Document:

Exhibit 4.2

 

 

	VIQ Solutions Inc.   	

 

Consolidated Financial Statements

 

And Independent Auditors’ Report thereon

 

Years ended December 31, 2020 and 2019

 

(Expressed in United States dollars)

 

    

     

    

 

 

 

KPMG LLP

Vaughan Metropolitan Centre 100 New Park Place

Suite 1400

Vaughan, ON Canada L4K 0J3 Telephone (905) 265-5900

Fax (905) 265-6390

www.kpmg.ca

 

INDEPENDENT AUDITORS’ REPORT

 

To the Shareholders of VIQ Solutions Inc.

 

Opinion

 

We have audited the consolidated financial
statements of VIQ Solutions Inc. (the Entity), which comprise:

 

		·	the consolidated statement of financial position as at December 31,
2020

 

		·	the consolidated statement of loss and comprehensive loss for the year then
ended

 

		·	the consolidated statement of changes in shareholders’ equity for the
year then ended

 

		·	the consolidated statement of cash flows for the year then ended

 

		·	and notes to the consolidated financial statements, including a summary of
significant accounting policies

 

(Hereinafter referred to as the “financial statements”).

 

In
our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the
Entity as at December 31, 2020, and its consolidated financial performance
and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

 

Basis for Opinion

 

We conducted our audit in accordance with
Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditors’
Responsibilities for the Audit of the Financial Statements” section of our auditors’ report.

 

We are independent of the Entity in accordance
with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical
responsibilities in accordance with these requirements.

 

We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.

 

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.

 

    

     

    

 

 

Key Audit Matters

 

Key
audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
for the year ended December 31, 2020. These matters were addressed
in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

 

We have determined the matters described
below to be the key audit matters to be communicated in our auditors’ report.

 

Evaluation of the fair value of
contingent consideration and acquired intangible assets for business combinations

 

Description of the matter

 

We draw attention to Notes 2(e), 3(i) and
4 to the financial statements. On January 31, 2020, the Entity acquired 100% of the assets of ASC Services LLC (“ASC”).
On February 26, 2020, the Entity acquired 100% of the shares of WordZXpressed Inc. (“WordZ”). The acquisitions of ASC
and WordZ were each determined to be a business combination and were accounted for using the acquisition method. The total consideration
was $5,175,096 for ASC, including contingent consideration of

 

$2,038,596, and $3,861,347 for
WordZ, including contingent consideration of $1,671,670. The acquisition-date fair value for the customer relationships and other
intangible assets was $2,880,000 and $550,000, respectively, for ASC and $2,220,000 and $260,000, respectively, for WordZ. The
Entity’s significant assumptions in determining the fair values of the contingent consideration and the acquired intangible
assets include:

 

		·	Forecasted revenues attributable to the acquired
businesses

 

		·	Forecasted earnings before interest, taxes, depreciation and amortization
(EBITDA)

 

		·	Discount rates.

 

Why the matter is a key audit matter

 

We identified the evaluation of the fair
value of contingent consideration and acquired intangible assets for business combinations as a key audit matter. This matter represented
significant auditor judgement due to the high degree of estimation uncertainty in determining the fair values of contingent consideration
and acquired intangible assets. In addition, specialized skills and knowledge were required in evaluating the results of our audit procedures
due to the sensitivity in the Entity’s determination of fair values to changes to certain significant assumptions.

 

How the matter was addressed in
the audit

 

The following are the primary procedures
we performed to address this key audit matter:

 

		·	We read the share purchase agreements for each of the business combinations.

 

    	2 

     

    

 

 

		·	We compared the Entity’s forecasted revenues
and EBITDA to the historical actual results to assess the Entity’s ability to accurately forecast.

 

		·	We involved valuations professionals with specialized
skills and knowledge, who assisted in evaluating the appropriateness of the Entity’s discount rates by comparing to discount rates
that were independently developed using publicly available data for comparable entities for each acquisition.

 

Impairment of goodwill and intangible
assets

 

Description of the matter

 

We draw attention to Notes 2(e), 3(i) and
8 to the financial statements. The goodwill and intangible balances are $6,976,096 and $12,118,352, respectively. The Entity reviews goodwill
and intangible assets for impairment annually, or more frequently when there are indicators that impairment may have occurred. The Entity
recorded an impairment charge of $2,258,369. When performing impairment tests, the Entity uses judgment in estimating the recoverable
values of the cash-generating units (“CGUs”) and uses internally developed valuation models that consider various factors
and assumptions including forecasted cash flows, revenue growth rates, earnings margins and discount rates. The use of different assumptions
and estimates could influence the determination of the existence of impairment and the valuation of goodwill and intangible assets. The
recoverable amount of the CGUs is estimated based on an assessment of their value in use using a discounted cash flow approach. Cash flows
for the years thereafter are extrapolated using the estimated terminal growth rate. The Entity has made certain assumptions in determining
the cash flow projections. Key assumptions include revenue growth rates, earnings margins and discount rates.

 

Why the matter is a key audit matter

 

We identified the evaluation of impairment
of goodwill and intangible assets as a key audit matter. This matter represented a significant risk of material misstatement given the
magnitude of the goodwill and intangible asset amounts and the high degree of estimation uncertainty in determining the recoverable amount
of each CGU. In addition, significant auditor judgment was required in evaluating the results of our audit procedures due to the sensitivity
of the recoverable amount to changes in certain key assumptions.

 

How the matter was addressed in
the audit

 

The following are the primary procedures we performed
to address this key audit matter.

 

		·	We assessed the historical accuracy of revenue
growth rates and earnings margins by comparing the Entity’s past projections to actual and historical performance. In addition,
we compared the revenue growth rates to current industry, market and economic trends.

 

    	3 

     

    

 

 

 

		·	To assess the impact of the discount rate assumption,
we performed sensitivity analysis on that assumption by using recent transactions.

 

Other Matter – Comparative
Information

 

The
financial statements for the year ended December 31, 2019 were audited
by another auditor who expressed an unmodified opinion on those financial statements on April 16,
2020.

 

Other Information

 

Management is responsible for the other
information. Other information comprises:

 

		·	the information included in Management’s
Discussion and Analysis filed with the relevant Canadian Securities Commissions.

 

Our opinion on the financial statements
does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

 

In connection with our audit of the financial
statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that
the other information appears to be materially misstated.

 

We obtained the information included in
Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditors’
report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other
information, we are required to report that fact in the auditors’ report.

 

We have nothing to report in this regard.

 

Responsibilities of Management and Those Charged with
Governance for the Financial Statements

 

Management is responsible for the preparation
and fair presentation of the financial statements in accordance with International Financial Reporting Standards (IFRS), and for such
internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.

 

In preparing the financial statements,
management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as applicable, matters related
to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease
operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible
for overseeing the Entity’s financial reporting process.

 

    	4 

     

    

 

 

 

Auditors’ Responsibilities
for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable
assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditors’ report that includes our opinion.

 

Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists.

 

Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of the financial statements.

 

As part of an audit in accordance with
Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the
audit.

 

We also:

 

		·	Identify and assess the risks of material misstatement
of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion.

 

		 	The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.

 

		·	Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Entity's internal control.

 

		·	Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates and related disclosures made by management.

 

		·	Conclude on the appropriateness of management's
use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditors’ report. However, future events or conditions may cause the Entity to cease to continue as a going concern.

 

		·	Evaluate the overall presentation, structure
and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.

 

    	5 

     

    

 

 

		·	Communicate with those charged with governance
regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.

 

		·	Provide those charged with governance with a
statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

		·	Obtain sufficient appropriate audit evidence
regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our
audit opinion.

 

		·	Determine, from the matters communicated with
those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

 

Chartered Professional Accountants, Licensed Public Accountants

 

The engagement partner on the audit resulting in this auditors’
report is Lesley Bridget Luk.

Vaughan, Canada

 

April 14,
2021

 

    	6 

     

    

 

VIQ Solutions Inc.

 

Consolidated Statements of Financial Position

(Expressed in United States dollars)

	 	 	December 31, 2020	 	 	December 31, 2019	 
	Assets	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 
	Cash	 	$	16,835,671	 	 	$	1,707,654	 
	Trade and other receivables, net of allowance for doubtful accounts	 	 	 	 	 	 	 	 
	(note 5)	 	 	4,475,751	 	 	 	3,169,545	 
	Inventories	 	 	49,381	 	 	 	64,706	 
	Prepaid expenses and deposits	 	 	254,230	 	 	 	184,207	 
	 	 	 	21,615,033	 	 	 	5,126,112	 
	Non-current assets	 	 	 	 	 	 	 	 
	Restricted cash	 	 	42,835	 	 	 	37,536	 
	Property and equipment (note 7)	 	 	215,835	 	 	 	111,587	 
	Right of use assets (note 18)	 	 	309,566	 	 	 	647,046	 
	Intangible assets (note 8)	 	 	12,118,352	 	 	 	10,216,461	 
	Goodwill (note 8)	 	 	6,976,096	 	 	 	4,295,515	 
	Deferred tax assets (note 20)	 	 	1,441,942	 	 	 	334,542	 
	Total assets	 	$	42,719,659	 	 	$	20,768,799	 
	 	 	 	 	 	 	 	 	 
	
Liabilities
	 	 	 	 	 	 	 	 
	Current liabilities	 	 	 	 	 	 	 	 
	Trade and other payables and accrued liabilities (note 6)	 	$	5,305,600	 	 	$	3,515,028	 
	Income tax payable (note 20)	 	 	201,592	 	 	 	94,606	 
	Share appreciation rights plan obligations (note 10)	 	 	126,503	 	 	 	149,078	 
	Current portion of long-term debt (note 9)	 	 	1,486,136	 	 	 	1,103,438	 
	Current portion of convertible note (note 9 (c))	 	 	-	 	 	 	2,336,804	 
	Current portion of lease obligations (note 19)	 	 	113,218	 	 	 	307,436	 
	Current portion of contract liabilities	 	 	1,252,957	 	 	 	455,026	 
	 	 	 	8,486,006	 	 	 	7,961,416	 
	Non-current liabilities	 	 	 	 	 	 	 	 
	Deferred tax liability (note20)	 	 	60,587	 	 	 	4,205	 
	Long-term convertible note (note 9 (c))	 	 	-	 	 	 	3,601,182	 
	Long-term debt (note 9)	 	 	12,138,799	 	 	 	6,505,637	 
	Long-term contingent consideration (note 4)	 	 	1,575,528	 	 	 	-	 
	Long-term lease obligations (note 19)	 	 	240,981	 	 	 	382,208	 
	Long-term contract liabilities	 	 	70,834	 	 	 	-	 
	Other long-term liabilities	 	 	360,525	 	 	 	103,629	 
	Total liabilities	 	 	22,933,260	 	 	 	18,558,277	 
	 	 	 	 	 	 	 	 	 
	
Shareholders’ equity
	 	 	 	 	 	 	 	 
	Capital stock (note 10)	 	 	50,234,551	 	 	 	21,987,937	 
	Contributed surplus	 	 	4,970,945	 	 	 	4,552,528	 
	Accumulated other comprehensive income (loss)	 	 	(78,906	)	 	 	(135,058	)
	Deficit	 	 	(35,340,191	)	 	 	(24,194,885	)
	Related party transactions (note 22) 	 	 	19,786,399	 	 	 	2,210,522	 
	Commitments, contractual obligations and contingencies (notes 19, 21)	 	 	 	 	 	 	 	 
	Subsequent events (notes 1, 9, 22 and 24)	 	 		 	 	 		 
	Total liabilities and shareholders’ equity	 	$	42,719,659	 	 	$	20,768,799	 

 

See accompanying notes to consolidated financial statements.

 

	Approved by the Board	 	Signed “Larry
    Taylor”	 	Signed “Sebastien
    Paré”
		 	Larry Taylor, Director	 	Sebastien Paré, CEO and Director

 

    

     

    

 

VIQ Solutions Inc.

Consolidated Statements of Loss and Comprehensive Loss 

(Expressed in
United States dollars)

	 	 	Year ended December 31,	 
	 	 	2020	 	 	2019	 
	Revenue (note 15)	 	 	$ 31,749,693	 	 	 	$ 25,096,308	 
	 Cost of sales	 	 	

 15,599,437
	 	 	 	

 14,276,321
	 
	Gross profit	 	 	16,150,256	 	 	 	10,819,987	 
	 	 	 	 	 	 	 	 	 
	
Expenses (note 16)
	 	 	 	 	 	 	 	 
	Selling and administrative expenses	 	 	11,034,902	 	 	 	8,954,512	 
	Research and development expenses	 	 	1,074,178	 	 	 	994,640	 
	Stock-based compensation (note 11)	 	 	725,316	 	 	 	195,113	 
	Foreign exchange (gain) loss	 	 	(132,306	)	 	 	217,040	 
	Depreciation	 	 	445,995	 	 	 	528,484	 
	Amortization	 	 	4,813,248	 	 	 	2,973,945	 
	 	 	 	17,961,333	 	 	 	13,863,734	 
	Loss before undernoted items and income taxes	 	 	(1,811,077	)	 	 	(3,043,747	)
	 	 	 	 	 	 	 	 	 
	Interest expense (note 9) 	 	 	(4,934,517	)	 	 	(1,549,904	)
	Accretion and other financing expense (note 9) 	 	 	(1,216,949	)	 	 	(916,734	)
	Gain (loss) on revaluation of conversion feature liability (note 9 (c)) 	 	 	(1,308,440	)	 	 	2,330,964	 
	Loss on repayment of long-term debt (note 9) 	 	 	(1,497,804	)	 	 	–	 
	Business acquisition costs (note 4) 	 	 	(19,058	)	 	 	(484,387	)
	Gain on contingent consideration (note 4) 	 	 	946,503	 	 	 	–	 
	Impairment of goodwill and intangibles (note 8)	 	 	(2,258,369	)	 	 	–	 
	 Other income (expense) (note 23)	 	 	10,373	 	 	 	(761,235	)
	 	 	 	(12,089,338	)	 	 	(4,425,043	)
	 	 	 	 	 	 	 	 	 
	Current income tax expense (note 20)	 	 	(106,986	)	 	 	(93,580	)
	Deferred income tax recovery (expense) (note 20)	 	 	1,051,018	 	 	 	(5,575	)
	Income tax (expense) recovery	 	 	944,032	 	 	 	(99,155	)
	Net loss for the year	 	$	(11,145,306	)	 	$	(4,524,198	)
	 	 	 	 	 	 	 	 	 
	
Exchange gain (loss) on translating foreign operations
	 	 	56,152	 	 	 	(262,811	)
	Comprehensive loss for the year	 	$	(11,089,154	)	 	$	(4,787,009	)
	 
Net loss per share (note 12)
	 	 	 	 	 	 	 	 
	Basic	 	$	(0.62	)	 	$	(0.46	)
	Diluted	 	$	(0.62	)	 	$	(0.46	)
	 Weighted average number of common shares	 	 	
 
 18,080,533
	 	 	 	
 
 9,752,131
	 
	outstanding – basic (note 12) 	 	 	 	 	 	 	 	 
	Weighted average number of common shares 	 	 	18,080,533	 	 	 	9,752,131	 
	outstanding – diluted (note 12)	 	 	 	 	 	 	 	 

 

See accompanying notes to consolidated financial statements.

 

    

     

    

 

VIQ Solutions Inc.

Consolidated Statements of Changes in Shareholders’ Equity

(Expressed
in United States dollars)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accumulated
    other	 	 	 	 
	 	 	Capital
    stock	 	 	Contributed	 	 	 	 	 	comprehensive	 	 	Total	 
	 	 	Number	 	 	Amount	 	 	surplus	 	 	Deficit	 	 	income
    (loss)	 	 	equity	 
	Balance as at December 31,
    2018	 	 	8,729,318	 	 	$	18,662,252	 	 	$	3,595,587	 	 	$	(19,670,687	)	 	$	127,753	 	 	$	2,714,905	 
	Comprehensive loss for the year	 	 	–	 	 	 	–	 	 	 	–	 	 	 	(4,524,198	)	 	 	(262,811	)	 	 	(4,787,009	)
	Shares issued due to exercise of stock options (note
    10)	 	 	67,860	 	 	 	85,979	 	 	 	(26,348	)	 	 	–	 	 	 	–	 	 	 	59,631	 
	Shares issued due to exercise of warrants (note 10)	 	 	1,362,506	 	 	 	2,196,277	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	2,196,277	 
	Shares issued upon settlement of payables (note 23)	 	 	659,600	 	 	 	1,003,652	 	 	 	762,575	 	 	 	–	 	 	 	–	 	 	 	1,766,227	 
	Shares issued – DSU (note 10)	 	 	33,333	 	 	 	39,777	 	 	 	(39,221	)	 	 	–	 	 	 	–	 	 	 	556	 
	Options forfeited	 	 	–	 	 	 	–	 	 	 	(39,652	)	 	 	–	 	 	 	–	 	 	 	(39,652	)
	Stock-based compensation (note 11)	 	 	–	 	 	 	–	 	 	 	299,587	 	 	 	–	 	 	 	–	 	 	 	299,587	 
	Balance as at December 31, 2019	 	 	10,852,617	 	 	$	21,987,937	 	 	$	4,552,528	 	 	$	(24,194,885	)	 	$	(135,058	)	 	$	2,210,522	 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	other	 	 	 	 
	 	 	Capital
    stock	 	 	Contributed	 	 	 	 	 	comprehensive	 	 	Total	 
	 	 	Number	 	 	Amount	 	 	surplus	 	 	Deficit	 	 	income
    (loss)	 	 	equity	 
	Balance as at December 31,
    2019	 	 	10,852,617	 	 	$	21,987,937	 	 	$	4,552,528	 	 	$	(24,194,885	)	 	$	(135,058	)	 	$	2,210,522	 
	Comprehensive loss for the period	 	 	–	 	 	 	–	 	 	 	–	 	 	 	(11,145,306	)	 	 	56,152	 	 	 	(11,089,154	)
	Issuance of common
    shares in private placement, net of issuance costs (note 10)	 	 	4,705,900	 	 	 	13,747,345	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	13,747,345	 
	Shares issued due to exercise of
    stock options (note 10)	 	 	92,500	 	 	 	129,982	 	 	 	(46,416	)	 	 	–	 	 	 	–	 	 	 	83,566	 
	Shares issued
    due to exercise of warrants and warrant repricing (note 9, 10)	 	 	1,154,759	 	 	 	1,940,925	 	 	 	3,324	 	 	 	–	 	 	 	–	 	 	 	1,944,249	 
	Shares issued due to convertible
    note (note 9)	 	 	6,785,651	 	 	 	12,428,362	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	12,428,362	 
	Stock-based
    compensation (note 11)	 	 	–	 	 	 	–	 	 	 	461,509	 	 	 	–	 	 	 	–	 	 	 	461,509	 
	Balance as
    at December 31, 2020	 	 	23,591,427	 	 	$	50,234,551	 	 	$	4,970,945	 	 	$	(35,340,191	)	 	$	(78,906	)	 	$	19,786,399	 

 

 

 

    

     

    

 

VIQ Solutions Inc.

Consolidated Statements of Cash Flows 

(Expressed in United States dollars)

	 	 	Year Ended December 31,	 
	 	 	2020	 	 	2019	 
	Cash provided by (used in):	 	 	 	 	 	 	 	 
	Operating activities	 	 	 	 	 	 	 	 
	Net loss for the year	 	$	(11,145,306	)	 	$	(4,524,198	)
	 	 	 	 	 	 	 	 	 
	Items not affecting cash:	 	 	 	 	 	 	 	 
	Depreciation	 	 	445,995	 	 	 	528,484	 
	Amortization	 	 	4,813,249	 	 	 	2,973,945	 
	Stock-based compensation (note 11)	 	 	725,316	 	 	 	195,113	 
	(Gain) loss on revaluation of conversion feature liability (note 9 (c))	 	 	1,308,440	 	 	 	(2,330,964	)
	Loss on repayment of long-term debt (note 9)	 	 	1,497,804	 	 	 	–	 
	Accretion and other financing expense (note 9)	 	 	1,216,949	 	 	 	916,734	 
	Interest expense (note 9)	 	 	4,934,517	 	 	 	1,549,904	 
	Income tax expense (recovery) (note 20)	 	 	(944,032	)	 	 	99,155	 
	(Gain) loss on contingent consideration (note 4)	 	 	(946,503	)	 	 	–	 
	Impairment of goodwill and intangibles (note 8)	 	 	2,258,369	 	 	 	–	 
	Other expense (income) (note 23)	 	 	(10,373	)	 	 	761,235	 
	Foreign exchange (gain) loss	 	 	(132,306	)	 	 	217,040	 
	Unrealized foreign exchange loss (gain)	 	 	174,251	 	 	 	(108,018	)
	Changes in non-cash operating working capital (note 13)	 	 	(773,287	)	 	 	(835,831	)
	Cash provided by (used in) operating activities	 	 	3,423,083	 	 	 	(557,401	)
	 	 	 	 	 	 	 	 	 
	Investing activities	 	 	 	 	 	 	 	 
	Purchase of property and equipment 	 	 	(202,297	)	 	 	(92,671	)
	Business acquisitions (note 4)	 	 	(4,411,500	)	 	 	–	 
	Earn out payment (note 4)	 	 	(377,312	)	 	 	–	 
	Development costs related to internally generated intangible assets (note 8)	 	 	(1,642,783	)	 	 	(1,689,711	)
	Change in restricted cash	 	 	(5,299	)	 	 	176	 
	Cash used in investing activities	 	 	(6,639,191	)	 	 	(1,782,206	)
	 	 	 	 	 	 	 	 	 
	Financing activities	 	 	 	 	 	 	 	 
	Issuance of share capital, net of issuance costs	 	 	13,747,345	 	 	 	–	 
	Proceeds from exercise of stock options (note 10)	 	 	10,568	 	 	 	59,631	 
	Proceeds from exercise of warrants (note 10)	 	 	1,859,963	 	 	 	2,196,277	 
	Proceeds from debt (note 9)	 	 	4,827,175	 	 	 	1,925,000	 
	Repayment of debt (note 9)	 	 	(838,031	)	 	 	(983,479	)
	Repayment of lease obligations (note 19)	 	 	(338,276	)	 	 	(392,969	)
	Payment of interest on debt (note 9)	 	 	(1,052,576	)	 	 	(657,300	)
	Payment of interest on lease obligations (note 19)	 	 	(53,549	)	 	 	(86,470	)
	Cash provided by financing activities	 	 	18,162,619	 	 	 	2,060,690	 
		 	 	 	 	 	 	 	 
	Net increase (decrease) in cash for the year	 	 	14,946,511	 	 	 	(278,917	)
	Cash, beginning of year	 	 	1,707,654	 	 	 	1,922,768	 
	Effect of exchange rate changes on cash	 	 	181,506	 	 	 	63,803	 
	Cash, end of year	 	$	16,835,671	 	 	$	1,707,654	 

 

See accompanying notes to consolidated financial statements.

