General

The following Management’s Discussion and Analysis (“MD&A”) is intended to assist the reader to assess

material changes in financial condition and results of operations of Hapbee Technologies, Inc. (“Hapbee”

or the “Company”) for the years ended December 31, 2023, and 2022 as well as the interim statements

for the applicable quarters.

This interim MD&A should be read in conjunction with the unaudited condensed consolidated interim

financial statements for the quarter ended March 31, 2024 and 2023, the audited consolidated financial

statements for the year ended December 31, 2023, and the annual MD&A for the year ended December

31, 2023. These financial statements have been prepared using accounting policies consistent with

International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards

Board (“IASB”).

All monetary amounts are in U.S. dollars unless otherwise specified.

Forward-Looking Statements

All statements made in this MD&A, other than statements of historical fact, are forward-looking statements

within the meaning of applicable securities laws. The Company’s actual results may differ significantly

from those anticipated in the forward-looking statements and readers are cautioned not to place undue

reliance on these forward-looking statements. Except as required by law, the Company undertakes no

obligation to release the results of any revisions to forward-looking statements that may be made to reflect

events or circumstances after the date of this MD&A or to reflect the occurrence of unanticipated events.

Forward-looking statements include, but are not limited to, statements with respect to future price levels,

success of technology development, success of marketing and product adoption, development timelines,

currency fluctuations, requirements for additional capital, unanticipated expenses, trademark or patent

disputes or claims, limitations on insurance coverage and the timing and possible outcome of pending

litigation.

In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects”

or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”,

“anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or state that

certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be

achieved”. Forward-looking statements involve known and unknown risks, uncertainties and other factors

which may cause the actual results, performance, or achievements of the Company to be materially different

from any future results, performance or achievements expressed or implied by the forward-looking

statements. Such factors include, among others, risks related to the integration of acquisitions; future price

levels; accidents, labor disputes and other risks of the technology industry; delays in obtaining approvals

or financing. Although the Company has attempted to identify important factors that could cause actual

actions, events or results to differ materially from those described in forward-looking statements, there may

be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There

can be no assurance that forward-looking statements will prove to be accurate, as actual results and future

events could differ materially from those anticipated in such statements. Accordingly, readers should not

place undue reliance on forward-looking statements. Additional information relating to Hapbee, including

the various risk factors that may cause the actual results, performance or achievements of the Company to

be materially different from any future results, performance or achievements expressed or implied by the

forward-looking statements referenced above, can be found under Hapbee’s SEDAR profile at

www.sedar.com

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

‍

History of the Company

Hapbee is a company incorporated on January 3, 2019, under the Business Corporations Act (British

Columbia). The head office is located at 1771 Robson Street, Suite 1427, Vancouver, BC V6G 3B7.

Registered and Corporate office is located at 4060 Sainte-Catherine Street West Suite 600, Westmount,

Quebec H3Z2Z3. The Company’s principal business activity is to commercialize wellness technologies

and products through the sale of hardware, subscriptions, enterprise licenses and royalty agreements using

electromagnetic signals that deliver one or more ultra-low radio frequency energy blends to produce sleep-

, performance-, and mood-enhancing effects.

On June 15, 2020, the Company completed a forward stock split of its shares on a 1 for 4.5 basis. The

Company had 13,455,000 common shares issued and outstanding and the resulting post stock split common

shares outstanding were 60,547,500. The numbers of common shares issuable pursuant to all share capital

have been retrospectively adjusted in accordance with the stock split ratio. On the same day, the Company

amended its articles in order to change its authorized capital from an unlimited number of common shares,

without par value, to an unlimited number of subordinated voting shares (“Subordinated Voting Shares,

SVS”), and created a new class of unlimited number of multiple voting shares (“Multiple Voting Shares,

MVS”), all without par value.

On October 30, 2020, the Company’s Subordinate Voting Shares were listed on the TSX Venture Exchange

(the “Listing”).

Since the Listing, the Company has done numerous private placements.

As of March 31, 2024, the Company had 114,289,047 Subordinated Voting Shares issued and outstanding and

450,000 Multiple Voting Shares issued and outstanding.

Business of the Company

The Company develops, markets, and sells subscriptions and licenses to a wearable wellness platform and

products that enhance the human experience through magnetic field technology. Our current hardware

products, the Hapbee Neckband and the Hapbee Smart Sleep Pad are devices that “play” or deliver unique

magnetic signals which digitally emulate the effects of compounds that would otherwise be ingested into

the body. The effects fall under three broad categories including: Sleep, Performance, and Mood. Hapbee-

enabled devices are controlled with a subscription to Hapbee App available on both iOS and Android

smartphones. There are a multitude of signal blends and routines available on the Hapbee App with

potentially hundreds of different sensations that can be produced using Hapbee’s patented ultra-low radio

frequency energy (ulRFE®

) technology.

