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HAMMER FIBER OPTICS HOLDINGS CORP MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

The following MD&A should be read in conjunction with Hammer Fiber Optics Holdings Corp., the financial statements and the accompanying notes. The MD&A contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. All statements that are not statements of historical fact are forward-looking statements. When used, the words “believe”, “plan”, “intend”, “anticipate”, “target”, “estimate”, “expect” and the like, and/or constructs in the future or conditional (“” “may”, “could”, “should”, etc.), or similar expressions, identify some of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events will differ materially from those expressed or implied by the forward-looking statements in this report on Form 10-Q. The Company’s actual results and timing of events could differ materially from those anticipated in such forward-looking statements. due to several factors.The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances that occur after the date of this report on Form 10-Q.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and other financial data included elsewhere in this report. See also the notes to our condensed consolidated financial statements and the MD&A of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K/A for the year ended July 31, 2020filed with the
SECOND to November 13, 2020.

Operating results

Three months completed January 31, 2022 Compared to the three months ended January 31, 2021

Net income for the three months ended January 31, 2022 and January 31, 2021
were $591,947 and $508,848, respectively, an increase of 14.04%. The increase is primarily due to the expansion of the company’s Over-the-Top (“OTT”) business segment, which includes its SMS messaging and hosting business units.

In the three months ended January 31, 2022the Company incurred total operating expenses of $733,105 compared to $532,956an increase of 25.04%, for the comparable period ended January 31, 2021. The increase in expenses is due to expenses associated with the Company’s diversification into financial services markets and increased expenses associated with the expansion of the telecommunications sector.

The Company recognized an allowance for depreciation of $17,940 and
$12,627 in the three months ended January 31, 2022 and January 31, 2021
respectively. In the three months ended January 31, 2022 and January 31, 2021 interest charges were $21,817 and $6,204 respectively.

In the three months ended January 31, 2022 the Company recorded a net loss of $127,753compared to the net result of $4,256,347 during the same three-month period ended January 31, 2021. The increased loss is due to the Company’s diversification into financial services markets and increased expenses associated with the expansion of the telecommunications sector.

Cash and capital resources

The Company is likely to remain a going concern. Its ability to remain a going concern depends on the company’s ability to raise debt and/or equity from third-party sources for working capital and business development needs until the company can be substantially maintained as a going concern on cash. cash flow from operations or the Company is increasing its cash flow from operations through the sale of services in ongoing business units, Final announcements1stPoint Communications and HammerPay.

Cash flow from operating activities

In the six months ended January 31, 2022 the Company’s total cash decreased by $11,478against a drop in cash of $13,448 in the period ended
January 31, 2021. Cash flow from operating activities decreased by $23,747compared to a decrease in $167,535 in the period ended January 31, 2020. The decrease is mainly due to improved operations.

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Cash flow from investing activities

In the six months ended January 31, 2022the Company’s investing activities used $23,745compared to $3,424 from investing activities during the semester January 31, 2021. The increase is mainly due to the expansion of the activities of the company’s telecommunications business unit, and in particular the expansion of its HammerCall video and collaboration platform.

Cash flow from financing activities

In the six months ended January 31, 2022the Company compensated $36,014 in cash from financing activities through $157,511 used during the half-year ended January 31, 2021.

Continuity of exploitation

From January 31, 2022, doubts existed as to the Company’s ability to continue operations, as the Company has no certainty of generating additional revenue in the future, has a working capital deficit and an overall accumulated deficit since its inception. The Company will require additional financing to continue its operations, either from management, existing shareholders or new shareholders through equity financing and/or debt financing sources. These factors raise substantial doubts as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to the recoverability and classification of the amounts of assets recognized and the classification of liabilities that might be necessary if the Company were unable to continue as a going concern.

Future funding

We will continue to rely on equity sales of our common stock to continue to fund our business activities. The issuance of additional shares may result in dilution for existing shareholders. There can be no assurance that we will complete additional sales of equity securities or arrange borrowings or other financings in an amount sufficient to fund our operations and other development activities.

Off-balance sheet arrangements

We do not have any material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial position, changes in our financial position, income or expenses, results of operations, liquidity , our capital expenditures or our capital resources that are important to shareholders.

Critical accounting policies

Our financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles. United States, applied consistently. The preparation of financial statements in accordance with
we Generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting periods.

Recently issued accounting pronouncements

The Company has implemented new accounting pronouncements that are relevant to the company and are effective. These pronouncements did not have a material impact on the financial statements, unless otherwise stated, and the Company does not believe that there are any other new accounting pronouncements that could have a material impact on its financial position. or its results of operations.

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