TruTrace Technologies Inc. — Management Reports 2020

Oct 13, 2020

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Management Discussion & Analysis For the year ended April 30, 2020 TruTrace Technologies Inc.

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MANAGEMENT DISCUSSION AND ANALYSIS

The following manag e ment discussion and anal y sis (MD&A) of the financial condition a n d results of o perations is intended to help th e reader und e rstand the c u rrent and prospective fin a ncial positio n and operating results of TruTr a ce Technolo g ies Inc. (the “ Company” o r “TruTrace”) . The MD&A d iscusses the o perating an d financial results f o r the year e n ded April 30, 2020. The M D&A is dated October 1 0 , 2020 and t a kes into con s ideration information available up to that da t e.

The MD & A should be read in conjunction with t h e annual co n solidated financial state m ents and related notes for the y ear ended April 30, 2020 , prepared in accordance w ith International Financi a l Reporting S tandards (IFRS). All amounts ar e denominat e d in Canadia n dollars (CD N $) unless oth e rwise identi f ied.

Addition a l information is availabl e on TruTra c e’s website (trutrace.co) and all pre v ious public f ilings are available through SED A R (www.sedar.com).

FORWARD‐LOOKING STATEMENTS

The M D &A contains certain for w ard‐looking statements relating to the Compa n y’s plans, s trategies, objectiv e s, expectati o ns and inte n tions. The u se of any o f the words “expect”, “anticipate”, “ c ontinue”, “estimat e ”, “objecti v e”, “ongoin g ”, “may”, “will”, “proj e ct”, “shoul d ”, “believe ” , “plans”, “ intends”, “confide n t”, “might” and similar expressions are intende d to identify forward ‐ l o oking infor m ation or stateme n ts. Various a s sumptions w ere used in drawing the c o nclusions or making the projections co n tained in the for w ard‐looking s tatements t h roughout t h is MD&A. T h e forward‐l o oking infor m ation and s t atements included in this MD & A are not g u arantees of future performance and should not b e unduly rel i ed upon. Forward ‐ looking stat e ments are b ased on cur r ent expecta t ions, estima t es, and projections that involve a number o f risks and uncertainties, which could c ause actual r esults to diff e r materially f rom those a n ticipated and des c ribed in th e forward‐lo o king statem e nts. Such i n formation a n d statemen t s involve k n own and unknow n risks, uncer t ainties, and other factor s that may c a use actual r e sults or eve n ts to differ m aterially from th o se anticipated in such for w ard‐looking information o r statement s . In particul a r, but witho u t limiting the for e going, this M D&A may contain for w ard‐looking i nformation a nd statements pertaini n g to the fluctuati o ns in the d e mand for t h e Company’ s services; th e ability for t he Compan y to attract and retain qualified personnel; t he existenc e of competi t ors; technol o gical chang e s and devel o pments; as s umptions regardin g foreign cu r rency excha n ge rates an d interest ra t es; the exis t ence of reg u latory and l egislative uncertai n ties; the possibility of ch a nges in tax l a ws and gene r al economic conditions including the c a pital and credit m a rkets; assu m ptions made about future performanc e and operati o ns. The Company cautions that the foregoin g list of assu m ptions, risks, and uncert a inties is not e xhaustive. T h e forward‐l o oking information and stateme n ts contained in this MD & A speak onl y as of the d a te of this M D &A and the Company as s umes no obligation to publicly u pdate or re v ise them to r e flect new ev e nts or circu m stances, exc e pt as may b e required pursuan t to applicabl e securities la w s.

NON‐IFRS FINANCIAL MEASURES

Through o ut this docu m ent, refere n ce is made t o “working capital”, and “ a djusted EBIT D A”, which a r e all non‐ IFRS me a sures. Mana g ement belie v es that wor k ing capital, d efined as cu r rent assets l e ss current li a bilities, is an indic a tor of the C o mpany’s liq u idity and its ability to m e et its curren t obligations. Managemen t believes that Adj u sted EBITDA, which norm a lize earnings to exclude c e rtain amoun t s, is a useful m easure for c omparing results from one pe r iod to anot h er. Readers are caution e d that these non‐IFRS m easures may not be comparable to similar measures u s ed by other c ompanies. R e aders are al s o cautioned not to view t h ese non‐ IFRS fin a ncial measures as an alt e rnative to fi n ancial meas u res calculat e d in accordance with Int e rnational Financial Reporting St a ndards (“IFRS”).

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MARKET PROFILE AND INFORMATION

TruTrac e Technologie s Inc., headq u artered in Calgary, AB, C a nada, is a f u ll‐service technology company that has dev e loped a fully integrated s o ftware platf o rm, secured on a blockc h ain infrastru c ture that gi v es clients the abili t y to store, m a nage, share a nd immedia t ely access q u ality assuran c e and testin g details, Certificates of Authenticity (“CoA”), as well as m otion and movement int e lligence on inventory fro m batches a n d lots to serialize d items.

The Company’s initial focus was in t he legal can n abis industry with the de p loyment of t h eir platform under the branded name Strain S ecure™ whi c h was desig n ed to regist e r and track c annabis inte l lectual prop e rty (“IP”) from ge n ome to sale. StrainSecure ™ records are proprietary, i mmutable, a n d cryptogra p hically secur e , thereby establishing, in a sin g le source, an accurate, v alidated, an d permanent account for cannabis str a ins from ownership to market.

As glob a l business c o ntinues to e xpand, the c omplexity t h roughout th e supply cha i n has creat e d unique challeng e s and oppor t unities for c o mpanies tha t can better s u pport a safe, consistent a n d transpare n t product ecosystem.

As prod u cts are cultiv a ted, process e d, manufactured, packag e d and broug h t to retail shelves, stakeh o lders are looking a t new methods to power d ynamic and c ollaborative p roduct testi n g, quality as s urance and t r acking to ensure s a fety and aut h enticity.

TruTrac e specifically addresses the s e unique challenges, inclu d ing:

• Quality Testing: T ruTrace’s so f tware platfo r m, in collaboration with t h e Company’ s network of l a boratory partners, provid e s an efficien t and streamlined proces s for both m a ndatory an d cGMP (Current Good Ma n ufacturing Practice) based testing, including cutti n g the admi n istrative bu r dens associ a ted with con t aminant/mic r obial, chemistry and pes t icide testing in order to help get pro d ucts safely t o market fast e r;

• DNA Based Product Validation and Actionable Quality Assurance: T h e underlying blockchain t e chnology creates a gene t ic based r e gistry and correspondi n g genetic fingerprint f o r electronic product identification, val i dation, and q uality assura n ce to enable any particip a nt on the pla t form, from r e gulators, pro d ucers, parti c ipants throu g hout the e n tire supply c hain (if desired or required), to patients and con s umers, with t he ability to v iew and trac k the product from Genome to Sale™; a n d

• Intellectual Property Registration and Support: Third, th e TruTrace S o ftware as a Service (SaaS) platforms protect the uniq u e intellectua l property of growers, bre e ders and m a nufacturers. For instance, currently there is a limited legal framew o rk for the issuance of pat e nt protectio n of unique cannabis strain s in either Can a da or the U n ited States. H owever, so m e form of int e llectual pro p erty protecti o n is important for the industry’s growt h as produc t s evolve an d develop. T hrough the implementation of Strai n Secure™, Tru T race aims to help provide this protecti o n. For exam p le, if a craft g rower creat e s a popular s t rain with unique characte r istics, the p latform will enable in t ellectual pr o perty prote c tion throu g h simple regi s tration of the strain’s ge n ome within StrainSecure ™ , thereby l o cking that d a ta into an i m mutable dec e ntralized ledger. The res u lting perma n ent record w ill be readil y accessible i n the event of future disp u tes, thus b r inging a lev e l of trust t o the industr y and ensuring associate d fees are paid to all applicable partie s in the market.

TruTrac e ’s leadership team combi n es decades of extensive e x perience acr o ss multiple industries, wi t h specific expertis e across co r porate man a gement, b u siness development, ad v ertising, in f ormation technology, includin g custom ent e rprise‐based software, supply chain, l e gal and fina n ce. The tea m ’s extensive c ombined experience, specific e x pertise in th e blockchain s ector and its developmen t of the most c omprehensi v e, secure

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and community‐drive n product archival platfor m positions T r uTrace for g r owing oppor t unities in a n umber of industry verticals.

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CORPORATE PROFILE

Organization

TruTrac e was incorp o rated under the British C o lumbia Busi n ess Companies Act on O c tober 19, 2 0 11 and is listed on the Canadian Securities E xchange “CSE”, under th e trading symbol “TTT’’. T h e head offic e and the records a nd registere d office is loc a ted at L120, 2 303 – 4th St SW, Calgary, A B, T2S 2S7.

TruTrac e Technologie s Inc. is a full‐service soft w are compan y that has d e veloped a fully integrated software platform, secured on a blockchai n infrastructure that gives clients the a bility to sto r e, manage, s hare and immediately access q u ality assurance and testin g details, Cer t ificates of Au t henticity (“CoA”), as well a s motion and movement intelli g ence on inventory from b a tches and lo t s to serialize d item.

On May 17, 2018, th e Company c o mpleted its Q ualifying Transaction, pur s uant to whi c h it acquired all of the issued a nd outstanding shares o f BLOCKStr a in Technolo g y Group I n c. (“PrivCo” ) , a private company incorpor a ted on November 22, 2017, under the l aws of Britis h Columbia.

The Company change d its name fr o m “BLOCKSt r ain Technolo g y Corp.” to “TruTrace Tec h nologies Inc . ” on April 26, 2019.

Operations

TruTrac e initial com m ercial deployment was S trainSecure ™ , a fully int e grated bloc k chain platfo r m which registers and tracks intellectual p roperty and mandatory testing data for the can n abis indust r y, and is dedicated to making i t safe and co n formable fo r breeders an d growers, la r ge and small, to protect a n d release their ge n etics, strain v arieties, and validated te s ting results into the publi c domain. Tr u Trace’s StrainSecure™ technology tracks the product at e very testing point, from G enome to S a le™, so cust o mers can m a ke much more in f ormed decis i ons about t h e products t hey choose, medical pra c titioners an d patients can rely on standardized and verified medicin e and suppliers can imple m ent actiona b le quality a s surance. The TruTrace registry a nd verificati o n system gi v es producer s , regulators, patients and customers e v erything the y need to know, h e lping suppo r t safe and informed choi c es about all of the cannabis products placed into the supply chain.

TruTrac e combines traditional ca n nabis cultu r e with mod e rn blockchain‐technolog y . By being o pen and available to everyon e , the platfor m is expecte d to help sh a pe the future adoption and authenticity of the cannabis industry. Th r ough use of a secure API n etwork, Tru T race will ma k e it easy for t esting provi d ers, grow facilities, app and sof t ware develo p ers, medical practitioners, pharmacies , research gr o ups, and ma j or supply

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chain pl a tforms to b u ild applicati o ns and solutions, thereb y helping fuel technology a nd innovati o n for the cannabis industry as a whole.

With co m pliance and regulation b e ing a critical priority for industry parti c ipants, TruT r ace is also f o cused on implementing StrainS e cure™ as a m ethod to en s ure that applicable regula t ory standard s are adhere d to, while providin g real‐time visibility of in d ustry operat i ons directly t o, and colla b oration wit h , agencies a s signed to enforce a nd regulate cannabis acti v ity nationwi d e. TruTrace uses powerf u l supply chain and IoT (“I n ternet of Things”) technology t o allow for the tracking of cannabis mo v ement from genetics to s a le, while pr o viding for the scalability of what is expected to become a g lobally trade d product.

