6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2022

Commission File Number: 001-40745

MCLOUD TECHNOLOGIES CORP.

(Registrant)

550-510 Burrard Street

Vancouver, BC V6C 3A8

(Address of Principal Executive Offices)

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MCLOUD TECHNOLOGIES CORP.
	(Registrant)
Date: April 4, 2022	By	/s/ Russel H. McMeekin
		Russel H. McMeekin
		Chief Executive Officer

EXHIBIT INDEX

Exhibit	Description of Exhibit
99.1	Audited Annual Financial Statements for the period ending December 31, 2021
99.2	MD&A for the period ending December 31, 2021
99.3	Annual Information Form for the fiscal year ended December 31, 2021
99.4	CEO and CFO Form 52-109F1 - IPO/RTO Certifications

EX-99.1

EXHIBIT 99.1

 

 

KPMG LLP

205 5th Avenue SW
Suite 3100

Calgary AB T2P 4B9
Tel (403) 691-8000

Fax (403) 691-8008

www.kpmg.ca

REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Shareholders and Board of Directors of mCloud Technologies Corp.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of mCloud Technologies Corp., (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of loss and comprehensive loss, changes in equity, and cash flows for the years then ended and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has had recurring net losses and cash used in operating activities, covenant violations and a net working capital deficiency as of December 31, 2021 that raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2019

 

Chartered Professional Accountants

Calgary, Canada April 4, 2022

mCloud Technologies Corp.

Consolidated Statements of Financial Position

Expressed in Canadian Dollars

	Notes	December 31, 2021			December 31, 2020
ASSETS
Current assets
Cash and cash equivalents		$	4,588,057		$	1,110,889
Trade and other receivables	6		14,566,975			12,312,814
Current portion of prepaid expenses and other assets	7		2,355,350			1,326,319
Current portion of long-term receivables	6		397,060			445,213
Total current assets		$	21,907,442		$	15,195,235
Non-current assets
Prepaid expenses and other assets	7	$	622,577		$	1,011,847
Long-term receivables	6		343,371			2,091,059
Right-of-use assets	8		916,028			3,660,717
Property and equipment	9		649,403			506,387
Intangible assets	10		20,585,833			27,766,839
Goodwill	10		27,081,795			27,086,727
Total non-current assets		$	50,199,007		$	62,123,576
Total assets		$	72,106,449		$	77,318,811
LIABILITIES
Current liabilities
Bank indebtedness	13	$	3,460,109		$	976,779
Trade payables and accrued liabilities	11		12,421,309			12,924,256
Deferred revenue	5		2,811,408			1,771,120
Current portion of loans and borrowings	12		12,447,939			3,431,251
Current portion of convertible debentures	14		22,185,170			–
Warrant liabilities	15		8,880,038			710,924
Current portion of lease liabilities	8		410,674			835,472
Current portion of other liabilities	16		–			6,003,838
Current portion of business acquisition payable	17		1,398,972			1,594,297
Total current liabilities		$	64,015,619		$	28,247,937
Non-current liabilities
Convertible debentures	14	$	110,540		$	19,534,988
Lease liabilities	8		634,798			3,109,604
Loans and borrowings	12		767,662			9,721,049
Deferred income tax liabilities	24		2,291,057			4,168,905
Other liabilities	16		–			232,577
Business acquisition payable	17		–			845,232
Total liabilities		$	67,819,676		$	65,860,292
EQUITY
Share capital	18	$	118,195,363		$	83,120,611
Contributed surplus			11,040,751			8,518,476
Accumulative other comprehensive income			1,571,998			1,669,596
Deficit			(130,016,073	)		(85,686,366	)
Total shareholders’ equity		$	792,039		$	7,622,317
Non-controlling interest	20		3,494,734			3,836,202
Total equity		$	4,286,773		$	11,458,519
Total liabilities and equity		$	72,106,449		$	77,318,811

Going concern (Note 2); Events after the reporting period (Note 32); Commitments and contingencies (Note 30)

The accompanying notes are an integral part of these consolidated financial statements.

Approved on behalf of the Board of Directors on April 4, 2022

“Russ McMeekin”	“Michael Allman”
Director	Director

1  | Consolidated Financial Statements

mCloud Technologies Corp.

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in Canadian dollars except number of shares)

		Year ended December 31,
	Notes	2021			2020
Revenue	4, 5	$	25,596,972		$	26,928,439
Cost of sales			(9,683,748	)		(10,281,922	)
Gross profit		$	15,913,224		$	16,646,517
Expenses
Salaries, wages and benefits		$	21,691,774		$	20,885,044
Sales and marketing			1,377,255			1,536,420
Research and development			3,179,353			1,078,164
General and administration			8,538,854			5,741,872
Professional and consulting fees			9,085,436			8,886,341
Share-based compensation	19		1,867,915			1,454,235
Depreciation and amortization	8-10		8,924,812			6,778,100
Total expenses		$	54,665,399		$	46,360,176
Operating loss		$	38,752,175		$	29,713,659
Other expenses (income)
Finance costs	21	$	8,618,794		$	6,033,510
Foreign exchange loss (gain)			(267,294	)		1,198,372
Business acquisition costs and other expenses			346,420			1,811,682
Fair value loss on derivatives	22		6,040,121			–
Other income	23		(7,126,097	)		(2,932,342	)
Loss before tax		$	46,364,119		$	35,824,881
Current tax expense (recovery)	24		157,303			(295,709	)
Deferred tax recovery	24		(1,822,109	)		(668,209	)
Net loss for the year		$	44,699,313		$	34,860,963
Other comprehensive (income) loss
Foreign subsidiary translation differences			69,460			(1,209,006	)
Comprehensive loss for the year		$	44,768,773		$	33,651,957
Net loss (income) for the year attributable to:
mCloud Technologies Corp. shareholders		$	44,329,707		$	36,870,267
Non-controlling interest			369,606			(2,009,304	)
		$	44,699,313		$	34,860,963
Comprehensive loss (income) for the year attributable to:
mCloud Technologies Corp. shareholders		$	44,427,305		$	35,563,921
Non-controlling interest			341,468			(1,911,964	)
		$	44,768,773		$	33,651,957
Loss per share attributable to mCloud shareholders - basic and diluted		$	3.73		$	5.07
Weighted average number of common shares outstanding - basic and diluted			11,898,183			7,272,464

The accompanying notes are an integral part of these consolidated financial statements.

2  | Consolidated Financial Statements

mCloud Technologies Corp.

Consolidated Statements of Changes in Equity

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except number of shares)

	Notes	Number of Shares		Share Capital		Contributed Surplus			Accumulated Other Comprehensive Income			Deficit			Total Shareholder’s Equity			Non-controlling Interest			Total Equity
Balance, December 31, 2020			9,168,416	$	83,120,611	$	8,518,476		$	1,669,596		$	(85,686,366	)	$	7,622,317		$	3,836,202		$	11,458,519
Share-based payments	19		–		–		1,867,915			–			–			1,867,915			–			1,867,915
RSUs exercised	19		71,190		337,104		(423,277	)		–			–			(86,173	)		–			(86,173	)
Broker warrants issued	18(b)		–		–		294,894			–			–			294,894			–			294,894
Shares issued in public offering, net of costs	18(a)		2,300,000		12,395,918		–			–			–			12,395,918			–			12,395,918
Warrants issued in public offering, net of costs	18(a)		–		–		619,796			–			–			619,796			–			619,796
Shares issued in private placement	18(a)		75,676		420,000		–			–			–			420,000			–			420,000
Shares issued on 2021 Debentures conversion, net	18(a)		2,107,787		14,436,728		–			–			–			14,436,728			–			14,436,728
Shares issued in USD public offering, net of costs	18(a)		2,415,000		7,485,002		–			–			–			7,485,002			–			7,485,002
Underwriter warrants issued in USD public offering	18(b)		–		–		162,947			–			–			162,947			–			162,947
Net (loss) income for the year			–		–		–			–			(44,329,707	)		(44,329,707	)		(369,606	)		(44,699,313	)
Other comprehensive (loss) income for the year			–		–		–			(97,598	)		–			(97,598	)		28,138			(69,460	)
Balance, December 31, 2021			16,138,069	$	118,195,363	$	11,040,751		$	1,571,998		$	(130,016,073	)	$	792,039		$	3,494,734		$	4,286,773
Balance, December 31, 2019			5,282,904	$	45,368,745	$	7,278,119		$	363,250		$	(48,816,099	)	$	4,194,015		$	1,924,238		$	6,118,253
Share-based payments			–		–		1,454,235			–			–			1,454,235			–			1,454,235
RSUs exercised			35,876		384,613		(529,006	)		–			–			(144,393	)		–			(144,393	)
Stock options exercised			7,638		166,400		(96,400	)		–			–			70,000			–			70,000
Warrants exercised			117,977		1,923,118		(427,426	)		–			–			1,495,692			–			1,495,692
Shares issued in business combination - CSA	27		126,737		2,304,073		–			–			–			2,304,073			–			2,304,073
Shares issued in business combination - kanepi	28		867,631		5,882,547		–			–			–			5,882,547			–			5,882,547
Shares issued for transaction costs - kanepi	28		22,064		149,596		–			–			–			149,596			–			149,596
Shares issued for asset acquisition - AirFusion			66,667		820,000		–			–			–			820,000			–			820,000
Shares issued on conversion of 2019 debentures	14(b)		3,333		50,000		24,000			–			–			74,000			–			74,000
Issue of special warrants, net			–		–		12,217,171			–			–			12,217,171			–			12,217,171
Conversion of special warrants			1,222,063		12,217,171		(12,217,171	)		–			–			–			–			–
Settlement of debt with RSUs			–		–		143,002			–			–			143,002			–			143,002
Shares issued in public offering, net of costs			1,415,526		13,854,348		671,952			–			–			14,526,300			–			14,526,300
Net (loss) income for the year			–		–		–			–			(36,870,267	)		(36,870,267	)		2,009,304			(34,860,963	)
Other comprehensive (loss) income for the year			–		–		–			1,306,346			–			1,306,346			(97,340	)		1,209,006
Balance, December 31, 2020			9,168,416	$	83,120,611	$	8,518,476		$	1,669,596		$	(85,686,366	)	$	7,622,317		$	3,836,202		$	11,458,519

The accompanying notes are an integral part of these consolidated financial statements.

3  | Consolidated Financial Statements

mCloud Technologies Corp.

Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

		Year ended December 31,
	Notes	2021			2020
Operating activities
Net loss		$	(44,699,313	)	$	(34,860,963	)
Items not affecting cash:
Depreciation and amortization	8-10		8,924,812			6,778,100
Share-based compensation	19		1,867,915			1,454,235
Finance costs	21		8,618,794			6,020,636
Fair value loss on derivatives	22		6,040,121			–
Other income	23		(2,675,671	)		(92,535	)
Provision for expected credit loss	26		1,159,742			223,129
Unrealized foreign currency exchange gain			(534,993	)		1,034,501
Business acquisition costs			–			149,596
Current tax expense (recovery)	24		157,303			(295,709	)
Deferred income tax recovery	24		(1,822,109	)		(668,209	)
Decrease in working capital	31		(1,988,521	)		(904,212	)
Interest paid			(3,377,851	)		(3,535,805	)
Taxes paid			–			(158,564	)
Net cash used in operating activities		$	(28,329,771	)	$	(24,855,800	)
Investing activities
Acquisition of property and equipment	9	$	(625,202	)	$	(127,688	)
Acquisition of and expenditure on intangible assets	10		(438,725	)		(809,764	)
Acquisition of assets of AirFusion			–			(835,302	)
Acquisition of business, net of cash acquired			–			(4,622,400	)
Net cash used in investing activities		$	(1,063,927	)	$	(6,395,154	)
Financing activities
Payment of lease liabilities	8	$	(1,095,327	)	$	(814,072	)
Repayment of loans	12		(9,781,554	)		(9,011,638	)
Proceeds from loans and bank indebtedness, net of transaction costs	12, 13		13,752,698			8,726,766
Net repayments of bank indebtedness	13		(1,004,211	)		(495,026	)
Proceeds from issuance of shares, net of issuance costs	18(a)		20,300,920			14,526,300
Proceeds from issuance of convertible debentures, net of costs	11(b)		5,424,661			5,285,997
Proceeds from issuance of warrants, net of issuance costs	18(b)		5,415,864			12,217,171
Proceeds from the exercise of stock options, net of issuance costs			–			70,000
Proceeds from exercise of warrants, net			–			1,495,692
Income tax withholding on RSUs			(86,173	)		(144,393	)
Net cash provided by financing activities		$	32,926,878		$	31,856,797
Increase in cash and cash equivalents		$	3,533,180		$	605,843
Effect of exchange rate fluctuations on cash held			(56,012	)		(24,144	)
Cash and cash equivalents, beginning of period			1,110,889			529,190
Cash and cash equivalents, end of period		$	4,588,057		$	1,110,889

Supplemental cash flow information (Note 31)

The accompanying notes are an integral part of these consolidated financial statements.

4  | Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 1 - NATURE OF OPERATIONS

mCloud Technologies Corp. (“mCloud” or the “Company”), is a provider of proprietary technology solutions, AssetCare. Customers use AssetCare software-as-a-service (“SaaS”) and data solutions to ensure assets continuously operate at peak performance. AssetCare is an asset management platform combining IoT, AI and the cloud to drive next-level performance and efficiency. mCloud offers foundational enterprise technology solutions enabling capabilities such as secure communications, connected work, and remote monitoring.

The Company is domiciled in Vancouver, Canada with its head office in Calgary, Alberta and its registered offices located at 550-510 Burrard Street, Vancouver, British Columbia, V6C 3A8.

The Company met the listing requirements of the Nasdaq Stock Market LLC (“NASDAQ”) and received approval to be listed on November 23, 2021. On November 24, 2021, the Company’s shares began trading on the NASDAQ under the stock symbol MCLD in U.S. dollars (Note 32(b)). The Company’s shares also trade on the TSX.V trading in Canadian dollars under the symbol MCLD and on the OTCQB Venture Market under the symbol MCLDF.

NOTE 2 - BASIS OF ACCOUNTING

The consolidated financial statements include the accounts of mCloud, the ultimate parent of the consolidated group, and its subsidiaries and are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), effective as of December 31, 2021.

These consolidated financial statements of the Company were approved by the Company’s Board of Directors and authorized for issue on April 4, 2022.

Basis of preparation

These consolidated financial statements were prepared on a going-concern basis, under the historical cost convention except for derivative financial instruments classified as at fair value through profit or loss. The Company’s accounting policies are described in Note 33 and these policies are consistently applied to all the periods presented.

The Company’s presentation currency is Canadian dollars, and all amounts are presented in Canadian dollars unless otherwise stated. The consolidated financial statements include the accounts of the Company and those of its subsidiaries which are entities over which the Company has control (Note 33(A)).

The Company has reclassified certain comparative figures in the consolidated financial statements to conform to the current year presentation. In addition to the Canadian dollar presentation, certain disclosures include the use of U.S. Dollars (“USD” or “US$”) in describing certain financing transactions.

Share consolidation

On November 19, 2021, the Company initiated a 3-to-1 consolidation of the Company’s issued and outstanding common shares which took effect at market opening on November 24, 2021. This share consolidation was approved by the Company’s shareholders in connection with the Company’s NASDAQ listing. The Company’s issued and outstanding convertible debentures, stock options, warrants and restricted share units were also subject to this share consolidation. The par value of the common shares was not adjusted as a result of this share consolidation. Accordingly, all share and per share amounts for the periods presented in these consolidated financial statements and notes thereto have been adjusted retrospectively to reflect this share consolidation.

Going Concern

The outbreak of the COVID-19 pandemic and the measures adopted by governments in countries worldwide to mitigate the pandemic’s spread have impacted the Company. These measures required the Company to restrict deployment of technical services due to the in-person nature of these activities and delay the start of certain projects for a duration of the year. This negatively impacted the Company’s financial performance and liquidity position.

During the year ended December 31, 2021, the Company generated a net loss of $44,699,313 and negative cash flows from operating activities of $28,329,771. At December 31, 2021, the Company had a working capital deficiency of $42,108,177. Working capital deficiency is a non-IFRS measure which is calculated as current assets less current liabilities. Current liquidity levels and available sources of capital are not adequate to fund the working capital deficiency.

5  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 2 - BASIS OF ACCOUNTING (continued)

Going Concern (continued)

The most significant cash outflows included in current liabilities include the repayment of the 2019 Convertible Debentures of $23,457,500 if not converted on or before May 31, 2022 (Note 14(a)); loans and borrowings of $11,763,697 including principal and interest payments; payment of trade and other payables of $12,421,309; and payments associated with leases of approximately $1,000,000.

While restrictions started to ease in the three months ended December 31, 2021, there is still uncertainly over how COVID-19 will impact the Company’s business and the timing of future revenues. Based on the Company’s liquidity position at the date of authorization of these consolidated financial statements and considering the uncertainty surrounding the impact of the pandemic, management estimates that it will need additional financing to meet its financial obligations. The Company is currently working with stakeholders and others to address the working capital deficiency. In the long-term, the ability of the Company to operate as a going concern is dependent on its ability to achieve and maintain profitable operations and positive cash flow from operations, and, as necessary, to obtain the necessary equity or debt financing to continue with operations. To date, the Company has funded its operations through debt and equity financing. While the Company has been successful in raising capital in the past and anticipates the lenders will not accelerate repayment of loans with covenant breaches as of December 31, 2021, March 31, 2022, and potential breaches forecasted over the coming year, there is no assurance that it will be successful in closing further financings in the future or obtaining waivers of the covenant breaches.

As a result, these factors are indicators that material uncertainties exist that raises significant doubt about the Company’s ability to continue as a going concern and, therefore, its ability to realize assets and discharge liabilities in the normal course of business.

In making their assessment, management considered all available information, together with forecasts and other mitigating strategies, about the future which is at least, but not limited to, twelve months from the end of the reporting period. Management has considered in its assessment its plans for the repayment of the 2019 Convertible Debentures, the likelihood of repayment of the term loan which has been classified as current (Note 12), the likelihood that undrawn funds under the operating facility will be available (Note 13), the required cash principal and interest payments on indebtedness, and the likelihood of payments required under contingent consideration arrangements. Management also considered available funding under a US$15,000,000 promissory note executed on March 28, 2022, which includes a $5,000,000 loan which was funded on April 1, 2022 but for which its use is restricted (Note 32(a)) .

Management also considered cash inflows from current operations, expected government assistance in the form of wage and rent subsidies, and expected increases in revenues and cash flows resulting from new revenue contracts expected over the next 12 months due to the anticipated reduction of COVID-19 related restrictions. Future debt and equity raises have been considered in determining that the going concern assumption remains appropriate.

These consolidated financial statements have been prepared on a going concern basis, which contemplates that the Company will continue in operation and be able to realize its assets and discharge its liabilities and commitments in the normal course of business for the foreseeable future. These consolidated financial statements do not include any adjustments to the carrying amounts and classifications of assets, liabilities and reported expenses that may otherwise be required if the going concern basis was not appropriate.

NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

In the preparation of the consolidated financial statements and the application of the Company’s accounting policies, management is required to make judgements, estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during each reporting period. The estimates and associated assumptions are limited by the relevance of historical data and uncertainty of future events. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized in the period in which the estimates are revised and in any future period.

Beginning in March 2020, the COVID-19 pandemic has had a substantial impact on economies around the world. As a result of the uncertainty associated with the unprecedented nature of the pandemic, certain of the Company’s significant assumptions may be impacted. Uncertain environments make estimating several items in the consolidated financial statements more challenging and are likely to result in more frequent changes in management’s expectations about the future. The long-term impact on the Company’s financial results and cash flows is unknown at this time. The Company has received government assistance in Canada, the United States and Australia to help temper the financial impact of COVID-19 (Note 23).

6  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

(a) Critical judgements in applying accounting policies

Judgement is used in situations when there is a choice and/or assessment required by management. Information about judgements made in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements, are as follows:

Determination of control of subsidiaries

Judgement is required to determine when the Company has control of subsidiaries. This requires an assessment of the relevant activities of the investee, being those activities that significantly affect the investee’s returns. Despite owning no shares, or having any voting rights, the Company determined that it exercises control over Agnity Global, Inc. (“Agnity”) as the Company has the right to nominate a majority of the members of Agnity’s Operations Committee and therefore the right and ability to direct the relevant activities of Agnity and to significantly affect its returns through the use of its rights. The Company has the right to receive royalty payments from Agnity on a monthly basis in perpetuity and the Company has credit risk with respect to the collectability of these royalty payments.

Assessment of indicators of impairment of goodwill, long-lived assets and intangible assets

Management reviews goodwill, depreciable long-lived assets and intangible assets for impairment triggers to determine if any events or changes in circumstances exist that would indicate that the carrying amount of an asset may not be recoverable over time. If impairment indicators exist, impairment assessments are conducted as the asset level or level of cash generating units (“CGUs”) as appropriate.

Leases

In measuring the Company’s leases judgement is required to determine the lease term of the contract including whether the Company is reasonably certain to exercise extension options where it is the lessee. A longer lease term results in a larger lease liability and right-of-use asset to be recognized by the Company and future changes in this lease term will result in modifications. In addition, estimates and assumptions are required to determine the incremental borrowing rate used to measure lease liabilities at inception of a lease.

Contingent consideration

Management uses judgement to assess the existence of contingencies. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. At initial recognition at the date of a business combination and at the end of each reporting period, management also uses judgement to assess the likelihood of the occurrence of one or more future events which impacts the fair value of the contingent consideration .

(b) Key sources of estimation uncertainty

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities and results of operations where a different estimate or assumption is used, are as follows:

Value of components for convertible debt and equity offerings

Management makes judgements related to the measurement of the fair value of the convertible debentures and equity offerings issued in the period, including the determination of the allocation of the proceeds between the components of the instrument. At inception of an instrument, the Company determines the value of each piece of the instrument and judgement is required in determining the inputs used in the fair value calculations and in determining the probability of certain outcomes.

Determination of stand-alone selling price

The total transaction price of certain revenue contacts is allocated to each performance obligation on a relative stand-alone selling price (“SSP”) basis, representing the selling price as if it was sold separately. This is a formal process involving judgement which could impact the timing of recognized revenue. In most cases, the SSP is based on observable data. If the SSP is not directly observable, the amount is estimated using either the expected cost plus a margin or residual approach. The SSP for perpetual software licenses is highly variable and therefore the Company applies the residual approach (Note 33(C)).

7  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

(b) Key sources of estimation uncertainty (continued)

Expected credit loss allowance and provision

The Company recognizes an amount equal to the lifetime expected credit loss (“ECL”) on trade and long-term receivables, other receivables, unbilled revenue and amounts due from related parties for which there has been a significant increase in credit risk since initial recognition. Loss allowances are measured based on historical experience and forecasted economic conditions. The amount of ECL is sensitive to changes in circumstances of forecast economic conditions.

Impairment of goodwill and other non-financial assets

Goodwill is reviewed annually on December 31 or more frequently if changes in circumstances indicate that the carrying value may be impaired. The Company completed its annual impairment testing at December 31, 2021 and determined there was no impairment. Determining whether an impairment has occurred requires the valuation of the recoverable amount of the CGUs as described in Note 10(b).

Share-based payment arrangements

The Company uses the Black-Scholes option-pricing model (“Black-Scholes model”) to determine the fair value of stock options and other equity instruments where the goods and services cannot be valued. In estimating the fair value, management is required to make certain assumptions and estimates such as the expected life of options, volatility of the Company's future share price, risk-free rate, future dividend yields and estimated forfeitures at the initial measurement date. Changes in assumptions used to estimate fair value could result in different outcomes.

Business combinations - purchase price allocation

The consideration transferred and acquired assets and assumed liabilities are recognized at fair value on the date the Company effectively obtains control. The measurement of each business combination is based on the information available on the acquisition date. The estimate of fair value of the consideration transferred and acquired intangible assets (including goodwill), property and equipment, other assets and the liabilities assumed are based on estimates and assumptions. The measurement is largely based on projected cash flows, discount rates and market conditions at the date of acquisition.

Taxation

Calculations for current and deferred taxes require management’s interpretation of tax regulations and legislation in the various tax jurisdictions in which the Company operates, which are subject to change. The measurement of deferred tax assets and liabilities requires estimates of the timing of the reversal of temporary differences identified and management’s assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income before they expire, which involves estimating future taxable income.

The Company is subject to assessments by various taxation authorities in the tax jurisdictions in which it operates, and these taxation authorities may interpret the tax legislation and regulations differently. In addition, the calculation of income taxes involves many complex factors. As such, income taxes are subject to measurement uncertainty and actual amounts of taxes may vary from the estimates made by management.

8  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 4 - SEGMENT REPORTING

The Company operates in one operating segment. For the purpose of segment reporting, the Company’s Chief Executive Officer (“CEO”) is the Chief Operating Decision Maker. The determination of the Company’s operating segment is based on its organization structure and how the information is reported to the CEO on a regular basis.

The Company’s revenue by location of the ultimate customer or consumer of product solution are as follows:

	Year ended December 31,
	2021		2020
Canada	$	10,733,922	$	13,832,691
United States		6,564,271		5,691,202
Japan		5,849,967		6,446,939
Australia		993,933		152,301
Other		1,454,879		805,306
Total revenue	$	25,596,972	$	26,928,439

The table below presents significant customers who accounted for greater than 10% of total revenues.

For the years ended December 31,	2021			2020
Customer A		Less than 10%			14	%
Customer B		Less than 10%			13	%
Customer C		11	%		Less than 10%
Customer D		11	%		Less than 10%

The Company’s non-current assets by country are as follows:

	December 31, 2021		December 31, 2020
Canada	$	30,812,581	$	37,966,772
Australia		10,372,410		11,731,960
United States		9,014,016		12,424,844
Total non-current assets	$	50,199,007	$	62,123,576

NOTE 5 - REVENUE

The Company’s operations and main revenue streams are those described in Note 33(C). All of the Company’s revenue is derived from contracts with customers. In the following tables, revenue is disaggregated by major service line and timing of revenue recognition.

	Year ended December 31,
	2021		2020
AssetCare initialization 1	$	1,250,181	$	7,689,232
AssetCare over time 2		23,461,748		12,809,054
Engineering services 3		885,043		6,430,153
	$	25,596,972	$	26,928,439

¹ Revenues from initial implementation and activation of AssetCare projects, including the sale of hardware.

² Revenues include sales of subscriptions to AssetCare, other subscriptions, post contract support and maintenance, perpetual software licenses, and installation and engineering services.

³ Revenues includes consulting, implementation and integration services entered into on a time and materials basis or fixed fee basis without the use of AssetCare.

9  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 5 - REVENUE (continued)

	Year ended December 31,
Timing of revenue recognition	2021		2020
Over time	$	24,422,749	$	18,551,736
At a point in time upon completion		1,174,223		8,376,703
	$	25,596,972	$	26,928,439

Significant changes in unbilled revenue and deferred revenue balances are as follows:

	Unbilled revenue			Deferred revenue
Balance at December 31, 2019	$	658,931		$	1,138,281
Acquired in business combination		117,686			–
Additions		11,478,436			6,316,586
Less: transferred to trade and other receivables		(11,557,665	)		–
Less: write-offs		(146,489	)		–
Less: recognized in revenue		–			(5,612,896	)
Less: applied to outstanding trade receivables		–			(30,586	)
Effect of movement in exchange rates		3,841			(40,265	)
Balance at December 31, 2020	$	554,740		$	1,771,120
Additions		7,470,881			10,616,893
Less: transferred to trade and other receivables		(7,269,579	)		–
Less: recognized in revenue		–			(9,585,211	)
Effect of movement in exchange rates		–			8,606
Balance at December 31, 2021 1	$	756,042		$	2,811,408

¹ Unbilled revenue is included in trade and other receivables (Note 6) and relates to the Company’s right to consideration for work completed but not billed at the reporting date. Unbilled revenue is transferred to trade and other receivables when services are billed to customers.

NOTE 6 - TRADE AND OTHER RECEIVABLES AND LONG-TERM RECEIVABLES

	December 31, 2021			December 31, 2020
Trade receivables from contracts with customers	$	14,204,320		$	10,182,229
Unbilled revenue (Note 5)		756,042			554,740
Indirect taxes receivable		148,200			341,583
Income taxes receivable		2,217			594,036
Other receivables		919,954			961,714
Contract asset 1		86,777			153,178
Loss allowance (Note 26(b))		(1,550,535	)		(474,666	)
Total trade and other receivables - current	$	14,566,975		$	12,312,814

¹ At December 31, 2021, the total contract assets were $90,200 with the non-current portion of $3,423 included in other assets (December 31, 2020 - $314,894 total and $161,716 non-current). No new contract assets were recognized and amortization to cost of sales over the life of the contract assets continues to occur until June 30, 2023.

10  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 6 - TRADE AND OTHER RECEIVABLES AND LONG-TERM RECEIVABLES (continued)

Long-term receivables

Long-term receivables represent receivables associated with revenue contracts whereby certain customers make fixed monthly installment payments over a period of time, ranging from one to three years, for performance obligations delivered upfront. For contracts where all performance obligations were completed except for monthly post contract and support maintenance, amounts due are included in trade receivables from contracts with customers.

	December 31, 2021		December 31, 2020
Current portion of long-term receivables 1	$	397,060	$	445,213
Non-current portion of long-term receivables 2		343,371		2,091,059
Total long-term receivables	$	740,431	$	2,536,272

¹ Net of expected credit loss allowance of $95,064 at December 31, 2021 and $131,364 at December 31, 2020 (Note 26(b)).

² Net of expected credit loss allowance of $61,619 at December 31, 2021 and nil at December 31, 2020 (Note 26(b)).

NOTE 7 - PREPAID EXPENSES AND OTHER ASSETS

	December 31, 2021		December 31, 2020
Prepaid insurance	$	348,063	$	122,893
Advances		121,806		38,593
Deposits		862,338		189,734
Prepaid licenses		938,887		1,075,797
Prepaid services		505,448		292,552
Other prepaid costs		197,962		325,481
Other assets		3,423		293,116
Prepaid expenses and other assets	$	2,977,927	$	2,338,166
Current portion	$	2,355,350	$	1,326,319
Non-current portion		622,577		1,011,847
	$	2,977,927	$	2,338,166

11  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 8 - LEASES

The Company leases buildings for its office space, vehicles and other office equipment. The length of a lease depends on the location of the office, with leases generally ranging from three to five years with an option to renew the lease after that date. The majority of office leases require the payment of variable rent for operating costs and taxes which are not based on an index or rate and are recognized as rent expense. Lease payments for short-term leases and low-value assets are recognized as rent expense on a straight-line basis over the lease term. The maturity analysis of the undiscounted cash flows for lease liabilities is included in Note 26(a).

a) Right-of-use assets

The following table presents the change in carrying amount of the Company’s right-of-use assets:

	Office			Equipment and Vehicles			Total
Balance at January 1, 2020	$	3,976,173		$	230,635		$	4,206,808
Acquired right-of-use assets (Note 27, 28)		509,290			–			509,290
Additions to right-of-use assets		84,413			6,158			90,571
Depreciation charge for the year		(780,767	)		(145,661	)		(926,428	)
Impact of lease modification		(221,590	)		–			(221,590	)
Effect of movement in exchange rates		2,648			(582	)		2,066
Balance at December 31, 2020	$	3,570,167		$	90,550		$	3,660,717
Depreciation charge for the year		(748,058	)		(80,198	)		(828,256	)
Impact of lease modification		(1,924,504	)		–			(1,924,504	)
Effect of movement in exchange rates		8,122			(51	)		8,071
Balance at December 31, 2021	$	905,727		$	10,301		$	916,028

b) Amounts recognized in consolidated statements of loss and comprehensive loss

	Year ended December 31,
	2021		2020
Accretion of lease liabilities included in finance costs	$	137,272	$	350,792
Depreciation of right-of-use assets 1		828,256		926,429
Expense related to variable lease payments 2		825,212		824,062
Expense related to short-term leases 2		4,550		–
	$	1,795,290	$	2,101,283

¹ Included in depreciation and amortization expense

² Included in rent expense within general and administrative expense

c) Amounts recognized in consolidated statements of cash flows

	Year ended December 31,
	2021		2020
Total cash outflows included in operating activities	$	137,272	$	350,792
Total cash outflows included in financing activities	$	1,095,327	$	814,072

12  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 9 - PROPERTY AND EQUIPMENT

	Office Furniture and Equipment			Leasehold Improvements			Computer Equipment			Total
Cost:
At January 1, 2020	$	292,364		$	376,589		$	296,643		$	965,596
Additions		30,543			–			97,145			127,688
Effect of movement in exchange rates		(917	)		(1,351	)		(6,964	)		(9,232	)
Balance at December 31, 2020	$	321,990		$	375,238		$	386,824		$	1,084,052
Additions		–			–			626,841			626,841
Disposals		(29,459	)		(43,409	)		(124,544	)		(197,412	)
Effect of movement in exchange rates		(504	)		(744	)		(4,588	)		(5,836	)
Balance at December 31, 2021	$	292,027		$	331,085		$	884,533		$	1,507,645
Accumulated depreciation:
At January 1, 2020	$	43,818		$	82,999		$	128,227		$	255,044
Depreciation		78,289			77,906			175,027			331,222
Effect of movement in exchange rates		(923	)		(1,436	)		(6,242	)		(8,601	)
Balance at December 31, 2020	$	121,184		$	159,469		$	297,012		$	577,665
Depreciation		75,117			73,864			336,765			485,746
Disposals		(29,458	)		(43,409	)		(123,240	)		(196,107	)
Other movements		6,746			–			(6,746	)		–
Effect of movement in exchange rates		(505	)		(744	)		(7,813	)		(9,062	)
Balance at December 31, 2021	$	173,084		$	189,180		$	495,978		$	858,242
Carrying amounts:
Balance at December 31, 2020	$	200,806		$	215,769		$	89,812		$	506,387
Balance at December 31, 2021	$	118,943		$	141,905		$	388,555		$	649,403

13  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 10 - INTANGIBLE ASSETS AND GOODWILL

a) Intangible assets

	Patents and trademarks			Customer relationships			Technology			Total
Cost:
At January 1, 2020	$	182,658		$	16,240,990		$	11,755,982		$	28,179,630
Additions		–			–			2,333,666			2,333,666
Acquisitions		–			3,434,334			3,846,189			7,280,523
Effect of movements in exchange rates		(2,957	)		(38,494	)		(32,016	)		(73,467	)
Balance at December 31, 2020	$	179,701		$	19,636,830		$	17,903,821		$	37,720,352
Additions		–			–			440,965			440,965
Effect of movement in exchange rates		(343	)		(3,217	)		1,556			(2,004	)
Balance at December 31, 2021	$	179,358		$	19,633,613		$	18,346,342		$	38,159,313
Accumulated amortization and impairments:
At January 1, 2020	$	84,583		$	1,977,625		$	2,446,333		$	4,508,541
Amortization 1		35,243			2,696,767			2,753,602			5,485,612
Effect of movements in exchange rates		(3,078	)		(19,774	)		(17,788	)		(40,640	)
Balance at December 31, 2020	$	116,748		$	4,654,618		$	5,182,147		$	9,953,513
Amortization 1		32,073			3,099,234			4,479,503			7,610,810
Effect of movement in exchange rates		85			3,820			5,252			9,157
Balance at December 31, 2021	$	148,906		$	7,757,672		$	9,666,902		$	17,573,480
Carrying amounts:
Balance at December 31, 2020	$	62,953		$	14,982,212		$	12,721,674		$	27,766,839
Balance at December 31, 2021	$	30,452		$	11,875,941		$	8,679,440		$	20,585,833

¹ Amortization charges are included in depreciation and amortization in the consolidated statements of loss and comprehensive loss.

b) Goodwill

Goodwill is tested for impairment on an annual basis at December 31, and when there are indicators the carrying amount may be impaired. In reviewing indicators of impairment, the Company considers the relationship between its market capitalization and its book value, among other qualitative and quantitative factors. At December 31, 2021, the Company had two CGUs, mCloud Technologies Corp. and Agnity (December 31, 2020 - two CGUs). Goodwill is all allocated to mCloud Technologies Corp. as this CGU benefits from prior business combinations. Furthermore, the Company has no ownership of the Agnity CGU but instead 100% non-controlling interest and this CGU does not include goodwill. The carrying amount of goodwill is as follows:

	December 31, 2021			December 31, 2020
Opening balance	$	27,086,727		$	18,758,975
Acquisitions, business combinations (Note 27, 28)		–			8,405,341
Effect of movements in exchange rates		(4,932	)		(77,589	)
Total goodwill	$	27,081,795		$	27,086,727

The recoverable amount of the mCloud CGU was determined using fair value less costs of disposal (“FVLCD”) with reference to the market capitalization of the Company. The impairment test of goodwill at December 31, 2021, concluded that the recoverable amount exceeded the carrying amount of the CGU, including goodwill, and as such no goodwill impairment existed. At December 31, 2021, the enterprise value implied by market capitalization of the Company was $146,500,000 compared to a net asset carrying value of $36,160,000.

14  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 11 - TRADE PAYABLES AND ACCRUED LIABILITIES

	December 31, 2021		December 31, 2020
Trade payables	$	5,591,316	$	5,903,789
Accrued liabilities		5,398,389		4,795,742
Interest payable		233,854		425,054
Mastercard facility (Note 13)		296,669		600,590
Due to related parties (Note 29)		265,074		846,228
Income taxes payable		266,753		21,752
Indirect taxes payable		150,577		242,703
Other		218,677		88,398
Total trade payables and accrued liabilities	$	12,421,309	$	12,924,256

NOTE 12 - LOANS AND BORROWINGS

The carrying value of loans and borrowings by entities controlled by the Company are as follows:

	December 31, 2021		December 31, 2020
Term loan	$	9,275,683	$	10,928,055
Nations Interbanc facility		2,639,143		1,137,360
Debenture payable to Industry Canada		26,412		76,227
Loan payable to related party 1		335,860		318,428
Oracle financing 2		826,418		427,250
Other loans and financing		112,085		264,980
Total 3	$	13,215,601	$	13,152,300
Current		12,447,939		3,431,251
Non-current		767,662		9,721,049
	$	13,215,601	$	13,152,300

¹ Loan assumed as part of CSA Acquisition (Note 27) which bears interest at 6% and matures in January 2023. Interest is payable annually and accrued interest is included in trade payables and accrued liabilities.

² Financing arrangements provided by Oracle Credit Corporation (“Oracle”) bearing interest between 6.2% and 6.6%. Interest is due in quarterly installments with loans maturing in May 2023 and February 2024. During the year ended December 31, 2021, proceeds from additional funding received was $577,378 (December 31, 2020 - $495,944)

³ Note 31(b) includes the reconciliation of movements of liabilities to cash flows arising from financing activities.

Term loan

In 2019, a subsidiary of the Company, mCloud Technology Services Inc. (“MTS”), entered into a term loan facility with Fiera Private Debt Fund VI LP (“Fiera”, formerly Integrated Private Debt Fund VI LP) in the amount of $13,000,000. The term loan payments are blended payments of principal and interest until maturity in August 2026 and the loan is secured against the assets of MTS. The Company and certain subsidiaries are guarantors.

On November 9, 2021, the Company amended its term loan and amended the associated intercreditor agreement between Fiera, ATB Financial (“ATB”) and the Company. The intercreditor agreement determines the priority of security interests in the case of default, with Fiera having first priority on all assets other than accounts receivable (Note 13). The amendments to the term loan include: increase in interest rate from 6.85% to 7.5% per annum; certain changes to financial covenants which are applicable for the period from July 1, 2021 to December 31, 2022; and, the addition of two mCloud subsidiaries as additional guarantors.

15  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 12 - LOANS AND BORROWINGS (continued)

The principal amount of the loan and the maturity date of August 7, 2026 remained the same. During the year ended December 31, 2021 there were $2,343,036 of principal and interest payments made. A modification loss associated with this change in terms of $138,908 is included in finance costs in the consolidated statement of loss for the year ended December 31, 2021 with an offsetting increase in the carrying value of the term loan. Transaction costs of $191,310 were incurred and are netted against the carrying value of the term loan.

Breach of loan covenants

The term loan contains covenants with quarterly and quarter end metrics. For the quarter ended December 31, 2021, the Company did not meet certain minimum covenants and therefore the term loan is due on demand and has been classified as current until such time as the covenants are in compliance. For the quarter ended March 31, 2022, the Company continued not to meet certain minimum covenants and did not receive a waiver from the lender.

Nations Interbanc facility

Under a factoring and security agreement with Nations Interbanc (“Nations”), Agnity, an entity controlled by the Company, receives advances up to a maximum of US$2,000,000 at any one time from Nations for providing them the right to collect cash flows from factored accounts receivable and charges a fee for this service. This is a financing agreement and the accounts receivables factored still carry credit risk, are not sold, and are not derecognized from Agnity’s statement of financial position. Nations advances funds up to a value of 85% of the accounts receivables factored. Nations charges a factoring fee of 1.5% of the gross face invoice amount for the first 30 days and a daily proration of 0.06% per day thereafter. The amount of funds advanced varies and is dependent on the cash requirements of Agnity. During the year ended December 31, 2021, Nations advanced $9,246,693 and Agnity repaid $7,954,698 of this balance.

NOTE 13 - BANK INDEBTEDNESS

	December 31, 2021		December 31, 2020
ATB Financial revolving operating facility	$	3,460,109	$	–
Operating loan facility 1		–		923,461
Bank overdraft 1		–		53,318
Total	$	3,460,109	$	976,779

¹ At December 31, 2020, the Company had access to an operating loan facility and Mastercard facility. On April 15, 2021, the operating loan facility was repaid. The Mastercard facility remains in place and at December 31, 2021, $296,669 was drawn (December 31, 2020 - $600,590) and this amount is included in trade payables and accrued liabilities on the consolidated statements of financial position. The bank overdraft at December 31, 2020 was repaid in October 2021.

ATB Financial Facility

On May 17, 2021, one of the Company’s subsidiaries executed a commitment letter for a $5,000,000 secured revolving operating facility with ATB which is a financial institution wholly owned by the Province of Alberta. The facility is available by way of a variety of instruments. On June 24, 2021, $2,500,000 was drawn which was the maximum amount under the intercreditor agreement with Fiera at that time. The facility is due on demand, bears interest at the prime rate plus 2% per annum with interest and fees due at the end of each month and may be prepaid without penalty.

On November 8, 2021, the Company and ATB amended the commitment letter between the parties governing the revolving operating facility. The amendment added an accordion feature which allows the Company to request ATB to increase the maximum principal amount of the facility from $5,000,000 to $10,000,000, funded in increments of $1,250,000, subject to certain requirements and approval from Fiera and ATB under an intercreditor agreement.

The facility is subject to certain reporting and financial covenants. The Company was in compliance with these covenants at December 31, 2021. The facility is secured against certain assets of the Company and its principal subsidiaries. In addition, the Company and certain of its subsidiaries have provided an unlimited guarantee for repayment of all amounts due under the facility. As part of the commitment letter amendment, the Company agreed to issue warrants to ATB (Note 15).

16  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 13 - BANK INDEBTEDNESS (continued)

On November 9, 2021, Fiera, ATB and the Company amended the intercreditor agreement which allows the Company to draw the full $5,000,000 of the facility subject to a limit which is equal to the lesser of $5,000,000 and the aggregate of eligible accounts receivable less priority payables as defined in the agreement. An additional $950,000 was drawn under the facility on November 12, 2021. At December 31, 2021, as a result of the Fiera covenant breach ATB has the ability to restrict further advances under the ATB facility.

NOTE 14 - CONVERTIBLE DEBENTURES

	December 31, 2021		December 31, 2020
2019 Convertible debentures liability (a)	$	22,185,170	$	19,534,988
2021 Convertible debentures liability (b)		69,034		–
2021 Convertible debentures embedded derivative (b)		41,506		–
Total	$	22,295,710	$	19,534,988

Current debentures	$	22,185,170	$	–
Non-current debentures		110,540		19,534,988
	$	22,295,710	$	19,534,988

a) 2019 Convertible debentures

	December 31, 2021			December 31, 2020
Opening balance	$	19,767,472		$	17,753,016
Conversion of debentures into common shares		–			(50,000	)
Interest paid		(2,345,750	)		(2,345,750	)
Accreted interest at effective interest rate		4,958,927			4,410,206
Carrying amount of liability component	$	22,380,649		$	19,767,472
Less: interest payable		(195,479	)		(232,484	)
Total	$	22,185,170		$	19,534,988

In July 2019, the Company completed a private placement offering of convertible unsecured subordinated debentures (the “2019 Debentures”) for total aggregate gross proceeds of $23,507,500. The 2019 Debentures bear interest at a rate of 10% per annum, paid quarterly, and mature on May 31, 2022, at which time the outstanding principal amount of $23,457,500 and any unpaid interest is repayable in cash if the 2019 Debentures have not been converted at the option of the holder or otherwise extinguished.

The principal amount of the 2019 Debentures is convertible into 1,563,833 units of the Company at the option of the holder at any time prior to maturity at a conversion price of $15.00 per unit. Each unit is comprised of one common share and one share purchase warrant. Each warrant is exercisable to acquire one common share at an exercise price of $22.50 until June 2024.

b) 2021 Convertible debentures

Issuance of Convertible Debentures

On December 7, 2020, the Company commenced efforts to raise an aggregate of US$10,000,000 through a private placement offering (the “Offering”) of convertible unsecured subordinated debentures (the “2021 Debentures”) at a price of US$100 per debenture. At December 31, 2020, total proceeds of $5,285,997 (US$4,146,825) had been received associated with two tranches of the Offering; however, as the debenture certificates were not yet issued the proceeds were recorded as other liabilities in the consolidated statement of financial position at December 31, 2020 (Note 16).

The Offering closed in six tranches between December 7, 2020 and May 25, 2021 with total gross proceeds of $11,328,870 (US$8,884,000). Each tranche had a specific maturity date and USD conversion price which was set at the date of close. The conversion prices ranged between $4.11 (US$3.42) and $8.28 (US$6.60) depending on the tranche.

17  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 14 - CONVERTIBLE DEBENTURES (continued)

b) 2021 Convertible debentures (continued)

Up until the date of conversion as described below under Conversion of Convertible Debentures, the maturity date of the 2021 Debentures was 36 months following the closing date of the applicable tranche. The principal amounts of the 2021 Debentures were convertible into common shares at the option of the holder at any time prior to maturity at the calculated conversion price stated in the debenture. The 2021 Debentures bore interest at 8% per annum, payable, at the option of the Company, in cash or common shares of the Company calculated in accordance with the debenture agreement which considered such factors as the price of the common stock on the TSX.V converted into USD at the date of record. The Company elected to pay all accrued interest in common shares which were issued on the conversion date.

On initial recognition, the 2021 Debentures included a host liability and embedded derivative conversion option. The fair value of the embedded derivative was determined first, with the residual amount of the total fair value of the convertible debentures allocated to the host liability. The host liability was classified as a financial liability recognized at amortized cost and the embedded derivative conversion option was an embedded derivative classified as fair value through profit or loss (“FVTPL”). The fair value measurement is further described in Note 25(b) - Financial Instruments under Valuation methodologies used in the measurement of fair value for Level 3 financial liabilities.

Conversion of Convertible Debentures

On July 12, 2021, the Company announced that it had entered into Debt Conversion and Exchange Agreements (“Conversion Agreements”) with holders of more than 99.2% of the outstanding principal amount of the 2021 Debentures subject to a number of conditions including TSX.V approval. The Conversion Agreements provided for certain changes in terms including a reduced conversion price on certain tranches of the 2021 Debentures and the addition of a common share purchase warrant for each common share to be issued upon conversion.

