Cognetivity Neurosciences : FY2022 MD&A

COGNETIVITY NEUROSCIENCES LTD.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

For the Year ended January 31, 2022

GENERAL

This Management's Discussion and Analysis ("MD&A") has been prepared by management as of June 3, 2022, and it presents an analysis of the consolidated financial position of Cognetivity Neurosciences Ltd. (the "Company") for the year ended January 31, 2022. The following information should be read in conjunction with the consolidated financial statements of the Corporation for the year ended January 31, 2022, including the notes contained therein. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS").

Unless otherwise indicated, references to $ or "dollars' are to Canadian dollars.

FORWARD-LOOKING STATEMENTS

This MD&A contains certain statements that may constitute "forward-looking statements". Forward-looking statements include but are not limited to, statements regarding future anticipated business developments and the timing thereof, regulatory compliance, sufficiency of working capital, and business and financing plans. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or which by their nature refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, the Company's ability to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies.

BUSINESS OVERVIEW

Cognetivity Neurosciences Ltd. (the "Company") was incorporated on December 11, 2015 under the laws of British Columbia, Canada. Its head office is located at 2250 - 1055 West Hastings Street, Vancouver, BC, V6E 2E9, Canada and registered office is located at 1500-1055 W. Georgia St., Vancouver, BC, V6E 4N7, Canada. The Company is a technology company that has developed a cognitive testing platform, the Integrated Cognitive Assessment (ICA), for use in medical and commercial environments and other neurological conditions.

The Company's common shares commenced trading on the Canadian Securities Exchange (the "CSE") on March 19, 2018 under the stock symbol "CGN". The Company also commenced trading on the Frankfurt Stock Exchange in Germany under the stock symbol "IUB" and the OTCQB in USA under the stock symbol "CGNSF" on May 3, 2018 and September 4, 2018 respectively.

SIGNIFICANT EVENTS AND MILESTONES

On May 4th, 2021 the Company announced a partnership with the world-leading data and interoperability platform provider InterSystems. The partnership will facilitate the seamless integration of its cognitive assessment platform with electronic healthcare records (EHRs) and enable the efficient adoption of Cognetivity's technology in healthcare systems throughout the world.

On June 8th, 2021 the Company announced that it had filed a key new patent covering the use of an AI-based system to estimate levels of core biomarkers of neurodegeneration in the brain.

On September 14, 2021 the Company announced that it reached an agreement with Loveday & Co regarding the deployment of the Integrated Cognitive Assessment (ICA) in the specialist dementia and senior care provider's practice.

On October 5th, 2021 the Company today announced that it had finalized a commercial agreement with Birmingham and Solihull Mental Health NHS Foundation Trust (BSMHFT) to deploy its Integrated Cognitive Assessment (ICA) across both primary and secondary care.

On September 22, 2021 Company today announced that it had reached its first commercial agreement for the Integrated Cognitive Assessment (ICA) to be deployed in clinical care in the Middle East.

On September 1st, 2021 the Company announced that it had reached a commercial agreement with the healthcare firm KetamineOne Capital Ltd ("Ketamine One") for the Integrated Cognitive Assessment (ICA) to be deployed in Ketamine One's clinics across North America. Cognetivity and Ketamine One have also entered into a non-binding letter of intent (the "LOI") to collaborate on mental health assessments and plan on conducting clinical trials within the Ketamine One clinic network.

On October 20, 2021 the Company announced that it received notification from the US Food and Drug Administration (FDA) that its 510(k) submission for the CognICA Integrated Cognitive Assessment (ICA) has been reviewed and found to meet the requirements of regulations 21 CFR 882.1470; Class II Exempt Medical Device. The notification allows the company to market the medical device for commercial distribution in the US.

On October 12, 2021 the Company announced that it had won two national awards recognizing its AI-powered platform for the early detection of cognitive decline and impairment, enabling the early diagnosis of conditions such as dementia and in particular Alzheimer's disease.

On January 24, 2019, the Company announced that it has signed a commercial agreement with Dementias Platform UK (DPUK) to become its ninth industry partner. Cognetivity will join forces with DPUK's existing partnership which includes many highly notable researchers from both academia and industry combining groundbreaking approaches from some of the world's best research universities with the R&D skills and knowledge of world-leading pharmaceuticals companies in strategic partnership initiatives.