EMulate Therapeutics, Inc (“EMulate”) is a disruptive platform technology company with multiple market

opportunities. They have received 47 global patents on technologies relating to the Hapbee Wearable

Wellness Product. In particular, EMulate invented and patented ulRFE technology that utilizes precisely

targeted ultra-low radio frequency energy to specifically regulate metabolic pathways on the molecular and

genetic levels – without chemicals, radiation or drugs – delivered via simple-to-use, non-sterile, non-

invasive, non-thermal, non-ionizing devices.

While EMulate remains focused on medical devices, Hapbee has acquired exclusive global licenses to adapt

the ulRFE technology for a non-medical consumer product aimed at the wellness industry.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

3

The science and technology behind Hapbee Wellness Products are based on magnetically induced effects.

We use a specialized process to create unique ulRFE signals that produce precise biological responses. The

Company is adapting this technology for “at home”, non-medical, recreational use by consumers to alter

moods and produce sensations expected to be helpful in everyday life. Certain emulated magnetic fields are

played through the Hapbee Wellness Products to deliver several types of unique sensations or moods

including signals that emulate Happy, Relax, Focus, Calm, Alert, & Sleepy.

Overall Performance

The following discussion of the Company’s financial performance is based on the unaudited consolidated

financial statements for the quarters-ended March 31, 2024 and 2023.

The statement of financial position as at March 31, 2024 indicated a cash balance of $1,845,212 (2023 -

$212,653), receivables of $103,721 (2023 - $82,419), inventory of $261,598 (2023 - $156,310) and

intangible assets of $1,805,366 (2023 - $1,858,240). The total assets remain fairly stable during the year

ended March 31, 2024 as compared to prior year.

Liabilities as at March 31, 2024 totaled $4,764,872 (2023 - $4,521,603) with the increase mainly due to an

increase in accounts payable and accrued liabilities and decreased loans payable. Shareholders’ equity is

comprised of share capital of $15,217,550 (2023 - $15,219,442), reserves of $8,435,373 (2023 -

$6,392,054) and an accumulated deficit of $24,401,898 (2023 - $23,823,477). The increase in reserves is

primarily due to the issuance of subscribed common shares for the non-brokered private placement

completed in April 2024.

During the quarter ended March 31, 2024, the Company reported a net loss and comprehensive loss of

$578,421 ($0.01 basic and diluted loss per share) compared to a net loss of $877,237 ($0.01 basic and

diluted loss per share) for the previous year’s first quarter. During the quarter, the Company has recorded

sales on products of $193,380 (2023 - $251,464) and cost of goods sold of $35,708 (2023 - $148,519). Key

expenses for the quarter included consulting fees of $443,638 (2023 - $390,991), general and administrative

of $95,042 (2023 - $231,765), and product development costs of $47,965 (2023 - $108,301).

Products

Hapbee Wearables

Hapbee currently sells 2 devices which allow users to leverage the benefits of Hapbee’s bio-streaming

technology, they are: the Hapbee Neckband and the Hapbee Smart Sleep Pad. The devices are available for sale

on the Company’s e-commerce website (www.Hapbee.com), select Target stores & Target.com and through a

growing network of distributors. The devices can be purchased individually or in a day/night combo package.

The purchase of a Hapbee device includes a 30-day trial of Premium Hapbee Subscription which affords the user

full-access to all Hapbee blends, routines, and functionality. Following 30 days, users have the option to sustain

their Premium Subscription through an auto-renew, monthly plan (@$19 per month) or annually (@$149).

The Hapbee Neckband is designed for daytime use while working, studying or relaxing. It weighs 4.5

ounces and comes with a micro USB-C charging and holding cradle that allows the headband to stand

upright as it charges. It is designed to have eight hours of battery life for each charge. The lightweight, and

low-profile design of the Hapbee Neckband allows users to wear the product comfortably and discreetly

around their collars or under their shirts.

Commented [KA1]: MS ALL GREEN HIGHLITES ARE FINANCIAL

THAT YOU CAN START FILIING IN

Commented [KA2R1]: I moved 2020 1nd 2021 numbers all

you need to do is add 2022 figures

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

4

The Hapbee Smart Sleep Pad is designed for evening and nighttime use. It measures 9” x 11” and is

constructed of soft and cushiony foam – ideal for placing under a pillow while sleeping or behind the back

while lounging. It is lightweight and foldable for travellers.

Both Hapbee devices allow wearers to optimize how they sleep and feel by producing a variety of sensations

by “playing” precise electromagnetic fields. The sensations fall under several broad categories such as:

Happy, Alert, Relax, Calm, Sleepy, and Focus. The product connects to and is controlled by the

customizable Hapbee App that is available for both iOS and Android compatible smartphones.