On May 7, 2019, Tru T race entere d into a lette r of intent w i th Strainprint™ Technolo g ies Ltd. ("St r ainprint") under w h ich the parties would wo r k together t o explore dev e lopment an d integration o pportunitie s to utilize their mutual technol o gies in order to bring gre a ter transpar e ncy and visi b ility to the l e gal cannabi s industry. This init i al engagem e nt was follo w ed up by an expanded plan between the Comp a ny and Stra i nprint to establish a joint venture (“JV”) i n February 2 0 20. Howeve r , all steps in the finalizat i on of this c o mmercial relationship were del a yed by the C OVID‐19 (Co r onavirus) gl o bal pandemi c . Neverthele s s, Management is still in talks w ith the Strai n print will co n tinue to wo r k to finalize m utually ben e ficial terms, and believes that such integrati o n in third‐p a rty systems such as this c ould have a positive imp a ct on the v a lue that the Company provides to end client s .

On May 9, 2019, Tru T race entere d into a lette r of intent wi t h Molecular Science Corp. ("MSC") un d er which the parties would work together to explore opportunities t o combine the blockchain ‐ secured technology of TruTrac e with the analytical expertise of MSC in order to deli v er greater tr a nsparency and visibility a r ound the quality of products being offered i n the legal ca n nabis indust r y. Managem e nt began working with a n umber of other la b oratories within the fram e work of a Pr o of of Conce p t with Shoppers Drug Mart in 2019 but has plans to reeng a ge MSC as a partner facility in the ne a r future. Ma n agement be l ieves that cooperative pa r tnerships with analytical testing facilities, such as MSC could have a positive financial impact on the Company.

On May 16, 2019, TruTrace annou n ced a worki n g relationshi p with Nonni e 's Nectar, LLC, a Los Ang e les based hemp extract compa n y that produ c es premium full‐spectru m hemp‐base d products gr o wn in the U.S.A. using organic f arming prac t ices, where b y Nonnie’s N ectar will b egin employing the StrainSecure™ pl a tform to collect, register, man a ge, track and publish verified testing d a ta of several of their products in mark e t. In early 2020, N o nnie’s Nectar ceased operations; how e ver, the expected revenue from this c lient was no m inal and therefor e manageme n t sees no ne g ative impact arising as a r e sult.

On June 4, 2019, sen i or managem e nt of TruTrace took part in a formal p resentation b efore an int e rnational audienc e at the 2019 Deloitte Gre e nhouse™ Ca n nabis Summit in Toronto t o discuss inn o vations and initiatives which are designed t o bring great e r transparency and colla b oration to the cannabis i n dustry. The invitation‐ only ev e nt took place following t he release o f Deloitte's t hird annual report on t h e impact of cannabis legalization on the Ca n adian econo m y: Nurturin g new growth: Canada gets ready for Ca n nabis 2.

On June 11, 2019, TruTrace appoin t ed Deepak A nand, CEO a n d Co‐Founder of Materia V entures, as a n advisor to the Company. Mr. Anand brou g ht significa n t experience having wor k ed closely with senior go v ernment officials, politicians, p olicy maker s , health professional organizations, c l inical practitioners, educ a tors and investor s . Manageme n t believes the addition of established a nd talented individuals, s u ch as Mr. An a nd could have a p o sitive financ i al impact on t he Company.

On June 14, 2019, T r uTrace bega n trading on the Canadia n Securities E xchange ("C S E") under t h e symbol "TTT." E f fective at th e close of bu s iness on Thursday, June 13, 2019, the common sha r es were deli s ted from TSX Ven t ure Exchang e at the requ e st of the Co m pany. The listing on the C SE is expect e d to provid e TruTrace with in c reased visib i lity with pr o spective gl o bal investo r s, improved liquidity and a more d iversified shareholder base.

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On June 17, 2019, S hoppers Drug Mart (“Sh o ppers”) announced at t h e second a n nual World Cannabis Congres s , a new Pilot Program (“Pilot”) built on TruTrace's p r oprietary Str a inSecure™ platform, whi c h focuses on testi n g and verifi c ation to confirm the ori g in, authenticity and quali t y assurance of cannabis products. We’re d e lighted to announce that P hase 1 is no w complete. T ruTrace’s so f tware is bein g used as a c e ntral hub for identity managem e nt, asset tra c king, validation, and prod u ct authentic a tion for Sho p pers medica l cannabis product s . Shoppers h a s also announced the co m missioning o f TruTrace an d Deloitte to execute Phase 2 of the pilot, wi t h full prod u ction and i m plementation of TruTra c e’s StrainSe c ure™ platform, slated to begin in Novemb e r 2019. This Pilot is aime d at not only p roviding det a iled inventory data to Shoppers as a part of their Medical C annabis initiative, but als o to bring a detailed level o f transparen c y and trust t o medical pr a ctitioners through o ut Canada. M anagement believes tha t this implem e ntation of StrainSecure™ will have a s ignificant financial impact on the company as the platf o rm will serve as a fundamental layer in the distribution of medical c annabis.

Althoug h the estimat e d size of th e medical ca n nabis marke t is significan t , management believes t h ere is an even greater opportu n ity to grow t he market, d ue to the s m all number o f medical practitioners who actively prescrib e cannabis without produ c t validation. “There is a c l ear consens u s within the cannabis ind u stry that the sou r ce and qual i ty of medic a l cannabis m ust be transparent and identifiable in order to meet the expectations of pati e nts and he a lth care practitioners,” s aid Ken We i sbrod, Vice President of Business Develop m ent, Shopp e rs Drug Mart. As of April 30, 2020 the Company beg a n implementing Phase 3 o f the pilot with Sh o ppers. Man a gement beli e ves that th e implementation of the Company’s t echnology w ithin the ecosystem of Shoppe r s Drug Mart a nd Loblaws, Inc. could ha v e a positive f inancial impact of the Co m pany and provide a dditional co m mercial opp o rtunities.

On June 25, 2019, TruTrace and Shivom Ven t ures Limited ("Shivom"), a biotechnology data an d analysis compan y optimising t he way DN A is shared, secured and a nalysed thr o ugh blockch a in and AI technology, announced that the t wo compani e s entered i n to a letter o f intent ("L O I") to establish a strategi c working relationship. The part n ership is ai m ed at utilizin g both Shivo m and TruTra c e's blockcha i n solutions i n order to substantially enhance the global medicinal and r ecreational c annabis mar k ets. Althoug h Manageme n t has not finalized a definitive agreement w ith Shivom, there are still discussions underway around how to best to integrat e these tech n ologies. Ma n agement believes that the integration of the Com p any’s techn o logy into these ty p es of third‐p a rty systems c ould have a p ositive finan c ial impact.

On July 9 , 2019, TruT r ace announ c ed that A&L Canada Labo r atories Inc. w ould serve a s one of the inaugural testing f acilities in t h e Shoppers and TruTrac e medical cannabis verifi c ation Pilot. A&L is an i n novative, research driven technology compa n y focused o n sustainable developmen t . For Food & Pharma, A& L provides analytic a l services for plant tissue, water, medi a and finishe d products. A & L's services f or cannabis a nd hemp also incl u de disease d i agnostics, genetic analysis, production r ecommenda t ions, Plant M onitoring Pr o gram and Health Canada requir e d testing. T h e company operates two w orld class a n alytical Lab o ratories serving clients through o ut Canada, t he U.S., an d Internationally. Manag e ment began working wi t h a number of other laborato r ies within the framework of a Proof of Concept wi t h Shoppers D rug Mart in 2019 but ha s plans to reengag e A&L as a pa r tner facility i n the near fu t ure. Management believe s that cooper a tive partner s hips with analytic a l testing facilities, such as A &L could ha v e a positive f inancial impact on the Co m pany.

On July 30, 2019, Tr u Trace anno u nced that it s common s h ares have c o mmenced t r ading on th e OTCQB® Venture Market, und e r the symbol TTTSF. The C ompany bel i eves that tr a ding on the O TCQB, alon g with the DTC eligibility it secur e d earlier this year, provid e s additional liquidity and e xposure am o ngst U.S. inv e stors.

On July 3 1, 2019, Tr u Trace and T h e Flowr Corporation (TS X .V: FLWR; OTC: FLWPF) jointly annou n ced that Flowr joined the Sho p pers medica l cannabis ve r ification Pilo t . "Our medi c al cannabis p roducts in C a nada are available through Shoppers as we b elieve the p h armacy model offers significant benefi t s to patients. We fully support t he objective s of this pilot program and look forwar d to working w ith our part n ers to ensur e patients have access to medici n al cannabis t hey can trus t ," said Dr. Lyle Oberg, Flo w r's Chief Me d ical and Poli c y Officer.

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"Medica l cannabis p a tients expec t that their m edication is safe, standa r dized and o f high qualit y , and we believe t his formal t r aceability pr o gram can play an impor t ant part of t he overall p r ocess of bui l ding that trust." Flowr has a su p ply agreement with Shop p ers to suppl y its FlowrRx b rand of medical cannabis products. Manage m ent believe s the utiliza t ion of Strai n Secure™ in t he validation and distri b ution of medical and recreati o nal cannabis by Flowr could have a positive financial impact on Tr u Trace.

On August 14, 2019, T ruTrace ann o unced the c o mpletion of Phase 1 of the Shoppers P ilot Program. The Pilot Program is specificall y designed to i ncrease tran s parency, int e roperability a nd product i d entification w ithin the medical cannabis industry. Shoppers has also engaged Tr u Trace and D eloitte Canada LLP ("Deloitte") to execute Phase 2 of t h e Pilot Pro g ram, with full production and implem e ntation of T ruTrace's StrainSecure platform targeted for late Novemb e r 2019.

"We hav e been enco u raged by the response to t his traceabili t y initiative. T here is a cle a r consensus w ithin the cannabis industry th a t the source and quality of medical c a nnabis mus t be transpar e nt and iden t ifiable in order to meet the ex p ectations of p atients and h ealth care pr a ctitioners," s aid Ken Weisbrod, Vice Pr e sident of Business Developme n t, Shoppers Drug Mart. "It is more important t h an ever to be able to a ssure all stakehol d ers, from regulators to health care p r actitioners, that the medical industry is taking the necessary steps to establish the infrastructu r e required t o deliver standardized, co n sistent medication to ou r patients. Shopper s has turned t o two truste d leaders, Tru T race and Deloitte Canada LLP, to assist us in the sec o nd phase of the p r oject." Man a gement beli e ves that the Company’s a bility to deli v er this solut i on on‐time a nd under budget f or a client a s significant a s Shoppers D rug Mart is a clear indication of suc c ess, and Ma n agement expects t his will lead to additional opportuniti e s not only with this client, but with si m ilarly situat e d clients, leading to a positive financial impa c t on the Co m pany.