On August 13, 2021, the Company received TSX.V approval and issued an aggregate of 2,107,787 common shares and 2,107,787 common share purchase warrants (Note 18(a)) to extinguish 99.2% of the principal and accrued interest thereon to the date of the Conversion Agreements.

The following reconciliation includes: (a) the original issuance of and accounting for the convertible debentures up to July 12, 2021; (b) the derecognition of the host liability and embedded derivative on July 12, 2021 as the change in terms of the agreement was determined to be a substantial modification and resulted in recognition of a new financial liability at this date; (c) the extinguishment of the amount due under the 2021 Debentures on August 13, 2021 in exchange for common shares and warrants; and (d) the accounting for the remaining debenture which was not converted. The warrants issued continue to be financial liabilities of the Company as further described in Note 15.

	December 31, 2021
Proceeds from issue of convertible debentures	$	11,328,870
Fair value adjustments (Note 22)		1,615,102
Total fair value of convertible debentures	$	12,943,972
Less: fair value of embedded derivative		(5,060,776	)
Less: transaction costs 1		(660,604	)
Carrying value of liability at inception	$	7,222,592
Interest expense associated with liability		813,615
Debt extinguishment, including interest payable		(7,735,230	)
Foreign exchange adjustments		(224,286	)
	$	76,691
Less: accrued interest included in accrued liabilities		(7,657	)
Carrying value of liability at end of period 2	$	69,034

¹ Total transaction costs were $1,061,854 which include cash compensation paid to brokers and the value of 115,760 broker warrants issued. Transaction costs of $401,250 allocated to the embedded derivative portion of the convertible debentures were expensed in finance costs in the consolidated statements of loss and comprehensive loss for the year ended December 31, 2021.

² Convertible debt in the principal amount of US$75,000 which matures January 2024, bears interest at 8% per annum and is convertible to the Company’s shares at a conversion price of $5.84 (US$4.59).

18  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 14 - CONVERTIBLE DEBENTURES (continued)

b) 2021 Convertible debentures (continued)

	December 31, 2021
Fair value of embedded derivative at inception	$	5,060,776
Fair value decrease 1		(784,261	)
Derecognition of embedded derivative on conversion		(4,214,198	)
Foreign exchange adjustments		(20,811	)
Balance, embedded derivative	$	41,506

¹    The fair value of the embedded derivative is remeasured at the end of each reporting period and on conversion and recognized in fair value (gain) loss on derivatives in the consolidated statements of loss and comprehensive loss (Note 22).

NOTE 15 - WARRANT LIABILITIES

	December 31, 2021		December 31, 2020
Derivative warrant liabilities - 2021 Debentures (a)	$	1,868,541	$	–
Derivative warrant liabilities - USD equity financing (b)		6,106,596		–
Warrant liability related to business acquisition (c)		709,835		710,924
Other warrant liability (c)		195,066		–
Total, all current	$	8,880,038	$	710,924

Derivative warrant liabilities

The Company issued warrants in conjunction with debt and equity transactions. Certain of these warrants are classified as derivatives which are recognized as financial liabilities. The estimated fair value of the derivative warrant liabilities has been calculated using the Black-Scholes model. At the issuance date and each reporting date until warrants are exercised, the fair value of the liability is remeasured, with changes in the fair value recorded as gains or losses in the consolidated statements of loss and comprehensive loss.

In conjunction with the USD equity offering described at (b) below, the Company agreed to list the warrants issued as part of the unit offering on the NASDAQ. On February 15, 2022, these warrants commenced trading under the symbol MCLDW (Note 32(b)).

Derivative warrant liabilities are classified as a Level 3 fair value measurement as further described in Note 25. There were no exercises of the warrants described below since issuance.

a) Warrants associated with 2021 Debentures

On August 13, 2021, the Company issued 2,107,787 common share purchase warrants in conjunction with the conversion and extinguishment of the 2021 Debentures (Note 14(b); 18(b)). The common share purchase warrants entitle the holder to purchase one common share of the Company at an exercise price of US$6.87 and mature in August 2024. The fair value of the warrants at August 13, 2021 was $5,947,689.

At December 31, 2021, the warrants were remeasured at a fair value of $1,868,541 and the Company recorded a gain on remeasurement since initial recognition of $4,177,825. The Black-Scholes model inputs and assumptions include:

	December 31, 2021			August 13, 2021
Share price at date of valuation	$	6.18		$	6.90
Exercise price	$	8.74		$	8.74
Risk free rate		0.88	%		0.43	%
Expected life (years)		2.62			3.00
Expected volatility 1		45.0	%		71.5	%
Fair value per warrant 2	$	0.89		$	2.82

¹ Expected volatility at December 31, 2021 measured at implied volatility of traded warrants.

² Considers a liquidity discount of 20% in determining the fair value per warrant as these warrants are not publicly traded.

19  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 15 - WARRANT LIABILITIES (continued)

b) Warrants associated with USD equity financing

On November 29, 2021, the Company issued 2,415,000 common share purchase warrants in conjunction with the November 2021 USD unit offering (Note 18). The common share purchase warrants entitle the holder to purchase one common share of the Company at an exercise price of US$4.75 and mature five years after issuance. The fair value of the warrants at issuance was $5,302,004 (US$4,158,396) and at December 31, 2021, the remeasured fair value was $6,106,596. The Black-Scholes model inputs and assumptions include:

	December 31, 2021			November 29, 2021
Share price at date of valuation	$	6.18		$	5.70
Exercise price	$	6.04		$	6.05
Risk free rate		1.25	%		1.18	%
Expected life (years)		4.92			5.00
Expected volatility 1		45.0	%		45.0	%
Fair value per warrant	$	2.53		$	2.19

¹ Expected volatility at represents implied volatility of the Company’s traded warrants.

c) Other warrant liabilities

Warrant liability related to business acquisition - Associated with the acquisition of Agnity, the Company assumed a warrant liability whereby the holder of the warrant has the option to convert the warrant into shares of Agnity, not the Company, by April 15, 2022, or receive a cash payment of US$552,250 at any time before the expiry of the warrant. The liability is measured at the Canadian dollar equivalent to its cash redemption amount which varies as a function of movements in exchange rates.

Warrant liability related to ATB Financial - At December 31, 2021, the Company had an obligation to issue warrants to ATB (Note 13). The fair value of the warrants was measured at the date the services were received in the amount of $195,066. On January 17, 2022, the Company issued 183,486 share purchase warrants to ATB to purchase an equivalent number of common shares of the Company at an exercise price of $5.45 per share, maturing one year from date of issuance (Note 32(b)).

NOTE 16 - OTHER LIABILITIES

	December 31, 2021		December 31, 2020
US Government loans	$	–	$	950,418
2021 Debentures subscriptions payable (Note 14(b))		–		5,285,997
Total	$	–	$	6,236,415
Current portion 1	$	–	$	6,003,838
Non-current portion		–		232,577
	$	–	$	6,236,415

¹ Includes US Government loans of $717,841 at December 31, 2020. These forgivable loans are considered to be government grants when there is reasonable assurance that they will be forgiven.

During the year ended December 31, 2021, the Company received two additional US Government loans as part of the Paycheck Protection Program (“PPP”) totaling $840,845 (US$668,689), each bearing interest at 1% per annum with maturity dates in February and May 2026. During the year ended December 31, 2020, the Company received four PPP US Government loans totaling $1,120,139 (US$805,246). A portion or the entirety of the amounts funded may be forgiven if all the funds are used for qualifying expenses which include payroll costs, rent and utility costs, and employment and compensation levels are maintained. The Company has used the entire loan amounts for qualifying expenses and as such expects these loans will be forgiven and no principal or interest payments will be made. During the year ended December 31, 2021, five government loans were forgiven resulting in $1,825,237 being included in other income (Note 23).

20  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 17 - BUSINESS ACQUISITION PAYABLE

	December 31, 2021			December 31, 2020
Opening balance	$	2,439,529		$	1,043,314
Contingent consideration changes related to CSA (Note  27)		(853,308	)		879,066
Contingent consideration changes related to kanepi (Note 28)		(171,092	)		568,638
Effect of foreign exchange differences		(16,157	)		(51,489	)
Total		1,398,972			2,439,529
Current portion		1,398,972			1,594,297
Non-current portion		–			845,232
	$	1,398,972		$	2,439,529

During the year ended December 31, 2021, the Company determined that the amount of the contingent consideration recognized at the date of acquisition of Construction Systems Associates, Inc. USA (“CSA”) would not be payable as the operational performance metrics were not achieved. In addition, the fair value of the contingent consideration recognized at the date of acquisition for kanepi Group Pty Ltd. and its subsidiaries (“kanepi”) was remeasured based on management’s estimate of the likelihood the performance metrics would be met by October 2022, resulting in a decrease in fair value and an offsetting amount recognized as other income.

At December 31, 2021, $383,368 of contingent consideration payable remains associated with the kanepi acquisition. The remaining balance of $1,015,604 relates to the acquisition consideration payable associated with the Field Diagnostic Services, Inc. (“FDSI”) acquisition completed in 2017.

NOTE 18 - SHARE CAPITAL

a) Common shares

The Company has an unlimited number of authorized voting shares with no par value. The following is a summary of shares issued during the year ended December 31, 2021. The Company issued 71,190 common shares on exercise of Restricted Share Units (“RSUs”) (Note 19(b)).

Brokered public offering

On April 15, 2021, the Company closed a public offering of 2,300,000 units of the Company at a price of $6.30 per unit for aggregate gross proceeds of $14,490,000. Each unit consists of one common share and one common share purchase warrant. Each warrant entitles the holder to purchase one common share at an exercise price of $8.55 for 36 months following closing subject to adjustment in certain events.

The public offering was brokered, and the underwriting agent received cash commissions of $1,014,300 or 7% of the gross proceeds under the offering. In addition, the Company also incurred $459,986 of share issuance costs in connection with the offering, for total net proceeds of $13,015,714. Net proceeds were allocated $12,395,918 to share capital with the residual of $619,796 allocated to warrants which is included in contributed surplus in the consolidated statement of changes in equity for the year ended December 31, 2021.

Non-brokered private placement offering

On August 13, 2021, the Company completed a non-brokered private placement, pursuant to a subscription agreement dated July 12, 2021, of 75,676 units of the Company at a unit price of $5.55 for gross proceeds of $420,000. Each unit consists of one common share and one share purchase warrant at an exercise price of $8.55 per common share with warrants expiring April 2024. Net proceeds of $420,000 were allocated fully to the common shares.

21  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 18 - SHARE CAPITAL (continued)

Conversion of 2021 Convertible Debentures

On August 13, 2021, the Company extinguished 99.2% of the principal and accrued interest of the 2021 Debentures (Note 14(b)). The principal and interest payable balance of converted debentures was settled by issuing an aggregate of 2,107,787 common shares and 2,107,787 common share purchase warrants. The value of the common shares at August 13, 2021, net of transaction costs was $14,436,728. See Note 15 for description of warrants issued.

USD Brokered public offering

On November 29, 2021, the Company closed a public offering of 2,100,000 units of the Company at US$4.50 per unit for aggregate gross proceeds of $12,040,198 (US$9,450,000) and net proceeds of $10,912,251 after underwriting discounts and commissions payable. On December 3, 2021, an additional 315,000 units, representing the over-allotment option under the offering, were issued for aggregate gross proceeds of $1,820,070 (US$1,417,450) and net proceeds of $1,674,464. Each unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitles the holder to purchase one common share, a warrant share, at an exercise price of US$4.75 per warrant share for five years following closing subject to adjustment in certain circumstances. The common shares and the share purchase warrants were issued separately.

Gross proceeds were allocated $5,302,004 to the warrants with the residual of $8,558,264 allocated to share capital. Transaction costs of $1,738,087 associated with the issuance of the units were allocated proportionately with the allocation of gross proceeds with $1,073,262 net against share capital and $664,825 allocated to finance costs (Note 21).

The Company also issued warrants to the underwriter of the offering to purchase 126,000 common shares at an exercise price of US$4.95 which are exercisable to May 22, 2025. The fair value of these warrants of $162,947 were recorded to contributed surplus and are considered transaction costs of which a portion is expensed in the consolidated statements of loss and comprehensive loss.

In addition to the transaction costs associated with the issuance of the units, the Company incurred additional expenses related to the registration process and listing of its common shares on the NASDAQ which are included in general and administrative costs in the consolidated statements of loss and comprehensive loss.

Common shares in escrow

At December 31, 2021, the Company has 681,024 (December 31, 2020 - 1,674,284) common shares subject to escrow conditions resulting from business combinations and asset acquisitions in prior years. There were no additional common shares subject to escrow conditions added during the year ended December 31, 2021. Escrow restrictions will be released on 458,599 shares in the year ending December 31, 2022, and the remaining 222,425 shares in the year ending December 31, 2023.

b) Warrants

The Company’s warrants outstanding at December 31, 2021 and 2020 are as follows and includes warrants classified as equity-settled and warrants classified as financial liabilities (Note 15):

	Number of Warrants			Weighted Average Exercise Price $
December 31, 2019		781,260		$	13.80
Issued		2,433,081			13.72
Exercised		(1,228,935	)		12.06
Expired		(53,880	)		13.31
December 31, 2020		1,931,526		$	14.82
Issued		7,140,223			7.64
Expired		(589,820	)		13.97
December 31, 2021		8,481,929		$	8.83

22  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 18 - SHARE CAPITAL (continued)

b) Warrants (continued)

During the year ended December 31, 2021, the Company issued share purchase warrants in conjunction with the following transactions:

Equity classified warrants

• 115,760 warrants to brokers in connection with the issuance of the 2021 Debentures (Note 14(b)). Warrants issued to brokers are denominated in USD with exercise prices that range between $4.12 (US$3.42) and $8.28 (US$6.60) and are exercisable for 24 months with maturity dates ranging from December 2022 to May 2023.

The total fair value of warrants issued to brokers of $294,894 was calculated using the Black-Scholes model with the following weighted average inputs and assumptions: issue date share price of $6.39; exercise price of $5.85; risk-free rate of 0.26%; expected life of 1.88 years; expected volatility of 69%; and no expected dividends.

• 2,300,000 warrants in connection with the April 15, 2021 public offering (Note 18(a));

• 75,676 warrants in connection with the non-brokered private placement offering (Note 18(a)); and

• 126,000 warrants issued to the underwriter of the November 2021 USD public offering (Note 18(a)). The total fair value of warrants of $162,947 was calculated using the Black-Scholes model with the following inputs and assumptions: issue date share price of $5.70; exercise price of $6.31; risk-free rate of 1.04%; expected life of 3.48 years; expected volatility of 45%; and no expected dividends.

Derivative liability warrants

• 2,107,787 warrants in connection with the August 13, 2021, conversion and interest settlement of the majority of the 2021 Debentures (Note 14(b)); and

• 2,415,000 warrants in connection with the November 2021 USD public offering (Note 18(a); Note 15).

Warrants outstanding at December 31, 2021 were as follows:

Expiry Date	Exercise Price $	Outstanding Warrants
June 2022	15.00	19,584
July 2022	14.25	525,114
December 2022	5.63	1,000
January 2023	5.72	37,400
January 2023	6.97	25,400
February 2023	7.80	8,000
March 2023	8.28	9,000
May 2023	4.12	34,960
April 2024	8.55	2,375,676
June 2024	22.50	3,333
August 2024	8.60	2,107,787
January 2025	16.20	611,027
May 2025	6.31	126,000
July 2025	14.25	182,648
November 2026	6.05	2,415,000
	$ 8.83	8,481,929

The weighted average remaining contractual life of outstanding warrants was 3.09 years at December 31, 2021 (December 31, 2020 - 2.29 years). Exercise prices for warrants denominated in USD as presented above were converted to the C$ equivalent exercise prices on the date of the applicable transaction.

23  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 19 - SHARE-BASED PAYMENT ARRANGEMENTS

The Company has an equity incentive plan (the “Plan”) which allows management to grant incentive stock options, non-statutory stock options, share appreciation rights, restricted share awards, restricted share unit awards, and other share awards to selected directors, employees, and consultants. A maximum of 10% of the issued and outstanding common shares of the Company may be reserved for issuance under the Plan.

The Company recorded share-based compensation as follows.

	Year Ended December 31,
	2021		2020
Stock options (a)	$	908,293	$	677,452
Restricted share units (b)		959,622		776,783
Total	$	1,867,915	$	1,454,235

a) Stock Options

The board of directors or designated committee set the terms of the share-based payment arrangements under the Plan; however, the general terms of stock options are as follows. The options have a maximum term of 10 years and vest as to 33% on each anniversary date of the date of grant over three years. In limited cases, options vest immediately. For the majority of grants, the exercise price is equal to the closing price of the Company’s common shares on the grant date. On the date the option holder ceases to be employed, vested options are exercisable for a period of three months following that date, and unvested options are forfeited. Compensation is recognized on a graded vesting basis over the vesting period.

Movement in the number of stock options outstanding and their related weighted-average exercise prices were as follows:

	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
	2021			2021		2020			2020
Outstanding at January 1		423,303		$	11.01		349,657		$	11.48
Granted		487,775			7.10		153,828			9.99
Exercised		–			–		(7,639	)		10.50
Forfeited		(40,088	)		9.87		(32,777	)		11.52
Expired		(4,201	)		11.03		(6,433	)		10.67
Cancelled		–			–		(33,333	)		10.50
Outstanding at December 31		866,789		$	8.81		423,303		$	11.01
Exercisable at December 31		275,473		$	11.10		161,244		$	11.70

No options were exercised in the year ended December 31, 2021. The weighted average share price at the date of exercise for stock options exercised in the year ended December 31, 2020 was $10.50.

24  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 19 - SHARE-BASED PAYMENT ARRANGEMENTS (continued)

a) Stock Options (continued)

The following summarizes information about the Company’s stock options outstanding at December 31, 2021:

	Options Outstanding				Options exercisable
Range of prices	Number		Weighted average exercise price	Weighted average life (years)	Number		Weighted average exercise price
$5.27 - $8.70	506,502	$	6.88	9.0	25,389	$	6.56
$9.60 - $10.95	200,706	$	10.67	4.9	138,622	$	10.57
$11.10 - $12.54	104,303	$	11.78	6.1	71,461	$	11.78
$12.60 - $18.60	55,278	$	14.11	6.4	40,001	$	14.59
	866,789	$	8.81	7.5	275,473	$	11.10

At December 31, 2021, if all exercisable options were exercised total cash received would be $3,057,750 (December 31, 2020 - $1,886,555). Unrecognized share-based compensation expense related to unvested stock options granted was $1,824,812 at December 31, 2021 (December 31, 2020 - $710,934).

Measurement of fair values for equity-settled arrangements

The weighted average fair value of stock options granted during the year ended December 31, 2021 of $4.25 per option, or $2,061,007 (December 31, 2020 - $4.54 per option or $698,949) was calculated at the grant date using the Black-Scholes model with the following weighted average assumptions and inputs.

	2021			2020
Grant date share price	$	7.00		$	8.93
Exercise price	$	7.10		$	9.74
Risk-free rate		1.32	%		0.36	%
Expected life, years		6.2 years			5.0 years
Expected volatility		75	%		66	%
Expected dividends		–	%		–	%
Forfeiture rate		7	%		–	%

Expected volatility is based on an evaluation of the historical volatility of the Company’s share prices since the Company commenced trading which is a reasonable approximation of the volatility over the expected term of the stock option. The expected term of the options has been based on historical experience and general option holder behavior. The forfeiture rate reflects the anticipated level of forfeitures of options in the future.

b) Restricted Share Units (“RSUs”)

RSUs are granted to directors, employees and consultants and each RSU entitles the holder to one common share at the end of the vesting period. RSUs have various terms ranging from immediate vesting to vesting on either the first, second or third anniversary of the grant date, or as to 33% on each anniversary date of the grant over three years. Compensation is recognized on a graded vesting basis over the vesting period. The Company issues common shares to the RSU holder equal to the number of vested RSUs at the RSU holders’ request.

25  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 19 - SHARE-BASED PAYMENT ARRANGEMENTS (continued)

b) Restricted Share Units (continued)

The Company’s obligation to issue shares on the vesting of RSUs is an unfunded and unsecured obligation of the Company. A continuity of RSUs is as follows:

Number of RSUs	2021	2020
Outstanding at January 1	222,222	151,790
Granted	73,164	123,797
Exercised 1	(71,190)	(35,877)
Forfeited	(7,074)	(3,332)
Withheld 1	(8,448)	(14,156)
Outstanding at December 31	208,674	222,222
Exercisable at December 31	115,468	33,516

¹ 71,190 common shares issued on exercise of 79,638 RSUs at a weighted average grant date exercise price of $8.87. Certain RSU holders elected for RSUs exercised to be settled net of any tax withholding obligations.

The fair value of each RSU is based on the market price of the Company’s common shares on the date of grant and the total fair value of RSUs granted in the year ended December 31, 2021 was $528,028 (December 31, 2020 - $1,069,042). Unrecognized share-based compensation expense related to unvested RSUs was $277,686 at December 31, 2021 (December 31, 2020 - $807,830).

NOTE 20 - NON-CONTROLLING INTEREST

In April 2019, the Company obtained control over Agnity and its subsidiaries via a business combination and the non-controlling interest (“NCI”) was measured at 100% of the acquired net identifiable assets of Agnity at the date of acquisition. Agnity develops and sells software applications and technology services that enable telecommunication service providers, network equipment manufacturers and enterprises to design, develop, and deploy communication-centric application solutions on a world-wide basis. Having control of Agnity has enabled the Company to gain access to Agnity’s patented technology and its customer base. In addition, Agnity’s communication platform ensures that AssetCare deployments around the globe are assured of connectivity, supported by Agnity telecommunication solutions.

The movement in the equity attributable to the non-controlling interest in the Company is detailed in the consolidated statements of changes in equity. There was no change to the non-controlling interest percentage in the years ended December 31, 2021 or 2020.

26  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 20 - NON-CONTROLLING INTEREST (continued)

The following table summarizes the information relating to Agnity, before any intercompany eliminations.

	December 31, 2021			December 31, 2020
NCI percentage		100	%		100	%
Current assets	$	11,906,502		$	7,778,252
Non-current assets		10,320,732			11,362,870
Current liabilities		(7,341,257	)		(5,318,366	)
Non-current liabilities		(226,583	)		(820,848	)
Net assets attributable to NCI	$	14,659,394		$	13,001,908
For the years ended		December 31, 2021			December 31, 2020
Revenue	$	11,192,716		$	11,215,876
Income (loss) allocated to NCI		(369,606	)		2,009,304
Other comprehensive income allocated to NCI		28,138			(97,340	)
Total comprehensive (loss) income attributable to NCI	$	(341,468	)	$	1,911,964
Cash flows used in operating activities	$	(1,859,900	)		(405,548	)
Cash flows used in investing activities		(578,483	)		–
Cash flows provided by financing activities		2,081,137			655,347
Foreign exchange impact on cash held in USD		(6,383	)		155,274
Net (decrease) increase in cash and cash equivalents	$	(363,629	)	$	405,073

NOTE 21 - FINANCE COSTS

	Year Ended December 31,
	2021		2020
Interest on loans and borrowings (Note 12)	$	1,179,234	$	1,272,512
Interest on convertible debentures (Note 14)		5,740,346		4,410,206
Interest on lease liabilities (Note 8)		137,245		350,792
Transaction costs expensed 1		1,471,219		–
Other finance costs		90,750		–
Total finance costs	$	8,618,794	$	6,033,510

¹ Transaction costs include costs incurred associated with financing or equity transactions that are not otherwise netted against the debt or equity instrument. The majority of costs are associated with the USD brokered public offering (Note 18(a)), the 2021 Debentures (Note 14(b)), the Fiera term loan amendment (Note 12) and the ATB facility amendment (Note 13).

NOTE 22 - FAIR VALUE LOSS (GAIN ) ON DERIVATIVES

	Year Ended December 31,
	2021
Gain on embedded derivatives 1	$	(784,261	)
Deferred charge loss 1		1,615,102
Loss on substantial modification and conversion 1		8,571,881
Gain on warrant liability remeasurement (Note 15) 2		(3,362,601	)
Total	$	6,040,121

¹ Associated with the 2021 Debentures (Note 14(b)) of which the majority is realized at December 31, 2021.

² Change in fair value unrealized (Note 25).

27  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 23 - OTHER INCOME

	Year Ended December 31,
	2021			2020
Government assistance 1	$	(4,201,822	)	$	(2,775,677	)
US Government loan forgiveness 2  (Note 16)		(1,825,237	)		(124,507	)
Derecognition of contingent consideration (Note 17)		(1,010,024	)		–
Other		(89,014	)		(32,158	)
Total other income	$	(7,126,097	)	$	(2,932,342	)

¹ Majority represents amounts received from the Canadian Government for wage and rental subsidies associated with COVID-19. The amount of government assistance available is dependent on the programs in place and the Company’s eligibility for these programs.

² Includes other income recognized as below market interest rate benefit.

NOTE 24 - INCOME TAXES

a) Amounts recognized in net loss

	Year Ended December 31,
	2021			2020
Current tax expense
Current year		157,303			(295,709	)
Changes in estimates related to prior years		–			–
		157,303			(295,709	)
Deferred tax expense (recovery)
Origination and reversal of temporary differences		(13,161,689	)		(10,744,803	)
Adjustment of prior years		11,339,580			10,076,594
		(1,822,109	)		(668,209	)
Tax expense (recovery)	$	(1,664,806	)	$	(963,918	)

28  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 24 - INCOME TAXES (continued)

b) Reconciliation of effective tax rate

The following table is a reconciliation of income tax expense (recovery), at the Canadian income tax rate and the amount of reported income tax recovery in the consolidated statements of loss and comprehensive loss. The Company’s operations are subject to income taxes primarily in Canada and the United States.

	Year Ended December 31,
	2021			2020
Loss before taxes	$	(46,364,119	)	$	(35,824,882	)
Statutory income tax rate 1		27	%		27	%
Income tax recovery at statutory rate		(12,518,312	)		(9,672,718	)
Increase (decrease) in taxes resulting from:
Change in deferred tax assets not recognized		11,339,580			10,076,594
Foreign tax rate and other foreign tax differences		(2,089,761	)		(2,293,503	)
Change in enacted rates		608,064			(58,050	)
Share issuance costs and other		(828,082	)		126,247
Non-deductible transaction costs		38,776			424,828
Other non-deductible items		1,784,929			432,684
Tax expense (recovery)	$	(1,664,806	)	$	(963,918	)

¹ Comprised of the Canadian Federal effective corporate tax rate of 15.0% and blended provincial tax rates.

c) Movement in deferred tax balances

The significant components of the Company’s deferred income tax asset (liabilities) are as follows:

	At December 31, 2020			Recovery/ (expense) through earnings			Recovery/ (expense) through equity		Recovery/ (expense) through OCI			At December 31, 2021
Property and equipment	$	261,661		$	(195,977	)	$	–	$	2,575		$	68,259
Intangible assets		(5,012,355	)		1,415,370			–		73,801			(3,523,184	)
Loans and accrued liabilities		(1,714,850	)		1,471,654			–		(1,816	)		(245,012	)
Share issuance costs		27,453			25,467			–		–			52,920
Foreign exchange		–			(6,765	)		–		24			(6,741	)
Non-capital losses/net operating losses		2,269,186			(887,640	)		–		(18,845	)		1,362,701
Total	$	(4,168,905	)	$	1,822,109		$	–	$	55,739		$	(2,291,057	)

	At  December 31, 2019			Acquired in business combinations			Recovery/ (expense) through earnings			Recovery/ (expense) through equity		Recovery/ (expense) through OCI			At December 31, 2020
Property and equipment	$	–		$	(376	)	$	263,436		$	–	$	(1,399	)	$	261,661
Intangible assets		(5,321,008	)		(1,136,429	)		1,280,692			–		164,390			(5,012,355	)
Loans and accrued liabilities		(1,696,435	)		–			(41,233	)		24,000		(1,182	)		(1,714,850	)
Share issuance costs		–			–			27,453			–		–			27,453
Foreign exchange		(39,532	)		–			39,532			–		–			0
Non-capital losses/net operating losses		3,202,361			–			(901,672	)		–		(31,503	)		2,269,186
Total	$	(3,854,614	)	$	(1,136,805	)	$	668,208		$	24,000	$	130,306		$	(4,168,905	)

29  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 24 - INCOME TAXES (continued)

d) Deferred tax assets not recognized and tax losses carried forward

The Company recognizes deferred tax assets to the extent that it is probable that future taxable profit will be available against which the Company can utilize the benefits of the deductible temporary differences and unused tax losses. Deductible temporary differences and unused tax losses for which a future benefit has not been recognized as a deferred tax asset include the following:

	Year Ended December 31,
	2021		2020
Net operating losses - United States	$	77,415,498	$	55,395,751
Non-capital losses - Canada		68,018,286		45,619,846
Foreign tax losses		157,602		865,599
Investment tax credits and research and development expenditures		6,603,163		6,603,287
Property and equipment		948,765		753,467
Share issuance costs		6,510,677		1,282,965
Other		2,046,890		1,922,194
	$	161,700,881	$	112,443,109

The Company has net operating losses of approximately US$60.8 million and non-capital losses of approximately $70.2 million (2020: US$44.1 million and $49.6 million) which are available to reduce future year's taxable income in the United States and Canada, respectively. The net operating losses will start expiring in 2029 while the non-capital losses will start expiring in 2027 if not utilized.

The Company has foreign tax losses in various jurisdictions of approximately $2.3 million (2020 - $1.2 million) which are available to reduce future year’s taxable income in their respective countries. The losses have expiry dates ranging from five years to indefinite life. The investment tax credit balance is $500,000 (2020 - $500,000) which is available to reduce future year’s taxes payable in Canada. The investment tax credits begin to expire in 2022 if not utilized.

Management estimates future income using forecasts based on the best available current information. No deferred tax liability has been recognized at December 31, 2021 or December 31, 2020 on temporary differences associated with earnings retained in the Company's investments in foreign subsidiaries in which it has an equity percentage. The Company is able to control the timing of the reversal of these differences and currently has no plans in the foreseeable future to repatriate any funds in excess of its foreign investment.

30  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 25 - FINANCIAL INSTRUMENTS

a) Classification and measurement of financial assets and liabilities by category

The following represents the carrying values of the financial assets and liabilities of the Company and the associated measurement basis for each balance.

Financial assets	Measurement basis	December 31, 2021		December 31, 2020
Cash and cash equivalents	Amortized cost	$	4,588,057	$	1,110,889
Trade and other receivables 1	Amortized cost		14,329,781		11,224,017
Long-term receivables	Amortized cost		740,431		2,536,272
Derivative asset	FVTPL		–		131,400
		$	19,658,269	$	15,002,578
Financial liabilities
Bank indebtedness	Amortized cost	$	3,460,109	$	976,779
Trade payables and accrued liabilities 1	Amortized cost		12,003,979		12,693,256
Loans and borrowings	Amortized cost		13,215,601		13,152,300
Lease liabilities 2	Amortized cost		1,045,472		3,945,076
2019 Debentures - host liability 3	Amortized cost		22,185,170		19,534,988
2021 Debentures - host liability 3	Amortized cost		69,034		–
2021 Debentures embedded derivative	FVTPL		41,506		–
Warrant liability - business acquisition	FVTPL		709,835		710,924
Warrant liabilities - derivatives (Note 15)	FVTPL		7,975,137		–
Business acquisition payable	Amortized cost		1,398,972		2,439,529
Other liabilities	Amortized cost		–		6,236,415
		$	62,104,815	$	59,689,267

¹ Excludes amounts for indirect taxes, income taxes and contract asset, where applicable. Note 26 describes credit risk associated with trade receivables including reconciliation of expected credit loss allowance.

² Lease liabilities are not subject to classification in the fair value hierarchy.

³ 2019 Debentures (Note 14(a)) and 2021 Debentures host liability (Note 14(b)).

Financial instruments not measured at fair value

The carrying values of the financial assets and liabilities where the measurement basis is other than FVTPL approximate their fair values due to the immediate or short-term nature of these instruments considering there have been no significant changes in credit and market interest rates since origination date.

b) Measurement of fair value

The fair value hierarchy establishes three levels to classify the significance of inputs to valuation techniques used in making fair value measurements of all financial assets and liabilities (Note 33(L)). At December 31, 2021 and 2020, there were no financial assets or financial liabilities measured and recognized at fair value on a non-recurring basis subsequent to initial recognition.

The Company’s policy for determining when a transfer between levels of the fair value hierarchy occurs is to assess the impact at the date of the event or change in circumstance that could result in the transfer. During the year ended December 31, 2021, subscriptions payable included in other liabilities of $5,285,997 were transferred from Level 2 to Level 3 on issuance of the 2021 Debentures, of which only $110,540 remain at December 31, 2021 (Note 14(b)). There were no other transfers between levels during the year ended December 31, 2021.

31  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 25 - FINANCIAL INSTRUMENTS (continued)

b) Measurement of fair value (continued)

Valuation methodologies used in the measurement of fair value for Level 2 financial assets and financial liabilities

The measurement of Level 2 financial assets and liabilities is made by reference to the inputs used to determine the fair value of each instrument using an appropriate valuation method. The fair value of long-term receivables is based on the present value considering the expected time of collection of the long-term contracts.

The fair value of loans and borrowings approximates their carrying value and has been determined by discounting the contractual cash flows using implied yields of obligations with similar credit risk and maturities. The fair value of the host liability for the 2019 Debentures approximates the carrying value and the fair value was initially calculated using a discount rate of 25% for an equivalent, non-convertible loan at the date of issue. The warrant liability associated with a previous business combination is measured based on the amount of cash that is payable in certain circumstances. A portion of other liabilities at December 31, 2020, represent subscriptions payable and the carrying amount of these balances approximates fair value.

Valuation methodologies used in the measurement of fair value for Level 3 financial liabilities

2021 Debentures

The fair value of the entire financial instrument associated with the 2021 Debentures was determined using a partial differential equation model for convertible debt which considered that the convertible debt consists of two components, each having different default risks. The model calculates the value based on key inputs, which impact the value of the convertible debt including: yield to maturity, principal and coupon payments, share price, exercise price, volatility, term, risk free rates and dividends. The risk adjusted discount rate was applied in determining yield to maturity and this is the most significant unobservable input, and the estimated fair value would increase (decrease) if the risk-adjusted discount rate were lower (higher).

The 2021 Debentures include an embedded derivative for the conversion option. The fair value of the embedded derivative was determined using the same methodology as above adjusted for the nature of the instrument. The embedded derivative includes a foreign currency component which reflects the foreign exchange exposure to convert a USD denominated liability to common shares which are denominated in Canadian dollars. The fair value of the embedded derivative was determined first with the residual of the total fair value of the instrument allocated to the host debt. The embedded derivative will be remeasured at each period end with changes in the fair value recognized in the consolidated statements of loss and comprehensive loss.

The Company determined that at the initial recognition date, which was the date of issuance of the debentures, that the fair value of the financial instruments was in excess of the transaction price for tranches one through five (i.e., the fair value of the proceeds received) and the fair value of the tranche six financial instrument was equal to the proceeds received. There were fluctuations in the fair value inputs that arose in the period between the closing of tranches one through five of the Offering and the date of the actual issuance of the debenture certificates. As such the difference between the fair value and transaction price was deferred at initial recognition and the deferred difference was recognized as a loss as factors including the passage of time were met which required recognition. The reconciliation of the opening to closing balances associated with the 2021 Debentures is presented in Note 14(b) including fair value changes.

The 2021 Debentures were derecognized at July 12, 2021 (with the exception of the US$75,000 principal balance which did not convert) as the instruments were substantially modified, and a new financial liability measured at FVTPL was recognized. The fair value was based on the price of common shares at July 12, 2021 and the warrant value was determined using the Black-Scholes model. These instruments were remeasured directly before conversion to equity. The remaining instruments are warrant liabilities as described following.

Warrant liabilities

With the exception of the warrant liability associated with a previous acquisition, the fair value of warrant liabilities is measured on a recurring basis using the Black-Scholes model based on the quoted price of the Company’s common stock in an active market, expected volatility, expected life and risk-free rate (Note 15).

32  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 25 - FINANCIAL INSTRUMENTS (continued)

b) Measurement of fair value (continued)

Business acquisition payable

The business acquisition payable consists of contingent consideration payable, the values of which were determined using a discounted cash flow model based on the present value of probability weighted average amount of expected payments discounted at an appropriate discount rate. The reconciliation of the opening to closing balances for Level 3 fair values are presented in Note 17.

NOTE 26 - CAPITAL AND RISK MANAGEMENT

Capital and Risk Management

The Company’s objective and polices for managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Company manages its capital structure and makes changes based on economic conditions including the impact of the ongoing pandemic, risks that impact the consolidated operations and future significant capital investment opportunities. In order to maintain or adjust its capital structure, the Company may issue new equity instruments or raise additional debt financing.

The Company is exposed to a variety of financial risks by virtue of its activities: liquidity risk, credit risk, interest rate risk and currency risk. The Board of Directors has overall responsibility for the determination of the Company’s capital and risk management objectives and policies while retaining ultimate responsibility for them. The Company’s overall capital and risk management program has not changed throughout the year. It focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance. Risk management is carried out by the finance department under policies approved by the Board of Directors. The finance department identifies and evaluates financial risks in close cooperation with management.

The Company’s risks related to financial instruments and the Company’s strategy to manage risks, are described below.

a) Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due in the normal course of business. The Company generally relies on funds generated from operations and external financing to provide sufficient liquidity to meet expected operating requirements. The Company manages its liquidity risk by monitoring its operating requirements, reducing costs where possible and applying for any available government COVID-19 support to support its business. The Company also engaged in fundraising activities throughout the year. Cash and cash equivalents as at December 31, 2021 were $4,588,057 (December 31, 2020 - $1,110,889).

Total working capital deficit increased to $42,108,177 at December 31, 2021 from $13,052,702 at December 31, 2020. Current assets increased by $6,712,207 at December 31, 2021 from December 31, 2020, the majority of which are increases in cash and cash equivalents and trade and other receivables. Current liabilities increased by $35,767,682 at December 31, 2021 from December 31, 2020; however, management anticipates a portion of this amount will not be paid in cash due to the nature of the instruments as detailed in the table following. Liquidity risk has increased during the year ended December 31, 2021, and current liquidity levels are not adequate to fund the working capital deficiency at December 31, 2021. The Company anticipates it will need additional financing to meet its current and future demands and the Company is in the process of securing additional financing; however, a material uncertainty exists that may cast doubt on the Company’s ability to continue as a going concern (Note 2).

33  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 26 - CAPITAL AND RISK MANAGEMENT (continued)

a) Liquidity risk (continued)

Maturities of financial liabilities

The Company’s carrying values of financial liabilities and the contractual undiscounted cash flows associated with these liabilities broken into relevant maturity grouping based on their contractual maturities are as follows:

At December 31, 2021			Undiscounted Contractual Cash Flows
	Carrying Amount		< 1 year		1 - 2 years		> 2 years		Total
Bank indebtedness 1	$	3,460,109	$	3,460,109	$	–	$	–	$	3,460,109
Trade payables and accrued liabilities		12,421,309		12,421,309		–		–		12,421,309
Loans and borrowings 2		13,215,601		11,763,697		786,123		–		12,549,820
Lease liabilities 3		1,045,472		521,506		534,241		179,281		1,235,028
2019 Debentures		22,185,170		24,630,375		–		–		24,630,375
2021 Debentures		110,540		7,635		103,073		–		110,708
Warrant liabilities 4		8,880,038		709,835		–		–		709,835
Business acquisition payable		1,398,972		1,398,972		–		–		1,398,972
	$	62,717,211	$	54,913,438	$	1,423,437	$	179,281	$	56,516,156

¹ No contractual maturity. Excludes interest charged on facility as detailed in Note 13.

² Includes term loan with a carrying value of $9,275,683 classified as current due to covenant breach. Assuming term loan is repaid in accordance with agreement to maturity, the undiscounted contractual cash flows for loans and borrowings would be $2,933,739, $5,472,193, and $4,143,888 , respectively for the periods presented above.

³ Variable costs due under leases not included in this amount. Minimum payment related to leases which have not yet commenced are not included in this amount. See Note 30.

⁴ Majority of liability will be settled by issuing common shares of the Company when warrants are exercised during the year. The remaining amount may be settled in cash or common shares of Agnity (Note 15).

As at December 31, 2020			Undiscounted Contractual Cash Flows
	Carrying Amount		< 1 year		1 - 2 years		> 2 years		Total
Bank indebtedness	$	976,779	$	976,779	$	–	$	–	$	976,779
Trade payables and accrued liabilities		12,924,256		12,924,256		–		–		12,924,256
Loans and borrowings		13,152,300		4,248,351		2,617,443		8,796,757		15,662,551
Lease liabilities		3,945,076		1,131,528		939,108		2,815,695		4,886,331
2019 Debentures		19,534,988		2,350,750		24,629,655		–		26,980,405
Warrant liabilities		710,924		710,924		–		–		710,924
Business acquisition payable		2,439,529		1,594,297		845,232		–		2,439,529
Other liabilities		6,236,415		6,003,838		232,577		–		6,236,415
	$	59,920,267	$	29,940,723	$	29,264,015	$	11,612,452	$	70,817,190

b) Credit risk

Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial contract. Credit risk is limited to the following instruments and the Company’s maximum exposure to credit risk is the carrying value of the financial assets (Note 25(a)).

The Company is mainly exposed to credit risk from credit sales. Management of the Company monitors the creditworthiness of its customers by performing background checks on all new customers. Further, management monitors the frequency of payments from ongoing customers and performs frequent reviews of outstanding balances. The Company considers that there has been a significant increase in credit risk when contractual payments are more than 90 days past due.

34  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 26 - CAPITAL AND RISK MANAGEMENT (continued)

b) Credit risk (continued)

Provisions for outstanding balances are established based on forward-looking information and revised when there are changes in circumstances that would create doubt over the receipt of funds. Such reviews are conducted on a continued basis through the monitoring of outstanding balances as well as the frequency of payments received. Accounts receivable amounts are completely written off once management determines the probability of collection to be remote.

Trade and other receivables, unbilled revenue and long-term receivables are from individual customers and are not assessed based on external credit rating agencies. The Company uses a provision matrix to measure the lifetime expected credit loss (“ECL”) of these balances. Receivables are grouped based on similar credit risk profiles and days past due. Loss rates are based on actual credit loss experience and reflect the forward looking conditions over the expected life of the receivable. As of December 31, 2021, substantially all of the Company’s trade receivables were outstanding for less than 60 days and a loss rate of 1% was applied in determining the ECL. The majority of the ECL is based on specific provisions related to specific customers.

The movement in the ECL allowance related to trade receivables and long-term receivables was as follows (Note 6):

	December 31, 2021			December 31, 2020
Beginning balance	$	606,030		$	382,901
Increase in loss allowance		1,162,537			443,961
Amounts written off during the year as uncollectible		(65,930	)		(220,832	)
Effects of movement in exchange rates		4,581			–
Total	$	1,707,218		$	606,030

c) Market risk

Market risk is the risk that changes in market prices such as interest rates or foreign exchange rates will affect the Company’s results or value as a result of holding these financial instruments. The object of market risk management is to manage and control market risk exposures within acceptable parameters given the nature of the business.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its credit facility and as this instrument is subject to variable rate interest. Management does not believe interest rate risk is currently material to its business.

Foreign currency risk

Currency risk is the risk that the fair values or future cash flows of the Company’s financial instruments will fluctuate because of changes in foreign currency rates and the degree of volatility of these rates. The Company conducts its business in the regions of Canada, Asia-Pacific, the United States and Europe, the Middle East and Africa, which gives rise to exposure to markets from changes in foreign currency rates. Currently, the Company does not use derivative instruments or other measures to reduce its exposure to foreign currency risk.

At December 31, 2021, the C$ equivalent carrying amount of the Company’s USD denominated monetary assets and liabilities was $14,554,193 (December 31, 2020 - $8,291,005) and $11,685,160 (December 31, 2020 - $16,398,521), respectively. Assuming all other variables remain constant, a fluctuation of +/- 5.0% in the exchange rate between C$ and USD would impact the net loss for the period by approximately $143,452 (December 31, 2020 - $405,376).

35  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 27 - CSA ACQUISITION

On January 24, 2020, the Company completed its acquisition of all the outstanding and issued common shares of Construction Systems Associates, Inc. USA. The acquisition was accounted for as a business combination using the acquisition method whereby the assets acquired, and the liabilities assumed were recorded at fair value. At acquisition date the fair values assigned to intangible assets, goodwill and the deferred tax liabilities were measured on a provisional basis and were revised by the Company as additional information was received.

On January 24, 2021, the measurement period for the acquisition ended and there were no further measurement period adjustments during the year ended December 31, 2021. The following table summarizes the final balances of each major class of consideration transferred, the recognized amounts of the identifiable assets acquired and liabilities assumed, and the resulting value of goodwill.

	Final
Consideration transferred:
Cash consideration	$	703,212
Fair value of common share consideration		2,304,073
Fair value of contingent consideration payable		879,066
Total consideration	$	3,886,351

Fair value of assets and liabilities recognized:
Cash	$	181,408
Trade and other receivables		262,846
Prepaid expenses and other deposits		13,863
Property and equipment		2,098
Right of use assets		242,894
Intangible - technology		551,880
Intangible - customer relationships		801,540
Accounts payable and accrued liabilities		(168,542	)
Short-term loan		(371,610	)
Lease liabilities		(242,894	)
Deferred tax liabilities		–
Fair value of net assets acquired	$	1,273,483
Goodwill	$	2,612,868

The fair value of the contingent consideration payable was based on an estimated weighted probability of certain revenue and EBITDA targets being met in the 2-year period following the acquisition date. At December 31, 2021, the Company assessed the fair value of the contingent consideration to be nil as these targets were not met and as such $838,932 was recognized in other income in the consolidated statements of loss and comprehensive loss for the year ended December 31, 2021 (Note 23).

The Company is required during the measurement period to retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period adjustments from acquisition date to the end of the measurement period are reflected above with the cumulative changes increasing goodwill. The impact on net income (loss) of recognizing these adjustments to the provisional amounts as if the accounting had been completed at the acquisition date are limited to a decrease in amortization of intangibles and related foreign currency translation differences.

36  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 28 - KANEPI ACQUISITION

On October 8, 2020, the Company completed its acquisition of all the outstanding and issued common shares of kanepi. kanepi provides advanced visual analytics solutions designed to deliver an immediate and positive impact on the industrial operations of asset intensive industries. The acquisition was accounted for as a business combination using the acquisition method whereby the net assets acquired, and the liabilities assumed were recorded at fair value. At acquisition date the fair values assigned to intangible assets, goodwill and the deferred tax liabilities were measured on a provisional basis.

The Company is required during the measurement period to retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date. On October 8, 2021, the measurement period for the acquisition ended and the following table summarizes the acquisition-date fair value and the final balances of each major class of consideration transferred, the recognized amounts of the identifiable assets acquired and liabilities assumed, and the resulting value of goodwill. The preliminary balances were reported in the consolidated financial statements for the year ended December 31, 2020 and there were no measurement period adjustments.

