Dec 1, 2022

11/29 12/01/2022 | 03:54pm EST Message : INTERIM MANAGEMENT'S DISCUSSION & ANALYSIS The following is a discussion and analysis ("MD&A") of the operating results and financial position of Yooma Wellness Inc. ("Yooma") and its subsidiaries (together "the Company"), dated November 28, 2022, which covers the interim period ended September 30, 2022 and should be read in conjunction with the unaudited condensed interim consolidated financial statements of the Company for the same period, which were prepared in accordance with International Financial Reporting Standards. Additional information on the Company is also available on SEDAR at www.sedar.com Where we say "we", "us", "our", or the "Company" we mean Yooma Wellness Inc. and its subsidiaries unless otherwise indicated. All amounts are presented in U.S. dollars unless otherwise indicated. Forward-looking statements Certain statements contained in this MD&A may constitute forward-looking statements. These statements relate to future events or the Company's future performance. All statements, other than statements of historical fact, may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "propose", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by investors as actual results may vary. These statements speak only as of the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement. With respect to forward-looking statements above and otherwise contained in this MD&A, the Company has made assumptions regarding, among other things: the legislative and regulatory environment; the impact of increasing competition; ability to obtain regulatory and shareholder approvals; and the Company's ability to obtain additional financing on satisfactory terms and to continue to operate as a going concern. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of, among other things, the risk factors set forth below: volatility in market conditions; effects of and responses to the COVID-19 pandemic; liquidity constraints and the need for future financing to satisfy working capital requirements; competition for suitable acquisitions. Readers are encouraged to review Note 1 of the Company's financial statements for the third-quarter of 2022, which indicate the existence of material uncertainties that cast significant doubt on the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent on, among other things, its ability to meet its financing requirements on a continuing basis, to have access to financing and to generate positive operating 2 results. While the Company has been successful in raising financing in the past and believes it will be able to continue to satisfy its financing requirements and ultimately achieve necessary levels of profitability and positive cash flows from operations, raising additional funds and improving operating results are dependent on a number of factors outside the Company's control and, as such, there can be no assurance that the Company will be able to do so in the future. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of these risk factors set forth above. Overview Yooma was originally incorporated as 2705507 Ontario Inc. on July 10, 2019, under the laws of the Province of Ontario, Canada. Pursuant to articles of amendment dated October 29, 2019, the name of the corporation was changed to "Yooma Corp." On February 10, 2021, Yooma completed a reverse takeover transaction with Globalive Technology Inc. ("Globalive"), pursuant to which Globalive acquired all of the issued and outstanding securities of Yooma in exchange for common shares of Globalive. The transaction was completed by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) with the common shares of Yooma listed on the Canadian Securities Exchange following the amalgamation of Globalive and Yooma. The Company changed its name from Yooma Corp. to Yooma Wellness Inc. on February 10, 2021. As at September 30, 2022 and as of the date of this Discussion, Yooma had the following operating subsidiaries: Subsidiaries Reverse take-over with Globalive Technology Inc. On February 10, 2021, Yooma completed a reverse takeover transaction with Globalive Technology Inc. ("Globalive"), pursuant to which Globalive acquired all of the issued and outstanding securities of Yooma in exchange for common shares of Globalive. The transaction was completed by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) with the common shares of Yooma listed on the Canadian Securities Exchange following the amalgamation of Globalive and Yooma. The Company changed its name from Yooma Corp. to Yooma Wellness Inc. on February 10, 2021. The consideration was paid by issuing common shares of Globalive to the Yooma security holders at a price per share calculated by dividing the value of cash and cash equivalents remaining in the Company on closing plus $500,000, by the number of issued and outstanding common shares of the Company, on a fully diluted basis, on the date of the closing. Based on 7,556,663 shares of Globalive outstanding on a fully diluted basis, the price per share of $0.6617 resulted in an exchange ratio of 1.1168 Globalive shares issued to Yooma security holders for each Yooma share owned prior to the transaction. Globalive's minimum cash 3 balance of $4,500,000 as at the closing date of the transaction consisted of actual cash on hand of $3,839,275, plus a note receivable of $200,000, and was net of transaction fees. As of the date of this discussion, the note was fully repaid. During the year ended December 31, 2021, the Company expensed transactions costs of $465,000 in connection with this transaction. The legal acquisition of Yooma by Globalive constitutes a reverse asset acquisition for accounting purposes as Yooma is identified as the acquirer and Globalive does not meet the definition of a business, as defined in IFRS 3, Business Combinations. This transaction resulted in a reverse takeover with Yooma being identified as the accounting acquirer and the net assets of