On Aug u st 20, 2019, TruTrace an n ounced tha t it signed a letter of int e nt to establi s h a strategi c working relationship with Anandia Laborat o ries Inc. ("A n andia"). Anandia is consi d ered an ind u stry leader i n science, genetics , and indepe n dent canna b is product t e sting. Pursu a nt to the L O I, Anandia w ill serve as a primary analytic a l and geneti c testing part n er in the Tr u Trace ecosy s tem. The pa r ties will also explore ways to work together on rapidly e x pediting an d optimizing t he testing p r ocesses und e r the Canna b is Act (Cana d a) as set forth by Health Canada, as well as evolving g e netic testing practices in the cannabi s industry. Al r eady the industry leader, Ana n dia is the l a rgest dedic a ted cannabi s testing lab in Canada. H eadquarter e d among Vancouv e r's burgeon i ng tech co m munity, Anandia's new s t ate‐of‐the‐a r t facility wa s custom‐de s igned for cannabis testing. Bet w een the company's Vancouver and Tor o nto labs, An a ndia provide s 19 different tests and services. These include the full sui t e of testing s ervices requi r ed by Healt h Canada, plu s other value ‐ add tests such as full cannabi n oid, terpene, and flavon o id profiling; genetic‐bas e d testing; p r edictive pro f iling; and genetics archiving se r vices. While operating in d ependently, Anandia is a wholly owned subsidiary o f Aurora Cannabi s Inc. (NYSE: ACB) (TSX: A CB) (Frankfu r t: 21P; WK N : A1C4WM). Managemen t believes th i s type of relationship is an indi c ation of the C ompany’s value in the market and coul d have a posi t ive financial i mpact on the Com p any.

On Aug u st 22, 2019 , TruTrace closed a first tranche (th e “First Tran c he”) of the non‐brokered private placeme n t (the “Fina n cing”). The F i rst Tranche consisted of 2 , 040,000 unit s (each, a “U n it”) of the C o mpany at a price of $0.25 per Unit for gross p roceeds of $ 510,000, which includes t h e advance o f $235,000 received on July 29, 2019. Each U nit consists o f one com m on share an d one non‐tr a nsferable common share purchase warrant (each, a “Wa r rant”). Each Warrant enti t les the hold e r to purchas e one additio n al common s hare at a price of $ 0.30 per co m mon share f o r a period of three years f r om the closi n g of the Fina n cing.

On Aug u st 28, 2019, TruTrace an d Segra Inter n ational Cor p . ("Segra"), a n agricultur e technology company, announced that the two compan i es entered into a letter of intent (“ L OI”) to esta b lish Segra a s primary genetics ’ verification p rovider for TruTrace. Alth o ugh Segra was considere d to be a lead genetics partner in the Shopper s and TruTra c e Pilot Progr a m, after extensive feedb a ck and cons i deration, M a nagement d e termined

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that additional providers were better suited to fit the need s of the initia t ive. Manage m ent sees n o negative impact arising as a result of this ch a nge.

On Sept e mber 4, 20 1 9, TruTrace a nd Deloitte announced a strategic all i ance to deli v er blockchai n product traceability solutions t o the canna b is industry. D eloitte has b een a leading voice in ca n nabis intelli g ence and research and has ad v ised and co n sulted clien t s at every l e vel of the c a nnabis sup p ly chain. Th e ir annual Cannabi s Report is a fundamental resource about the curr e nt and futu r e state of t h e young ind u stry. The alliance w ill improve c lients' abilit y to build tru s ted brands, e nsure medi c al and recre a tional distributors and retailers receive accu r ate shipments, and provid e consumers w ith confide n ce they are buying verifie d products from cre d ible sources . Deloitte pro v ides audit & assurance, c o nsulting, fin a ncial advisor y , risk advisory, tax and related s ervices to p u blic and pri v ate clients spanning mul t iple industri e s. Deloitte s erves four out of five Fortune Global 500® companies t h rough a glo b ally connected network o f member firms in more than 150 countrie s and territor i es bringing w orld‐class ca p abilities, insi g hts and service to addres s clients' mos t complex business challenges. Since the d a te of this strategic alliance, the Co m pany and D eloitte hav e been in continu o us discusion s regarding t h e developm e nt and deployment of m utually beneficial solutio n s for the market. M anagement believes this relationship w ill be mutually profitable , as the two c o mpanies lo o k to grow and expl o it the opportunities provided in the gl o bal cannabi s industry, an d this could have a positiv e financial impact on the Compa n y.

On Sept e mber 5, 20 1 9, Aphria In c . ("Aphria") (TSX: APHA a nd NYSE: A P HA) and TruTrace annou n ced that Aphria j o ined Phase 2 of the Shop p ers medical c annabis veri f ication Pilot P rogram. "W e are thrilled t o partner with Sh o ppers Drug M art and TruTrace Techn o logies to increase transp a rency withi n the medical cannabis industry," said Irwin D . Simon. "At A phria Inc., w e take respo n sibility to he a rt and recognize the imp o rtance of standardized testing a nd quality a s surance. Thi s program re f lects our ongoing commit m ent to prot e cting the health a n d safety of o ur patients." Aphria Inc. i s a leading gl o bal cannabi s company d r iven by an u n relenting commit m ent to our p e ople, the planet, product quality and i n novation. Headquartered i n Leamingto n , Ontario – the gr e enhouse ca p ital of Cana d a – Aphria Inc. has been a leader in low‐cost pro d uction of hi g h‐quality cannabis at scale, grown in natura l conditions. F ocusing on u ntapped op p ortunities and backed by the latest technologies, Aphria Inc. is commit t ed to bringi n g breakthrough innovatio n to the glob a l cannabis m a rket. The Compan y 's portfolio o f brands is g rounded in e xpertly‐rese a rched consumer insights designed to meet the needs o f every cons u mer segme n t. Aphria In c . drives sus t ainable long ‐ term shareh o lder value t hrough a diversifi e d approach to innovation, strategic pa r tnerships an d global expa n sion, with a presence in m ore than 10 coun t ries across 5 continents. M anagement believes the u tilization of StrainSecure ™ in the validation and distribut i on of medical and recreational cannabi s by Aphria c o uld have a p o sitive financi a l impact on T ruTrace.

On Sept e mber 11, 2019, TruTrace announced t h at Tilray Ca n ada Ltd. ("Tilray Canada"), a subsidiar y of Tilray, Inc. (NA S DAQ: TLRY), a global pion e er in cannab i s research, c u ltivation, pr o duction and distribution, joined the Shopper s Drug Mart medical can n abis verification Pilot Pro g ram. Tilray i s a global pi o neer in the research, cultivati o n, productio n and distrib u tion of cannabis and can n abinoids cu r rently servin g tens of thousands of patients and consumers in 13 co u ntries span n ing five con t inents. Man a gement believes the utilization of StrainSe c ure™ in the validation and distributio n of medical a nd recreational cannabis by Tilray co u ld have a positive f inancial imp a ct on TruTra c e.

On Sept e mber 13, 2019, the Com p any closed a second tran c he (the “Sec o nd Tranche”) of the Fina n cing. The Second T ranche cons i sted of 840, 9 50 units (ea c h, a “Unit”) of the Comp a ny at a pric e of $0.25 per Unit for gross pr o ceeds of $2 1 0,237. Each U nit consists o f one comm o n share and one non‐transferable War r ant. Each Warrant entitles the h older to pur c hase one additional com m on share at a price of $0.30 per com m on share for a period of three years from th e closing of th e Financing.

On Octo b er 16, 2019 , the Compa n y and AdvancedCare, a l e ading clinical research, clinical and tel e medicine platform used by me d ical professi o nals around t he world, announced the entry of a let t er of intent t o begin a strategic working rel a tionship to i ntegrate their technologi e s to bring i n novative so l utions to th e medical

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industry. Under the t e rms of the a g reement, AdvancedCare w ill begin integrating the S t rainSecure t e chnology into its p roprietary p l atform with the objectiv e of providin g product da t a directly to medical pro f essionals, patients and researc h ers to ensur e medication has been ve r ified and is s afe to cons u me. Further m ore, it is expecte d that the combined syst e m will be u t ilized in car e plans and c linical resea r ch trials in t he global medical industry. Management b e lieves the u t ilization of S trainSecure ™ in broader medical opportunities could h a ve a positiv e financial i m pact on the Company. A lthough Adv a ncedCare w a s considere d to be a partner t hat could b r ing value to the business of the Com p any, Manag e ment decid e d to go in a different directio n . Manageme n t sees no ne g ative impact arising as a r e sult of this c h ange.

On Octo b er 24, 2019, TruTrace clo s ed a first tra n che of a non ‐ brokered pri v ate placement financing o f secured converti b le debentur e s (each a “ D ebenture”). The Compa n y issued De b entures in t h e aggregate principal amount o f $200,000.

On Nov e mber 6, 201 9 , TruTrace closed a seco n d tranche o f a non‐brok e red private p lacement fi n ancing of secured convertible d ebentures ( e ach a “Deb e nture”). Th e Company i s sued Deben t ures in the a ggregate principal amount of $ 7 5,000.

On Nov e mber 19, 2 0 19, TruTrac e announce d that Cleve r Leaves ("Clever Leaves"), a leading vertically integrat e d global co m pany and fully licensed p r oducer of p h armaceutica l ‐grade medi c al cannabis a nd hemp extracts, joined TruT r ace’s StrainSecure™ platf o rm to bring standardiza t ion and pro d uct validation into its internati o nal distribution strategy. C lever Leave s is a leading v ertically inte g rated produ c er of medica l cannabis and he m p extracts and is curren t ly cultivatin g over 1.5 m illion squar e feet of gre e nhouses un d er Good Agricult u ral and Colle c tion Practice s (GACP) in C o lombia, with expected ex p ansion to 2. 3 million square feet by the end o f 2019 and the goal of re a ching 10 mil l ion square f e et by 2021. A lthough Clev e r Leaves has not been operatin g in Canada a s of yet, Ma n agement believes the future utilizatio n of StrainSe c ure™ in the v alidation and dist r ibution of le g al cannabis b y Clever Leav e s could have a positive financial impac t on TruTrace.

On Febr u ary 4, 2020, T ruTrace and Strainprint® announced plans to establish a joint ve n ture (“JV”) t o develop new tools and syste m s designed to improve t h e overall ex p erience of c a nnabis patients and con s umers by connecting validated product dat a with authe n ticated pati e nt data. Ma n agement has not taken a dditional steps fo r ward to acce l erate this ini t iative, in par t due to the C OVID‐19 Glo b al pandemic. Manageme n t sees no negative impact arising as a result.

On Mar c h 10, 2020, T ruTrace app o inted Cesare Fazari to its Board of Dir e ctors, effective March 9, 2 020. Mr. Fazari is a founding p artner of N o rthwood De v elopments and has been active in th e company for over 30 years. H e specializes i n commerci a l retail rollo u t, having co m pleted thou s ands of turnkey projects for major commer c ial franchise s such as Sho p pers Drug Mart, Marshall s , Trade Secr e ts and Public Mobile to name a few. With his entreprene u rial vision, M r. Fazari ha s been the s e ed Venture C apital inves t or in many s uccessful public c o mpanies suc h as Hydropothacary Corp . , Ianthus, Dr o ne Delivery Services and others. Mr. F azari also previously sat on the board of the public merc h ant bank, Fountain Asset Corporation a nd is curren t ly on the advisory board of se v eral public and private c o mpanies. M a nagement is confident that the additi o n of Mr. Fazari could have a p o sitive financi a l impact on the Company.

FINANCIAL AND OPERATION HIGHLIGHTS

FINANCIA L AND OPER ATION HIGHL IGHTS
		Year end ed	Ye ar ended
		April 30, 20 20	April 30, 2019
Revenue	$	402,6 79$	10,000
Adjusted EBITDA(1)		(4,040, 934)	(9 ,218,414)
EBITDA(1 )		(4,608, 045)	(14 ,785,786)
Net loss		(4,639, 182)	(14 ,773,169)
Compreh ensive loss	$	(4,639, 182) $	(14 ,773,169)

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Revenue

• The Company’s p roprietary s o ftware was built to ena b le TruTrace to serve as a full‐service software pro v ider with a f ully integrat e d blockchai n platform t h at registers and tracks t h e quality of products throughout the s upply chain, including w i thin the leg a l cannabis i n dustry from genome to sale. The pro d uct‐based re g istry is prop r ietary, imm u table, and cr y ptographica l ly secure, th e reby establi s hing, in a sing l e source, an a ccurate, vali d ated, and p e rmanent acc o unt from ownership to m a rket.