	Final
Consideration transferred:
Cash consideration	$	4,657,512
Fair value of common share consideration		5,882,547
Fair value of contingent consideration payable		568,638
Total consideration	$	11,108,697

Fair value of assets and liabilities recognized:
Cash	$	556,880
Trade and other receivables		598,059
Other current assets		13,149
Property and equipment		1,224
Right of use assets		266,396
Intangible - technology		3,294,309
Intangible - customer relationships		2,632,794
Accounts payable and accrued liabilities		(643,385	)
Lease liabilities		(266,396	)
Deferred tax liabilities		(1,136,806	)
Fair value of net assets acquired	$	5,316,224
Goodwill	$	5,792,473

The fair value of the contingent consideration payable is based on an estimated weighted probability of certain revenue or customer acquisition targets being met in a two-year period from the acquisition date. At acquisition date and December 31, 2020, the fair value of the contingent consideration was determined to be $568,638 based on estimates of achievement of targets. The fair value of the contingent consideration is determined using a discounted cash flow model at a discount rate of 27%. At December 31, 2021, the Company assessed the likelihood of achievement of the targets and determined the fair value of the contingent consideration decreased by $171,092 and this amount was recognized in other income in the consolidated statements of loss and comprehensive loss for the year ended December 31, 2021 (Note 17, 23).

37  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 29 - RELATED PARTY TRANSACTIONS

The Company’s related parties includes its subsidiaries and key management personnel. During its normal course of operations, the Company enters into transactions with its related parties for goods and services that are measured at the amount exchanged.

Key management personnel compensation

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company defines key management personnel as key officers and directors.

For the years ended December 31,	2021		2020
Salaries, management and directors’ fees	$	1,613,502	$	1,683,015
Share-based payments		432,098		628,019
Total	$	2,045,600	$	2,311,034

Other related party balances and transactions ¹

	December 31, 2021		December 31, 2020
Due to principal owner of Agnity 2	$	234,278	$	813,023
Due to officer of Company for working capital loan 2		30,796		33,205
Due to key management personnel 2		121,852		116,091
Due to Agnity Communications Private Ltd. 3		1,111,521		1,138,630
Loan due to former shareholder of CSA 4		335,860		318,428
Amount due to related parties	$	1,834,307	$	2,419,377

¹ Unless otherwise noted, all amounts due are unsecured, non-interest bearing and due on demand.

² Included in trade accounts payable and accrued liabilities on the consolidated statements of financial position.

³ Associated with consulting services paid to a company partially owned by the principal owner of Agnity. Consulting services were $3,765,201 for the year ended December 31, 2021 (December 31, 2020 - $2,532,550). Balance due included in trade accounts payable and accrued liabilities on the consolidated statements of financial position.

⁴ Included in loans and borrowings (Note 12) on the consolidated statements of financial position.

NOTE 30 - COMMITMENTS AND CONTINGENCIES

Commitments

The Company has the following minimum payments for contractual commitments that are not recognized as liabilities at December 31, 2021, which are disclosed in Note 26(a) - Risk Management, Liquidity Risk.

		Undiscounted Contractual Cash Flows
		<1 year		2 - 3 years		4 - 5 years		More than 5 years		Total
Variable lease payments 1	$	396,719	$	477,562	$	125,275	$	12,999	$	1,012,555
Lease payments related to leases which have not yet commenced 2		104,702		2,589,330		2,762,597		12,636,454		18,093,083
	$	501,421	$	3,066,892	$	2,887,872	$	12,649,453	$	19,105,638

¹ Variable lease payments associated lease liabilities (Note 8).

² In October 2021, the Company executed a 12-year lease for office space in Calgary, Alberta. Basic rent and estimated common expense payments commence in December 2022, preceded by a fixturing period which the Company will use to build out the space. The Company will receive a tenant improvement allowance which is expected to cover the majority of the costs.

38  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 30 - COMMITMENTS AND CONTINGENCIES (continued)

Contingencies

The Company may be party to legal proceedings and claims that arise in the ordinary course of business as either a plaintiff or defendant. The Company analyzes all legal proceedings and the allegations therein. The outcome of any proceedings, either individually or in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity.

NOTE 31 - SUPPLEMENTAL CASH FLOW INFORMATION

a) Changes in non-cash working capital

For the years ended December 31, 2021	2021			2020
Trade and other receivables increase	$	(3,342,737	)	$	(2,006,780	)
Long-term receivables decrease (increase)		1,682,646			(924,625	)
Prepaid expenses and other assets increase		(591,737	)		(1,119,123	)
Trade payables and accrued liabilities (decrease) increase		(782,561	)		2,513,477
Deferred revenue increase		1,045,868			632,839
Decrease in working capital	$	(1,988,521	)	$	(904,212	)

b) Changes in liabilities arising from financing activities

	2021			2020
Balance of loans, borrowings and PPP loans, beginning of year	$	14,102,718		$	13,973,055
New advances		10,664,916			8,726,766
Repayments of principal		(9,781,554	)		(9,011,638	)
Repayments of interest		(757,950	)		(642,809	)
Liability related items
Assumption of loans in business combination		–			371,609
Forgiveness of PPP Loans		(1,835,237	)		(124,507	)
Finance fees paid		(191,310	)		–
Non-cash related items
Accretion of interest and debt issuance costs		869,567			959,058
Loss on debt modification		138,908			–
Foreign exchange and other		5,543			(148,816	)
Balance of loans, borrowings and PPP loans, end of year	$	13,215,601		$	14,102,718

39  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 31 - SUPPLEMENTAL CASH FLOW INFORMATION (continued)

c) Non-cash investing and financing activities

For the years ended December 31,	2021		2020
Value of shares issued in business combination	$	–	$	8,186,620
Value of shares issued on conversion of 2021 Debentures (Note 14(b))		14,436,728		–
Value of share issued on conversion of 2019 Debentures		–		50,000
Value of shares issued on AirFusion asset acquisition		–		820,000
Settlement of liabilities through issuance of common shares or RSUs		–		143,002
Non-cash accretion of interest included in finance cost		3,015,294		2,145,706
Non-cash broker warrants compensation (Note 18(b))		294,894		–
Non-cash underwriter warrants compensation (Note 18(b))		162,947		–
Non-cash warrants consideration associated with credit facility		195,066		–
Addition to right-of-use assets		–		599,861
Addition to lease liabilities		–		599,861

NOTE 32 - EVENTS AFTER THE REPORTING PERIOD

a) Financing of Electric Vehicle Development Projects

In conjunction with the Company’s agreements to provide AssetCare solutions to optimize Electric Vehicle (“EV”) charging efficiency at auto dealerships in the states of New York and California, on March 28, 2022, a subsidiary of the Company executed a promissory note with the Noteholder in the aggregate principal amount of US$15,000,000 (the “Note”).

Initially US$5,000,000 is available to be funded with the remainder available only after certain corporate tax reorganization work is completed by the Company. The initial principal amount of US$5,000,000 (the “Loan”) was funded on April 1, 2022. The Loan matures on March 31, 2025, with 10% per annum interest payable monthly in arrears in USD. The Loan may not be prepaid unless authorized by the lender and is unsecured until certain conditions are met. The Loan contains representations, warranties and covenants which must be complied with to avoid an event of default which will allow the lender to demand repayment and increase the interest rate to 18%, amongst other implications.

The use of proceeds of is solely for the development of the Company’s EV dealership projects. In addition to the Loan, the Note requires certain income based payments, including sharing on a 50/50% basis, all EV, solar and carbon reduction related tax credits and incentives, be made from the borrower to the lender based on income resulting from this project over the term of the 20-year EV dealership projects. The Note is subject to change of control provisions and right of first refusal provisions for additional financing related to the EV projects.

b) Warrant activity

On February 15, 2022, the Company’s warrants associated with the USD equity offering described in Note 15(b), commenced trading under the symbol MCLDW (Note 1 and 15).

On January 17, 2022, the Company issued warrants to ATB to purchase an equivalent number of common shares of the Company and the warrant liability of $195,066 described in Note 15(c) was derecognized with an offsetting credit to contributed surplus for the value assigned to the warrants.

40  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES

The Company has consistently applied the following accounting policies to all periods presented in these consolidated financial statements.

A. Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries as at December 31, 2021. Control exists over an investee when the Company is exposed, or has rights, to variable returns from its investee and has the ability to affect those returns through its power over the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. Unless otherwise stated, the subsidiaries have share capital consisting solely of ordinary shares and the proportion of ownership interests held equals the voting rights held by the entity.

Subsidiaries

The Company’s principal subsidiaries include the following entities many of which have 100% ownership in other entities. The Company directly and indirectly owns 100% of all subsidiaries except for the Agnity group of companies. While the Company does not have an ownership interest in the Agnity entities, the Company controls them and as such the financial results are consolidated into the Company’s consolidated financial statements.

	Principle activity	Place of business and operations	Functional currency
mCloud Technologies Corp.	Parent company	Canada	CDN $
mCloud Technologies (USA) Inc.	Operations	United States	USD $
mCloud Technologies (Canada) Inc.	Operations	Canada	CDN $
Field Diagnostic Services, Inc. (“FDSI”)	Operations	United States	USD $
Construction Systems Associates, Inc. ("CSA")	Operations	United States	USD $
mCloud Technologies Services Inc. ("MTS")	Operations	Canada	CDN $
NGRAIN (Canada) Corporation (“NGRAIN”)	Operations	Canada	CDN $
kanepi Group Pty. Ltd.	Operations	Australia	AUD $
kanepi Services Pty. Ltd.	Operations	Australia	AUD $
mCloud Technologies Singapore Pte. Ltd.	Operations	Singapore	SGD $
mCloud Corp (HK) Ltd.	Operations	China	RMB ¥
mCloud Technologies (Saudi Arabia)	Operations	Saudi Arabia	SAR $
Agnity Global, Inc. (“Agnity”)	Operations	United States	USD $
Agnity Communications, Inc. (“ACI”)	Operations	United Stated	USD $
Agnity Healthcare, Inc. (“AHI”)	Operations	United States	USD $

When the Company loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognized in net income (loss). Any interest retained by the former subsidiary is measured at fair value when control is lost.

All intercompany transactions, balances, revenues and expenses have been eliminated on consolidation. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Company. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognized from the effective date of acquisition, or up to the effective date of disposal, as applicable.

41  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

A. Basis of Consolidation (continued)

Non-controlling interests

Non-controlling interests arise from business combinations in which the Company acquires less than 100% ownership interest. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary's profit or loss and net assets that is not attributable to the common shareholders of the Company. The entire portion of the Agnity operations is a non-controlling interest. The interests of the non-controlling shareholders are initially measured at either fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. Any subsequent income/loss, dividends and foreign translation adjustments attributable to the non-controlling interests is recognized as part of the non-controlling interests’ income or equity. When changes in ownership interests are disproportionate to cumulative contributions, distributions and income (loss) allocations, non-controlling interest are adjusted through direct charges to equity. The Company attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. Changes in the Company’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Business combinations

Acquisitions of subsidiaries and assets that meet the definition of a business under IFRS are accounted for using the acquisition method. The consideration transferred in the acquisition is measured at acquisition date fair value. The identifiable assets acquired and liabilities assumed that meet the conditions for recognition under IFRS 3 Business Combinations are recognized at their fair values at the acquisition date. Any excess consideration over the fair value of the identifiable net assets is recognized as goodwill. Acquisition-related costs, other than those associated with the issuance of debt or equity, are recognized in profit or loss as incurred.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. The measurement period is the period from the date of acquisition to the date the Company obtains complete information about facts and circumstances that existed as of the acquisition date up to a maximum of one year.

Any contingent consideration is measured at fair value at the acquisition date. If contingent consideration that meets the definition of a financial instrument is classified as equity, it is not remeasured and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured at fair value at each reporting date with changes in fair value recognized in profit or loss.

B. Foreign currency

Functional currency is the currency of the primary economic environment in which an entity operates. The functional currency of the parent company and its material subsidiaries are presented in the table in Note 33(A). These consolidated financial statements are presented in Canadian dollars.

Foreign currency transactions. In preparing the financial statements of each individual subsidiary, transactions in currencies other than the entity's functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the dates those fair values are determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.

Presentation currency translations. For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company's foreign operations are translated into Canadian dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income (loss) and accumulated in equity (attributed to non-controlling interests as appropriate).

42  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Revenue recognition

The Company’s revenues are derived from the sales of perpetual software licenses, subscriptions to AssetCare, installation and engineering services, hardware and post contract support and maintenance (“PCS”).

Revenue from the sale of hardware and perpetual software licenses is recognized at the point in time when control is transferred to the customer, generally upon delivery at the customer’s location.

Installation services involve the installation and implementation of energy efficient hardware, perpetual software licenses and IoT connections which feed information to the AssetCare platform. Engineering services include consulting, implementation and integration services entered into either on a time and materials basis or fixed fee basis. Revenue from installation and engineering services is recognized overtime, using an input method based on direct labour hours to measure progress towards complete satisfaction of the service.

Revenues from PCS and subscriptions to the AssetCare platform are recognized ratably overtime over the term of the PCS or subscription. Any amounts received for which performance obligations have not been completed are recognized as deferred revenue.

The Company’s contracts often include a number of promised goods or services, which are typically distinct from other performance obligations, and are therefore accounted for separately. A good or service is distinct if the customer can benefit from it on its own or together with other readily available resources, and the Company’s promise to transfer the good or service is separately identifiable from other promises in the contractual arrangement with the customer.

In determining the transaction price of a contract with a customer, the Company considers the effects of variable consideration, existence of a significant financing component, non-cash consideration, and any consideration payable to the customer. The total transaction price is allocated to each performance obligation on a relative stand-alone selling price (“SSP”) basis, representing the selling price as if it was sold separately. This is a formal process involving judgement which could impact the timing of recognized revenue.

In most cases, the SSP is based on observable data. Where possible, a narrow SSP range for each product and service is established and this range is assessed on a periodic basis or when material changes in facts and circumstances warrant a review. If the SSP is not directly observable, the amount is estimated using either the expected cost plus a margin or residual approach. The SSP for perpetual software licenses is highly variable and therefore the Company applies the residual approach, which determines the SSP by subtracting the SSP of hardware, installation and other services in the contract from the total transaction price.

Long-term contracts

The Company enters into multi-year contracts with some customers for goods and services. Under the terms of these contracts, the customer is billed an equal monthly amount over the term of the contract. Revenue is recognized as performance obligations are completed, generally with a significant portion of the transaction price being recognized at the beginning of the contract based on the calculated SSP for performance obligations that are satisfied at the point in time at which goods are delivered to customers. The remainder of the revenue is recognized over the life of the contract over time or as services are completed.

D. Financial Instruments

i. Recognition and initial measurement

On initial recognition, all financial assets and liabilities are classified and recorded at fair value, net of attributable transaction costs, except for financial assets and liabilities classified as at fair value through profit or loss (“FVTPL”).

Cash and bank indebtedness

Cash is held in bank accounts. The Company considers only those investments that are highly liquid, readily convertible to cash with original maturities of three months or less at date of purchase as cash equivalents.

Bank indebtedness consists of bank overdrafts and draws from the credit facility account repayable on demand for cash management purposes.

43  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

ii. Classification and subsequent measurement

Financial Assets

On initial recognition, a financial asset is classified as measured at: amortized cost; fair value through other comprehensive income; or fair value through profit or loss, depending on the business model in which a financial asset is managed and its contractual cash flow characteristics. Financial assets that do not meet the below classifications are classified as fair value through profit or loss.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at fair value through other comprehensive income if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial Liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative, or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in net income (loss).

When a financial liability is non-substantially modified, a gain or loss is recognized into net income (loss). The gain or loss is calculated at the date of modification as the difference between the remaining original contractual cash flows and the modified cash flows both discounted at the original effective interest rate. Any costs associated with the modified loan is added to the loan carrying amount and amortized over the remaining modified loan term. The carrying amount of the loan is revised to reflect the new cash outflows at the date of modification.

iii. Derecognition of financial assets and liabilities

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or the Company transfers the rights to receive the contractual cash flow in a transaction in which substantially all the risks and rewards of ownership have been transferred.

A financial liability is derecognized when its contractual obligations are discharged, cancelled or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non- cash assets transferred or liabilities assumed) is recognized in net income (loss).

iv. Impairment of non-derivative financial assets

The Company applies an expected credit loss (“ECL”) impairment model, which applies to financial assets measured at amortized cost, contract assets, lease receivables, and financial guarantee contracts. The ECL model results in an allowance for credit losses being recorded on financial assets regardless of whether there has been an actual loss event. Except for trade receivables, the ECL model requires the recognition of credit losses based on 12 months of expected losses for financial assets and the recognition of lifetime expected losses on financial assets that have experienced a significant increase in credit risk since origination or which are considered credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. ECL’s are probability-weighted estimates of credit losses. Credit losses are measured as the present value of all cash shortfalls representing the difference between the cash flows due to the entity in accordance with the contract and the cash flow an entity expects to receive. The Company has elected to measure loss allowances for trade receivables at an amount equal to lifetime ECL’s.

44  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

iv. Impairment of non-derivative financial assets (continued)

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information analysis, based on the Company's historical experience and including forward looking information. Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a portion or the full amount. The Company assesses the timing of write-offs based on whether there is a reasonable expectation of recovery. Impairment losses related to trade and other receivables are presented within general and administrative expenses.

E. Property and equipment

Property and equipment are recorded at cost, less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:

	Life
Computer equipment	2 -5 years
Office furniture and equipment	7 years
Leasehold improvements	lesser of useful lives or lease term

The estimated useful lives and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Repairs and maintenance costs that do not improve or extend productive life are recognized in profit or loss in the period in which the costs are incurred.

F. Intangible assets and goodwill

Intangible assets

Intangible assets acquired separately

Intangible assets patents and trademarks, customer relationships and technology, all of which have a finite life. Intangible assets acquired separately are measured on initial recognition at cost and intangible assets acquired in a business combination are recognized at fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and intangible assets are recognized in profit or loss as incurred.

Intangible assets are amortized over their estimated useful lives, on a straight-line basis, as follows:

	Life
Patents and trademarks	5 - 15 years
Customer relationships	5 - 20 years
Technology	5 years

Amortization methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if required on a prospective basis.

45  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

F. Intangible assets and goodwill (continued)

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

Internally generated intangible assets

Expenditures on research activities are recognized as an expense in the period in which they were incurred.

Internally-generated intangible assets arising from development or from the development phase of an internal project are recognized if all of the following factors have been demonstrated:

• Technical feasibility of completing the intangible asset results in the intangible asset being available for use or sale;

• There is an intention to complete the intangible asset and use or sell it;

• There is an ability to use or sell the intangible asset;

• Evidence to suggest how the intangible asset will generate probable future economic benefits;

• There is availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and,

• An ability to reliably measure the expenditure(s) attributable to the intangible asset during its development exists.

The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Where no internally-generated intangible asset can be recognized, development expenditures are recognized in profit or loss in the period in which it is incurred.

Goodwill

Goodwill, representing the excess of the consideration paid for entities acquired over the fair values of the assets acquired and liabilities assumed, is initially measured at cost and is not amortized. After initial recognition, goodwill is measured at cost less any accumulated impairment losses and is tested annually for impairment.

For the purpose of impairment testing, goodwill is allocated to each of the Company’s cash-generating units that are expected to benefit from the synergies of the business combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the cash generating unit. The recoverable amount is the greater of an asset’s fair value less costs of disposal or its value in use. In determining fair value less costs of disposal, recent market transactions are considered or an appropriate valuation model is used. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statements of loss on comprehensive loss. Goodwill impairments are not reversed. Management evaluates goodwill for impairment annually as of December 31 unless impairment indicators exist at another reporting date. On disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

G. Impairment of non-financial assets

The carrying amount of property and equipment and intangible assets with a finite life are reviewed each reporting period to determine whether events or changes in circumstances indicate that their carrying amounts may not be recoverable. Intangible assets with an indefinite life are reviewed and tested on an annual basis or whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal or its value in use. To assess value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal recent market transactions are considered or an appropriate valuation model is used.

46  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

G. Impairment of non-financial assets (continued)

To assess impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash-generating units). For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

H. Leases

i. Recognition and initial measurement as a lessee

At the commencement date of a lease, the Company recognizes a right-of-use asset and a lease liability for all leases except leases of low-value assets and leases with a duration of 12 months or less.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A lease is defined as a contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company determines whether, throughout the period of use, it has the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. The Company reassesses whether a contract is, or contains, a lease only if the terms and conditions of the contract are changed.

Lease liabilities are initially measured at the present value of unpaid lease payments at the commencement date of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• variable lease payments that depend on an index or a rate (such as CPI), initially measured using the index or rate as at the commencement date;

• amounts expected to be payable by the Company under residual value guarantees;

• exercise price of a purchase option if the Company is reasonably certain to exercise that option; and

• payments of penalties for terminating the lease, if the lease term reflects the Company exercising an option to terminate the lease.

Variable rent payments that are not based on an index or rate, including additional rent for operating costs and taxes and non-recoverable goods and services tax, are recognized as rent expense, within general and administrative expense or direct costs, as incurred. Lease payments for short-term leases and leases of low-value assets are recognized as rent expense on a straight-line basis over the lease term.

Right-of-use assets are initially measured at cost comprised of the initial lease liability adjusted for any lease payments made at or before commencement of the lease, plus initial direct costs incurred less lease incentives received.

ii. Classification and subsequent measurement as a lessee

Subsequent to the commencement date of the lease, the lease liability is measured at amortized cost using the effective interest method. The lease liability is remeasured by discounting the revised lease payments using a revised discount rate when there is a change in the lease term or there is a change in the assessment of an option to purchase the underlying asset. The lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate when there is a change in the amounts expected to be payable under a residual value guarantee or there is a change in future lease payments resulting from a change in an index or a rate used to determine variable payments. Upon remeasurement of a lease liability, a corresponding adjustment to the right-of-use asset is recognized.

Subsequent to the commencement date of the lease, the Company measures the right-of-use asset at cost, less accumulated depreciation, and any accumulated impairment losses, and adjusted for any remeasurement of the lease liability.

47  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

H. Leases (continued)

The right-of-use asset is depreciated using the straight-line method from the commencement date of the lease to the earlier of the end of the useful life of the underlying asset and the end of the lease term. The Company assesses its right-of-use assets for impairment and accounts for identified impairment losses similar to its assessment of impairment on other property and equipment.

Refundable security deposits are classified as financial assets measured at amortized cost and included in current other receivables or other non-current assets. Tenant improvement allowances are recognized as a reduction in the costs of the associated leasehold improvement assets.

The Company has taken the practical expedient not to assess whether rent concessions arising as a result of COVID-19 are lease modifications. These rent concessions are in the form of rent deferrals and there is no change to the amount recognized in profit or loss as a result of these changes.

I. Government grants

Government grants are assistance by government agencies in the form of transfers of resources to an entity in return for past or future compliance with certain conditions related to the operating activities of the entity. Government grants are recognized where there is reasonable assurance that the grant will be received, and the Company will comply with all attached conditions. Government grants related to costs are deferred, if applicable, and recognized gross in profit or loss on a systematic basis in the periods in which the expenses are recognized. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset. Government loans are analyzed to determine whether they qualify as grants or are required to be treated as financial liabilities.

J. Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where appropriate, the future cash flow estimates are adjusted to reflect risks specific to the liability. Provisions are measured using managements best estimate as to the outcomes, based on known facts, risks and uncertainties at the reporting date.

Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company. Contingent liabilities are not recognized in the consolidated financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.

K. Share related items

Stock options

The Company grants stock options to employees, directors, officers, and consultants. The fair value of options granted is recognized as a share-based payment expense with a corresponding increase in equity. The fair value is measured for each tranche at grant date and is recognized on a graded-vesting basis over the period during which the options vest. Stock options granted to non-employees are measured at the fair value of the goods or services received except where the fair value cannot be estimated, in which case it is measured at the fair value of the equity instrument granted. The fair value of the share-based compensation to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with stock options.

The fair value of options is determined using the Black-Scholes option pricing model which incorporates all the market vesting conditions. The number of options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

Expected forfeitures are estimated at the date of grant and subsequently adjusted if further information indicates actual forfeitures may vary from the original estimate. The impact of the revision of the original estimate is recognized in net loss such that the cumulative expense reflects the revised estimate. Upon exercise of stock options, consideration received on exercise of these equity instruments is recorded as share capital and the related share-based payment reserve is transferred to share capital.

48  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

K. Share related items (continued)

Restricted share units

The Company grants RSU’s to directors, employees and consultants which are measured at fair value based on the closing price of the Company’s common shares for the day preceding the date of the grant. The fair value of the grant is recognized as a share-based payment expense over the vesting period with a corresponding charge to contributed surplus. Common shares of the Company are issued on exercise by the holder of vested RSU’s.

Warrants issued as consideration for services

In certain circumstances, the Company issues warrants as consideration for services provided generally in conjunction with debt or equity financings. Where identifiable services are not reliability measured the services are measured with reference to the fair value of the equity instruments issued using the Black-Scholes model. The measurement date is when the entity obtains the goods or is provided the services and the warrants are not remeasured thereafter.

Loss per share

Basic loss per share is calculated by dividing the loss attributable to the common shareholders of the Company by the weighted average number of common shares outstanding during the respective reporting periods. Where a loss is reported, diluted loss per share is the same as basic loss per shares as all potential equity instruments are anti-dilutive and not included in the calculation.

L. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date or, in its absence, the most advantageous market to which the group has access at that date. Several of the company's accounting policies and disclosures require the measurement of fair values for both financial and non-financial assets and liabilities. The Company uses the fair value hierarchy to classify the significance of inputs to valuation techniques used in making fair value measurements of financial assets and liabilities. The categories are:

• Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date;

• Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• Level 3 inputs are unobservable inputs for the asset or liability.

When one level one input is available the Company measures the fair value of the instrument using the quoted price in an active market for that instrument (Level 1). A market is regarded as active if transactions for the asset or a liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the group uses valuation techniques that maximize the use of relevant observable inputs and minimizes the use of unobservable inputs (Level 2 or Level 3). The chosen valuation technique incorporates all the factors that market participants would consider in pricing a transaction.

M. Convertible debentures

Convertible debentures are accounted for depending on the terms of the contract. The fair value of the debentures are allocated into components parts, which may include separate host debt, embedded derivative(s) and/or equity components based on the terms of the contract. Where the fair value of the financial instrument is different than the transaction price then the measurement is dependent on whether the fair value was determined based on a valuation technique that only uses data from observable markets (Level 1 input) or otherwise. For compound financial instruments such as the 2019 Debentures where there is a liability and equity component, on issuance of the convertible debentures, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument.

The proceeds are allocated to the liability component first with the remainder of the proceeds allocated to the conversion option that is recognized and included in equity. The liability component (net of transaction costs) is subsequently measured at amortized cost using the effective interest rate method until it is extinguished on conversion or redemption. The carrying amount of the conversion option is not remeasured in subsequent periods.

49  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

M. Convertible debentures (continued)

For the majority of the 2021 Debentures, the fair value of the financial instruments was greater than the transaction price. The residual is treated as a deferred amount and recognized similar to fair value adjustments on derivatives. For hybrid financial instruments such as the 2021 Debentures where there is a liability and embedded derivative component, the fair value of the embedded derivative is determined first with the residual of the total fair value for the instrument allocated to the host debt. The host debt (liability), net of transaction costs, is subsequently measured at amortized cost using the effective interest rate method until it is extinguished on conversion or redemption.

Transaction costs are apportioned between each component of the convertible debentures based on a percentage of proceeds when the instruments are initially recognized. Transaction costs attributable to the liability and equity components are offset against the respective balances with transaction costs attributable to embedded derivatives directly expensed.

N. Warrant liabilities

Warrants issued where the number of common shares to be issued or the value of the common shares varies as they are denominated in a foreign currency are classified as derivative financial liabilities. The derivative warrant liability is measured at fair value with changes in fair value recognized in the consolidated statements of loss at the end of each reporting period.

O. Income taxes and deferred taxation

Income tax expense of the Company represents current tax and deferred tax.

The Company records current tax based on the taxable profits for the period which is calculated using tax rates that have been enacted or substantively enacted by the reporting date. Taxable profit differs from profit as reported in the consolidated statements of loss and comprehensive loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible.

Deferred income taxes are accounted for using the liability method. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and measured using the substantively enacted tax rates and laws in effect when the differences are expected to reverse. The effect of a change in tax rates or tax legislation is recognized in the period of substantive enactment. Deferred tax assets, such as unused tax losses, income tax reductions, and certain items that have a tax basis but cannot be identified with an asset or liability on the statement of financial position, are recognized to the extent it is probable that taxable profit will be available against which the difference can be utilized. Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current assets and liabilities. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

When there is uncertainty concerning the Company’s filing position regarding the tax bases of assets or liabilities, the taxability of certain transactions or other tax-related assumptions, then the Company: (a) considers whether uncertain tax treatments should be considered separately, or as a group, based on which approach provides better predictions of the resolution; (b) determines if it is probable that the tax authorities will accept the uncertain tax treatment; and (c) if it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainly based on the most likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty. Companies are to assume in making this measurement that a taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when making those examinations.

50  | Notes to the Consolidated Financial Statements

mCloud Technologies Corp.

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars except otherwise noted)

NOTE 33 - SIGNIFICANT ACCOUNTING POLICIES (continued)

P. Accounting standards development

(a) Application of new and revised IFRSs

The Company did not apply any new standards or amendments for the year ended December 31, 2021.

(b) New accounting standards, interpretations and amendments not yet effective

There are a number of new accounting standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that are not expected to have a material impact on the Company in the year of adoption and as such are not included here.

In February 2021, the IASB issued amendments to two existing accounting standards regarding accounting estimates and accounting policies. The amendments issued were Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2), which helps preparers determine which accounting policies to disclose in their financial statements, and Definition of Accounting Estimates (Amendment to IAS 8) which helps entities to distinguish between accounting policies and accounting estimates. These amendments are applicable starting January 1, 2023 with early adoption permitted and are not expected to have a material impact on the Company.

51  | Notes to the Consolidated Financial Statements

 

EX-99.2

EXHIBIT 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The significant events that occurred during the fourth quarter and financial year ended December 31, 2021 (the “Reporting Period”) and to the date of this report are described below. All dollar amounts are stated in millions of Canadian Dollars ("C$") unless otherwise stated. On November 24, 2021, the common shares of the Company were consolidated on the basis of 1 post-consolidation share for every 3 pre-consolidation share (a 3:1 basis) (the "Share Consolidation"). For the year ended December 31, 2019, the number of shares and per share amounts were adjusted to reflect the changes resulting from a 10 for 1 share consolidation which took effect on December 13, 2019. All figures in this MD&A relating to the number of share or the exercise or conversion price of convertible and exchangeable securities of the Company are expressed on a post-share consolidation basis. The information contained herein is dated as of April 4, 2022 unless otherwise stated.

As at December 31, 2021, the Company had 63,776 connected assets (December 31, 2020 - 59,462; December 31, 2019 - 41,088). The Company experienced sporadic growth in connected assets resulting from pandemic-induced restrictions in the markets where mCloud operates. The Company continues to expect full quarter-on-quarter growth resuming as restrictions lift.

Significant Business Contracts and Partnerships

Invest Alberta Corporation

On February 2, 2021, the Company announced it had signed a memorandum of understanding with Invest Alberta Corporation (“Invest Alberta”), an Alberta crown corporation. The goal of the memorandum was for the Company to leverage its technology to help Canadian and global energy companies reduce carbon emissions and act on ESG issues. The Company believes the move may accelerate the development and adoption of its offerings through increased engagement with key customers and local industry in Alberta.

Memorandum of Understanding with Fidus Global, LLC

On February 16, 2021, the Company announced that it had signed a memorandum of understanding with Fidus Global, LLC (“Fidus”) to commence sales, implementation, and ongoing field services for the Company’s AssetCare segment for connected buildings in the United States.

AssetCare Partnership with Major North American Utility Providers

On April 21, 2021, the Company announced that it would be offering its AssetCare solutions for HVAC and IAQ to small business customers of three major North American energy utility providers, two in the continental United States and one in Canada. Based on information provided by the three utilities, the Company estimated that these utility partnerships will make AssetCare HVAC and IAQ solutions available to approximately one million commercial buildings in the United States and Canada.

On May 18, 2021, the Company announced that it had successfully implemented AssetCare to customers associated with these utility program partnerships. Among these customers are two prominent car dealership properties in the State of New York.

18   | Management's Discussion and Analysis  

Implementation of AssetCare in the Head Office of Cadence Financial Group

On May 3, 2021, the Company announced that it had equipped the head office of Cadence Financial Group, located in Vancouver, Canada, with a combination of IoT-enabled 24/7 air quality monitoring and AI-driven connected air purification capable of outperforming standard HEPA filtration by continuously eliminating up to 95% of harmful particulates and contaminants smaller than one micron in size.

Deployment of AssetCare in Arkansas Government Buildings

On June 15, 2021, the Company announced that pursuant to its partnership with Fidus, the Company’s AssetCare solution was now being offered at various government buildings operated by the State of Arkansas, as the state seeks to improve indoor air safety across government properties, including office buildings, schools, and other state-run facilities in the wake of COVID-19.

Field Deployment of AssetCare with Oil and Gas Operators in Alberta

On June 23, 2021, the Company announced its partnership with Prosaris Solutions Ltd., through which the Company began its rollout of a new AssetCare solution targeting fugitive gas emissions for operators in the oil and gas sector in Alberta, and enabling such operators to continuously inspect and correct such gas leaks at their facilities.

Partnership with URBSOFT in Saudi Arabia

On July 13, 2021, mCloud announced it had signed a memorandum of understanding to partner with URBSOFT, a strategic provider of advanced ground and aerial inspection technology solutions in the Kingdom of Saudi Arabia. This partnership paved the way for mCloud to take AssetCare to support the digitalization and ESG objectives of Saudi Vision 2030, the Kingdom of Saudi Arabia’s national economic plan.

Offering AssetCare Connected Building Solutions via Con Edison in New York

On July 20, 2021, mCloud announced it had begun to offer its AssetCare solutions for HVAC and IAQ to small business customers of Con Edison, the energy company that serves New York City and Westchester County, N.Y. The Company is a solutions provider in Con Edison's Business Energy Pro program, which offers energy saving incentives to businesses located on Staten Island and in Westchester County. Business Energy Pro is one of the first "pay-for-performance" incentive programs in the country. Small businesses that participate earn payments for measured energy savings over a multi-year period. Through mCloud's partnership with Con Edison, AssetCare customers in New York state can earn payments for measured energy savings achieved through AssetCare over a multi-year period.

Licensed by Ministry of Investment of Saudi Arabia to Advance Digitalization and ESG Objectives of Saudi Vision 2030

On October 13, 2021, mCloud announced it received approval and a license to conduct business activities from the Ministry of Investment of Saudi Arabia ("MISA"). The MISA license marks a major milestone in mCloud's activities in the Middle East and North Africa ("MENA") region, enabling mCloud to provide AssetCare solutions to the Kingdom of Saudi Arabia and other countries in the MENA region.

Lease for Calgary

On September 27, 2021, the Company executed a 12-year lease for its office in Calgary, Alberta. The lease term commences on December 1, 2022, preceded by a fixturing period which the Company will use to build out the office space to their specifications.

AssetCare Deployment at Casa Pasta and CHICK “N” DIP

On November 9, 2021, the Company announced it had equipped two initial locations in Saudi Arabia - Casa Pasta and CHICK "N" DIP restaurants - with its AssetCare solution for HVAC and IAQ, to optimize the indoor air quality and energy efficiency in the restaurants. This was facilitated through the Company’s partnership with URBSOFT, previously announced on July 13, 2021.

19   | Management's Discussion and Analysis  

AssetCare Deployment at Life Plaza

On November 30, 2021, the Company announced a three-year agreement with Colliers Macaulay Nicolls Inc., an appointed agent of Slate Asset Management, to deploy mCloud's AssetCare solution for HVAC and IAQ at Life Plaza, one of Slate Asset Management’s premier office towers in downtown Calgary, Alberta, and the Company’s largest IAQ deployment to date. The initial subscription term for this agreement would become effective at the completion of AssetCare installation and is set to renew in November 2025.

Agreement with Virtual Vision

On December 15, 2021, the Company announced it had signed an agreement with Virtual Vision (the "V2 Agreement"), a local provider of cloud computing services within Saudi Arabia, to host the Company's AssetCare solutions on the V2 Public Cloud for use in the Kingdom. The V2 Agreement enables mCloud to complete the onboarding of several new Saudi customers and immediately take these customers live with AssetCare. The V2 Agreement also ensures mCloud is ready for scalable deployment within Saudi Arabia and in a manner compliant with Saudi legal requirements by geo-locating AssetCare data within the Kingdom.

Partnership with Mercedes-EQ Formula E Team

On January 20, 2022, the Company announced a partnership with the Mercedes-EQ Formula E Team as an official team partner, through which the use of mCloud's AssetCare portfolio of solutions to drive the ESG performance of the Formula E business would be explored. This announcement was made just ahead of the official opening of Season 8 of the ABB FIA Formula E World Championship - the world's only all- electric FIA World Championship and the only sport certified net zero carbon since inception. The Mercedes-EQ Formula E Team is collaborating with the Company to explore the use of the Company’s AssetCare portfolio of solutions to drive the ESG performance of their business, including technologies to reduce harmful emissions, the carbon footprint of their facilities, and further enhancing the safety and comfort of the work environment.

Memorandum of Understanding with Saudi Arabian Oil Company

On January 25, 2022, the Company announced it had signed a memorandum of understanding with Saudi Arabian Oil Company (“Aramco”) to explore the co-development of a digital technology hub for delivering ESG solutions in the Kingdom of Saudi Arabia. The hub would enable the Company and Aramco to jointly develop new AI-powered innovations to facilitate the carbon reduction of complex energy-intensive assets throughout the Kingdom and abroad. Additionally, the Company announced that it planned to develop a center of excellence that will serve as a home base for a dedicated team of ESG and digital transformation experts based in Saudi Arabia, particularly to leverage Virtual Vision’s high-performance infrastructure in accordance with the V2 Agreement.

Creation of an ESG-Digital Hub in Houston, Texas

On January 26, 2022, the Company announced the creation of a new “ESG-Digital Hub” based in Houston Texas, to serve as an additional focal point for local mCloud teams driving the ongoing technological development and customer delivery of AssetCare solutions. The new Houston-based location joins other Company hubs in Calgary, Alberta, established in collaboration with Invest Alberta, and the hub based in Saudi Arabia, in collaboration with Aramco.

Agreement with Vail Buick Dealership as First AssetCare Agreement to Optimize EV Charging

On March 21, 2022, the Company announced it had signed an agreement on March 17, 2022 to deliver its AssetCare for Connected Buildings solution to manage the energy efficiency of the Vail Buick Dealership in Bedford Hills, New York, the first of 15 planned installations for auto dealerships in New York state to help control rising energy costs in the electric vehicle ("EV") era. mCloud will deploy an innovative combination of AI in the cloud, solar power generation, and battery storage to continuously manage the energy cost and carbon footprint of the entire dealership, including the substantial increased energy consumption from EV charging now being implemented onsite. The Vail Buick Dealership agreement covers a 17-year term commencing on or before June 2022.

20   | Management's Discussion and Analysis  

Agreement with Carbon Royalty Corp to Fund First 30 AssetCare EV Solutions for Auto Dealerships

On March 30, 2022, announced it had signed an agreement on March 28, 2022 with Carbon Royalty Corp to proceed with closing and funding the first 30 AssetCare solutions to optimize Electric Vehicle ("EV") charging efficiency at auto dealerships in the states of New York and California. The agreement partners mCloud with Carbon Royalty Corp, enabling the implementation of these AssetCare contracts to be fully funded via Carbon Royalty Corp. As a benefit of this partnership, Carbon Royalty Corp receives 50% of the tax incentives, carbon credits, and other accretive financial benefits mCloud would be eligible to receive in the United States resulting from the implementation of these solutions. These benefits would be split between mCloud and Carbon Royalty Corp over the expected 20-year contract terms of AssetCare arrangements.

Financing

2021 Convertible Debentures

The Company completed the issuance of six tranches of a convertible debenture financing pursuant to which it has issued an aggregate of US$7.043 million convertible debentures ("2021 Convertible Debentures"). On July 12, 2021, the Company entered into debt conversion and exchange agreements with the holders of more than 99.2% of the outstanding principal amount of the 2021 Convertible Debentures, pursuant to which the Company issued an aggregate of 2,107,787 common shares and 2,107,787 warrants in consideration for the extinguishment of 99.2% of the principal and accrued interest owing under the 2021 Convertible Debentures.

April 2021 Brokered Offering

On April 15, 2021, the Company issued a total of 2,300,000 units of the Company at an issue price of

$6.30 per unit for aggregate gross proceeds of CAD$14.490 million (the "Brokered Offering"). Each unit consisted of one common share and one warrant of the Company. Each warrant is exercisable for one common share at an exercise price of $8.55 per common share, subject to adjustment in certain events. The Brokered Offering was led by ATB Capital Markets Inc. (the "Agent"). The Agent was paid a cash fee equal to 7% of the gross proceeds raised under the Brokered Offering.

Credit Facility with ATB Financial and Intercreditor Agreement with Fiera Private Debt Fund VI LP

On May 17, 2021, the Company announced it had entered into a secured credit facility with ATB, which is a $5 million margined, demand operating loan facility (the “ATB Facility”). The proceeds of the ATB Facility were used in part, to repay in full all indebtedness and liability owing by the Company to HSBC Bank of Canada and for general corporate purposes. The ATB Facility is a demand operating line bearing interest at a floating rate equal to the prime rate per annum established by ATB from time to time for commercial loans denominated in Canadian dollars made by ATB in Canada, plus an applicable margin rate based on the senior debt to EBITDA ratio of the Company at the time of determination. Repayments under the ATB Facility will be made on a monthly interest-only basis until demand. The ATB Facility is secured against certain assets of the Company and its principal subsidiaries.

On June 24, 2021, $2.5 million was drawn from the ATB Facility, in accordance with the maximum amount permitted under the Company’s intercreditor agreement with Fiera Private Debt Fund VI LP (“Fiera”).

On November 8, 2021, the ATB Facility was amended. As part of the amendment, ATB provided an additional $5 million in available funding to the Company via an accordion, subject to lender consent. In consideration of ATB making available to the Company additional advances under the ATB Facility, the Company granted to ATB non-transferable warrants to acquire up to 183,486 common shares at an exercise price of $5.45 per common share for a term not exceeding one year.

21   | Management's Discussion and Analysis  

On November 9, 2021, the Company amended its term loan and amended the associated intercreditor agreement between Fiera, ATB and the Company. The intercreditor agreement determines the priority of security interests in the case of default, with Fiera having first priority on all assets other than accounts receivable. The amendments to the term loan include: increase in interest rate from 6.85% to 7.5% per annum; certain changes to financial covenants which are applicable for the period from July 1, 2021 to December 31, 2022; and, the addition of two mCloud subsidiaries as additional guarantors.

Non-Brokered Offering

On August 13, 2021, the Company completed a non-brokered private placement, pursuant to a subscription agreement dated July 12, 2021, offering of 75,676 units of the Company at a unit price of

$5.55 for gross proceeds of $0.420 million. Each unit consists of one common share and one share purchase warrant at an exercise price of $8.55 per common share with warrants expiring April 2024.

November 2021 Offering, 2021 Share Consolidation, and Listing on Nasdaq Capital Market

On November 24, 2021, the Company announced that its common shares had begun trading on the Nasdaq Capital Market (“NASDAQ”) under the symbol “MCLD” in connection with the completion of a 3:1 share consolidation (the “2021 Share Consolidation”). On November 29, 2021, the Company announced the completion of an underwritten public offering of 2,100,000 units at a price to the public of US$4.50 per unit. Each unit issued in the offering consisted of one common share and one warrant to purchase one common share at an exercise price of USD$4.75. The common shares began trading on the NASDAQ on November 24, 2021 under the symbol "MCLD". The Company received gross proceeds of approximately US$9.5 million, before deducting underwriting discounts and commissions and other estimated offering expenses.

The Company had also granted the underwriters, Maxim Group LLC, to purchase up to an additional 315,000 common shares and an additional 315,000 warrants (each on a post-consolidation basis) at the public offering price to cover over-allotments. On November 29, 2021, the Company announced that Maxim Group LLC had purchased the 315,000 warrants in accordance with the over-allotment option, and on December 6, 2021 announced that Maxim Group LLC had exercised the over-allotment option in full to purchase an additional 315,000 common shares at the Offering Price. The proceeds from the over- allotment option were US$1.417 million. The aggregate gross proceeds of the offering, including the over- allotment option, were US$10.867 million. In conjunction with the USD equity offering described above, the Company agreed to list the warrants issued as part of the unit offering on the NASDAQ. On February 15, 2022, these warrants commenced trading in USD under the symbol "MCLDW".

22   | Management's Discussion and Analysis  

 

Since the beginning of 2020, governments around the world have been forced to enact emergency measures in response to the World Health Organization's declaration of the COVID-19 pandemic. Businesses around the world have suffered material disruption resulting in economic slowdown and uncertainty and significant volatility in the financial markets. To date, the impacts to the Company's operations and financial matters associated with COVID-19 have included (i) a slow-down in technical services due to the in-person nature of these activities and the restrictions placed such as lock-downs and social distancing by governments around the world with many of the most restrictive measures in the most recent quarter being in our core geographic markets, (ii) a delay in the collection of receivables closely associated with business who were most widely impacted by shut-downs and restrictions, and (iii) a delay in certain projects. The long-term impact on the Company’s financial results and cash flows is unknown. While the Company has been negatively impacted by COVID-19, given the nature of the Company's operations, COVID-19 has increased customer demand and created new opportunities for mCloud to engage with new and existing customers using the remote connectivity offered by AssetCare™.

COVID Government Support

The Company received government assistance in both Canada the United States and Australia to help temper the financial impact of the crisis. During the three and twelve months ended December 31, 2021, government assistance of $0.472 million and $4.202 million, respectively, was recorded in Other Income on the consolidated Statements of Loss and Comprehensive Loss (three months and year ended December 31, 2020, $0.821 and $2.776 million, respectively).

Impact on Strategic Plan and Growth

The Company continues to assess the economic impacts of COVID-19 pandemic on its future operations, including the liquidity forecast and valuation of the Company’s intangible and goodwill assets related to recent acquisitions. As at December 31, 2021, the Company's senior management team has determined that the value of the Company’s assets is not materially impacted. In making this judgment, management has assessed various criteria including, but not limited to, existing laws, regulations, orders, disruptions, and potential disruptions in commodity prices and capital markets.

23   | Management's Discussion and Analysis  

SELECTED ANNUAL FINANCIAL INFORMATION

The information in the tables below is derived from the Company's audited consolidated financial statements for each of the three most recently completed financial years. These have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and are presented in Canadian dollars which is the functional and presentation currency of the Company. All figures reported in the MD&A are reported in millions, except for per share, stock option, common share, percentages and unit amounts. The information below is not necessarily indicative of results for any future financial year.

Years ended December 31	2021		2020		2019
Revenues	$	25.597	$	26.928	$	18.340
Gross profit	15.913		16.647		$	10.757
Total expenses	54.665		46.360		$	27.138
Other expenses (income)	5.947		5.148		$	11.514
Net loss	44.699		34.861		$	27.895
Loss per share attributable to mCloud shareholders – basic and diluted	3.73		$	5.07	$	2.43
Total assets	72.106		$	77.319	$	59.859
Total non-current financial liabilities	1.513		$	33.443	$	32.146

24   | Management's Discussion and Analysis  

Review of Annual Financial Results

The table below provides key financial performance metrics of the Company for the years ended December 31, 2021, December 31, 2020 and December 31, 2019. This information should be read in conjunction with the Annual 2021 and 2020 Financial Statements.