The first step towards enjoying Hapbee is calibration. This critical element of user onboarding allows first

time customers to actually feel the biostreams at work. This 20-minute routine plays a digital stimulant

followed by a digital relaxant. In repeated trials with consumers over the past 18 months, between 80%

and 85% of subjects are able to “feel it” as a result of the calibration routine.

The Company leverages a variety manufacturing and distribution partners for the purposes of securing

components, contract manufacturing, assembly, testing and distribution of Hapbee devices. All Hapbee

devices are currently assembled in the United States and most components are sourced from domestic

vendors. Some finished goods – like packaging and custom casings – are sourced from overseas. In

September 2022, the Company established an assembly, distribution, and reverse logistics facility in

Torrance, California.

Since its development over 15,000 Hapbee Devices have been produced and sold. The company is in

development of its next generation of products – including second generation versions of the Sleep Pad and

Neckband, which are scheduled to be released in late 2024.

Hapbee Subscription and the Hapbee App

The Hapbee App is the main user interface that allows users to control and use their Hapbee devices. The

App currently includes 75 different blends and routines – each for a specific lifestyle use. Users receive a

free trial of all-access to the complete library for a limited time (typically 30 days) followed by the option

to continue all-access via a monthly or annual paid subscription

The Company continues to optimize the user experience and is testing a variety of both paid and non-paid

subscription options to maximize user engagement and revenue.

The Company engaged three full-time and one part-time mobile app developers and one full-time and one

part-time API/Web development team to collaborate, together with several independent contractors, on the

development of the Hapbee App, including how signals will be deployed and the strict security protocols

for software, servers and products. The Hapbee App currently has over 75 unique builds and updates and

is being used commercially. Future planned releases will include improved usability based on user

feedback and enhanced functionality to entice more users to try and opt-in for a paid subscription plan.

The signals themselves, which are played on the Hapbee Wearable Wellness Products, are security

protected using encryption standards such as AES 128-bit song encryption keys, 128-bit device

communication encryption keys and 2048 key length using RSA1 and ECDSA2 encryption providers on

the Company’s server resources. Songs are transferred from EMulate via Secure HTTPS to our secure

1 Rivest–Shamir–Adleman (“RSA”) is one of the first public-key cryptosystems and is widely used for secure data transmission.

2 Elliptic Curve Digital Signature Algorithm (“ECDSA”) offers a variant of the Digital Signature Algorithm (“DSA”) which uses elliptic curve

cryptography.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

5

server hosted by Microsoft Azure to distribute to users via the Hapbee App and transferred to each product

using a secure device key determined by the manufacturer (over the Bluetooth LE frequency).

The Company has also developed a protective data encryption tool for enhanced software security. The

Company will be able to encrypt songs using the specifications of our product, and there is no reliance on

a third-party vendor to create updates, nor are there security violations inside the encryption tool that would

compromise the product. The utility for encryption uses Microsoft .NET Framework and Windows Desktop

Platform to ensure the highest security. Subscriber data, which includes basic contact information, is

encrypted and saved on the Company’s secure server.

In addition to platform security protection though encryption protocols, which protect the loading and

playing of the signals through the Hapbee App onto the Hapbee Neckband and Hapbee Smart Sleep Pad,

the products are also sealed through sonic welding, and broken open or tampered with, the products and

embedded signals are rendered useless.

The Hapbee App allows the Company to collect and analyze trends on user habits including time of day

plays, duration, and other demographics. The Hapbee App also gives the Company the opportunity to co-

brand and release new signals with other companies in industries such as hospitality, transportation,

automotive and patient care.

Signals can be added, updated and removed on the fly, and the app can specify suggested play time on a

per signal basis. At the time of this MD&A, there are more signals and routines in research and

development. Consumer feedback will determine the priority of the development of additional signals.

Features such as controlling signal intensity, scheduling signal playtimes or mixing custom signal

“playlists” are Hapbee App.

Research and Development

To date, the Company has spent $2,720,075 on the creation of the Hapbee devices and the Hapbee App.

Management has planned ongoing form factor and application development to increase the portfolio of

sensations that are available to users.

Over the next 12 to 18 months, the Company’s goal is to release new functionality and integrations.

Currently there are additional signals in evaluation stages while other signals are being investigated with

respect to optimizing their strength.

With the advent of new material such as flexible battery and circuit electronics and electronics integrated

into washable fabrics, the Company is considering developing form factors for activity-specific application

such as a helmet or a yoga mat for relaxation or a pillowcase for sleep.

Intangible Assets

The Company capitalized the acquisition costs of licenses and development costs related to the design and

development of the product prototype.