 

    PAGE 4

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		1.	Nature of operations

 

VIQ Solutions Inc. (“VIQ”
or the “Company”) is a technology and service platform provider for digital evidence capture, retrieval, and content management.
VIQ’s modular software allows customers to easily integrate the platform at any stage of their organization's digitization, from
the capture of digital content from video and audio devices through to online collaboration, mobility, data analytics, and integration
with sensors, facial recognition, speech recognition, and case management or patient record systems. VIQ operates worldwide with a network
of partners including security integrators, audio-video specialists, and hardware and data storage suppliers.

 

The Company also provides recording
and transcription services directly to a variety of clients including medical, courtrooms, legislative assemblies, hearing rooms, inquiries
and quasi-judicial clients in numerous countries including Canada, the United Kingdom, the United States and Australia.

 

VIQ was incorporated by articles of
incorporation in the province of Alberta in November 2004. On June 21, 2017, the Company continued under articles of continuance
in the province of Ontario. The Company’s offices are located at 700 – 5915 Airport Road, Mississauga, Ontario, L4V 1H1. VIQ
is a public Company. Subsequent to yearend, the Company graduated from the Toronto Venture Exchange to the Toronto Stock Exchange. The
Company's common shares began trading on TSX under trading symbol VQS at the market open on January 21, 2021.

 

In December 2019, the Company
completed a 1:20 reverse stock split. The exercise price, conversion price, and the number of common shares issuable under any stock-based
option or convertible securities of the Company were proportionately adjusted upon completion of the reverse stock split. References in
these consolidated financial statements to share amounts, per share data, share prices, exercise prices and conversion prices have been
adjusted to reflect the 1:20 reverse stock split.

 

On January 31, 2020, the Company,
through its US subsidiary VIQ Media Transcription Inc., acquired the assets of ASC Services LLC (“ASC”). On February 26,
2020, the Company through its US subsidiary VIQ Services Inc., acquired the shares of WordZXpressed Inc. (“WordZ”). Refer
to note 4 for details on the acquisition.

 

		2.	Basis of preparation

 

		(a)	Statement of compliance

 

The Company prepares its consolidated
financial statements in accordance with International Financial Reporting Standards (“IFRS”) using the accounting policies
described herein as issued by the International Accounting Standards Board (“IASB”). The preparation of consolidated financial
statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise
judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment and complexity, or areas
where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 3.

 

The accounting policies applied in
these consolidated financial statements are based on IFRS issued as at April 14, 2021, the date the Board of Directors approved the
consolidated financial statements.

 

		(b)	Comparative figures

 

Certain comparative figures have been
adjusted for the year ended December 31, 2019 to reflect the current year’s presentation. The adjustments were not considered
material and did not affect the Company’s consolidated revenue or consolidated net income.

 

    PAGE 5

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		2.	Basis of preparation (continued)

 

		(c)	Basis of measurement

 

The consolidated financial statements
have been prepared under the historical cost convention, except for the revaluation of certain financial assets and financial liabilities
to fair value as noted below. Presentation of the statements of financial position differentiates between current and non-current assets
and liabilities. The statements of loss and comprehensive loss are presented using the function classification of expenses.

 

		(d)	Functional currency, presentation currency and foreign currency translation

 

The functional currency of VIQ Solutions
Inc. is the Canadian dollar (“CAD”). The functional currency of the Company’s subsidiaries are as follows; Dataworxs
Systems Limited – CAD, VIQ Solutions, Inc. – United States dollar (“USD”), VIQ Australia Pty. Ltd –
Australian dollar (“AUD”), Dataworxs Systems Australia Pty. Ltd – AUD, VIQ Solutions PTY Ltd – AUD, Spark &
Cannon Pty – AUD, VIQ Services Inc. – USD, Net Transcripts – USD, Transcription Express – USD, HomeTech –
USD, VIQ Media Transcriptions – USD, and WordZXpressed – Inc. – USD. All financial information is presented in USD unless
otherwise stated.

 

	The exchange rates used were as follows:	 

 

	USD / CAD exchange rate	 	December 31, 2020	 	 	December 31, 2019	 
	Closing at the reporting date	 	 	0.7672	 	 	 	0.7682	 
	Average rate for the period	 	 	0.7480	 	 	 	0.7537	 

 

	USD / AUD exchange rate	 	December 31, 2020	 	 	December 31, 2019	 
	Closing at the reporting date	 	 	0.7311	 	 	 	0.7013	 
	Average rate for the period	 	 	0.6901	 	 	 	0.6954	 

 

The financial results of each subsidiary
consolidated in the Company’s consolidated financial statements are measured using the subsidiary’s functional currency, which
is the currency of the primary economic environment in which the entity operates for each of the Company’s wholly-owned subsidiaries.

 

Foreign currency transactions are translated
into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting
from the settlement of foreign currency transactions and from the translation at period-end exchange rates of monetary assets and liabilities
denominated in currencies other than an operation’s functional currency are recognized in the consolidated statements of loss and
comprehensive loss.

 

The financial statements of entities
that have a functional currency different from the presentation currency of USD are translated into USD as follows: assets and liabilities
at the closing rate at the date of the balance sheet, and income and expenses at the average rate of the period as this is considered
a reasonable approximation to actual rates. All resulting changes are recognized in other comprehensive income (loss) as translation adjustments.

 

The Company has monetary items that
are receivable from foreign operations. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable
future is, in substance, a part of the parent company’s net investment in that foreign operation. Such exchange differences are
recognized initially in other comprehensive income and reclassified from equity to net loss on disposal of the net investment in foreign
operations.

 

		(e)	Use of estimates and judgements

 

The preparation of consolidated financial
statements in accordance with IFRS requires management to make estimates and assumptions that affect the application of the Company’s
accounting policies and the amounts reported in the consolidated

 

    PAGE 6

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		2.	Basis of preparation (continued)

 

		(e)	Use of estimates and judgements (continued)

 

financial statements and the related
notes. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in
the future. These estimates have been applied in a manner consistent with that in prior periods and there are no known trends, commitments,
events or uncertainties that the Company believes will materially affect the assumptions utilized in these consolidated financial statements.
Estimates and underlying assumptions are reviewed on an ongoing basis and revisions to estimates are recognized prospectively. The estimates
are impacted by many factors, some of which are highly uncertain and actual results may differ from those estimates.

 

The continuing uncertainty around the
outbreak of the novel coronavirus (“COVID-19”) pandemic required the use of judgments and estimates in the preparation of
the consolidated financial statements for the year ended December 31, 2020. The future impact of COVID-19 uncertainties could generate,
in future reporting periods, a significant impact to the reported amounts of assets, liabilities, revenue and expenses in these and any
future consolidated financial statements. Examples of accounting estimates and judgments that may be impacted by the pandemic include,
but are not limited to, impairment of goodwill and intangible assets and allowance for doubtful accounts.

 

The areas with significant judgements
and estimates are as follows:

 

		·	Stock-based compensation – Management uses judgment to determine the inputs to the Black-Scholes option pricing model
including the expected option life, and forfeiture rates. Changes in these assumptions will impact the calculation of fair value and the
amount of compensation expense recognized in the consolidated statements of loss and comprehensive loss.

 

		·	Warrants – Similar to other stock-based compensation, management uses judgment to determine the inputs to the Black-Scholes
option pricing model including the expected life. Changes in these assumptions will impact the calculation of fair value and the value
attributed to the warrants.

 

		·	Internally generated development costs – Management monitors the progress of internal research and development projects
and uses judgment to distinguish research from the development phase. Expenditures during the research phase are expensed as incurred.
Development costs are recognized as an intangible asset when the Company can demonstrate certain criteria in accordance with IAS 38, Intangible
Assets.

 

		·	Functional currency – The functional currency of the Company and its subsidiaries has been assessed by management based
on consideration of the currency and economic factors that mainly influence revenues, operating costs, financing and related transactions.
Changes to these factors may have an impact on the judgment applied in the future determination of the Company’s and its subsidiaries’
functional currency.

 

		·	Income taxes – At the end of each reporting period, the Company assesses whether the realization of deferred tax benefits
is sufficiently probable to recognize deferred tax assets. This assessment requires the exercise of judgment on the part of management
with respect to, among other things, benefits that could be realized from available income tax strategies and future taxable income, as
well as other positive and negative factors. The recorded amount of total deferred tax assets could be reduced if estimates of projected
future taxable income and benefits from available income tax strategies are lowered, or if changes in current income tax regulations are
enacted that impose restrictions on the timing or extent of the Company’s ability to utilize deferred tax benefits. The Company’s
effective income tax rate can vary significantly quarter-to-quarter for various reasons, including the mix and volume of business in lower
income tax jurisdictions and in jurisdictions for which no deferred income tax assets have been recognized because management believed
it was not probable that future taxable profit would be available against which income tax losses and deductible temporary differences
could be utilized. The Company’s effective income tax rate can also vary due to the impact of foreign exchange fluctuations.

 

		·	Allocation of the transaction price to multiple performance obligations in contracts with customers - Contracts with customers
sometimes include promises to deliver multiple products and services. Determining whether such bundled products and services are considered
i) distinct performance obligations that should be separately recognized, or ii) non-distinct and therefore should be combined with another
good or service and recognized as a combined unit of accounting may require judgment. The determination of the standalone selling price
("SSP") for distinct

 

    PAGE 7

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		2.	Basis of preparation (continued)

 

		(e)	Use of estimates and judgements (continued)

 

SSP when it sells each of the products
and services separately and needs to determine whether there is a discount that needs to be allocated based on the relative SSP of the
various products and services. In general, SSP for support and maintenance is established as a percentage of the software license fee
as supported by internal analysis of similar vendor contracts. SSP for licenses as well as for professional services is established based
on observable prices for the same or similar services when sold separately. Management exercises judgment in determining whether a contract's
outcome can be estimated reliably. Management also applies estimates in the calculation of future contract costs and related profitability
as it relates to labour hours and other considerations, which are used in determining the value of amounts recoverable on contracts and
timing of revenue recognition. Estimates are continually and routinely revised based on changes in the facts relating to each contract.

 

		·	Allowance for doubtful accounts - The Company performs impairment testing annually for accounts receivable in accordance with
IFRS 9. The expected credit loss (“ECL”) model requires judgment, including consideration of how changes in economic factors
affect ECLs, which are determined on a probability-weighted basis. The Company applies the simplified approach to determine ECLs on trade
receivables by using a provision matrix based on historical credit loss experiences. The historical results were used to calculate the
run rates of default which were then applied over the expected life of the trade receivables, adjusted for forward looking estimates.

 

		·	Goodwill impairment testing and recoverability of assets – Goodwill and indefinite-life intangible assets are reviewed
annually for impairment, or more frequently when there are indicators that impairment may have occurred, by comparing the carrying value
of the asset, or the cash-generating unit (“CGU”) reflecting the lowest level at which assets generate independence cash flows,
to the asset or CGU’s recoverable amount. Management uses judgment in estimating the recoverable values of the Company's CGUs and
uses internally developed valuation models that consider various factors and assumptions including forecasted cash flows, revenue growth
rates, earnings margins, and discount rates. The use of different assumptions and estimates could influence the determination of the existence
of impairment and the valuation of goodwill and indefinite-life intangibles. The recoverable amount of the CGUs are estimated based on
the assessment of the higher of their value in use using a discounted cash flow approach and fair value less cost to sell.

 

		·	Purchase price allocation – In a business combination, all identifiable assets acquired and liabilities and contingent
liabilities assumed are recorded at their fair values. For any intangible asset acquired, management, or where the complexity of the estimate
requires, an independent valuation expert at the direction of management, develop the fair value, using appropriate valuation techniques,
which are generally based on a forecast of the revenue attributable to the acquired business, annual customer attrition rates and royalty
rates, earnings before interest, taxes, depreciation and amortization and discount rates. The valuations are linked closely to the assumptions
made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. All acquisitions
have been accounted for using the acquisition method. Certain fair values may be estimated at the acquisition date pending confirmation
or completion of the valuation process. Where provisional values are used in accounting for a business combination, they may be adjusted
retrospectively in subsequent periods. However, the measurement period will last no greater than one year from the acquisition date.

 

		·	Contingent consideration - The Company measures the contingent consideration payable in a business combination at the estimated
fair value at each reporting date. The fair value is estimated based on the range of possible outcomes and Management’s assessment
of the likelihood of each outcome.

 

		·	Incremental borrowing rate used to discount leases – The Company’s incremental borrowing rate is used to estimate
the initial value of the lease liability and associated right of use asset. The Company’s incremental borrowing rate is determined
with reference to the Company’s long-term debt which represents the amount that the Company could borrow at within a similar time
frame.

 

    PAGE 8

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		3.	Significant accounting policies

 

		i)	Significant accounting policies

 

Basis of consolidation

 

The consolidated financial statements
of the Company include the accounts of VIQ and the consolidated accounts of all of its wholly-owned subsidiaries including (i) the
operations of VIQ Solutions, Inc. (formerly VIQ Solutions (U.S.) Inc.); (ii) the operations of Dataworxs Systems Limited and
its wholly-owned subsidiary Dataworxs Australia Pty Ltd. (collectively, “Dataworxs”); (iii) the operations of VIQ Australia
Pty. Limited and its wholly-owned subsidiaries VIQ Solutions Pty. Ltd. and Spark & Cannon Pty. Ltd. (collectively, “VIQ
Solutions PTY”), and; (iv) the operations of VIQ Services Inc. and its wholly owned subsidiaries, Net Transcripts, Inc.,
Transcription Express, Inc., HomeTech, Inc., VIQ Media Transcription Inc., and wordZXpressed, Inc.

 

Subsidiaries are entities controlled
by the Company where control is defined as the power to govern the financial and operating policies of an entity so as to obtain benefits
from its activities. Subsidiaries are included in the consolidated financial statements from the date control is obtained until the date
control ceases. All intercompany balances, transactions, income and expenses have been eliminated on consolidation.

 

Inventories

 

Inventories of finished goods and raw materials and supplies
are valued at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of
business less any applicable selling expenses. Cost is determined on a weighted average basis. Reversals of previous write-downs to net
realizable value are recognized when there is a subsequent increase in the value of inventories.

 

Restricted cash

 

Restricted cash is recorded at fair value. Changes to fair
value are recorded in the consolidated statements of loss and comprehensive loss in the period incurred. Restricted cash is required to
satisfy operating lease requirements.

 

Property and equipment

 

Property and equipment are recorded
at cost less accumulated depreciation and accumulated impairment losses. Rates and basis of depreciation applied to write off the cost
of property and equipment to their residual values over their estimated useful lives are as follows:

 

	Furniture and fixtures	8%–20% declining balance
	Computer and transcription equipment	20%–50% declining balance, 33%–50% straight line 
	Leasehold improvements	Over the term of the lease

 

An asset’s residual value, useful
life and depreciation method are reviewed, and adjusted prospectively if appropriate, on an annual basis. Repairs and maintenance costs
are charged to the consolidated statements of loss and comprehensive loss during the period which they are incurred. Gains and losses
on disposals of property and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included
as part of selling and administrative expenses in the consolidated statements of loss and comprehensive loss.

 

Intangible assets

 

Intangible assets with infinite lives
that are acquired separately are measured at fair value. Intangible assets with finite lives that are acquired separately are measured
on initial recognition at fair value, which comprises its purchase price plus any directly attributable costs of preparing the asset for
its intended use.

 

Our acquired intangible assets consist
of customer relationships, acquired technology, non-compete agreements and brands acquired in business combinations. These intangible
assets are recorded at their fair value at the respective acquisition date. We use the income approach as a valuation technique that calculates
the fair value of an intangible asset based on the present value of future cash flows that the asset can be expected to generate over
its remaining useful life. The discounted cash flow (“DCF”) is the methodology used, which is a form of the income approach
that begins with a forecast of the annual cash flows a market participant would expect the subject intangible asset to generate over a
discrete projection period. The future cash flow for each

 

    PAGE 9

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		3.	Significant accounting policies (continued)

 

		i)	Significant accounting policies (continued)

 

of the years in the discrete projection
period are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the intangible
assets’ projected cash flows, again, from a market participant perspective. The Company relies on the relief-from-royalty method
to value the acquired technology and brand and the Multi-Period Excess Earnings of (“MEEM”)
method to value customer relationship assets. After initial recognition,
intangible assets are measured at cost less accumulated amortization and impairment losses.

 

The estimated useful lives at acquisition date for the Company’s
classes of intangible assets are as follows:

 

	Acquired Technology	5 years
	Customer Relationships	4.8 – 7.8 years
	Brands	4.8 years to indefinite
	Non-Compete agreements	Term of agreement

 

The estimated useful life and amortization methods are reviewed
annually, with the effect of any change in estimate being accounted for on a prospective basis. These assets are subject to an impairment
test as described below.

 

Our internally generated intangible
assets consist of developed technologies. The Company incurs costs associated with the design and development of new products. Expenditures
during the research phase are expensed as incurred. Expenditures during the development phase are capitalized if the Company can demonstrate
each of the following criteria: (i) the technical feasibility of completing the intangible asset so that it will be available for
use or sale, (ii) its intention to complete the intangible asset and use or sell it, (iii) its ability to use or sell the intangible
asset, (iv) how the intangible asset will generate probable future economic benefits, (v) the availability of adequate technical,
financial and other resources to complete the development and to use or sell the intangible asset, and (vi) its ability to measure
reliably the expenditure attributable to the intangible asset during its development; otherwise, they are expensed as incurred. Costs
associated with maintaining computer software programs are recognized as an expense as incurred. Internally generated software development
costs recognized as intangible assets are carried at cost less any accumulated amortization on a straight- line basis over 3 years after
they are completed. These assets are subject to an impairment test as described below.

 

Business combinations

 

IFRS 3, Business Combinations (“IFRS
3”), requires business combinations to be accounted using the acquisition method. Under this method, the cost of an acquisition
is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling
interest in the acquiree.

 

When the Company acquires a business,
it assesses the financial assets and liabilities assumed for appropriate classification and designation based on the facts and circumstances
at the acquisition date. Business acquisition costs incurred are expensed and included in transaction costs. Measurement period adjustments
are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year
from the acquisition date) about facts and circumstances that existed at the acquisition date. The excess of (i) the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest
in the acquiree over the (ii) fair value of the net identifiable assets acquired is recorded as goodwill.

 

Goodwill arising on an acquisition
of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s CGUs that is expected to benefit from the synergies
of the combination.

 

A CGU 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 CGU is less than its 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 unit. Any impairment loss
for goodwill is recognized directly in the consolidated statements of loss and comprehensive loss. An impairment loss recognized for goodwill
is not reversed in subsequent periods.

 

    PAGE 10

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		3.	Significant accounting policies (continued)

 

		i)	Significant accounting policies (continued)

 

On disposal of the relevant CGU, the
attributable amount of goodwill is included in the determination of the profit or loss on disposal. Determining whether goodwill is impaired
requires an estimation of the higher of fair value less costs of disposal and value in use of the CGUs which goodwill has been allocated.
The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and
a suitable discount rate in order to calculate present value.

 

Capital stock

 

Common shares are classified as equity.
Incremental costs directly attributable to the issuance of shares are recognized as a deduction from equity. The proceeds from the issuance
of units (shares and warrants) is bifurcated between capital stock and warrants, with the value of the warrants determined using the Black-Scholes
option pricing model.

 

Financial instruments

 

Financial assets

 

Recognition and initial measurement

 

The Company recognizes financial assets
when it becomes party to the contractual provisions of the instrument. Financial assets are measured initially at their fair value plus,
in the case of financial assets not subsequently measured at fair value through profit or loss, transaction costs that are directly attributable
to their acquisition. Transaction costs attributable to the acquisition of financial assets subsequently measured at fair value through
profit or loss are expensed in the consolidated statements of loss and comprehensive loss when incurred.

 

Classification and subsequent measurement

 

On initial recognition, financial assets
are classified as subsequently measured at amortized cost, fair value through other comprehensive income (“FVOCI”) or fair
value through profit or loss (“FVTPL”). The Company determines the classification of its financial assets, together with any
embedded derivatives, based on the business model for managing the financial assets and their contractual cash flow characteristics.

 

Financial assets are classified as
follows:

 

		·	Amortized cost - Assets that are held for collection of contractual cash flows where those cash flows
are solely payments of principal and interest are measured at amortized cost. Interest revenue is calculated using the effective interest
method and gains or losses arising from impairment, foreign exchange and derecognition are recognized in the consolidated statements of
loss and comprehensive loss. Financial assets measured at amortized cost are comprised of trade receivables.

 

		·	Fair value through other comprehensive income (FVOCI) - Assets that are held for collection of contractual
cash flows and for selling the financial assets, and for which the contractual cash flows are solely payments of principal and interest,
are measured at fair value through other comprehensive income. Interest income calculated using the effective interest method and gains
or losses arising from impairment and foreign exchange are recognized in the consolidated statements of loss and comprehensive loss. All
other changes in the carrying amount of the financial assets are recognized in other comprehensive income. Upon derecognition, the cumulative
gain or loss previously recognized in other comprehensive income is reclassified to net loss. The Company does not hold any financial
assets measured at fair value through other comprehensive income.

 

		·	Mandatorily at fair value through profit or loss (FVTPL) - Assets that do not meet the criteria to be
measured at amortized cost or fair value through other comprehensive income are measured at fair value through profit or loss. All interest
income

 

    PAGE 11

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		3.	Significant accounting policies (continued)

 

		(i)	Significant accounting policies (continued)

 

and changes in the financial assets’ carrying amount
are recognized in profit or loss. Financial assets mandatorily measured at fair value through profit or loss are comprised of cash and
cash equivalents.