Years ended December 31,

	2021		2020		2019		2021 vs 2020 Change $		2021 vs 2020 Change %		2020 vs 2019 Change $		2020 vs 2019 Change %
Revenue	$	25.597	$	26.928	$	18.340	$	(1.331)	(5)	%	$	8.588	47	%
Cost of Sales	(9.684)		(10.282)		(7.583)		0.598		(6)	%	(2.699)		36	%
Gross Profit	$	15.913	$	16.647	$	10.757	$	(0.733)	(4)	%	$	5.890	55	%
Expenses
Salaries, wages and benefits	$	21.692	$	20.885	$	10.314	$	0.807	4	%	$	10.571	102	%
Sales and marketing	1.377		1.536		3.167		(0.159)		(10)	%	(1.631)		(51)	%
Research and development	3.179		1.078		0.498		2.101		195	%	0.580		116	%
General and administrative	8.539		5.742		3.295		2.797		49	%	2.447		74	%
Professional and consulting fees	9.085		8.886		4.352		0.199		2	%	4.534		104	%
Share-based compensation	1.868		1.454		1.468		0.414		28	%	(0.014)		(1)	%
Depreciation and amortization	8.925		6.778		4.044		2.147		32	%	2.734		68	%
Total expenses	$	54.665	$	46.360	$	27.138	$	8.305	18	%	$	19.222	71	%
Operating loss	$	38.752	$	29.714	$	16.380	$	9.039	30	%	$	13.334	81	%
Other Expenses (income)
Finance costs	$	8.619	$	6.034	$	3.218	$	2.585	43	%	$	2.816	88	%
Foreign exchange loss (gain)	(0.267)		1.198		0.494		(1.466)		(122)	%	0.704		143	%
Impairment	—		—		0.601						(0.601)		(100)	%
Business acquisition costs and other expenses	0.346		1.812		9.880		(1.465)		(81)	%	(8.068)		(82)	%
Fair value loss on derivatives	6.040		—		—		6.040		100	%	—		—	%
Other income	(7.126)		(2.932)		(0.168)		(4.194)		143	%	(2.764)		1645	%
Loss before tax	$	46.364	$	35.825	$	30.405	$	10.539	29	%	$	5.420	18	%
Current tax expense (recovery)	$	0.157	$	(0.296)	$	(0.182)	$	0.453	(153)	%	$	(0.114)	63	%
Deferred tax (recovery) expense	(1.822)		(0.668)		2.692		(1.154)		173	%	(3.360)		(125)	%
Net loss for the period	$	44.699	$	34.861	$	27.895	$	9.838	28	%	$	6.966	25	%

25   | Management's Discussion and Analysis  

Revenue

In the following tables, revenue is disaggregated by nature and timing of revenue recognition. See Segment Reporting Information in Note 4 to the Annual 2021 and 2020 Financial Statements for further information on revenue by location.

Years ended December 31,

Major Service Line	2021		2020		2019		2021 vs 2020 Change $		2021 vs 2020 %		2020 vs 2019 Change $		2020 vs 2019 %
AssetCare Initialization	$	1.250	$	7.689	$	5.965	$	(6.439)	(84)	%	$	1.724	29	%
AssetCare Over Time	23.462		12.809		2.940		10.653		83	%	9.869		336	%
Engineering Services	0.885		6.430		9.436		(5.545)		(86)	%	(3.005)		(32)	%
Total	$	25.597	$	26.928	$	18.340	$	(1.331)	(5)	%	$	8.588	47	%
Timing of revenue recognition	2021		2020		2019		2021 vs 2020 Change $		2021 vs 2020 %		2020 vs 2019 Change $		2020 vs 2019 %
Revenue recognized over time	$	24.423	$	18.551	$	12.375	$	5.872	32	%	$	6.176	50	%
Revenue recognized at point in time upon completion	1.174		8.377		5.965		(7.202)		(86)	%	2.412		40	%
Total	$	25.597	$	26.928	$	18.340	$	(1.331)	(5)	%	$	8.588	47	%

Revenues for the year ended December 31, 2021 were $25.597 million, compared to $26.928 million for the same period in 2020, a decrease of $1.331 million, or 5%, primarily due to $6.439 million lower AssetCare Initialization and $5.545 million lower engineering services, partially offset by $10.653 million higher sales from AssetCare Over Time. The overall decrease in revenue is primarily attributable to interruptions and delays in the delivery of these service caused by COVID-19.

For the year ended December 31, 2020, revenues increased by $8.588 million, to $26.928 million from

$18.340 million for the same period in 2019. The increase was due to an increase of $9.869 million in AssetCare Over Time, and higher AssetCare Initialization of $1.724 million due to an increase of customers onboarded during 2020, partially offset by lower Engineering Services of $3.005 million attributable to COVID-19 delays performing in-person engineering services.

The Company operates in one operating segment. For the purpose of segment reporting, the Company’s Chief Executive Officer (“CEO”) is the Chief Operating Decision Maker. The determination of the Company’s operating segment is based on its organizational structure and how the information is reported to the CEO on a regular basis. The Company’s revenue is generated from its customers in Canada, the United States of America, Asia-Pacific, Europe, and the Middle East and Africa. The Company’s assets primarily reside in North America and Australia. See “Risk Factors” in the Company’s Annual Information Form for further discussion on the risks and uncertainties that the Company believes may materially affect the Company’s future performance, including total revenue.

26   | Management's Discussion and Analysis  

The Company’s revenue by location of the ultimate customer or consumer of product solution are as follows:

Year ended December 31,

	2021		2020		2019
Canada	$	10.734	$	13.833	$	10.890
United States	6.564		5.691		7.451
Japan	5.850		6.447		—
Australia	0.994		0.152		—
Other	1.455		0.805		—
Total revenue	$	25.597	$	26.928	$	18.341

The table below presents significant customers who accounted for greater than 10% of total revenues for the years ended December 31, 2021, 2020 and 2019:

 

	2021	2020	2019
Customer A	Less than 10%	13.6 %	n/a
Customer B	Less than 10%	13.1 %	11.0 %
Customer C	11.3 %	Less than 10%	20.0 %
Customer D	10.7 %	Less than 10%	n/a

Cost of Sales, Gross Profit, Gross Margin %

Years ended December 31,

	2021			2020			2019			2021 vs 2020 Change $		2021 vs 2020 %		2020 vs 2019 Change $		2020 vs 2019 %
Cost of Sales	$	9.684		$	10.282		$	7.583		$	(0.598)	(6)	%	$	2.699	36	%
Gross Profit	15.913			16.647			10.757			(0.733)		(4)	%	5.890		55	%
Gross Margin % 1	62.2		%	61.8		%	58.6		%			1	%			3	%

1 Gross margin % are Non-IFRS Measures (see Non-IFRS Measure section for details).

Cost of sales for the year ended December 31, 2021 were $9.684 million, a decrease of 6% from the same period in 2020 of $10.282 million, in line with the overall decrease in revenue of 5%. Gross margin % was relatively flat year over year.

Cost of sales for the year ended December 31, 2020 increased to $10.282 million from $7.583 million for the year ended December 31, 2019. Gross profit for the year ended December 31, 2020 increased to

$16.647 million from $10.757 million for the year ended December 31, 2019 due to a change in revenue types and significantly higher revenues.

27   | Management's Discussion and Analysis  

Expenses

Years ended December 31,

Expenses	2021		2020		2019		2021 vs 2020 Change $		2021 vs 2020 %		2020 vs 2019 Change $		2020 vs 2019 %
Salaries, wages and benefits	$	21.692	$	20.885	$	10.314	$	0.807	4	%	$	10.571	102	%
Sales and marketing	1.377		1.536		3.167		(0.159)		(10)	%	(1.631)		(51)	%
Research and development	3.179		1.078		0.498		2.101		195	%	0.580		116	%
General and administration	8.539		5.742		3.295		2.797		49	%	2.447		74	%
Professional and consulting fees	9.085		8.886		4.352		0.199		2	%	4.534		104	%
Share-based compensation	1.868		1.454		1.468		0.414		28	%	(0.014)		—	%
Depreciation and amortization	8.925		6.778		4.044		2.147		32	%	2.734		68	%
Total	$	54.665	$	46.360	$	27.138	$	8.305	18	%	$	19.222	71	%

Total expenses for the year ended December 31, 2021 increased by 18% or $8.305 million compared with the same period in 2020. For the year ended December 31, 2020, total expenses increased 71% or

$19.222 million, compared to the same period in 2019. The most significant changes for the periods presented are as follows:

• General and administration expenses, which typically consist of public company fees, bad debt expense, rent expense, and recruitment costs, increased by 49% or $2.797 million in 2021 compared to 2020, primarily due to an increase in the loss allowance of $1.162 million related to uncollectible receivables, and $1.000 million associated with the Company's NASDAQ listing, combined with costs associated with a full year of the Company's ownership of its kanepi subsidiary that were not present in the year ended December 31, 2020. General and administration expenses increased by 74% or $2.447 million for the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to facilities and overhead costs associated with a full year of ownership of its subsidiaries including mCloud Technologies Services ("MTS"), acquired in Q3 2019, Construction Systems Associates, Inc. USA ("CSA"), acquired in Q1 2020, and kanepi, acquired in Q4 2020.

• Depreciation and amortization expenses increased by 32% or $2.147 million in 2021 compared to 2020, attributable to a full year of amortization of intangibles acquired through business and asset acquisitions in Fiscal 2020. Depreciation and amortization expenses increased by 68% or $2.734 million in 2020 compared to 2019, due to amortization of intangibles assets acquired through acquisitions of Agnity, MTS and CSA.

• The Company's customers use its software to monitor their assets and rely on the Company to provide updates and releases as part of its software maintenance and support services. While the Company has not developed a formal research and development policy, the Company is and has been engaged with a number of research and development initiatives as a part of its ongoing effort to continually update its software and develop new products. Research and development expenses increased by $2.101 million in 2021 compared to 2020, due to ongoing development and investments in AssetCare Mobile, IAQ Badge and 3D technologies. Research and development expenses increased by $0.580 million in 2020 compared to 2019, due to the development of AssetCare project investments.

28   | Management's Discussion and Analysis  

• Professional and consulting expenses increased by $0.199 million in 2021 compared to 2020, due to the Company retaining more consultants for various accounting and professional service functions that were previously performed by employees in 2020, combined with the costs associated with a full year of the Company's ownership of its kanepi subsidiary. Professional and consulting expenses increased by $4.534 million in 2020 compared to 2019, attributable to professional legal and advisory, as well as accounting and valuation services related to business acquisitions and financings completed during the year.

• For the year ended December 31, 2021, salaries, wages and benefits were flat year over year, compared to the same period in 2020. Salaries, wages and benefits increased by 102% or $10.571 million in 2020 compared to 2019, due to higher headcount attributable to acquisitions of CSA and kanepi, combined with added personnel in the asset purchase of AirFusion.

• The above noted increases were partially offset by a decrease in the Company's sales and marketing costs by 10% or $0.159 million due to lower marketing spending early in 2021, as the pandemic curtailed industry activity and the Company elected to spend less. This decrease in spending was partially offset by the mCloud Connect event that took place in 2021. For the year ended December 31, 2020, sales and marketing decreased by 51% or $1.631 million compared to the same period in 2019, due to the curtailment of activities attributable to ongoing COVID-19 restrictions.

Other Expenses (Income)

Years ended December 31,

Other expenses (income)	2021		2020		2019		2021 vs 2020 Change $		2021 vs 2020 %		2020 vs 2019 Change $		2020 vs 2019 %
Finance costs	$	8.619	$	6.034	$	3.218	$	2.585	43	%	$	2.816	88	%
Foreign exchange loss (gain)	(0.267)		1.198		0.494		(1.465)		(122)	%	$	0.704	143	%
Impairment of intangible asset	—		—		0.601		—		—	%	$	(0.601)	(100)	%
Business acquisition costs and other expenses	0.346		1.812		9.880		(1.466)		(81)	%	$	(8.068)	(82)	%
Fair value loss on derivatives	6.040		—		—		6.040		—	%	$	—	—	%
Other income	(7.126)		(2.932)		(0.168)		(4.194)		143	%	$	(2.764)	1645	%
Total	$	7.612	$	6.111	$	14.025	$	1.500	25	%	$	(7.914)	4713	%

29   | Management's Discussion and Analysis  

Other expenses (income) increased by $1.500 million during the year ended December 31, 2021, compared to the same period in 2020. For the year ended December 31, 2020, Other expenses (income) decreased $7.914 million, compared to the same period in 2019. The primary driver for these changes are as follows:

• Finance costs increased by $2.585 million during the year ended December 31, 2021, compared to the same period in 2020, due to increased interest and transaction costs associated with the 2021 Convertible Debentures, which were converted in Q3 2021, along with interest and fees on new borrowings, partially offset by lower interest on repaid borrowings. Finance costs increased by $2.816 million for the year ended December 31, 2020, compared with the same period in 2019, due to higher interest expense on the 2019 Convertible Debentures, with the funds used for business acquisitions.

• Foreign exchange was a gain of $0.267 million for the year ended December 31, 2021, compared to a loss of $1.198 million for the same period in 2020, due to an increase in US denominated financings in 2021. For the year ended December 31, 2020, the foreign exchange loss increased by $0.704 million to $1.198 million from $0.494 million for the same period in 2019, as a result of the timing of cash receipts and payments.

• During the year ended December 31, 2021, the Company determined that the amount of the contingent consideration recognized at the date of acquisition of CSA would not be payable as the operational performance metrics were not achieved. In addition, the fair value of the contingent consideration recognized at the date of acquisition for kanepi remeasured based on management’s estimate of the likelihood the performance metrics would be met by October 2022, resulting in a decrease in fair value and an offsetting amount recognized as other income, presented as business acquisition costs and other expenses, . For the year ended December 31, 2019, business acquisition costs included $9.870 million incurred as transaction costs in connection with acquisitions including consulting fees, legal and professional fees and fair value of $8.880 million for 800,000 common shares issued for brokering and due diligence services.

• Fair value changes in derivatives were a loss of $6.040 million for the year ended December 31, 2021. These are non-cash losses as a result of the conversion of the 2021 Convertible Debenture into common shares and warrants. The initial fair value loss on the convertible debentures along with losses on modification and remeasurement of the financial liability, partially offset by gains on the remeasurement of the warrant liability from date of issuance on August 13, 2021 to December 31, 2021 are the primary drivers of this amount. The additional element of these fair value changes in derivatives relates to the remeasurement of warrant liabilities issued in November 2021, at December 31, 2021.

• Other Income increased by $4.194 million for the year ended December 31, 2021, to $7.126 million from $2.932 million for the same period in 2020. The majority of Other Income includes wage and rent subsidies received from the Canadian government and low-interest loans from the US government, which were partially forgiven in 2021 and 2020. Also during the year ended December 31, 2021, contingent consideration associated with the acquisition of CSA and kanepi was determined not to be payable and as such, $1.010 million was recognized in Other Income. For the year ended December 31, 2020, Other Income increase by $2.764 million compared to the same period in 2019, primarily due to wage subsidies and benefits from low-interest loans received from US and Canadian government COVID-19 relief programs.

30   | Management's Discussion and Analysis  

Current and Deferred Income Taxes

Years ended December 31,

Expenses	2021		2020		2019		2021 vs 2020 Change $		2021 vs 2020 %		2020 vs 2019 Change $		2020 vs 2019 %
Current tax expense (recovery)	$	0.157	$	(0.296)	$	0.182	$	0.453	(153)	%	$	(0.478)	(262)	%
Deferred tax expense (recovery)	$	(1.822)	$	(0.668)	$	(2.692)	$	(1.154)	173	%	$	2.024	(75)	%

For the year ended December 31, 2021, current tax expense was $0.157 million compared to a current tax recovery of $0.296 million, compared to the same period in 2020. The increase in current tax expense of

$0.453 million was due to taxes owing attributable to taxable income in the US operations. For the year ended December 31, 2020, current taxes decreased by $0.478 million from a current tax expense of

$0.182 million for the same period in 2019, attributable to the carry back of 2020 tax losses for refunds of past taxes paid.

For the year ended December 31, 2021, the Company recorded a deferred tax recovery of $1.822 million compared with a deferred tax recovery of $0.668 million, for the same period in 2020. The increase in the deferred tax recovery was primarily due to foreign tax rate and other foreign tax differences. For the year ended December 31, 2020, the deferred tax recovery decreased by $2.024 million, to $2.692 million for the same period in 2019. The decrease was due to the recognition of deferred tax assets, recognized through profit and loss to offset deferred tax liabilities recognized in equity on the issuance of convertible debentures.

The Company has net operating losses of approximately USD$60.9 million and non-capital losses of C$70.2 million (December 31, 2020 - USD$44.1 million and C$49.6 million) which are available to reduce future year's taxable income in the United States and Canada, respectively. The net operating losses will commence to expire in 2029 while the non-capital losses will commence to expire in 2027 if not utilized.

The Company has foreign tax losses in various jurisdictions of C$2.3 million (December 31, 2020 - C$1.2 million) which are available to reduce future year's taxable income in their respective countries. The losses vary in expiry from five years to indefinite life.

The investment tax credit balance is C$0.5 million (December 31, 2020 - C$0.5 million) which is available to reduce future year's taxes payable in Canada. The investment tax credits begin to expire in 2022 if not utilized.

31   | Management's Discussion and Analysis  

Review of Quarter Financial Results

Revenue

In the following tables, revenue is disaggregated by nature and timing of revenue recognition.

Three months ended December 31,

Major Service Line	2021		2020		Change $			Change %
AssetCare Initialization	$	0.173	$	2.672	$	(2.499	)		(94	)%
AssetCare Over Time		3.886		5.546		(1.660	)		(30	)%
Engineering Services		0.111		1.005		(0.894	)		(89	)%
Total	$	4.170	$	9.223	$	(5.053	)		(55	)%

Timing of revenue recognition	2021		2020		Change $			Change %
Revenue recognized over time	$	4.073	$	4.757	$	(0.684	)		(14	)%
Revenue recognized at point in time upon completion		0.097		4.466		(4.369	)		(98	)%
Total	$	4.170	$	9.223	$	(5.053	)		(55	)%

For the three months ended December 31, 2021, total revenue was $4.170 million, a decrease of $5.053 million, compared to $9.223 million for the same period in 2020. This decrease is attributable the resurgence of the "Omicron" COVID-19 variant and the return of stricter COVID-19 restrictions, which led to a decrease of $2.499 million and $1.660 million, respectively, in revenues generated from the AssetCare Initialization and AssetCare Over Time categories, combined with a decrease of $0.894 million in revenues generated from Engineering Services. These revenue streams are dependent on performing in-person services and have been impacted by the COVID-19 restrictions.

Cost of Sales, Gross Profit, Gross Margin %

Three months ended December 31,

	2021			2020			Change $			Change %
Cost of Sales	$	1.507		$	3.579		$	(2.072	)		(58	)%
Gross Profit		2.664			5.644			(2.981	)		(53	)%
Gross margin % 1		63.9	%		61.2	%					4	%

1 Gross margin % are Non-IFRS Measures (see Non-IFRS Measure section for details).

Cost of sales for the three months ended December 31, 2021 were $1.507 million, a decrease of 58% from $3.579 million for the same period in 2020, primarily due to a decrease of in-person services related to tighter COVID-19 restrictions in the last quarter of the year. For the three months ended December 31, 2021, gross profit decreased by $2.981 million to $2.664 million from $5.644 million for the same period in 2020, primarily due to a decrease in revenues of $5.053 million, partially offset by a decrease in cost of sales by $2.072 for the reasons noted above.

32   | Management's Discussion and Analysis  

Expenses

Three months ended December 31,

Expenses	2021		2020		Change $		Change %
Salaries, wages and benefits	$	5.608	$	4.486	$	1.122		25	%
Sales and marketing		0.400		0.304		0.096		32	%
Research and development		1.105		0.323		0.782		242	%
General and administration		4.187		1.924		2.263		118	%
Professional and consulting fees		2.446		2.090		0.356		17	%
Share-based compensation		0.684		0.427		0.257		60	%
Depreciation and amortization		2.146		1.917		0.229		12	%
Total	$	16.576	$	11.471	$	5.105		45	%

Total expenses for the three months ended December 31, 2021 increased by 45% or $5.105 million compared with the same period in 2020. The most significant changes between 2021 and 2020 are as follows:

• General and administration expenses increased by 118% or $2.263 million primarily as the result of costs associated with the Company's NASDAQ listing, which occurred in November 2021, combined with a bad debts provision.

• Research and development expenses increased by $0.782 million in Q4 2021 compared with 2020, related specifically to the ongoing development of AssetCare Mobile, "IAQ" Badge and 3D technologies. Spending in prior year was curtailed as a means of conserving cash.

• Professional and consulting expenses increased by 17% or $0.356 million, primarily related to increased costs for professional services associated with the general efforts to raise capital to explore current and future acquisition opportunities, perform technical accounting and advisory fees and prepare and file the Company's prospectus supplements. Consultants filled positions in 2021 that were previously held by employees in 2020.

• Salaries, wages and benefits costs increased by 25% or $1.122 million, primarily due to a full year of the costs associated with a full year of the Company’s ownership of its kanepi subsidiary, as compared with the prior year when kanepi was acquired in October 2020. This was partially offset by the use of consultants in 2021 for tasks previously performed by employees in 2020.

• Depreciation and amortization non-cash costs increased by 12% or $0.229 million for Q4 2021. These changes were related to intangible assets which were acquired as part of business and assets acquisitions completed throughout Fiscal 2020 acquired from CSA, and the intangible assets acquired as part of the Company's acquisition of kanepi.

• Sales and marketing costs increased by 32% mainly as a result of investments by the Company to explore opportunities in the AssetCare solutions across all industries and in particular, in the IAQ space.

33   | Management's Discussion and Analysis  

Other Expenses (Income)

Three months ended December 31,

Other expenses (income)	2021			2020			Change $			Change %
Finance costs	$	2.724		$	1.694		$	1.030			61	%
Foreign exchange loss (gain)		(0.041	)		1.583			(1.624	)		(103	)%
Business acquisition costs and other expenses		0.023			0.501			(0.478	)		(95	)%
Fair value gain on derivatives		(3.075	)		–			(3.075	)		–	%
Other income		(1.654	)		(0.971	)		(0.683	)		70	%
Total	$	(2.023	)	$	2.807		$	(4.830	)		(172	)%

Total other expenses (income) decreased by $4.830 million in the three months ended December 31, 2021. The primary drivers are as follows:

• Finance costs increased by $1.030 million for the three months ended December 31, 2021, due to higher interest and fees on new borrowings.

• Foreign exchange changed from a loss of $1.583 million for the comparative period in 2020 to a gain of $0.041 million in Q4 2021. These movements were the result of the timing of cash receipts and payments, combined with the USD public offering that closed in the last quarter of 2021.

• Fair value changes in derivatives constituted a gain of $3.075 million for the three months ended December 31, 2021. These non-cash changes relate to the fair value adjustment for the warrants and was partially offset by the remeasurement of warrant liabilities, issued in November 2021, being revalued at December 31, 2021.

• Other Income increased by $0.683 million for the three months ended December 31, 2021. The majority of Other Income includes wage and rent subsidies received from the Canadian government and low-interest loans from the US government which have been partially forgiven in the periods.

Current and Deferred Income Taxes

Three months ended December 31,

Expenses	2021			2020			Change $			Change %
Current tax expense (recovery)	$	(0.704	)	$	(0.397	)$		(0.307	)		77	%
Deferred tax expense (recovery)	$	(0.854	)	$	0.682	$		(1.535	)		(225	)%

For the three months ended December 31, 2021, the Company recorded a current tax recovery of $0.704 million, an increase of $0.307 million, compared to $0.397 million for the same period in 2020.

Deferred tax recovery was $0.854 million for the three months ended December 31, 2020, a decrease of

$1.535 million from a deferred tax expense $0.682 million, for the same period in 2019.

34   | Management's Discussion and Analysis  

SUMMARY OF QUARTERLY RESULTS

The Company's selected financial information for the last eight completed fiscal quarters is shown in the table below. Accounting policies under IFRS were consistently applied across all periods.

For the quarter ended:	Q4 2021		Q3 2021 (1)		Q2 2021 (1)		Q1 2021 (1)		Q4 2020		Q3 2020		Q2 2020		Q1 2020
Total revenue	$	4.171	$	7.434	$	6.556	$	7.436	$	9.223	$	6.137	$	5.010	$	6.558
Net loss		10.331		15.616		9.000		9.752		8.918		8.713		9.353		7.878
Net loss -
mCloud		9.662		15.466		8.930		10.271		9.725		9.417		9.707		8.021
shareholders
Basic and
diluted loss per	$	0.70	$	1.22	$	0.88	$	1.12	$	1.07	$	1.15	$	1.53	$	1.47
share
Total assets	$	72.106	$	74.706	$	80.586	$	75.996	$	77.319	$	68.113	$	64.349	$	67.869
Total non- current financial liabilities	$	1.513	$	12.978	$	24.565	$	43.440	$	33.443	$	33.319	$	37.223	$	32.795

(1)       The results for each of the quarters ended March 31, June 30 and September 30, 2021 have been adjusted for an immaterial error correction which: impacted revenue, current and non-current long-term accounts receivables; deferred revenue, and correspondingly, impacted net loss and net loss attributable to mCloud shareholders and related loss per share attributable to mCloud shareholders - basic and diluted. During the quarters ended:

• March 31, 2021, decreased revenue and increased net loss, net loss attributable to mCloud shareholders and loss per share attributable to mCloud shareholders - basic and diluted by $0.945 million ($0.10 per share);

• June 30, 2021, decreased revenue and increased net loss, net loss attributable to mCloud shareholders and loss per share attributable to mCloud shareholders - basic and diluted by $0.652 million ($0.13 per share);

• September 30, 2021, increased revenue and decreased net loss, net loss attributable to mCloud shareholders and loss per share attributable to mCloud shareholders - basic and diluted by $0.098 million ($0.01 per share).

Total revenue was $4.171 million in Q4 2021, a decrease of $5.053 million, compared to $9.223 million in Q4 2020. This decrease is attributable to lower revenues as a result of COVID-19 restrictions.

Net losses in Q4 2021 increased to $10.331 million compared to a net loss of $8.918 million in Q4 2020, resulting in a change of $1.413 million quarter over quarter, primarily attributable to a decrease of $5.053 million of revenue due to COVID-19 restrictions and delays. These were partially offset by a change in other expenses (income) of $4.830 million primarily related to fair value gain on derivatives. Net losses in Q4 2021 decreased to $10.331 million compared to a net loss of $15.616 million in Q3 2021, primarily due to a non-cash derivative loss on the 2021 Convertible Debentures, partially offset by higher revenues in Q3 2021.

Basic and diluted net loss per share of $0.70/share in Q4 2021, was a decrease of $0.37/share, from

$1.07/share in Q4 2020. This decrease was primarily attributable to the lower net loss as described above, combined with the increase in share count as a result of the conversion of the 2021 Convertible Debentures in Q3 2021. See “Year in Review - Financing” for further discussion on the 2021 Convertible Debentures and the Company’s listing and public offering on the NASDAQ.

35   | Management's Discussion and Analysis  

CAPITAL RESOURCES

The Company’s objective and polices for managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Company manages its capital structure and makes changes based on economic conditions including the impact of the ongoing pandemic, risks that impact the consolidated operations and future significant capital investment opportunities. In order to maintain or adjust its capital structure, the Company may issue new equity instruments or raise additional debt financing.

Analysis of Cash Flows

On December 31, 2021, the Company had $4.588 million in cash ($1.111 million as at December 31, 2020;

$0.529 million as at December 31, 2019). All cash was held in bank accounts, primarily with Canadian and US banks.

The following table summarizes cash inflows and outflows for the periods shown.

Cash provided by (used in):	2021	2020	2019
Operating activities	$(28.330)	$(24.856)	$(14.516)
Investing activities	(1.064)	(6.395)	(20.732)
Financing activities	32.927	31.857	34.465
Increase in cash, before effect of exchange rate fluctuation	$3.533	$0.606	$(0.784)

Cash flows used in operating activities increased to $28.330 million in 2021 compared with $24.856 million in 2020, primarily as a result of a higher net loss in 2021. This was partially offset by increased Other Income and more non-cash charges in 2021 compared with 2020. Cash flow from operations can vary significantly from period to period as a result of the Company’s working capital requirements which are dependent on operations and increased spending to grow the Company and expand its presence in the market. Cash flows used in operating activities for the year ended December 31, 2020 increased to

$24.856 million, from $14.516 million for the same period in 2019, due to increased spending to expand the Company's presence in markets.

Cash flows used in investing activities decreased in 2021 to $1.064 million compared with $6.395 million in 2020, as there were no acquisitions in 2021 compared to 2020, during which time kanepi was acquired along with assets from AirFusion. This was partially offset by higher spending in 2021 on the acquisition of property and equipment and the development of intangible assets compared with 2020. This spending was focused on furthering development of new AssetCare products. Cash used in investing activities was

$6.395 million for the year ended December 31, 2020 as compared $20.732 million for the same period in 2019, a net decrease of $14.337 million, due to the acquisitions of CSA, AirFusion, kanepi and ongoing development of the Company's technology. For the same period in 2019, the cash used in investing activities primarily related to the acquisition of MTS.

Cash flows provided by financing activities increased to $32.927 million for the year ended December 31, 2021 compared with $31.857 million for the year ended December 31, 2020. The net increase was primarily attributable to the brokered public offering of $12.281 million, net of transaction costs, in conjunction with the Company's NASDAQ listing, combined with an increase in net proceeds received from bank indebtedness, partially offset by net proceeds received, after transaction costs, for warrants issued in 2020. For the year ended December 31, 2020, the Company had net cash received of $31.857 million compared with net cash received of $34.465 million for the same period in 2019, a net decrease of

36   | Management's Discussion and Analysis  

$2.608 million. The decrease is primarily due to the issuance of the 2019 Convertible Debentures, partially offset by cash flows received from public offerings, debentures and special warrants during the year ended December 31, 2020.

Factoring and Security Agreement with Nations Interbanc

Under a factoring and security agreement with Nations Interbanc (“Nations”), Agnity Communications Inc. (“Agnity”), an entity controlled by the Company, receives advances up to a maximum of US$2 million from Nations for providing them the right to collect cash flows from factored accounts receivable and charges a fee for this service. This is a financing agreement and the accounts receivables factored still carry credit risk, are not sold, and are not derecognized from Agnity’s statement of financial position. Nations charges a factoring fee of 1.5% of the gross face invoice amount for the first 30 days and a daily proration of 0.06% per day thereafter. The amount of funds advanced varies and is dependent on the cash requirements of Agnity.

The MasterCard Facility

The Company’s credit facility with MasterCard (the “MasterCard Facility”) with a total limit of $0.425 million provides cash security to MasterCard held on deposit for expenses outstanding on the Company issued credit cards. As at December 31, 2021, the MasterCard Facility was drawn to $0.297 million (December 31, 2020 - $0.601 million).

Short-Form Base Shelf Prospectus

On April 28, 2020, the Company filed a final short form base shelf prospectus which allows the Company to offer, from time to time, over a 25-month period, common shares, preferred shares of any series, senior or subordinated secured or unsecured debt securities, subscription receipts, warrants, and units comprised of one or more of the aforementioned securities, with an aggregate value of up to $200 million. Securities may be offered separately or together, in amounts, at prices, and on terms to be determined based on market conditions at the time of sale and set forth in an accompanying prospectus supplement. This final short form base shelf prospectus was updated and refiled with the British Columbia Securities Commission on November 18, 2021 and with the US Securities and Exchange Commission on Form F-10/ A on November 19, 2021 in connection with the Company’s listing to the NASDAQ.

On November 26, 2021, a supplement was filed in connection with the November 18, 2021 prospectus through which the Company offered 2,100,000 units at a price of US$4.50 per unit. Each unit consisted of one common share in the capital of the Company and one transferable common share purchase warrant. Each warrant is exercisable to purchase one common share at a price of US$4.75 per share up to November 29, 2026, being five years after the closing date of November 29, 2021.

LIQUIDITY

The principal liquidity needs of the Company are for working capital requirements, debt servicing and repayment obligations, and costs associated with the growth of the business. The Company is exposed to liquidity risk which is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due in the normal course of business. The Company manages its liquidity risk by monitoring its operating requirements, reducing costs were possible given the status of the COVID-19 pandemic, and applying for any available government funding to support its business. The Company generally relies on funds generated from operations and external financing to provide sufficient liquidity to meet budgeted operating requirements. The Company assesses its liquidity on an ongoing basis based on current market factors, and cannot make any statements regarding any known trends or fluctuations likely to affect the Company’s liquidity beyond standard market conditions. See Note 26 of the Financial Statements for further discussion on the Company's liquidity risk.

37   | Management's Discussion and Analysis  

The Company’s ability to fund current and future operations is dependent on its ability to generate sources of cash through positive cash flows from operations combined with equity and/or debt financing as needed, including, but not limited to the ATB Facility.

Based on its current business plan and the impacts of COVID-19, the Company has identified near-term capital needs. The Company’s near-term cash requirements relate primarily to the repayment of the 2019 Convertible Debentures, operations, working capital and general corporate purposes. The Company updates its forecast regularly and considers additional financial resources as appropriate. Additionally, the shares in the capital of the Company became dually listed and began trading on the NASDAQ on November 24, 2021. See “Year in Review - Financing” for further discussion on the Company’s NASDAQ listing. The Company has created aggressive marketing and sales plans and increased headcount related to sales and business development, while balancing this with the re-opening from pandemic restrictions, which is expected to increase revenues and operating cash flows.

To date, the Company received wage subsidies totaling $5.817 million and rent subsidies of $1.120 from the Canadian Government. During the year ended December 31, 2021, wage and rental subsidies of

$4.202 million were included in Other Income in the 2021 Financial Statements. To date, the Company received low-interest government loans totaling $1.961 million under the Paycheck Protection Program (the “PPP”) with the US Government, which ceased on May 31, 2021, to help alleviate the negative economic impacts on COVID-19 to its business. During the year ended December 31, 2021, other income of $1.825 million was recognized associated with these loans as they represent government grants.

The outbreak of the COVID-19 pandemic and the measures adopted by governments in countries worldwide to mitigate the pandemic’s spread have impacted the Company. These measures required the Company to restrict deployment of technical services due to the in-person nature of these activities and delay the start of certain projects for a duration of the year. This negatively impacted the Company’s financial performance and liquidity position.

During the year ended December 31, 2021, the Company generated a net loss of $44.699 million and negative cash flows from operating activities of $28.330 million. At December 31, 2021, the Company had a working capital deficiency of $42.108 million. Working capital deficiency is a non-IFRS measure which is calculated as current assets less current liabilities.

Current liquidity levels and available sources of capital are not adequate to fund the working capital deficiency. The most significant cash outflows included in current liabilities include the repayment of the 2019 Convertible Debentures of $23.458 million if not converted on or before May 31, 2022; loans and borrowings of $11.764 million including principal and interest payments; payment of trade and other payables of $12.421 million and payments associated with leases of approximately $1 million.

While restrictions started to ease in the three months ended December 31, 2021, there is still uncertainly over how COVID-19 will impact the Company’s business and the timing of future revenues. Based on the Company’s liquidity position at the date of authorization of these consolidated financial statements and considering the uncertainty surrounding the impact of the pandemic, management estimates that it will need additional financing to meet is financial obligations. The Company is currently working with stakeholders and others to address the working capital deficiency. In the long-term, the ability of the Company to operate as a going concern is dependent on its ability to achieve and maintain profitable operations and positive cash flow from operations, and, as necessary, to obtain the necessary equity or debt financing to continue with expand its operations. To date, the Company has funded its operations through debt and equity financing. While the Company has been successful in raising capital in the past and anticipates the lenders will not accelerate repayment of loans with covenant breaches as of December 31, 2021 and potential breaches forecasted over the coming year, there is no assurance that it will be successful in closing further financings in the future or obtaining waivers of the covenant breaches.

38   | Management's Discussion and Analysis  

As a result, these factors are indicators that material uncertainties exist that raises significant doubt about the Company’s ability to continue as a going concern and, therefore, its ability to realize assets and discharge liabilities in the normal course of business.

In making their assessment, management considered all available information, together with forecasts and other mitigating strategies, about the future which is at least, but not limited to, twelve months from the end of the reporting period. Management has considered in its assessment its plans for the repayment of the 2019 Convertible Debentures, the likelihood of repayment of the term loan which has been classified as current, the required cash principal and interest payments on indebtedness, and the likelihood of payments required under contingent consideration arrangements.

Management also considered cash inflows from current operations, expected government assistance in the form of wage and rent subsidies, and expected increases in revenues and cash flows resulting from new revenue contracts expected over the next twelve months due to the anticipated reduction of COVID-19 related restrictions. Future debt and equity raises have been considered in determining that the going concern assumption remains appropriate.

39   | Management's Discussion and Analysis  

Contractual Obligations and Commitments

Below is a summary of the Company's contractual obligations and commitments as at December 31, 2021.

At December 31, 2021	Undiscounted Contractual Cash Flows
Contractual Obligations	< 1 year		1 – 2 years		> 2 years		Total
Bank indebtedness 1	$	3.460	$	—	$	—	$	3.460
Trade payables and accrued liabilities	12.421		—		—		12.421
Loans and borrowings 2	11.764		0.786		—		12.550
Lease liabilities 3	0.522		0.534		0.179		1.235
2019 Convertible Debentures	24.630		—		—		24.630
2021 Convertible Debentures	0.008		0.103		—		0.111
Warrant liabilities 5	0.710		—		—		0.710
Business acquisition payable	1.399		—		—		1.399
Contractual obligations	$	54.913	$	1.423	$	0.179	$	56.516

At December 31, 2021	Undiscounted Contractual Cash Flows
Commitments	< 1 year		2 - 3 years		4 - 5 years		More than 5 years		Total
Variable lease payments 5	0.397		0.478		0.125		0.013		1.013
Lease payments related to leases which have not yet commenced 6	0.105		2.589		2.763		12.636		18.093
Commitments	$	0.501	$	3.067	$	2.888	$	12.649	$	19.106

¹ No contractual maturity, due on demand. Excludes interest charged on facility.

² Includes term loan with a carrying value of $9.276 classified as current due to covenant breach. Assuming term loan is repaid in accordance with agreement to maturity, the undiscounted contractual cash flows for loans and borrowings would be $2.934 million, $5.472 million, and $4.144 million, respectively for the periods presented above.

³ Variable costs payable under lease agreements are not included in this amount. Minimum payment related to leases which have not yet commenced are not included in this amount.

⁴ Majority of liability will be settled by issuing common shares when warrants are exercised during the year. The remaining amount may be settled in cash or common shares of Agnity.

⁵ Variable lease payments associated with lease liabilities.

⁶ In October 2021, the Company executed a 12-year lease for office space in Calgary, Alberta. Base rent and estimated common expense payments commence in December 2022, preceded by a fixturing period which the Company will use to build out the space. The Company will receive a tenant improvement allowance which is expected to cover the majority of the costs.

40   | Management's Discussion and Analysis  

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

A description of the Company's financial instruments and the financial risks that the Company is exposed to and management of these risks can be found in Notes 25 and 26, respectively, of the Company's 2021 Financial Statements.

Fair Values

The carrying values of cash and cash equivalents, trades and other receivables, bank indebtedness, trade payables and accrued liabilities, other liabilities, business acquisition payable, and due to related parties approximate their fair values due to the immediate or short-term nature of these instruments. The fair values of long-term receivables, loans and borrowings, and convertible debentures approximate their carrying values as they were either recently issued by the Company or fair valued as part of the acquisition purchase price allocations or their interest rate approximates market rate. There has been no significant change in credit and market interest rates since the date of their issuance. The derivative asset is carried at fair value and revalued at each reporting date.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Risk Management

The Company’s board of directors has overall responsibility for determining the Company’s capital and risk management objectives and policies, while retaining ultimate responsibility for ensuring the successful execution of such objectives and policies. The Company’s overall capital and risk management program has not changed throughout the year. This program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance. Risk management is carried out by the Company’s finance department under policies approved by the Company’s board of directors. The finance department identifies and evaluates financial risks in close cooperation with the Company’s senior management team.

Credit Risk

Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial contract. Credit risk is limited to the following instruments and the Company’s maximum exposure to credit risk is the carrying value of the financial assets.

The Company is mainly exposed to credit risk from credit sales. Management of the Company monitors the creditworthiness of its customers by performing background checks on all new customers. Further, management monitors the frequency of payments from ongoing customers and performs frequent reviews of outstanding balances. The Company considers that there has been a significant increase in credit risk when contractual payments are more than 90 days past due.

Provisions for outstanding balances are established based on forward-looking information and revised when there are changes in circumstances that would create doubt over the receipt of funds. Such reviews are conducted on a continued basis through the monitoring of outstanding balances as well as the frequency of payments received. Accounts receivable are completely written off once management determines the probability of collection to be remote.

41   | Management's Discussion and Analysis  

Trade and other receivables, unbilled revenue and long-term receivables are from individual customers and are not assessed based on external credit rating agencies. The Company uses a provision matrix to measure the lifetime expected credit loss (“ECL”) of these balances. Receivables are grouped based on similar credit risk profiles and days past due. Loss rates are based on actual credit loss experience and reflect the forward looking conditions over the expected life of the receivable.

Market risk

This is the risk that changes in market prices such as interest rates or foreign exchange rates will affect the Company’s results or value as a result of holding these financial instruments. The object of market risk management is to manage and control market risk exposures within acceptable parameters given the nature of the business.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its credit facility. Management does not believe interest rate risk is currently material to its business.

Foreign Currency Risk

Currency risk is the risk that the fair values or future cash flows of the Company’s financial instruments will fluctuate because of changes in foreign currency rates and the degree of volatility of these rates. The Company conducts its business in Canada, Asia-Pacific, the United States and Europe, the Middle East and Africa, which gives rise to exposure to markets from changes in foreign currency rates. Currently, the Company does not use derivative instruments or other measures to reduce its exposure to foreign currency risk.

At December 31, 2021, the C$ equivalent carrying amount of the Company’s US$ denominated monetary assets and liabilities was $14.554 million (December 31, 2020 - $8.291 million) and $11.685 million (December 31, 2020 - $16.399 million), respectively. Assuming all other variables remain constant, a fluctuation of +/- 5.0% in the exchange rate between C$ and US$ would impact the net loss for the period by approximately $0.143 million (December 31, 2020 - $0.405 million).

TRANSACTIONS BETWEEN RELATED PARTIES

The Company's related parties include its subsidiaries, its non-controlling interest, an entity related to its non-controlling interest and key management personnel. The Company's related party transactions are in the normal course of operations and have been valued at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

42   | Management's Discussion and Analysis  

Key Management Personnel Compensation

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company defines key management personnel as key officers, executives and directors of the Company. For the three months and years ended December 31, 2021, and 2020, the contractual and discretionary compensation awarded to key management personnel, including director fees, is as follows:

	Three months ended December 31				Year ended December 31
	2021		2020		2021		2020		2019
Salaries, fees and short-term benefits	$	0.564	$	0.404	$	1.614	$	1.683	$	1.460
Share-based compensation	0.181		0.096		0.432		0.628		0.388
	$	0.745	$	0.500	$	2.046	$	2.311	$	1.849

As at December 31, 2021, amounts due to key management personnel for salaries, director fees, and short-term benefits was $0.122 million (December 31, 2020 - $0.116 million; December 31, 2019 - $Nil). In addition, at December 31, 2021, the Company owed $0.031 million (December 31, 2020 - $0.033 million; December 31, 2019 - $Nil) to an officer of the Company for an unsecured, non-interest bearing amount as reimbursement for expenses incurred during the normal course of business.

Other Transactions and Balances

As at December 31, 2021, the Company had $0.234 million (December 31, 2020 - $0.813 million) due to an entity controlled by the principal owner of Agnity for the purchase of assets. The amount is unsecured, non-interest bearing and due on demand.

The Company engaged an entity partially owned by the principal owner of Agnity to perform consulting services in the amount of $3.765 million during the year ended December 31, 2021 (year ended December 31, 2020 - $2.533 million; December 31, 2019 - $1.630 million). As at December 31, 2021, the Company owed the entity $1.112 million (December 31, 2020 - $1.139 million; December 31, 2019 - $1.533 million).

ACCOUNTING MATTERS

Basis of Presentation and Accounting Policies

The Company’s 2021 Financial Statements have been prepared in accordance with IFRS as issued by the IASB. IFRS comprises IFRSs, International Accounting Standards (“IASs”), and interpretations issued by the IFRS Interpretations Committee (“IFRICs”) and the former Standing Interpretations Committee (“SICs”). Note 33 of the Company’s financial statements for the year ended December 31, 2021, provides details of the significant accounting policies. There were no changes in accounting policy in the year that had a material impact on the Company's financial statements.

Critical Accounting Estimates and Judgements

Management is required to make judgments, estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during each reporting period.

43   | Management's Discussion and Analysis  

The estimates and associated assumptions are limited by the relevance of historical data and uncertainty of future events. Actual results could differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

Determination of control of subsidiaries

Judgement is required to determine when the Company has control of subsidiaries. This requires an assessment of the relevant activities of the investee, being those activities that significantly affect the investee’s returns. Despite owning no shares, or having any voting rights, the Company determined that it exercises control over Agnity Global, Inc. (“Agnity”) as the Company has the right to nominate a majority of the members of Agnity’s Operations Committee and therefore the right and ability to direct the relevant activities of Agnity and to significantly affect its returns through the use of its rights. The Company has the right to receive royalty collectability from Agnity on a monthly basis in perpetuity and the Company has credit risk with respect to the collectibility of these royalty payments.

Assessment of indicators of impairment of goodwill, long-lived assets and intangible assets

Management reviews, goodwill, depreciable long-lived assets and intangible assets for impairment triggers to determine if any events or changes in circumstances exist that would indicate that the carrying amount of an asset may not be recoverable over time. If impairment indicators exist, impairment assessments are conducted as the asset level or level of cash generating units (“CGUs”) as appropriate.

Leases

In measuring the Company’s leases judgement is required to determine the lease term of the contract including whether the Company is reasonably certain to exercise extension options where it is the lessee. A longer lease term results in a larger lease liability and right-of-use asset to be recognized by the Company and future changes in this lease term will result in modifications. In addition, estimates and assumptions are required to determine the incremental borrowing rate used to measure lease liabilities on adoption and at inception of a lease.

Contingent consideration

Management uses judgement to assess the existence of contingencies. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. Management also uses judgement to assess the likelihood of the occurrence of one or more future events which impacts the fair value of the contingent consideration at the end for the Reporting Period.

Value of components for convertible debt and equity offerings

Management makes judgements related to the measurement of the fair value of the convertible debentures and equity offerings issued in the period, including the determination of the allocation of the proceeds between the components of the instrument. At inception of an instrument, the Company determines the value of each piece of the instrument and judgement is required in determining the inputs used in the fair value calculations and in determining the probability of certain outcomes.