On February 18, 2020, the Company has reported that it is developing a novel smartphone app focused on the personalised tracking and management of cognitive performance. The product is being designed for use in non-clinical environments but will be powered by the same technology as the Integrated Cognitive Assessment (ICA), the company's flagship product and recently CE-marked medical device.

On September 29, 2020, the Company announced its first deployment of its CE-market ICA platform in a clinical setting, with its technology being used by specialist doctors in the UK National Health Service. North Staffordshire Combined Healthcare NHS Trust, one of only two specialist mental health Trusts in England to receive an overall 'Outstanding' rating from the Care Quality Commission (CQC) in 2019, deployed the ICA within its care pathway for patients with suspected dementia; the first use of the ICA in a specialist clinical setting.

On November 17, 2020, the company announced the first deployment of its CE-marked ICA in primary healthcare, being used by primary healthcare practitioners as an artificial intelligence based digital tool to aid monitoring for UK National Health Service (NHS) patients with pre-dementia symptoms. Monitoring of these Mild Cognitive Impairment (MCI) patients is important in early diagnosis and determining disease progression but has traditionally been problematic and time consuming using previously available methods. Cognetivity's ICA's speed, ease of use and objectivity allows effective detection and monitoring in this critical phase, helping to improve patient outcomes.

Currently, Cognetivity pursues its growth strategy by:

1. Expanding its commercial operations in the USA (selling the Company's FDA registered clinical tool, CognICA), the Middle East and UK through hiring key experienced sales and support personnel in each region.
2. Targeted commercial and marketing campaigns to onboard key opinion leaders and reference clients in each of these regions
3. Continuously developing the ICA platform's technical capability to allow its distribution on other platforms, and its integration with a wide range of healthcare data providers, Electronic Health Record (EHR) system providers and 3rd party digital healthcare platforms.
4. Further developing the Company's technology infrastructure to deliver CognICA as a software as a service (SaaS) commercial model
5. Developing strategic partnerships with large health insurers, particularly in the USA, with the aim of including the ICA in mandated regular health checks and to be used for the early screening for brain health issues in affiliated clinics and health centers, leading to reduced costs of treatment for payers.
6. Developing strategic partnerships with large pharmaceutical companies, both for market access for a standalone digital tool and as an adjunct technology for pharmaceutical products.
7. Publishing trial results in internationally recognised peer reviewed journals and presenting results at international scientific and healthcare conferences.
8. Developing the ICA for home use, for the remote monitoring of patient's progress under treatment regimens and for general home healthcare check‐ups.
9. Hiring and training customer support representatives as required to support the company's commercial growth, the delivery of high quality services and providing technical support for the Company's customers.
10. Applying for grants and government assistance as applicable to help to develop the ICA platform into commercial markets both in healthcare and consumer health monitoring, and to develop in‐house capability in sales, development and support.

OVERALL PERFORMANCE

The consolidated statements of financial position as of January 31, 2022 indicates a cash balance of $1,377,039 (January 31, 2021 - $1,359,851) and total current assets of $1,856,110 (January 31, 2021 - $1,751,205).

Current liabilities at January 31, 2021 total $5,555,208 (January 31, 2021 - $964,888). Shareholders' deficiency of $5,675,378 (January 31, 2021 - equity of $862,911) is comprised of common shares of $12,879,760 (January 31, 2021 - $9,873,571), equity portion of convertible debentures of $Nil (January 31, 2021 - $34,851), reserves of $5,393,046 (January

31, 2021 -$1,821,894), accumulated deficit of $23,964,858 (January 31, 2021 - $10,837,531), and accumulative other comprehensive gain of $16,674 (January 31, 2021 - loss of $29,874).

As at January 31, 2022, the working capital deficiency is $3,699,098 (January 31, 2021 - working capital of $786,317).

DISCUSSION OF OPERATIONS

The Company incurred $13,127,327 of net loss for the year ended January 31, 2022 (January 31, 2021 - $1,928,097) as the Company had not commenced generating revenue yet. The Company's operations are in their early stages and no comparative or trend discussion is relevant.

Comparison of Results of Operations

Current Quarter

During the quarter ended January 31, 2022, the Company reported a net loss of $5,189,519 (January 31, 2021 - $1,002,935), and a net comprehensive loss of $5,221,610 (January 31, 2021 - $1,034,075). The increased losses during the period were mainly due to the increase in consulting fees, marketing and advertising, research and development salaries and benefits expenses and share-based compensation.