 

		·	Designated at FVTPL – On initial recognition, the Company may irrevocably designate a financial
asset to be measured at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch that would
otherwise arise from measuring assets or liabilities, or recognizing the gains and losses on them, on different bases. All interest income
and changes in the financial assets’ carrying amount are recognized in the consolidated statements of loss and comprehensive loss.
The Company does not hold any financial assets designated to be measured at fair value through profit or loss.

 

Business model assessment

 

The Company assesses the objective
of its business model for holding a financial asset at a level of aggregation which best reflects the way the business is managed, and
information is provided to management. Information considered in this assessment includes stated policies and objectives.

 

Contractual cash flow assessment

 

The cash flows of financial assets
are assessed as to whether they are solely payments of principal and interest on the basis of their contractual terms. For this purpose,
 ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined
as consideration for the time value of money, the credit risk associated with the principal amount outstanding, and other basic lending
risks and costs. In performing this assessment, the Company considers factors that would alter the timing and amount of cash flows such
as prepayment and extension features, terms that might limit the Company’s claim to cash flows, and any features that modify consideration
for the time value of money.

 

The Company measures all equity investments
at fair value. Changes in fair value are recorded in the consolidated statements of loss and comprehensive loss. The entity does not hold
any equity investments.

 

Impairment of financial assets

 

The Company recognizes a loss allowance
for the expected credit losses associated with its financial assets, other than financial assets measured at fair value through profit
or loss. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable
information regarding past events, current conditions and forecasts of future economic conditions.

 

The Company applies the simplified
approach for trade receivables. Using the simplified approach, the Company records a loss allowance equal to the expected credit losses
resulting from all possible default events over the assets’ contractual lifetime.

 

The Company assesses whether a financial
asset is credit-impaired at the reporting date. Regular indicators that a financial instrument is credit-impaired include significant
financial difficulties as evidenced through borrowing patterns or observed balances in other accounts and breaches of borrowing contracts
such as default events or breaches of borrowing covenants. For financial assets assessed as credit-impaired at the reporting date, the
Company continues to recognize a loss allowance equal to lifetime expected credit losses.

 

For financial assets measured at amortized
cost, loss allowances for expected credit losses are presented in the consolidated balance sheet as a deduction from the gross carrying
amount of the financial asset.

 

Financial assets are written off when
the Company has no reasonable expectations of recovering all or any portion thereof.

 

    PAGE 12

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		3.	Significant accounting policies (continued)

 

		(i)	Significant accounting policies (continued)

 

Financial liabilities

 

Recognition and initial measurement

 

The Company recognizes a financial
liability when it becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures financial
liabilities at their fair value plus transaction costs that are directly attributable to their issuance, with the exception of financial
liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in the consolidated
statements of loss and comprehensive loss.

 

Where an instrument contains both a
liability and equity component, these components are recognized separately based on the substance of the instrument, with the liability
component measured initially at fair value and the equity component assigned the residual amount.

 

Classification and subsequent measurement

 

Subsequent to initial recognition,
all financial liabilities are measured at amortized cost using the effective interest rate method. Interest, gains and losses relating
to a financial liability are recognized in profit or loss.

 

The standard contains three classifications
categories for financial assets: measured at amortized cost, FVOCI and FVTPL. The classification for each class of the Company’s
financial assets and financial liabilities is as follows:

 

	Financial assets and liabilities	 	IFRS 9 Classification
	Cash and restricted cash	 	FVTPL
	Trade and other receivables	 	Amortized cost
	Trade and other payables	 	Amortized cost
	Long-term debt	 	Amortized cost
	Convertible note	 	Amortized cost
	Share appreciation rights plan obligations	 	FVTPL
	Conversion feature derivative liability	 	FVTPL

 

Compound financial instruments

 

Convertible notes issued with warrants
are evaluated whether any embedded derivatives need to be separated from the host instrument. In accordance with IAS 32.31 for compound
financial instruments, because equity instruments are defined as contracts evidencing a residual interest in the assets of an entity after
deducting all of its liabilities, the warrants are assigned the residual amount of the consideration after deducting the fair value of
the liability components and are subsequently carried at historical cost. The liability components represent the host debt and the embedded
conversion feature.

 

The embedded derivative conversion option is separated from
its host contract on the basis of its stated terms and initially measured at fair value using the Black-Scholes model, with the host debt
contract being the residual amount after separation. Subsequently, the loan payable component is measured at amortized cost using the
effective interest method over the term of the loan. The loan component is accreted to the face value by recording accretion expense.
The values of the conversion feature is re-measured at each reporting date until settlement, with changes in the fair value recorded in
the consolidated statements of loss and comprehensive loss.

 

Unit issuances comprising of one common
share and one-half warrant share are segregated between the capital stock and warrant value components at the date of issue. The fair
value of the capital stock component is calculated using the share price at the date of the issuance. The fair value of the warrants is
calculated using the Black Scholes pricing model. Amounts allocated to each component are allocated using the relative fair value basis.

 

    PAGE 13

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

		3.	Significant accounting policies (continued)

 

		(i)	Significant accounting policies (continued)

 

Leases

 

In accordance with IFRS 16, Leases
(“IRS 16”), at inception of a contract, the Company assesses whether the contract is or contains a lease based on
whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, based on the initial amount of the lease liability. The assets are depreciated to the earlier of the end
of the useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the
expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if
the Company is reasonably certain to exercise that option. In addition, the right-of-use asset is periodically adjusted for certain
remeasurements of the lease liability.

 

The lease liability is initially measured
at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in
the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. The lease liability is measured at
amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments, if there is a change
in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment
of whether it will exercise a purchase, extension or termination option.

 

When the lease liability is remeasured
in this way, a corresponding adjustment is made to the carrying amount of the right- of-use asset, or is recorded in profit or loss if
the carrying amount of the right-of-use asset has been reduced to zero.

 

The Right-of-use assets and lease obligations
of $1,072,426 were recorded on January 1, 2019, no net impact on deficit. When measuring lease liabilities, the Company discounted
lease payments using its incremental borrowing rate of 10% at January 1, 2019. The Company has elected to apply the practical expedient
to account for leases for which the lease term ends within 12 months of the date of initial application as short-term leases. The Company
has elected to apply the practical expedient to grandfather the assessment of which transactions are leases on the date of initial application,
as previously assessed under IAS 17 and IFRIC 4. The Company applied the definition of a lease under IFRS 16 to contracts entered into
or changed on or after January 1, 2019.

 

Impairment of property and equipment,
definite life intangibles, indefinite life intangibles and goodwill

 

For purposes of assessing impairment
under IFRS, assets are grouped in CGUs, the lowest levels for which there are largely independent cash inflows. The Company has eight
CGUs, which consist of VIQ Solutions PTY Ltd, Dataworxs, Net Transcripts, Transcription Express, HomeTech, wordZXpressed, VIQ Media Transcription
and VIQ Solutions Inc. and the CGUs are tested for impairment at least annually. All other long-lived assets and finite life intangible
assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

 

An impairment loss is recognized for
the amount by which the asset’s or CGU’s carrying amount exceeds its recoverable amount, which is the higher of fair value
less costs to sell or value-in-use. To determine the value-in-use, management estimates expected future cash flows from the cash-generating
unit and determines a suitable pre-tax discount rate in order to calculate the present value of those cash flows. The data used for impairment
testing procedures are directly linked to the Company’s latest approved budget, adjusted as necessary to exclude the effects of
future reorganizations and asset enhancements.

 

Discount rates have been determined for each of the CGUs
and reflect their respective risk profile as assessed by management. Impairment losses for the CGUs reduce first the carrying amount of
any goodwill allocated to that CGU, with any remaining impairment loss charged pro rata to the other assets in the CGU.

 

With the exception of goodwill, all assets
are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An
impairment charge is reversed if the assets’ recoverable amount exceeds its carrying amount only to the extent that the new
carrying amount does not exceed the carrying value of the asset had it not originally been impaired.

 

    PAGE 14

     

    

 

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	3.	Significant accounting policies (continued)

 

	(i)	Significant accounting policies (continued)

  

Property and equipment and definite
life intangibles are tested for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
For the purpose of measuring recoverable values, assets are grouped at the lowest levels for which there are separately identifiable cash
flows, which are its CGUs. The recoverable value is the higher of an asset’s fair value less costs of disposal and value in use
(being the present value of the expected future cash flows of the relevant asset or CGU). 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 risk specific to the asset. An impairment loss is recognized for the value by which the asset’s carrying value
exceeds its recoverable value.

 

Revenue recognition

 

Revenue represents the amount of consideration the Company
expects to receive for the delivery of products and services in its contracts with customers, net of discounts and sales taxes. The Company
reports revenue mainly under seven revenue categories being, Technology services, Software license, Support and maintenance, SaaS, Professional
services, and Hardware and other.

 

Revenue is recognized upon transfer of control of products
or services to customers at an amount that reflects the transaction price the Company expects to receive in exchange for the products
or services. The Company’s contracts with customers often include the delivery of multiple products and services, which are generally
capable of being distinct and accounted for as separate performance obligations. The accounting for a contract or contracts with a customer
that contain multiple performance obligations requires the Company to allocate the contract or contracts’ transaction price to the
identified distinct performance obligations.

 

Technology services revenue consists
of fees charged for recurring services provided to our customers. Technology service revenue is recognized when the service is delivered
to the customer. The Company has select customers where a flat rate is charged and revenue is recognized on a monthly basis.

 

Software license revenue is comprised of non-recurring license
fees charged for the use of our software products generally licensed under perpetual arrangements and to a lesser extent sale of third
- party license software. The Company sells on- premise software licenses on a perpetual basis. On-premise software licenses are bundled
with software maintenance and support services for a term. The license component and maintenance and support components are each allocated
revenue using their relative estimated SSP. Revenue from the license of distinct software is recognized at the time that both the right-
to-use the software has commenced and the software has been made available to the customer.

 

Support and maintenance and other recurring revenue primarily
consist of fees charged for customer support on our software products post-delivery. Certain of the Company’s contracts with customers
contain provisions that require the customer to agree to first year support and maintenance in order to maintain the active right to use
a perpetual license. Support and maintenance and other recurring revenue primarily consists of fees charged for customer support on software
products post- delivery.

 

Revenue from software-as-a-service (SaaS) arrangements,
which allows customers to use hosted software over a term without taking possession of the software, are provided on a subscription basis.
Revenue from the SaaS arrangement, which includes the hosted software and maintenance is recognized ratably over the term of the subscription.

 

    PAGE 15

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	3.	Significant accounting policies (continued)

 

	(i)	Significant accounting policies (continued)

 

Professional service revenue consists of fees charged for
customization, implementation, integration, training and ongoing services associated with our software products and technology services.
Professional services are typically billed on a time and material basis and revenue is recognized over time as the services are performed.
For professional services contracts billed on a fixed price basis, revenue is recognized over time based on the proportion of services
performed.

 

Hardware revenue include the resale of third party hardware
that forms part of the overall customer solutions. Hardware revenue is recognized when the goods are shipped and received by the customer.

 

Cost of sales

Cost of sales for the computer products
and services business segment includes the cost of finished goods inventory, costs related to shipping and handling and expenses relating
to software support services. Cost of sales for the transcription business segments includes production wages and other associated costs.

 

Income taxes

The income tax provision comprises
current and deferred tax. Income tax is recognized in the consolidated statements of loss and comprehensive loss except to the extent
that it relates to items recognized directly in equity, in which case the income tax is also recognized directly in equity.

 

Current tax is the expected tax payable
on the taxable income for the year, using tax rates enacted, or substantively enacted, at the end of the reporting period, and any adjustment
to tax payable in respect of previous years.

 

Deferred tax is determined on a non-discounted
basis using tax rates and laws that have been enacted or substantively enacted at the end of the reporting period and are expected to
apply when the asset is realized or liability is settled. Deferred tax assets are recognized for deductible temporary differences, unused
tax losses and other income tax deductions to the extent that it is probable the Company will have taxable income against which those
deductible temporary differences, unused tax losses and other income tax deductions can be utilized. The extent to which deductible temporary
differences, unused tax losses and other income tax deductions are expected to be realized is reassessed at the end of each reporting
period.

 

In a business combination, temporary
differences arise as a result of differences in the fair values of identifiable assets and liabilities acquired and their respective tax
bases. Deferred tax assets and liabilities are recognized for the tax effects of these differences. Deferred tax assets and liabilities
are not recognized for temporary differences arising from goodwill or from the initial recognition of assets and liabilities acquired
in a transaction other than a business combination which do not affect either accounting or taxable income or loss.

 

Net loss per common share

Basic net loss per common share is
calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per
common share is calculated by dividing the applicable net loss by the sum of the weighted average number of common shares outstanding
and all additional common shares that would have been outstanding if potentially dilutive common shares had been issued during the period.
The dilutive effect of outstanding stock options and warrants on earnings per share is calculated by determining the proceeds for the
exercise of such securities which are then assumed to be used to purchase common shares of the Company.

 

Stock-based compensation

The Company has a stock option plan for
directors, officers and employees, a deferred share unit (“DSU”) plan for directors and a share appreciation rights (“SAR”)
plan for directors, officers, employees, and consultants. Each tranche in an award is considered a separate award with its own vesting
period and grant date fair value. Other than the DSU grants, the fair value of each tranche is measured at the date of grant using the
Black-Scholes option pricing model. Compensation expense is recognized over the tranche’s vesting period, based on the number of
awards expected to vest, with the offset credited to contributed surplus, and share appreciation rights plan obligations. Forfeitures
are estimated at the grant date and are revised to reflect changes in actual forfeitures. The number of awards
expected to vest is reviewed quarterly, with any impact being recognized immediately. When options are exercised the amount received is
credited to capital stock and the fair value attributed to these options is transferred from contributed surplus to capital stock. As
the SAR is a cash-settled plan, the fair value is recognized as a liability in the consolidated balance sheet and is re-measured each
period using the Black- Scholes options pricing model and charged to the consolidated statements of loss and comprehensive loss at each
reporting date until the award is settled.

 

    PAGE 16

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	3.	Significant accounting policies (continued)

 

	(i)	Significant accounting policies (continued)

 

The holder of the DSU will only be able to redeem the DSUs
in shares upon cessation of their service with the Company, therefore, the Company records DSUs as equity. Grants of DSUs are recorded
at fair value in selling and administration expense at the time of grant. The quoted market price of the underlying shares on the grant
date is considered to be equivalent to fair value for the DSUs. The charge to equity for DSUs is not updated to fair value at each subsequent
reporting period. Upon settlement, the amount recognized in contributed surplus for the award is reclassified to share capital, with any
premium or discount applied to deficit.

 

Government assistance:

 

The Company recognizes government grants
when there is reasonable assurance that the grant will be received, and any conditions associated with the grant have been met. Grants
that compensate the Company for expenses incurred are recognized in the consolidated statement of loss and comprehensive loss as a reduction
of the related expenses in the period in which they are earned, provided the conditions for receiving the grant are met in that period.

 

Research and development credits

Investment tax credits are accrued
when qualifying expenditures are incurred and there is reasonable assurance that the credits will be realized. Investment tax credits
earned with respect to current expenditures for qualified research and development activities are included in the consolidated statements
of loss and comprehensive loss as a reduction of expenses. Investment tax credits associated with capital expenditures are reflected as
reductions in the carrying amounts of capital assets.

 

Comprehensive loss

Comprehensive loss consists of net
loss and other comprehensive income (loss). Other comprehensive income (loss) represents changes in shareholders’ equity and includes
foreign exchange gains and losses on the translation of the financial statements of the Company’s foreign operations into its presentation
currency and is presented as accumulated other comprehensive income (loss) on the consolidated balance sheet. The Company’s net
loss per share presented on the consolidated statements of loss and comprehensive loss is based upon its net loss and not its comprehensive
loss.

 

	(ii)	Accounting standards and amendments adopted

 

The International Accounting Standards
Board (“IASB”) has issued the following accounting standards which has been adopted by the Company:

 

Amendment to IFRS 3 – Business
Combinations

On October 22, 2018, the IASB
issued Definition of a Business (Amendments to IFRS 3: Business Combinations). The amendments to IFRS 3 are applicable for acquisitions
occurring on or after January 1, 2020 and are adopted prospectively. These amendments to the implementation guidance of IFRS 3 clarify
the definition of a business to assist entities to determine whether a transaction should be accounted for as a business combination or
an asset acquisition. The amendments to IFRS 3 – Business Combinations may affect whether future acquisitions are accounted for
as business combinations or asset acquisitions, along with the resulting allocation of the purchase price between the net identifiable
assets acquired and goodwill. The Company has adopted the amendment as of January 1, 2020.

 

    PAGE 17

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	4.	Acquisitions

 

On January 31, 2020, the Company
through its US subsidiary, VIQ Media Transcription Inc., acquired 100% of the assets of ASC. ASC was a provider of transcription services
focused on the multi-speaker transcription market, serving both government and public ‘content creation space’ and complements
the Company’s transcription services business. The purchase price paid for the ASC acquisition was $5,175,096, with $3,136,500 paid
in cash on closing and an estimated $2,038,596 to be paid as contingent consideration via a performance-based earn-out payable quarterly
over 30 months. With respect to the contingent consideration, the Company has agreed to make quarterly payments to the sellers between
July 15, 2020 and April 15, 2023 based on the achievement of quarterly revenue targets as defined in the purchase agreement.
At the date of acquisition, contingent consideration was measured on a discounted cash flow basis, reflecting the present value of undiscounted
expected future payments of $2,948,083 which is the expected payout based on forecast revenues at that date, discounted using a risk-
adjusted discount rate of 20.6 percent. The expected cash flows, which can range between $nil and $3,095,487, and the risk- adjusted discount
rate are each significant unobservable inputs in the determination of contingent consideration.

 

As at the acquisition date, the presence
of goodwill in the ASC acquisition was supported by the following factors: a long history of profitable operations, a positive reputation
in the marketplace, including providing services to a significant financial data technology company, which was a useful credentialing
tool for sales to new customers; the expectation that ASC could earn higher than typical operating margins for several years in the future
due to the specialized nature of the services offered, while also considering there could be erosion of margins over time due to eventual
competitive pressures; the potential for growth at the valuation date, including the potential to expand market share through acquiring
new customers or by participating in new market segments. The deal provided VIQ with access to a new industry (media) to market their
service offering, and this market was considered to have limited competition at the acquisition date and to provide an opportunity for
premium pricing; and, the acquisition provided access to an assembled skilled workforce.

 

On February 26, 2020, the
Company through its US subsidiary VIQ Services Inc., acquired 100% of the shares of WordZ. WordZ was a provider of English
transcription services to medical service providers and to insurance companies in the USA and complements the Company’s
transcription services business. The purchase price paid for the WordZ acquisition was $3,861,347, with $1,275,000 paid in cash on
closing, $1,200,000 paid via a promissory note payable quarterly over 36 months, recorded at the discounted value of $914,677, and
an estimated $1,671,670 to be paid as contingent consideration via a performance-based earnout payable quarterly over 36 months. The
Company has agreed to make quarterly payments to the sellers between October 1, 2020 and July 1, 2023 based on the
achievement of quarterly revenue targets as defined in the purchase agreement. At the date of acquisition, contingent consideration
is measured on a discounted cash flow basis, reflecting the present value of undiscounted expected future payments of $2,175,231,
which is the expected payout based on forecast revenues, discounted using a risk-adjusted discount rate of 16.1 percent. The
expected cash flows, which can range between $nil and $2,338,373, and the risk-adjusted discount rate are each significant
unobservable inputs in the determination of contingent consideration.

 

As at the acquisition date, the presence
of goodwill in the WordZ acquisition was supported by the following factors: a long history of operations; a positive reputation in the
marketplace, including being a leading provider of transcription services in insurance and law enforcement, providing services across
the USA. The customer base acquired included a large national Insurance company, which was a useful credentialing tool for sales to new
customers; there was potential for continued growth at the valuation date, including the potential to acquire new customers or by participating
in new market segments. The acquisition included the acquisition of medical customers. While there were competitive pressures in the medical
transcription industry at the acquisition date, management considered certain geographic segments and sub-markets (such as midwifery and
child protective services) to present opportunities for growth, and considered that the company’s experience with medical customers
could provide access to profitable growth in certain markets; the potential for achieving operating margin efficiencies resulting in operating
margins that might also be achieved by other larger entities operating in this or similar process/document management industries; and,
the acquisition provided access to an assembled skilled workforce. As at December 31, 2020, as a result of an unexpected downturn
in the acquired business, the Company recognized an impairment charge on goodwill for WordZ of 1,453,832 (2019 – nil) (note 8).

 

The acquisitions completed during the
year ended December 31, 2020 were each determined to be a business combination and were accounted for using the acquisition method
in accordance with IFRS 3 with the results of operations consolidated with those of the Company effective January 31, 2020 for ASC
and February 26, 2020 for WordZ.

 

    PAGE 18

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	4.	Acquisitions (continued)

 

During the year ended December 31,
2020, the Company incurred $19,058 in business acquisition costs related to the acquisitions which have been expensed and recorded as
business acquisitions costs in the consolidated statements of loss and comprehensive loss (December 31, 2019 - $484,387).

 

The total consideration for the acquisitions
and the purchase price allocation is as follows:

 

	 	 	Measurement	 
	 	 	ASC	 	 	WordZ	 
	Consideration	 	 	 	 	 	 	 	 
	Cash	 	$	3,136,500	 	 	$	1,275,000	 
	Promissory note	 	 	–	 	 	 	914,677	 
	Contingent consideration	 	 	2,038,596	 	 	 	1,671,670	 
	Total Consideration	 	$	5,175,096	 	 	$	3,861,347	 
	 	 	 	 	 	 	 	 	 
	Identifiable
assets acquired and liabilities assumed
	 	 	 	 	 	 	 	 
	Net tangible assets acquired (liabilities assumed)	 	 	(869,706	)	 	 	(72,485	)
	Customer relationships (note 8)	 	 	2,880,000	 	 	 	2,220,000	 
	Non-compete (note 8)	 	 	–	 	 	 	70,000	 
	Brand (note 8)	 	 	550,000	 	 	 	190,000	 
	Goodwill	 	$	2,614,802	 	 	$	1,453,832	 

 

During the year ended December 31,
2020, the contingent consideration of WordZ and ASC was adjusted based on revision of the estimated quarterly revenue target achievement.
As a result, $946,503 was reported as a gain on contingent consideration of which $89,449 was recorded as additional earnout payable for
ASC and $1,035,952 was recorded as a reduction in earnout payable for WordZ. Additionally, accretion expense of $628,983 was recorded
for ASC and WordZ during the year ended December 31, 2020. Earnout payment totalling $377,312 was made to the previous owners of
ASC and WordZ during the year ended December 31, 2020.