Determination of stand-alone selling price

The total transaction price of certain revenue contacts is allocated to each performance obligation on a relative stand-alone selling price (“SSP”) basis, representing the selling price as if it was sold separately. This is a formal process involving judgement which could impact the timing of recognized revenue. In most cases, the SSP is based on observable data. If the SSP is not directly observable, the amount is estimated using either the expected cost plus a margin or residual approach. The SSP for perpetual software licenses is highly variable and therefore the Company applies the residual approach.

44   | Management's Discussion and Analysis  

Expected credit loss allowance and provision

The Company recognizes an amount equal to the lifetime expected credit loss (“ECL”) on trade and long term receivables, other receivables, unbilled revenue and amounts due from related parties for which there has been a significant increase in credit risk since initial recognition. Loss allowances are measured based on historical experience and forecasted economic conditions. The amount of ECL is sensitive to changes in circumstances of forecast economic conditions.

Impairment of goodwill and other non-financial assets

Goodwill is reviewed annually on December 31 of each financial year, or more frequently if changes in circumstances indicate that the carrying value may be impaired. The Company completed its annual impairment testing as at December 31, 2021 and determined there was no impairment. Determining whether an impairment has occurred requires the valuation of the respective assets or CGUs, which the Company estimate the recoverable amount using a discounted cash flow method. The key estimates and assumptions used are revenue growth, gross margin, and discount rate. These estimates are based on past experience and management’s expectations of future changes in the market and forecasted growth initiatives.

Share-based payments

The Company uses the Black-Scholes option -pricing model to determine the fair value of stock options and other equity instruments where the goods and services cannot be valued. In estimating the fair value, management is required to make certain assumptions and estimates such as the expected life of options, volatility of the Company's future share price, risk-free rate, future dividend yields and estimated forfeitures at the initial grant measurement date. Changes in assumptions used to estimate fair value could result in different outcomes.

Business combinations - purchase price allocation

The consideration transferred and acquired assets and assumed liabilities are recognized at fair value on the date the Company effectively obtains control. The measurement of each business combination is based on the information available on the acquisition date. The estimate of fair value of the consideration transferred and acquired intangible assets (including goodwill), property and equipment, other assets and the liabilities assumed are based on estimates and assumptions. The measurement is largely based on projected cash flows, discount rates and market conditions at the date of acquisition. See “Fair Market Value” in this MD&A for further discussion.

Taxation

Calculations for current and deferred taxes require management’s interpretation of tax regulations and legislation in the various tax jurisdictions in which the Company operates, which are subject to change. The measurement of deferred tax assets and liabilities requires estimates of the timing of the reversal of temporary differences identified and management’s assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income before they expire, which involves estimating future taxable income.

The Company is subject to assessments by various taxation authorities in the tax jurisdictions in which it operates, and these taxation authorities may interpret the tax legislation and regulations differently. In addition, the calculation of income taxes involves many complex factors. As such, income taxes are subject to measurement uncertainty and actual amounts of taxes may vary from the estimates made by management.

45   | Management's Discussion and Analysis  

Off-Balance Sheet Arrangements

Various forms of security have been granted by the Company and certain of its subsidiaries in favour of arm’s length lenders. The securities granted give the lenders a comprehensive level of protection against a default by the Company or its subsidiaries, as applicable, in the performance of its obligations, including the repayment of the indebtedness and interest thereon. The Company relies on these arrangements in order to obtain financing needed for business purposes. See “Liquidity” in this MD&A for further information regarding the particulars of the Company’s off-balance sheet arrangements.

CONTROLS AND PROCEDURES

Prior to 2022, the Company was not required to establish and maintain DC&P and ICFR pursuant to National Instrument ("NI") 52-107. The Company is listed on the TSX-V and on November 24, 2021 also listed and commenced trading its shares on NASDAQ. As a result of the NASDAQ listing, the Company is no longer a venture issuer. Accordingly, commencing in 2022, mCloud is required to establish and maintain DC&P and ICFR.

In light of these new requirements for 2022, the following discussion provides preliminary commentary about the Company's D&CP and ICFR.

Disclosures Controls and Procedures

The Company’s disclosure controls and procedures (“DC&P”), as defined in National Instrument 52-109 Certification of Disclosure in Issuer’s Annual Filings (“NI 52-109”) are designed to provide reasonable assurance that information required to be disclosed in our filings under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation. They are also designed to provide reasonable assurance that all information required to be disclosed in these filings is accounted for, accumulated and communicated to the Company’s senior management team including the CEO and Chief Financial Officer (“CFO”) as appropriate. This is meant to allow for timely decisions regarding public disclosure.

The Company cannot provide absolute assurance that all information required to be disclosed in its filings is reported within the time periods specified in securities legislation because of the limitations in control systems to prevent or detect all misstatements due to error or fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company have been detected.

Internal Controls over Financial Reporting

The Company’s senior management team is responsible for establishing and maintaining adequate internal controls over financial reporting (“ICFR”), as defined in NI 52-109. ICFR means a process designed by or under the supervision of the CEO and CFO, and effected by the Company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS, and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) are designed to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) are designed to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

46   | Management's Discussion and Analysis  

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Commencing the first quarter of 2022, the Company will be required to report any material weaknesses in the design of ICFR. Any such material weaknesses would also impact DC&P. Although we have not completed a full evaluation as of this date, we are aware of material weaknesses.

Management has identified the following material weaknesses:

• An ineffective control environment resulting from an insufficient number of trained financial reporting and accounting, information technology (IT) and operational personnel with the appropriate skills and knowledge and with assigned responsibility and accountability related to the design, implementation and operating effectiveness of internal control over financial reporting.

• The insufficient number of personnel described above contributed to an ineffective risk assessment process necessary to identify all relevant risks of material misstatement and to evaluate the implications of relevant risks on its internal control over financial reporting.

• An ineffective information and communication process resulting from (i) insufficient communication of internal control information, including objectives and responsibilities, such as delegation of authority; and (ii) ineffective general IT controls and ineffective controls related to spreadsheets, resulting in insufficient controls to ensure the relevance, timeliness and quality of information used in control activities.

• As a consequence of the above and as a result of inadequate segregation of duties and secondary review, the Company had ineffective control activities related to the design, implementation and operating effectiveness of process level and financial reporting controls which had a pervasive impact on the Company's internal control over financial reporting.

• An ineffective monitoring process resulting from the evaluation and communication of internal control deficiencies, including monitoring corrective actions, not being performed in a timely manner.

These material weaknesses resulted in material misstatements, which were corrected prior to the release of the consolidated financial statements as of and for the year ended December 31, 2021, and also in immaterial misstatements, some of which were corrected prior to the release of the consolidated financial statements as of and for the year ended December 31, 2021. These material weaknesses create a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis.

47   | Management's Discussion and Analysis  

Remediation

The Company is still considering the full extent of the procedures to implement in order to remediate the material weaknesses described above, however the current remediation plan includes:

• Identifying key positions necessary to support the Company’s initiatives related to internal controls over financial reporting, and expanding its hiring efforts accordingly.

• Hiring consultants to assist with process improvements and control remediation efforts in targeted accounting, IT and operations processes.

• Formalizing its entity-wide risk assessment process, and documenting internal ownership of risk monitoring and mitigation efforts, with improved risk monitoring activities and regular reporting to those charged with governance at an appropriate frequency.

• Finalize a delegation of authority matrix to enforce desired limits of authority for key transactions, events, and commitments, and communicating these limits of authority to relevant personnel throughout the Company.

• Further simplify and streamline its spreadsheet models to reduce the risk of errors in mathematical formulas and improve the ability to verify the logic of spreadsheets.

• Hiring a consultant to assist management with process improvements and control remediation for general IT controls.

• Continuing to perform scoping exercises and planning for an ERP implementation to streamline the number of applications used for financial reporting activities.

48   | Management's Discussion and Analysis  

 

The Company's authorized capital includes an unlimited number of common shares. As of March 30, 2022, the following common shares, share purchase warrants, stock options, restricted share units and convertible debt conversion options were outstanding:

	Securities Outstanding
Shares issued and outstanding	16,150,100
Share purchase warrants (1)	8,665,406
Stock options	910,389
Restricted share units	229,143
2019 Convertible Debentures (2)	1,563,833
2021 Convertible Debentures (3)	15,750
Total	27,534,621

⁽¹⁾ Share purchase warrants offer the holder the right to purchase a common share of the Company at a specified price by a specific date. Share purchase warrants outstanding have exercise prices ranging from Canadian dollar equivalent at date of issuance between $4.12 - $22.50 and a weighted average remaining contractual life of 2.8 years.

⁽²⁾ Debentures are convertible at the option of the holder and have a conversion price of $15.00 and mature May 31, 2022.

⁽³⁾ Debentures are convertible at the option of the holder and have a conversion price of $5.84 which has been converted to Canadian dollars at March 30, 2022. The Debentures have an remaining life to maturity of 1.8 years.

49   | Management's Discussion and Analysis  

 

This MD&A contains certain "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology 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 may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved". The forward-looking information contained herein and therein may include, but is not limited to, information relating to:

• the expansion of the Company's business to new geographic areas, including Australia, China, Southeast Asia, Continental Europe and the Middle East;

• the performance of the Company's business and operations;

• the intention to grow the business and operations of the Company;

• expectations with respect to the advancement of the Company's products and services, including the underlying technology;

• expectations with respect to the advancement and adoption of new products, including the adoption of new products by the Company's existing customer base;

• the estimated market value of the potential connected commercial buildings and industrial sites the Company could service;

• the acceptance by customers and the marketplace of the Company's products and solutions;

• the ability to attract new customers and develop and maintain existing customers, including increased demand for the Company's products;

• the ability to successfully leverage current and future strategic partnerships, alliances and/or acquisitions;

• the anticipated trends and challenges in the Company's business and the markets and jurisdictions in which the Company operates;

• the ability to obtain capital;

• the competitive and business strategies of the Company;

• sufficiency of capital;

• general economic, financial market, regulatory and political conditions in which the Company operates and;

• the Company's ability to meet the evolving ESG needs of its clients (as ESG is a rapidly developing landscape, and ESG is a key component of the Company's business model).

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

50   | Management's Discussion and Analysis  

An investment in securities of the Company is speculative and subject to a number of risks including, without limitation, the risks discussed under the heading "Risk Factors"of the Company's Annual Information Form. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward- looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this MD&A, the Company has made certain assumptions, including, but not limited to:

• the Company will be able to successfully consolidate acquired businesses with the Company's existing operations;

• the Company will be able to incorporate acquired technologies into its AssetCare platform;

• the Company will be able to realize synergies with acquired businesses;

• the customers of any acquired businesses will remain customers of the Company following the completion of an acquisition;

• the Company will continue to comply with regulatory requirements;

• the Company will have sufficient working capital and will, if necessary, be able to secure additional funding necessary for the continued operation and development of its business;

• development activities and wide-spread acceptance of the use of AI;

• no significant changes to our effective tax rate, recurring revenue, and number of shares outstanding;

• the Company will be able to scale its services and reach all potential markets;

• the estimated number of connected commercial buildings and industrial sites the Company can service is accurate;

• the Company will be able to develop its technologies and leverage certain partnerships to meet its clients' rapidly developing ESG needs and goals;

• key personnel will continue their employment with the Company, and the Company will be able to obtain and retain additional qualified personnel, as needed, in a timely and cost-efficient manner; and

• general economic conditions and global events, including the impact of COVID-19.

Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this MD&A are made as of the date of this MD&A. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.

51   | Management's Discussion and Analysis  

 

EX-99.3

EXHIBIT 99.3

 

mCLOUD TECHNOLOGIES CORP.

ANNUAL INFORMATION FORM

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021

April 4, 2022

TABLE OF CONTENTS

NOTICE TO READER	1
FORWARD-LOOKING STATEMENTS	1
INDUSTRY AND OTHER STATISTICAL INFORMATION	3
Trademark and Trade Names	3
GLOSSARY	4
CORPORATE STRUCTURE	9
GENERAL DEVELOPMENT OF THE BUSINESS	12
THE BUSINESS	27
RISK FACTORS	36
DIVIDENDS	50
DESCRIPTION OF CAPITAL STRUCTURE	50
MARKET FOR SECURITIES	52
PRIOR SALES	53
ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER	55
DIRECTORS AND OFFICERS	55
AUDIT COMMITTEE INFORMATION	65
MAJOR SHAREHOLDERS AND INTERESTS OF EXPERTS AND COUNSEL	67
CODE OF BUSINESS CONDUCT AND ETHICS	68
Promoters	68
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	69
NO DEFAULT IN PAYMENT	69
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS	69
TRANSFER AGENT AND REGISTRAR	70
MATERIAL CONTRACTS	70
INTERESTS OF EXPERT	70
ADDITIONAL INFORMATION	70
SCHEDULE "A"	71

NOTICE TO READER

In this annual information form (the "AIF"), unless otherwise noted or the context indicates otherwise, "mCloud", the "Company", "we", "us" and "our" refer to mCloud Technologies Corp. and its subsidiaries. All financial information in this AIF is prepared in Canadian dollars and using International Financial Reporting Standards ("IFRS"). Unless otherwise specified, in this AIF, all references to "dollars" or to "$" are to Canadian dollars. The information contained herein is dated as of April 4, 2022 unless otherwise stated.

FORWARD-LOOKING STATEMENTS

This AIF contains certain "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology 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 may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved". The forward-looking information contained herein may include, but is not limited to, information relating to:

• the continued expansion of the Company's business in several geographic areas, including Australia, China, Southeast Asia, Continental Europe, the United States and the Middle East;

• the performance of the Company's business and operations;

• the intention to grow the business and operations of the Company;

• expectations with respect to the advancement of the Company's products and services, including the underlying technology;

• expectations with respect to the advancement and adoption of new products, including the adoption of new products by the Company's existing customer base;

• the estimated market value of the potential connected commercial buildings and industrial sites the Company could service;

• the acceptance by customers and the marketplace of the Company's products and solutions;

• the ability to attract new customers and develop and maintain existing customers, including increased demand for the Company's products;

• the ability to successfully leverage current and future strategic partnerships and alliances;

• the ability to develop and secure new strategic partnerships and alliances;

• the anticipated trends and challenges in the Company's business and the markets and jurisdictions in which the Company operates;

2 

• the ability to obtain capital;

• the competitive and business strategies of the Company;

• sufficiency of capital;

• the Company’s ability to meet the evolving environmental, social, and governance ("ESG") needs of its clients within the rapidly developing ESG landscape; and

• general economic, financial market, regulatory and political conditions in which the Company operates.

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Company is speculative and subject to a number of risks including, without limitation, the risks discussed under the heading "Risk Factors" contained herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this AIF, the Company has made certain assumptions including, but not limited to, the following:

• the Company will be able to successfully consolidate acquired businesses with the Company's existing operations;

• the Company will be able to incorporate acquired technologies into its AssetCare platform;

• the Company will be able to realize synergies with acquired businesses;

• the customers of any acquired businesses will remain customers of the Company following the completion of an acquisition;

• the Company will continue to comply with all applicable regulatory requirements;

• the Company will have sufficient working capital and will, if necessary, be able to secure additional funding necessary for the continued operation and development of its business;

• development activities and the wide-spread acceptance of the use of artificial intelligence ("AI");

• there are no significant changes to the Company’s effective tax rate, recurring revenue or outstanding shares;

• the Company will be able to scale its services to reach potential markets;

• the estimated number of connected commercial buildings and industrial sites the Company can service is accurate;

3 

• the Company will be able to develop its technologies and leverage partnerships to meet its clients’ rapidly developing ESG needs and goals;

• key personnel will continue their employment with the Company and the Company will be able to obtain and retain additional qualified personnel, as needed, in a timely and cost-efficient manner; and

• general economic conditions and global events including the impact of COVID-19.

Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this AIF are made as of the date of this AIF. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.

INDUSTRY AND OTHER STATISTICAL INFORMATION

This AIF includes market share, industry and other statistical information that the Company has obtained from independent industry publications, government publications, market research reports and other published independent sources. Such publications and reports generally state that the information contained therein has been obtained from sources believed to be reliable. Although the Company believes these publications and reports to be reliable, it has not independently verified any of the data or other statistical information contained therein, nor has it ascertained or validated the underlying economic or other assumptions relied upon by these sources. The Company does not intend, and undertakes no obligation, to update or revise any such information or data, whether as a result of new information, future events or otherwise, except as, and to the extent required by applicable securities laws.

Trademark and Trade Names

This AIF includes, or may include, trademarks and trade names that are protected under applicable intellectual property laws and are the property of the Company. Solely for convenience, our trademarks and trade names referred to in this AIF may appear without the ® symbol, or other applicable symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, and trade names.

4 

GLOSSARY

In this AIF, the following terms have the following meanings:

"2019 Convertible Debentures"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Convertible Debenture Financing".
"2020 Circular"	has the meaning ascribed thereto in "Promoters".
"2021 Convertible Debentures"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - 2021 Convertible Debentures".
"2021 Debenture Maturity Date"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - 2021 Convertible Debentures".
"2021 Share Consolidation"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - 2021 Share Consolidation and Listing on NASDAQ".
"2199027"	means 2199027 Alberta Ltd.
"ABBCA"	has the meaning ascribed thereto in "Corporate Structure - Intercorporate Relationships".
"Acceleration Notice"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Convertible Debenture Financing".
"Acquisition Payable"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Acquisition of Flow’s Interest in the Royalty Agreement with Agnity".
"Additional Tranche"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".
"Agent"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - April 2021 Brokered Offering".
"Agents’ Option"	means the over-allotment option granted by the Company to Raymond James Ltd. and Paradigm Capital Inc., as agents in respect of the Special Warrants Financing, to arrange for the sale of an additional 15% of Special Warrants, exercisable in whole or in part until 48 hours prior to the closing of the Special Warrants Financing.
"Agnity"	means Agnity Global Inc.
"Agnity Amending Agreement"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Acquisition of Flow’s Interest in the Royalty Agreement with Agnity".
"AI"	has the meaning ascribed thereto in "Forward-Looking Statements".
"AIF"	means this annual information form of the Company dated June 24, 2020 prepared pursuant to Part 6 of National Instrument 51-102 Continuous Disclosure Obligations.
"AirFusion"	means AirFusion, Inc.
"Amalgamation Agreement"	has the meaning ascribed thereto in "Corporate Structure - Intercorporate Relationships".

5 

"Aramco" “Articles”	means the Saudi Arabian Oil Company. means the articles of incorporation of the Company.
"AssetCare"	means the open, cloud-based platform of the Company that employs big data, deep analytics, machine learning, real-time collaboration and communication, and best practice maintenance, among others, to deliver asset management solutions that improve the performance, efficiency, and care of critical assets, equipment, and infrastructure.
"ATB "	means ATB Financial.
"ATB Facility"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Credit Facility with ATB Financial".
"AR"	means augmented reality.
"Audit Committee"	means the audit committee of the Company.
"Autopro Amalgamation Agreement"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Acquisition of Fulcrum and Autopro Consultants".
"Autopro Automation"	means Autopro Automation Ltd.
"Base Shelf Prospectus"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Filing of Final Base Shelf Prospectus".
"BCBCA"	has the meaning ascribed thereto in "Corporate Structure - Name, Address and Incorporation".
"Board"	means the board of directors of the Company.
"Broker Warrants"	means the Warrants issued to agents in consideration for their services under a brokered private placement of the Company.
"Brokered Offering"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - April 2021 Brokered Offering".
"Code"	has the meaning ascribed thereto in "Risk Factors - U.S. Tax Risks".
"Company"	means mCloud Technologies Corp.
"Compensation Committee"	means the compensation committee of the Company.
"Compensation Stock Option"	means an options of the Company exercisable for Shares.
"Consideration Shares"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Acquisition of Fulcrum and mCloud Services ".
"Convertible Debenture Financing"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Convertible Debenture Financing".
"Convertible Debenture Financing Unit"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Convertible Debenture Financing".

6 

"Corporate Governance and Nominating Committee"	means the corporate governance and nominating committee of the Company.
"COVID-19"	means the illness caused by the coronavirus disease, also known as the 2019 novel coronavirus.
"Credit Agreement"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - The Credit Agreement".
"Credit Facility"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - The Credit Agreement".
"CSA"	means Construction Systems Associates, Inc.
"Cypress"	means Cypress Envirosystems Inc.
"DGCL"	has the meaning ascribed thereto in "Corporate Structure - Name, Address and Incorporation".
"EBITDA"	means earnings before interest, taxes, depreciation, and amortization.
"Equity Incentive Plan"	means the Company’s equity incentive plan, which was approved by the shareholders of the Company at the Company’s Annual and Special Meeting of Shareholders held on June 12, 2019.
“ESG”	has the meaning ascribed thereto in “Forward-Looking Information”.
"FDSI"	means Field Diagnostic Services, Inc.
"Fidus"	means Fidus Global, LLC.
"Finder Warrants"	means the Warrants issued to finders in consideration for their services under a non-brokered private placement of the Company.
"Flow"	means Flow Capital Corp.
"Flow APA"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Acquisition of Flow’s Interest in the Royalty Agreement with Agnity".
"Fulcrum"	means Fulcrum Automation Technologies Ltd.
"GBCC Debt Settlement"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - GBCC Debt Settlement".
"Huayan"	means Hubei Huayan Zhidian Technology Co., Ltd.
"HVAC"	has the meaning ascribed thereto in "Corporate Structure - Name, Address and Incorporation".
"IAQ"	means indoor air quality.
"IFRS"	means the International Financial Reporting Standards developed and maintained by the International Accounting Standards Board.
"IIAC"	means the Investment Industry Association of Canada.
"IoT"	has the meaning ascribed thereto in "Corporate Structure - Name, Address and Incorporation".

7 

"July 2020 Offering"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - July 2020 Offering".
"July 2020 Units"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - July 2020 Offering".
"July 2020 Warrant"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - July 2020 Offering".
"kanepi"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - kanepi Acquisition".
"kanepi Earn-out Payments"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - kanepi Acquisition".
"Longyuan"	means Longyuan Construction Investment (Chengde) Wind Power Co., Ltd.
“MENA”	means the Middle East and North Africa region.
"mCloud Services"	means mCloud Technologies Services Inc. (formerly known as Autopro Automation Consultants Ltd.)
"mCloud Technologies"	means mCloud Technologies (Canada) Inc.
"mCloud USA"	means mCloud Technologies (USA) Inc.
"Merger"	has the meaning ascribed thereto in "Corporate Structure - Name, Address and Incorporation".
"Merger Agreement"	has the meaning ascribed thereto in "Corporate Structure - Name, Address and Incorporation".
"mixed reality"	has the meaning ascribed thereto in "The Business - Overview - Specialized Skill and Knowledge".
"NASDAQ"	means NASDAQ Capital Market.
"NGRAIN"	means NGRAIN (Canada) Corporation.
"Norwin"	means Norwin Holding ApS.
"Norwin Debt Settlement"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Norwin Debt Settlement".
"NYCE Sensors"	means NYCE Sensors, Inc.
"Prospectus Supplement"	has the meaning ascribed thereto in "Promoters".
"OTCQB"	means the OTCQB Venture Market.
"Qualifying Condition"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".
"Qualifying Prospectus"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".
"RealWear"	means RealWear Inc.
"SaaS"	has the meaning ascribed thereto in "The Business - Overview".

8 

“SEC” "SEDAR"	means the U.S. Securities and Exchange Commission. means the System for Electronic Document Analysis and Retrieval.
"SecureAire"	means SecureAire LLC.
"Share"	means a common share without par value in the capital stock of the Company.
"Shelf Prospectus"	has the meaning ascribed thereto in "Promoters".
"Special Warrants"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".
"Special Warrants Financing"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".
"Special Warrant Financing Agency Agreement"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".
"Special Warrants Financing Agent"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".
"Special Warrants Financing Unit"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".
"Stock Purchase Agreement"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Stock Purchase Agreement to Acquire CSA".
"TELUS"	means TELUS Communications Inc.
"Third Offering"	has the meaning ascribed thereto in "General Development of the Business - Three Year History - Third Private Placement".
"TELUS"	means the TSX Venture Exchange.
"UVI"	means Universal Ventures Inc.
"UVI Subco"	means Universal Ventures Subco Inc.
"VWAP"	means volume weighted average trading price.
"Warrant"	means a Share purchase warrant of the Company.
"Warrant Share"	has the meaning ascribed thereto in "General Development of the Business - Subsequent Events - Special Warrants Financing".

9 

CORPORATE STRUCTURE

Name and Address

The Company is a publicly-traded technology solutions provider that combines the Internet of Things ("IoT"), the cloud, and AI to create new efficiencies for energy assets including heating, ventilation, and air conditioning ("HVAC") units, wind turbines, and oil and gas controls. The Company’s head office is located at 550-510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3A8. The Company also has technology and operations centers in Edmonton, Alberta; San Francisco, California; Atlanta, Georgia; Houston, Texas; Perth, Australia; Singapore; Beijing, China; London, United Kingdom; and Trnava, Slovakia. The Company’s telephone number is (604) 669-9973.

Incorporation

The Company (formerly UVI) was incorporated on December 21, 2010 pursuant to the Business Corporations Act (British Columbia) ("BCBCA"). The Company’s British Columbia incorporation number is BC0898477. The Articles do not contain a description of the Company’s objects and purposes.

On April 21, 2017, UVI entered into a merger agreement ("Merger Agreement") with its wholly-owned subsidiary, UVI Subco, a corporation incorporated pursuant to the Delaware General Corporation Law ("DGCL"), and mCloud Corp., a corporation incorporated pursuant to the DGCL. Pursuant to the Merger Agreement, UVI acquired all of the issued and outstanding securities of mCloud Corp. by way of a reverse triangular merger of UVI Subco into mCloud Corp. ("Merger"). The amalgamated company, a new private company named "Universal mCloud USA Corp.", continued as a wholly-owned subsidiary of the Company.

On October 13, 2017, the Company changed its name from "Universal Ventures Inc." to "Universal mCloud Corp.", and on October 18, 2017, the Company began trading on the TSXV as a Tier 2 Technology Issuer (as defined in TSXV Policy 2.1 - Initial Listing Requirements) under the new symbol "MCLD". On May 18, 2018, the Company also began trading on the OTCQB under the symbol "MCLDF". The Company subsequently changed its name in October of 2019 to "mCloud Technologies Corp.". On December 13, 2019, the Company announced a change in the trading symbol of its Shares on the OTCQB from "MCLDF" to "MCLDD". On November 24, 2021, the Shares began trading on the NASDAQ under the symbol "MCLD".

Directors

Under the Articles, a director or senior officer who holds a disclosable interest (as such term is defined in the BCBCA) in a contract or a transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only and if to the extent provided under the BCBCA.

A director with a disclosable interest in a contract or a transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors’ resolution approving the contract or transaction, unless all directors have a disclosable interest in the contract or transaction, in which case any or all of those directors may vote on such a resolution.

A director with a disclosable interest in a contract or a transaction into which the Company has entered or proposes to enter and who is present at the meeting of the directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

A director or senior officer who holds any office or possesses any property, right, or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual’s duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the BCBCA.

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The Articles, by-laws, or charter documents of the Company do not specify a retirement age for directors. Directors are not required to hold a Share of the Company as qualification for his or her office but must be qualified as required by the BCBCA to become, act or continue to act as a director.

Shareholders’ Meetings

The Company’s Articles provide that (a) the Company must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors; (b) the directors may, at any time, call a meeting of shareholders to be held at such time and place as may be determined by the directors; (c) the quorum for the transaction of business at any meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting; and (d) in addition to those persons who are entitled to vote at a meeting of shareholders, the only other persons entitled to be present at the meeting are the directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company, any other persons invited to be present at the meeting by the directors or by the chair of the meeting and any persons entitled or required under the BCBCA or the Articles to be present at the meeting.

Limitations on Ownership of Securities

Except as provided in the Investment Canada Act, there are no limitations specific to the rights of non-Canadians to hold or vote the Shares under the laws of Canada or British Columbia or in the Company's Articles, by-laws, or charter documents.

Change in Control

There are no provisions in the Articles, charter documents, or by-laws that would have the effect of delaying, deferring or preventing a change in the control of the Company, or that would operate with respect to any proposed merger, acquisition or corporate restructuring involving the Company or any of its subsidiaries.

Ownership Threshold

The Articles do not require disclosure of Share ownership. Securities legislation in Canada, however, requires that shareholder ownership (as well as ownership of an interest in, or right or obligation associated with, a related financial instrument of a security of the Company) must be disclosed once a person beneficially owns or has control or direction over, directly or indirectly, securities of a reporting issuer carrying more than 10% of the voting rights attached to all the reporting issuer’s outstanding voting securities. Share ownership of director nominees must also be reported annually in proxy materials sent to the Company’s shareholders. Additionally, as the Company is listed on the NASDAQ, it must comply with United States federal securities laws, which requires it to disclose in its annual report, or Form 20-F, holders who own 5% or more of its issued and outstanding shares.

Intercorporate Relationships

The Company has four material, wholly-owned subsidiaries in which it has a direct or indirect material interest: mCloud USA, a corporation incorporated pursuant to the DGCL; mCloud Services, a corporation incorporated pursuant to the Business Corporations Act (Alberta) ("ABBCA"); NGRAIN, a corporation incorporated pursuant to the Canada Business Corporations Act; and kanepi, a corporation incorporated pursuant to the laws of Australia.

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mCloud Technologies (USA) Inc., (“M-USA”)

M-USA is an operating company that carries on its business and operations in the United States. mCloud USA has three wholly owned subsidiaries: mCloud Technologies (Canada) Inc., a corporation incorporated pursuant to the BCBCA; FDSI, a corporation organized pursuant to the DGCL; and CSA, a corporation organized pursuant to the laws of the State of Georgia. mCloud Technologies (Canada) Inc., is an operating company with business and operations in Canada. FDSI provides advanced enterprise software, handheld energy efficiency diagnostic tools and related training, and project management services that enable more rapid and accurate servicing of HVAC equipment, which decreases energy and operational costs. FDSI provides expertise in HVAC diagnostics and building data energy analytics and testing tools, analysis outcomes and programmatic solutions for national and restaurant chains. FDSI’s diagnostics technology is embedded in energy management systems and HVAC units. CSA, which was acquired by the Company on January 27, 2020, is an Atlanta-based 3D technology company. Its operatings were immediately amalgamated with M-USA and the legal entity was formally wound-up effective December 31, 2021.

mCloud Technolgies (Canada) Holdings, Inc., (“MTCH”)

MTCH is a holding company with one direct subsidiary, mCloud Technologies Services Inc., (“MTS”) a professional engineering and integration firm specializing in the design and implementation of high-value industrial automation solutions to the oil and gas industry in Alberta, Canada. On July 11, 2019, the Company indirectly acquired MTCH, a corporation incorporated pursuant to the ABBCA, by way of an amalgamation between one of the Company’s subsidiaries, 2199027, and Fulcrum, which had acquired MTCH and its subsidiary immediately prior to its acquisition by the Company. The acquisition of MTCH, by Fulcrum, was pursuant to a share purchase agreement dated June 12, 2019 between Mike Lane, Bob Beattie, Fulcrum, MTCH and the Company. The amalgamation of 2199027 and Fulcrum was completed pursuant to the terms of an amalgamation agreement dated June 12, 2019 between the Company, Fulcrum and 2199027 ("Amalgamation Agreement"). The amalgamated company, renamed "Autopro Automation Ltd.", continued as a wholly-owned subsidiary of the Company, and was later renamed mCloud Technologies (Canada) Holdings, Inc., with MTS being a wholly-owned subsidiary.

NGRAIN (Canada) Corp.

NGRAIN is an operating company carrying on business and operations in Canada. NGRAIN contributes its AI and 3D technology to the Company’s AssetCare solutions. The Company acquired NGRAIN pursuant to the terms of a share purchase agreement dated January 2, 2018. NGRAIN owns all of the issued and outstanding shares of NGrain (US) Corp., a corporation incorporated pursuant to the laws of the State of Nevada.

mCloud Technologies Australia Holdings Pty Ltd.

On October 8, 2020, the company acquired, via its wholly-owned subsidiary mCloud Technologies Australia Pty Ltd., kanepi Group Pty. Ltd. Both kanepi Services Pty Ltd., and mCloud Technologies Singapore (previously kanepi PTE Ltd) are operating companies carrying on operations in Australia and Singapore. kanpei contributes advanced visual analytics solutions and its technologies are incorporated into the AssetCare platform. The Company also provides the Company with a strategic base in which the Company can increase its product offerings in the southern hemisphere.

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The following chart identifies each of the Company’s wholly owned subsidiaries as of the date of this AIF (including jurisdiction of formation, incorporation or continuance of the various entities):

Ownership of the above noted entities is 100% unless otherwise indicated.

GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

The Company became a public company on the TSXV through a reverse takeover of UVI in October 2017. The Company has engaged in a strategy of acquiring existing businesses that have developed proven technologies and integrating those technologies into the Company’s AssetCare platform. The following is a summary of the general development of the Company over the three most recently completed financial years.

Acquisition of Flow’s Interest in the Royalty Agreement with Agnity

On January 17, 2019, the Company completed the acquisition of Flow’s interest in the royalty agreement with Agnity pursuant to an asset purchase agreement ("Flow APA") for a total purchase price comprised of $204,604 (US$153,227) in cash on closing and the Acquisition Payable (as hereinafter defined). Upon prepayment of the Acquisition Payable, the Company was also required to pay either US$525,000 payable in cash or 150,000 Shares, at Flow’s discretion. In addition, the Company is also required to pay, within the 6 year period following the closing, 150,000 Shares if the 5-day VWAP is equal to or exceeds $10.00 per Share, 100,000 Shares if the 5-day VWAP is equal to or exceeds $20.00 per Share, and 100,000 Shares if the 5-day VWAP on the TSXV is equal to or exceeds $30.00 per Share.

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In connection with the acquisition, the Company received a secured loan from Flow in the principal amount of US$2,000,000, for a term of 12 months at an interest rate of 25% per annum, which was established as an acquisition payable ("Acquisition Payable"). The Company has made monthly interest payments of US$41,667 until July 2019, when the Company announced its full repayment thereof.

On April 22, 2019, the Company executed an amending agreement with Agnity (the "Agnity Amending Agreement") to modify the terms of the royalty agreement acquired. Pursuant to the amending agreement, both parties agreed to establish an operations committee for which at all times the Company has the right to nominate a majority of the members of the operations committee. As consideration for the amendment, the Company agreed to fix the royalty payment at US$10,000 per month commencing in March 2019 and to assume $43,050 of Agnity’s liabilities payable to a third party.

Pursuant to the amending agreement, the Company determined that it had obtained control over Agnity and its subsidiaries pursuant to IFRS 10 Consolidated Financial Statements. The Company considered several factors in determining if and when it gained control over Agnity including, if it had the right and ability to direct the relevant activities of the entity, the ability to significantly affect its returns through the use of its rights, and whether it had exposure to variable returns.

Accordingly, the acquisition of Agnity is accounted as a business combination effective on April 22, 2019 using the acquisition method in accordance with IFRS 3 Business Combinations. Given the Company owns nil voting interests in Agnity, the non-controlling interest is measured at the 100% of the net identifiable assets of Agnity acquired.

This acquisition expanded the Company’s AssetCare platform to reach the telecom space in North America, Asia, and Europe, and solidified the Company’s position as the eminent IoT asset management solutions provider for smart buildings and wind and power utility providers.

Appointment of Non-Executive Strategic and Integration Advisor and Chief Financial Officer

On January 17, 2019, the Company announced the appointment of Sunir Kapoor, former Chairman of Agnity, to the position of non-executive Strategic and Integration Advisor, and Doug Garnhart to the position of Chief Financial Officer, following the resignation of Darren Anderson.

Norwin Debt Settlement

On January 17, 2019, the Company announced that the Board had approved a settlement of up to #eu#11,000 of debt owed to Norwin through the issuance of Shares ("Norwin Debt Settlement"), in accordance with an agreement between the Company and the founder of Norwin, Ole Sangill. Pursuant to the Norwin Debt Settlement, the Company issued 5,896 Shares at a deemed price of $2.90 per Share.

Huayan Partnership

On February 4, 2019, the Company announced its partnership with Huayan, the first enterprise in Hubei Province, China, to engage in smart platform development and IoT product services. Pursuant to the terms of the partnership, mCloud’s AssetCare may distribute through Huayan’s smart building services to its existing and growing customer base, which includes commercial buildings, offices, hospitals and schools.

Appointment of Chief Product Officer

On February 19, 2019, the Company announced the appointment of Barry Po to the position of Chief Product Officer.

14 

Expansion of AssetCare into Wind Industry

On March 26, 2019, the Company signed a memorandum of understanding with Britwind Ltd., an affiliate of Ecotricity Group Ltd., to improve the performance of over 1,000 wind turbines through an upgrade, called "rEsolve", solution. In addition to the wind turbines, the transaction would represent a portfolio of over 90,000 connected assets for the Company.

Expansion of AssetCare for Oil and Gas Field Workers

On April 4, 2019, the Company unveiled plans to improve the efficiency of over 1,400,000 field workers operating 500,000+ assets in oil and gas industries across North America, by connecting them with real-time access to digital work assistance capabilities using the AssetCare platform in RealWear’s HMT-1 industrial head-mounted display solutions.

TELUS Office Tower Agreement

On April 11, 2019, the Company announced the start of a 6-year agreement with TELUS Corporate Real Estate to deploy AssetCare at one of its premier office towers at 200 Consilium Place, Scarborough, Ontario. Pursuant to the agreement, the Company began upgrading legacy thermostats in TELUS’ office tower using Cypress’ wireless pneumatic thermostats and green box controllers.

Appointment of Executive Vice President and Chief Financial Officer

On May 27, 2019, the Company announced the appointment of Chantal Schutz to the position of Executive Vice President and Chief Financial Officer in replacement of Doug Garnhart.

Convertible Debenture Financing

On May 30, 2019, the Company announced the commencement of a private placement offering of convertible unsecured subordinated debentures ("2019 Convertible Debentures") at a price of $100 per 2019 Convertible Debenture ("Convertible Debenture Financing"). The 2019 Convertible Debentures bear interest at a rate of 10% per annum, calculated and paid quarterly on the last day of August, November, February and May of each year, and maturing on the date that is 36 months following the closing of each tranche, as applicable.

The principal amount of the 2019 Convertible Debentures is convertible into units of the Company (each a "Convertible Debenture Financing Unit"), with each Convertible Debenture Financing Unit being comprised of one Share and one Warrant exercisable for one Share at an exercise price of $7.50 until the earlier of (i) 60 months following the initial closing and (ii) the date specified in an Acceleration Notice (as defined below). The conversion price of each Convertible Debenture Financing Unit is $5.00, subject to customary adjustment provisions.

From the date that is 4 months plus 1 day following the closing of the last tranche, subject to any required approvals, the Company will also have the right to accelerate the expiry date of the Debentures issued under the Convertible Debenture Financing to not less than 21 days after the date on which a written notice is provided ("Acceleration Notice"), if the daily VWAP of the Shares trading on the TSXV is greater than $25.00 for any 30 consecutive trading days on the TSXV.

On July 11, 2019, the Company completed the Convertible Debenture Financing for total aggregate gross proceeds of $23,507,500 and net cash proceeds of $22,865,049. The private placement was completed in three separate tranches including the first tranche of the Debentures for gross proceeds of $16,659,000 closed on June 24, 2019, the second tranche for gross proceeds of $1,740,000 closed on June 28, 2019, and the final tranche for gross proceeds of $5,108,500 closed on July 11, 2019.

15 

The Company also compensated finders for introducing purchasers in the Convertible Debenture Financing with aggregate cash commissions of $299,355 and a total of 59,871 Broker Warrants, each exercisable for one Share at an exercise price of $5.00 for a period of 36 months from the date of its issuance. The 2019 Convertible Debentures are listed for trading on the TSXV under the symbol "MCLD.DB".

Acquisition of Fulcrum and mCloud Services

On July 11, 2019, the Company announced the completion of its acquisition of Fulcrum by way of an amalgamation (the "Autopro Amalgamation Agreement") between the Company, 2199027 and Fulcrum, which had acquired mCloud Services immediately prior to the amalgamation.

The total consideration for the acquisition was approximately $36,000,000 paid by issuance of 3,600,000 Shares ("Consideration Shares") to former shareholders of Fulcrum and mCloud Services, issuance of promissory notes in the principal amount of $18,000,000, and cash of $4,650,689. The Consideration Shares are subject to escrow, with 34% of the Consideration Shares released from escrow 6 months following the closing of the acquisition and 33% of the Consideration Shares released on each date that is 12 months and 18 months following the closing of the acquisition.

The acquisition represented the Company’s entry into process industry markets, including new customers in oil and gas, petrochemical, and pipeline management. mCloud Services provides over 30 years of domain expertise in these and other process markets, accelerating the Company’s agenda to deliver AI solutions specific to upstream, midstream, and downstream process facilities. The acquisition has also expanded mCloud’s AssetCare footprint by adding major oil and gas customers along with industry-specific expertise to drive the delivery of integrated oil and gas solutions that combine AI, 3D, and mobile cloud computing technologies.

The Company filed a Form 51-102F4 in respect of the acquisition of mCloud Services dated September 20, 2019, as amended and refiled by the Company on April 15, 2020, and April 28, 2020.

First AssetCare Deployment for Oil and Gas Customers

On July 22, 2019, the Company announced its first deliveries of AssetCare solutions to oil and gas customers . The first mCloud application for “Smart Oil and Gas” was a remote management capability based on technology originally developed at mCloud Services for client support services. This remote management capability is now part of mCloud’s AssetCare platform and is implemented at 6 oil and gas facilities in Alberta, Canada with annual contracted recurring revenues totaling $1,000,000.

The Credit Agreement

On August 7, 2019, the Company entered into a credit agreement ("Credit Agreement") with Integrated Private Debt Fund VI LP. The Credit Agreement provided a secured term credit facility of $13,000,000 ("Credit Facility"), secured against the assets of mCloud Services and certain other assets of mCloud.

The proceeds of the Credit Facility were used to fund the repayment of certain outstanding notes of the Company related to its acquisition of mCloud Services, and for general working capital purposes. The Credit Facility has a term of 7 years, bearing an interest rate of 6.85% per annum, and the Company is to make blended monthly payments of principal and interest based on a 7-year amortization schedule.

Longyuan Agreement

On August 19, 2019, the Company announced the start of a multi-phase relationship with Longyuan to use mCloud’s AssetCare solution to assess and optimize wind turbine pitch systems at Longyuan’s Pu Fa Wind Farm in China. The Company’s Connected Energy team has been working with Longyuan to establish a performance baseline for the wind turbines, focusing on power curve optimization and pitch system health.

16 

GBCC Debt Settlement

In September 2019, the Company settled a debt owed to GBCC Corporation, mCloud’s advisor on market expansion opportunities in China, in the amount of $60,000 through the issuance of 15,000 Shares ("GBCC Debt Settlement") at a price of $4.00 per Share.

Change to the Board

On September 3, 2019, the Company announced the appointment of Ian Russell, President and Chief Executive Officer of the IIAC, as an independent director of the Company. Mr. Russell serves on all of the Company’s board committees, including the Audit Committee and the Compensation Committee.

Appointments to Support mCloud’s AssetCare Expansion

On September 10, 2019, the Company announced the appointment of Jason Brown to the position of President, Connected Industry segment, and Patrick Kelly to the position of Director, Solutions Business Development.

On September 12, 2019, the Company announced the appointment of James (Jim) Christian to the position of Vice President, Emerging Solutions.

New 3D Digital Twin Solution

On October 1, 2019, the Company announced the launch of a new AssetCare solution under the banner of the "3D Digital Twin", which enables mCloud to use high-precision 3D laser scanners to create digital replicas of a "connected facility".

New Middle East Headquarters

On November 7, 2019, the Company announced that it was in the process of establishing a new regional office in Bahrain to expand its AssetCare offering to customers in the Middle East.

Appointment to Support mCloud’s AssetCare Expansion

On November 12, 2019, the Company announced the appointment of Kent Chan to the position of Strategic Growth Manager, Connected Industry segment, to manage operations capabilities and support business growth for AssetCare applications in Southeast Asia and Western Canada for liquefied natural gas.

New Auditor

On November 15, 2019, the Company announced that it had changed its auditors from MNP LLP to KPMG LLP, effective as of November 9, 2019.

2019 Share Consolidation

On December 11, 2019, the Company received TSXV approval of the consolidation of the issued and outstanding Shares on the basis of 1 post-consolidation Share for every 10 pre-consolidation Shares. The Shares commenced trading on the TSXV on a consolidated basis under the same trading symbol "MCLD" on December 13, 2019.

OTCQB Trading Symbol Change

On December 13, 2019, the Company announced a change in its trading symbol on the OTCQB from "MCLDF" to "MCLDD".

17 

Stock Purchase Agreement to Acquire CSA

On December 16, 2019, the Company announced that it had signed a binding stock purchase agreement ("Stock Purchase Agreement") to acquire CSA, an Atlanta-based 3D technology company, effective as of December 13, 2019.

Special Warrants Financing

On January 14, 2020, the Company completed a brokered private placement of 2,875,000 special warrants ("Special Warrants") at a price of $4.00 per Special Warrant for total gross proceeds of $11,500,000 ("Special Warrants Financing"), which amount includes the full exercise of the Agents’ Option.

Each Special Warrant is convertible into one unit of the company ("Special Warrants Financing Unit") without payment of additional consideration upon certain conditions being met. Each Special Warrants Financing Unit consists of one Share and one-half of one Warrant, with each Warrant being exercisable to acquire one Share ("Warrant Share") at an exercise price of $5.40 per Share until January 14, 2025.

The Special Warrants were offered pursuant to an agency agreement dated January 14, 2020, between the Company and Raymond James Ltd. and Paradigm Capital Inc., as agents ("Special Warrants Financing Agents"), pursuant to which the Special Warrants Financing Agents received cash commission equal to 7% of the gross proceeds under the offering (the "Special Warrant Financing Agency Agreement").

On January 27, 2020, the Company completed an additional tranche of the Special Warrants Financing on a non-brokered basis, issuing 457,875 Special Warrants at a price of $4.00 per Special Warrant for total gross proceeds of $1,831,500 ("Additional Tranche").

The Company agreed to use its commercially reasonable efforts to qualify the distribution of the Shares and Warrants issuable upon exercise of the Special Warrants by way of a prospectus ("Qualifying Prospectus") within 60 days following the closing of the offering ("Qualifying Condition"). The securities issued pursuant to the Special Warrants Financing, inclusive of the Additional Tranche, would be subject to a 4-month hold period from the date of the closing of the offering, unless the Qualifying Prospectus were filed and receipted within that time. If the Qualifying Condition were not met, each Special Warrant would be exercised (without payment of additional consideration and with no further action on the part of the holder thereof) for 1:1 Special Warrant Financing Units. The Qualifying Prospectus was filed on April 28, 2020 (See "Filing of Base Shelf Prospectus Supplement" below).

The aggregate gross proceeds under the Special Warrants Financing, inclusive of the Additional Tranche is $13,331,500.

Acquisition of CSA

On January 27, 2020, the Company completed the acquisition of CSA, effective as of January 24, 2020, pursuant to the Stock Purchase Agreement. As of the date of the AIF, CSA is a subsidiary of one of the Company’s material subsidiaries, mCloud USA.

In accordance with the terms and conditions of the Stock Purchase Agreement, the Company paid US$535,142 in cash and issued 380,210 Shares to the vendors on closing as consideration for the acquisition of all of the outstanding stock of CSA.