• Mo n etization of T ruTrace’s sui t e of product s includes, bu t is not limite d to:

• ❖ Monthly Saa S Usage Fees

• ❖ Product Veri f ication Fees

• ❖ Standardized Test Verifica t ion Fees ❖ Traceability F ees ❖ Custom Dev e lopment

• Thir d Party Publishing Licensin g Fees

• The Company be g an generatin g revenue in t he later part of the year e n ded April 30 , 2019.

Earnings and net earnings[(1) ]

The Company’s loss w as $4,639,18 2 for the year ended April 3 0, 2020 compared to $14 , 773,169 for the period ended A pril 30, 201 9 . The larger loss in 2019 compared t o 2020 was a result of h igh start‐up costs not subsequ e ntly incurre d .

REVERSE TAKEOVER

On May 17, 2018, t he Compan y completed its Qualifyin g Transactio n (the Trans a ction) whereby each outstan d ing share of PrivCo was e x changed, on a one for o n e basis, for t h e issued an d outstandin g common shares o f the Compan y , with PrivC o becoming a w holly‐owne d subsidiary of the Compa n y.

The Tra n saction cons t ituted a rev e rse takeove r of the Company by the shareholders of PrivCo b u t did not meet th e definition o f a business c ombination a s defined un d er IFRS 3. A s such, the Transaction is a ccounted under IF R S 2, where t h e difference between the consideratio n given to ac q uire the Company and the net asset value of the Compan y is recorded as a listing e x pense. Since PrivCo is de e med to be t h e accountin g acquirer for acco u nting purpo s es, these fin a ncial statem e nts present the historical f inancial info r mation of PrivCo up to the date of the Trans a ction.

Fair va Fair v Prep Bank Acco Listing lue of shares alue of net lia aid deposits indebtednes unts payable expense issued (6,854 bilities s ,382 @ $0.30 )	$ 2,0 (2 56,315 32,750 (21,270) 76,184)
	(2 64,704)
	$ 2,3 21,019

OUTLOOK AND GUIDANCE

This Outl o ok and Guida n ce contains fo r ward‐looking s tatements tha t the Company does not intend, and does n o t assume any oblig a tion, to updat e , except as re q uired by law. T he forward‐lo o king information and statem e nts include: ● The c urrent econo m ic climate and its effect on t h e Company’s client base busi n ess; ● The C ompany’s ability to successf u lly acquire ne w customers;

● The C ompany’s ability to successf u lly implement its technology; and

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● Man a gement’s ass u mptions rega r ding the sust a inability of re c urring revenu e streams and the Company’ s expected profitability.

Business Overview

With th e launch of o u r StrainSecu r e™ platform , TruTrace of f ers an easily integrated b l ockchain sol u tion that tracks c a nnabis from Genome to S ale™ throug h the supply chain and pr o vides actionable quality a ssurance and real ‐ time testing data to the cannabis ind u stry. In add i tion, the Co m pany also r e leased their TruTrace Enterpri s e™ SaaS pla t form, which was specifically designe d to power t h e traceability of testing s tandards within t h e nutraceuti c al, food and p harmaceutical space with a focus on the authentication of source materials or ingre d ients used in formulation.

The Co m pany’s Strai n Secure™ pla t form will play a key role in the canna b is industry, s ervicing bot h licensed produce r s and micro c ultivators ali k e. This will be done through the continued develop m ent of the Company’s technology, as well a s through str a tegic partnerships with k e y players in the marketp l ace and ho w they will work with TruTrace moving forwar d .

TruTrac e has dev e loped a c omprehensi v e verification system for requi r ed tests including: contami n ant/microbi a l, chemistry a nd pesticide , and genetic s tests for product verification, as well a s a supply chain m a nagement p l atform that e nsures tran s parency and quality assu r ance between all stakeholders. We want to empower producers, ma n ufacturers, d istributors, m edical prac t itioners, reg u lators and c o nsumers with inf o rmation regarding what tr u ly is in their p roduct.

The Co m pany has been able to m irror its technology on t h e front end f rom an aut o mation poin t of view, embedding it within l a boratories t h at are cond u cting contaminant/microbial, chemistr y , pesticide a n d genetic testing. A s such, we h a ve essentially digitized all aspects of t h e testing process, a crucial point for th e integrity of the cannabis indus t ry.

TruTrac e ’s goal within the legal ca n nabis industr y is to build a framework f o r licensed p r oducers (“LP s ”) as well as micro cultivators t h at are entering the newly legalized ecosystem, helping them to easily and ine x pensively move their products through tes t ing procedu r es. We the n place that t esting data on the bloc k chain for immuta b ility and int e llectual property protecti o n and feed t hat informa t ion through the ecosystem for full visibility into the sup p ly chain. Th e resulting outcome is a trustworthy source of prod u ct and inve n tory data that can be used to support any t hing from clinical trials t o medical ef f icacy studie s , as well as providing regulato r s, medical p ractitioners, patients an d even retail consumers a much‐desir e d level of a ctionable intellige n ce. With Tru T race, all parties can see whether a pro d uct is clean, s afe, pesticid e ‐free and tr u ly is what it claims to be.

RESULTS OF OPERATIONS

Revenue

TruTrac e generates revenue in three principal areas:

Software as a Service (“SaaS”) / Licensed Cultivator – The S t rainSecure™ and TruTrace Enterprise™ platforms are SaaS offerings for provincially a nd federally licensed businesses, as well as manuf a cturers or distributors with an a im to provid e collaborati v e and transp a rent data o n the quality o f their products. The StrainSecure™ platform is a blockch a in enabled q u ality assura n ce, testing a n d inventory m anagement system that integrates into thir d party ERP ( E nterprise Re s ource Planni n g) complian c e systems w i thin the lega l cannabis in d ustry and serves a s an interop e rable smart‐hub relating to the prov e nance and quality of cannabis. The s y stem has modules specifically designed for v a rious memb e rs of the val u e chain in ca n nabis and al t hough it wa s designed for can n abis, has a p plications in several oth e r industries. Similarly, TruTrace Enterprise™ plat f orm is a blockchain enabled quality assura n ce, testing a nd inventor y manageme n t system th a t integrates into third

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party E R P complianc e systems within traditional industrie s to and se r ve as an in t eroperable s mart‐hub regardin g the standar d ization and q uality of pro d ucts throug h out the supp l y chain.

Software as a Service / Laboratories – The Str a inSecure™ and TruTrace E nterprise™ p latforms als o serve as comple m entary SaaS systems for analytical a n d genetic laboratories a n d testing b o dies. These platforms empower current pr o cesses and s ystems, suc h as a partn e r’s LIMS (Laboratory Inf o rmation Ma n agement Systems ) and other in t ernal operat i ons.

Software Development and Professional Service Fees – T r uTrace also provides cus t om develop m ent and consulti n g services to industry stak e holders wit h an aim to support an open and collaborative infrast r ucture of companies required t o provide a transparent and reliable supply chai n . Our team works with clients to determi n e administra t ive inefficiencies and desi g ns custom t o ols to fit their needs. Our m anagement team and key per s onnel have broad experience in ent e rprise soft w are development. We provide proje c t‐specific services t o clients bas e d upon their needs.

Transactional Verification and Traceability – T h e verificatio n , validation and traceability of invent o ry within each pla t form are off e red on a batch‐by‐batch b asis as we s e cure and manage product data throug h a robust blockchain enabled system and ser v e as an inter o perable lay e r in the testi n g and validation of product.

FINANCIAL RESULTS OF OPERATIONS

The foll o wing table highlights the e xpenses for t he year end April 30, 202 0 as compar e d to the last y ear April 30, 2019.

	Year April 30 ended , 2020 Ye April ar ended 30, 2019
Corpora Deprecia General Operatin Product Salaries, Stock‐ba te developme tion and administ g costs developmen subcontracto sed compens nt costs rative costs t costs rs, and bene ation fits $	6 7 2,0 8 5 28,301 $ 5,836 49,865 5,000 75,822 14,485 67,111 4 1 2 1 3 ,323,139 4,834 ,082,231 64,842 ,159,940 ,391,512 ,246,353
Total op erating expe nses $	4,8 46,420 $ 12 ,272,851

For the y ear ended A p ril 30, 2020, t otal operati n g expenses w ere $4,846,4 2 0 compared to the $12,2 7 2,851 for the peri o d ended April 30, 2019. K e y differences year over ye a r are outline d in more detail below.

Operating costs whic h consists of m aterials an d supplies, an d lab testing costs for the Company’s o perations were $5,000 for the year ended A p ril 30, 2020 c ompared to $ 64,842 during the prior c o mparative p e riod. The change i s attributed t o the level o f operations the Company was in this year versus the start‐up stage the Compan y was in duri n g the prior y e ar.

Depreciation was $5 , 836 for the year ended April 30, 2 0 20. This ex p ense is rela t ed to the equipment purchas e d by the Co m pany for lab o ratory integ r ation purpos e s and is a non‐cash expense. Overall, t h e change year over year is not significant.

Stock‐ba s ed compensation expens e was $567,111 for the ye a r ended April 30, 2020 c o mpared to $ 3 ,246,353 in the prior year. This expense is d r iven by the timing of the, i ssuance, the variables used for the calculation of the Blac k Scholes pricing model an d the vesting o f stock options and is a n o n‐cash expe n se.

Corpora t e developm e nt costs we n t from $4,323,139 for th e year ended April 30, 20 1 9 to $628,3 0 1 for the current y ear. The cha n ge is attribu t ed to the stage of the co m pany shiftin g from start‐up to operational which commenced during the last three m onths of the prior year.

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General and administrative costs d eclined from $1,082,231 t o $749,865 in the curren t year. The d e cline is a result of greater focu s on efficiencies year on y e ar and the c h ange from a start‐up company to an o p erational one.

Salaries, subcontract o rs and ben e fits declined year on ye a r from $1,3 9 1,512 to $8 1 4,485. The d ecline is attribut e d to the co m pany incurri n g less devel o pment costs year on yea r and hence l e ss headcou n t year on year.

PRODUCT DEVELOPMENT

On Janu a ry 19, 2018, the Compan y entered int o a master s e rvices agree m ent and a s t atement of w ork with Heated D etails, Inc. ( “Heated Det a ils”) to dev e lop the initi a l phases of the product developmen t strategy necessary to launch the TruTrace p latform. All w ork entere d into betwe e n the Comp a ny and Heat e d Details since th a t time has r e lated to dev e lopment an d design work for StrainSe c ure™ within t he emergin g cannabis industry and TruTrac e Enterprise™ within more traditional industries, suc h as food an d cosmetics. D uring the year ended April 30, 2020, the Co m pany paid $2 , 164,821 to Heated Details to carry out t his assignme n t.

FOREIGN EXCHANGE

			Yea r ended	Ye ar ended	Ye ar ended
			April 3 0, 2020	April	30, 2019
Foreign	exchange loss	$	(74,162) $		(36,134)

Foreign e xchange gai n s and losse s are the res u lt of foreign currency flu c tuations during the perio d and the timing o f when items a re settled. F o reign excha n ge gains and losses fluctu a te annually i n relation to c hanges in the US/ C anadian and E uro/Canadian exchange r a te.