 

As at December 31, 2020, total
contingent consideration is $3,015,434 (2019 - $nil), of which $1,439,906 (2019 - $nil) is recorded as trade and other payables and accrued
liabilities, and $1,575,528 has been recorded as long-term contingent consideration (2019 - $nil).

 

The accounting for the acquisitions is complete as of December 31,
2020. The finalization of the above purchase price allocations of the valuation of fair value for the assets acquired and liabilities
assumed, including intangible assets and taxation- related balances as well as for potential unrecorded liabilities was completed as of
December 31, 2020.

 

For the year ended December 31,
2020 consolidated revenues of $31,749,693 include revenue from acquisitions of $9,410,821 (ASC: $6,625,930; WordZ: $2,784,891). Net loss
for the year ended December 31, 2020 of $11,145,306 include profit from acquisitions of $1,281,997 (ASC: profit of $2,500,079; WordZ:
loss of $1,218,082).

 

If the acquisitions would have occurred
on January 1, 2020, management estimates that the pro forma consolidated revenue for the year ended December 31, 2020 would
have been $33,462,074 and net loss for the year ended December 31, 2020 would have been $10,873,372 as compared to the amounts reported
in the consolidated statements of loss and comprehensive loss for the year ended December 31, 2020. This unaudited pro forma financial
information is for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition
had taken place at the beginning of the period presented or the results that may be realized in the future.

 

    PAGE 19

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	5.	Trade and other receivables

 

	 	 	December 31, 2020	 	 	December 31, 2019	 
	Trade accounts receivable	 	$	4,233,012	 	 	$	3,930,178	 
	Other receivable (note 6)	 	 	366,077	 	 	 	141,582	 
	Less: allowance for doubtful accounts (note 21)	 	 	(123,338	)	 	 	(902,215	)
	 	 	$	4,475,751	 	 	$	3,169,545	 

 

As at December 31, 2020, other
receivable relates to unbilled revenue of $297,581 (2019 - $141,582) and governance assistance receivable (note 6).

 

	6.	Government Assistance

 

Australian Business Wage Subsidies

 

The Australian government introduced
programs to support Australian businesses whose revenues were impacted by the COVID-19 pandemic. The government is providing wage subsidies
to qualifying companies of approximately AU$750 per employee per week. For the year ended December 31, 2020, the Company determined
that it qualified for the subsidies and submitted claims for $2,017,189 (2019 – nil) for the Australian Business Wage Subsidies,
which has ben received and recognized as a reduction to the related payroll expenses in the consolidated statements of loss and comprehensive
loss.

 

Canadian Emergency Wage Subsidy
(“CEWS”) and Canadian Emergency Rent Subsidy (“CERS”)

 

The Canadian government introduced
programs to support Canadian businesses whose revenues were impacted by the COVID- 19 pandemic. The government is providing wage and rent
subsidies to eligible companies based on percentage decrease in revenue per eligible periods. For the year ended December 31, 2020,
the Company determined that it qualified for these subsidies and submitted claims for $111,529 (2019 – nil) for CEWS and $6,725
for CERS which has been recognized as a reduction to the related payroll and rent expenses in the consolidated statements of loss and
comprehensive loss.

 

U.S. Paycheck Protection Program Loan

 

On April 24, 2020, the Company
received a loan for $2,159,000 under the U.S. Small Business Administration Paycheck Protection Program through BMO Harris Bank at
an interest rate of 1% maturing in two years. Principal and interest are due beginning seven months from the date of the note.
Generally, the loan will be forgiven if utilized for payment of qualifying expenses during the 24-week period that begins at the
origination date of the loan. As at December 31, 2020, the balance of $260,230 was unutilized and reported as long-term debt of
which $214,307 was recorded as current portion. Refer to note 10.

 

For the year ended December 31,
2020, the Company determined that it qualified for the subsidies and submitted claims for the three COVID-19 related government support
programs described above for a total of subsidy of $4,034,313, which has been received. Of the subsidies amount received, $1,203,327 was
recognized as a reduction to operating expenses against related salary costs and other expenses in the consolidated statement of loss
and comprehensive loss during the year ended December 31, 2020, and $2,830,986 as a reduction to cost of sales during the year ended
December 31, 2020. There was no government assistance recorded during year ended December 31, 2019.

 

As at December 31, 2020, the consolidated statement of
financial position included assistance receivable of $68,496 (2019 - $nil) in trade and other receivables.

 

    PAGE 20

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	7.	Property and equipment

 

Details of the Company’s property and equipment as
of December 31, 2020 and December 31, 2019 are listed as follows:

 

	 	 	Balance	 	 	 	 	 	 	 	 	Balance	 
	 	 	January 1,	 	 	Additions/	 	 	Foreign	 	 	December 31,	 
	 	 	2020	 	 	(Disposals)	 	 	exchange	 	 	2020	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Furniture and fixtures	 	$	253,977	 	 	$	13,971	 	 	$	70	 	 	$	268,018	 
	Computer and transcription equipment	 	 	1,298,714	 	 	 	188,327	 	 	 	12,688	 	 	 	1,499,729	 
	Building – Leasehold improvements	 	 	4,817	 	 	 	-	 	 	 	103	 	 	 	4,920	 
	 	 	$	1,557,508	 	 	$	202,298	 	 	$	12,861	 	 	$	1,772,667	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Furniture and fixtures	 	$	204,713	 	 	$	14,543	 	 	$	50	 	 	$	219,306	 
	Computer and transcription equipment	 	 	1,239,819	 	 	 	86,400	 	 	 	9,187	 	 	 	1,335,406	 
	Building – Leasehold improvements	 	 	1,389	 	 	 	668	 	 	 	63	 	 	 	2,120	 
	 	 	$	1,445,921	 	 	$	101,611	 	 	$	9,300	 	 	$	1,556,832	 
	Net book value	 	$	111,587	 	 	 	 	 	 	 	 	 	 	$	215,835	 

 

	 	 	Balance January 1,
 2019
	 	 	Additions/ (Disposals)	 	 	Foreign exchange	 	 	Balance December 31,
 2019
	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Furniture and fixtures	 	$	253,670	 	 	$	1,309	 	 	$	(1,002	)	 	$	253,977	 
	Computer and transcription equipment	 	 	1,190,489	 	 	 	91,362	 	 	 	16,863	 	 	 	1,298,714	 
	Building – Leasehold improvements	 	 	4,595	 	 	 	-	 	 	 	222	 	 	 	4,817	 
	 	 	$	1,448,754	 	 	$	92,671	 	 	$	16,083	 	 	$	1,557,508	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Furniture and fixtures	 	$	189,063	 	 	$	(1,758	)	 	$	17,408	 	 	$	204,713	 
	Computer and transcription equipment	 	 	1,147,545	 	 	 	17,007	 	 	 	75,267	 	 	 	1,239,819	 
	Building – Leasehold improvements	 	 	709	 	 	 	15	 	 	 	665	 	 	 	1,389	 
	 	 	$	1,337,317	 	 	$	15,264	 	 	$	93,340	 	 	$	1,445,921	 
	Net book value	 	$	111,437	 	 	 	 	 	 	 	 	 	 	$	111,587	 

 

    PAGE 21

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	8.	Intangible assets and goodwill

 

Details of the Company’s intangible assets as of December 31,
2020 and December 31, 2019 are listed as follows:

 

	 	 	Balance January 1,
 2020
	 	 	Acquisitions

 (note 4)	 	 	Additions	 	 	Impairment	 	 	Foreign
 exchange	 	 	Balance

December 31,

 2020
	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Customer relationships	 	$	7,393,708	 	 	 	5,100,000	 	 	 	–	 	 	 	(726,467	)	 	 	8,456	 	 	$	11,775,697	 
	Technology	 	 	470,000	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	470,000	 
	Non-compete	 	 	–	 	 	 	70,000	 	 	 	–	 	 	 	(18,969	)	 	 	–	 	 	 	51,031	 
	Brand	 	 	840,000	 	 	 	740,000	 	 	 	–	 	 	 	(59,101	)	 	 	–	 	 	 	1,520,899	 
	Internally generated intangible assets	 	 	5,259,287	 	 	 	–	 	 	 	1,642,783	 	 	 	–	 	 	 	112,965	 	 	 	7,015,035	 
	 	 	$	13,962,995	 	 	 	5,910,000	 	 	 	1,642,783	 	 	 	(804,537	)	 	 	121,421	 	 	$	20,832,662	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Customer relationships	 	$	1,812,833	 	 	 	–	 	 	 	2,276,341	 	 	 	–	 	 	 	10,391	 	 	 	4,099,565	 
	Technology	 	 	102,499	 	 	 	–	 	 	 	94,000	 	 	 	–	 	 	 	–	 	 	 	196,499	 
	Non-compete	 	 	–	 	 	 	–	 	 	 	19,638	 	 	 	–	 	 	 	–	 	 	 	19,638	 
	Brand	 	 	–	 	 	 	–	 	 	 	133,921	 	 	 	–	 	 	 	–	 	 	 	133,921	 
	Internally generated intangible assets	 	 	1,831,202	 	 	 	–	 	 	 	2,289,348	 	 	 	–	 	 	 	144,137	 	 	 	4,264,687	 
	 	 	$	3,746,534	 	 	 	–	 	 	 	4,813,248	 	 	 	–	 	 	 	154,528	 	 	$	8,714,310	 
	Net book value	 	$	10,216,461	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	12,118,352	 

 

	 	 	Balance January 1,
 2019
	 	 	Acquisitions (note 4)	 	 	Additions	 	 	Impairment	 	 	Foreign

 exchange	 	 	Balance

 December
 31, 2019
	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Customer relationships	 	$	7,375,700	 	 	$	–	 	 	$	–	 	 	$	–	 	 	$	18,008	 	 	$	7,393,708	 
	Technology	 	 	470,000	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	470,000	 
	Brand	 	 	840,000	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	840,000	 
	Internally generated intangible assets	 	 	3,382,117	 	 	 	–	 	 	 	1,689,711	 	 	 	–	 	 	 	187,459	 	 	 	5,259,287	 
	 	 	$	12,067,817	 	 	$	–	 	 	$	1,689,711	 	 	$	–	 	 	$	205,467	 	 	$	13,962,995	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Customer relationships	 	$	252,383	 	 	$	–	 	 	$	1,477,254	 	 	$	–	 	 	$	83,196	 	 	$	1,812,833	 
	Technology	 	 	8,499	 	 	 	–	 	 	 	94,000	 	 	 	–	 	 	 	–	 	 	 	102,499	 
	Internally generated intangible assets	 	 	448,122	 	 	 	–	 	 	 	1,402,691	 	 	 	–	 	 	 	(19,611	)	 	 	1,831,202	 
	 	 	$	709,004	 	 	$	–	 	 	$	2,973,945	 	 	$	–	 	 	$	63,585	 	 	$	3,746,534	 
	Net book value	 	$	11,358,813	 	 	 	                    	 	 	 	 	 	 	 	               	 	 	 	 	 	 	$	10,216,461	 

 

    PAGE 22

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	8.	Intangible assets and goodwill (continued)

 

Details of the Company’s goodwill as of December 31,
2020 and December 31, 2019 are listed as follows:

 

	 	 	December 31,
 2019
 	 	 	Acquisitions	 	 	Impairment	 	 	Foreign
 exchange	 	 	December 31,
 2020
 	 
	VIQ Solutions PTY Ltd.	 	 	587,187	 	 	 	–	 	 	 	–	 	 	 	62,814	 	 	 	650,501	 
	Dataworxs	 	 	138,053	 	 	 	–	 	 	 	–	 	 	 	2,965	 	 	 	141,018	 
	Net Transcripts	 	 	1,575,511	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	1,575,511	 
	Transcription Express	 	 	1,516,904	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	1,516,904	 
	HomeTech	 	 	477,860	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	477,860	 
	ASC	 	 	–	 	 	 	2,614,802	 	 	 	–	 	 	 	–	 	 	 	2,614,802	 
	WordZ	 	 	–	 	 	 	1,453,832	 	 	 	(1,453,832	)	 	 	–	 	 	 	–	 
	 	 	$	4,295,515	 	 	$	4,068,634	 	 	$	(1,453,832	)	 	$	65,779	 	 	$	6,976,096	 

 

	 	 	December 31,
 2018
	 	 	Acquisitions	 	 	Impairment	 	 	Foreign
 exchange
	 	 	December 31,
 2019
	 
	VIQ Solutions PTY Ltd.	 	 	589,950	 	 	 	–	 	 	 	–	 	 	 	(2,763	)	 	 	587,187	 
	Dataworxs	 	 	131,710	 	 	 	–	 	 	 	–	 	 	 	6,343	 	 	 	138,053	 
	Net Transcripts	 	 	1,575,511	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	1,575,511	 
	Transcription Express	 	 	1,516,904	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	1,516,904	 
	HomeTech	 	 	477,860	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	477,860	 
	 	 	$	4,291,935	 	 	 	       –	 	 	 	     –	 	 	$	3,580	 	 	$	4,295,515	 

 

Impairment testing for cash-generating
units containing goodwill

 

The annual impairment test of goodwill
was performed as of December 31, 2020. The recoverable amount of the Company’s CGUs was estimated based on an assessment of
their value in use using a discounted cash flow approach. Cash flows for the years thereafter are extrapolated using the estimated terminal
growth rate. The risk premiums expected by market participants related to uncertainties about the industry and assumptions relating to
future cash flows may differ or change quickly, depending on economic conditions and other events.

 

The Company has made certain assumptions
in determining the cash flow projections based over a five-year period from 2021 to 2026 on budgets approved by management and include
management’s best estimate of expected market conditions. The cash flow projections include certain key assumptions regarding revenue
growth rates, terminal revenue growth rates and current income tax rates. Accordingly, it is reasonably possible that future changes in
assumptions may negatively impact future valuations of goodwill and the Company would be required to recognize an impairment loss. The
Company determined the revenue growth rate, the terminal revenue growth rate based on past performance and its expectations for market
development. The pre-tax discount rates used reflect specific risks in relation to the CGUs.

 

    PAGE 23

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

	8.	Intangible assets and goodwill (continued)

 

The Company used a discounted cash
flow approach as the primary valuation approach to determine the value of each of the 8 CGUs identified. With respect to the VIQ Solutions
Inc CGU, there are no goodwill or indefinite life intangible assets associated with that CGU and no triggering events as at December 31,
2020, Consequently, no further impairment analysis was performed on that CGU.

 

The following are key assumptions on
which management based its determinations of the recoverable amount for goodwill based on each CGU’s value in use:

 

	Assumptions	 	VIQ
    
Solutions	 	 	Dataworxs
    Australia	 	 	Net

    Transcripts	 	 	Transcription	 	 	Home

    Tech	 	 	WordZXpressed	 	 	VIQ
    Media

    Transcription	 
	2020	 	PTY	 	 	Ltd.	 	 	Inc.	 	 	Express
    Inc.	 	 	Inc.	 	 	Inc.	 	 	Inc	 
	Revenue
    Growth Rate	 	 	2.0	%	 	 	2.0	%	 	 	2.0	%	 	 	2.0	%	 	 	2.0	%	 	 	                2.0	%	 	 	2.0	%
	Terminal
  revenue growth rate	 
     	 
     	 
  2.0  	 
  %  	 
     	 
     	 
  2.0  	 
  %  	 
     	 
     	 
  2.0  	 
  %  	 
     	 
     	 
  2.0  	 
  %  	 
     	 
     	 
  2.0  	 
  %  	 
     	 
     	 
  2.0  	 
  %  	 
     	 
     	 
  2.0  	 
  %  
	Pre-tax
    discount rate	 	 	17.7	%	 	 	17.7	%	 	 	17.7	%	 	 	17.7	%	 	 	17.7	%	 	 	22.5	%	 	 	16.7	%

 

In determining the recoverable amount,
management estimated the expected future cash flows from the wordZXpressed CGU and applied a suitable pre-tax discount rate in order to
calculate the present value of those cash flows. The analysis revealed that recoverable amount of $1,328,778 of the CGU is less than the
carrying amount of $3,587,147 and as such, an impairment loss was allocated to reduce the carrying amount of the goodwill, customer relationships,
brand, and non-compete intangible assets. The Company recorded an impairment charge of $2,258,369 in the consolidated statements of loss
and comprehensive loss (2019 - $nil) for the wordZXpressed CGU reducing the carrying value of goodwill and acquired intangible assets.
The wordZXpressed CGU that provides technology services to the insurance, law enforcement, and legal industry. For the purpose of impairment
testing, goodwill is allocated to the Company’s CGU, which represent the lowest level of group of assets that generate identifiable
cash inflows.

 

	9.	Long-term debt

 

	 	 	Crown

 Capital 

Note

 Payable	 	 	WordZ 

VTB	 	 	WordZ SBA Loan (note 6)	 	 	Transcription

 Express

 VTB	 	 	HomeTech

 VTB	 	 	Total	 
	Balance as at January 1, 2020
 
	 	$	5,964,602	 	 	$	–	 	 	$	–	 	 	$	–	 	 	$	541,035	 	 	$	6,505,637	 
	Add: current portion	 	 	–	 	 	 	-	 	 	 	–	 	 	 	863,438	 	 	 	240,000	 	 	 	1,103,438	 
	 	 	$	5,964,602	 	 	$	–	 	 	$	–	 	 	$	863,438	 	 	$	781,035	 	 	$	7,609,075	 
	Debt advancement	 	 	4,482,659	 	 	 	915,105	 	 	 	260,230	 	 	 	–	 	 	 	–	 	 	 	5,657,994	 
	Interest expense	 	 	1,409,961	 	 	 	50,865	 	 	 	 	 	 	 	84,731	 	 	 	 	 	 	 	1,545,57	 
	Accretion expense	 	 	313,112	 	 	 	98,333	 	 	 	–	 	 	 	–	 	 	 	80,690	 	 	 	492,135	 
	Interest payment	 	 	(982,969	)	 	 	–	 	 	 	–	 	 	 	(69,607	)	 	 	–	 	 	 	(1,052,576	)
	Debt repayment	 	 	–	 	 	 	–	 	 	 	–	 	 	 	(598,031	)	 	 	(240,000	)	 	 	(838,031	)
	Foreign exchange translation	 	 	210,782	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	210,782	 
	Balance as at December 31, 2020	 	$	11,398,146	 	 	 	1,064,303	 	 	 	260,230	 	 	 	280,531	 	 	 	621,725	 	 	 	13,624,935	 
	Less: current portion	 	 	(304,746	)	 	 	(446,552	)	 	 	(214,307	)	 	 	(280,531	)	 	 	(240,000	)	 	 	(1,486,136	)
	 	 	$	11,093,400	 	 	$	617,751	 	 	$	45,923	 	 	$	–	 	 	$	381,725	 	 	$	12,138,799	 

 

    PAGE 24

     

    

 

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)

  

	9.	Long-term
                                            debt (continued)

 

	 	 	Crown Capital
 Note Payable	 	 	Transcription
 Express VTB
 Loan	 	 	HomeTech VTB
 Loan	 	 	Total	 
	Balance as at January 1, 2019	 	$	5,489,305	 	 	$	1,639,882	 	 	$	903,392	 	 	$	8,032,579	 
	Interest expense	 	 	620,624	 	 	 	138,975	 	 	 	-	 	 	 	759,599	 
	Accretion expense	 	 	201,052	 	 	 	-	 	 	 	97,643	 	 	 	298,695	 
	Interest payment	 	 	(505,360	)	 	 	(151,940	)	 	 	-	 	 	 	(657,300	)
	Debt repayment	 	 	-	 	 	 	(763,479	)	 	 	(220,000	)	 	 	(983,479	)
	Foreign exchange translation	 	 	158,981	 	 	 	-	 	 	 	-	 	 	 	158,981	 
	Balance as at December 31, 2019	 	$	5,964,602	 	 	$	863,438	 	 	$	781,035	 	 	$	7,609,075	 
	Less: current portion	 	 	-	 	 	 	(863,438	)	 	 	(240,000	)	 	 	(1,103,438	)
	 	 	$	5,964,602	 	 	$	-	 	 	$	541,035	 	 	$	6,505,637	 

 

	(a)	Crown
                                            Capital Funding Partner LP Note Payable

 

The
Company entered a secured debt facility with Crown Capital Funding Partner LP (“Crown”) with maximum available funds of $11,770,500
(CAD$15,000,000) bearing an interest rate of 10 percent payable quarterly. The loan is secured by a general security agreement covering
all assets of the Company. The outstanding principal balance of the loan is repayable on November 28, 2023. On initiation of the
debt facility on November 28, 2018, 450,000 common share purchase warrants were issued to Crown. A value of $623,152 (CAD$828,917)
was attributed to the 450,000 warrants and was recorded in contributed surplus.

 

Each
warrant is convertible into one common share in the capital of the Company at a price per share equal to CAD$2.06 until November 28,
2023. In addition, in lieu of payment of the debt facility origination fee the Company issued 106,383 common shares to Crown at a deemed
price of CAD$2.80 which was equal to the 20-day volume weighted trading price on the trading day immediately preceding November 28,
2018. A value of $225,530 (CAD$300,000) was attributed to the 106,383 common shares and has been included in capital stock. During 2018,
the Company had drawn $6,548,461(CAD$8,935,000) of the available facility.