During the quarter ended January 31, 2022, the Company recorded operating expenses of $5,158,578 (January 31, 2021 - $1,010,123). The largest factors contributing to the operating expenses were consulting fees, marketing and advertising, salaries and benefits expenses and share-based compensation. Consulting fees of $2,673,556 (January 31, 2021 - $136,130) were mainly for consultants providing clinical testing for the cognitive testing platform, the integrated Cognitive Assessment (ICA). Marketing and advertising expenses of $422,935 (January 31, 2021 - $197,240) were related to promote its Artificial Intelligence-driven platform for detection of cognitive performance in Alzheimer's and pre-Alzheimer's patients. Salaries and benefits of $750,079 (January 31, 2021 - $332,880) were related to the increase in employees and the salaries paid to employees. Share-based payment of $1,000,929 (January 31, 2021 - $43,875) were related to the Company grant more stock options and RSU during the current period.

Year-to-date

During the year ended January 31, 2022, the Company reported a net loss of $13,127,327 (January 31, 2021 - $1,928,097) and a net comprehensive loss of $13,080,779 (January 31, 2021 - $1,945,163). The increased losses were mainly due to the increase in consulting fees, marketing and advertising, professional fees, research and development expenses, salaries and benefits and share-based compensation.

During the year ended January 31, 2022, the Company recorded operating expenses of $13,089,325 (January 31, 2021 - $2,514,413). The largest factors contributing to the operating expenses were consulting fees, marketing and advertising, professional fees, research and development expenses, salaries and benefits and share-based payment. Consulting fees of $3,286,438 (January 31, 2021 - $547,092) were mainly from fees paid to consultants for providing clinical testing for the cognitive testing platform, the integrated Cognitive Assessment (ICA) and corporate advisory and bonus paid to key management personnel. Marketing and advertising expenses of $945,807 (January 31, 2021 - $230,798), were related to its Artificial Intelligence-driven plat form for detection of cognitive impairment in patients. Professional fees of $288,467 (January 31, 2021 - $126,913) were related to legal and audit service provided. Research and development expenses of $491,228 (January 31, 2021 - $70,996). The increase in research and development expenses was due to the Company receiving less tax credits for research and development during the current period compared to January 31, 2021. Salaries and benefits expenses of $4,019,164 (January 31, 2021 - $1,115,622) were related to the increase in employees and the salaries and bonus paid to employees. Share-based compensation of $3,678,650 (January 31, 2021 - $75,536) was due to the company grant more stock options and RSUs to the directors, officers and consultants during the year.

SELECTED ANNUAL INFORMATION

The following table sets out selected financial information derived from the Company's audited consolidated financial statements for the three most recently completed financial years. These financial data are prepared in accordance with IFRS.

	For the years ended
	January 31, 2022		January 31, 2021	January 31, 2020
	$		$	$
OPERATIONS
Revenue	-		-	-
Net Loss	13,127,327		1,928,097	2,645,114
Other comprehensive loss	13,080,779		1,945,163	2,630,999
Basic and diluted loss per share	0.18		0.03	0.06
BALANCE SHEET
Working capital (deficiency)	(3,699,098)		786,317	(300,081)
Total assets	2,004,830		1,827,799	748,065
Total non-current liabilities	2,125,000		-	-
Cash dividends declared	-		-	-

During the year ended January 31, 2022, the Company incurred a net loss of $13,127,327 which mainly consisted of consulting fees, marketing and advertising, professional fees, research and development, salaries and benefits and share- based compensation.

SUMMARY OF QUARTERLY RESULTS

The following table sets out selected unaudited quarterly financial information of the Company. This information is derived from unaudited quarterly consolidated financial statements prepared by management. These financial data are prepared in accordance with IFRS.

	Qtr 4	Qtr 3	Qtr 2	Qtr 1
	31-Jan-22	31-Oct-21	31-Jul-21	30-Apr-21
	$	$	$	$
Revenue	Nil	Nil	Nil	Nil
Net Loss	5,189,519	6,036,396	1,024,795	876,617
Basic and diluted loss per share	0.07	0.08	0.01	0.01
Total assets	2,004,830	1,110,118	1,175,978	1,934,058
Working Capital (deficiency)	(3,699,098)	(2,438,532)	(265,136)	625,047