NET EARNINGS, TOTAL COMPREHENSIVE LOSS AND CASH FLOWS

NET EAR NINGS, TOTA L COMPREHE NSIVE LOSS A	ND CASH FL	O WS
			Year ended	Ye ar ended
			A pril 30, 2020	April 30, 2019
Adjusted EBITDA(1)		$	(4,040,934) $	(9 ,218,414)
EBITDA(1 )			(4,668,045)	(14 ,785,786)
Compreh ensive loss			(4,639,182)	(14 ,773,169)
Funds us ed in operatio ns before wo rking capital	changes(1)		(3,951,491)	(9 ,045,912)
Funds us ed in operatio ns		$	(2,117,514) $	(8 ,966,557)

The Co m pany’s comp r ehensive los s was $4,639 , 182 for the y ear ended A p ril 30, 2020. Compared t o the prior year’s lo s s of $14,77 3 ,169. The variance year o n year is du e to the Com p any incurring significant c orporate develop m ent costs in 2019 as compared to 2020 and chargi n g less for st o ck‐based co m pensation a n d for the reasons n oted under f inancial results of operati o ns.

For the year ended A pril 30, 20 2 0, adjusted E BITDA was a negative $ 4 ,040,934. T h e larger los s in 2019 compared to 2020 was a result of high corporat e development costs.

The Co m pany’s funds used in oper a tions were $ 2,117,514 the year ended April 30, 20 2 0, and mainl y covered marketi n g campaigns and product developmen t . In the prio r year the m a jor contributing expenses to use of funds fr o m operation s were corporate develop m ent costs an d stock‐based compensati o n charges.

FINANCIAL AND OPERATING HIGHLIGHTS ‐ QUARTERLY ANALYSIS

		2020		2020		202 0	2020
		Q4		Q3		Q 2	Q1
Revenue	$	(248,841)	$	300,000	$	303,52 0 $	48,000
Adjusted EBITDA(1)		(686,545 )		(1, 134,933)		(846,5 14)	(1 ,372,942)
EBITDA( 1)		(835,325 )		(1, 179,023)		(913,2 23)	(1 ,740,474)

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Net loss		(803,175 )		(1, 180,421)		(914,65 2)	(1 ,740,934)
Compreh ensive loss	$	(803,175 )	$	(1, 180,421)	$	(914,65 2) $	(1 ,740,934)
		2019		2019		201 9	2019
		Q4		Q3		Q 2	Q1
Revenu e	$	10,000	$	‐	$	‐ $	‐
Adjuste d EBITDA(1)		(1,864,327)		(1,5 72,311)		(1,598,52 5)	(4, 167,857)
EBITDA (1)		(1,886,023)		(1,6 01,002)		(2,297,92 9)	(9, 000,832)
Net loss		(1,881,971)		(1,5 97,593)		(2,295,24 4)	(8, 998,361)
Compre hensive loss	$	(1,881,871)	$	(1,5 97,593)	$	(2,295,24 4) $	(8, 998,361)

LIQUIDITY AND CAPITAL RESOURCES

Working capital

“ Working capital ” is used by mana g ement and t h e investment community to analyze th e operating li q uidity available to the Company. Workin g capital is de f ined as current assets less current liabil i ties.

Working capital is der i ved from the consolidated statements o f financial p o sition and is c alculated as f ollows:

					I ncrease
		April 30,		April 3 0,	(decr ease) in
As at		2020		201 9	Working capital
Curren t Assets
Casha nd cash equi valents	$	12,536	$	1,163,21 9 $	(1,1 50,683)
Accou nts receivable		29,396		63,64 8	( 34,252)
Prepa id and deposi ts		31,991		115,47 4	( 83,483)
	$	73,923	$	1,342,34 1 $	(1,2 68,418)
Curren t Liabilities
Accou nts payablea nd accrued lia bilities	$	2,416,837	$	634,61 9$	1,7 87,218
	$	2,416,837	$	634,61 9$	1,7 87,218
Workin gcapital(1)	$	( 2,342,914)	$	707,72 2$	(2,9 03,610)
The key driver of the change in wo rking capital	was the dec rease in cash of			$1,150,68 3 year on ye ar as this
cash was used in oper ations. This is offset by the increase ina ccounts paya ble due to th e timing ofp ayments.
Prepaids and accounts receivable of fset each oth er but change d year overy ear due to ch anges in the business.
Liquidity

At April 3 0, 2020, the Company had $12,536 (April 30, 2019 : $1,163,219) of cash on h a nd. The Co m pany has converti b le debentur e s which can be converte d into equity at the optio n of the holder. The Com p any shall have th e right to re q uire the con v ertible deb e nture holde r s to convert any principal and interest amount outstan d ing if, for an y 10 consecutive trading d a ys commen c ing on the d a te that is fo u r months plus one day followin g the grant d ate and pri o r to the ma t urity date, t he closing price of the common shares of the Compan y is greater t han $0.50, s ubject to ad j ustment as provided for in the certificate repres e nting the Debenture. Therefore, liquidity ris k relates to i t s accounts p a yable and a c crued liabilities and debe n tures, as the Com p any may en c ounter diffic u lty dischargi n g its obligati o ns.

While the Company has been able to demonstr a te the abilit y to raise cap i tal to fund it s operations t o date, it has not y et been abl e to generate the sales volumes requir e d to create p ositive cash f lows from o p erations. Whethe r and when t h e Company w ill generate s ufficient op e rating cash flows to pay f o r its expenditures and settle its obligations a s they fall du e subsequent to April 30, 2 0 20 is uncert a in.

The Co m pany consid e rs the items included in c a pital to incl u de sharehol d ers’ equity. T he Company manages its capit a l structure a n d makes adj u stments to it in light of c h anges in ec o nomic and business conditions, the

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financin g environment and the ris k characteris t ics of its un d erlying asset s . In order t o maintain or adjust its capital s t ructure, the Company may issue ne w shares, ne w debt, or sc a le back the size and nature of its operatio n s. The Com p any is not su b ject to exter n ally imposed capital requirements.

Manage m ent intends to regularly r eview its on g oing level of cash flow fr o m operation s , as well as i t s level of capital resources, and actively manage its af f airs. This re v iew will co n sider factor s such as th e current economic environment, changes in demand f or the Com p any’s servic e s, capital s p ending requirements, foreign e xchange rat e s, working c a pital needs, and profitability of the C o mpany’s op e rations, any of which could m a terially affec t the Company’s ability to m eet its oblig a tions.

Addition a l financing m ay be nece s sary in a va r iety of circu m stances, in c luding the r e quirement o f working capital t o ramp up operations r equired by strong growth, the occ u rrence of adverse circu m stances, fluctuati o ns in foreig n currency tr a nslation, or t he decision to expand ge o graphically i n to new mar k ets or by acquisiti o n. It is antici p ated that th e required fin a ncing may b e raised by b a nk debt, oth e r forms of d e bt, or the issue of e quity. It is p o ssible that s u ch financing w ill not be av a ilable, or no t available on favorable terms.

SUBSEQUENT EVENTS

• a) In June 2020, t h e Company s ettled $950, 0 00 of indeb t edness (the “ Indebtedness”) previousl y owed to its primary ven d or responsi b le for softw a re develop m ent, design a nd mainten a nce of the Company’s pr o prietary Str a inSecure™ p latform. Pur s uant to the settlement o f the Indeb t edness, the Company issued 9,500,000 common s h ares of the C ompany to a n assignee a n d 9,500,000 common sh a res to an of f icer of the C o mpany who w as a second assignee of t he vendor. T h e Company w ill recogniz e a gain of $332,500 on th e settlement.

• b) D u ring July 20 2 0, the Comp a ny signed a software lic e nse agreem e nt (the “Lic e nse Agreem e nt”) with OrionOne Glob a l, Inc. (“Orio n One”), a global supply chain provider. Under the License Agree m ent, the Company agreed to pay OrionOne, a com p any controll e d by an officer of the Co m pany, an initial license fe e of CAD $38 5 ,000 which w as paid thro u gh the issua n ce of 7,700, 0 00 common s hares of the Company at a deemed price of $0.05 per common share to Orio n One. The initial term of th e License Agr e ement is fiv e years, ren e wable for c o nsecutive fi v e‐year term s with the license being p erpetual in n ature. In addition, the C o mpany agre e d to pay Ori o nOne a fee o f US$25,000 within 30 da y s of the closing of the Company’s nex t equity financing, or six m onths from t he date of t h e License A g reement, whichever is so o ner. The C o mpany also agreed to p a y OrionOne a nominal a n nual license fee in lieu o f royalty pa y ments.

• c) O n July 9, 2020, University H e alth Networ k (UHN), a leading health r e search orga n ization anno u nced the la u nch of a firs t ‐of‐its‐kind r e al world evi d ence study l e d by Dr. Ha n ce Clarke, Di r ector of Pai n Services, Toronto General Hospital, and a reco g nized leade r in educati n g Canadian s about chr o nic pain m a nagement a n d the risk f a ctors of con t inued opioi d use. The st u dy would b e in collabor a tion with M e dical Canna b is by Shoppe r s and suppo r ted by the C o mpany’s StrainSecure™ pl a tform.

• d) O n July 16, 202 0 , MediPhar m Labs Corp., a global lead e r in specializ e d, research‐ d riven pharmaceutical‐ quality cannabi s extraction, d istillation an d derivative p roducts ann o unced its pa r ticipation in a ground‐ br e aking collab o ration betw e en UHN and Medical Ca n nabis by Sh o ppers that w ill use the Company’s bl o ckchain technology to tra c k medical ca n nabis produ c ts from seed to sale.

• e) O n August 18, 2020, Orga n igram Holdi n gs Inc., the parent com p any of Organigram Inc., a leading lic e nsed producer of cannabi s , announced it partnered w ith Medical Cannabis by S hoppers on P hase 2 of Sh o ppers’ Pilot Program po w ered by the C ompany.

• f) O n August 19, 2 020, the Co m pany anno u nced that it h ad teamed w ith Riviera & West One L o gistics to ensure the highest quality for its line of p r oducts inclu d ing Hygen‐X h and and sur f ace sanitizer products. Ri v iera is a lea d ing provider of bottled p r oducts in N o rth America and oversea s from an FD A ‐licensed

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fa c ility in Sout h ern California. This mar k ed the first implementa t ion of the C ompany’s p r oprietary Tr u Trace Enter p rise™ SaaS platform in sec t ors outside o f the medica l cannabis se c tor.

• g) O n August 24, 2020, Avic a nna Inc., a biopharmac e utical comp a ny focused on the dev e lopment, m a nufacturing and comme r cialization o f plant‐deriv e d cannabinoid‐based pro d ucts annou n ced that th r ough its majority owne d subsidiary, Santa Marta Golden He m p S.A.S. (“SMGH“), Avic a nna had co m pleted exp o rts of CBG and CBD isola t es into the U nited States , CBD isolate into Germany and the co m mencemen t of a pilot tr a cking syste m for the exp o rt of its acti v e pharmaceutical ingredient (“API“) pr o ducts in par t nership with the Compan y .

• h) O n August 26, 2020, the Co m pany announced that medical distribut o r, Safe Com p any, had selected th e TruTrace Enterprise™ Sa a S platform t o manage inv e ntory and quality assuran c e processes for its m e dical and pr o tective cons u mables, hos p ital supplies a nd air purifi c ation solutio n s.