(a) Licenses

License Agreement for certain sensory technologies

On March 29, 2019, the Company acquired a license from EMulate. The Company paid an up-front fee of

$1,500,000 for this license. The Company will pay EMulate, on a quarterly basis, 20% royalties on the net

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

6

income from use, sales, lease or rental of the authorized product containing cognate signals. In exchange,

the Company will obtain from EMulate certain exclusive rights and licenses to develop, use, import, and

commercialize consumer digital products using EMulate’s technology. The license has a term of 20 years

from the effective date.

Pursuant to amendments to the License Agreement with Emulate, the effective date of the License

Agreement was changed to October 26, 2020. All other terms remain unchanged.

On October 30, 2019, the Company acquired another license from EMulate. The Company paid an up-front

fee of $30,000 for this license. The Company will pay EMulate, on a quarterly basis, 20% royalties on the

net income from sales, lease or rental of the authorized product containing cognate signals. The royalty rate

on the first $10,000,000 will be 25% on the net income from use of the authorized product containing

cognate signals. In exchange, the Company will obtain from EMulate certain exclusive rights and licenses

to develop, use, import, and commercialize consumer digital products using EMulate’s technology. The

license has a term of 20 years from the effective date.

Pursuant to amendments to the License Agreement with Emulate, the effective date of the License

Agreement was changed to October 26, 2020. All other terms remain unchanged.

On April 21, 2021, the Company acquired another license from EMulate. The Company paid an up-front

fee of $10,000 for this license. The Company will pay EMulate, on a quarterly basis, 20% royalties on the

net income from sales, lease or rental of the authorized product containing cognate bedtime signals. The

royalty rate on the first $10,000,000 will be 25%. In exchange, the Company will obtain from EMulate

certain exclusive rights and licenses to develop, use, import, and commercialize consumer digital products

using EMulate’s technology. The license has a term of 20 years from the effective date.

On July 29, 2021, the Company acquired another license from EMulate. The Company paid an up-front fee

of $10,000 for this license. The Company will pay EMulate, on a quarterly basis, 20% royalties on the net

income from sales, lease or rental of the authorized product containing cognate bedtime signals. The royalty

rate on the first $10,000,000 will be 25%. In exchange, the Company will obtain from EMulate certain

exclusive rights and licenses to develop, use, import, and commercialize consumer digital products using

EMulate’s technology. The license has a term of 20 years from the effective date.

Sensory technologies licensed in both agreements include the human senses of being happy, sleepy,

focused, alert, calm and relaxed.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

7

(b) Development Costs

During the year 2023, the Company incurred development costs of $Nil (2023: $Nil) related to the

developing an augmentative wearable product that emulates normal molecular interactions in the body

through small, specific magnetic fields.

During the year, amortization of intangible assets has been recorded in amortization-intangible assets.

The following table outlines the Company’s intangible assets as at March 31, 2024:

March 31,

2024

December 31,

2023

$ $

License Agreement for certain sensory technologies 1,500,000 1,500,000

License Agreement for certain sensory technologies 30,000 30,000

License Agreement for certain sensory technologies 20,000 20,000

Development costs capitalized 1,079,980 1,079,980

Accumulated amortization of intangible assets - license fees (295,375) (276,250)

Accumulated amortization of intangible assets - development costs (529,239) (495,490)

1,805,366 1,858,240

Summary of Quarterly Results

The following table sets out selected unaudited quarterly financial information of the Company for the eight

most recent quarters of operation. This information is derived from unaudited quarterly financial statements

prepared by management. The financial data for the quarters ended from April 1, 2022 to March 31, 2024,

are prepared in accordance with IFRS.

1

st

Quarter 2023

March 31,

2023

4

th

Quarter 2023

December 31,

2023

3

rd

Quarter 2023

September

30, 2023

2

nd

Quarter 2023

June 30, 2023

1

st

Quarter 2023

March 31,

2023

4

th

Quarter 2022

December 31,

2022

3

rd

Quarter 2022

September

30, 2022

2

nd

Quarter 2022

June 30, 2022

Total revenues $197,893 $220,882 $230,575 $257,029 $255,662 $837,799 $326,604 $303,966

Net loss from continuing

operations ($579,689) ($465,668) ($782,003) ($985,856) ($983,071) ($850,801) ($942,962) ($2,061,311)

Net loss from continuing

operations per common

share outstanding – basic

& diluted

($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.03)

Net income (loss) ($578,421) ($394,764) ($436,834) ($1,009,932) ($870,039) ($1,255,723) ($995,961) $827,612

Net income loss per

common share outstanding

– basic

($0.01) ($0.01) ($0.005) ($0.01) ($0.01) ($0.02) ($0.01) $0.01

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

8

Overall, amortization of intangible assets, consulting fees, general and administrative (including advertising

and marketing), interest accretion and expense on convertible debentures, product development costs,

professional fees, and share-based compensation were the major components that caused variances in net

losses from quarter to quarter.