 

In
March 2020, in connection with the acquisition of ASC and WordZ (note 4), the Company borrowed the remaining $4,566,945 (CAD$6,065,000)
of the available facility. The fair value of this drawdown was $4,482,659. As part of this transaction, the Company and Crown entered
into an amendment to the Debt Facility, pursuant to which 450,000 new common share purchase warrants were issued to Crown on January 31,
2020 and previously issued 450,000 common share purchase warrants were concurrently cancelled. The new warrants reflect a price per Share
equal to CAD$2.06 (the “Exercise Price”) until expiry on November 28, 2023. As a result of this modification, the Company
recorded $84,287 (CAD$111,387) reflecting the incremental fair value of the warrant associated with the amendment as a reduction in the
carrying value of the note payable. Additionally, the Company incurred fees of $353,115 (CAD$450,000) associated with establishing the
amended debt facility which are recorded as a reduction in the carrying value of the note payable. These fees remain unpaid and the long-term
payable is added to the Company’s outstanding principal. These fees accrue interest at 10 percent and repayment is due on November 28,
2023.

 

The
difference between the face value and ascribed value of the Crown Capital note payable is being accreted over the remaining life of the
debt facility. Corresponding transaction costs were netted against the face value of the debt facility and are recognized as accretion
and other financing expense over the term of the loan. During the year ended December 31, 2020, there was $313,112 recorded as accretion
and other financing expense related to the note payable in the consolidated statements of loss and comprehensive loss (December 30,
2019 – $201,052).

 

In
December 2020, the Company received a waiver from Crown Capital as at December 31, 2020. The waiver removed the Fixed Charge
Coverage Ratio (FCCR) covenant and the test of FCCR is no longer required at December 31, 2020.

 

    PAGE 25

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)

  

	9.	Long-term
                                            debt (continued)

 

Subsequent
to year end, in March 2021, the Company received a waiver to remove the Fixed Charge Coverage Ratio covenant for all four quarters
of 2021.

 

	(b)	Unsecured
                                            Promissory Notes

 

Unsecured
promissory notes have been issued to the former owners of acquired companies. As part of the acquisition of Transcription Express, the
Company issued an unsecured promissory note to the former owners of Transcription Express with a face value of $1,666,227, bearing interest
at 10% per annum. During the year ended December 31, 2019, the terms of the Transcription Express unsecured promissory note were
amended with the principal and accrued interest to be paid monthly beginning on July 31, 2019 to the period ending April 30,
2021.

 

As
part of the acquisition of HomeTech, the Company issued an unsecured interest-free promissory note to the former owners of HomeTech with
a face value of $1,200,000, to be paid monthly for 60 months in equal installments of $20,000 beginning February 25, 2019 to the
period ending January 25, 2024. The Company recorded the unsecured promissory note by discounting the principal amounts due using
a market annual interest rate of 12%. The difference between the present value and the face value is being accreted over the term of
the unsecured promissory notes

 

An
additional note was issued to the former owners of WordZ with a face value of $1,200,000 bearing interest at 5% to be paid quarterly
for 36 months beginning January 5, 2021 to the period ending October 5, 2023. The fair value of the unsecured promissory notes
was determined on a market annual interest rate of 12%. The difference between the face value and the ascribed value of the notes is
being accreted over life of the notes.

 

	(c)	Convertible
                                            Notes

 

On
November 28, 2018, the Company issued unsecured convertible notes with a face value of $1,000 bearing interest at a rate of 10%
per annum for gross proceeds of $3,717,934 (CAD $4,954,988) maturing in five years after issuance. The principal amount of the convertible
debt is convertible, at the option of the holder, into common shares at a conversion price of CAD $2.82 per share.

 

On
December 20, 2018, the Company issued unsecured convertible notes with a face value of $1,000 bearing interest at a rate of 10%
per annum for gross proceeds of $1,150,000 (CAD $1,551,925) maturing in five years after issuance. The principal amount of the convertible
debt is convertible, at the option of the holder, into common shares at a conversion price of CAD $2.72 per share.

 

On
May 7, 2019, the Company issued unsecured convertible notes with a face value of $1,000 bearing interest at a rate of 10% per annum
for gross proceeds of $1,925,000 (CAD $2,594,016) maturing in five years after issuance. The principal amount of the convertible debt
is convertible, at the option of the holder, into common shares at a conversion price of CAD $2.70 per share

 

During
the year ended December 31, 2020, the Company entered into agreements (the “Amending Agreements”) with the holders of
unsecured convertible notes (each, a “Note”) in the aggregate principal amount of approximately $6,792,934, granting the
holders of such Notes (each a “Noteholder”) the option to convert the principal and the aggregate interest payable on their
Notes from the date of issuance to the maturity date (the “Total Interest Payable”) into Shares at a conversion price of
CAD$2.18 per Share (the “Conversion Option”). The modification of the convertible notes resulted in in a charge of $1,497,804
reflecting the incremental fair value of the reduced exercise price. This charge was recorded as a loss on repayment of long-term debt
in the consolidated statements of loss and comprehensive loss.

 

Concurrent
with their entry into the Amending Agreements, Noteholders holding all of the outstanding Notes exercised the Conversion Option during
the year ended December 31, 2020. As a result of the exercise of the Conversion Option, the Company recognized $3,503,797 in interest
expense reflecting interest charges from the date of the conversion through the maturity date. For the year ended December 31, 2020,
the Company recognized a loss of $1,308,440 on the revaluation of the conversion feature liability (2019 – gain of $2,330,964).

 

    PAGE 26

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)

  

	9.	Long-term
                                            debt (continued)

 

The
Corporation issued 6,785,651 common shares to settle its outstanding Notes having an aggregate principal amount of

 

$6,871,003,
total interest payable of $4,296,999, and a loss on revaluation of conversion feature liability to the date of exercise of $1,260,360
for a total amount of $12,428,362 credited to share capital of the Company.

 

The
minimum remaining principal repayments of debt under all agreements are as follows:

  

	 	 	Crown 
 Capital	 	 	wordZXpresse
 d Inc.	 	 	Transcription
 Express VTB
 loan	 	 	HomeTech 
 VTB loan	 	 	Total	 
	2021	 	$	-	 	 	$	400,000	 	 	$	280,531	 	 	$	240,000	 	 	$	920,531	 
	2022	 	 	-	 	 	 	400,000	 	 	 	-	 	 	 	240,000	 	 	 	640,000	 
	2023	 	 	12,123,615	 	 	 	400,000	 	 	 	-	 	 	 	240,000	 	 	 	12,763,615	 
	2024	 	 	-	 	 	 	-	 	 	 	-	 	 	 	20,000	 	 	 	20,000	 
	 	 	$	12,123,615	 	 	$	1,200,000	 	 	$	280,531	 	 	$	740,000	 	 	$	14,344,146	 

 

	10	Capital
                                            stock

  

Common Shares

 

The Company’s authorized capital consists of an unlimited number
of common shares with no par value. As at December 31, 2020, common shares of the Company were reserved as follows:

 

	 	 	Exercise Price 
 (CAD)	 	 	Expiry dates	 	Number outstanding	 
	Options	 	 	$1.20 – $4.20	 	 	January 2021 – December 2021	 	 	233,333	 
	 	 	 	$4.40 – $6.40	 	 	January 2022 – December 2022	 	 	97,000	 
	 	 	 	$2.84 - $6.00	 	 	January 2023 – December 2023	 	 	141,250	 
	 	 	 	$2.10 - $3.10	 	 	January 2024 – December 2024	 	 	250,350	 
	 	 	$	3.13	 	 	January 2025 – December 2025	 	 	396,000	 
	 	 	 	 	 	 	 	 	 	1,117,933	 
	Deferred share units	 	$	1.20	 	 	N/A	 	 	66,667	 
	Warrants	 	$	2.60	 	 	January 2021	 	 	659,600	 
	 	 	$	3.24	 	 	February 2021	 	 	14,278	 
	 	 	$	2.06	 	 	November 2023	 	 	450,000	 
	 	 	 	 	 	 	 	 	 	1,123,878	 

 

On November 6, 2020, the Company
announced a bought deal financing and issued 4,705,900 common shares at a price per share of CAD $4.25 per common share for aggregate
gross proceeds of CAD $20,000,075 (US$15,378,058) and proceeds net of issuance costs were $13,747,345. This sale of shares and receipt
of proceeds were completed on November 26, 2020.

 

Warrants

 

On March 4, 2020, VIQ announced
that it was accelerating the vesting of 1,103,526 warrants (each a “Warrant”) exercisable to acquire common shares of the
Company (each a “Common Share”), originally issued pursuant to private placements closing on November 28, 2018, December 20,
2018 and May 7, 2019. Pursuant to the terms of the Warrants (the “Warrant Certificates”), the Company has the right
to accelerate the expiry date of the Warrants in the event that the closing price of the Common Shares on the TSX Venture Exchange is equal to or greater than
CAD$2.68 for any ten (10) consecutive trading days (an “Acceleration Event”). During the year ended December 31,
2020, 1,154,759 warrants which were granted with the convertible debt issued on November 28, 2018, December 21, 2018 and May 7,
2019 were exercised (December 31, 2019 – 1,362,499) at the exercise price of CAD $2.14 and CAD $3.24 (December 31, 2019
 – $2.14) for proceeds of $1,859,963 (December 31, 2019 - $2,196,277).

 

    PAGE 27

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)

 

	10.	Capital stock (continued)

  

 

During the year ended December 31, 2020, there were
no warrants issued (December 31, 2019 – 1,715,778) and as at December 31, 2020, there were 1,123,878 warrants outstanding
(December 31, 2019 – 2,519,600).

 

Stock Option Plan

 

The Company has an incentive stock
option plan for its directors, officers, employees, and contractors. The Company's stock option plan allows for the granting of options
(and Deferred Share Units as described below) up to an aggregate amount equal to 10% of the aggregate number of common shares of the
Company outstanding. The options, which have a term not exceeding five years when issued, generally vest as follows:

 

	 	•	1/3 at time of issue

	 	•	1/3 after one year

	 	•	1/3 after two years

 

As at December 31, 2020, the
Company had 770,483 options (December 31, 2019 – 613,283) that had vested with a weighted average exercise price of CAD $2.84
per share (December 31, 2019 – CAD$2.62).

 

During the year ended December 31,
2020, there were 396,000 stock options granted to directors, officers, employees, and contractors (December 31, 2019 – 257,850).
During the year ended December 31, 2020, 92,500 options were exercised (December 31, 2019 – 67,860) for proceeds of $83,566
(December 31, 2019 – $59,631). SARS were exercised for the equivalent value of the stock options exercised. There were no
stock options forfeited during the year ended December 31, 2020 (December 31, 2019 – 50,000). There were 53,667 stock
options that were expired during the year ended December 31, 2020 (December 31, 2019 – 250)

 

The following information applies
to stock options outstanding and exercisable at December 31, 2020:

 

	Range of exercise

 prices

 (CAD)	 	Options

 outstanding	 	 	Weighted

 average

 remaining

 contractual life	 	 	Weighted

 average exercise

 price 
(CAD)	 	 	Options

 exercisable	 	 	Weighted

 average exercise

 price 
(CAD)	 
	$1.20 – $1.30	 	 	140,000	 	 	 	0.3 years	 	 	$	1.26	 	 	 	140,000	 	 	$	1.26	 
	$2.10 – $4.20	 	 	93,333	 	 	 	0.5 years	 	 	$	2.70	 	 	 	93,333	 	 	$	2.70	 
	$4.40 – $6.40	 	 	97,000	 	 	 	1.4 years	 	 	$	4.92	 	 	 	97,000	 	 	$	4.92	 
	$2.84 - $6.00	 	 	141,250	 	 	 	2.8 years	 	 	$	3.28	 	 	 	141,250	 	 	$	3.28	 
	$2.20 - $3.10	 	 	250,350	 	 	 	3.5 years	 	 	$	2.44	 	 	 	166,900	 	 	$	2.44	 
	$3.13	 	 	396,000	 	 	 	4.3 years	 	 	$	3.13	 	 	 	132,000	 	 	$	3.13	 
	 	 	 	1,117,933	 	 	 	2.9 years	 	 	$	2.88	 	 	 	770,483	 	 	$	2.84	 

 

Deferred Share Units Plan

 

In 2015, the Company established a
Deferred Share Units (“DSU”) Plan to provide non-employee directors to participate in the long-term success of the Company.
DSUs are fully vested upon being granted.

 

The Board of Directors may grant DSUs
(and the number of options to purchase shares described above) up to a maximum of 10% of common shares outstanding and up to a maximum
of 100,000 units.

 

    PAGE 28

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)

 

	 	10.	Capital stock (continued)

 

Maximum allowable grants under the
Stock Option and DSU plans in aggregate as at December 31, 2020 were 2,359,143 (December 31, 2019 – 1,085,261) of which
1,117,933 were outstanding stock options and 66,667 were outstanding DSUs for a total of 1,184,600 (December 31, 2019 – 934,767).

 

The Company did not grant any DSU’s
to Directors of the Company during the year ended December 31, 2020 (2019 – nil).

 

Share Appreciation Rights Plan

 

In 2015, the Company established a
Share Appreciation Rights (“SAR”) plan for its Service Providers (as defined in VIQ’s SAR plan). The Company's SAR
plan provides incentive compensation, based on the appreciation in the value of the Company’s shares, to the service providers,
thereby providing additional incentive for their efforts in promoting the continued growth and success of the business of the Company.
During the year ended December 31, 2018, the Company amended the outstanding SARs to extend the expiry of the SARs from December 31,
2018 to July 15, 2020, the date the SARs plan will expire. The aggregate number of units in respect of which SARs have been granted
and not yet exercised, shall not at any time exceed 10% of the aggregate number of shares that are then issued and outstanding. The SAR
units, which have a term not exceeding five years when granted, generally vest as follows:

 

	 	•	1/3 at time of issue

	 	•	1/3 after one year

	 	•	1/3 after two years

 

At any time on or after the date when
the trading price of one share is equal to or exceeds four times the fair value of one SAR unit at the grant date, the Company shall
be entitled to require the disposition of the vested SAR units by the grantee to the Company, by the Company paying the bonus in cash
to the grantee.

 

The value of each SAR unit when issued
is based on the market price of the Company's stock on the date of grant. At the end of December 31, 2017, the Company amended the
SARs plan by placing a limit on the appreciated value of the Company’s shares within the SARs plan to limit the overall liability.
At December 31, 2019, 188,990 outstanding SARs units were fully vested. As at December 31, 2020, 188,990 of the fully vested
outstanding SARs units were exercised and a corresponding share appreciation rights plan obligation of $126,503 has been recognized in
the consolidated statement of financial position to reflect the outstanding cash settlement.

 

	 	11.	Stock-based compensation

 

The total compensation expense relating to the value assigned
to the stock options granted to directors, officers, employees and contractors for the year ended December 31, 2020 was $461,509
(2019 - $299,587) which was included in the stock base compensation expense with a corresponding charge to contributed surplus.

 

During the year ended December 31,
2020, $263,807 (2019 – gain $104,474) was included in stock base compensation expense with a corresponding entry to share appreciation
rights plan obligation relating the value assigned to the SARS granted to directors, officers, and employees.

 

    PAGE 29

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)

 

	 	12.	Net loss per share

 

	 	 	Year ended December 31,	 
	 	 	2020	 	 	2019	 
	Numerator for basic and diluted net loss per share: 	 	 	 	 	 	 	 	 
	Net loss for the year	 	$	(11,145,306	)	 	$	(4,524,198	)
	
Denominator for basic net loss per share:
	 	 	 	 	 	 	 	 
	Weighted average number of common shares outstanding	 	 	18,080,533	 	 	 	9,752,131	 
	Effect of potential dilutive securities	 	 	–	 	 	 	–	 
	Adjusted denominator for diluted net loss per share	 	 	18,080,533	 	 	 	9,752,131	 
	
Basic net loss per share
	 	$	(0.62	)	 	$	(0.46	)
	Diluted net loss per share	 	$	(0.62	)	 	$	(0.46	)

 

For the year ended December 31,
2020, 2,308,478 of potentially dilutive common shares (December 31, 2019 – 7,017,894) issuable upon the exercise of the conversion
option related to convertible debt, warrants, deferred share units, and options were not included in the computation of loss per share
because their effect was anti-dilutive.

 

The December 31, 2019 weighted
average number of common shares outstanding and corresponding net loss per share has been updated due to an immaterial error.

 

	 	13.	Supplemental cash flow information

 

Components of the net change in non-cash
working capital are as follows:

 

	 	 	Year ended December 31,	 
	 	 	2020	 	 	2019	 
	Trade and other receivables	 	$	(316,778	)	 	$	(234,649	)
	Inventories	 	 	18,473	 	 	 	(5,932	)
	Prepaid expenses	 	 	(53,416	)	 	 	(38,505	)
	Trade and other payables	 	 	(40,937	)	 	 	(644,442	)
	Contract liabilities and taxes	 	 	(380,629	)	 	 	87,697	 
	Total	 	$	(773,287	)	 	$	(835,831	)

 

Other supplemental cash flow information
as follows:

 

	 	 	Year ended December 31,	 
	 	 	2020	 	 	2019	 
	Cash received for interest	 	$	1,068	 	 	$	1,340	 
	Cash paid for interest	 	 	1,105,298	 	 	 	780,892	 

 

    PAGE 30

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)

 

	 	14.	Segmented financial information

 

The Company has determined it has
two reportable business segments namely technology and related revenue and technology services. The technology segment, develops, distributes
and licenses computer-based digital solutions based on its proprietary technology; and the technology service segment, provides recording
and transcription services.

 

The Company’s reportable segments
are strategic business segments that offer different products and/or services. These business segments work on different business models
and operate autonomously. The Company does not segregate sales and associated costs by individual technology products. Accordingly, segmented
information on revenue and associated costs is only provided for the full line of software solutions currently offered by the Company.

 

The Chief Executive Officer, Chief
Operating Officer, and Chief Financial Officer are the operating decision maker and regularly reviews our operations and performance
by segment. They review segment gain (loss) as the key measure of profit for the purpose of assessing performance of each segment and
to make decisions about the allocation of resources.

 

Financial information by reportable
business segment is as follows:

 

	 	 	Year ended December 31, 2020	 
	 	 	Technology and related
 revenue
	 	 	Technology services	 	 	Corporate	 	 	Total	 
	Consolidated income (loss)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue	 	$	3,201,837	 	 	$	28,547,856	 	 	$	–	 	 	$	31,749,693	 
	Gross profit	 	 	2,169,414	 	 	 	13,980,842	 	 	 	–	 	 	 	16,150,256	 
	Selling and administrative expenses	 	 	6,012,270	 	 	 	4,606,557	 	 	 	416,075	 	 	 	11,034,902	 
	Stock-based compensation	 	 	–	 	 	 	–	 	 	 	725,316	 	 	 	725,316	 
	Research and development expenses	 	 	1,074,178	 	 	 	–	 	 	 	–	 	 	 	1,074,178	 
	Depreciation and amortization	 	 	2,429,329	 	 	 	2,829,914	 	 	 	–	 	 	 	5,259,243	 
	Foreign exchange gain	 	 	(65,303	)	 	 	(67,003	)	 	 	 	 	 	 	(132,306	)
	Interest, accretion and other financing expense	 	 	26,746	 	 	 	–	 	 	 	6,124,720	 	 	 	6,151,466	 
	Other income	 	 	(25	)	 	 	(10,348	)	 	 	–	 	 	 	(10,373	)
	Loss on revaluation of conversion feature liability	 	 	–	 	 	 	–	 	 	 	1,308,440	 	 	 	1,308,440	 
	Gain on contingent consideration	 	 	–	 	 	 	(946,503	)	 	 	–	 	 	 	(946,503	)
	Impairment of intangibles	 	 	–	 	 	 	2,258,369	 	 	 	–	 	 	 	2,258,369	 
	Loss on repayment of long-term debt	 	 	–	 	 	 	–	 	 	 	1,497,804	 	 	 	1,497,804	 
	Business acquisition costs	 	 	–	 	 	 	–	 	 	 	19,058	 	 	 	19,058	 
	Current income tax expense	 	 	–	 	 	 	106,986	 	 	 	–	 	 	 	106,986	 
	Deferred income tax expense (recovery)	 	 	61,879	 	 	 	(1,112,897	)	 	 	–	 	 	 	(1,051,018	)
	Segment income (loss)	 	 	(7,369,660	)	 	 	6,315,767	 	 	 	(10,091,413	)	 	 	(11,145,306	)
	Consolidated balance sheet	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total segment assets	 	$	18,908,266	 	 	$	23,811,393	 	 	 	–	 	 	$	42,719,659	 
	Total segment current liabilities	 	 	2,411,430	 	 	 	5,948,073	 	 	 	126,503	 	 	 	8,486,006	 
	Total segment non-current liabilities	 	 	–	 	 	 	2,993,328	 	 	 	11,093,401	 	 	 	14,086,729	 

 

    PAGE 31

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)

 

	 	14.	Segmented financial information (continued)

 

	 	 	Year ended December 31, 2019	 
	 	 	Technology and related revenue	 	 	Technology services	 	 	 
Corporate
	 	 	 
Total
	 
	Consolidated income (loss)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue	 	$	3,461,060	 	 	$	21,635,248	 	 	$	–	 	 	$	25,096,308	 
	Gross profit	 	 	1,799,404	 	 	 	9,020,583	 	 	 	–	 	 	 	10,819,987	 
	Selling and administrative expenses	 	 	1,397,310	 	 	 	4,576,823	 	 	 	2,980,379	 	 	 	8,954,512	 
	Stock-based compensation	 	 	–	 	 	 	–	 	 	 	195,113	 	 	 	195,113	 
	Research and development expenses	 	 	994,640	 	 	 	–	 	 	 	–	 	 	 	994,640	 
	Depreciation and amortization	 	 	1,555,543	 	 	 	1,946,886	 	 	 	–	 	 	 	3,502,429	 
	Foreign exchange (gain) loss	 	 	660,482	 	 	 	(443,442	)	 	 	–	 	 	 	217,040	 
	Interest, accretion and other financing expense	 	 	29,918	 	 	 	2,436,720	 	 	 	–	 	 	 	2,466,638	 
	Gain on revaluation of conversion feature liability	 	 	–	 	 	 	–	 	 	 	(2,330,964	)	 	 	(2,330,964	)
	Other (income) expense	 	 	–	 	 	 	(1,340	)	 	 	762,575	 	 	 	761,235	 
	Business acquisitions costs	 	 	–	 	 	 	–	 	 	 	484,387	 	 	 	484,387	 
	Tax expense (recovery)	 	 	(18,978	)	 	 	118,133	 	 	 	–	 	 	 	99,155	 
	Segment income (loss)	 	 	(2,819,511	)	 	 	386,803	 	 	 	(2,091,490	)	 	 	(4,524,198	)
	Consolidated
balance sheet	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
 Total segment assets
	 	$	6,051,627	 	 	$	14,717,172	 	 	$	
–
	 	 	$	20,768,799	 
	Total segment current liabilities	 	 	2,360,626	 	 	 	3,114,908	 	 	 	2,485,882	 	 	 	7,961,416	 
	Total segment non-current liabilities	 	 	–	 	 	 	6,995,679	 	 	 	3,601,182	 	 	 	10,596,861	 

 

Property and equipment are located in the following countries:

 

	 	 	December 31, 2020	 	 	December 31,
    2019	 
	Canada Australia	 	$	120,511	 	 	$	94,023	 
	 	 	 	95,324	 	 	 	17,564	 
	 	 	$	215,835	 	 	$	111,587	 

 

    PAGE 32

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars)  

 

	 	15.	Revenue

 

The Company generates revenue primarily
from the delivery of technology transcription services to its customers. Revenue from contracts with customers is disaggregated by primary
geographical market, major products and services and timing of revenue recognition. The table also includes a reconciliation of the disaggregated
revenue with the Company’s reportable segments (note 14).