• i) In September 2020, the Co m pany closed a non‐broke r ed private p l acement fin a ncing of sub o rdinated se c ured conver t ible debentures in the ag g regate principal amount o f $360,000. T he debentur e s mature th r ee years fro m the date of issuance an d bear interes t of 8.25% p e r annum. Th e principal a m ount of a debenture, tog e ther with an y accrued an d unpaid inte r est, will be p ayable on th e maturity date, unless earlier convert e d in accorda n ce with its terms. The pr i ncipal amou n t of a debe n ture, togeth e r with all ac c rued and u n paid interes t thereon, is convertible into units of the Compan y (each, a “ D ebenture U n it”), at the o p tion of the h older, at a c o nversion pri c e of $0.05 p e r Debentur e Unit (the “C o nversion Price”), with ea c h Debenture Unit compri s ed of one co m mon share o f the Compa n y (each, a “ D ebenture Sh a re”) and o n e transfera b le share pu r chase warr a nt (each, a “Debenture Warrant”), w ith each D e benture Wa r rant exercis a ble into on e additional D ebenture S h are (each, a “Debentur e Warrant Sh a re”) at an e x ercise price of $0.05 per Debenture W arrant Share for a period of two years from the da t e of issue; a nd the Com p any has the right, at its sole option a nd, at any t i me prior a d ebenture m a turity date, t o require th e holder to c o nvert all or a ny portion o f the outsta n ding princip a l amount and any accrue d but unpaid Interest thereon into Debenture Units at the Conversion Price, i f the daily volume‐weight e d average price of the common shares of the C o mpany on t h e Canadian Securities Ex c hange (or s u ch other sto c k exchange o n which the common sha r es may be t r aded at such time) for an y 10‐day con s ecutive tradi n g day period is greater th a n $0.20, sub j ect to adjust m ent as provided for in th e certificate r e presenting t h e debenture.

• j) In September 2020, a holde r of a debent u re issued in October 2019 agreed to c onvert an o u tstanding debenture with an amount o wing of $21 3 ,538 into 4, 2 73,160 com m on shares a t a revised c o nversion price of $0.05 p er share, in f ull settleme n t of the am o unt owing u n der the deb e nture. The d ebenture had been previ o usly convertible into a co n version unit at a price of $ 0.25 per conversion unit, w ith each su c h conversio n unit compri s ed of a com m on share a n d a share purchase warrant exercisabl e at $0.30 per share.

• k) The Company a pplied for the Canadian Emergency Business Loan for $40,0 0 0. The Com p any was approved and r e ceived the f u nds subsequent to year e n d. The loan h as to be rep a id by the Company by D e cember 31, 2022 to receiv e loan forgiv e ness of $10, 0 00.

OUTSTANDING SHARE DATA

OUTSTAN DING SHARE DATA
Issued sh are capital in cludes the fol lowingas at
Ap ril 30, 2020	O ctober 10, 20 20
 83,3 outs  14,9  2,90 61,732 Com tanding 00,000 Stock 7,350 Sharep mon Shar options urchase warr es issued ants and	 1 o  1  2 14,334,892 utstanding 4,350,000 Sto ,907,350 Sha Common S ck options re purchasew hares issue arrants d and

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SHAREHOLDERS’ EQUITY

Authorized share capital

Unlimite d number of c ommon shares and prefe r red shares without par val u e.

Common shares issued

1. On M ay 17, 2018, t he Transacti o n was completed and 36, 8 54,382 shar e s were issue d .

2. On M ay 17, 2018, concurrent w ith the Tra n saction, the Company iss u ed 35,000,0 0 0 common s hares for proc e eds of $10, 5 00,000. The Company in c urred $512, 9 64 in share issuance co s ts and a su b scription recei v able of $4,5 0 0 was cancelled.

3. On A u gust 22, 20 1 9, the Comp a ny issued 2, 0 40,000 com m on shares a n d 2,040,000 warrants for proceeds of $510,000. The C ompany incurred $14,457 in share issu a nce costs. O n September 1 3, 2019, the Company issue d 840,950 common share s and 840,95 0 warrants for proceeds o f $210,238. The Company issued an additional 26,400 c ommon shares and 26,40 0 warrants fo r $6,600 in sh a re issuance c osts.

4. On N o vember 8, 2019, the Co m pany issued 2 50,000 com m on shares w ith a fair value of $30,000 in vendor debt.

The con t ributed surpl u s reserve in c luded in the Shareholders’ Deficiency section of the Statement o f Financial Position c omprises all unexercised s tock options .

			Number	of Common		Sha re Capital	Sha re Capital	Sha re Capital
				Shares
Balance a t April 30, 20 18				**38,350,000 **	$			575,250
Shares iss ued for acqu isition of the	Company			6,854,382				2,056,315
Shares iss ued on priva te placement				35,000,000		1		0,500,000
Share issu e costs				‐				(342,999)
Cancellat ion of subscri ption receiva		ble		‐				(4,500)
Balancea t April 30, 20 19				80,204,382	$	1		2,784,066
Shares an d warrants is sued on priva te placement				2,880,950				716,033
Share issu e costs				26,400				(18,733)
Share issu e for debt se ttlement				250,000				30,000
Balance a t April 30, 20 20				83,361,732	$	1	3,511,366

Options

The Co m pany has ad o pted a stock option plan where it ma y issue a max i mum of 16, 0 00,000 options. Under the ter m s of the sto c k option pla n , options m a y be grante d only to: (i) employees, o fficers, dire c tors, and consulta n ts of the C o mpany; and (ii) employees, officers, d irectors, an d consultant s of an affiliate of the Compan y .

Such op t ions will be e xercisable for a period of up to 10 yea r s from the d a te of grant. In connectio n with the foregoin g , the numb e r of common shares res e rved for iss u ance to any one option e e will not e x ceed five percent ( 5%) of the issued and ou t standing co m mon shares, and the nu m ber of common shares re s erved for issuance to all techn i cal consulta n ts will not e xceed two p ercent of th e issued and outstanding common shares.

As at Apr il 30, 2020, th e Companyh ad the follow ing optionso utstanding	an d exercisable :
Expiry Da te Exer cise Price Remain ing	Number of	N umber of

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			Contrac tual	Optio ns	Options
			Life(ye ars)	Outstandi ng	Ex ercisable
May 18,2 023	$	0.30	2 .71	11,650,0 00	1 1,650,000
Septemb er 28, 2023		0.30	1 .83	600,0 00	400,000
April 11, 2019		0.36	0 .83	500,0 00	500,000
May 7, 20 24		0.26	4 .02	500,0 00	500,000
May 10,2 024		0.25	4 .03	150,0 00	150,000
July30, 2 024	$	0.25	4 .02	1,500,0 00	925,004
				14,900,0 00	14 ,125,004

The following is a summary of the C ompany’s st o ck option ac t ivity:

The follo wing is a sum mary of theC ompany’s sto ck o	ption act ivity:
	Number of		Weighted Average
	options		Exer cise Price
Outstand ing at April 3 0, 2018	‐		‐
Granted	13,950,000		0.30
Forfeited	(1,166,666)		0.30
Outstand ing at April 3 0, 2019	12,783,334		0.30
Granted	2,150,000		0.25
Forfeited	(33,334)		0.30
Outstand ing at April 3 0, 2020	14,900,000	$	0.30
Exercisab le at April 30 , 2020	14,125,004	$	0.30

On May 18, 2018, the Company is s ued 12,750, 0 00 stock options to employees and dir e ctors of the C ompany. 12,600,000 of these o ptions vest o n September 19, 2018, wi t h another 1 5 0,000 vestin g over a twelve month from th e date of the g rant. The ex e rcise price o f these optio n s is $0.30, a n d they expir e on May 18, 2023. On Septem b er 18, 2018, 2 ,750,000 op t ions that we r e set to vest o n September 19, 2018 w e re extended t o vest on January 1 9, 2019.

On Sept e mber 28, 2018, the Com p any issued 700,000 stock options to e m ployees. 233,334 of the s e options vested u p on grant, 233,333 will ve s t on Septem b er 28, 2019 a nd 233,333 w ill vest on September 28, 2 020. The exercise price of thes e options is $ 0 .30, and the y expire on September 28, 2 023.

On April 11, 2019, th e Company issued 500,000 stock option s to employe e s. 500,000 of these options will vest on Augu s t 12, 2019. T h e exercise p r ice of these o ptions is $0. 3 6, and they e xpire on April 11, 2024.

During t h e year ende d April 30, 20 1 9, 1,166,666 options were cancelled. On May 7 , 2019, the C ompany issu e d 500,000 stock options t o an employ e e. These opti o ns vested u p on grant. The exercise price of these options is $0.26, and they expire on May 7, 202 4 .

On May 10, 2019, th e Company i s sued 150,000 stock opti o ns to an employee. Thes e options ve s ted upon grant. T h e exercise pr i ce of these o p tions is $0.2 4 5, and they e xpire on Ma y 10, 2024. On July 3 0, 2019, the Company is s ued 1,500,0 0 0 stock opti o ns to emplo y ees and directors of the C ompany. 500,004 of these opti o ns vested upon grant, wit h another 49 9 ,998 vesting on the first a n niversary of t he grant, and the r emaining 49 9 ,998 vesting on the second anniversar y of the grant . The exercis e price of the s e options

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is $0.25, and they expire on July 30 , 2024. Durin g the six mon t hs ended Oc t ober 31, 2019, 33,334 options were forfeited.

For the y ear ended A p ril 30, 2020, t he Company recorded $5 2 7,279 (April 3 0, 2019‐ $3, 2 46,353) in st o ck‐based compen s ation, based on the fair values of stock options gran t ed which we r e estimated u sing the Bla c k‐Scholes option p r icing model w ith the follo w ing weighte d average assumptions:

		Year e nded		Year ended
		April 30, 2020		April 3 0, 2019
Risk fre e interest rat e		1.47% ‐ 1 .62%		1.59% ‐2.30%
Expect ed volatility		1 12.73% ‐ 119 .08%		118.84%‐1 23.65%
Expect ed life		5 years		5 years
Expect ed dividendy ield		0%		0%
Exercis eprice	$	0.245 – 0.26	$	0.3 0‐0.36

COMMITMENTS AND CONTINGENCIES

Operating lease

The corporation has no commitme n ts as on Apri l 30, 2020.

RELATED PARTY TRANSACTIONS

Summar y of key man a gement pers o nnel compe n sation:

Key management per s onnel include those pers o ns having a u thority and r esponsibility for planning, directing and con t rolling the activities of the Company as a whole. The Company has determined that key ma n agement personn e l consist of m embers of t h e Company' s Board of Di r ectors and c o rporate offi c ers. The remuneration of direct o rs and key m anagement p ersonnel during the years ended April 3 0, 2019 and 2 018 are set o ut below:

		Yea r ended		Yea r ended	Yea r ended
		April 3 0, 2020		April	30, 2019
General and administ rative ‐ Direc tor fees	$	1 26,500	$		30,919
Salaries , subcontracto rs, and bene fits		3 59,187			441,923
Stock‐ba sed compens ation		1 58,463		1	,128,845
	$	6 44,150	$	1	,601,687

Corporate Development Costs

On June 1, 2018, the Company e n tered into a master services agreement with a co m pany contr o lled by a director to provide marketing, w eb develop m ent, planning, patent w ork, administrative ser v ices, and facilitati o n and nego t iation servic e s. For the y ear ended April 30, 202 0 , the Corporation incurred fees of $132,98 0 (April 30, 2 0 19 ‐ $3,54,0 0 0). As at Ap r il 30, 2020, the Corporati o n was indeb t ed to this c o mpany in the amo u nt of $85,671 (April 30, 2 0 19 ‐ $Nil) which was inclu d ed in accounts payable and accrued lia b ilities.

