VIVO Cannabis : Q4 2021 MD&A

VIVO CANNABIS INC.

Management's Discussion & Analysis

For the Year Ended December 31, 2021

March 30, 2022

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Introduction

This management's discussion and analysis ("MD&A") of the financial condition and results of operations of VIVO Cannabis Inc. (the "Company" or "VIVO") is for the year ended December 31, 2021 and is prepared as of March 30, 2022. It is supplemental to, and should be read in conjunction with, the Company's audited consolidated financial statements and notes thereto for the years ended December 31, 2021 and 2020. The Company's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). All monetary amounts herein are expressed in Canadian dollars unless otherwise specified.

This MD&A provides information that management of the Company believes is helpful to understand the results of operations and financial condition of the Company. The objective is to present readers with a view of the Company from management's perspective by interpreting the material trends and activities that have affected the operating results, liquidity and financial position of the Company.

This MD&A refers to certain non-IFRS financial measures. For further information, see the section entitled "Non-IFRS Financial Measures".

Additional information relating to the Company can be found under the Company's profile on the SEDAR website at www.sedar.com.

Company Overview

The Company operates two wholly owned licence holders ("Licence Holders") under the Cannabis Act (Canada) (the "Cannabis Act"), being ABcann Medicinals Inc. ("ABcann") and Canna Farms Limited ("Canna Farms"), both of which hold licences to produce and sell dried cannabis and cannabis oils, and to cultivate and produce cannabis products for direct sale to medical patients across Canada, as well as for retail adult-use sales. ABcann and Canna Farms are both wholly owned subsidiaries of the Company.

ABcann received its first licence to produce cannabis in 2014 and commenced production in 2015, with commercial sales commencing in 2016. ABcann currently operates two production facilities in Napanee, Ontario, being its original Vanluven facility (the "Vanluven Facility") and the Kimmetts Facility (the "Kimmetts Facility"). Canna Farms, which was the first licensed producer in British Columbia, has a solid track record of execution, which led to it being one of the first licensed producers to achieve positive operating cash flow. Canna Farms operates a production facility in Hope, British Columbia (the "CF Facility"), as well as an online medical cannabis platform.

At its July 2021 AGM, the Company elected a new Board of Directors and announced the appointment of Ray Laflamme as CEO and Chairman of the Board. Since that time VIVO's board and management have assessed the Company's business strategy which now is firmly focused on supporting its medical patient business in Canada, Australia, and Germany. The Company has many assets and capabilities that position it as a strong player in the medical cannabis market. By developing these assets, the Company intends to establish itself as a global medical leader focused on enhancing the lives of its patients.

The common shares in the capital of the Company (each a "Share") trade on the Toronto Stock

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Exchange (the "TSX") under the symbol "VIVO".

Selected Annual Financial Information

The following table sets forth a comparison of revenues and earnings on an annual basis for each of the Company's three most recently completed years. The financial data for the 2021, 2020, and 2019 financial years was prepared in accordance with IFRS. The functional currency and the reporting currency of the Company is the Canadian dollar.

		Year Ended	Year Ended	Year Ended
	(in millions, except per share	December 31,	December 31,	December 31,
	amounts)	2021	2020	2019
		($)	($)	($)
	Net revenue	25.0	32.8	24.8
	Net loss	69.6	55.7	30.7
	Net loss per share	0.19	0.18	0.10
	Total assets	118.4	202.0	276.9
	Working capital	18.9	24.4	60.9
	Total non-current financial	0.3	5.7	30.4
	liabilities

The Company's revenue materially decreased in 2021, primarily due to its strategic focus shifting to supporting its medical patient business in Canada, Australia, and Germany. This change in strategic focus was initiated in mid-2021 to play to the Company's strengths: its medical cannabis asset base, core competencies and its differentiating competitive advantages. Revenue decreased by 24% in 2021 as compared to 2020, from $32.8 million to $25 million.

The Company's net loss increased from $55.7 million in 2020 to $69.6 million in 2021. This increase was driven, primarily by the Company taking an impairment of $71.5 million on its intangible assets including goodwill in 2021 (2020: $33.5 million). This loss was offset by $18.2 million in deferred tax recovery associated with the impairment. Other offsetting factors included $4.4 million in reduced general and administrative expenses in 2021 vs 2020.

Strategic Overview

Canna Farms™ and ABcann Medicinals

Canna Farms™ and ABcann Medicinals together have more than fifteen years of experience supporting cannabis medical patients with a wide range of conditions and symptoms and together have amassed a deep understanding of patient motivations.

Canna Farms™ was established in 2013, as the first licensed producer in British Columbia, and since that time has established deep roots in the medical cannabis community. It is now a respected and recognized cannabis brand with thousands of positive patient self-reported outcomes. Today Canna Farms™ is one of the top health and wellness brands in Canada. Canna Farms™ was BC's first licensed

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producer and proudly holds itself to the highest cultivation standards. In 2020, it was recognized by Brightfield Group as the brand with the 4th highest Brand Awareness.

Canna Farms™ has many thousands of patients who have tracked themselves and self-reported their outcomes using the Strainprint app on nearly 100 different Canna Farms™, Beacon Medical™, Fireside™ and Lumina™ products in over 200,000 sessions. Due to it being the first licensed producer to partner with Strainprint, Canna Farms™ has the largest data set within the mobile app and the efficacy of specific strains used for various conditions have been published in several independent academic peer-reviewed articles. Canna Farms™ operates an industry-leading online medical cannabis platform, (https://www.cannafarms.ca/product-medical) that combines the Company's brands with products from third-party cultivators in one on-line medical store. In this way patients can now access a broad selection of medical cannabis products from some of the largest medical cannabis suppliers in Canada.

Canna Farms™ operations focus on indoor cannabis cultivation, packaging and solventless extraction and concentrate production.

ABcann Medicinals' operations in Napanee Ontario focus on ethanol extraction, product formulation, and EU-GMP related processes. This operation's ethanol extraction suite produces high quality cannabis extracts and distillates for use in many of VIVO's products including quality oils, distillates, concentrates and more advanced formulations of VIVO's current and anticipated portfolio of medical products, as well as edibles and topicals.

The following table provides additional information with respect to the Company's production capacity at its facilities:

							Facility Area		Estimated Annual Rated
								Capacity
	Location		Grow Type		Status		(square feet)		(kg)(1)
	Napanee, ON		Indoor		Operating		29,000			1,000
	Hope, BC		Indoor		Operating	47,000		3,000
	Napanee, ON		Seasonal		Operating	86,000		2,000(2)
		Airhouses

1. Estimated annual rated capacity is based on the Company's experience growing a variety of different cannabis strains at the Vanluven Facility and Canna Farms Facility. Material assumptions used to determine the estimated rated capacity include the yield per square foot of cultivation space per harvest; the number of harvests per year; and the maximum number of square feet of cultivation space available to cultivate plants. Depending on the relative market demand for cultivation and other production requirements, the Company has and will continue to allocate some of its cultivation space to non-cultivation activities.
2. The seasonal airhouses are expected to produce output of up to 2,000 kg of quality dry flower annually when performing optimally. The total mass of the 2021 harvest fell short of this optimal production capacity as only one tent was used due to a late winter storm damaging several of the tents.

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