First Quarter 2024

Liquidity and Capital Resources

As at March 31, 2024 the Company had working capital of negative $373,769 (Q4 2023 - negative

$2,077,662). Cash as at March 31, 2024 was of $1,845,212 (Q4 2023 - $212,653).

During the quarter ended March 31, 2024, the Company received proceeds of $2,000,000 (2023 - $NIL)

from subscribed common shares issuances and $189,281 (2023 – $1,499,577) from convertible debentures

issuances.

The Company has financed its operations to date primarily through the issuance of its shares and convertible

debentures. The Company believes that it has sufficient working capital for its short-term corporate

obligations but generation of additional capital will be required for future operations until sufficient revenue

can be generated from the Company’s sales of its wearable wellness products. As the Company cannot

predict the time at which revenue will exceed expenses, the Company continues to seek capital through

various means including the issuance of equity and/or debt.

The Company’s financial success will be dependent upon the extent to which it can complete development

of its current product and the user absorption the product receives. Such development may take longer than

expected and the amount of resulting revenue, if any, is difficult to determine. The value of the core product

is largely dependent upon many factors beyond the Company’s control.

Off Balance Sheet Transactions

There are currently no off balance sheet arrangements which could have a material effect on current or

future results of operations, or the financial condition of the Company.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

9

Related Party Transactions

The aggregate value of transactions recorded relating to key management personnel and entities which they have

control or significant influence were as follows:

Notes

For the year-ended

March 31, 2024

($)

For the year-ended

December 31, 2023

($)

EMulate Therapeutics Inc. – Royalty Fees (a) 35,000 105,000

Les Consultants Shtern Inc. (b) 150,000 450,000

MK & Associates (c) 30,000 125,110

4114566 Canada Inc. (d) 60,000 60,000

David Hoppenheim (e) 48,000 48,000

Brian Mogen (f) 54,000 54,000

(a) EMulate Therapeutics Inc., an entity which has significant influence on the Company charged royalty fees.

(b) Les Consultants Shtern Inc., an entity owned by Yona Shtern, the new CEO charged consulting fees to the Company.

(c) MK & Associates, an entity controlled by the Company’s Chief Financial Officer, charged consulting fees to the

Company.

(d) 4114566 Canada Inc., an entity controlled by the Company’s Corporate Secretary, charged consulting fees to the

Company.

(e) David Hoppenheim is the Chief Operating Officer (COO) of the Company.

(f) Brian Mogen is the Chief Technology Officer (CTO) of the Company.

The following table outlines the Company’s related party payables:

March 31, 2024

$

December 31, 2023

$

Les Consultants Shtern 308,248 381,613

MK & Associates 150,587 129,254

4114589 Canada Inc. 171,893 137,400

David Hoppenheim 112,230 98,669

Brian Mogen 149,600 149,600

892,558 896,536

Proposed Transactions

The Company does not currently have any proposed transactions approved by the Board of Directors. All

current transactions are fully disclosed in the audited consolidated financial statements for the year ended

March 31, 2024.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

10

Critical Accounting Judgments and Estimates

The preparation of the consolidated financial statements in conformity with IFRS requires management to

make judgments and estimates that affect the application of accounting policies and the reported amounts

of assets, liabilities, income and expenses. Actual results could differ from these estimates. Revisions to

accounting estimates are recognized in the period in which the estimates are revised and in any future

periods affected. Information about critical accounting judgments and estimates in applying accounting

policies that have the most significant impact on the amounts recognized in the consolidated financial

statements are outlined below.

Share-based payments

The Company makes certain estimates and assumptions when calculating the estimated fair values of stock

options granted and warrants issued. The significant assumptions used include estimates of expected

volatility, expected life, expected dividend rate and expected risk-free rate of return. Changes in these

assumptions may result in a material change to the expense recorded for grants of stock options and the

issuance of warrants.

Deferred income taxes

The Company is periodically required to estimate the tax base of assets and liabilities. Where applicable

tax laws and regulations are either unclear or subject to varying interpretations, it is possible that changes

in these estimates could occur that materially affect the amounts of deferred income tax assets and liabilities

recorded in the consolidated financial statements. Changes in deferred tax assets and liabilities generally

have a direct impact on earnings in the period of changes.

Each period, the Company evaluates the likelihood of whether some portion or all of each deferred tax asset

will not be realized. This evaluation is based on historic and future expected levels of taxable income, the

pattern and timing of reversals of taxable temporary timing differences that give rise to deferred tax

liabilities, and tax planning initiatives. Levels of future taxable income are affected by, among other things,

the market price for commodities, production costs, quantities of proven and probable reserves, interest

rates, and foreign currency exchange rates.