Product Development Costs

On Janu a ry 19, 2018, the Compa n y entered in t o a master s ervices agre e ment and a statement of work to develop t he initial ph a ses of the pr o duct develo p ment strate g y necessary to launch the T ruTrace plat f orm. The Corpora t ion shares an officer wit h the service provider. F o r the year e nded April 3 0, 2020 the Company incurred fees of $2,1 6 4,281 (April 3 0, 2019 ‐ $2,159,940). As at the year e n d the Corpo r ation was in d ebted by $1,241,120 (April 30, 2 019 ‐ $ 97,6 8 3).

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Other

As at Ap r il 30, 2020 expense reim b ursements o f $6,425 (April 30, 2019 $ 9 ,345) is due t o a former d irector of the Com p any and incl u ded in acco u nts payable & accrued lia b ilities.

NON‐IFRS FINANCIAL MEASURES

This MD & A contains r eferences to certain finan c ial measure s and associa t ed per share data that do not have any stan d ardized meaning as prescribed by IFRS and may not be compara b le to similar m easures pre s ented by other co m panies. These financial m easures are c omputed on a consistent basis for each reporting period and include E BITDA, Adjus t ed EBITDA, A djusted net e arnings, and w orking capi t al.

These n o n‐GAAP mea s ures are ide n tified and de f ined as follo w s:

“ EBITDA ” is a measure of the Co m pany’s operating profitability. EBITDA p rovides an i n dication of t h e results generat e d by the Co m pany’s princ i pal business activities pri o r to how the s e activities are financed, a ssets are deprecia t ed and amo r tized or how the results are taxed in va r ious jurisdict i ons.

EBITDA is derived fr o m the cond e nsed consolidated state m ents of ope r ations and c omprehensi v e income (loss) an d is calculate d as follows:

		202 0	2019
Net loss	$	(4,639,18 2)$	(14 ,773,169)
Deprecia tion		5,83 6	4,834
Interest income		(25,30 **1) **	(17,451)
EBITDA	$	(4,658,64 5) $	(14 ,785,786)

“ Adjusted EBITDA ” is used by ma n agement an d investors t o analyze EBI T DA (as defined above) prior to the effect of foreign exch a nge, other income and ex p enses, and s h are‐based p a yment expe n se. Adjusted EBITDA is not inte n ded to repr e sent net earnings as calc u lated in acc o rdance with IFRS. Adjust e d EBITDA provides an indication of the resu l ts generated by the Com p any’s princip a l business a c tivities prior to how thes e activities are fina n ced, assets a r e depreciate d , amortized and impaired, the impact o f foreign exchange, how the results are taxe d in various jurisdictions, e ffects of sh a re‐based pa y ment expen s es, and nor m alized other expenses not recu r ring in natur e .

Adjusted EBITDA is ca l culated as fo l lows:

are taxed not recur Adjusted in various j ring in nature EBITDA is cal urisdictions,e . culated as fol ffects lows:	of sha re‐based pay m	ent expens es, and norm ali	zed other expenses
		Yea r ended	Ye ar ended
		April 3 0, 2020	April 30, 2019
EBITDA	$	(4,6 58,645) $	(14 ,785,786)
Plus:
Stock‐b ased compen sation		5 67,111,	3 ,246,353
Listing expense		‐	2 ,321,019
Adjusted EBITDA	$	(4,0 91,534) $	(9 ,218,414)

ADDITIONAL GAAP MEASURES DEFINITIONS

“ Funds provided by operations ” is used by ma n agement an d investors to analyze the f unds genera t ed by the Compan y ’s principal b usiness activities prior to c onsideration of working c a pital, which i s primarily made up of highly li q uid balances. This balance is reported i n the Conden s ed Consolidated Stateme n ts of Cash Fl o ws and is included in the cash p r ovided by o p erating activities section.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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The Co m pany is exp o sed to risks that arise fr o m its use of financial in s truments. T h is note des c ribes the Compan y ’s objective s , policies an d processes f or managing those risks a nd the met h ods used to measure them. F u rther quanti t ative information in res p ect of these risks is pres e nted throughout these c o ndensed consolid a ted interim f inancial statements.

General O bjectives, P o licies and Pr o cesses:

The Boa r d of Directo r s has overall responsibili t y for the de t ermination o f the Comp a ny’s risk ma n agement objectiv e s and polici e s and retai n ing ultimate responsibility for them, it has deleg a ted the aut h ority for designin g and operating processes that ensure t he effective implementat i on of the ob j ectives and p olicies to the Com p any’s financ e function.

The ove r all objective of the Board is to set poli c ies that see k to reduce ri s k as far as p o ssible without unduly affecting the Compa n y’s competit i veness and f lexibility. Further details r egarding these policies a r e set out below.

a) Credit Risk

Credit ri s k is the risk o f financial l o ss to the Co m pany if a cu s tomer or co u nterparty to a financial i n strument fails to m eet its cont r actual obliga t ions. Financial instrumen t s which are potentially s u bject to cre d it risk for the Com p any consist p rimarily of c a sh and trade receivables.

The carr y ing amount o f financial as s ets represents the maximum credit ex p osure. All ca s h is held at a Canadian Chartered Bank.

b) Liquidity Risk

Liquidity risk is the ris k that the Co m pany will n o t be able to m eet its finan c ial obligatio n s as they be c ome due. The Co m pany’s policy is to ensure t hat it will al w ays have suf f icient cash t o allow it to m eet its liabili t ies when they bec o me due, un d er both nor m al and stressed condition s , without inc u rring unacceptable losses or risking damage t o the Comp a ny’s reputati o n. If future c a sh flows are uncertain, the liquidity ris k increases.

The Co m pany monit o rs its risk of shortage of funds by m o nitoring the maturity dat e s of existin g financial liabilitie s . The Company’s financia l liabilities ar e comprised of accounts p ayable and accrued liabi l ities, and loan pay a ble. The Co m pany anticipates it will h a ve adequate liquidity to f u nd its financial liabilities t h rough its existing w orking capi t al and equit y issues. Furt h ermore, a p o rtion of liabilities are ex p ected to be settled in common shares of t h e Company, thereby miti g ating liquidi t y risk. Howe v er, there is no assuranc e that the Compan y will have su f ficient cash f l ow to be abl e to discharg e its future financial liabiliti e s.

c) Interest Rate Risk

Interest rate risk is the risk that t he future c a sh flows of a financial instrument will fluctuate b e cause of changes in market in t erest rates. C ash flow int e rest rate ris k is limited to potential de c reases on the interest rate offered on cash h eld with cha r tered Canadi a n financial i n stitutions. T h e Company c onsiders this risk to be immaterial. There is n o interest pa y able on the l o an payable a nd is, theref o re, not subject to cash flo w interest rate risk.

d) Exchange Rate Risk

Exchang e rate risk is t he risk that a variation in exchange rates between the Canadian dollar and U S dollar or other fo r eign currencies will affect t he Company’s operations and financial results. The C ompany inc u rs certain

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expense s in US dolla r s and is exp o sed to foreign exchange rate fluctuation. These e x penses are s ubject to exchang e rate risk.

CRITICAL ACCOUNTING JUDGEMENT AND ESTIMATES

The Co m pany makes e stimates an d assumptions about the f u ture that af f ect the repo r ted amount s of assets and liabilities. Estima t es and judg e ments are c o ntinually ev a luated based on historica l experience a nd other factors, including exp e ctations of f u ture events t hat are belie v ed to be rea s onable und e r the circumstances. In the futu r e, actual exp e rience may d iffer from th e se estimates and assumptions.

New standard IFRS 16 Leases

The Company has ad o pted the ne w IFRS pronouncement as at May 1, 201 9 in accordan c e with the transitional provisio n s of the sta n dard and as described b e low. The ad o ption of thi s new IFRS p r onounceme n t has not resulted in any adjust m ents to pre v iously report e d figures.

On Janu a ry 13, 2016, t he IASB issu e d IFRS 16. T h e new stand a rd is effectiv e for annual p eriods begin n ing on or after Ja n uary 1, 2019. IFRS 16 re p laced IAS 17 ‐ Leases ("I A S 17"). This s tandard intr o duced a sin g le lessee accounti n g model an d requires a lessee to rec o gnize assets and liabilitie s for all leases with a ter m of more than 12 months, unl e ss the under l ying asset is of low value. A lessee is r equired to r e cognize a ri g ht‐of‐use asset re p resenting its right to use t he underlyin g asset and a lease liabilit y representin g its obligatio n to make lease pa y ments. IFRS 16 substant i ally carries forward the l e ssor accounting require m ents of IAS 17, while requirin g enhanced disclosures to be provided by lessors. O ther areas o f the lease accounting m o del have been im p acted, inclu d ing the defi n ition of a lease. On May 1 , 2019, the C ompany ado p ted this sta n dard and there was no mate r ial impact o n the Com p any's unau d ited conden s ed consolid a ted interim financial stateme n ts as the Co m pany has no material lease contracts t h at fall under IFRS 16.

BUSINESS RISKS

You should carefully consider th e following r isks and un c ertainties in addition to other infor m ation in TruTrac e ’s filing state m ent dated M ay 10, 2018 w ith respect t o the Transa c tion in evalu a ting the Co m pany and its busin e ss. The mar k et in which t he Company competes is very compet i tive and cha n ges rapidly. New risks may em e rge from ti m e to time an d manageme n t may not b e able to pre d ict all of the m or be able t o predict how the y may cause a ctual results to be differe n t from thos e expected. R e ferences to “ TruTrace” b e low refer to the C o mpany and i t s affiliates as at the date hereof.

 Limited Operating History and History of Losses

TruTrac e has only re c ently commenced commercial operations and ha s cash, accounts receivable, a note receivab l e, sales tax r e ceivable, pr e paids and de p osits, and p r operty and e q uipment as a ssets. TruTr a ce has no history o f earnings and has not yet generated a n y revenue. A s such, it is s u bject to ma n y of the risk s common to early‐stage enterprises, inclu d ing: under‐ c apitalization ; cash shortages; limitations with r e spect to personn e l, financial, and other r e sources; an d lack of rev e nue. Althou g h TruTrace anticipates generating revenue in the future , it is also inc u rring substa n tial expense s in the establishment of it s business. T h e success of the C o mpany will u ltimately de p end on its a b ility to generate cash fro m its business . There is no a ssurance that the future expansion of the business wi l l be sufficie n t to raise t h e required f unds to continue the develop m ent of its b u siness. Ther e is no assurance that the Company wil l be successf u l in achievin g a return

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on shareholders’ inve s tment, and the likelihood of success must be considered in light o f the early s t age of its operatio n s.

 Service Interruptions

TruTrac e intends to s erve customers from thi r d‐party data center hosting facilities l o cated in O n tario and Quebec. Any damag e to, or failu r e of, TruTrace’s systems could result in interruptions to its s e rvice. As TruTrac e continues t o add data ce n ters and ad d capacity in e xisting data centers, it m a y move or t r ansfer its data an d its custome r s’ data. Des p ite precauti o ns taken during this proc e ss, any unsuccessful data transfers may im p air the deliv e ry of its ser v ices. Furthe r , any dama g e to, or failure of, TruTrace’s systems generally could re s ult in interruptions in its s ervice. Inter r uptions in TruTrace’s service may redu c e revenue, c ause it to issue credits or pay p e nalties, caus e customers to terminate t heir subscrip t ions and ma t erially adver s ely affect its rene w al rates and a bility to attr a ct new customers.