 

	Primary geographical markets	 	Year ended December 31,	 
	 	 	2020	 	 	2019	 
	United States	 	$	
22,180,946
	 	 	$	14,484,717	 
	Australia	 	 	8,531,854	 	 	 	9,042,475	 
	United Kingdom	 	 	611,666	 	 	 	1,240,068	 
	Canada	 	 	305,166	 	 	 	275,066	 
	Other	 	 	120,061	 	 	 	53,982	 
	Total	 	$	31,749,693	 	 	$	25,096,308	 

 

	Major products / service lines	 	Year ended December 31,	 
	 	 	2020	 	 	2019	 
	Technology services	 	$	
28,190,993
	 	 	$	21,013,483	 
	Software licenses	 	 	1,013,854	 	 	 	272,513	 
	Support and maintenance	 	 	1,519,424	 	 	 	2,263,952	 
	SaaS	 	 	42,662	 	 	 	103,739	 
	Professional services	 	 	288,597	 	 	 	390,021	 
	Hardware	 	 	657,711	 	 	 	715,027	 
	Other	 	 	36,452	 	 	 	337,573	 
	Total	 	$	31,749,693	 	 	$	25,096,308	 

 

The Company had one customer who contributed
greater than 10 percent of consolidated total revenues during the year ended December 31, 2020 (December 31, 2019 – two
customers). During the year, this customer comprised 11.3 percent of consolidated revenue (December 31, 2019 – 26 percent).

 

    PAGE 33

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed
in United States dollars) 

 

	 	16.	Expenses by nature

 

Expenses incurred by nature are as follows:

 

	 	 	Year ended December 31	 
	 	 	2020	 	 	2019	 
	Employee and contractor expenses (note 17)	 	$	
 22,682,199
	 	 	$	19,509,742	 
	Inventory, materials and other cost of sales	 	 	1,043,844	 	 	 	940,685	 
	Depreciation and amortization	 	 	5,259,235	 	 	 	3,502,429	 
	Facilities	 	 	279,028	 	 	 	301,859	 
	Professional and consulting fees	 	 	1,566,224	 	 	 	1,031,364	 
	Investor relations and other shareholder expenses	 	 	288,778	 	 	 	305,527	 
	Bad debt	 	 	18,116	 	 	 	114,237	 
	Marketing and advertising/promotion expenses	 	 	226,104	 	 	 	162,848	 
	Software license and IT expenses	 	 	1,318,239	 	 	 	278,966	 
	Telephone and internet	 	 	260,634	 	 	 	514,006	 
	Travel	 	 	78,467	 	 	 	376,477	 
	Insurance	 	 	103,702	 	 	 	126,709	 
	Office, administrative, and other operating expenses	 	 	568,506	 	 	 	758,166	 
	Foreign exchange (gain) loss	 	 	(132,306)
  
 
	 	 	 	217,040	 
	Total	 	$	33,560,770	 	 	$	28,140,055	 

 

	 	17.	Employee benefit expense

 

Expenditures for employee benefits are as follows:

 

	 	 	Year ended December 31,	 
	 	 	2020	 	 	2019	 
	Salaries and wages and employee benefits	 	$	11,060,315	 	 	$	10,985,999	 
	Contract labour	 	 	9,818,222	 	 	 	7,760,273	 
	Stock-based compensation	 	 	725,316	 	 	 	195,113	 
	Other staff expense	 	 	1,078,346
  
 
	 	 	 	568,357	 
	Total	 	$	22,682,199	 	 	$	19,509,742	 

 

    PAGE 34

     

    

 

 

 

 

 

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

	18.	Right of Use Assets

 

Details of the Company’s right of use assets are the
following:

 

	 	 	Balance 
 January
 1, 2020	 	 	Additions	 	 	Disposals	 	 	Foreign 
 exchange	 	 	Balance 
 December
 31, 2020	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Buildings	 	$	1,048,596	 	 	$	56,925	 	 	$	(44,725	)	 	$	44,758	 	 	$	1,105,554	 
	Equipment	 	 	36,268	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	36,268	 
	 	 	$	1,084,864	 	 	$	56,925	 	 	$	(44,725	)	 	$	44,759	 	 	$	1,141,822	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Buildings	 	$	426,516	 	 	$	333,725	 	 	$	(22,363	)	 	$	72,417	 	 	$	810,295	 
	Equipment	 	 	11,302	 	 	 	10,659	 	 	 	-	 	 	 	-	 	 	 	21,961	 
	 	 	$	437,818	 	 	$	344,384	 	 	$	(22,363	)	 	$	72,417	 	 	$	832,256	 
	Net book value	 	$	647,046	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	309,566	 

 

	 	 	Balance

January 

1, 2019  	 	 	Additions 	 	 	Foreign 

exchange  	 	 	Balance 

December

31,
2019 	 
	Cost  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Buildings	 	$	-	 	 	$	1,036,158	 	 	$	12,438	 	 	$	1,048,596	 
	Equipment	 	 	-	 	 	 	36,268	 	 	 	-	 	 	 	36,268	 
	 	 	$	-	 	 	$	1,072,426	 	 	$	12,438	 	 	$	1,084,864	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Buildings	 	$	-	 	 	$	424,090	 	 	$	2,426	 	 	$	426,516	 
	Equipment	 	 	-	 	 	 	11,302	 	 	 	-	 	 	 	11,302	 
	 	 	$	-	 	 	$	435,392	 	 	$	2,426	 	 	$	437,818	 
	Net book value	 	$	-	 	 	 	 	 	 	 	 	 	 	$	647,046	 

 

	19.	Lease obligations

 

Below is a summary of the activity related to our lease
liabilities for the year ended December 31, 2020 and 2019:

 

	 	 	Year ended December 31 	 
	 	 	2020	 	 	2019	 
	Lease obligations, January 1, 2020	 	$	689,644	 	 	$	1,072,426	 
	Additions	 	 	12,199	 	 	 	-	 
	Disposals	 	 	(67,787	)	 	 	-	 
	Interest on lease liabilities	 	 	53,549	 	 	 	86,470	 
	Interest payments on lease liabilities	 	 	(53,549	)	 	 	(86,470	)
	Principal payments of lease liabilities	 	 	(338,276	)	 	 	(392,969	)
	Adjustments	 	 	(33,869	)	 	 	(3,328	)
	Foreign exchange difference	 	 	24,550	 	 	 	13,515	 
	Lease obligations, December 31, 2020	 	$	354,199	 	 	$	689,644	 

 

    PAGE 35

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

	19.	Leases (continued)

 

The Company and its subsidiaries have
entered into agreements to lease office premises until 2025. The annual rent expenses for premises consist of minimum rent and does not
include variable costs. The minimum payments under all agreements are as follows:

 

	2021	 	$	124,223	 
	2022	 	 	114,962	 
	2023	 	 	98,698	 
	2024	 	 	73,075	 
	2025	 	 	62,711	 
	 	 	$	473,669	 

 

	20.	Income taxes

 

The reconciliation of the combined Canadian federal and provincial
statutory income tax rate of 26.5% (2019 - 26.5%) to the effective tax rate is as follows:

 

	 	 	2020	 	 	2019	 
	Net loss before income taxes	 	$	(12,089,338	)	 	$	(4,425,043	)
	Expected income tax (recovery)	 	 	(3,203,675	)	 	 	(1,172,636	)
	Difference in foreign tax rates	 	 	202,331	 	 	 	-	 
	Share based compensation and non-deductible expenses	 	 	(114,257	)	 	 	(202,553	)
	Prior year true-ups	 	 	75,227	 	 	 	119,972	 
	Tax rate changes and other adjustments	 	 	2,210	 	 	 	(15,933	)
	Recognition of previously unrecognized deferred tax assets	 	 	(317,387	)	 	 	-	 
	Foreign exchange translation adjustment	 	 	-	 	 	 	(172,081	)
	Change in tax benefits not recognized	 	 	2,411,519	 	 	 	1,542,386	 
	Income tax expense	 	$	(944,032	)	 	$	99,155	 

 

The Company’s income tax expense (recovery) is allocated
as follows:

 

	 	 	2020	 	 	2019	 
	Current income tax expense	 	$	106,986	 	 	$	93,580	 
	Deferred income tax expense	 	 	(1,051,018	)	 	 	5,575	 
	Income tax expense (recovery)	 	$	(944,032	)	 	$	99,155	 

 

    PAGE 36

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

	20.	Income taxes (continued)

 

The significant components of deferred tax assets are as
follows:

 

	 	 	2020	 	 	2019	 
	Non-capital losses carried forward	 	$	154,406	 	 	$	183,530	 
	Intangible assets	 	 	59,668	 	 	 	61,214	 
	Right of use assets	 	 	-	 	 	 	174,264	 
	Reserves	 	 	1,227,868	 	 	 	180,927	 
	Deferred tax assets	 	$	1,441,942	 	 	$	599,935	 
	Intangible assets	 	 	(43,564	)	 	 	(98,364	)
	Right of use assets	 	 	-	 	 	 	(171,234	)
	Other	 	 	(17,023	)	 	 	-	 
	Deferred tax liabilities	 	 	(60,587	)	 	 	(269,598	)
	Net deferred tax assets	 	$	1,381,355	 	 	$	330,337	 

 

The following tables present tax effects of temporary differences
and carry-forwards, as well as movements in the deferred tax balances:

 

	 	 	Balance at 

December 31,
    

2019	 	 	Recognized

    in profit

 and loss 	 	 	Other
 	 	 	Balance
at 

December 31, 

2020  	 
	Deferred tax assets (liabilities):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-capital losses carried forward	 	 	183,530	 	 	 	(29,124	)	 	 	-	 	 	 	154,406	 
	Intangible assets	 	 	(37,150	)	 	 	53,254	 	 	 	-	 	 	 	16,104	 
	Right of use assets	 	 	3,030	 	 	 	(3,030	)	 	 	-	 	 	 	-	 
	Reserves	 	 	180,927	 	 	 	1,046,941	 	 	 	-	 	 	 	1,227,868	 
	Other	 	 	-	 	 	 	(17,023	)	 	 	-	 	 	 	(17,023	)
	 	 	$	330,337	 	 	$	1,051,018	 	 	$	-	 	 	$	1,381,355	 

 

	 	 	Balance at	 	 	Recognized	 	 	 	 	 	Balance at	 
	 	 	January 1,	 	 	in profit	 	 	 	 	 	December	 
	 	 	2019	 	 	and loss	 	 	Other	 	 	31,2019	 
	Deferred tax assets (liabilities): Non-capital losses carried forward	 	 	267,137	 	 	 	(83,607	)	 	 	-	 	 	 	183,530	 
	Intangible assets	 	 	(110,373	)	 	 	73,223	 	 	 	-	 	 	 	(37,150	)
	Right of use assets	 	 	-	 	 	 	3,030	 	 	 	-	 	 	 	3,030	 
	Reserves	 	 	182,481	 	 	 	(1,554	)	 	 	-	 	 	 	180,927	 
	Other	 	 	-	 	 	 	3,333	 	 	 	(3,333	)	 	 	-	 
	 	 	$	339,245	 	 	$	(5,575	)	 	$	(3,333	)	 	$	330,337	 

 

    PAGE 37

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

	20.	Income taxes (continued)

 

Deferred taxes are provided as a result
of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities.
Deferred tax assets have not been recognized in respect of the following deductible temporary differences:

 

	 	 	2020	 
	Property and equipment	 	 	633,070	 
	Intangible assets	 	 	3,762,917	 
	Share issuance costs – 20(1)(e)	 	 	318,920	 
	Non-capital losses carried forward – Canada	 	 	16,387,380	 
	Non-capital losses carried forward – US	 	 	344,750	 
	Capital losses carried forward – Canada	 	 	345,288	 
	Capital losses carried forward – Australia	 	 	570,372	 
	Investment tax credits	 	 	595,160	 
	SR&ED pool	 	 	1,862,140	 
	Share appreciation rights plan obligations	 	 	153,638	 
	Ontario SR&ED credit	 	 	92,195	 
	Contract liabilities	 	 	412,831	 
	Lease obligations	 	 	19,888	 
	Unrealized foreign exchange	 	 	674,146	 
	 	 	 	26,172,695	 

 

The Company has available Canadian non-capital losses of
approximately $16,387,380 and capital losses of approximately $345,288. The net capital loss carry-forward may be carried forward
indefinitely, but can only be used to reduce capital gains. These Canadian non-capital income tax losses expire between the years
2026 to 2040.

 

During the year ended December 31, 2020, the Company
utilized Canadian loss carry-forwards of approximately $nil (2019 - $nil) to reduce taxable income in the current year.

 

The Company also has investment tax credits available to
reduce future federal taxes payable of approximately $595,160 which expire between years 2025 to 2034.

 

The effective and statutory tax rate
in the Company’s Australian subsidiaries is 27.5% (2019 – 27.5%). These subsidiaries have capital losses of approximately
$570,372 (2019 – $245,455) available to offset future taxable capital gains. These losses do not expire.

 

The Company’s US subsidiaries have non-capital losses
of approximately $344,750 available to reduce future taxable income. These losses do not expire.

 

Unrecognized deferred tax liabilities

 

The aggregate amount of temporary differences
associated with investments in subsidiaries for which the Company have not recognized deferred tax liabilities is approximately $1,600,000
as the Company ultimately controls whether the liability will be incurred and is satisfied that it will not be incurred in the foreseeable
future.

 

    PAGE 38

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial
Statements

(Expressed in United States
dollars)

 

	21.	Risk management for financial instruments

 

Fair values

 

The estimated fair values of cash,
trade and other receivables, restricted cash, trade and other payables, and share appreciation rights plan obligations approximate their
carrying values due to the relatively short-term nature of the instruments. The estimated fair values of current and long-term debt and
obligations under finance lease also approximate carrying values due to the fact that effective interest rates are not significantly different
from market rates.

 

Fair value measurements recognized in the consolidated balance
sheets must be categorized in accordance with the following levels:

 

		·	Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

		·	Level 2: 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 for the asset or liability that are not based on observable market data (unobservable inputs).

 

The Company’s financial instruments
carried at fair value on the consolidated balance sheets consist of cash and restricted cash. Cash and restricted cash are valued using
quoted market prices (Level 1). Share appreciation rights and the conversion feature derivative liability are categorized using observable
market inputs (Level 2). The Company did not value any financial instruments using valuation techniques based on non-observable market
inputs (Level 3) as at December 31, 2020.

 

Liquidity risk

 

Liquidity risk is the risk that the
Company will not be able to meet its financial obligations as they become due. The Company’s approach in managing liquidity is to
ensure, to the extent possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, by continuously monitoring actual and budgeted cash flows.

 

The Company has sustained losses over
the last number of periods and has financed these losses mainly through a combination of equity and debt offerings. Management believes
that it has raised sufficient cash to meet all of its contractual debt that is coming due in 2021 and has the ability to fund any operating
losses that may occur in the upcoming periods.

 

The table below summarizes the Company’s
contractual obligations into relevant maturity groups at the balance sheet date based on the expected contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows for operations:

 

	 	 	2021	 	 	2022	 	 	2023	 	 	2024	 	 	2025	 	 	Total	 
	Trade and other payables
    and accrued liabilities obligations	 	$	5,305,600	 	 	$	–	 	 	$	–	 	 	$	–	 	 	$	–	 	 	$	5,305,600	 
	Share appreciation
    rights plan	 	 	126,503	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	126,503	 
	Lease obligations	 	 	124,223	 	 	 	114,962	 	 	 	98,698	 	 	 	73,075	 	 	 	62,711	 	 	 	473,669	 
	Contingent
    consideration	 	 	1,758,656	 	 	 	1,505,080	 	 	 	782,990	 	 	 	 	 	 	 	 	 	 	 	4,046,726	 
	Crown Capital
    debt	 	 	304,746	 	 	 	–	 	 	 	12,123,615	 	 	 	–	 	 	 	–	 	 	 	12,428,361	 
	wordZXpressed
    SBA loan	 	 	214,307	 	 	 	45,923	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	260,230	 
	wordZXpressed
    loan	 	 	400,000	 	 	 	400,000	 	 	 	400,000	 	 	 	–	 	 	 	–	 	 	 	1,200,000	 
	Transcription
    Express VTB loan	 	 	280,531	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	–	 	 	 	280,531	 
	HomeTech
    VTB loan	 	 	240,000	 	 	 	240,000	 	 	 	240,000	 	 	 	20,000	 	 	 	–	 	 	 	740,000	 
	Total	 	$	8,754,566	 	 	$	2,305,965	 	 	$	13,645,303	 	 	$	93,075	 	 	$	62,711	 	 	$	24,861,620	 

 

Credit risk

 

Credit risk arises from the potential
that a customer or counterparty will fail to perform its obligations. The Company is exposed to credit risk from its customers; however,
the Company has a significant number of customers, minimizing the concentration of credit risk. Further, a large majority of the Company’s
customers are economically stable organizations such as government agencies or departments with whom the Company transacts with on a regular
basis, further reducing the overall credit risk.

 

Historically, the Company has suffered
losses under trade receivables. In order to minimize the risk of loss from trade

 

    PAGE 39

     

    

 

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

21.            Risk
management for financial instruments (continued)

 

receivables, the Company’s extension of credit to customers
involves review and approval by senior management and conservative credit limits for new or higher risk accounts.

 

The Company reviews its trade receivable accounts regularly
and writes down these accounts to their expected realizable values, by making an allowance for expected credit losses, as soon as the
account is determined not to be fully collectible. The allowance is recorded as an expense in the consolidated statements of loss and
comprehensive loss. Shortfalls in collections are applied against this provision. Estimates for allowance for expected credit losses
are determined by a customer-by-customer evaluation of collectability at each balance sheet reporting date, taking into account the amounts
that are past due and any available relevant information on the customers’ liquidity and going concern issues. Normal credit terms
for amounts due from customers call for payment within 30 to 60 days.

 

The Company’s exposure to credit risk for trade receivables
by geographic area was as follows:

 

	 	 	December 31, 2020	 	 	December 31, 2019	 
	United States	 	 	65	%	 	 	54	%
	Australia	 	 	17	%	 	 	33	%
	United Kingdom	 	 	16	%	 	 	11	%
	Canada	 	 	0	%	 	 	1	%
	Rest of world	 	 	2	%	 	 	1	%
	 	 	 	100	%	 	 	100	%

 

The Company is subject to risk of non-payment of accounts receivable.
The Company mitigates credit risk by assessing the credit worthiness of customers prior to extending credit and monitoring the aging
and size of credit extended to customers. All of the Company’s cash is held with major financial institution and thus the exposure
to credit risk is considered insignificant. Management actively monitors the Company’s exposure to credit risk under its financial
instruments, including with respect to trade receivables.

 

The following is a breakdown of trade receivables aging, net
of allowance of doubtful accounts:

 

	 	 	December 31, 2020	 	 	December 31, 2019	 
	0 to 30 days	 	$	2,902,154	 	 	$	2,286,445	 
	31 to 60 days	 	 	661,408	 	 	 	636,975	 
	61 to 90 days	 	 	487,560	 	 	 	51,222	 
	91 days and older	 	 	424,629	 	 	 	194,903	 
	 	 	$	4,475,751	 	 	$	3,169,545	 

 

At December 31, 2020, the for allowance for doubtful
accounts recorded against trade receivables is $123,338 (2019 - $902,215). The activity of the allowance for doubtful accounts
provision is as follows:

 

	 	 	December 31, 2020	 	 	December 31, 2019	 
	Beginning of year	 	$	902,215	 	 	$	769,930	 
	Add: provision for allowance for doubtful accounts	 	 	18,116	 	 	 	114,237	 
	Less: write-offs	 	 	(815,817	)	 	 	–	 
	Foreign exchange adjustments	 	 	18,824	 	 	 	18,048	 
	Expected credit loss – end of year	 	$	123,338	 	 	$	902,215	 

 

    PAGE 40

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

		21.	Risk management for financial instruments (continued)

 

Interest rate risk

 

Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company’s interest rate risk is
primarily related to the Company’s interest-bearing debts on its consolidated balance sheet. The Company does not have a material
amount of long-term debt with variable interest rates, thereby minimizing the Company’s exposure to cash flow interest rate risk.

 

Foreign currency risk

 

Foreign currency risk arises because of fluctuations in exchange
rates. The Company conducts a significant portion of its business activities in foreign currencies, primarily the U.S. and Australian
dollars and Great Britain pounds with a large portion of the Company’s sales and operating costs being realized in these foreign
currencies. The Company’s objective in managing its foreign currency risk is to minimize its net exposure to foreign currency cash
flows by transacting, to the greatest extent possible, with third parties in Canadian, U.S. and Australian dollars.

 

The financial assets and liabilities that are denominated in
foreign currencies will be affected by changes in the exchange rate between the United States dollar and these foreign currencies. This
primarily includes cash, restricted cash, trade and other receivables, trade and other payables, provisions and obligations under finance
lease which were denominated in foreign currencies.