Globalive being recorded at fair value at the date of the transaction. Consequently, the historical results of operations are those of Yooma. The following summarizes the reverse take-over and the Globalive assets acquired and assumed by Yooma: Fair value $ 960,725 As the transaction was not considered to be a business combination, the excess of the fair value of the consideration over the net assets acquired in the amount of $960,725 are included as listing costs on the consolidated statement of loss and comprehensive loss. Dual Listing on AQSE and Concurrent Capital Raise On August 10, 2021 Yooma successfully completed the listing of the Company's common shares on the Aquis Stock Exchange Growth Market ("AQSE"), a UK-based multilateral trading facility for entrepreneurial companies seeking visibility and access to growth capital in Europe. Shares of Yooma are now dual listed, trading on the AQSE under the ticker YOOM while continuing to trade on the Canadian Securities Exchange under the ticker YOOM. Yooma was admitted to the AQSE after raising gross proceeds of USD $10,137,047 less allocation to purchased warrants, through the placing of 14,059,402 common shares at a price of C$0.90 (£0.5232) per share. Investors were also granted a half warrant exercisable at a price of C$1.35 (£0.7849) per share. Yooma has granted 7,029,694 warrants in total, which will expire three years after listing on AQSE, as well as 224,600 non-transferrable warrants at CDN$0.90 per share and 112,300 non-transferrable warrants at CDN$1.35 per share with a two-year expiry to certain eligible persons who provided finance and investor introduction services in connection with the financing. Chrystal Capital Partners LLP, Europe's leading cannabis corporate finance and investment house, acted as advisor to the Company on the capital raise. The proceeds of the equity financing were used for general corporate purposes and to complete several strategic acquisitions. The placing marked the largest ever capital raise for a cannabis company on the AQSE exchange. 4 Acquisition of Wellness Brands From EMMAC Life Sciences Group On March 11, 2021, the Company completed a transaction to acquire certain wellness brands from EMMAC Life Sciences Group. This included certain assets of Blossom (CBD skincare brand), MYO Plant Nutrition (UK nutraceutical brand specializing in sports nutrition), and the shares of Green Leaf SAS in France (which owns Hello Joya and What the Hemp, two hemp-protein snack brands). The Company issued 7,459,981 shares of Yooma to EMMAC Life Sciences Limited (the "EMMAC Consideration Shares") as the consideration for the acquired assets. The assets acquired in the transaction are assets of Yooma Europe Limited, a company incorporated in the laws of the United Kingdom. The EMMAC Consideration Shares were subject to a contractual lock-up, with 50% of the EMMAC Consideration Shares becoming tradeable on September 1, 2021 and the remaining 50% becoming tradable on February 28, 2022. The acquisition has been accounted for as a business combination with the Company as the acquirer. The allocation of the purchase consideration was as follows: Cash $ (14,444) (i) The fair value of trade receivables and the gross contractual amount is $505,252. There is no provision for uncollectable trade receivables as of the acquisition date. The fair value of the common shares was determined using Yooma's closing share price of CAD$1.46 per share and foreign exchange rate of $1.265 CAD to $1.00 USD at the close of business 5 on March 11, 2021. The value was adjusted for the 4-month statutory hold period using the Chaffee Put Model. The goodwill of $4,363,042 represents the expected synergies from establishing a presence and potential growth platform in the UK and France. Merger with Socati Corp. On March 19, 2021, the Company and its wholly-owned subsidiary Yooma Acquisition Inc. completed a three-way merger (the "Merger") with Socati Corp (the "Socati"), under a merger agreement between the three parties dated March 19, 2021 (the "Merger Agreement"). On completion of the Merger, Socati became a wholly-owned subsidiary of Yooma and the Socati shareholders, as well as certain creditors and other parties having convertible or contingent rights to receive Socati shares, exchanged their securities of Socati for a right to receive common shares of Yooma, subject to delivery of certain documentation required under the Merger Agreement. In total, the consideration paid by Yooma in connection with the Merger was satisfied by the issuance of 23,320,896 common shares of Yooma (the "Consideration Shares"). The fair value of consideration issued was estimated as $18,916,000. With the exception of 928,512 Consideration Shares, the Consideration Shares were subject to (a) an 18-monthlock-up period, with one third of the shares releasing on the 6-, 12- and 18-month anniversaries of the closing date, and (b) a 12-month escrow indemnity holdback for 10% of the issued Consideration Shares, which would have allowed them to be accessed to satisfy the indemnity obligations of the parties under the Merger Agreement. As at September 30, 2022, the lock-up periods have expired and the escrow indemnity holdback shares have been released without the Company making any indemnity claims. Operating primarily out of its 22,000 square-foot manufacturing facility in Montana, Socati's business focused on the manufacture of cannabidiol ("CBD"), minor cannabinoids such as cannabigerol ("CBG") and cannabinol ("CBN"), and other functional ingredients. It also specialized in the sale of an extensive catalogue of wellness products made with these ingredients. It was one of the first scale producers of 'USDA Organic' certified cannabinoid ingredients with non-detectable levels of THC, the psychoactive component of hemp. The acquisition has been accounted for as a business combination with the Company as the acquirer. The allocation of the purchase consideration was as follows: Cash