It is also expected th a t TruTrace’s business mig h t be harme d if its custo m ers believe i t s service is u nreliable. TruTrac e intends to r e plicate and b ack‐up custo m er data as p art of its disaster recovery plans. Howe v er, these plans m a y not be suc c essful in all circumstances . The Company will not co n trol the oper a tion of any third party facilities it may use. All of the facili t ies it operat e s or utilizes w ould to be v u lnerable to d amage or in t erruption from ea r thquakes, floods, fires, po w er loss, telecommunicati o ns failures and similar ev e nts. They m a y also be subject t o break‐ins, sabotage, intentional acts o f vandalism and similar mi s conduct. De s pite precautions taken at these facilities, th e occurrence o f a natural d isaster or a n act of terro r ism, a decisi o n to close any facility without adequate n o tice or ot h er unanticipated proble m s at these facilities could result i n lengthy interrup t ions in TruTrace’s service. Even with it s disaster recovery arrang e ments, TruTrace’s servic e could be interrup t ed and its business and financial condit i on could be m aterially ad v ersely affect e d.

 Need for Continued Development of Technology

The succ e ss of TruTra c e’s platform will be depe n dent on the a ccuracy, pro p er use and c o ntinuing development of its te c hnological systems, including its busin e ss systems a n d operation a l platforms. I ts ability to e ffectively use the i nformation g enerated by its informati o n technolog y systems, as well as its s u ccess in implementing new sys t ems and up g rades, may a ffect its abi l ity to: cond u ct business w ith its clien t s, including d elivering services and solutions; manage its inventory a nd accounts receivable; p urchase, sell, ship and i n voice its product s and service s efficiently a n d on a timely basis; and m aintain its c ost‐efficient operating m o del while expandi n g its busines s in revenue and in scale.

 Ability to Generate Profits

There can be no assu r ance that Tr u Trace will g e nerate net profits in futu r e periods. F u rther, there c an be no assurance that it will be cash flo w positive in future peri o ds. In the e v ent that Tr u Trace fails t o achieve profitability, the valu e of its shar e s may decli n e. In additi o n, if TruTrac e is unable to achieve or maintain positive c ash flows, it will be required to seek a dditional fu n ding, which m ay not be a vailable on f a vourable terms, o r at all.

 Regulatory Uncertainty

The leg a l global can n abis industr y is still in it s infancy an d is dependent on the regulatory env i ronment, includin g federal, state and local l a ws. Part of TruTrace’s bu s iness and ac h ievement of its business o bjectives within t h is sector w i ll be depen d ent, in par t , on compli a nce with regulatory req u irements e n acted by govern m ental authori t ies for the c o llection and t racking of d a ta related to the cannabis sector. Whil e TruTrace expects that its busi n ess model w ill be perceived to be v iable and compliant with applicable r egulatory require m ents, there i s no guarant e e that its pla t form will be adopted or u tilized. To th e extent that there are changes t o existing re g ulations, the adoption an d use of TruT r ace’s platfor m may be ad v ersely affect e d.

In additi o n to the ab o ve, in jurisdictions such a s the Unite d States, the conflict bet w een federal and state

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legislati o n could ha v e a material adverse i m pact on Tr u Trace’s busi n ess. TruTra c e’s manage m ent has determi n ed that, at this time, it w ill only ente r regulated m arkets wher e there is an alignment b e tween all levels of government and if Canad i an Securities Exchange (t h e “ CSE ”) has approved it c onducting o p erations. Howeve r , there can b e no assuran c e that the re g ulatory envi r onment will r emain favou r able to the conduct of TruTrac e ’s business. F urther, even within Cana d a, different p rovinces and local governmental auth o rities will have dif f erent regulatory requirements and it is possible that TruTrace’s p l atform may n ot be compatible with those re q uirements. T his variabilit y may be dif f icult and/or i neffective to manage fro m both a tec h nological and cost standpoint. In the event that TruTrace’s business is determine d to be non‐ c ompliant wi t h certain applicab l e regulatory r equirements, its business and financial condition co u ld be materi a lly adversely affected.

 Blockchain Related Risks

The use of blockchai n technology f or enterpris e applications is in its earl y stages. Whi l e numerous use cases have be e n developed to demonst r ate the efficiency, securit y and viabilit y of blockcha i n technolog y , it is still largely u nproven. Th e re are risks that the un d erlying bloc k chain proto c ols and met h odologies will not be scalable o r sustainabl e in industry‐ w ide applications. As a ne w and largely unregulated industry, cha n ges in or more ag g ressive enforcement of l a ws and reg u lations arou n d blockchain could adver s ely impact companies involved in the indu s try. Failure or delays in obtaining n e cessary ap p rovals, or c h anges in go v ernment regulati o ns and polici e s and practi c es could hav e an adverse impact on Tr u Trace’s futu r e cash flows, earnings, results of operations a nd financial condition. F u rther, gover n mental agen c ies could sh u t down or r e strict the use of blockchain pl a tforms or bl o ckchain bas e d technologies. This cou l d lead to a loss or inter r uption in business for TruTrace.

 Intellectual Property Risk

TruTrac e ’s activities m ay infringe o n patents, trademarks or o t her intellect u al property r ights owned b y others. If TruTra c e is require d to defend it s elf against i n tellectual pr o perty rights c laims, it ma y spend significant time and effort and incur s ignificant litigation costs, regardless o f whether su c h claims ha v e merit. If T r uTrace is found to have infring e d on the patents, tradem a rks or other intellectual p roperty right s of others, it may also be subje c t to substantial claims fo r damages o r a requirement to cease t h e use of su c h disputed i n tellectual property, which could have an adv e rse effect on its operatio n s. Such litiga t ion or claims and the con s equences that could follow coul d distract ma n agement of T ruTrace fro m the ordinar y operation o f its business a nd could increase costs of doing business, r e sulting in a n egative imp a ct on the bu s iness, financ i al condition, or results of opera t ions of the C o mpany.

 Evolving Business Model

As digital assets and blockchain technologies be c ome more widely availabl e , managem e nt expects the services and pro d ucts associat e d with them to evolve. A s a result, to s t ay current with the indus t ry, TruTrace’ s business model m ay need to e volve as well. From time to time, Tru T race may modify aspect s of its busin e ss model relating to its produ c t mix and service offeri n gs. It cannot offer any a ssurance th a t these or a ny other modifica t ions will be s uccessful or w ill not resul t in harm to t h e business. T ruTrace may not be able t o manage growth e ffectively, which could d a mage its re p utation, lim i t its growth and negativ e ly affect its operating results. S uch circums t ances would have a mat e rial adverse e ffect on the Company’s a bility to con t inue as a going concern, which would have a material adverse effect on its business, prospec t s and opera t ions, and harm Tr u Trace’s investors.

 Network Security Risks

TruTrac e expects to o btain, trans m it and store confidential user informa t ion in connection with it s services. These a c tivities are s u bject to the laws and re g ulations of Canada and o t her jurisdicti o ns. The req u irements imposed by these la w s and regul a tions, which often differ materially a m ong the many jurisdicti o ns where TruTrac e intends to o f fer services, are designed to protect the privacy of p ersonal info r mation and to prevent that information fro m being inapp r opriately dis c losed. TruTr a ce expects t o rely on a va r iety of techn o logies to

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secure it s systems. Despite the implementation o f network s e curity measures, its infras t ructure will p otentially be vulnerable to com p uter break‐i n s and simila r disruptive problems. Advances in computer capabilities, new discover i es in the fie l d of cryptog r aphy or oth e r events or developmen t s, including improper act s by third parties, m ay result in a compromi s e or breach o f the securit y measures t h at the Com p any uses to p rotect its systems. TruTrace co u ld also suffer from an inte r nal security b reach.

Comput e r viruses, b r eak‐ins or o ther securit y problems could lead to misappro p riation of p r oprietary information and interruptions, del a ys or cessati o n in service to TruTrace u sers. If inter n al TruTrace p ersonnel or a thi r d party wer e to misapp r opriate, mis p lace or lose corporate i n formation, including financial and account information, customers’ p e rsonal infor m ation, or so u rce code, its business ma y be harmed. TruTrace may be required to e x pend signific a nt capital an d other resources to prote c t against these security b r eaches or losses o r to alleviate problems ca u sed by thes e breaches o r losses. If third parties g a in improper access to TruTrac e ’s systems o r databases o r those of it s partners or contractors, they may be able to stea l , publish, delete or modify con f idential customer inform a tion. A sec u rity breach c ould expose TruTrace to monetary liability, a nd lead to inquiries, fines , or penalties.

 Reliance on Key Personnel

TruTrac e ’s success d e pends in large measure on certain key personnel and the c ontributions of these individu a ls to its imm e diate opera t ions are likel y to be of ce n tral importa n ce. The loss of the servic e s of such key pers o nnel could have a materi a l adverse eff e ct on the C o mpany. In addition, the c o mpetition fo r qualified personn e l in the technology indus t ry is intense and there c a n be no ass u rance that T r uTrace will b e able to continue to attract and retain all personnel n e cessary for t he develop m ent and op e ration of its business. Investor s must rely upon the abili t y, expertise, judgment, discretion, int e grity, and g o od faith of T ruTrace’s manage m ent.

 Management of Complex Software Implementation Projects

The successful deploy m ent of TruT r ace’s softwa r e will depen d on managing complex implementatio n projects. A variet y of factors m ay result in complex de p loyments b e ing delayed, cancelled o r failing, incl u ding: the inherent complexity o f modern s o ftware; diffi c ulty staffing the project with qualified personnel; difficulty managin g a project i n which the c ustomer and multiple ve n dors must w ork together effectively; u nrealistic deadline s ; inability to realistically li m it the scop e of the proje c t; problems w ith third par t y systems, s o ftware or services; inaccurate o r faulty data; and insuffi c ient time a n d investmen t spent in th e planning a n d design phases o f the projec t . As a resul t , TruTrace m ay not be a ble to succ e ssfully mana g e deployments of its softwar e which could harm its rep u tation, be co s tly to correc t , delay reven u es, and exp o se it to litiga t ion.

 Conflicts of Interest

Certain d irectors and officers of Tr u Trace are al s o directors a nd officers o f other comp a nies. In addi t ion, they may dev o te time to o ther outside business interests, so lon g as such acti v ities do not m aterially or adversely conflict w ith their duties to the Co m pany. The i n terests of th e se persons c o uld conflict w ith those of TruTrace. Conflicts of interest, i f any, will be subject to th e procedures and remedie s provided u n der applicable laws. In particular, in the eve n t that such a conflict of i nterest arise s at a meeti n g of TruTrac e board of directors, a director who has suc h a conflict w ill abstain fr o m voting fo r or against t he approval o f any such m atter. In accorda n ce with applicable laws, t h e directors o f TruTrace will be required to act hones t ly, in good fa i th, and in the best interests of TruTrace.

 Competition

TruTrac e expects to c ompete wit h other tech n ology platfo r ms focused o n the suppl y chain, as well as the global c a nnabis secto r . Market an d financial co n ditions, and other conditi o ns beyond T ruTrace’s co n trol, may

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make it m ore attracti v e to invest in other financial vehicles w h ich could limit the market for TruTrace’s shares.

 Risks Relating to COVID‐19

The rec e nt outbrea k of COVID‐ 1 9 (Coronavi r us) pandemic could impact the Co m pany’s oper a tions by negatively impacting the suppl y chain inclu d ing both m a nufacturing and delivery of products to custome r s, create shortages of qualified staff, reduc e consumptio n of product a nd reduce t h e availabilit y of both equ i ty and or debt in t he marketpl a ce. Such an outbreak, could have a m aterial adve r se effect on our business , financial conditio n , results of operations an d our ability t o raise capital either throu g h equity of d e bt.

Other Information

Addition a l informatio n about the C o mpany is av a ilable under TruTrace’s profile on SED A R at www.se d ar.com.

Approval

This MD & A is authori z ed for issue b y the Board o n October 1 0 , 2020.

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