 

The Company’s Australian subsidiaries have a majority of revenue
and expenses being transacted in Australian dollars. As of December 31, 2020, fluctuations of the Australian dollar relative to
the United States dollar of 5% would result in an exchange gain or loss on the net financial assets, impacting the Company’s comprehensive
income by approximately $58,000 (2019 –$1,000).

 

The Company’s computer products and services operations
are exposed to exchange rate changes in the U.S. dollar relative to the Canadian dollar since a substantial portion of this business
unit’s sales are denominated in U.S. dollars with most of the related expenses in Canadian dollars. A 5% fluctuation of the U.S.
dollar would result in an exchange gain or loss on the net financial assets of approximately $78,000 (2019 – $33,000) as at December 31,
2020.

 

The Company’s computer products and services operations
are exposed to exchange rate changes in the Great Britain pound relative to the United States dollar since a portion of this business
unit’s sales are denominated in Great Britain pounds with most of the related expenses in United States dollars. A fluctuation
of the Great Britain pound of 5% would result in an exchange gain or loss on the net financial assets of approximately $23,000 (2019
 – $nil) as December 31, 2020.

 

The Company does not currently use foreign exchange contracts
to hedge its exposure of its foreign currencies cash flows as management has determined that this risk is not significant at this point
in time. The Company recognized a foreign exchange gain from operations of $132,306 for the year ended December 31, 2020 (2019 –
foreign exchange loss of $217,040).

 

Capital management

 

The Company considers its capital structure to consist of shareholders’
equity, long-term debt and convertible debt. The Company’s objective in managing capital is to ensure sufficient liquidity to pursue
its organic growth strategy, fund research and development and undertake selective acquisitions, while at the same time taking a conservative
approach toward financial leverage and management of financial risk.

 

    PAGE 41

     

    

 

 

VIQ Solutions Inc.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

 

		22.	Related party transactions

 

Key management personnel are comprised of the Company’s
directors and executive officers. In addition to their salaries, key management personnel also participate in the Company’s share
option program (note 11), DSU plan, SAR plan. Key management personnel compensation for the year ended December 31, 2020 and December 31,
2019 is as follows:

 

	 	 	2020 
 
 
	 	 	2019
 
 
	 
	 Salaries and short-term employee benefits (i)	 	$	1,141,349	 	 	$	1,018,166	 
	Stock-based compensation	 	 	491,638	 	 	 	106,959	 
	 	 	$	1,632,987	 	 	$	1,125,125	 

 

		(i)	Short-term employee benefits include bonuses and car allowances

 

Subsequent to the year ended December 31, 2020, the Company
granted a non-revolving executive loan (the “Executive Loan”) to Sebastien Paré, President, Chief Executive Officer
and a director of the Company in the aggregate amount of $518,431 (CAD$657,838) to: (i) facilitate Mr. Paré exercise
of certain vested outstanding stock options; and (ii) facilitate Mr. Paré repaying certain indebtedness incurred in
connection with Mr. Paré previous exercise of convertible securities of the Company. The Executive Loan matures on February 10,
2028 and bears interest at a rate of 1.0% per annum. The Executive Loan is secured by a pledge of 175,000 common shares in the capital
of the Company held by Sebastien Paré in favor of the Company (the “Share Pledge”). Pursuant to the terms of the Share
Pledge, Mr. Paré has agreed to comply with certain covenants in favor of the Company.

 

		23.	Other income (expense)

 

During the year ended December 31, 2020, there was a gain
on disposal of $3,042 related to the termination of operating lease due to migration to remote workforce. Other income of $5,454 of was
recorded related to an allowance for doubtful account that was written off and later collected, $1,068 of interest income, and $809 of
miscellaneous income resulting in an aggregate total of $10,373 was recorded in the statements of loss and other comprehensive loss during
the year ended December 31, 2020.

 

On January 31, 2019, the Company entered into an agreement
to settle certain outstanding fees owed to an arm’s length service provider. Pursuant to such agreement, the Company issued 659,600
units (each a “Unit”) in satisfaction of $1,000,000 (CAD$1,319,200) based on the Bank of Canada Exchange Rate on January 30,
2019 of fees owed to such service provider. Each Unit is comprised of one common share and one common share purchase warrant. The common
share purchase warrants are exercisable for a period of two years from the date of issuance at an exercise price of CAD $2.60 per share.
The Company calculated the fair value of the units to be $1,766,227 and the difference of $762,575 is recorded in other expense on the
statements of loss and other comprehensive loss for 2019. Offsetting the amount, there was interest income of $1,340 for the year ended
December 31, 2019.

 

		24.	Subsequent events

 

The Company received proceeds of approximately $2,307,000 from
the exercise of 1,123,878 warrants and 178,333 stock options in January and February of 2021. The exercise prices of the warrants
ranges from C$2.06 to $3.24 and the exercise prices of the stock options ranges from C$1.20 to C$2.20.

 

    PAGE 42Exhibit 4.3

 

 

VIQ Solutions Inc.

 

 

2020 Management’s Discussion and Analysis of Financial

Condition and Results of Operations

(Expressed in United States dollars)

 

 

 

https://viqsolutions.com/

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

The following Management’s Discussion and
Analysis (“MD&A”) comments on the financial condition and results of operations of VIQ Solutions Inc. (“VIQ”
or the “Company”) for the three and twelve months ended December 31, 2020. The information contained herein should be
read in conjunction with the 2020 audited consolidated financial statements prepared in accordance to International Financial Reporting
Standards (“IFRS”).

 

Certain information included herein is forward-looking
and based upon assumptions and anticipated results that are subject to uncertainties. Should one or more of these uncertainties materialize
or should the underlying assumptions prove incorrect, actual results may vary significantly from those expected. See “Forward-Looking
Statements” and “Risk Factors”. The information in this discussion is provided as of April 14, 2021 unless we indicate
otherwise.

 

Unless the context otherwise requires, all references
to “VIQ”, “Company”, “VIQ Solutions”, “our”, “us”, and “we” refer
to VIQ Solutions Inc. and its subsidiaries. Additional information regarding the Company is available on SEDAR at www.sedar.com.

 

As a result of the Company’s graduation
to TSX, there will be no further trading of VIQ shares on TSX-V after January 20, 2021. VIQ’s common shares were delisted from
TSX-V at the commencement of trading on TSX. The trading symbol for the common shares of VIQ on TSX will remain unchanged as “VQS.”

 

This MD&A is dated April 14, 2021. All
amounts herein are presented in United States dollars, unless otherwise stated.

 

Forward-looking Statements

 

This MD&A contains forward-looking statements
about our achievements, the future success of our business and technology strategies, performance, goals and other future events. Management’s
assessment of future plans and operations, cash flows, methods of financing and the ability to fund financial liabilities, and the timing
of and impact of adoption of IFRS and other accounting policies may constitute forward-looking statements under applicable securities
laws and necessarily involve risks including, without limitation, the risks identified below including COVID-19 pandemic globally.

 

As a consequence, the Company’s actual results
may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information
are based on a number of factors and assumptions which have been used to develop such statements and information, but which may prove
to be incorrect. Although VIQ Solutions believes that the expectations reflected in such forward-looking statements or information are
reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations
will prove to be correct.

 

In addition to other factors and assumptions which
may be identified in this document and other documents filed by the Company, assumptions have been made regarding, among other things:
the impact of increasing competition; the general stability of the economic and political environment in which VIQ Solutions operates,
including significant changes in demand from our clients as a result of the impact of a global economic crisis and capital markets weakness;
the risk of potential non-performance by counterparties, including but not limited to, clients and suppliers, during uncertain economic
conditions; our dependence on a limited number of clients; our dependence on industries affected by rapid technological change; our ability
to successfully manage our operations internationally including in the United Kingdom, Australia and the United States; the challenge
of managing our financial exposures to foreign currency fluctuations; our ability to obtain qualified staff and services in a timely and
cost-efficient manner; our ability to obtain financing on acceptable terms including anticipated sources of funding of working capital and financial losses which may
include securing credit facilities, accessing new equity, corporate acquisitions or business combinations or joint venture arrangements;
the ability to secure new contracts on terms acceptable to the Company; the ability to successfully develop new products; the Company's
ability to effectively register, for protection, its new and existing products in certain jurisdictions; the Company's ability to protect
new and existing products from proprietary infringement by third parties and its ability to effectively enforce such proprietary infringements;
taxes in the jurisdictions in which the Company operates, including Canada, the United Kingdom, Australia and the United States; and VIQ
Solutions' ability to successfully market its products. Readers are cautioned that the foregoing list of factors is not exhaustive.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 1

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

The purpose of the forward-looking statements
is to provide the reader with a description of management’s expectations regarding the Company’s 2021 outlook and may not
be appropriate for other purposes. Readers are encouraged to read the section entitled “Risk Factors” in this MD&A for
a broader discussion of the factors that could affect our future performance. Furthermore, the forward-looking statements contained in
this document are made as at the date of this document and the Company does not undertake any obligation to update publicly or to revise
any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required
by applicable securities laws.

 

Non-IFRS Measures

 

The Company prepares its financial statements
in accordance with IFRS. Non-IFRS measures are used by management to provide additional insight into our performance and financial condition.
We believe non- IFRS measures are an important part of the financial reporting process and are useful in communicating information that
complements and supplements the consolidated financial statements. This MD&A also includes certain measures which have not been prepared
in accordance with IFRS such as, Adjusted EBITDA. To evaluate the Company’s operating performance as a complement to results provided
in accordance with IFRS, the term “Adjusted EBITDA” refers to net income (loss) before adjusting earnings for stock-based
compensation, depreciation, amortization, interest expense, accretion and other financing expense, (gain) loss on revaluation of conversion
feature liability, loss on repayment of long- term debt, business acquisition costs, impairment of goodwill and intangibles, other expense
(income), foreign exchange (gain) loss, current and deferred income tax expense (recovery). We believe that the items excluded from Adjusted
EBITDA are not connected to and do not represent the operating performance of the Company.

 

We believe that Adjusted EBITDA is useful supplemental
information as it provides an indication of the results generated by the Company’s main business activities prior to taking into
consideration how those activities are financed and taxed as well as expenses related to stock-based compensation, depreciation, amortization,
impairment of goodwill and intangibles, other expense (income), and foreign exchange (gain) loss. Accordingly, we believe that this measure
may also be useful to investors in enhancing their understanding of the Company’s operating performance.

 

Adjusted EBITDA is not a measure recognized by
IFRS and do not have standardized meanings prescribed by IFRS. Therefore, Adjusted EBITDA may not be comparable to similar measures presented
by other issuers. Investors are cautioned that Adjusted EBITDA should not be construed as an alternative to net income (loss) as determined
in accordance with IFRS.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 2

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Overview

 

VIQ Solutions combines artificial intelligence
driven voice and video capture technology and services to securely manage digital content in the most rigid security environments including
courts, law enforcement, insurance, conferencing and media.

 

We help our cybersecurity focused clients securely
speed the capture, creation, and management of large volumes of information, preserve the unique value of the spoken word and video image,
and deliver meaningful data our security focused customers can utilize.

 

The Company is
a global market leader in the capture, management, and transformation of sensitive digital evidence. We enable our 1,300+ clients’
digital transformation by implementing cybersecure capture solutions, driving the migration to cloud solutions, enabling hybrid technology
services with human to machine workflow, and employing Artificial Intelligence (“AI”) tools such as speech recognition, sentiment
analysis, market specific lexicon and algorithms.

 

Our revenue consists primarily of technology services,
software license fees, support and maintenance and other recurring fees, professional service fees, and hardware sales. Technology service
revenue consists of fees charged for recurring transcription services provided to our customers. Software license revenue is comprised
of license fees charged for the use of our software products generally licensed under perpetual arrangements and to a lesser extent sale
of third party software licenses. Support and maintenance and other recurring revenue primarily consist of fees charged for customer support
on our software products post-delivery and, to a lesser extent, recurring fees derived from software-as-a-service arrangements. Professional
service revenue consists of fees charged for customization, implementation, integration, training and ongoing services associated with
our software products and technology services. Hardware revenue includes the resale of third party hardware that forms part of our customer
solutions. Occasionally our customers may purchase a combination of software, maintenance, professional services and hardware, although
the type, mix and quantity vary by customer and by product.

 

Cost of sales consists primarily of staff costs,
professional services and the cost of hardware and third- party licenses to fulfill customer arrangements.

 

Selling and administrative expenses consist primarily
of personnel and related costs for our sales and marketing functions, including salaries and benefits, contract acquisition costs including
commissions earned by sales personnel, direct marketing campaigns, public relations and other promotional activities. Selling and administrative
expenses also consist primarily of personnel and related costs associated with the administrative functions of our business including
corporate, finance, and internal information system support as well as legal, accounting, other professional fees, investor relations,
occupancy costs and insurance.

 

Research and development expenses include personnel
and related costs for ongoing research, development and product management initiatives.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 3

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Key Operating Highlights during 2020

 

		·	Total revenue for the three months ended December 31,
2020 was $7,775,674, an increase of $1,679,124 or 28% from $6,096,550 recognized
in the comparative period in 2019. Total revenue for the year ended December 31, 2020 was $31,749,693, an increase of $6,653,385,
or 27% from $25,096,308 recognized in the comparative
period in 2019.

 

		·	Gross margin for the three months ended December 31,
2020 was $2,965,965 representing 38% of revenue versus 40% of revenue in the comparative period in 2019. Gross margin for the year ended
December 31, 2020 was $16,150,256 representing 51% of revenue versus 43% of revenue in the comparative period in 2019.

 

		·	Net loss for the three months ended December 31,
2020 was $3,857,540, an increase of $1,331,858 or 53% from a net loss of $2,525,682 recognized in the comparative period in 2019. Net
loss for the year ended December 31, 2020 was $11,145,306, an increase of $6,621,108 or 146% from the net loss of $4,524,198 in the
comparative period in 2019.

 

		·	Adjusted EBITDA for the three months ended December 31,
2020 was $646,674, an increase of $983,273 or 292%
from an Adjusted EBITDA loss of $336,599 recognized in the comparative period in 2019. Adjusted EBITDA for the year ended December 31,
2020 of $4,987,679, an increase of$4,116,844 or 473% from an Adjusted
EBITDA of $870,835 in the comparative period in 2019. The increase in Adjusted EBITDA was driven by higher revenue, productivity gains
in technology services and wage subsidies.

 

Impact of 2020 acquisitions:

 

For the three month and twelve month periods
ended December 31, 2020 consolidated revenues of $7,775,674 and $31,749,693 include revenue from acquisitions of $2,081,598 (ASC:
$1,410,004; WordZ: $671,594) and $9,410,821 (ASC: $6,625,930; WordZ: $2,784,891) respectively.

 

Net loss for the three month ended December 31,
2020 of $3,857,540 include a loss from acquisitions of $782,148 (ASC: profit of $390,378; WordZ: loss of $1,172,527), which was driven
by impairment charge for WordZ of $2,258,369. Net loss for the twelve month ended December 31, 2020 of $11,145,306 include profit
from acquisitions of $1,281,997 (ASC: profit of $2,500,079; WordZ: loss of $1,218,082).

 

During the year ended December 31, 2020,
the Company incurred $19,058 in business acquisition costs related to the acquisitions which have been included in the consolidated statement
of loss and comprehensive loss (December 31, 2019 - $484,387).

 

If the acquisitions would have occurred on January 1,
2020, management estimates that the pro forma consolidated revenue for the year ended December 31, 2020 would have been $33,462,074
and net loss for the year ended December 31, 2020 would have been $10,873,372 as compared to the amounts reported in the consolidated
statements of loss and comprehensive loss for year ended December 31, 2020. This unaudited pro forma financial information is for
information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken
place at the beginning of the period presented or the results that may be realized in the future.

 

Results of Operations

 

Key performance indicators that we use to manage
our business and evaluate our financial results and operating performance include: revenue, expenses, Adjusted EBITDA, and net income
(loss). We evaluate our performance on these metrics by comparing our actual results to management budgets, forecasts, and prior period
performance.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 4

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

The following table sets forth a summary of our results of operations
for the three and twelve months ended December 31, 2020 and 2019:

 

Unaudited

 

	 	 	Three
    months ended

    December 31	 	 	Period
    over Period

    Change	 	 	Year
    ended December 31	 	 	Period
    over Period

    Change	 
	 	 	2020	 	 	2019	 	 	$	 	 	%	 	 	2020	 	 	2019	 	 	$	 	 	%	 
	Revenue	 	 	7,775,674	 	 	 	6,096,550	 	 	 	1,679,124	 	 	 	28	 	 	 	31,749,693	 	 	 	25,096,308	 	 	 	6,653,385	 	 	 	27	 
	Cost of sales	 	 	4,809,709	 	 	 	3,663,963	 	 	 	1,145,746	 	 	 	31	 	 	 	15,599,437	 	 	 	14,276,321	 	 	 	1,323,116	 	 	 	9	 
	Gross profit	 	 	2,965,965	 	 	 	2,432,587	 	 	 	533,378	 	 	 	22	 	 	 	16,150,256	 	 	 	10,819,987	 	 	 	5,330,269	 	 	 	49	 
	Operating Expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Selling and administrative expenses	 	 	2,892,376	 	 	 	2,493,512	 	 	 	398,864	 	 	 	16	 	 	 	11,034,902	 	 	 	8,954,512	 	 	 	2,080,390	 	 	 	23	 
	Research and development expenses	 	 	288,146	 	 	 	275,674	 	 	 	12,472	 	 	 	5	 	 	 	1,074,178	 	 	 	994,640	 	 	 	79,538	 	 	 	8	 
	Gain on contingent consideration	 	 	(861,231	)	 	 	-	 	 	 	(861,231	)	 	 	-	 	 	 	(946,503	)	 	 	-	 	 	 	(946,503	)	 	 	-	 
	Total Operating expenses	 	 	2,319,291	 	 	 	2,769,186	 	 	 	(449,895	)	 	 	(16	)	 	 	11,162,577	 	 	 	9,949,152	 	 	 	1,213,425	 	 	 	12	 
	Adjusted EBITDA (1)	 	 	646,674	 	 	 	(336,599	)	 	 	983,273	 	 	 	(292	)	 	 	4,987,679	 	 	 	870,835	 	 	 	4,116,844	 	 	 	473	 
	Stock-based compensation	 	 	87,802	 	 	 	(28,740	)	 	 	116,542	 	 	 	(406	)	 	 	725,316	 	 	 	195,113	 	 	 	530,203	 	 	 	272	 
	Depreciation	 	 	98,632	 	 	 	122,753	 	 	 	(24,121	)	 	 	(20	)	 	 	445,995	 	 	 	528,484	 	 	 	(82,489	)	 	 	(16	)
	Amortization	 	 	1,431,855	 	 	 	807,852	 	 	 	624,003	 	 	 	77	 	 	 	4,813,248	 	 	 	2,973,945	 	 	 	1,839,303	 	 	 	62	 
	Interest expense	 	 	491,848	 	 	 	403,153	 	 	 	88,695	 	 	 	22	 	 	 	4,934,517	 	 	 	1,549,904	 	 	 	3,384,613	 	 	 	218	 
	Accretion and other financing
    expense	 	 	482,849	 	 	 	219,751	 	 	 	263,098	 	 	 	120	 	 	 	1,216,949	 	 	 	916,734	 	 	 	300,215	 	 	 	33	 
	(Gain) loss on revaluation of  conversion
    feature liability	 	 	834,036	 	 	 	(735,743	)	 	 	1,569,779	 	 	 	213	 	 	 	1,308,440	 	 	 	(2,330,964	)	 	 	3,639,404	 	 	 	156	 
	Loss on repayment of long-term
    debt	 	 	207,657	 	 	 	-	 	 	 	207,657	 	 	 	-	 	 	 	1,497,804	 	 	 	-	 	 	 	1,497,804	 	 	 	-	 
	Impairment of goodwill and intangibles	 	 	2,258,369	 	 	 	-	 	 	 	2,258,369	 	 	 	-	 	 	 	2,258,369	 	 	 	-	 	 	 	2,258,369	 	 	 	-	 
	Other expense (income)	 	 	(7,886	)	 	 	762,345	 	 	 	(770,231	)	 	 	(101	)	 	 	(10,373	)	 	 	761,235	 	 	 	(771,608	)	 	 	(101	)
	Business acquisition costs	 	 	-	 	 	 	484,387	 	 	 	(484,387	)	 	 	(100	)	 	 	19,058	 	 	 	484,387	 	 	 	(465,329	)	 	 	(96	)
	Foreign  exchange  (gain)
    loss	 	 	152,885	 	 	 	54,170	 	 	 	98,715	 	 	 	(182	)	 	 	(132,306	)	 	 	217,040	 	 	 	(349,346	)	 	 	161	 
	Loss before income taxes	 	 	(5,391,373	)	 	 	(2,426,527	)	 	 	(2,964,846	)	 	 	(122	)	 	 	(12,089,338	)	 	 	(4,425,043	)	 	 	(7,664,295	)	 	 	(173	)
	Current income tax expense	 	 	565,707	 	 	 	(93,580	)	 	 	659,287	 	 	 	(705	)	 	 	(106,986	)	 	 	(93,580	)	 	 	(13,406	)	 	 	14	 
	Deferred income  tax
    recovery	 	 	968,126	 	 	 	(5,575	)	 	 	973,701	 	 	 	(17,465	)	 	 	1,051,018	 	 	 	(5,575	)	 	 	1,056,593	 	 	 	(18,952	)
	Income  tax (expense)
    recovery	 	 	1,533,833	 	 	 	(99,155	)	 	 	1,632,988	 	 	 	1,647	 	 	 	944,032	 	 	 	(99,155	)	 	 	1,043,187	 	 	 	1,052	 
	Net Loss (2)	 	 	(3,857,540	)	 	 	(2,525,682	)	 	 	(1,331,858	)	 	 	(53	)	 	 	(11,145,306	)	 	 	(4,524,198	)	 	 	(6,621,108	)	 	 	(146	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Weighted average number of common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic	 	 	20,341,203	 	 	 	10,848,296	 	 	 	 	 	 	 	 	 	 	 	18,080,533	 	 	 	9,752,131	 	 	 	 	 	 	 	 	 
	Diluted	 	 	20,341,203	 	 	 	10,848,296	 	 	 	 	 	 	 	 	 	 	 	18,080,533	 	 	 	9,752,131	 	 	 	 	 	 	 	 	 
	Net income (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic	 	 	(0.19	)	 	 	(0.23	)	 	 	 	 	 	 	 	 	 	 	(0.62	)	 	 	(0.46	)	 	 	 	 	 	 	 	 
	Diluted	 	 	(0.19	)	 	 	(0.23	)	 	 	 	 	 	 	 	 	 	 	(0.62	)	 	 	(0.46	)	 	 	 	 	 	 	 	 
	Tota l Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	42,719,659	 	 	 	20,768,799	 	 	 	21,950,860	 	 	 	106	 
	Total Long-Term Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	14,447,254	 	 	 	10,596,861	 	 	 	3,850,393	 	 	 	36	 

 

		(1)	Adjusted EBITDA, Earnings before stock-based compensation, depreciation, amortization, interest expense, accretion and other financing
expense, (gain) loss on revaluation of conversion feature liability, loss on repayment of long-term debt, business acquisition costs,
impairment of goodwill and intangibles, other expense (income), foreign exchange (gain) loss, and current and deferred income tax expense
(recovery), is a non-IFRS measure. Please refer to the section entitled “Non- IFRS Measures.”