Going concern

The determination of the Company’s ability to continue as a going concern requires the Company to make

certain judgements about whether the Company will be able to realize its assets and discharge its liabilities

in the normal course of business. The company is an early-stage technology company and will likely need

to raise additional capital in the coming year to continue growth, scaling of operations and funding of future

product development.

Capitalization of intangible assets

Management is required to use judgement in determining the economic useful lives of identifiable

intangible assets and the capitalization of costs for internally generated intangible assets is subject to

judgment including the technical feasibility, timeframe to commercialization, assessment of availability of

resources to complete the project, and if economic benefits will be generated form its use. Management is

required to use judgement in determining the economic useful lives of identifiable intangible assets.

Judgement is also required in identifying indicators of impairment of the Company’s intangible assets.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

11

Change in Accounting Policies including Initial Adoption

Please refer to Note 3 of the Company's unaudited consolidated financial statements for the quarter ended

March 31, 2024 for more information regarding the Company's significant accounting policies and changes.

Financial Instruments and Risk Management

The Company’s financial instruments consist of cash, accounts payable and convertible debentures. The

fair values of the Company’s cash and accounts payable approximate their carrying values, due to their

short-term natures. The Company’s cash is measured at fair value under the fair value hierarchy based on

level one quoted prices in active markets for identical assets or liabilities.

The Company’s financial instruments are exposed to certain financial risks, including currency risk, credit

risk, liquidity risk, interest rate risk and price risk.

Credit risk

Credit risk is the risk of loss due to the counterparty's inability to meet its obligations. The Company’s

exposure to credit risk is on its cash. Risk associated with cash is managed through the use of major banks

which are high credit quality financial institutions as determined by rating agencies. Credit risk is assessed

as low.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations when they

become due. The Company aims to ensure that there is sufficient capital in order to meet short-term

operating requirements, after taking into account the Company’s holdings of cash. The Company believes

that the capital sources will be sufficient to cover the expected cash requirements by obtaining financing

through the issuance of debt or shares. Liquidity risk is assessed as high.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates,

commodity and equity prices, and foreign exchange rates.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate because of changes in market interest rates. The Company is not currently exposed to

interest rate risk.

(b) Price risk

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as

the potentially adverse impact on the Company’s ability to obtain equity financing due to

movements in individual equity prices or general movements in the level of the stock market. The

Company is not exposed to price risk as it has no instruments in publicly held securities.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

12

(c) Foreign currency risk

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument

will fluctuate because they are denominated in currencies that differ from the respective functional

currency. The Company is not exposed to foreign exchange risk as all of its operations are in the

United States of America, except of cash held in Canadian Dollars which amounted to $238,078

Canadian Dollars at March 31, 2024 (2023 - $180,625), accounts receivable which amounted to

$NIL Canadian Dollars at March 31, 2024 (2023 - $NIL) and accounts payable which amounted to

$320,820 Canadian Dollars at March 31, 2024 (2023 - $466,654).

For a list of additional risk factors that may impact the performance of the Company, please refer to

“Risk Factors” in the Prospectus available on SEDAR.

Disclosure of Outstanding Share Data

The following information relates to share data of the Company as at the date of this MD&A:

(A) Share capital

On June 15, 2020, the Company amended its articles in order to change its authorized capital from an

unlimited number of common shares, without par value, to an unlimited number of Subordinated Voting

Shares, and created a new class of unlimited number of Multiple Voting Shares, all without par value.

Authorized

The Company’s authorized capital consists of (i) an unlimited number of Subordinated Voting Shares, and

(ii) an unlimited number of Multiple Voting Shares. The holders of Subordinated Voting Shares are entitled

to one vote for each Subordinated Voting share held. The holders of Multiple Voting Shares are entitled to

100 votes for each Multiple Voting Share held.

Voting Rights

All holders of Subordinated Voting Shares and Multiple Voting Shares are entitled to receive notice of any

meeting of shareholders of the Company, and to attend, vote and speak at such meetings, except those

meetings at which only holders of a specific class of shares are entitled to vote separately as a class under

the Business Corporations Act (British Columbia). A quorum for the transaction of business at any meeting

of shareholders is two persons present at the meeting, each of whom is entitled to vote at the meeting, and

who hold or represent by proxy in the aggregate not less than 5% of the outstanding shares of the Company

entitled to vote at the meeting.

On all matters upon which shareholders the Company are entitled to vote:

• each Subordinated Voting Share is entitled to one vote per Subordinated Voting Share; and

• each Multiple Voting Share is entitled to 100 votes per Multiple Voting Share.