AirFusion Contract

On February 10, 2020, the Company announced that it had signed a contract, effective as of February 7, 2020, to acquire certain technologies from AirFusion, an AI visual inspection and monitoring technology provider based in Boston, its subsidiary, AirFusion GmbH, existing customer contracts and technologies under development from its partner in Warsaw, Poland.

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The acquisition closed on May 15, 2020. The Company issued 200,000 Shares to the vendors upon closing of the acquisition.

NYCE Sensors

On March 16, 2020, the Company announced that it was embedding advanced sensing technology from NYCE Sensors, a provider of IoT solutions for commercial buildings applications, into its AssetCare solutions for connected buildings to enhance its digital IAQ management.

2019 Strategic Objective

On March 24, 2020, the Company announced that it had surpassed its 2019 strategic objective of connecting at least 40,000 assets to its AssetCare platform in buildings, wind turbines and oil and gas facilities.

Filing of Final Base Shelf Prospectus

On April 28, 2020, the Company filed its short form base shelf prospectus for Nunavut and the amended and restated short form base shelf prospectus dated April 28, 2020 (the "Base Shelf Prospectus") with the securities regulatory authorities of the provinces of Canada and the territory of Nunavut.

The Base Shelf Prospectus allows the Company to offer from time to time, over a 25-month period, Shares, preferred shares, debt securities, subscription receipts, Warrants and units of the Company with an aggregate value of up to $200,000,000. The Base Shelf Prospectus was subsequently amended in November, 2021.

IoT and AI Solutions for Restaurant and Retail Businesses

On April 28, 2020, the Company announced that it is collaborating with industry leaders and medical experts to launch an extension to its AssetCare for connected buildings, using IoT and AI to help restaurant and retail businesses return to work as governments and health officials respond to the COVID-19 pandemic. Since 2020, the Company has implemented its HVAC and IAQ solution to such businesses around the world, notably buildings in North America and Saudi Arabia.

Filing of Base Shelf Prospectus Supplement

On April 29, 2020, the Company filed a prospectus supplement to its Base Shelf Prospectus. The prospectus supplement was comprised of the Qualifying Prospectus per the Special Warrant Financing and upon filing, each Special Warrant was automatically exercised (without payment of additional consideration and with no further action on the part of the holder thereof) into 1:1 Special Warrants Financing Units. Each Special Warrants Financing Unit consists of one Share and one-half of one Warrant, with each Warrant exercisable to acquire one Warrant Share at a price of $5.40 until January 14, 2025, subject to adjustment in certain events. The Warrants were listed for trading on the TSXV under the symbol "MCLD.WT".

SecureAire Partnership

On May 19, 2020, the Company announced that it was combining its AI-powered HVAC and IAQ capabilities of its AssetCare platform with air purification technology based on active particle control through a partnership with SecureAire. Through the use of analytics, the Company and SecureAire will provide facility managers with the ability to measure and verify the air quality of their spaces in real-time.

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Partnership with nybl

On June 24, 2020, the Company announced that it had signed a mutual reseller agreement and global service agreement with nybl, a technology company delivering AI solutions to industries that include process industries such as oil and gas. The agreement provides that nybl and the Company will cooperate to deliver a joint solution that will connect and optimize an initial 2,000 oil wells in North America and Kuwait.

July 2020 Offering

On July 6, 2020, the Company announced the completion of a public offering of 3,150,686 units of the Company (the "July 2020 Units") at a price of $3.65 per July 2020 Unit for aggregate gross proceeds to the Company of $11,500,003 (the "July 2020 Offering"). The syndicate of underwriters for the Offering was co-led by Raymond James Ltd. and Eight Capital, and included Gravitas Securities Inc. and Paradigm Capital Inc. Each July 2020 Unit is comprised of one Share and one-half of one Share purchase warrant (each whole Share purchase warrant, a "July 2020 Warrant"). Each July 2020 Warrant is exercisable to acquire one Share of the Company until July 6, 2022 at an exercise price of $4.75. The July 2020 Warrants are listed for trading on the TSXV under the symbol "MCLD.WS". The July 2020 Offering was completed by way of a prospectus supplement to the Company’s Base Shelf Prospectus.

Non-Brokered Financing

On July 16, 2020, the Company announced the completion of a non-brokered financing pursuant to which the Company issued a total of 1,095,890 units of the Company at a price of $3.65 per unit for aggregate gross proceeds of $4,000,000. Each unit consisted of one Share and one-half one Share purchase warrant of the Company. Each whole Share purchase warrant is exercisable for one Share until July 16, 2025, at an exercise price of $4.75 per Share, subject to adjustment in certain events.

Kanepi Acquisition

On October 13, 2020, the Company completed the acquisition of kanepi Pty Ltd ("kanepi") pursuant to a previously executed share purchase agreement to acquire all the issued and outstanding capital of kanepi dated June 25, 2020. kanepi provides advanced visual analytics solutions for industrial operations of asset intensive industries. kanepi’s footprint in the southern hemisphere is expected to bolster mCloud’s presence in a variety of process industries including upstream and midstream oil and gas, offshore floating production storage and offloading, liquefied natural gas, and mining facilities.

The kanepi technology is applicable to all AssetCare offerings, including the Company's connected worker solution on RealWear headsets. The integration of kanepi's technology is expected to grow mCloud’s ability to potentially connect workers in Australia, Africa, and Southeast Asia.

The Company used $4,697,512 of the net proceeds of the July 2020 Offering in order to satisfy the aggregate cash consideration payable by the Company on completion of the kanepi acquisition. In addition to the cash consideration, the Company issued 2,602,897 Shares to the sellers of kanepi. All consideration Shares will be subject to a 30-month lock-up, with 25% of the consideration Shares released from the lock-up on the 12, 18, 24 and 30-month anniversaries of the closing date.

In addition, subject to kanepi earning AUD$10,000,000 of revenue during the 12-month period following closing or AUD$14,000,000 of revenue during the 24-month period following closing, or kanepi meeting certain customer acquisition targets during such periods, the Company will potentially pay two additional payments to the sellers of AUD$1,000,000 million each (the "kanepi Earn-out Payments"). If earned, 50% of each kanepi Earn-out Payment will be made in cash, with the remainder satisfied by the issuance of Shares based on a price per share equal to the VWAP of the Shares on the TSXV for the 15 trading days immediately prior to the date on which the applicable earn-out condition is satisfied.

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Commercial Buildings

On December 22, 2020, the Company announced it signed its first ten AssetCare contracts with building operators based in New York. The contracts kicked off a new commercial building campaign for the Company, aimed at businesses operating portfolios of small-and-medium-sized buildings in New York and California. The campaign is based on exclusive partnerships the Company secured with local service providers in these two states to jointly market and offer mCloud's solutions using IoT and AI to drive improvements in IAQ and energy efficiency.

Invest Alberta Corporation

On February 2, 2021, the Company announced it had signed a memorandum of understanding with Invest Alberta Corporation, an Alberta crown corporation.

The goal of the memorandum was for the Company to leverage its technology to help Canadian and global energy companies reduce carbon emissions and act on ESG issues. The Company believes the move may accelerate the development and adoption of its offerings through increased engagement with key customers and local industry in Alberta.

Memorandum of Understanding with Fidus Global, LLC

On February 16, 2021, the Company announced that it had signed a memorandum of understanding with Fidus to commence sales, implementation, and ongoing field services for the Company’s AssetCare segment for connected buildings in the United States.

Appointment of Executive Vice President, HR and Global Talent

On March 8, 2021, the Company announced that it had appointed Kim Clauss as Executive Vice President, HR and Global Talent.

2021 Convertible Debentures

The Company completed six tranches of a convertible debenture financing pursuant to which it has issued an aggregate of US$7,043,000 convertible debentures ("2021 Convertible Debentures"). The 2021 Convertible Debentures bear interest from each applicable issuance date at a rate of 8% per annum, calculated and paid quarterly on the last day of December, March, June, and September of each year. Interest will be paid in Shares or cash at the election of the Company. The Debentures will mature on the date that is 36 months following the interest accrual date (each, an "2021 Debenture Maturity Date"). The principal amount of the 2021 Convertible Debentures will be convertible into Shares at the option of the holder at a time prior to the close of business on the last business day immediately preceding the applicable 2021 Debenture Maturity Date. The conversion price per Share is 110% of the lower of i) the VWAP of the Shares on the TSXV for the five trading days preceding the applicable closing date and ii) the closing price of the Shares on the TSXV on the day prior to the applicable closing date, subject to adjustment in certain events. The conversion price of the 2021 Convertible Debentures issued under the first, second, third, fourth, fifth, and sixth tranches of the offering were US$4.44, US$4.59, US$5.55 US$6.21, US$6.66, and US$6.90 per Share, respectively. The principal amount of the 2021 Convertible Debentures outstanding from time to time will be repayable in Shares or cash at the election of the Company on the applicable 2021 Debenture Maturity Date. On July 12, 2021, the Company entered into debt conversion and exchange agreements with the holders of more than 99.2% of the outstanding principal amount of the 2021 Convertible Debentures, pursuant to which the Company issued an aggregate of 6,323,360 Shares and 6,323,360 Warrants in consideration for the extinguishment of USD$8,809,000 principal and USD$302,730 interest owing under the 2021 Convertible Debentures.

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April 2021 Brokered Offering

On April 15, 2021, the Company issued a total of 6,900,000 units of the Company at an issue price of $6.30 per unit for aggregate gross proceeds of CAD$14,490,000 (the "Brokered Offering"). Each unit consisted of one Share and one Warrant of the Company. Each Warrant is exercisable for one Share at an exercise price of $8.55 per Share, subject to adjustment in certain events. The Brokered Offering was led by ATB Capital Markets Inc. (the "Agent"). The Agent was paid a cash fee equal to 7% of the gross proceeds raised under the Brokered Offering.

AssetCare Partnership with Major North American Utility Providers

On April 21, 2021, the Company announced that it would be offering its AssetCare solutions for HVAC and IAQ to small business customers of three major North American energy utility providers, two in the continental United States and one in Canada. Based on information provided by the three utilities, the Company estimated that these utility partnerships will make AssetCare HVAC and IAQ solutions available to approximately one million commercial buildings in the United States and Canada.

On May 18, 2021, the Company announced that it had successfully implemented AssetCare to customers associated with these utility program partnerships. Among these customers are two prominent car dealership properties in the State of New York.

Implementation of AssetCare in the Head Office of Cadence Financial Group

On May 3, 2021, the Company announced that it had equipped the head office of Cadence Financial Group, located in Vancouver, Canada, with a combination of IoT-enabled 24/7 air quality monitoring and AI-driven connected air purification capable of outperforming standard HEPA filtration by continuously eliminating up to 95% of harmful particulates and contaminants smaller than one micron in size.

Release of First Annual ESG Report

On May 11, 2021, the Company published its first annual ESG report. The report detailed the Company’s commitment to ESG and its related activities in 2020 and offered insight into the Company’s ongoing mission to deliver AssetCare to optimize renewable energy assets such as wind turbines and decarbonize energy-intensive assets in commercial buildings and high-intensity ESG sectors such as oil and gas.

Credit Facility with ATB Financial and Intercreditor Agreement with Fiera Private Debt Fund VI LP

On May 17, 2021, the Company announced it had entered into a secured credit facility with ATB, which is a $5,000,000 margined, demand operating loan facility (the “ATB Facility”). The proceeds of the ATB Facility were used in part, to repay in full all indebtedness and liability owing by the Company to HSBC Bank of Canada and for general corporate purposes. The ATB Facility is a demand operating line bearing interest at a floating rate equal to the prime rate per annum established by ATB from time to time for commercial loans denominated in Canadian dollars made by ATB in Canada, plus an applicable margin rate based on the senior debt to EBITDA ratio of the Company at the time of determination. Repayments under the ATB Facility will be made on a monthly interest-only basis until demand. The ATB Facility is secured against certain assets of the Company and its principal subsidiaries.

On June 24, 2021, $2.5 million was drawn from the ATB Facility, in accordance with the maximum amount permitted under the Company’s intercreditor agreement with Fiera Private Debt Fund VI LP (“Fiera”).

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On November 9, 2021, Fiera, ATB and the Company amended the Company’s intercreditor agreement with Fiera, to now permit the Company to draw the full $5 million of the ATB Facility subject to calculated borrowing base limits.

On November 25, 2021, the ATB Facility was amended. As part of the amendment, ATB provided an additional $5,000,000 in available funding to the Company via an accordion, subject to lender consent. In consideration of ATB making available to the Company additional advances under the ATB Facility, the Company granted to ATB non-transferable Warrants to acquire up to 183,486 Shares at an exercise price of $5.45 per Share for a term not exceeding one year.

Director and Officer Change

On May 31, 2021, Michael Sicuro resigned from his position as a director and officer of the Company.

Delivery of AI Grid-Adaptive Energy Savings to Various Buildings in North America

On June 9, 2021, the Company announced that it had added grid-adaptive demand management to its “AssetCare for Buildings” solution using AI in the cloud to actively manage the electric demand of a building in direct response to signals from local utility operators. The Company also announced that it was onboarding its first 20 new AssetCare customer buildings to benefit from this capability in partnership with local utilities in British Columbia, California, and New York.

Deployment of AssetCare in Arkansas Government Buildings

On June 15, 2021, the Company announced that pursuant to its partnership with Fidus, the Company’s AssetCare solution was now being offered at various government buildings operated by the State of Arkansas, as the state seeks to improve indoor air safety across government properties, including office buildings, schools, and other state-run facilities in the wake of COVID-19.

Field Deployment of AssetCare with Oil and Gas Operators in Alberta

On June 23, 2021, the Company announced its partnership with Prosaris Solutions Ltd., through which the Company began its rollout of a new AssetCare solution targeting fugitive gas emissions for operators in the oil and gas sector in Alberta, and enabling such operators to continuously inspect and correct such gas leaks at their facilities.

Partnership with URBSOFT in Saudi Arabia

On July 13, 2021, the Company announced it had signed a Memorandum of Understanding to partner with URBSOFT, a strategic provider of advanced ground and aerial inspection technology solutions in the Kingdom of Saudi Arabia. This partnership paved the way for the Company to take AssetCare to support the digitalization and ESG objectives of Saudi Vision 2030, the Kingdom of Saudi Arabia’s national economic plan.

Appointment of Executive Vice President and Chief Operating Officer

On July 15, 2021, the Company announced it had appointed Arnel Santos to the role of Executive Vice President and Chief Operating Officer. Mr. Santos joined the Company in May 2021 as the Company’s regional leader for the Americas.

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Offering AssetCare Connected Building Solutions via Con Edison in New York

On July 20, 2021, the Company announced it had begun to offer its AssetCare solutions for HVAC and IAQ to small business customers of Con Edison, the energy company that serves New York City and Westchester County, N.Y. The Company is a solutions provider in Con Edison's Business Energy Pro program, which offers energy saving incentives to businesses located on Staten Island and in Westchester County.  Business Energy Pro is one of the first "pay-for-performance" incentive programs in the country.  Small businesses that participate earn payments for measured energy savings over a multi-year period.  Through the Company's partnership with Con Edison, AssetCare customers in New York state can earn payments for measured energy savings achieved through AssetCare over a multi-year period.

Non-Brokered Offering

On August 16, 2021, the Company announced that it had completed a non-brokered private placement offering of 227,027 units of the Company at a price per unit of $1.85 for gross proceeds of approximately $420,000. Each unit consisted of one Share and one Warrant, with each such Warrant entitling the holder thereof to acquire one Share at an exercise price of $2.85 per Share at any time prior to 5:00 p.m. (Mountain Standard Time) on April 15, 2024.

Filing of Form 40-F Registration Statement

On August 17, 2021, the Company announced that it had filed a Form 40-F Registration Statement with the United States Securities and Exchange Commission, fulfilling a significant milestone in the process for the Company to list its Shares on the NASDAQ.

AssetCare Updates

On September 14, 2021, the Company announced the addition of four major technology updates to its portfolio of AssetCare connected solutions, which were presented at mCloud Connect 2021, the Company’s annual customer event. The updates were as follows:

• Addition of a new smartphone scannable QR code that uses AI and the cloud to present a live, real-time reading and assessment of the IAQ inside an AssetCare connected building;

• A new cybersecurity layer powered by Armis Inc., with whom the Company had partnered;

• A new 3D Digital Twin user experience and interface; and

• New connected worker capabilities for AssetCare Mobile enabling field teams to digitize, streamline, and automate manual tasks, and allowing customers to digitize workflows, use paperless forms, and enable virtual document sharing in a single app optimized for the frontline worker.

License from Ministry of Investment of Saudi Arabia to Advance Digitalization and ESG Objectives of Saudi Vision 2030

On October 13, 2021, the Company announced it had received approval and a license to conduct business activities from the Ministry of Investment of Saudi Arabia (“MISA”), marking a major milestone in the Company’s activities in the Middle East and North Africa (“MENA”) region, enabling mCloud to provide AssetCare solutions to the Kingdom of Saudi Arabia and other countries in the MENA region.

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Lease for Calgary

In October 2021, the Company executed a 12-year lease for its office in Calgary, Alberta. The lease term commences on December 1, 2022, preceded by a fixturing period which the Company will use to build out the office space to their specifications.

AssetCare Deployment at Casa Pasta and CHICK “N” DIP

On November 9, 2021, the Company announced it had equipped two initial locations in Saudi Arabia - Casa Pasta and CHICK "N" DIP restaurants - with its AssetCare solution for HVAC and IAQ, to optimize the indoor air quality and energy efficiency in the restaurants. This was facilitated through the Company’s partnership with URBSOFT, previously announced on July 13, 2021.

mCloud Ranked 57^th Fastest-Growing Company in North America

On November 17, 2021, the Company announced that it had been listed as the 57^th fastest-growing company in North America on Deloitte’s Technology Fast 500 list and #2 on the Deloitte Canada Clean Technology Fast 50 list. The Company was ranked based on the 3,106% growth in revenue it experienced between 2017 and 2020.

November 2021 Offering, 2021 Share Consolidation and Listing on NASDAQ

On November 24, 2021, the Company announced that its Shares had begun trading on the NASDAQ under the symbol “MCLD” in connection with the completion of a 3:1 share consolidation (the “2021 Share Consolidation”). On November 29, 2021, the Company announced the completion of an underwritten public offering of 2,100,000 units at a price to the public of US$4.50 per unit, all on a post-consolidation basis. Each unit issued in the offering consisted of one Share and one Warrant to purchase one Share at an exercise price of USD$4.75. The Shares began trading on the NASDAQ on November 24, 2021 under the symbol "MCLD". The Company received gross proceeds of approximately US$9.5 million, before deducting underwriting discounts and commissions and other estimated offering expenses. 

The Company had also granted the underwriters, Maxim Group LLC, to purchase up to an additional 315,000 Shares and an additional 315,000 Warrants (each on a post-consolidation basis) at the public offering price to cover over-allotments. On November 29, 2021, the Company announced that Maxim Group LLC had purchased the 315,000 Warrants in accordance with the over-allotment option, and on December 6, 2021 announced that Maxim Group LLC had exercised the over-allotment option in full to purchase an additional 315,000 Shares at the Offering Price. The proceeds from the over-allotment option were US$1,417,500. The aggregate gross proceeds of the offering, including the over-allotment option, were US$10,917,500.

AssetCare Deployment at Life Plaza

On November 30, 2021, the Company announced a three-year agreement with Colliers Macaulay Nicolls Inc., an appointed agent of Slate Asset Management, to deploy mCloud's AssetCare solution for HVAC and IAQ at Life Plaza, one of Slate Asset Management’s premier office towers in downtown Calgary, Alberta, and the Company’s largest IAQ deployment to date. The initial subscription term for this agreement would become effective at the completion of AssetCare installation and is set to renew in November 2025.

Agreement with Virtual Vision

On December 15, 2021, the Company announced it had signed an agreement with Virtual Vision (the "V2 Agreement"), a local provider of cloud computing services within Saudi Arabia, to host the Company's AssetCare solutions on the V2 Public Cloud for use in the Kingdom. The V2 Agreement enables the Company mCloud to complete the onboarding of several new Saudi customers and immediately take these customers live with AssetCare. The V2 Agreement also ensures mCloud is ready for scalable deployment within Saudi Arabia and in a manner compliant with Saudi legal requirements by geo-locating AssetCare data within the Kingdom.

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Partnership with Mercedes-EQ Formula E Team

On January 20, 2022, the Company announced a partnership with Mercedes-EQ Formula E Team as an official team partner, through which the use of mCloud's AssetCare portfolio of solutions to drive the ESG performance of the Formula E business would be explored. This announcement was made just ahead of the official opening of Season 8 of the ABB FIA Formula E World Championship - the world's only all-electric FIA World Championship and the only sport certified net zero carbon since inception. The Mercedes-EQ Formula E Team had begun collaborating with the Company to explore the use of the Company’s AssetCare portfolio of solutions to drive the ESG performance of their business, including technologies to reduce harmful emissions, the carbon footprint of their facilities, and further enhancing the safety and comfort of the work environment. 

Memorandum of Understanding with Saudi Arabian Oil Company

On January 25, 2022, the Company announced it had signed a memorandum of understanding with Saudi Arabian Oil Company (“Aramco”) to explore the co-development of a digital technology hub for delivering ESG solutions in the Kingdom of Saudi Arabia. The hub would also enable the Company and Aramco to jointly develop new AI-powered innovations to facilitate the carbon reduction of complex energy-intensive assets throughout the Kingdom and abroad. Additionally, the Company announced that it planned to develop a center of excellence that will serve as a home base for a dedicated team of ESG and digital transformation experts based in Saudi Arabia, particularly to leverage Virtual Vision’s high-performance infrastructure in accordance with the V2 Agreement.

Creation of ESG-Digital Hub in Houston, Texas

On January 26, 2022, the Company announced the creation of a new “ESG-Digital Hub” based in Houston Texas, to serve as an additional focal point for local mCloud teams driving the ongoing technological development and customer delivery of AssetCare solutions. The new Houston-based location joins other Company hubs in Calgary, Alberta, established in collaboration with Invest Alberta, and the hub based in Saudi Arabia, in collaboration with Aramco.

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Summary of Revenue

In the following table, revenue is provided for the fiscal years ended for the years ended December 31, 2021, December 31, 2020 and December 31, 2019, and is disaggregated by nature and timing of revenue recognition:

Year ended December 31, 2021

Major Service Line	2021		2020		2019		2021 vs 2020 Change $			2021 vs 2020 %			2020 vs 2019 Change $			2020 vs 2019 %
AssetCare Initialization		1.250	$	7.689	$	5.965	$	(6.4396	)		(84	)%	$	1.724			29	%
AssetCare Over Time		23.462		12.809		2.940		10.653			83	%		9.869			336	%
Engineering Services		0.885		6.430		9.436		(5.545	)		(86	)%		(3.005	)		32	%
Total	$	25.597	$	26.928	$	18.340	$	1.331			5	%	$	8.588			47	%

Timing of revenue recognition	2021		2020		2019		2021 vs 2020 Change $			2021 vs 2020 %			2020 vs 2019 Change $		2020 vs 2019 %
Revenue recognized over time	$	24.423	$	18.551	$	12.375	$	5.872			32	%	$	6.176		50	%
Revenue recognized at point in time upon completion		1.174		8.377		5.965		(7.202	)		(86	)%		2.412		40	%
Total	$	25.597	$	26.928	$	18.340	$	1.331			8	%	$	8.588		47	%

Revenues for the year ended December 31, 2021 were $25.597 million, compared to $26.928 million for the same period in 2020, a decrease of $1.331 million, or 5%, primarily due to $6.138 million of lower AssetCare Initialization and $5.529 million lower engineering services, partially offset by $10.336 million of higher sales from AssetCare Over Time. The declines experienced in AssetCare Initialization and Engineering Services are attributable to interruptions and delays in the delivery of these service streams caused by COVID-19.

For the year ended December 31, 2020, revenues of increased by $2.224 million, to $26.928 million from $18.340 million for the same period in 2019. The increase was due to an increase of $9.869 million in AssetCare Over Time, and higher AssetCare Initialization of $1.724 million due to an increase of customers onboarded during 2020, partially offset by lower Engineering Services of $3.005 million attributable to COVID-19 delays performing in-person engineering services.

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The Company operates in one operating segment. For the purpose of segment reporting, the CEO is the Chief Operating Decision Maker. The determination of the Company’s operating segment is based on its organizational structure and how the information is reported to the CEO on a regular basis. The Company’s revenue is generated from its customers in Canada, the United States of America, Asia-Pacific, Europe, and the Middle East and Africa. The Company’s assets primarily reside in North America and Australia. See “Risk Factors” in this AIF for further discussion on the risks and uncertainties that the Company believes may materially affect the Company’s future performance, including total revenue.

The Company’s revenue by location of the ultimate customer or consumer of product solution are as follows:

	Year ended December 31,
	2021	2020	2019
Canada	$10.734	$13.833	$10.890
United States	6.564	5.691	7.451
Japan	5.850	6.447	-
Australia	0.994	0.152	-
Other	1.445	0.805	-
Total revenue	$25.597	$26.928	$18.341

The table below presents significant customers who accounted for greater than 10% of total revenues for the years ended December 31, 2021, 2020 and 2019:

	2021	2020	2019
Customer A	Less than 10%	13.6 %	n/a
Customer B	Less than 10.0 %	13.1 %	11.0 %
Customer C	11.3%	Less than 10%	20.0 %
Customer D	10.7 %	Less than 10%	n/a

THE BUSINESS

Overview

The Company delivers solutions combining IoT, AI, and the cloud to unlock the untapped potential of energy-intensive assets such as:

• HVAC units and refrigerators in commercial buildings;

• control systems, heat exchangers, and compressors at process industry facilities; and

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• wind turbines generating renewable energy at onshore wind farms.

IoT enables inexpensive, readily scalable connectivity to these and other under-served assets. Data from these IoT sensors are taken into the cloud, where digital twins of these assets are created, and AI is applied to identify opportunities to optimize asset performance. Asset operators and maintainers who manage these assets in the field are guided through a portfolio of mobile, connected applications that enable these teams to take asset management actions that ensure optimal performance.

Through the Company’s proprietary AssetCare platform, AI is used to identify opportunities to improve asset performance and enable asset operators and maintainers to take direct action creating these measurable improvements. Some key applications of the Company’s AssetCare technology at work include:

• curbing wasted energy while improving occupant comfort in commercial facilities through AI-powered adaptive control;

• maximizing asset availability and production yields of renewable energy sources through continuous performance assessment and predictive maintenance; and

• optimizing the uptime and manage the operational risk of industrial process plants, including oil and gas facilities, through continuous AI-powered advisory and assistance to process operators in the field.

In all markets, the Company uses a commercial Software-as-a-Service ("SaaS") business model to distribute its AssetCare solution. Customers pay a simple, subscription-based price that is determined by number of assets, asset size or complexity, and the expected efficiency gains to be created using AI and analytics. Set up as multi-year, recurring subscriptions, customers pay no fees upfront to onboard an AssetCare solution; any upfront costs are leveraged across the lifetime of the initial subscription period.

The Company serves five key market segments:

1) Connected Buildings, which includes AI and analytics to automate and remotely manage commercial buildings, driving improvements in energy efficiency, occupant health and safety through IAQ optimization and food safety and inventory protection;

2) Connected Workers, which includes cloud software connected to third party hands-free, head-mounted “smart glasses” combined with AR capabilities to help workers in the field stay connected to experts remotely, facilitate repairs, and provide workers with an AI-powered “digital assistant”;

3) Connected Energy, which includes inspection of wind turbine blades using AI-powered computer vision and the deployment of analytics to improve wind farm energy production yield and availability;

4) Connected Industry, which includes process assets and control endpoint monitoring, equipment health, and asset inventory management capabilities, driving lower cost of operation for field assets and access to high-precision 3D digital twins enabling remote management of change operations across distributed teams; and

5) Connected Health, which includes remote health monitoring and connectivity to caregivers using mobile apps and wireless sensors that enable 24/7 care without the need for in-person visits, including at elder care facilities, age-in-place situations and medical clinics which also have strict requirements for IAQ and greenhouse gas standards.

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All of the target market segments are powered by common technology unique to the Company, enabling it to create and scale asset energy solutions using IoT, AI and cloud capabilities, with real-time information contextualized to each asset, and secure communications and 3D digital twin technologies.

The Company serves customers globally with a local presence in North America, the United Kingdom and Continental Europe, the Middle East, Southeast Asia, and Greater China.

Production and Services

The Company’s principal method of production is software development associated with the evolution of the AssetCare platform. Actual delivery and ongoing asset management is provided using AI and analytics supported by an internal team of asset management experts, with experience in all of the defined asset classes that mCloud serves in market. Certain aspects of AssetCare onboarding, such as the installation of IoT hardware, may involve third party service providers who partner with mCloud in all of the markets where mCloud does business.

Specialized Skill and Knowledge

The Company retains specialized skills and knowledge within each of its lines of business. In its “Connected Buildings” business, mCloud possesses talent and experience in building energy management, specifically energy efficient management of HVAC units and lighting. Within its “Connected Energy” business, mCloud has a team of experts in wind turbine engineering and turbine operations and maintenance. In its Connected Industry segment, the Company possesses talent and experience related to the management of process assets used in the refinement of oil and gas products.

From a core technology perspective, the team also retains specialized skills and expertise in specific areas of software development, namely the development of artificial intelligence capabilities, such as neural networks and deep learning. Team members also possess backgrounds in data science and statistics. To support the delivery of AssetCare capabilities that support mobile workers, the mCloud team has special knowledge and experience in the development of advanced mobile applications, and 3D capabilities including augmented and virtual reality (collectively known as "mixed reality").

Competitive Conditions

In the principal markets that mCloud operates, there are numerous incumbent solution providers including Honeywell International Inc., Siemens AG, and General Electric Company, which also operate commercial offerings that overlap or compete with AssetCare. mCloud’s competitive advantage lies in its combined use of IoT, AI, and the cloud to make enterprise-grade asset management capabilities available to an entire underserved market of assets that have traditionally gone unmanaged because conventional solutions have been too expensive to be economical.

The Company also competes with emerging technology ventures that overlap with target market segments for AssetCare solutions. These include ventures such as C3.ai and Cognite who offer technologies to heavy industries and BrainBox and Airthings, who provide connected HVAC energy efficiency and IAQ technologies to commercial buildings.

The Company observes that in the principal markets it serves, most incumbent asset management solutions place a heavy focus on acquiring data, storing it, then reporting it to make it available to end customers. mCloud differentiates itself from the competition by using AI and analytics to create actionable insight that help customers decide what actions are the best ones to take to get the most out of their assets - instead of simply reporting on data, mCloud’s AssetCare platform helps customers take action based on data, which ultimately creates customer benefit.

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Marketing Channels

The Company employs sales team members in these countries charged with direct sales efforts of AssetCare solutions. Global marketing efforts to support these sales efforts include virtual campaigns and events to attract new customers, strengthen relationships with existing customers, and build brand presence and visibility. The Company also hosts an annual user conference called mCloud Connect, which includes head-liners from well-known industry leaders, panels, and interactive sessions to gather “voice of the customer” feedback, which is used to improve the Company’s portfolio of AssetCare offerings.

The Company maintains a robust presence in seven countries: Canada, the United States, the United Kingdom, the Kingdom of Bahrain as the gateway to markets in the Middle East, China, Singapore and Australia, supplemented by a growing international network of channel and delivery partners around the world.

The Company has conducted extensive research to size the markets and opportunities it can access through its AssetCare platform. The Company estimates it has the capability of serving over 7.3 million commercial buildings and over 34,000 industrial sites in 20 different locales worldwide, with each building or site representing multiple

potential connectable assets, workers, or 3D digital twins.

Serviceable commercial buildings include restaurants, mid-size retail (including retail finance sites such as bank branches), and long-term care facilities. In these buildings, the Company connects to assets such as HVAC, lighting, and refrigeration units. Connectable workers include people involved in the day-to-day operation or maintenance of these commercial buildings, including mechanical service workers and facility managers.

Industrial sites include oil and gas, liquefied natural gas, and floating production storage and offloading facilities, as well as wind farms, mining processing plants, and pulp and paper facilities. In these locations, connectable assets include process control systems, heat exchangers, pumps, and gas compressors. Connectable workers include field operators, maintainers, engineers, asset managers, and plant managers. The Company’s experience in delivering digital 3D models from entire multi-billion-dollar assets the size of a FPSO vessel down to asset subcomponents such as wind turbine blades creates large obtainable market opportunities.

Based on the average monthly fee currently generated per connection or 3D digital twin, the Company estimates the current obtainable market opportunity to be approximately $24 billion in recurring revenue per annum including all potential targeted assets, workers, and 3D digital twins that the Company can currently address.

Intangible Properties

mCloud’s success depends in part on its ability to create unique intellectual property that improves the Company’s ability to create and deliver customer value in the principal markets where it does business. The Company relies on the use of intellectual property rights, including patents, copyrights, registered trademarks, and trade secrets in Canada, the United States and the European Union.

The Company retains a portfolio of 15 technology patents in the areas of HVAC energy efficiency, 3D, and asset management, a global customer base in industries including retail, healthcare, heavy industry, oil and gas, nuclear power generation, and renewable energy, and a portfolio of 12 registered trademarks, including marks related to mCloud and AssetCare:

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Patent	Patent No. / App. Serial No.	Jurisdiction	Date Issued / Date Filed	Status	Registered Owner
Apparatus and method for detecting faults and providing diagnostics in vapor compression cycle equipment	6,658,373	US Patent	12/2/2003	Live	Field Diagnostic Services, Inc.
Estimating operating parameters of vapor compression cycle equipment	6,701,725	US Patent	3/9/2004	Live	Field Diagnostic Services, Inc.
Estimating evaporator airflow in vapor compression cycle cooling equipment	6,973,793	US Patent	12/13/2005	Live	Field Diagnostic Services, Inc.
Apparatus and method for detecting faults and providing diagnostics in vapor compression cycle equipment	7,079,967	US Patent	7/18/2006	Live	Field Diagnostic Services, Inc.
Method for Determining Evaporator Airflow Verification	8,024,938	US Patent	9/27/2011	Live	Field Diagnostic Services, Inc.
Method and Apparatus for Transforming Polygon Data to Voxel Data for General Purpose Applications	6,867,774	US Patent	3/15/2005	Live	NGRAIN (Canada) Corporation
Method and System for Rendering Voxel Data while Addressing Multiple Voxel Set Interpenetration	7,218,323	US Patent	5/15/2007	Live	NGRAIN (Canada) Corporation
Method and Apparatus for Transforming Point Cloud Data to Volumetric Data	7,317,456	US Patent	1/8/2008	Live	NGRAIN (Canada) Corporation
Method, System and Data Structure for Progressive Loading and Processing of a 3D Dataset	7,965,290	US Patent	6/21/2011	Live	NGRAIN (Canada) Corporation

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Method and System for Calculating Visually Improved Edge Voxel Normals when Converting Polygon Data to Voxel Data	8,217,939	US Patent	7/16/2012	Live	NGRAIN (Canada) Corporation
System and Method for Optimal Geometry Configuration Based on Parts Exclusion	9,159,170	US Patent	10/13/2015	Live	NGRAIN (Canada) Corporation
Method and System for Emulating Kinematics	9,342,913	US Patent	5/17/2016	Live	NGRAIN (Canada) Corporation
System, Computer-Readable Medium and Method for 3D Differencing of 3D Voxel Models	9,600,929	US Patent	3/21/2017	Live	NGRAIN (Canada) Corporation
System, Method and Computer-Readable Medium for Organizing and Rendering 3D Voxel Models in a Tree Structure	9,754,405	US Patent	9/10/2015	Live	NGRAIN (Canada) Corporation
Portable apparatus and method for decision support for real time automated multisensor data fusion and analysis	10,346,725 072239.0004 / BR BR 11 2017 024598 1 072239.0005 / MX MX/a/2017/014648 072239.0006 / EU EP16797087.0 072239.0007 / IN 201747045184 072239.0008 / CN 2016800413571 072239.0009 / CA 072239.0010 / ZA 2018/01638	US Patent National Stage Filings in BR / MX / EU / IN / CN / CA / ZA	7/9/2019	Live	mCloud Corp.

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(ii) Trademarks

Trademark	App. Serial No. / Reg. No.	Date Issued / Date Filed	Status	Registered Owner
ACRx	75281276/ 2492872	9/25/2001	Live	Field Diagnostic Services, Inc.
MCLOUD CORP (standard mark)	87327278/ 5333557	14/11/2017	Live	mCloud Corp.
mCloud Corp (design mark)	87327435/ 5333558	14/11/2017	Live	mCloud Corp.
Asset Circle of Care (standard mark)	87327483/ 5333559	14/11/2017	Live	mCloud Corp.
AssetCare (standard mark)	87327512/ 5333560	11/14/2017	Live	mCloud Corp.
3KO	77398780/ 3796217	11/11/2008	Live	NGRAIN (Canada) Corporation
NGRAIN (design mark)	77912373/ 3840652	6/15/2010	Live	NGRAIN (Canada) Corporation
NGRAIN (design mark)	009245101 (EU)	12/27/2010	Live	NGRAIN (Canada) Corporation
PRODUCER	009327412 (EU)	2/3/2011	Live	NGRAIN (Canada) Corporation
NGRAIN (standard mark)	78199527/ 2881383	9/7/2004	Live	NGRAIN (Canada) Corporation
mCloud Connect (standard mark)	5756945	5/21/2019	Live	mCloud Corp.
mCloud (design mark)	88/907693		In Application (Approved)
mCloud (design mark)	88/907606		In Application (Approved)
AssetCare (design mark)	88/907679		In Application (Approved)
PanoMap (standard mark)	88/916707 6,444,185	8/10/2021	Live	mCloud Corp.
Newton Engine (standard mark)	88/907682		In Application (Approved)

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Kanepi	40201608870Y / SG	June 1 2016	Live	Kanepi Pte Ltd
	40201608871T / SG	June 1 2016	Live	Kanepi Pte Ltd
SEE YOUR BUSINESS	2024268 / AUS	March 11 2020	Live	Kanepi Pte Ltd
MY LDAR (standard mark)	97264404	February 11, 2020	In Application	mCloud Corp.
	97264407	February 11, 2020	In Application	mCloud Corp.

The Company also uses key domain names, including acrx.com, fdsi.site, fdsi.us, fielddiagnostics.com, fmdiagnosticscoe.com, mysamobile.com, peatanalytics.com, mcloudcorp.com, assetcare.io, assetcare.net, myldar.com, ngrain.com, ngrain.ca, ngrain.net, ngrain.org and i3dimensions.com.

The Company further protects its proprietary source code and algorithms as trade secrets, limiting access to these to employees who have a need to know such information.

Environmental Protection

The Company does not see any financial or operational effects from environmental protection requirements on capital expenditures, profit or loss, and competitive position in this financial year. In the future, the Company may see enhanced demand for AssetCare in businesses who have a mandate to become more energy efficient or demonstrate they have instituted effective methane emission reduction and mitigation programs in response to new government regulations.

Employees

As of the date of this AIF, the Company and its subsidiaries have 216 employees employed in 14 offices in Canada, the United States, Greater China, the Middle East, Southeast Asia, and Australia. As of the year ended December 31, 2020, the Company and its subsidiaries had 227 employees employed in 14 offices in Canada, the United States, Greater China, the Middle East, and Southeast Asia. As of the year ended December 31, 2019, the Company and its subsidiaries had over 216 employees employed in twelve offices in Canada, the United States, Greater China, the Middle East, and Southeast Asia. The fluctuation in the Company’s number of employees is not significant, and none of the Company’s employees belong to any labour unions. Furthermore, all of the Company’s employees are employed on a full-time basis.

Incentive stock options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock awards other than incentive stock options (including non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards, collectively “Stock Awards”) may be granted to employees, directors and consultants; provided, however, that Stock Awards may not be granted to employees, directors and consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, subject to certain exceptions set out in the Company’s Incentive Stock Option Plan.

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Foreign Operations

The Company operates in multiple geographies around the world, including North America (the United States and Canada), Europe (the United Kingdom and continental Europe), Southeast Asia (primarily Greater China), the Middle East (primarily Saudi Arabia), and Australia with most of its business taking place outside of Canada. mCloud is not dependent on business in any one region for its success.

Research and Development

The Company’s customers use its software to monitor their assets and rely on the Company to provide updates and releases as part of its software maintenance and support services. Consequently, while the Company has not implemented a formal research and development policy for the past three years, the Company is and has been (including, but not limited to, the past three years) engaged with a number of research and development initiatives as a part of its ongoing effort to continually update its software and develop new products.

Fixed Assets

On September 27, 2021, the Company executed a 12-year lease for its office in Calgary, Alberta located at 8 Avenue SW, Steven Avenue Place, Calgary, Alberta, Canada. In total, the Company has leased 33,000 square feet of the property, situated on the 3^rd and 33^rd floor of the building located at the aforementioned address. The lease term commences on December 1, 2022, preceded by a fixturing period which the Company will use to build out the office space to their specifications. The Company is currently in the design and scoping stage, and has not yet finalized its plans for the precise use of the property, and does not yet have any plans to construct, expand, or improve the facilities. No environmental issues have currently been identified that will affect the Company’s utilization of the asset.

Material Effects

Certain government regulations have a material impact on the Company’s business. The Company has implemented certain measures to address and conform to all the frameworks noted below, and others as required, and conducts an annual review to ensure compliance with such frameworks and regulations.

The Company is required to adhere to such frameworks as the EU’s General Data Protection Regulations, the EU’s ePrivacy Regulation, Brazil’s General Data Protection Law, the California Consumer Privacy Act, the California Online Privacy Protection Act, and various other regulations in effect in other U.S. states, which require the Company, among other things, to have a valid privacy policy, block cookies before the user provides consent, allow users to opt-in or opt-out of receiving communications from the Company, show a notice of collection, and keep records of consent and processing. While the Company does not yet do business in Brazil, and has not reached the required number of users in California for the applicable regulations noted above to have effect, the Company has implemented measures to ensure that it remains compliant with these frameworks in advance of such compliance being legally required.

Data security practices are monitored and regulated by the Federal Trade Commission in the U.S., the Office of the Privacy Commissioner in Canada, and the European Data Protection Board of the EU. Canada, in particular, has several privacy law statutes that the Company is required to adhere to, such as the Personal Information Protection and Electronic Documents Act, the Personal Information Protection Act (Alberta), the Personal Information Protection Act (British Columbia), and An Act Respecting the Protection of Personal Information in the Private Sector (Quebec).

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Generally speaking, the Company is also required to comply with and respect the competition, consumer protection, and taxation laws, and intellectual property laws and regulations handed down by standard copyright and trademark laws in each of the jurisdictions it operates in. For confidential government contracts that require specific approvals to examine, possess, or transfer intellectual property, the Company is required to adhere to the International Traffic in Arms Regulations in the US, and the Canadian Controlled Goods Program in Canada. Additionally, the Company also follows and adheres to the best practices set out in the various National Institute of Standards and Technology frameworks, the Information Technology Infrastructure Library framework, and the Certified Information Systems Security Professional framework.

RISK FACTORS

AN INVESTMENT IN SECURITIES OF THE COMPANY IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK AND SHOULD ONLY BE MADE BY INVESTORS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.

Prior to making an investment decision, investors should consider the investment risks set forth below and those described elsewhere in this AIF, which are in addition to the usual risks associated with an investment in a business at an early stage of development. The directors of mCloud consider the risks set forth below to be the most significant, but do not consider them to be all of the risks associated with an investment in securities of mCloud. If any of these risks materialize into actual events or circumstances or other possible additional risks and uncertainties of which the directors are currently unaware or which they consider not to be material in connection with mCloud’s business actually occur, mCloud’s assets, liabilities, financial condition, results of operations (including future results of operations), business and business prospects, are likely to be materially and adversely affected. In such circumstances, the price of mCloud’s securities could decline and investors may lose all or part of their investment.

Factors Influencing Serviceable Obtainable Market.

The Company’s statements regarding serviceable obtainable market reflect the Company’s estimate of the entire market available to the Company and its competitors. The markets for the Company's AssetCare offering are subject to substantial competition and mCloud may not capture as much market share as it currently expects to capture. mCloud has direct competitors in these markets who may have credible advantages over the Company in areas such as financial strength, regional presence, and human resources, which could influence the Company's ability to capture market share. Certain prospective customers in these markets may also have the means to develop and deploy their own solutions. Furthermore, current mCloud customers in these markets may decide not to renew or reduce the scope of their AssetCare subscriptions following the completion of their subscription term based on business need or changes in their strategy. The Company partners with third-parties such as mechanical contractors and engineering service providers to deliver AssetCare, and in the event mCloud captures greater market share, the Company’s ability to successfully deliver to customers depends on either these partnerships or mCloud’s ability to scale its local presence to meet demand. The Company believes that statements about its serviceable obtainable market are reasonable. However, there is no guarantee that mCloud will be able to capture or service any portion of the market, which could adversely affect mCloud’s business and financial results.  

Force Majeure Events - COVID-19.

Major health issues and pandemics, such as COVID-19, may adversely affect trade, global and local economies, and the trading prices of the Shares. Outbreaks may affect the supply chain of the Company and may restrict the level of economic activity in affected areas, which may adversely affect the price and demand for the Company's products and services, as well as the Company’s ability to collect outstanding receivables from its customers. It is possible that the Company may be required to temporarily close one or more of its offices and suspend its operations. Given the ongoing and dynamic nature of the circumstances surrounding COVID-19, the extent to which the coronavirus will impact the Company’s financial results and operations is uncertain. It is possible, however, that the Company’s business operations and financial performance in 2022 and beyond may be materially adversely affected by COVID-19.

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Going Concern Assumption.

The financial statements of mCloud have been prepared in accordance with IFRS on a going concern basis, which presumes that mCloud will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. mCloud's continuation as a "going concern" is uncertain and is dependent upon, amongst other things, attaining a satisfactory revenue level, the support of its customers, its ability to continue profitable operations, the generation of cash from operations, and its ability to obtain financing arrangements and capital in the future. These material uncertainties represent risk to mCloud’s ability to continue as a going concern and realize its assets and pay its liabilities as they become due. If the "going concern" assumption was not appropriate for the financial statements, then adjustments would be necessary to the carrying values of assets and liabilities, the reported expenses and the balance sheet classifications used. Such adjustments could be material.

mCloud may be unable to identify and complete suitable platform acquisitions and acquisitions in its existing vertical markets.

mCloud cannot be certain that it will be able to identify suitable new acquisition candidates that are available for purchase at reasonable prices. Even if mCloud is able to identify such candidates, it may be unable to consummate an acquisition on suitable terms. When evaluating an acquisition opportunity, mCloud cannot assure investors that it will correctly identify the risks and costs inherent in the business that it is acquiring. If mCloud is to proceed with one or more significant future acquisitions in which the consideration consists of cash, a substantial portion of its available cash resources may be used, or it may have to seek additional financing to complete such acquisitions.

Potential acquisitions could be difficult to consummate and integrate into mCloud’s operations, and they and investment transactions could disrupt mCloud’s business, dilute stockholder value or impair mCloud’s financial results.