Unless a different majority is required by law or the articles of the Company, resolutions to be approved by

shareholders require approval by a simple majority of shareholders.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

13

Conversion Rights and Conditions

Issued and outstanding Multiple Voting Shares, including fractions thereof, may at any time, subject to the

FPI Condition (as defined below), at the option of the holder, be converted into Subordinated Voting Shares

at a ratio of 100 Subordinated Voting Shares per Multiple Voting Share. Further, the board of directors of

the Company may determine in the future that it is no longer advisable to maintain the Multiple Voting

Shares as a separate class of shares and may cause all of the issued and outstanding Multiple Voting Shares

to be converted into Subordinated Voting Shares at a ratio of 100 Subordinated Voting Shares per Multiple

Voting Share. The right of the Multiple Voting Shares to convert into Subordinated Voting Shares is subject

to certain conditions in order to maintain the status of the Company as a “foreign private issuer” under

United States securities laws (the “FPI Condition”).

At March 31, 2024, the Company has 114,289,047 Subordinated Voting Shares issued and outstanding and

450,000 Multiple Voting Shares issued and outstanding.

As at the date of this MD&A, the Company has 168,494,341 Subordinated Voting Shares issued and

outstanding and 450,000 Multiple Voting Shares issued and outstanding. (See “Subsequent Events”)

(B) Stock Options and Restricted Share Units

The Company has the Stock Option Plan as described above under the heading, “Business to be Transacted

at the Meeting – D. Approval of Rolling Stock Option Plan”), and a Restricted Share Unit Plan (the “RSU

Plan”) which was last amended and approved by the shareholders on December 7, 2022. The Stock Option

Plan as proposed and the RSU Plan will comply with the requirements of the Exchange’s Policy 4.4 Incentive

Stock Options as it relates to Tier 2 issuers. The Company has issued incentive stock options to purchase up

to 8,605,000 Subordinate Voting Shares. The Company has made RSU awards for 8,367,875 Subordinate

Voting Shares.

The Company’s RSU Plan, in its current form, is designed to provide certain directors, officers, employees

and consultants of the Company and its related entities with the opportunity to acquire RSUs in order to

enable them to participate in the long-term success of the Company. The purpose of the RSU Plan, similar

to the Stock Option Plan, is to promote a greater alignment of the interests of directors, officers, employees

and consultants of the Company with the interests of the shareholders. The Board (or such other committee

the Board may appoint) is responsible for administering the RSU Plan. RSUs vest on terms established by

the Board, or any Board committee appointed for such purpose.

(C) Warrants

In connection with the private placement closed during the year 2021, the Company issued 20,308,963 non-

transferrable warrants. Each warrant entitles the holder thereof to purchase one additional subordinate voting

share of the Company at a price of $C0.50 per share for a period of 36 months from the closing date. The

fair value of warrants was valued using the Black-Scholes Option Pricing Model.

In connection with a private placement closed during the year 2022, the Company issued 5,307,894 non-

transferrable warrants. Each warrant entitles the holder thereof to purchase one additional subordinate voting

share of the Company at a price of $C0.50 per share for a period of 36 months from the closing date. The

fair value of warrants was valued using the Black-Scholes Option Pricing Model.

In connection with a private placement closed during the year 2022, the Company issued 22,380,459 non-

transferrable warrants. Each warrant entitles the holder thereof to purchase one additional subordinate voting

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

14

share of the Company at a price of $C0.15 per share for a period of 24 months from the closing date. The

fair value of warrants was valued using the Black-Scholes Option Pricing Model.

In connection with private placements closed during the year 2023, the Company issued 13,093,488 non-

transferrable warrants. Each warrant entitles the holder thereof to purchase one additional subordinate voting

share of the Company at a price of $C0.15 per share for a period of 24 months from the closing date. The

fair value of warrants was valued using the Black-Scholes Option Pricing Model.

The warrants outstanding and exercisable as at March 31, 2024 are as follows:

Expiry date Number of warrants

outstanding

Number of warrants exercisable Exercise

Price ($)

Balance December 31, 2021 20,898,129 20,898,129 0.38

Granted January 29, 2024 5,307,894 5,307,894 0.37

Granted January 29, 2024 182,000 182,000 0.37

Granted November 8, 2024 22,380,459 22,380,459 0.11

Expired (589,166) (589,166) 0.39

Balance December 31, 2022 48,179,316 48,179,316 0.29

Expired

Granted

Granted

Granted

January 28, 2023

October 19, 2025

December 22, 2025

June 2, 2025

(182,000)

3,788,587

1,400,451

7,904,450

(182,000)

3,788,587

1,400,451

7,904,450

0.37

0.11

0.11

0.11

Balance March 31, 2024 61,090,804 61,090,804 0.23

Additional Disclosure for Venture Issuers without Significant Revenue

During the quarter ended March 31, 2024, the Company incurred development costs of $47,965 (Q4 2023

- $50,413) related to Hapbee Wearable Wellness Product. Of the total development costs NIL was recorded

as intangible assets – development costs and the balance has been recorded as product development costs.

The breakdown of material components for development costs that are capitalized is:

March 31, 2024 December 31, 2023

Product Development (including salary

component in 2022 reallocated for 2023) $788,679 $740,714

Tooling and Production - -

Signal Development and Safety Testing - -

$788,679 $740,714

Amortization of intangible assets - development

costs (529,239) (495,490)

$259,440 $245,224

Product development consisted mainly of materials and consulting fees.

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

15

Subsequent Events

Growth Initiatives and Partnerships

The Company has launched several important partnerships with well-known Ambassadors and Enterprises

as part of its growth strategy to build brand awareness and facilitate consumer trial.

Target Stores

Target is the seventh largest retailer with over 1,900 stores in the US with a growing focus on health and

digital wellness. Hapbee devices are now available at over 104 Target stores in the United States and online

at Target.com

Diageo

Diageo is a global alcoholic beverage company, with its headquarters in London, England. Its leading

brands include Guinness, Smirnoff, Bailey’s liqueur, Captain Morgan rum, Johnnie Walker, Tanqueray and

Gordon's gin. Hapbee has partnered with Diageo to test-launch digital mood enhancement as a complement

to consumption of their growing non-alcoholic products in pubs in Dublin, Ireland and London, England.

Jumeirah

Jumeirah Group, a member of Dubai Holding and a global luxury hotel company, operates a world-class

portfolio of 26 properties, comprising beachfront resorts, city hotels, and luxury serviced residences across

the Middle East, Europe, and Asia. Hapbee has partnered with Jumeirah to test-launch Hapbee Sleep Pads

and custom Jumeirah Sleep Routines in select guest rooms as part of their Sleep Concierge program.

Hapbee Neckbands are also being used in spa and with hotel staff to deliver focus and relaxation on demand.

Ambassadors

Well-known wellness-centric product ambassadors including Heather Thomson (Housewives of NYC),

Jaylen Brown (Boston Celtics), Jose Calderon (Toronto Raptors) and others are sharing their personal

Hapbee experiences with their large audiences on social media platforms.

Private Placement

On April 18, 2024, the Company completed a non-brokered private placement of units of the Company for

aggregate gross proceeds of USD $2,075,000 (C$2,785,000). Net proceeds from the placement are intended

to fund working capital for on-going operations, invest in product innovation and enhancements, underwrite

long term growth initiatives and reduce cost of goods by migrating manufacturing to offshore

manufacturing partners.

The private placement round was led by Rizwan Shah and Jaylen Brown. In addition to their investment,

they have assumed active roles as members of the Company’s leadership team as Chief Commercial Officer

and Chief Innovation Officer, respectively.

As part of the Offering, the Company issued 50,454,544 Units at a price of CAD $0.055 per Unit (the

“Offering Price”), which consisted of the issuance of 50,454,544 subordinate voting shares of the Company

(“Shares”) and 50,454,544 Share purchase warrants (“Warrants”) with each Warrant entitling the holder

HAPBEE TECHNOLOGIES, INC.

Management’s Discussion and Analysis

For the quarter ended March 31, 2024

16

thereof to acquire one Share at a price of CAD$0.11 per Share for a period of 3 years from the closing date

of the Offering.

The expiry date of the Warrants will be subject to prior acceleration, at the discretion of the Company,

should the volume weighted average price of the Company’s listed Shares on the TSX Venture Exchange

(“TSXV”), or any other stock exchange on which the Company’s Shares are then listed, is greater than

CAD$0.40 for a period of 10 consecutive trading days, the whole in accordance with the terms of the

Warrants. Each Share and Warrant issued (including the Shares underlying the Warrants) will be subject to

a hold period of four months plus one day following the closing of the Offering (the “Hold Period”) pursuant

to Canadian and US securities laws.

Any net proceeds received by the Company from the Offering are intended to be used for product

development, manufacturing, business development, working capital and general corporate purposes.

Convertible Debentures Issuance for Cash

During the quarter-ended March 31, 2024, the Company issued convertible debentures in the amount of

USD $189,281 in exchange for USD $189,281.

RSU Conversions

In January 2024, Directors, Management and Consultants to the Company have converted 2,671,250

Restricted Share Units (RSU) that have vested into Subordinated Voting Shares (SVS). In April 2024

Directors and Consultants to the Company in April 2024 have converted 3,054,750 RSU into SVS.

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