As part of mCloud’s business strategy, it may continue, from time to time, to seek to grow its business through acquisitions of or investments in new or complementary businesses, technologies or products that it believes can improve its ability to compete in its existing customer markets or allow it to enter new markets. The potential risks associated with acquisitions and investment transactions include, but are not limited to:

• failure to realize anticipated returns on investment, cost savings and synergies;

• difficulty in assimilating the operations, policies, and personnel of the acquired company;

• unanticipated costs associated with acquisitions;

• challenges in combining product offerings and entering into new markets in which we may not have experience;

• distraction of management’s attention from normal business operations;

• potential loss of key employees of the acquired company;

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• difficulty implementing effective internal controls over financial reporting and disclosure controls and procedures;

• impairment of relationships with customers or suppliers;

• possibility of incurring impairment losses related to goodwill and intangible assets; and

• other issues not discovered in due diligence, which may include product quality issues or legal or other contingencies.

Acquisitions and/or investments may also result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, the expenditure of available cash, and amortization expenses or write-downs related to intangible assets such as goodwill, any of which could have a material adverse effect on mCloud’s operating results or financial condition. Investments in immature businesses with unproven track records and technologies have an especially high degree of risk, with the possibility that mCloud may lose its entire investment or incur unexpected liabilities. mCloud may experience risks relating to the challenges and costs of closing a business combination or investment transaction and the risk that an announced business combination or investment transaction may not close. There can be no assurance that mCloud will be successful in making additional acquisitions in the future or in integrating or executing on its business plan for existing or future acquisitions.

mCloud may acquire contingent liabilities through acquisitions that could adversely affect mCloud’s operating results.

mCloud may acquire contingent liabilities in connection with acquisitions it has completed, which may be material. Although management uses its best efforts to estimate the risks associated with these contingent liabilities and the likelihood that they will materialize, their estimates could differ materially from the liabilities actually incurred.

Acquisitions, investments, joint ventures, and other business initiatives may negatively affect mCloud’s operating results.

The growth of mCloud through the successful acquisition and integration of complementary businesses is a critical component of its corporate strategy. mCloud continually evaluates acquisition opportunities within its respective marketplace and may be in various stages of discussions with respect to such opportunities. mCloud plans to continue to pursue acquisitions that complement its existing business, represent a strong strategic fit, and are consistent with its overall growth strategy and disciplined financial management. mCloud may also target future acquisitions to expand or add functionality and capabilities to its existing portfolio of solutions, as well as add new solutions to its portfolio. mCloud may also consider opportunities to engage in joint ventures or other business collaborations with third parties to address market segments. These activities create risks such as: (i) the need to integrate and manage the businesses and products acquired with mCloud’s own business and products; (ii) additional demands on its resources, systems, procedures and controls; (iii) disruption of its ongoing business; and (iv) diversion of management’s attention from other business concerns. Moreover, these transactions could involve: (a) substantial investment of funds or financings by issuance of debt or equity or equity-related securities; (b) substantial investment with respect to technology transfers and operational integration; and (c) the acquisition or disposition of product lines or businesses.

Also, such activities could result in charges and expenses and have the potential to either dilute the interests of existing shareholders or result in the issuance or assumption of debt. This could have a negative impact on the credit ratings of mCloud’s outstanding debt securities.

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Such acquisitions, investments, joint ventures, or other business collaborations may involve significant commitments of financial and other resources of mCloud. Any such activity may not be successful in generating revenues, income, or other returns to mCloud, and the resources committed to such activities will not be available to it for other purposes. Moreover, if mCloud is unable to access capital markets on acceptable terms or at all, it may not be able to consummate a specific acquisition, or a series of acquisitions. Alternatively, mCloud may have to complete a transaction on the basis of a less than optimal capital structure. mCloud’s potential inability (i) to take advantage of growth opportunities for its business or for its products and services, or (ii) to address risks associated with acquisitions or investments in businesses, may negatively affect its operating results. Additionally, any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or charges associated with any acquisition or investment activity, may materially impact mCloud’s results of operations which, in turn, may have an adverse material effect on the market price of Shares or credit ratings of its outstanding debt securities.

The loss of one or more of mCloud’s key personnel, or its failure to attract and retain other highly qualified personnel in the future, could harm its business.

mCloud currently depends on the continued services and performance of its key personnel, including its executive officers. The loss of key personnel could disrupt mCloud’s operations and have an adverse effect on its business and financial results.

As mCloud continues to grow, it cannot guarantee that it will continue to attract the personnel it needs to maintain its competitive position. As mCloud scales, the total cash and equity compensation structure necessary to retain and attract key personnel may have to change to be in line with market rates for the verticals in which mCloud competes. If mCloud fails in attracting, hiring, and integrating key personnel with industry-specific experience, or retaining and motivating existing personnel, it may be unable to grow effectively.

mCloud cannot be certain that additional financing will be available on reasonable terms when required, or at all.

From time to time, mCloud may need additional financing, including to fund potential acquisitions. Its ability to obtain additional financing, if and when required, will depend on investor demand, mCloud’s operating performance, the condition of the capital markets, and other factors. To the extent mCloud draws on its credit facilities, if any, to fund certain obligations, it may need to raise additional funds, and mCloud cannot provide assurance that additional financing will be available to it on favorable terms when required, or at all. If mCloud raises additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences, or privileges senior to the rights of mCloud’s Shares, and existing shareholders may experience dilution.

mCloud may not be able to protect its intellectual property rights, which could make it less competitive and cause it to lose market share.

mCloud’s software is proprietary. mCloud’s strategy is to rely on a combination of copyright, patent, trademark and trade secret laws in the United States, Canada, and other jurisdictions, and to rely on license and confidentiality agreements and software security measures to further protect its proprietary technology and brand. mCloud has obtained or applied for patent protection with respect to some of its intellectual property, but generally does not rely on patents as a principal means of protecting its intellectual property. mCloud has registered or applied to register some of its trademarks in the United States and in selected other countries. mCloud generally enters into non-disclosure agreements with its employees and customers, and historically has restricted third-party access to its software and source code, which it regards as proprietary information.

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The steps mCloud has taken to protect its proprietary rights may not be adequate to avoid the misappropriation of its technology or independent development by others of technologies that may be considered a competitor. mCloud’s intellectual property rights may expire or be challenged, invalidated, or infringed upon by third parties or it may be unable to maintain, renew or enter into new licenses on commercially reasonable terms. Any misappropriation of mCloud’s technology or development of competitive technologies could harm its business and could diminish or cause it to lose the competitive advantages associated with its proprietary technology and could subject it to substantial costs in protecting and enforcing its intellectual property rights, and/or temporarily or permanently disrupt its sales and marketing of the affected products or services. The laws of some countries in which mCloud’s products are licensed do not protect its intellectual property rights to the same extent as the laws of the United States. Moreover, in some non-U.S. countries, laws affecting intellectual property rights are uncertain in their application, which can affect the scope of enforceability of mCloud’s intellectual property rights.

mCloud’s software research and development initiatives and its customer relationships could be compromised if the security of its information technology is breached as a result of a cyberattack. This could have a material adverse effect on mCloud’s business, operating results, and financial condition, and could harm its competitive position.

mCloud devotes significant resources to continually updating its software and developing new products, and its financial performance is dependent in part upon its ability to bring new products and services to market. mCloud’s customers use its software to monitor their assets and rely on mCloud to provide updates and releases as part of its software maintenance and support services. The security of mCloud’s information technology environment is therefore important to its research and development initiatives, and an important consideration in its customers’ purchasing decisions. If the security of mCloud’s systems is impaired, its development initiatives might be disrupted, and it might be unable to provide service. mCloud’s customer relationships might deteriorate, its reputation in the industry could be harmed, and it could be subject to liability claims. This could reduce mCloud’s revenues, and expose it to significant costs to detect, correct and avoid any breach of security and to defend any claims against it.

The loss of mCloud’s rights to use technology currently licensed by third parties could increase operating expenses by forcing mCloud to seek alternative technology and adversely affect mCloud’s ability to compete.

mCloud occasionally licenses technology, including software and related intellectual property, from third parties for use in its products and may be required to license additional intellectual property. There are no assurances that mCloud will be able to maintain its third-party licenses or obtain new licenses when required on commercially reasonable terms, or at all.

Information technology systems.

mCloud’s operations depend in part upon IT systems. mCloud’s IT systems are subject to disruption, damage, or failure from many sources, including computer viruses, security breaches, natural disasters, power loss, and defects in design. To date, mCloud has not experienced any material losses relating to IT system disruptions, damage, or failure, but there are no assurances that it will not incur such losses in the future. Any of these and other events could result in IT systems failures, operational delays, production downtimes, destruction or corruption of data, security breaches, or other manipulation or improper use of mCloud’s systems and networks.

mCloud’s products are highly technical, and if they contain undetected errors mCloud’s business and financial results could be adversely affected.

mCloud’s products are highly technical and complex. mCloud’s products may now or in the future contain undetected errors, bugs, or vulnerabilities. Some errors in mCloud’s products may only be discovered after they have been released. Any errors, bugs, or vulnerabilities discovered in mCloud’s products after release could result in damage to mCloud’s reputation, loss of users, loss of revenue, or liability for damages, any of which could adversely affect mCloud’s business and financial results.

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If mCloud’s products are unable to work with devices, platforms, or interfaces to deliver targeted user experiences, this could adversely affect mCloud’s business and financial results.

mCloud is dependent on the interoperability of AssetCare with popular cloud systems that it does not control, such as Google. Any changes in such systems that degrade the functionality of mCloud’s products or give preferential treatment to competitive products could adversely affect mCloud’s business and financial results.

Reliance on third party networks.

mCloud is dependent on third party mobile networks such as those provided by major telecommunications companies to provide services. These third-party networks are controlled by third parties and are subject to compromise or failure. Extended disruptions of such networks could adversely affect mCloud’s business and financial results.

If mCloud is not able to maintain and enhance the AssetCare brand, or if events occur that damage the AssetCare reputation and brand, mCloud’s ability to expand its base of users may be impaired, which could adversely affect mCloud’s business and financial results.

mCloud believes that the AssetCare brand will significantly contribute to the success of its business. mCloud also believes that maintaining and enhancing its own brands, the AssetCare brand, is critical to expanding its base of users. Many of its new users are referred by existing users, and therefore mCloud strives to ensure that users remain favorably inclined towards AssetCare. Maintaining and enhancing the AssetCare brand will depend largely on mCloud’s ability to continue to provide useful, reliable, trustworthy, and innovative products, which it may not do successfully. mCloud may introduce new products or terms of service that users do not like, which could adversely affect mCloud’s business and financial results.

If mCloud fails to increase market awareness of AssetCare and expand sales and marketing operations, mCloud’s business and financial results could be adversely affected.

mCloud believes that the AssetCare brand will continue to significantly contribute to the success of its business. mCloud intends to spend significant resources on increasing the market awareness of the AssetCare brand and expanding its sales and marketing operations. There is no guarantee that mCloud will be successful in its efforts to increase market awareness. Failure to increase market awareness of the AssetCare brand or the failure of customers to adopt the AssetCare brand could adversely affect mCloud’s business and financial results.

If mCloud does not continue to develop technologically advanced products that successfully integrate with the software products and enhancements used by its customers, future revenues and its operating results may be negatively affected.

mCloud’s success depends upon its ability to design, develop, test, market, license and support new software products, services, and enhancements of current products and services on a timely basis in response to both competitive threats and marketplace demands. The software industry is increasingly focused on cloud computing, mobility, social media, and SaaS among other continually evolving shifts. In addition, mCloud’s software products, services, and enhancements must remain compatible with standard platforms and file formats. Often, mCloud must integrate software licensed or acquired from third parties with its proprietary software to create or improve its products. If mCloud is unable to achieve a successful integration with third party software, it may not be successful in developing and marketing its new software products, services, and enhancements. If mCloud is unable to successfully integrate third party software to develop new software products, services, and enhancements to existing software products and services, or to complete the development of new software products and services which it licenses or acquires from third parties, its operating results will materially suffer. In addition, if the integrated or new products or enhancements do not achieve acceptance by the marketplace, mCloud’s operating results will materially suffer. Moreover, if new industry standards emerge that mCloud does not anticipate or adapt to, or with rapid technological change occurring, if alternatives to its services and solutions are developed by its competitors, its software products and services could be rendered obsolete, causing it to lose market share and, as a result, harm its business and operating results and its ability to compete in the marketplace.

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mCloud’s new products and changes to existing products could fail to attract or retain users or generate revenue.

mCloud’s ability to retain, increase, and engage its user base and to increase its revenue will depend heavily on mCloud’s ability to create or acquire successful new products, both independently and in conjunction with software and platform developers or other third parties.

mCloud may introduce significant changes to its existing products or develop and introduce new and unproven products, including using technologies with which it has little or no prior development or operating experience. If new or enhanced products fail to engage users, mCloud may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify certain investments, and the business may be adversely affected. In the future, mCloud may invest in new products and initiatives to generate revenue. There is no guarantee these approaches will be successful. If mCloud is not successful with new approaches to monetization, it may not be able to maintain or grow its revenue as anticipated or recover any associated development costs, which could adversely affect mCloud’s business and financial results.

mCloud may be unable to meet its ESG-related targets and objectives.

As ESG forms a significant part of mCloud’s overall value proposition, mCloud may, especially in its public disclosure, voluntary or otherwise, set certain targets and goals with respect to its own ESG performance and its efforts to help existing and future users meet their ESG-related goals. Investors may choose to invest in mCloud in partial or total reliance on these ESG targets and goals. In spite of mCloud’s commitment and allocation of resources accordingly, there is no guarantee that such goals will be met.

mCloud may incur liability as a result of information retrieved from or transmitted over or through mCloud products or network.

mCloud may face claims relating to information that is retrieved from or transmitted over the Internet or through mCloud and claims related to mCloud’s products. In particular, the nature of mCloud’s business exposes it to claims related to intellectual property rights, rights of privacy, and personal injury torts.

Changes in worldwide capital spending and continued economic growth may have a material adverse effect on mCloud.

One factor that significantly affects mCloud’s financial results is the impact of economic conditions on the willingness of mCloud’s current and potential customers to make capital investments. Changes in economic growth or the global economy could lead customers to be cautious about capital spending, which places additional pressure on departments to demonstrate acceptable return on investment. Uncertain worldwide economic and political environments, and uncertain policy directives, would make it difficult for mCloud, its customers and suppliers to accurately predict future product demand, which could result in an inability to satisfy demand for mCloud’s products and a loss of market share. mCloud’s revenues may decline in such circumstances and profit margins could be eroded, or mCloud could incur significant losses.

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Moreover, economic conditions worldwide may contribute to slowdowns in the markets in which mCloud operates, resulting in reduced demand for mCloud’s solutions as a result of customers choosing to refrain from capital investments.

Turmoil in the geopolitical environment in many parts of the world, including terrorist activities and military actions, as well as political and economic issues in many regions, may put pressure on global economic conditions. mCloud’s business and financial results and its ability to expand into other international markets may also be affected by changing economic conditions particularly germane to that sector or to particular customer markets within that sector.

mCloud is exposed to fluctuations in currency exchange rates that could negatively impact mCloud’s business and financial result.

Because a portion of mCloud’s business is conducted outside of North America, mCloud faces exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve, which could adversely affect mCloud’s business and financial results.

Any changes to existing accounting pronouncements or taxation rules or practices may affect how mCloud conducts business.

New accounting pronouncements, taxation rules and varying interpretations of accounting pronouncements or taxation rules have occurred in the past and may occur in the future. The change to existing rules, future changes, if any, or the need for mCloud to modify a current tax position may adversely affect the way mCloud conducts business.

mCloud’s business is subject to complex and evolving domestic and foreign laws and regulations. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to mCloud’s business practices, increased cost of operations, or declines in user growth or engagement, or otherwise harm mCloud’s business.

mCloud is subject to a variety of laws and regulations in the United States and abroad that involve matters central to its business, including user privacy, data protection, intellectual property, distribution, contracts and other communications, competition, consumer protection, and taxation. Foreign laws and regulations are often more restrictive than those in the United States. These U.S. federal and state and foreign laws and regulations are constantly evolving and can be subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which mCloud operates. Existing and proposed laws and regulations may be costly to comply with and can delay or impede the development of new products, result in negative publicity, increase mCloud’s operating costs, require significant management time and attention, and subject mCloud to claims or other remedies, including fines or demands that mCloud modify or cease existing business practices.

mCloud’s business is highly competitive. Competition presents an ongoing threat to the success of its business. If mCloud fails to compete successfully against industry peers, mCloud’s ability to increase revenues and achieve profitability will be impaired.

In North American and international markets, mCloud faces competition from various types of technology and remote asset management businesses. mCloud directly competes with global asset care management companies, including: IBM Corporation, AT&T Intellectual Property, Hitachi, Ltd., Verizon Communications, Inc., PTC Inc., SAP GE, Rockwell Automation, Inc., Schneider Electric SE, Infosys Limited, Honeywell International Inc., Siemens AG, and General Electric Company, among others.

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As mCloud introduces new products and as its existing products evolve, or as other companies introduce new products and services, mCloud may become subject to additional competition.

Some of mCloud’s current and potential competitors have significantly greater resources and hold advantageous competitive positions in certain market segments than mCloud currently holds. These factors may allow mCloud’s competitors to respond more effectively than mCloud to new or emerging technologies and changes in market requirements. mCloud’s competitors may develop products that are similar to mCloud’s or that achieve greater market acceptance, may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. Certain competitors could use strong or dominant positions in one or more markets to gain a competitive advantage against mCloud. As a result, mCloud’s competitors may acquire and engage users of mCloud’s current products at the expense of the growth or engagement of its user base, which could adversely affect mCloud’s business and financial results.

mCloud believes that its ability to compete effectively depends upon many factors both within and beyond mCloud’s control, including:

• the usefulness, ease of use, performance, and reliability of mCloud’s products compared to its competitors;

• the size and composition of mCloud’s user base;

• the engagement of mCloud’s users with its products;

• the timing and market acceptance of mCloud’s products, including developments and enhancements, or similar improvements by its competitors;

• mCloud’s ability to monetize its products, including its ability to successfully monetize AssetCare;

• customer service and support efforts;

• marketing and selling efforts;

• mCloud’s financial condition and results of operations;

• changes mandated by legislation, regulatory authorities, or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on mCloud;

• acquisitions or consolidation within mCloud’s industry, which may result in more formidable competitors;

• mCloud’s ability to attract, retain, and motivate talented employees, particularly computer engineers;

• mCloud’s ability to cost-effectively manage and grow its operations; and

• the mCloud reputation and brand strength relative to competitors.

If mCloud is not able to effectively compete, its user base and level of user engagement may decrease, which could adversely affect mCloud’s business and financial results.

mCloud’s compensation structure may hinder its efforts to attract and retain vital employees.

A portion of mCloud’s total compensation program for its executive officers and key personnel includes the award of options or restricted stock units to buy Shares. If the market price of the Shares performs poorly, such performance may adversely affect mCloud’s ability to retain or attract critical personnel. In addition, any changes made to mCloud’s equity incentive award policies, or to any other of its compensation practices, which are made necessary by governmental regulations or competitive pressures, could adversely affect its ability to retain and motivate existing personnel and recruit new personnel. For example, any limit to total compensation which may be prescribed by the government or applicable regulatory authorities or any significant increases in personal income tax levels levied in countries where mCloud has a significant operational presence may hurt its ability to attract or retain its executive officers or other employees whose efforts are vital to its success. Additionally, payments under mCloud’s long-term incentive plan are dependent to a significant extent upon the future performance of mCloud both in absolute terms and in comparison, to similarly situated companies. Any failure to achieve the targets set under mCloud’s long-term incentive plan could significantly reduce or eliminate payments made under this plan, which may, in turn, materially and adversely affect its ability to retain the key personnel who are subject to this plan.

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The requirements of being a public company may strain mCloud’s resources, divert management’s attention and affect its ability to attract and retain executive management and qualified board members.

As a reporting issuer, mCloud is subject to the reporting requirements of applicable securities legislation of the jurisdiction in which it is a reporting issuer, the listing requirements of the TSXV and other applicable securities rules and regulations. Compliance with these rules and regulations will increase mCloud’s legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on its systems and resources. Applicable securities laws will require mCloud to, among other things, file certain annual and quarterly reports with respect to its business and results of operations. In addition, applicable securities laws require mCloud to, among other things, maintain effective disclosure controls and procedures and internal control over financial reporting.

In order to maintain and, if required, improve its disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight are required. Specifically, due to the increasing complexity of its transactions, it is anticipated that mCloud will improve its disclosure controls and procedures and internal control over financial reporting primarily through the continued development and implementation of formal policies, improved processes and documentation procedures, as well as the continued sourcing of additional finance resources. As a result, management’s attention may be diverted from other business concerns, which could harm mCloud’s business and results of operations. To comply with these requirements, mCloud may need to hire more employees in the future or engage outside consultants, which will increase its costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. mCloud intends to continue to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If its efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against mCloud, which could adversely affect mCloud’s business and financial results.

As a public company subject to these rules and regulations, mCloud may find it more expensive for it to obtain director and officer liability insurance, and it may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for mCloud to attract and retain qualified members of its Board, particularly to serve on its Audit Committee and Compensation Committee, and qualified executive officers.

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As a result of disclosure of information in filings required of a public company, mCloud’s business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, mCloud’s business and results of operations could be harmed, and even if the claims do not result in litigation or are resolved in its favor, these claims, and the time and resources necessary to resolve them, could divert the resources of mCloud’s management and harm its business and results of operations.

The price of the securities of mCloud may fluctuate significantly, which may make it difficult for holders of securities of mCloud to sell its securities at a time or price they find attractive.

mCloud’s stock price may fluctuate significantly as a result of a variety of factors, many of which are beyond its control. In addition to those described under "Forward-Looking Statements", these factors include:

• actual or anticipated quarterly fluctuations in its financial results and financial condition;

• changes in financial estimates or publication of research reports and recommendations by financial analysts with respect to it or other financial institutions;

• reports in the press or investment community generally or relating to mCloud’s reputation or the industry in which it operates;

• strategic actions by mCloud or its competitors, such as acquisitions, restructurings, dispositions, or financings;

• fluctuations in the stock price and financial results of mCloud’s competitors;

• future sales of mCloud’s equity or equity-related securities;

• proposed or adopted regulatory changes or developments;

• domestic and international economic factors unrelated to mCloud’s performance; and

• general market conditions and, in particular, developments related to market conditions for the remote asset management industry.

In addition, in recent years, the stock market in general has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies, including for reasons unrelated to their operating performance. These broad market fluctuations may adversely affect mCloud’s stock price, notwithstanding mCloud’s financial results. mCloud expects that the market price of the Shares will fluctuate and there can be no assurances about the levels of the market prices for such Shares.

mCloud does not know whether an active, liquid and orderly trading market will develop for the securities of mCloud or what the market price of the securities of mCloud will be, and as a result it may be difficult for investors to sell its securities of mCloud.

An active trading market for securities of mCloud may not be sustained. The lack of an active market may impair an investor’s ability to sell its securities of mCloud at the time they wish to sell them or at a price that they consider reasonable. The lack of an active market may also reduce the fair market value of an investor’s securities of mCloud. Further, an inactive market may also impair mCloud’s ability to raise capital by selling securities of mCloud and may impair its ability to enter into collaborations or acquire companies or products by using securities of mCloud as consideration. The market price of securities of mCloud may be volatile, and an investor could lose all or part of their investment.

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mCloud does not intend to pay dividends on the Shares for the foreseeable future.

mCloud currently does not plan to declare dividends on the Shares in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of the Board. Consequently, an investor’s only opportunity to achieve a return on the investment in mCloud will be if the market price of Shares appreciates and the investor sells shares at a profit. There is no guarantee that the trading price of mCloud’s Shares in the market will ever exceed the price that an investor paid.

If research analysts do not publish research about mCloud’s business or if they issue unfavorable commentary or downgrade mCloud’s Shares, mCloud’s stock price and trading volume could decline.

The trading market for the securities of mCloud may depend in part on the research and reports that research and investment analysts publish about mCloud and its business. If mCloud does not maintain adequate research coverage, or if one or more analysts who covers mCloud downgrades its stock, or publishes inaccurate or unfavorable research about mCloud’s business, the price of mCloud’s Shares could decline. If one or more of the research analysts ceases to cover mCloud or fails to publish reports on it regularly, demand for securities of mCloud could decrease, which could cause mCloud’s stock price or trading volume to decline.

The market price of mCloud’s Shares may decline due to the large number of outstanding Shares eligible for future sale.

Sales of substantial amounts of Shares in the public market, or the perception that these sales could occur, could cause the market price of Shares to decline. These sales could also make it more difficult for mCloud to sell equity or equity-related securities in the future at a time and price that it deems appropriate.

Certain Shares, such as those Shares subject to lock-up agreements, will have restrictions on trading.

mCloud may also issue Shares or securities convertible into Shares from time to time in connection with a financing, acquisition or otherwise. Any such issuance could result in substantial dilution to existing holders of Shares and cause the trading price of mCloud’s securities to decline.

mCloud may issue additional equity securities or engage in other transactions that could dilute its book value or affect the priority of Shares, which may adversely affect the market price of Shares.

The Board may determine from time to time that it needs to raise additional capital by issuing additional Shares or other securities in connection with its business and strategic plans, particularly with respect to its growing operations. Except as otherwise described in this AIF, mCloud will not be restricted from issuing additional Shares, including securities that are convertible into or exchangeable for, or that represent the right to receive, Shares. Because mCloud’s decision to issue securities in any future offering will depend on market conditions and other factors beyond mCloud’s control, it cannot predict or estimate the amount, timing, or nature of any future offerings, or the prices at which such offerings may be affected. There is no assurance that the Company will be successful in obtaining required financing as and when needed on acceptable terms, if at all. Additional equity offerings may dilute the holdings of its existing shareholders thereby reducing the value of their investments, or reduce the market price of its common stock, or both. Holders of Shares are not entitled to pre-emptive rights or other protections against dilution. New investors also may have rights, preferences and privileges that are senior to, and that adversely affect, mCloud’s then-current holders of Shares. Additionally, if mCloud raises additional capital by making offerings of debt or preference shares, upon liquidation of mCloud, holders of its debt securities and preference shares, and lenders with respect to other borrowings, may receive distributions of its available assets before the holders of Shares.

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mCloud is a holding company.

mCloud is a holding company and may have no material non-financial assets other than its direct ownership of its subsidiaries. mCloud will have no independent means of generating revenue. To the extent that mCloud needs funds beyond its own financial resources to pay liabilities or to fund operations, and its subsidiaries are restricted from making distributions to it under applicable laws or regulations or agreements, or do not have sufficient earnings to make these distributions, mCloud may have to borrow or otherwise raise funds sufficient to meet these obligations and operate its business and, thus, its liquidity and financial condition could be materially adversely affected.

The market price of Shares may be subject to wide price fluctuations.

The market price of Shares may be subject to wide fluctuations in response to many factors, including variations in the financial results of mCloud and its subsidiaries, divergence in financial results from analysts’ expectations, changes in earnings estimates by stock market analysts, changes in the business prospects for mCloud and its subsidiaries, general economic conditions, legislative changes, and other events and factors outside of mCloud’s control. In addition, stock markets have from time-to-time experienced extreme price and volume fluctuations, including general economic and political conditions, which could adversely affect the market price for Shares.

mCloud may suffer reduced profitability if it loses foreign private issuer status in the United States.

If, as of the last business day of mCloud’s second fiscal quarter for any year, more than 50% of mCloud’s outstanding voting securities (as defined in the United States Securities Act of 1933) are directly or indirectly held of record by residents of the United States, mCloud will no longer meet the definition of a "Foreign Private Issuer" under the rules of the U.S. Securities and Exchange Commission. If mCloud fails to qualify for Foreign Private Issuer status, it will remain unqualified unless it meets the test as of the last business day of its second fiscal quarter. This change in status could have a significant effect on the Company as it would significantly complicate the raising of capital through the offer and sales of securities and reporting requirements, resulting in increased audit, legal and administration costs. The ability of mCloud to be profitable could be significantly affected.

Asset Location and Legal Proceedings.

mCloud has assets located outside of Canada, and therefore it may be difficult to enforce judgments obtained by mCloud in foreign jurisdictions by Canadian courts. Similarly, to the extent that mCloud’s assets are located outside of Canada, investors may have difficulty collecting from mCloud any judgments obtained in Canadian courts and predicated on the civil liability provisions of applicable securities legislation. Furthermore, mCloud may be subject to legal proceedings and judgments in foreign jurisdictions.

mCloud is exposed to credit risk.

Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial contract. Credit risk is limited to the following instruments and mCloud’s maximum exposure to credit risk is the carrying value of the financial assets.

mCloud is mainly exposed to credit risk from credit sales. Management monitors the creditworthiness of its customers by performing background checks on all new customers. Further, management monitors the frequency of payments from ongoing customers and performs frequent reviews of outstanding balances. mCloud considers that there has been a significant increase in credit risk when contractual payments are more than 90 days past due.

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Provisions for outstanding balances are established based on forward-looking information and revised when there are changes in circumstances that would create doubt over the receipt of funds. Such reviews are conducted on a continued basis through the monitoring of outstanding balances as well as the frequency of payments received. Accounts receivable are completely written off once management determines the probability of collection to be remote.

Trade and other receivables, unbilled revenue and long-term receivables are from individual customers and are not assessed based on external credit rating agencies. mCloud uses a provision matrix to measure the lifetime expected credit loss of these balances. Receivables are grouped based on similar credit risk profiles and days past due. Loss rates are based on actual credit loss experience and reflect the forward-looking conditions over the expected life of the receivable.

mCloud is exposed to interest rate risk.

Interest rate risk is the risk that the fair value or future cash flows of mCloud’s financial instruments will fluctuate because of changes in market interest rates. mCloud is exposed to interest rate risk on its credit facility and factoring facility with Nations Interbanc as these instruments have variable rates. Management does not believe interest rate risk is currently material to its business.

If the Company fails to maintain compliance with NASDAQ Listing Rules, the Company may be delisted from the NASDAQ Capital Market, which would result in a limited public market for trading the Company’sr shares and make obtaining future debt or equity financing more difficult for the Companys.

The issued and outstanding Shares of the Company are listed and posted for trading on the TSXV and on the NASDAQ under the symbol “MCLD”. However, there is no assurance that we will be able to continue to maintain our compliance with the NASDAQ continued listing requirements. If we fail to do so, our Shares may lose their status on NASDAQ Capital Market and they would likely be traded on the over-the-counter markets, including the Pink Sheets market. As a result, selling the Shares could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and security analysts’ coverage of us may be reduced. In addition, in the event the Shares are delisted, broker dealers would bear certain regulatory burdens which may discourage broker dealers from effecting transactions in the Shares and further limit the liquidity of the Shares. These factors could result in lower prices and larger spreads in the bid and ask prices for the Shares. Such delisting from NASDAQ and continued or further declines in the share price of the Shares could also greatly impair our ability to raise additional necessary capital through equity or debt financing and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions.

If the Company was delisted from NASDAQ, ite may become subject to the trading complications experienced by “Penny Stocks” in the over-the-counter market.

Delisting from NASDAQ may cause the Shares of the Company to become subject to the SEC’s “penny stock” rules. The SEC generally defines a penny stock as an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. One such exemption is to be listed on NASDAQ. Therefore, if we were to be delisted from NASDAQ, the Shares of the Company could become subject to the SEC’s “penny stock” rules. These rules require, among other things, that any broker engaging in a purchase or sale of our securities provide its customers with: (i) a risk disclosure document, (ii) disclosure of market quotations, if any, (iii) disclosure of the compensation of the broker and its salespersons in the transaction, and (iv) monthly account statements showing the market values of our securities held in the customer’s accounts. A broker would be required to provide the bid and offer quotations and compensation information before effecting the transaction. This information must be contained on the customer’s confirmation. Generally, brokers are less willing to effect transactions in penny stocks due to these additional delivery requirements. These requirements may make it more difficult for shareholders to purchase or sell the Shares of the Company. Since the broker, not us, prepares this information, we would not be able to assure that such information is accurate, complete or current.

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DIVIDENDS

As of the date of this AIF, the Company has not declared dividends since inception and has no current intention to declare dividends on its Shares in the foreseeable future. Any decision to pay dividends on its Shares in the future will be at the discretion of the Board and will depend on, among other things, the Company’s results of operations, current and anticipated cash requirements and surplus, financial condition, any future contractual restrictions and financing agreement covenants, solvency tests imposed by corporate law and other factors that the Board may deem relevant.

DESCRIPTION OF CAPITAL STRUCTURE

Shares

The authorized capital of the Company consists of an unlimited number of Shares. As of the March 30, 2022, there were 16,150,100 Shares outstanding. The holders of Shares are entitled to one vote per Share at all meetings of the shareholders of the Company either in person or by proxy. The holders of Shares are also entitled to dividends, if and when declared by the directors of the Company, and the distribution of the residual assets of the Company in the event of a liquidation, dissolution or winding up of the Company.

All Shares rank equally as to all benefits which might accrue to the holders thereof, including the right to receive dividends, voting powers, and participation in assets and in all other respects, on liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other disposition of the assets of the Company among its shareholders for the purpose of winding up its affairs after the Company has paid out its liabilities. The Shares are not subject to any call or assessment rights, any pre-emptive rights, any conversion or any exchange rights. The Shares are not subject to any redemption, retraction, purchase for cancellation, surrender, sinking or purchase fund provisions. Additionally, the Shares are not subject to any provisions permitting or restricting the issuance of additional securities and any other material restrictions or any provisions requiring a securityholder to contribute additional capital to the Company.

Subject to the BCBCA, the Company may by special resolution make alterations to the authorized Share structure and special rights or restrictions to change the rights of the shareholders. The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

Warrants, Broker Warrants, Finder Warrants and Compensation Stock Options

As of March 30, 2022, the Company has an aggregate of 8,665,415 Warrants, Broker Warrants, Finder Warrants and Compensation Stock Options issued as compensation in connection with various equity financings completed by the Company. Each outstanding Broker Warrant, Finder Warrant and Compensation Stock Option is exercisable for one Share of the Company.

Equity Incentive Plan Grants

Pursuant to the Company’s Equity Incentive Plan, the Company currently has: (a) 910,389 incentive stock options outstanding, entitling the holders thereof to purchase an equal number of Shares; and (b) 229,143 restricted stock unit awards outstanding, entitling the holders thereof to acquire an equal number of 229,143 Shares upon satisfaction of specified time-vesting conditions being met.

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2019 Convertible Debentures

The Company currently has $23,507,500 principal amount of 2019 Convertible Debentures outstanding. The following is a brief summary of the key attributes and characteristics of the 2019 Convertible Debentures.

Interest

The 2019 Convertible Debentures bear interest at a rate of 10% per annum from the date of issue, calculated quarterly and in arrears payable on the last day of August, November, February, and May of each year.

Subordination

The 2019 Convertible Debentures are subordinated to all existing and future secured indebtedness (if any) of the Company.

Conversion Rights

The 2019 Convertible Debentures are convertible at the option of the holder, at any time prior to the close of business on the last business day immediately preceding the maturity date, into that number of Shares computed on the basis of the principal amount of the Convertible Debenture divided by the then applicable conversion price thereof.

The Company may force the conversion of the principal amount of the then outstanding 2019 Convertible Debentures at the conversion price on not less than 21 days’ notice should the daily volume weighted average trading price of the Company’s Shares meet certain thresholds for any 30 consecutive trading days on the TSXV.

2021 Convertible Debentures

The Company currently has $75,000 principal amount of 2021 Convertible Debentures outstanding. The following is a brief summary of the key attributes and characteristics of the 2021 Convertible Debentures.

Interest

The 2021 Convertible Debentures bear interest at a rate of 8% per annum from the applicable interest accrual date, calculated quarterly and in arrears payable on the last day of March, June, September and December of each year. The Company has the option to pay the interest in the form of Shares calculated as the accrued interest divided by the lower of: i) the volume weighted average trading price of the Shares on the TSXV (or such other stock exchange on which the Shares may trade) for the seven trading days preceding the date of the public announcement by the Company announcing the payment of interest in the form of Shares; and ii) the closing price of the Shares on the TSXV (or such other stock exchange on which the Shares may trade) on the date of the public announcement by the Company announcing the payment of interest in the form of Shares.

Subordination

The 2021 Convertible Debentures are subordinated to all existing and future secured indebtedness (if any) of the Company.

Conversion Rights

The 2021 Convertible Debentures are convertible at the option of the holder, at any time prior to the close of business on the last business day immediately preceding the applicable 2021 Debenture Maturity Date, into that number of Shares computed on the basis of the principal amount of the Convertible Debenture divided by the then applicable conversion price thereof.

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The Company has the right to repay the principal amount of the 2021 Convertible Debentures on the applicable 2021 Debenture Maturity Date in the form of Shares.

MARKET FOR SECURITIES

The issued and outstanding Shares of the Company are listed and posted for trading on the TSXV and on the NASDAQ under the symbol "MCLD". The Company also has a class of Warrants that trade on the TSXV under the symbol "MCLD.WT" that expire January 14, 2025, and have an exercise price of $16.20 and a class of Warrants that trade on the TSXV under the symbol "MCLD.WS" that expire July 6, 2022 and have an exercise price of $14.25 The 2019 Convertible Debentures trade on the TSXV under the symbol "MCLD.DB". The below tables summarize the particulars of the trading of the Company’s securities on the TSXV during the most recently completed financial year. The Share and dollar numbers, but not volume numbers, set out below are presented on a post-2021 Share Consolidation basis.

Shares Traded on the TSXV ("MCLD")

Month	High ($)	Low ($)	Volume
January 2021	7.11	54.32	238,767
February 2021	7.50	4.883	253,233
March 2021	6.7350	5.451	114,332
April 2021	5.70	4.08	371,701
May 2021	4.41	2.568	513,268
June 2021	4.32	3.69	269,869
July 2021	6.48	4.02	469,568
August 2021	6.57	4.47	547,035
September 2021	6.39	4.815	338,599
October 2021	5.769	5.01	207,701
November 2021	5.96	4.10	639,833
December 2021	4.95	3.94	1,349,300

2019 Convertible Debentures ("MCLD.DB")

Month	High ($)	Low ($)	Volume ($100 per debenture)
January 2021	70.01	65	130
February 2021	85	77	680
March 2021	80	70	2,970
April 2021	79.5	71	1,230
May 2021	75	66	1,000
June 2021	75	72	630
July 2021	84	70	7,070
August 2021	85	80	224
September 2021	90	80	270
October 2021	80	75	521
November 2021	N/A	N/A	0
December 2021	84	73	190

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Warrants ("MCLD.WT")

Month	High ($)	Low ($)	Volume
January 2021	0.5	0.4	2,500
February 2021	0.9	0.85	12,000
March 2021	0.5	0.4	15,300
April 2021	0.42	0.4	12,900
May 2021	0.4	0.25	11,520
June 2021	0.5	0.5	600
July 2021	0.65	0.31	1,400
August 2021	0.53	0.29	7,000
September 2021	N/A	N/A	0
October 2021	N/A	N/A	0
November 2021	0.45	0.45	6,350
December 2021	0.45	0.45	1,000

Warrants ("MCLD.WS")

Month	High ($)	Low ($)	Volume
January 2021	0.15	0.13	8,500
February 2021	0.29	0.29	10,000
March 2021	N/A	N/A	0
April 2021	0.14	0.07	30,250
May 2021	0.07	0.06	16,000
June 2021	0.07	0.07	5,000
July 2021	0.07	0.07	10,000
August 2021	N/A	N/A	3,000
September 2021	0.07	0.04	7,050
October 2021	0.06	0.05	3,000
November 2021	N/A	N/A	0
December 2021	0.01	0.01	9,350

The Company has not repurchased any of its securities during the 12-month period ended December 31, 2021.

PRIOR SALES

Other than as set forth in the following table, the Company has not sold or issued any securities not listed or quoted on the TSXV during the 12-month period ended December 31, 2021. The Share and dollar numbers set out below are presented on a post-2021 Share Consolidation basis.

Warrants to Purchase Shares	Number of Securities	Exercise Price Per Security	Reason for Issuance
January 15, 2021	1,000	USD$4.44	Convertible debenture financing
March 23, 2021	37,400	USD$4.56	Convertible debenture financing
March 23, 2021	25,400	USD$5.55	Convertible debenture financing
March 23, 2021	8,000	USD$6.21	Convertible debenture financing
March 23, 2021	9,000	USD$6.60	Convertible debenture financing
April 15, 2021	2,300,000	$8.55	Unit Offering
May 25, 2021	34,960	USD$3.42	Convertible debenture
August 13, 2021	75,676	$8.55	Non-brokered Offering Units
August 13, 2021	2,107,787	USD$6.87	Conversion of 2021 Debentures

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Debentures	Principal Amount of Securities	Conversion Price Per Security	Reason for Issuance
January 15, 2021	USD$932,667	USD$4.44	Financing
March 23, 2021	USD$1,390,000	USD$4.59 - US$6.60	Financing
May 25, 2021	USD$638,667	USD$3.42	Financing

Options	Number of Securities	Exercise Price Per Security	Reason for Issuance
January 6, 2021	8,333	$5.67	Pursuant to Company’s Equity Incentive Plan
January 31, 2021	3,333	$6.36	Pursuant to Company’s Equity Incentive Plan
February 28, 2021	17.500	$7.62	Pursuant to Company’s Equity Incentive Plan
Match 1, 2021	16,667	$8.13	Pursuant to Company’s Equity Incentive Plan
April 30, 2021	3,666	$6.30	Pursuant to Company’s Equity Incentive Plan
May 31, 2021	1,667	$6.30	Pursuant to Company’s Equity Incentive Plan
June 30, 2021	38,332	$6.30	Pursuant to Company’s Equity Incentive Plan
July 19, 2021	3,333	$6.48	Pursuant to Company’s Equity Incentive Plan
July 31, 2021	12,998	$7.65	Pursuant to Company’s Equity Incentive Plan
September 30, 2021	834	$6.93	Pursuant to Company’s Equity Incentive Plan
October 22, 2021	328,646	$6.99	Pursuant to Company’s Equity Incentive Plan
December 8, 2021	27,500	$5.27	Pursuant to Company’s Equity Incentive Plan
December 31, 2021	300	$6.10	Pursuant to Company’s Equity Incentive Plan

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Restricted Stock Units	Number of Securities	Exercise Price Per Security	Reason for Issuance
January 29, 2021	8,333	$6.36	Pursuant to Company’s Equity Incentive Plan
February 28, 2021	8,333	$7.62	Pursuant to Company’s Equity Incentive Plan
March 1, 2021	8,333	$8.13	Pursuant to Company’s Equity Incentive Plan
March 31, 2021	3,333	$6.96	Pursuant to Company’s Equity Incentive Plan
April 26, 2021	1,667	$5.13	Pursuant to Company’s Equity Incentive Plan
April 30, 2021	167	$5.37	Pursuant to Company’s Equity Incentive Plan
May 31, 2021	833	$4.86	Pursuant to Company’s Equity Incentive Plan
June 30, 2021	17,666	$5.16	Pursuant to Company’s Equity Incentive Plan
July 19, 2021	1,667	$6.93	Pursuant to Company’s Equity Incentive Plan
July 31, 2021	10,416	$7.65	Pursuant to Company’s Equity Incentive Plan
September 30, 2021	416	$6.93	Pursuant to Company’s Equity Incentive Plan
October 5, 2021	8,333	$6.93	Pursuant to Company’s Equity Incentive Plan

ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER

The following table sets out the number of Shares and other securities held, to the knowledge of the Company, in escrow or that are subject to a contractual restriction on transfer as at the date of this AIF:

Designation of class	Number of securities held in escrow or that are subject to a contractual restriction on transfer	Percentage of class
Common Shares	667,273(1) (1) (2)	4.13%

Notes:

^{1. 667,273 Shares issued in connection with the Company's acquisition of kanepi are held in escrow.}

DIRECTORS AND OFFICERS

Name, Address, Occupation and Security Holding

The following table sets out the names of the directors and officers of the Company, the municipality and province of residence, their position with the Company, their principal occupation during the past five years, and the number and percentage of Shares beneficially owned, directly or indirectly, or over which control or direction is proposed to be exercised, by each of the directors and officers as of the date of this AIF:

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Name, Municipality of Residence and Position with Company (1)	Director/Officer Since	Principal Occupation During Last 5 Years	Number of Shares Owned or Controlled Post-2021 Share Consolidation (2)(3)	Percentage of Total Number of Shares Outstanding Post-2021 Share Consolidation
Russel H. McMeekin (Calgary, Alberta) President, Chief Executive Officer, Director	October 13, 2017	President and Chief Executive Officer of the Company since October 2017. Formerly, Co-Founder and Executive Chairman of Energy Knowledge; and Managing Partner at FTV then Yokogawa Ventures, 2012 - 2016. Board member of GoodGamer TSXV:GG	229,538 (4)	1.42%
Michael Allman (5)(6)(7) (Rancho Santa Fe, California) Director	October 13, 2017	Chief Executive of H2scan Inc., 2016 - 2017; President and Chief Financial Officer of Bit Stew Systems Inc., 2015 - 2016; and unemployed, 2012 - 2016.	135,157	0.84%
Costantino Lanza (Thousand Oaks, California) Chief Growth Officer, Director	October 13, 2017	Chief Growth Officer of the Company since October 2017 and Chief Revenue Officer of the company, 2019 - Present. Formerly, Senior Vice President (Integration) at Yokogawa Electric, 2016; Partner at Energy Knowledge, 2015; and Chief Executive Officer of INOVX Solutions Inc., 2006 - 2014.	182,845	1.13%
Elizabeth MacLean (5)(6)(7) (Phoenix, Arizona) Director	October 16, 2018	Chief Financial Officer of Newgioco Group Inc., 2018-2019.	Nil	0%
Ian. C. W. Russell (5)(6)(7) (5)(6)(7)(8) (Toronto, Ontario) Director	September 3, 2019	President and Chief Executive Officer of IIAC, April 2006 - Present.	18,702	0.16%
Chantal Schutz (Vancouver, British Columbia) Chief Financial Officer	May 27, 2019	Director of Clean Seed Capital Group Ltd., April 2014 - December 2020; Director of NYCE Sensors, Inc., March 2017 - June 2021. Formerly, Chief Executive Officer of NYCE Sensors, Inc., March 2017 - June 2019	8,491	0.05%

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^Notes:

^{1. The information as to country of residence and principal occupation, not being within the knowledge of the Company, has been furnished by the respective directors and/or officers individually.}

^{2. Shares beneficially owned or controlled as of the date of this AIF.}

^{3. The information as to number of Shares beneficially owned or over which a director or officer exercises control or direction, not being within the knowledge of the Company, has been furnished by the respective directors and/or officers individually and reviewed based upon public disclosure.}

^{4. These shares are beneficially owned by McMeekin Family Trust, over which Mr. McMeekin exercises control.}

^{5. Current member of the Audit Committee.}

^{6. Current member of the Corporate Governance and Nominating Committee.}

^{7. Current member of the Compensation Committee.}

As at the date of this AIF, the directors, and executive officers of the Company as a group beneficially owned, or controlled or directed, directly or indirectly, a total of 575,050 Shares, representing approximately 3.56% of the total number of Shares outstanding.

Management

The following is a brief description of the directors and officers of the Company. None of the directors or senior officers of the Company noted herein were selected as a director or member of the Company’s senior management team as a result of any arrangement or understanding with major shareholders, customers, suppliers, or others. Furthermore, there are no family relationships between any of the named directors or senior officers of the Company noted herein. Additionally, there are no service contracts in place between the Company, or any of its subsidiaries, and its directors providing for benefits upon termination of employment.

Russel H. McMeekin

Director, President and Chief Executive Officer

Mr. McMeekin was previously a founding partner of Energy Knowledge, Inc., which was acquired by Yokogawa Electric Corporation. Mr. McMeekin went on to serve as Executive Chairman of Yokogawa Venture Group, leading the acquisitions of Industrial Evolution and KBC Advanced Technologies, an energy software and consulting company publicly listed in the United Kingdom. Mr. McMeekin was the founding Chief Executive Officer of SCI Energy Inc., a Silicon Valley cloud-based energy-efficiency company now based in Dallas, Texas. Previously, Mr. McMeekin was the President and Chief Executive Officer of NASDAQ-listed Progressive Gaming International for six years, a company that led the use of RFID technologies for critical item tracking., Mr. McMeekin spent more than 10 years at Honeywell International Inc., including serving as President of Honeywell International Inc.’s Digital and Software Business Units. At Honeywell International Inc., he led joint ventures with Microsoft Corporation, United Technologies Corporation and i2 Technologies. Mr. McMeekin started his career at SACDA Inc., a University of Western Ontario Computer Aided Design Venture which was later acquired by Honeywell International Inc. Mr. McMeekin graduated in Engineering Technology from Sault College of Applied Technology, continued his studies at the University of Waterloo. and he completed a Honeywell International Inc. Sponsored Executive Leadership Program through the Harvard Business School. He also completed the Stanford School of Law Executive Director Program. Mr. McMeekin is also a director of GoodGamer Inc. a TSXV listed company Ticker (GOOD).

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Michael Allman

Director

Mr. Allman is a highly accomplished Chief Executive Officer and Chairman, with extensive experience in growing, restructuring and optimizing business strategies and operations for Fortune 300 companies and top-tier consulting firms around the world. He recently was the Chief Operating Officer of Bitstew, Inc. a leading IoT cloud company acquired by GE Digital. Mr. Allman previously served as President and Chief Executive Officer of Southern California Gas Company. Mr. Allman has a master’s degree in business administration from the University of Chicago Graduate School of Business and a bachelor’s degree in chemical engineering from Michigan State University. He is a Certified Management Accountant and a Certified Internal Auditor.

Costantino Lanza

Director, Chief Growth Officer, and Corporate Secretary

Mr. Lanza, a former partner of Energy Knowledge, Inc., is versed in applying advanced technologies to traditional asset intensive industries with many years of direct experience, most recently with Yokogawa Venture Group, where he led the integration of KBC Advanced Technologies, Yokogawa’s largest ever acquisition. Mr. Lanza has served in leadership roles at Honeywell International Inc. and ExxonMobil Corporation before becoming Chief Executive Officer of INOVx Solutions, Inc. from 2006 to 2015, where 3D technologies were used to improve asset performance management. Mr. Lanza holds a BS and MS degree in Chemical Engineering from Columbia University.

Elizabeth MacLean

Director

Ms. MacLean is Chief Financial Officer for Newgioco Group, Inc. (OTCQB:NWGI), a vertically integrated leisure-gaming technology company headquartered in Toronto, Canada. Ms. MacLean has more than 20 years of experience leading finance teams in various industries in both the United States and the United Kingdom. Since September 2016, Ms. MacLean has served as the Treasurer of H. MacLean Realty Company, Inc. Since August 2018, Ms. MacLean has served as an adjunct faculty member at Ottawa University. Ms. MacLean received an MBA in global finance from Stanford University’s Graduate School of Business and a Bachelor of Arts in biology from the University of Chicago.

Ian Russell

Director

Mr. Russell has long held prominent positions in the investment industry, both on a domestic and global level. He is the President and Chief Executive Officer of IIAC, a position he has held since the inauguration of the IIAC in April 2006. Prior to his appointment at the IIAC, Mr. Russell was Senior Vice-President with the Investment Dealers Association of Canada, a national self-regulatory organization. Mr. Russell worked as an executive at the highly respected international publication, "The Bank Credit Analyst", and spent nearly a decade at the Bank of Canada. His experience has given him a unique and deep knowledge of the investment business, including underwriting, debt and equity trading and financial advice, as well as an understanding of the market and economic trends that drive the decisions of investors and issuers. He is active in the international investment community: Chair of the International Council of Securities Associations from 2014 to 2017; designated leader of the Canadian mission to the Asia Financial Forum; and invited guest and regular participant at Cumberland Lodge Financial Summit in the U.K., a roundtable of European and international leaders to discuss future policy and regulation in European capital markets. Mr. Russell is a prolific writer and columnist, both in industry publications and newspapers. He is also a frequent commentator in the media, and a sought-after presenter and speaker. Mr. Russell has a postgraduate degree (MSc Economics) from the London School of Economics and Political Science, and an Honours degree in Economics and Business from the University of Western Ontario. He has completed the Partners, Directors and Seniors Officers Qualifying Examination and is a Fellow of the Canadian Securities Institute.

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Chantal Schutz

Chief Financial Officer

Ms. Schutz is a Chartered Professional Accountant (CPA,CA) with over 20 years of experience as a financial leader and entrepreneur. Prior to joining mCloud, Ms. Schutz was the Chief Executive Officer of NYCE Sensors. Ms. Schutz has extensive expertise in both private and publicly traded markets, having held Chief Financial Officer roles in businesses of varying size prior to joining NYCE Sensors Inc. As the Chief Financial Officer and member of the Executive Team at Back In Motion Rehab, Inc., she helped secure financing and developed and implemented systems and procedures which saw the doubling of revenue and headcount, as well as a corporate restructuring. Formerly, Ms. Schutz worked as an independent, contracted Chief Financial Officer for small and medium sized, owner-managed businesses, assisting in the development and implementation of strategic plans and financial reorganizations, as well as implementation of Sarbanes-Oxley and Bill 198. Ms. Schutz has also been an instructor of Financial Management at the B.C. Institute of Technology and facilitated for over 10 years in the Chartered Accountant School of Business. Ms. Schutz articled with both KPMG and PwC and earned her Bachelor of Commerce in Entrepreneurial Management from Royal Roads University. Ms. Schutz is passionate about ensuring that business owners, teens and young adults understand the need for strong financial literacy, and she is a sought-after speaker and advisor at business events and conferences around North America.

Compensation

The disclosure below provides information about the Company’s philosophy, objectives, and processes, and a summary of the compensation awarded to the individuals who carried out the roles of the Chief Executive Officer and the Chief Financial Officer of the Company at any point during the year ended December 31, 2021 and the most highly compensated executive officer of the Company, other than the Chief Executive Officer and Chief Financial Officer, whose total compensation was, individually, more than $150,000 for the 12 months ended December 31, 2021 (each a "Named Executive Officer" and collectively, the "Named Executive Officers").

Compensation Committee

The administration of the Corporation's compensation practices is handled by the Compensation Committee.

Among other things, the Compensation Committee's role is to ensure that the total compensation paid to the Corporation's executive officers, including the Named Executive Officers, is fair, reasonable and competitive. In the course of reviewing and recommending to the Board the compensation of executive officers other than the Chief Executive Officer, the Compensation Committee annually reviews the performance of the executive officers with the Chief Executive Officer, and the Chief Executive Officer makes recommendations to the Compensation Committee regarding their compensation.

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The Compensation Committee will evaluate the performance of the Chief Executive Officer, based on its evaluation, review and make recommendations to the Board with respect to all direct and indirect compensation, benefits and perquisites (cash and non-cash) for the Chief Executive Officer based on such evaluation. The Compensation Committee will also review and make recommendations to the Board with respect to compensation, benefits and perquisites for all other senior executive officers of the Corporation, incentive-compensation plans and equity-based plans, and policies regarding management benefits and perquisites.

Neither the Board nor any committee of the Board has formally established a mechanism to consider the implications of the risks associated with the Corporation's compensation policies and practices. However, the Board and the Compensation Committee inherently consider these risks. The Compensation Committee reviews and manages the policies and practices of the Corporation and ensures that they are aligned with the interests of the shareholders. The Compensation Committee reviews, among other things, the overall compensation and the annual salary increases of the executive officers of the Corporation while keeping as a reference both the financial performance of the Corporation and the turnover risk for the Corporation. The Board also addresses risk related to compensation policies in the context of compensation mechanisms that are linked to the achievement of certain goals or targets (e.g. short term and long-term objectives), both financial and otherwise. The Board is involved in the supervision of key projects and initiatives of the Corporation and the manner in which they are being carried out. Consequently, the Board is in a position where it can control significant risks that may be taken by the Corporation's management and ensures that those risks remain appropriate and that members of management do not expose the Corporation to excessive risks.

Each member of the Compensation Committee has direct experience relevant to compensation matters resulting from their respective current and past backgrounds and/or roles. The members of the Compensation Committee have experience dealing with compensation matters in large and small organizations, including public companies. The Corporation does not have a policy in place that limits the ability for directors or Named Executive Officers to hedge the shares of the Corporation that they own. However, none of the current directors or Named Executive Officers of the Corporation are hedging any of the shares of the Corporation that they own.

Compensation Process

The Corporation has no formal or informal policy or target for allocating compensation between long-term and short-term compensation, between cash and non-cash compensation, or among the different forms of non-cash compensation. Instead, the Board determines subjectively what it believes to be the appropriate level and mix of the various compensation components based on the recommendations of the Compensation Committee.

Compensation Objectives

The Corporation's compensation philosophy for Named Executive Officers is designed to attract well-qualified individuals by paying modest base salaries plus short and long-term incentive compensation in the form of equity-based or other suitable long-term incentives. In making its determinations regarding the various elements of executive compensation, the Board has utilized published studies of compensation paid in comparable businesses, specifically the 2016 study conducted by Culpepper and Associates. These studies have been used to ensure that the compensation received by the Board will be in line with industry standards.

The duties and responsibilities of the Chief Executive Officer are typical of those of a business entity of the Corporation's size in a similar business and include direct reporting responsibility to the Chairman of the Board, overseeing the activities of all other executives of the Corporation, representing the Corporation, providing leadership and responsibility for achieving corporate goals and implementing corporate policies and initiatives.

The objectives of the Corporation's executive compensation program are as follows:

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• to attract, retain and motivate talented executives who create and sustain the Corporation's continued success;

• to align the interests of the Corporation's executives with the interests of the Corporation's shareholders; and

• to provide total compensation to executives that is competitive with that paid by other companies of comparable size engaged in similar businesses in appropriate regions.

The Corporation believes that its current compensation programs are structured to support the achievement of the foregoing strategic objectives. Overall, the executive compensation program aims to design executive compensation packages that meet executive compensation packages for executives with similar talents, qualifications and responsibilities at companies with similar financial, operating and industrial characteristics. The Corporation expects to undergo significant growth and is committed to retaining its key executives for the next several critical years, but at the same time ensuring that executive compensation is tied to specific corporate goals and objectives. The Corporation's executive compensation program has been designed to reward executives for reinforcing the Corporation's business objectives and values, for achieving the Corporation's performance objectives and for their individual performances.

Elements of Compensation

The Company seeks to achieve the compensation objectives described earlier through different elements of compensation, including salary and both short-term and long-term incentive plans, with the incentives having both equity and non-equity components. The Company believes that these various elements are important to effectively achieve the objectives of its executive compensation philosophy.

The elements of the Named Executive Officers' compensation are:

(a) base salaries;

(b) performance bonuses; and

(b) equity incentive grants.

There is no regulatory oversight of the Company's compensation process for the Named Executive Officers.

Base Salary

The Company pays its executive officers a base salary to compensate them for services rendered during a fiscal year. Base salaries are determined for each executive officer based on an evaluation of such officer's experience, skills, knowledge, scope of responsibility and performance. Base salary levels are reviewed and considered annually, and from time to time adjustments may be made to base salary levels based upon promotions or other changes in job responsibility or merit-based increases based on assessments of individual performance.

The base salary review of any executive officer will take into consideration the current competitive market conditions, experience, proven or expected performance, and the particular skills of the executive officer. Base salary is not evaluated against a formal "peer group".

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Performance Bonuses

In addition to a base salary, the Named Executive Officers are eligible to receive performance-based bonuses meant to motivate the Named Executive Officers to achieve shorter-term goals. The pre-established, quantitative target(s) used to determine performance bonuses will be set by the Board or a committee thereof each fiscal year. Awards under the plan will be made by way of cash payments only, which payments will be made at the end of the relevant fiscal year. Each Named Executive Officer will be measured against the financial targets within his or her control and, while overall company performance is part of the plan, individual targets will represent the highest percentage of the plan payout. The cash bonuses are primarily designed to align the financial interests of the Corporation's executives with the interests of the Corporation's shareholders.

Equity-Based Compensation

The executive officers are eligible to receive option, restricted stock or other equity and equity-linked awards under the Equity Incentive Plan. The Company intends for equity awards to be an integral part of its overall compensation program as the Company believes that the long-term performance of the Company will be enhanced through the use of equity-based awards that reward executive officers for increasing long-term shareholder value. The Company also believes that such awards will promote an ownership perspective among its executive officers and encourage executive retention. Equity based compensation awarded to executive officers (including Named Executive Officers) will typically be subject to time-based vesting provisions. The Company does not have any formal policy regarding when equity-based compensation is to be granted or the size of any given grant. In determining the number of awards to be granted to executive officers, the Compensation Committee takes into account the individual's position, scope of responsibility, ability to affect profits and shareholder value and the value of the awards in relation to other elements of the individual executive officer's total compensation, including base salary and cash bonuses. When considering equity or equity-linked awards to an executive officer, consideration of the number of awards previously granted to the executive may be taken into account, however, the extent to which such prior awards remain subject to resale restrictions will generally not be a factor.

Broad-Based Benefits Programs

All full-time employees, including the Company's Named Executive Officers, may participate in the Company's health and welfare benefit programs, including medical, dental and vision care coverage, disability insurance and life insurance. The Company does not intend to provide perquisites or personal benefits to its Named Executive Officers that are not otherwise available to other employees generally.

Pension Plan Benefits

The Company does not have a defined benefits pension plan, a defined contribution plan or a deferred compensation plan.

Summary Compensation Table

As of December 31, 2021, the Corporation had two Named Executive Officers: Russel H. McMeekin and Costantino Lanza.

The following table sets out the compensation paid or payable to the Named Executive Officers of the Company for the fiscal year ended December 31, 2021:

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Name and Principal Position	Year	Salary ($)	Bonus ($)	Committee or meeting fees ($)	Value of perquisites ($)	All other compensation ($)	Total compensation ($)
Russel H. McMeekin(1) Director, President and Chief Executive Officer	2021	$249,999.84 USD	Nil	Nil	Nil	$93,500 USD	$343,499.84 USD
Costantino Lanza(2) Director and Chief Growth Officer	2021	$249,999.84 USD	Nil	Nil	Nil	$42,358 USD	$292,357 USD
Chantal Schutz Chief Financial Officer	2021	$262,000 CAD	Nil	Nil	Nil	Nil	$262,000 CAD
Michael Allman Director	2021	Nil	Nil	$48,000USD	Nil	Nil	$48,000 USD
Elizabeth MacLean Director	2021	Nil	Nil	$48,000 USD	Nil	Nil	$48,000 USD
Ian Russell Director	2021	Nil	Nil	$48,000 USD	Nil	Nil	$48,000 USD
Michael A. Sicuro(4)	2021	Nil	Nil	$20,000 USD	Nil	Nil	$20,000 USD

NOTES:

(1) Inclusive of the total compensation, Mr. McMeekin received no compensation for his role as director of the Company.

(2) Inclusive of the total compensation, Mr. Lanza received no compensation for his role as director of the Company.

(3) Mr. Sicuro resigned effective as of May 31, 2021.

Employment, Consulting and Management Agreements

During the year ended December 31, 2021, the Company did not employ or retain any management companies to perform executive management services.

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Compensation Securities

No compensation securities vested and no underlying Common Shares were issued pursuant to restricted stock unit awards for any directors or Named Executive Officers in the financial year ended December 31, 2021. Ms. Chantal Schutz was awarded 28,800 Options on October 21, 2021 with an exercise price of $6.69, expiring on October 21, 2031. Ms. Schutz was also awarded 8,333 Options on July 31, 2021 with an exercise price of $7.65, expiring on July 31, 2031.

Term of Office

The term of office for each director of the Company expires immediately before each annual meeting of the shareholders of the Company.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

No director of the Company:

a) is, at the date of this AIF, or has been, within ten (10) years before the date of this AIF, a director, chief executive officer or chief financial officer of any company, including any personal holding company of such director, chief executive officer or chief financial officer that: (i) while that person was acting in that capacity, was the subject of a cease trade or similar order, or an order that denied the other relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or (ii) was the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 consecutive days issued after the that person ceased to be a director or executive officer and which resulted from an event that occurred while the person was acting in such capacity, other than with respect to the following:

i) On May 2, 2019, Mr. McMeekin and Mr. Sicuro, the Chief Executive Officer and Interim Chief Financial Officer of the Company, respectively at the time, were subject to a management cease trade order issued by the British Columbia Securities Commission as a result of the Company having not filed its audited annual financial statements and related management’s discussion and analysis for the financial year ended December 31, 2018. The management cease trade order was revoked by the British Columbia Securities Commission on May 31, 2019.

b) is, at the date of this AIF, or has been, within 10 years before the date of this AIF, a director or executive officer of any company (including any personal holding company of such director or executive officer) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, other than with respect to the following:

i) Blue Earth Inc. was a micro-cap project development company operating in a capital-intensive industry. As such, it relied on continuous support from investors to fund the company. When a couple of key projects ran into permitting and construction delays, investors lost confidence in the management team and the company was unable to procure the necessary equity funding to remain in business. The assets transitioned to the major creditor through a court supervised bankruptcy. Michael Allman was director of Blue Earth Inc. when it became insolvent; and

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ii) Endurance Windpower was in the business of manufacturing specialty wind turbines to generate electricity. The business was heavily dependent on government subsidies for renewable energy. When governments stopped subsidizing small wind, particularly in the United Kingdom (which was Endurance Windpower’s largest market) product demand fell dramatically, and the company was forced into receivership. Michael Allman was a director of Endurance Windpower at the time it was forced into receivership.

c) has, within 10 years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such person or their personal holding company.

No director of the Company has been subject to: (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.

Conflicts of Interest

Some of the directors and officers of the Company are also directors, officers and/or promoters of other reporting and non-reporting issuers. Accordingly, conflicts of interest may arise which could influence these persons in evaluating possible acquisitions or in generally acting on behalf of the Company, notwithstanding that they are bound by the provisions of the Business Corporations Act (British Columbia), as amended, to act at all times in good faith in the interest of the Company and to disclose such conflicts to the Company if and when they arise. To the best of their knowledge, the management of the Company is not aware of the existence of any conflicts of interest between any of the directors and officers of the Company as of the date of this AIF, other than as disclosed herein.

AUDIT COMMITTEE INFORMATION

The members of the Audit Committee are Ms. MacLean, as Chairperson, Mr. Allman and Mr. Russell. Each of the members of the Audit Committee are "independent" for the purposes of NI 52-110. All members of the Audit Committee are "financially literate" for the purposes of NI 52-110.

All three members of the Audit Committee have been senior officers and/or directors of publicly traded companies or have been business executives, in each case with the responsibility of performing financial functions, for a number of years. In these positions, each such director has been responsible for receiving financial information relating to the entities of which they were directors, officers or executives. They have, or have developed, an understanding of financial statements generally and of how statements are used to assess the financial position of a company and its operating results. Each member of the Audit Committee also has a significant understanding of the business in which the Company is engaged and has an appreciation for the relevant accounting principles used in the Company`s business.

Further, each member has the requisite education and experience that has provided the member with:

• an understanding of the accounting principles used by the Company to prepare the Company's financial statements;

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• the ability to assess the general application of the above-noted principles in connection with estimates, accruals and reserves;

• experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial statements, or experience actively supervising individuals engaged in such activities; and

• an understanding of internal controls and procedures for financial reporting.

The Audit Committee's primary responsibility is to assist the Board in discharging its oversight responsibilities with respect to financial matters and compliance with laws and regulations. The Audit Committee's specific responsibilities with respect to its oversight of financial matters include, among other things: to select, evaluate, monitor the independence of, and recommend an auditor to the Board for appointment or reappointment, as the case may be, by the Company`s shareholders and make recommendations with respect to the auditor's compensation; to review and determine the auditor's fee and the terms of the auditor's engagement and inform the Board thereof; where the Audit Committee may deem it appropriate, to recommend to the Board that the auditor be terminated; to meet with senior management without the auditor present to discuss the performance of the auditor; to pre-approve any audit services, and any non-audit services permitted under applicable law, to be performed by the auditor; to review and approve the audit plan; to review with senior management and the auditor the annual audited consolidated financial statements, together with the auditor's report thereon and the interim financial statements, before recommending them to the Board, and review with senior management and the auditor the relevant management's discussion and analysis relating thereto; to review other financial reporting and disclosures, including earnings press releases and other press releases disclosing financial information and all other financial statements of the Company that require approval by the Board before they are released to the public; to oversee the integrity of the Company`s financial reporting processes and disclosures, including its internal controls, disclosure controls and procedures and compliance with legal and regulatory requirements, and to report regularly to the Board on such matters; to oversee the Company's risk management function; to review with senior management the status of taxation matters; and to review and oversee the Company`s investment strategies and policies.

The Audit Committee reviews and pre-approves all audit and non-audit services to be provided to the Company by its external auditors on an annual basis. Before the appointment of the external auditor for any non-audit service, the Audit Committee considers the compatibility of the service with the auditor's independence.

Audit Committee Charter

The responsibilities and duties of the Audit Committee are set out in the committee's charter, the text of which is attached as Schedule "A" to this AIF.

Audit Committee Oversight

At no time has a recommendation of the Audit Committee to nominate or compensate an external auditor not been adopted by the Board.

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Exemption

As at December 31, 2021, the Company was a "venture issuer" as defined in NI 52-110, and in this AIF, is relying on the exemption in section 6.1 of NI 52-110 relating to Parts 3 (Composition of Audit Committee) and 5 (Reporting Obligations) of NI 52-110.

External Auditor Service Fees (By Category)

The following table summarizes the fees paid to the external auditors of the Company, in each of the last two fiscal years.

Fiscal Year	Audit Fees	Audit-Related Fees	Tax Fees	All Other Fees
2020	$769,826	$nil	$321,050	$38,873
2021	$1,799,383	$6,420	$339,624	$102,720

^Notes:

^{1. "Audit Fees" include fees necessary to perform the annual audit of the Company’s financial statements.}

^{2. "Audit-Related Fees" include other services that are performed by the auditor such as consultations or internal control reviews.}

^{3. "Tax Fees" include fees for tax compliance, tax planning and tax advice. These services include preparing tax returns and corresponding with government tax authorities.}

^{4. "All Other Fees" include all other non-audit services, such as French translation services related to prospectus filings and historical financial statements and MD&As}

MAJOR SHAREHOLDERS AND INTERESTS OF EXPERTS AND COUNSEL

Major Shareholders

The Company is a publicly traded corporation, incorporated in the province of British Columbia, the registered shareholders of which include residents of the United States, residents of Canada and other foreign residents. To the knowledge of the directors and executive officers of the Company, as at the date of this AIF, there are no holders who own beneficially, directly or indirectly, 5% or more of the Shares of the Company.

As at the date of this AIF, there were: 10 holders of record of the Company’s Shares, who were residents of Canada, owning 12,040,681 (74.55%) of the Company’s Shares; 1 holder of record of the Company’s Warrants (MCLD.WS) who is a resident of Canada, owning 1,500,343 (95.24%) of the Company’s MCLD.WS Warrants; and 30 holders of record of the Company’s Warrants (MCLD.WT), who are residents of Canada, owning 1,664,575 (90.81%) of the Company’s MCLD.WT Warrants.

As at the date of this AIF, there were: 53 holders of record of the Company’s Shares who were U.S. residents, owning 3,586,783 (22.21%) of the Company’s Shares; 2 holders of record of the Company’s Warrants (MCLD.WS) who are residents of the United States, owning 75,000 (4.76%) of the Company’s MCLD.WS Warrants; and 78 holders of record of the Company’s Warrants who were U.S. residents, owning 142,656 (7.78%) of the Company’s MCLD.WT Warrants.

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Furthermore, to the knowledge of the directors and executive officers of the Company, the Company is not directly or indirectly owned or controlled by another corporation, by any foreign government, or by any other natural or legal person severally or jointly.

All shareholders have the same voting rights with respect to the issued Shares. There are no arrangements known to the Company the operation of which may at a subsequent date result in a change in control of the Company.

Interests of Experts and Counsel

No experts or counselors employed on a contingent basis by the Company has a material, direct, or indirect economic interest in the Company.

CODE OF BUSINESS CONDUCT AND ETHICS

The Company has adopted a Code of Business Conduct and Ethics that applies to all employees, directors, and senior officers of the Company, including the CEO and CFO. Shareholders may request a copy of the Code of Business Conduct and Ethics by written request directed to mCloud Technologies Corp. at 550-510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3A8. There have been no waivers or amendments to the Code of Business Conduct and Ethics during the year ended December 31, 2021.

Promoters

Russel McMeekin and Costantino Lanza may be considered promoters of the Company, as they have taken the initiative in reorganizing and financing the business of the Company. Other than as disclosed herein, the shelf prospectus dated November 18, 2021 (the "Shelf Prospectus"), the prospectus supplement dated November 26, 2021 (the "Prospectus Supplement"), and the management information circular dated November 30, 2021, distributed in connection with the annual and special meeting of the shareholders of the Company held on December 30, 2021 (the "2020 Circular"), each of which can be found on the Company’s SEDAR profile at www.sedar.com, there is nothing of value, including money, property, contracts, options or rights of any kind, received or to be received by Mr. McMeekin or Mr. Lanza, directly or indirectly, from the Company or any subsidiary thereof nor any assets, services or other consideration received or to be received by the Company or any subsidiary thereof in return. Except as disclosed in this AIF, the Prospectus Supplement, the Shelf Prospectus, or the 2020 Circular, no asset has been acquired within the Company's two most recently completed financial years or during the Company's current financial year, or is to be acquired by the Company or any subsidiary, from Mr. McMeekin or Mr. Lanza for valuable consideration.

Other than as disclosed in this AIF, neither Mr. McMeekin nor Mr. Lanza is, as at the date hereof, and was not within 10 years before the date hereof, a director, chief executive officer, or chief financial officer of any person or issuer that: (i) was subject to any cease trade order, order similar to a cease trade order or an order that denied the relevant person or issuer access to any exemption under securities legislation, and was in effect for a period of more than 30 consecutive days, that was issued while they were acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to any cease trade order, order similar to a cease trade order or an order that denied the relevant person or issuer access to any exemption under securities legislation, and was in effect for a period of more than 30 consecutive days, that was issued after they ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while they were acting in the capacity as director, chief executive officer or chief financial officer.

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Neither Mr. McMeekin nor Mr. Lanza is, as at the date hereof, nor has been within the 10 years before the date hereof, a director or executive officer of any person or company that, while they were acting in that capacity, or within a year of him ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. In addition, neither Mr. McMeekin nor Mr. Lanza has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his assets.

Neither Mr. McMeekin nor Mr. Lanza has been subject to any penalties or sanctions imposed by a court relating to provincial and territorial securities legislation or by a provincial and territorial securities regulatory authority, and neither such individual has entered into a settlement agreement with a provincial and territorial securities regulatory authority. In addition, neither Mr. McMeekin nor Mr. Lanza is subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable investor in making an investment decision. As of the date of this AIF, Mr. McMeekin beneficially owns, controls or directs, 229,538 Shares (1.42% of the issued and outstanding Shares), 25,000 restricted stock units (10.91% of the total amount of restricted stock units issued by the Company), and 25,000 incentive stock options (2.75% of the total amount of incentive stock options issued by the Company). As of the date of this AIF, Mr. Lanza beneficially owns, controls or directs, 182,845 Shares, (1.13% of the issued and outstanding Shares), 12,500 restricted stock units (5.46% of the total amount of restricted stock units issued by the Company), and 12,500 incentive stock options (1.37% of the total amount of incentive stock options issued by the Company).

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

The Company is not aware of: (a) any legal proceedings to which it is a party, or by which any of its property is subject of, which would be material to it and are not aware of any such proceedings being contemplated; (b) any penalties or sanctions imposed by a court relating to securities legislation, or other penalties or sanctions imposed by a court or regulatory body against it that would likely be considered important to a reasonable investor making an investment decision; or (c) any settlement agreements that we have entered into before a court relating to securities legislation or with a securities regulatory authority.

NO DEFAULT IN PAYMENT

The Company confirms that there has been no default, material or otherwise, in the payment of principal, interest, or a sinking or purchase fund installment.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

To the knowledge of management of the Company, there are no material interests, direct or indirect, by way of beneficial ownership of securities or otherwise, of any informed persons of the Company, directors of the Company, executive officers of the Company, proposed directors or executive officers of the Company, any shareholder who beneficially owns more than ten percent (10%) of the Shares of the Company, or any associate or affiliate of these persons in any transaction since the commencement of the Company’s last completed financial year or in any proposed transaction, which has materially affected or would materially affect the Company other than as disclosed herein or in the financial statements of the Company for the financial year ended December 31, 2021. Reference should be made to the notes to the financial statements for a more detailed description of any material transaction.

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TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar of the Company is TSX Trust Company, located at its principal offices in Vancouver, British Columbia.

MATERIAL CONTRACTS

During the course of the two years prior to the date of the AIF, the Company has entered into the following material contracts, other than contracts entered into in the ordinary course of business:

a) Credit Agreement as described under the heading "General Developments of the Business";

b) ATB Credit Facility as described under the heading “General Developments of the Business”;

c) Autopro Amalgamation Agreement as described under the heading "General Developments of the Business"; and

d) Agnity Amending Agreement as described under the heading "General Developments of the Business".

INTERESTS OF EXPERT

The financial statements of the Company for the fiscal year ended December 31, 2021 have been audited by the Company's auditor, KPMG LLP, located at 205 5 Ave SW, Suite 3100, Calgary, AB T2P 4B9. KPMG LLP have confirmed with respect to the Company that they are independent within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulations, and also that they are independent accountants with respect to the Company under all relevant US professional and regulatory standards.

ADDITIONAL INFORMATION

Additional information concerning the Company, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under the Company’s Equity Incentive Plan, is contained in the information circular of the Company dated November 30, 2021 prepared in connection with the annual and special meeting of the shareholders of the Company held on December 30, 2021.

Additional financial information concerning the Company, including the Company’s financial statements, the notes thereto, the auditor’s report thereon and related management’s discussion and analysis for the year ended December 31, 2021, can be found on the Company’s profile on SEDAR at ww.sedar.com. The SEC maintains an Internet site that contains reports and other information that we file electronically with the SEC at www.sec.gov.

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SCHEDULE "A"

MCLOUD TECHNOLOGIES CORP.

(the "Corporation")

CHARTER OF THE AUDIT COMMITTEE

1.       Objectives

The Audit Committee (the "Committee") is appointed by the board of directors (the "Board") of mCloud Technologies Corp. (the "Corporation") to assist the Board in fulfilling its oversight responsibilities with respect to financial reporting issues and issues relating to the appointment and review of the auditor for the Corporation.

The Committee acknowledges the corporate governance guidelines issued by the Canadian Securities Administrators in National Instrument 58-101 Disclosure of Corporate Governance Practices ("NI 58-101") and National Policy 58-201 Corporate Governance Guidelines ("NP 58-201"), and other regulatory provisions as they pertain to financial reporting and accounting matters. The objective of the Committee is to review, monitor and promote appropriate accounting practices of the Corporation.

The Audit Committee (the "Committee") is responsible for assisting the board of directors of the Corporation (the "Board") in general oversight and monitoring of:

(i)       the integrity of the Corporation's consolidated financial statements;

(ii) the Corporation's compliance with applicable legal and regulatory requirements related to financial reporting;

(iii)       the qualifications, independence and performance of the Corporation's auditor;

(iv) the design and implementation of accounting systems, internal controls and disclosure controls, including the Corporation's written disclosure policy, if any;

(v) the review and identification of the principal risks facing the Corporation and development of appropriate procedures to monitor and mitigate such risks; and

(vi)       any additional matters delegated to the Committee by the Board.

The Committee's oversight role regarding compliance systems shall not include responsibility for the Corporation's actual compliance with applicable laws and regulations.

The Committee will continuously review and modify this Charter with regards to, and to reflect changes in, the business environment, industry standards on matters of financial reporting and accounting, additional standards which the Committee believes may be applicable to the Corporation's business, the location of the Corporation's business and its shareholders and the application of laws and policies.

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2.        Composition

The Committee will be comprised of not less than three directors, selected by the Board on the recommendation of the Corporate Governance and Nominating Committee. All members of the Committee will be "independent" and each member of the Committee will be "financially literate" within the meaning of applicable securities laws including, without limitation, Multilateral Instrument 52-110 - Audit Committees ("MI 52-110"), NASDAQ Rule 5605(a)(2) and SEC Rule 10A-3(b)(1).

The members of the Committee shall be appointed or re-appointed by the Board on an annual basis and shall continue as members of the Committee until their successors are appointed or until they cease to be directors of the Corporation. Any member may be removed and replaced at any time by the Board and will automatically cease to be a member as soon as the member ceases to meet the qualifications set out above. The Board will fill vacancies on the Committee by appointment from among qualified members of the Board. If a vacancy exists on the Committee, the remaining members will exercise all its powers so long as a quorum remains in office.

Each year, the Board will appoint one member who is qualified for such purpose to be Chairman of the Committee. If, in any year, the Board does not appoint a Chairman of the Committee, the incumbent Chairman of the Committee will continue in office until a successor is appointed.

3.       Meetings and Minutes

(a)       Scheduling

The Committee will meet as often as it determines is necessary to fulfill its responsibilities, which in any event will be not less than quarterly. A meeting of the Committee may be called by the auditor, the Chairman of the Committee, the Chairman, the Chief Executive Officer, the Chief Financial Officer or any Committee member.

Meetings will be held at a location in Canada determined by the Chairman of the Committee and notice shall be given in accordance with the provisions of the Corporation's bylaws.

(b)       Notice to Auditor

The auditor is entitled to receive notice of every meeting of the Committee and, at the expense of the Corporation, to attend and be heard thereat and, if so requested by a member of the Committee, shall attend any meeting of the Committee held during the term of office of the auditor.

(c)       Agenda

The Chairman of the Committee will establish the agenda for each meeting. Any member may propose the inclusion of items on the agenda, request the presence of or a report by any member of senior management, or at any meeting raise subjects that are not on the agenda for the meeting.

(d)       Distribution of Information

The Chairman of the Committee will distribute, or cause the officers of the Corporation to distribute, an agenda and meeting materials in advance of each meeting to allow members sufficient time to review and consider the matters to be discussed.

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(e)       Attendance and Participation

Each member is expected to attend all meetings. A member who is unable to attend a meeting in person may participate by telephone or teleconference.

A portion of each meeting will be held without management (including management directors) being present.

(f)       Quorum

Two members will constitute a quorum for any meeting of the Committee.

(g)       Voting and Approval

At meetings of the Committee, each member will be entitled to one vote and questions will be decided by a majority of votes. In case of an equality of votes, the Chairman of the Committee will not have a second or casting vote in addition to his or her original vote.

(h)       Procedures

Procedures for Committee meetings will be determined by the Chairman of the Committee or a resolution of the Committee or the Board.

(i)       Transaction of Business

The powers of the Committee may be exercised at a meeting where a quorum is present in person or by telephone or other electronic means, or by resolution in writing signed by all members entitled to vote on that resolution at a meeting of the Committee.

(j)       Absence of Chairman of the Committee

In the absence of the Chairman of the Committee at a meeting of the Committee, the members in attendance must select one of them to act as chairman of that meeting.

(k)       Secretary

The Committee may appoint one of its members or any other person to act as secretary.

(l)       Minutes of Meetings

A person designated by the Chairman of the Committee at each meeting will keep minutes of the proceedings of the Committee and the Chairman will cause an officer of the Corporation to circulate copies of the minutes to each member on a timely basis.

4.       Scope, Duties and Responsibilities

The Committee is responsible for performing the duties set out below as well as any other duties at any time required by law to be performed by the Committee or otherwise delegated to the Committee by the Board:

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(a)       Appointment and Review of the Auditor

The auditor is ultimately accountable to the Committee and reports directly to the Committee. Accordingly, the Committee will evaluate and be responsible for the Corporation's relationship with the auditor. Specifically, the Committee will:

(i) select, evaluate, and recommend an auditor to the Board for appointment or reappointment, as the case may be, by the Corporation's shareholders and make recommendations with respect to the auditor's compensation;

(ii) review and approve the auditor's engagement letter;

(iii) resolve any disagreements between senior management and the auditor regarding financial reporting;

(iv)       at least annually, obtain and review a report by the auditor describing:

(A)       the auditor's internal quality-control procedures, including the safeguarding of confidential information;

(B)       any material issues raised by such procedures, or the review of the auditor by an independent oversight body, such as the Canadian Public Accountability Board, respecting independent audits carried out by the auditor, and the steps taken to deal with any issues raised in any such review;

(v)       meet with senior management not less than quarterly without the auditor present for the purpose of discussing, among other things, the performance of the auditor and any issues that may have arisen during the quarter; and

(vi)       where appropriate, recommend to the Board that the auditor be terminated.

(b)       Confirmation of the Auditor's Independence

At least annually, and in any event before the auditor issues its report on the annual financial statements, the Committee will:

(i)       review a formal written statement from the auditor describing all its relationships with the Corporation;

(ii)       discuss with the auditor any relationships or services that may affect its objectivity and independence (including considering whether the auditor's provision of any permitted non-audit services is compatible with maintaining its independence);

(iii)       obtain written confirmation from the auditor that it is objective within the meaning of the Rules of Professional Conduct/Code of Ethics adopted by the provincial institute or order of Chartered Accountants to which it belongs and is an independent public accountant within the meaning of the Independence Standards of the Canadian Institute of Chartered Accountants; and

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(iv)       confirm that the auditor has complied with applicable rules, if any, with respect to the rotation of certain members of the audit engagement team.

(c)       Pre-Approval of Non-Audit Services

The approval of the appointment of the auditor for any non-audit service to be provided to the Corporation must be obtained from the Committee in advance; provided that it will not approve any service that is prohibited under the rules of the Canadian Public Accountability Board or the Independence Standards of the Canadian Institute of Chartered Accountants. Before the appointment of the auditor for any non-audit service, the Committee will consider the compatibility of the service with the auditor's independence. The Committee may pre-approve the appointment of the auditor for any non-audit services by adopting specific policies and procedures, from time to time, for the engagement of the auditor for non-audit services.

(d)       Communications with the Auditor

The Committee has the authority to communicate directly with the auditor and will meet privately with the auditor periodically to discuss any items of concern to the Committee or the auditor.

(e)       Review of the Audit Plan

The Committee will discuss with the auditor the nature of an audit and the responsibility assumed by the auditor when conducting an audit under generally accepted auditing standards. The Committee will review a summary of the auditor's audit plan for each audit and approve the audit plan with such amendments as it may agree with the auditor.

(f)       Review of Audit Fees

The Committee will review and determine the auditor's fee and the terms of the auditor's engagement and inform the Board thereof. In determining the auditor's fee, the Committee will consider, among other things, the number and nature of reports to be issued by the auditor, the quality of the internal controls of the Corporation, the size, complexity and financial condition of the Corporation and its subsidiaries and the extent of support to be provided to the auditor by the Corporation.

(g)       Review of Consolidated Financial Statements

The Committee will review and discuss with senior management and the auditor the annual audited consolidated financial statements, together with the auditor's report thereon and the interim financial statements, before recommending them for approval by the Board. The Committee will also review and discuss with senior management and the auditor management's discussion and analysis relating to the annual audited financial statements and interim financial statements, where applicable. The Committee may also, if it so elects, engage the auditor to review the interim financial statements prior to the Committee's review of such financial statements.

(h)       Review of Other Financial Information

The Committee will review:

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(i)       all earnings press releases and other press releases disclosing financial information, as well as all financial information and written earnings guidance provided to analysts and rating agencies;

(ii)       all other financial statements of the Corporation that require approval by the Board before they are released to the public, including, without limitation, financial statements for use in prospectuses or other offering or public disclosure documents and financial statements required by regulatory authorities; and

(iii)       disclosures made to the Committee by the Chief Executive Officer and Chief Financial Officer during their certification process for applicable securities law filings by the Corporation (where applicable) about any significant deficiencies and material weaknesses in the design or operation of the Corporation's internal controls over financial reporting which are reasonably likely to adversely affect the Corporation's ability to record, process, summarize and report financial information, and any fraud involving senior management or other employees who have a significant role in the Corporation's internal control over financial reporting.

(i)       Oversight of Internal Controls and Disclosure Controls

The Committee will review periodically with senior management of the Corporation the adequacy of the internal controls and procedures that have been adopted by the Corporation and its subsidiaries to safeguard assets from loss and unauthorized use and to verify the accuracy of the financial records. The Committee will review any special audit steps adopted in light of material control deficiencies or identified weaknesses.

The Committee will review with senior management of the Corporation the controls and procedures that have been adopted by the Corporation to confirm that material information about the Corporation and its subsidiaries that is required to be disclosed under applicable law or stock exchange rules is disclosed.

(j)       Legal Compliance

The Committee will review any legal matters that could have a significant effect on the Corporation's financial statements.

(k)       Risk Management

The Committee will oversee the Corporation's risk management function and, on a quarterly basis, will review a report from senior management describing the major financial, legal, operational and reputational risk exposures of the Corporation and the steps senior management has taken to monitor and control such exposures.

(l)       Taxation Matters

The Committee will review with senior management the status of taxation matters of the Corporation.

(m)       Employees of the Auditor

The Committee will review and approve policies for the hiring by the Corporation of any partners and employees and former partners and former employees of the present or former auditor.

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(n)       Evaluation of Financial and Accounting Personnel

The Committee will have direct responsibility to:

(i)       develop a position description for the Chief Financial Officer, setting out the Chief Financial Officer's authority and responsibilities, and present it to the Corporate Governance and Nominating Committee and Board for approval;

(ii)       review and approve the goals and objectives that are relevant to the Chief Financial Officer's compensation and present the same to the Corporate Governance and Nominating Committee and Board for approval;

(iii)       evaluate the Chief Financial Officer's performance in meeting his or her goals and objectives;

(iv)       review and assess the performance of the Corporation's financial and accounting personnel; and

(v) recommend to the Compensation Committee and Board remedial action where necessary.

(o)       Signing Authority and Approval of Expenses

The Committee will determine the signing authority of officers and directors in connection with the expenditure and release of funds. The Committee will also review the Chief Executive Officer's and Chief Financial Officer's expense statements. Director expense statements will be reviewed by the Chief Executive Officer. Where the Chief Executive Officer thinks it advisable, he or she may request that the Committee review director expense statements.

5.       Complaints Procedure

The Committee will administer the Corporation's Whistleblower Policy for the receipt, retention and follow-up of complaints received by the Corporation regarding accounting, internal controls, disclosure controls or auditing matters and the confidential, anonymous submission of concerns by employees of the Corporation regarding such matters.

6.       Reporting

The Committee will regularly report to the Board on:

(i)       the auditor's independence, engagement, and fees;

(ii)       the performance of the auditor and the Committee's recommendations regarding its reappointment or termination;

(iii)       the adequacy of the Corporation's internal controls and disclosure controls;

(iv)       the Corporation's risk management procedures;

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(v)       its recommendations regarding the annual and interim financial statements of the Corporation, including any issues with respect to the quality or integrity of the financial statements;

(vi)       its review of any applicable annual and interim management's discussion and analysis;

(vii)       any complaints made under, and the effectiveness of, the Corporation's Whistleblower Policy;

(viii)       the Corporation's compliance with applicable legal and regulatory requirements related to financial reporting; and

(ix)       all other significant matters it has addressed or reviewed and with respect to such other matters that are within its responsibilities, together with any associated recommendations.

7.       Assessment

At least annually, the Corporate Governance and Nominating Committee will review the effectiveness of the Committee in fulfilling its responsibilities and duties as set out in this Charter and in a manner consistent with the mandate adopted by the Board.

8.       Review and Disclosure

The Committee will review this Charter at least annually and submit it to the Corporate Governance and Nominating Committee together with any proposed amendments. The Corporate Governance and Nominating Committee will review the Charter and submit it to the Board for approval with such further proposed amendments as it deems necessary and appropriate.

9.       Access to Outside Advisors and Records

The Committee may retain independent counsel and any outside advisor at any time and has the authority to determine any such advisors' fees and other retention terms. The Committee, and any outside advisors retained by it, will have access to all records and information, relating to the Corporation and all their respective officers, employees and agents which it deems relevant to the performance of its duties.

EX-99.4

EXHIBIT 99.4

Unofficial consolidation for financial years beginning on or after January 1, 2011

This is an unofficial consolidation of Form 52-109F1 - IPO/RTO Certification of Annual Filings Following an Initial Public Offering, Reverse Takeover or Becoming a Non-Venture Issuer reflecting amendments made effective January 1, 2011 in connection with Canada’s changeover to IFRS. The amendments apply for financial periods relating to financial years beginning on or after January 1, 2011. This document is for reference purposes only and is not an official statement of the law.

Form 52-109F1 - IPO/RTO

Certification of Annual Filings Following

an Initial Public Offering, Reverse Takeover or

Becoming a Non-Venture Issuer

I, Russ McMeekin, Chief Executive Officer of mCloud Technologies Corp., certify the following:

1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of mCloud Technologies Corp. for the financial year ended December 31, 2021.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

Date: April 4, 2022

 

_______________________

Russ McMeekin

Chief Executive Officer

NOTE TO READER

In contrast to the usual certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), namely, Form 52-109F1, this Form 52-109F1 - IPO/RTO does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.

Investors should be aware that inherent limitations on the ability of certifying officers of an issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 in the first financial period following

• completion of the issuer’s initial public offering in the circumstances described in s. 4.3 of NI 52-109;

• completion of a reverse takeover in the circumstances described in s. 4.4 of NI 52-109; or

• the issuer becoming a non-venture issuer in the circumstances described in s. 4.5 of NI 52-109;

may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Unofficial consolidation for financial years beginning on or after January 1, 2011

This is an unofficial consolidation of Form 52-109F1 - IPO/RTO Certification of Annual Filings Following an Initial Public Offering, Reverse Takeover or Becoming a Non-Venture Issuer reflecting amendments made effective January 1, 2011 in connection with Canada’s changeover to IFRS. The amendments apply for financial periods relating to financial years beginning on or after January 1, 2011. This document is for reference purposes only and is not an official statement of the law.

Form 52-109F1 - IPO/RTO

Certification of Annual Filings Following

an Initial Public Offering, Reverse Takeover or

Becoming a Non-Venture Issuer

I, Chantal Schutz, Chief Financial Officer of mCloud Technologies Corp., certify the following:

1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of mCloud Technologies Corp. for the financial year ended December 31, 2021

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

Date: April 4, 2022

 

_______________________

Chantal Schutz

Chief Financial Officer

NOTE TO READER

In contrast to the usual certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), namely, Form 52-109F1, this Form 52-109F1 - IPO/RTO does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.

Investors should be aware that inherent limitations on the ability of certifying officers of an issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 in the first financial period following

• completion of the issuer’s initial public offering in the circumstances described in s. 4.3 of NI 52-109;

• completion of a reverse takeover in the circumstances described in s. 4.4 of NI 52-109; or

• the issuer becoming a non-venture issuer in the circumstances described in s. 4.5 of NI 52-109;

may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.