		(2)	Year ended December 31, 2020 Net loss includes $6,310,041 in expenses relating to the conversion feature, interest, and loss
on repayment of long-term debt for the conversion of the convertible debenture to equity and $4,813,248 of amortization related to the
intellectual property acquired from the acquisitions and the commercial deployments of NetScribe, aiAssist, and MobileMic Pro.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 5

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Comparison of the three and twelve
month periods ended December 31, 2020 and 2019 

 

Revenue

 

Total revenue for the three months ended December 31,
2020 was $7,775,674, an increase of $1,679,124, or 28%, from $6,096,550 recognized in the comparative period in 2019. Total revenue for
the year ended December 31, 2020 was $31,749,693, an increase of $6,653,385, or 27%, from $25,096,308 recognized in the comparative
period in 2019. Included in revenue of $7,775,674 is $2,081,598 related to acquisitions with the balance of $5,694,076 derived from the
legacy business. Revenue growth of 28% for the three months ended December 31, 2020 is made up of 34% due to acquisitions offset
by negative organic growth of (6%) from the legacy business. As expected, we have seen our business impacted both positively and negatively
by the COVID-19 pandemic. Our insurance, law enforcement and courts sectors were negatively impacted by COVID-19; however, some of this
was offset by increased revenue from the conferencing and media as more of our customers migrated to online solutions. The primary reason
for the negative organic growth for the year ended December 31, 2020 was the impact of COVID-19. In addition, travel restrictions
have negatively impacted the ability to sell our technology services and software and many businesses have delayed buying decisions.

 

Cost of Sales

 

Cost of Sales for the three months ended
December 31, 2020 increased by $1,145,746, or 31%, to $4,809,709, from $3,663,963 for the comparative period in 2019. Cost of
Sales for the year ended December 31, 2020 increased by $1,323,116, or 9%, to $15,599,437, from $14,276,321, for the
comparative period in 2019. The increase in cost of sales for the three months ended December 31, 2020 is primarily due to
acquisitions made in Q1 2020. Cost of sales for the year ended December 31, 2020 includes an increase of $3,797,881 from
acquisitions made in Q1 2020, which is partially offset by COVID- 19 subsidies of $2,830,986.

 

Gross Profit

 

Gross profit for the three months ended
December 31, 2020 increased by $533,378, or 22%, to $2,965,965, from $2,432,587, for the comparative period in 2019. Gross
profit for the year ended December 31, 2020 increased by $5,330,269, or 49%, to $16,150,256, from $10,819,987, for the
comparative period in 2019. The decrease in gross profit for the three months ended December 31, 2020 is primarily due to
impact of COVID-19, reduction in volume, while maintaining non-variable employees on payroll. Also, post migration backlog resulted
in additional overtime costs. In addition, accelerated hiring costs across all segments to change workforce profile to editors.
Increase in gross profit for the year ended December 31, 2020 was primarily due to revenue growth through acquisitions along
with wage subsidies.

 

Selling and Administrative Expenses

 

Selling and Administrative expenses for the three
months ended December 31, 2020 increased by $398,864, or 16%, to $2,892,376, from $2,493,512, for the comparative period in 2019.
Selling and Administrative expenses for the year ended December 31, 2020 increased by $2,080,390, or 23%, to $11,034,902, from $8,954,512,
for the comparative period in 2019. The Company has taken appropriate measures to manage selling and administrative expenses in conjunction
with the negative organic growth resulting from COVID-19. Increase in Selling and Administrative expenses for the year ended December 31,
2020 was primarily due to the growth in the number of employees compared to the same periods in 2019 primarily due to acquisitions along
with professional service fees. Selling and Administrative expenses for the year ended December 31, 2020 included $1,203,327 in
COVID subsidies vs. $0 recognized in prior year.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 6

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Research and Development Expenses

 

Research and development expenses for the three months ended
December 31, 2020 increased by $12,472, or 5%, to $288,146, from $275,674, for the comparative period in 2019. Research and
development expenses for the year ended December 31, 2020 increased by $79,538, or 8%, to $1,074,178, from $994,640, for the
comparative period in 2019. The increase in Research and development expenses is due to the increased spend related to the
Company’s AI project.

 

Gain on Contingent Consideration

 

For the three months ended December 31,
2020, (Gain) Loss on Contingent Consideration increased by $861,231, to a gain of $861,231, from $0 recognized in the comparative
period in 2019. For the year ended December 31, 2020, (Gain) Loss on Contingent Consideration increased by $946,503, to a gain
of $946,503, from $0 recognized in the comparative period in 2019. This increase is mainly due to the contingent consideration gain
amount recorded for the year ended December 31, 2020 and relates to a decrease in anticipated acquisition earnout payment
accruals primarily as a result of decreases to revenue forecasts for WordZ acquisition due to the COVID-19 pandemic. Revenue
forecasts are updated on a quarterly basis and the related anticipated acquisition earnout payment accruals are updated
accordingly.

 

Stock-Based Compensation

 

For the three months ended December 31,
2020, Stock Based Compensation increased by $116,542, to $87,802, from a gain of $28,740, recognized in the same period of 2019. For
the year ended December 31, 2020, Stock Based Compensation increased by $530,203, to $725,316, from $195,113, recognized in the
same period of 2019. The increase in Stock Based Compensation for the three months and year ended December 31, 2020 is due to
more stock options being granted compared to the same period in 2019.

 

Depreciation

 

For the three months ended December 31, 2020, Depreciation decreased
by $24,121, to $98,632, from $122,753 recognized in the comparative period in 2019. For the year ended December 31, 2020, Depreciation
decreased by $82,489, to $445,995, from $528,484 recognized in the comparative period in 2019. Decrease in depreciation expense for the
year ended December 31, 2020 is due primarily to the declining balance method of depreciation used by the Company in that as the
net book value decreases, in the absence of any significant additions, the depreciation expense is expected to decrease over the life
of the assets.

 

Amortization

 

For the three months ended December 31, 2020, Amortization
increased by $624,003 or 77%, to $1,431,855, from $807,852 recognized in the comparative period in 2019. For the year ended
December 31, 2020, Amortization increased by $1,839,303 or 62%, to $4,813,248, from $2,973,945 recognized in the comparative
period in 2019. The increase in amortization expense for the year ended December 31, 2020 is primarily attributable to an
increase in the carrying value of our intangible asset balance as a result of acquisitions completed during the year ended
December 31, 2020.

 

Interest Expense

 

For the three months ended December 31,
2020, interest increased by $88,695, to $491,848, from $403,153 recognized in the comparative period in 2019. For the year ended
December 31, 2020, interest increased by $3,384,613, to $4,934,517, from $1,549,904 recognized in the comparative period in
2019.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 7

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Interest increased for the year ended December 31, 2020
primarily due to the conversion of the convertible debenture to equity of $3,503,797 with a slight decrease in interest on lease
obligations of $32,921 for termination of operating lease.

 

Accretion and Other Financing Expense

 

For the three months ended December 31, 2020, Accretion and
Other Financing expense increased by $263,098, to $482,849, from $219,751 recognized in the comparative period in 2019. For the year
ended December 31, 2020, Accretion and Other Financing expense decreased by $300,215, to $1,216,949, from $916,734 recognized
in the comparative period in 2019. The decrease in accretion and other financing expense for the three months and year ended
December 31, 2020 is due to a significant portion of convertible debt was converted to equity in Q1 2020.

 

(Gain) Loss on Revaluation of Conversion Feature
Liability

 

For the three months ended December 31, 2020,
(Gain) Loss on revaluation of Conversion Feature Liability decreased by $1,569,779, from a gain of $735,743 recognized in the comparative
period in 2019 to a loss of $834,036, for the three months ended December 31, 2020. For the year ended December 31, 2020, (Gain)
Loss on revaluation of Conversion Feature Liability decreased by $3,639,404, to a loss of $1,308,440 from a gain of $2,330,964 recognized
in the comparative period in 2019. The variance is primarily due to the fluctuation of foreign exchange rates and the changes in the stock
price.

 

Loss on Repayment of Long-term Debt

 

For the three months ended December 31,
2020, Loss on repayment of long-term debt increased by $207,657, to $207,657, from $0 recognized in the comparative period in 2019.
For the year ended December 31, 2020, Loss on repayment of long-term debt increased by $1,497,804, to $1,497,804, from $0
recognized in the comparative period in 2019. The loss on repayment of long-term debt amount recorded for the year ended
December 31, 2020 is due to the re-pricing of the conversion price of the convertible debenture to C$2.18 per share resulting
in a charge of $1,497,804 reflecting the incremental fair value of the reduced exercise price.

 

Impairment of Goodwill and Intangibles

 

For the three months ended December 31,
2020, Impairment of Goodwill and Intangibles increased by $2,258,369, to $2,258,369, from $0 recognized in the comparative
period in 2019. For the year ended December 31, 2020, Impairment of Goodwill and Intangibles increased by $2,258,369, to
$2,258,369, from $0 recognized in the comparative period in 2019. An impairment expense of $2,258,369 was recorded as at
December 31, 2020 relating to one business that was acquired in 2020.The forecasted cash flows for this business have declined
significantly from the forecasted cash flows at the time of acquisition primarily due to the near-term impact, as well as the yet
uncertain but probable longer-term impact of the COVID- 19 pandemic. See “Risk Factors”. There was no similar expense
recorded for the same period in 2019.

 

Other Expense (Income)

 

For the three
months ended December 31, 2020, Other Expense (Income) decreased by $770,231, to an income of $7,886 from an expense of
$762,345 recognized in the comparative period in 2019. For the year ended December 31, 2020, Other Expense (Income) decreased
by $771,608, to an income of $10,373 from an expense of $761,235 recognized in the comparative period in 2019. The decrease in Other
Expense (Income) is primarily due to the loss on settlement of payables that occurred in Q4 2019, relating to the value of shares
granted to settle payables was higher than anticipated in addition to the value of warrants granted. Included in Other Expense
(Income) for the three months and year ended December 31, 2020 is a gain on disposal of $3,042 related to the termination of
operating lease due to migration to remote workforce. Also, $5,454 related to an allowance for doubtful account that was written off
and later collected, $1,068 of interest income, and $809 of miscellaneous income.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 8

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Business Acquisition Costs

 

For the three months ended December 31, 2020, Business
acquisition financing costs decreased by $484,387, to $0, from $484,387 recognized in the comparative period in 2019. For the year
ended December 31, 2020, Business acquisition financing costs decreased by $465,329, to $19,058, from $484,387 recognized in
the comparative period in 2019. Business acquisition financing costs recognized in the comparative period relate to the acquisition
of ASC and WordZ.

 

Foreign Exchange (Gain) Loss

 

For the three months ended December 31, 2020, Foreign
Exchange (Gain) Loss increased by $98,715, to $152,885, from $54,170 recognized in the comparative period in 2019. For the year
ended December 31, 2020, Foreign Exchange (Gain) Loss decreased by $349,346, to a gain of $132,306, from a loss of $217,040
recognized in the comparative period in 2019. Foreign Exchange (Gain) loss decreased for the year ended December 31, 2020 due
to fluctuations in the foreign exchange rates. Our businesses are organized geographically so many of our expenses are incurred in
the same currency as our revenues, which mitigates some of our exposure to currency fluctuations. Foreign exchange gain and losses
are primarily related to the unrealized foreign translation gains and losses of certain non-US dollar denominated working capital
balances to US dollars.

 

Income Tax (Expense) Recovery

 

We operate globally and we calculate our tax provision
in each of the jurisdictions in which we conduct business. Our effective tax rate on a consolidated basis is, therefore, affected by the
realization and anticipated relative profitability of our operations in those various jurisdictions, as well as different tax rates that
apply and our ability to utilize tax losses and other credits. For the three months ended December 31, 2020, Income Taxes, net
of deferred income tax recovery, increased by $1,632,988, to a recovery of $1,533,833, from an expense of $99,155 in the comparative period
in 2019. For the year ended December 31, 2020, Income Taxes, net of deferred income tax recovery increased by $1,043,187, to
a recovery of $944,032, from an expense of $99,155 in the comparative period in 2019. The change in Income Taxes for the three months
ended December 31, 2020 is primarily due to reversal of tax treatment on COVID subsidies. These were deemed taxable at the end of
Q2; however, tax treatment was later reversed by US Legislators. Also, deferred tax recovery recognized primarily related to intangible
assets. The change for the year ended December 31, 2020 is due to deferred tax recovery recognized primarily related to intangible
assets.

 

Net Loss and Earnings Per Share

 

Net loss for the three months ended
December 31, 2020 was $3,857,540 compared to net loss of $2,525,682 for the same period in 2019. On a per weighted average
share basis, this translated into a net loss per share of $0.19 in the three months ended December 31, 2020 compared to a net
loss per weighted average share of $0.23 for the same period in 2019. Net loss for the year ended December 31, 2020 was
$11,145,306 compared to net loss of $4,524,198 for the same period in 2019. On a per weighted average share basis, this translated
into a net loss per share of $0.62 in the year ended December 31, 2020 compared to a net loss per weighted average share of
$0.46 for the same period in 2019.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 9

 

     

     

    

 

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Quarterly Results of Operations

 

The following table sets out selected financial
information for each of the eight most recent quarters, the latest of which ended December 31, 2020. Our quarterly operating results
have historically fluctuated significantly and may continue to fluctuate significantly in the future. Therefore, we believe that past
operating results and period to period comparisons should not be relied upon as an indication of the Company's future performance.

 

	 	 	(unaudited)	 
	 	 	Dec-20	 	 	Sep-20	 	 	Jun-20	 	 	Mar-20	 	 	Dec-19	 	 	Sep-19	 	 	Jun-19	 	 	Mar-19	 
	Revenue	 	 	7,775,674	 	 	 	8,172,800	 	 	 	8,253,015	 	 	 	7,548,204	 	 	 	6,096,550	 	 	 	6,451,077	 	 	 	6,189,458	 	 	 	6,359,223	 
	Net income (loss)	 	 	(3,857,540	)	 	 	(345,862	)	 	 	(936,531	)	 	 	(6,005,373	)	 	 	(2,525,682	)	 	 	291,994	 	 	 	(1,519,355	)	 	 	(771,155	)
	Weighted average number of shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic	 	 	20,341,203	 	 	 	18,494,247	 	 	 	18,364,354	 	 	 	15,092,939	 	 	 	10,848,296	 	 	 	9,549,609	 	 	 	9,416,779	 	 	 	9,177,708	 
	Diluted	 	 	20,341,203	 	 	 	18,494,247	 	 	 	18,364,354	 	 	 	15,092,939	 	 	 	10,848,296	 	 	 	10,044,578	 	 	 	9,416,779	 	 	 	9,177,708	 
	Net income (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic	 	 	(0.19	)	 	 	(0.02	)	 	 	(0.05	)	 	 	(0.40	)	 	 	(0.23	)	 	 	0.03	 	 	 	(0.16	)	 	 	(0.08	)
	Diluted	 	 	(0.19	)	 	 	(0.02	)	 	 	(0.05	)	 	 	(0.40	)	 	 	(0.23	)	 	 	0.03	 	 	 	(0.16	)	 	 	(0.08	)

 

Key factors that account for the fluctuation in
quarterly results include the variability in the Company’s revenue due to timing of acquisitions and seasonality of revenue. Seasonality
impacts the transcription services industry in that it is impacted in some cases by summer holiday seasons, such as court closings in
January in Australia, and the Thanksgiving and December holidays in the US, Canada and UK. It also has a slight impact in US
summer period. Our quarterly results may also fluctuate as a result of the various acquisitions which may be completed by the Company
in any given quarter. We may experience variations in our net income/(loss) on a quarterly basis depending upon the timing of certain
expenses or gains, which may include changes in provisions and acquired contract liabilities.

 

Liquidity

 

As of December 31, 2020, we held cash of
$16,835,671, as compared to $1,707,654 at December 31, 2019. We believe that ongoing operations, working capital and associated cash
flows in addition to our cash resources provide sufficient liquidity to support our ongoing business operations and satisfy our obligations
as they become due. If we continue to acquire accretive businesses we may need additional external funding depending upon the size and
timing of the potential acquisitions.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 10

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Below is a summary of our cash provided by (used
in) operating, investing, and financing activities for the periods indicated:

 

	 	 	Year ended December 31,	 
	 	 	2020	 	 	2019	 
	Cash provided by (used in) operating activities	 	 	3,423,083	 	 	 	(557,401	)
	Cash provided by (used in) investing activities	 	 	(6,639,191	)	 	 	(1,782,206	)
	Cash provided by (used in) financing activities	 	 	18,162,619	 	 	 	2,060,690	 
	Net increase (decrease) in cash for the year	 	 	14,946,511	 	 	 	(278,917	)
	Cash, beginning of year	 	 	1,707,654	 	 	 	1,922,768	 
	Effect of foreign exchange	 	 	181,506	 	 	 	63,803	 
	Cash, end of year	 	 	16,835,671	 	 	 	1,707,654	 

 

Cash provided by (used in) operating activities

 

We generated cash of $3,423,083 from
operating activities for the year ended December 31, 2020. The $3,423,083 provided by operating activities resulted from
$11,145,306 in net loss plus $15,341,676 of non-cash adjustments to net loss and $773,287 attributable to movements in non-cash
working capital with changes primarily arising from an increase in accounts receivable and prepaid expenses, offset by an increase
in accounts payable and accrued liabilities.

 

Cash provided by (used in) investing activities

 

For the year ended December 31, 2020,
cash used in investing activities was $6,639,191, which consisted of purchase of property and equipment of $202,297, business
acquisitions of $4,411,500, development costs related to internally generated intangible assets $1,642,783, earnout payout for ASC
and WordZ $377,312 and change in restricted cash of $5,299.

 

Cash provided by (used in) financing activities

 

Cash provided
by financing activities for the year ended December 31, 2020 was $18,162,619, which is mainly a result of proceeds from capital
raise of $13,747,345 net of issuance costs, proceeds from debt of $4,827,175 to complete ASC and WordZ acquisitions, proceeds from the
exercise of stock options and warrants of $10,568 and $1,859,963 respectively, offset by repayment of debt of $838,031, repayment of
lease obligations of $338,276, repayment of interest on lease obligations of $53,549, and repayment of interest on debt of $1,052,576.

 

Debt covenants

 

As of December 31, 2020 we have satisfied
all debt covenants required under the credit facility with Crown Capital Partners. In December 2020, the Company received a waiver
to remove the Fixed Charge Coverage Ratio (“FCCR”) covenant as at December 31, 2020. The waiver essentially removed the
FCCR covenant and the test of FCCR is no longer required as the covenant. Therefore, there is no breach at December 31, 2020. Subsequent
to year end, in March 2021, the Company received a waiver to remove the FCCR covenant for all four quarters of 2021.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 11

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Capital Resources

 

Our objective in managing capital is to ensure
sufficient liquidity to pursue our growth strategy, fund research and development to enhance existing product offerings as well as develop
new ones to maintain our competitive advantage, pursue accretive acquisitions and provide sufficient resources to meet day- to-day operating
requirements, while managing financial risk. We intend to use our operating income and funds on hand to meet funding requirements for
the development and commercialization of our technology products and services based on anticipated market demand and working capital purposes.
Our actual funding requirements will vary depending on a variety of factors, including our success in executing our business plan, the
progress of our research and development efforts, our commercial sales, and our ability to manage our working capital requirements.

 

Our officers and senior management are responsible
for managing the capital and do so through monthly meetings and regular review of financial information. Our Board of Directors is responsible
for overseeing this process. We manage capital to ensure that there are adequate capital resources while maximizing the return to shareholders
through the optimization of the cash flows from operations and capital transactions.

 

Other commitments

 

Commitments include operating leases for office equipment and facilities.
Also, occasionally we structure some of our acquisitions with contingent consideration based on the future performance of the acquired
business. The fair value of contingent consideration recorded, partially in trade and other payables and accrued liabilities of $1,439,906
and long-term contingent consideration of $1,575,528, in our Year End 2020 Consolidated Financial Statements was $3,015,434 at December 31,
2020. Aside from the aforementioned, we do not have any other business arrangements or any equity interests in any non-consolidated entity.

 

Contingent Off-Balance Sheet Arrangements

 

As a general practice, we have not entered into
off-balance sheet financing arrangements.

 

Transactions Between Related Parties

 

Subsequent to the year ended December 31,
2020, the Company granted a non-revolving executive loan (the “Executive Loan”) to Sebastien Paré, President, Chief
Executive Officer and a director of the Company in the aggregate amount of USD$518,431 to: (i) facilitate Mr. Paré exercise
of certain vested outstanding stock options; and (ii) facilitate Mr. Paré repaying certain indebtedness incurred in connection
with Mr. Paré previous exercise of convertible securities of the Company. The Executive Loan matures on February 10,
2028 and bears interest at a rate of 1.0% per annum. The Executive Loan is secured by a pledge of 175,000 common shares in the capital
of the Company held by Sebastien Paré in favour of the Company (the “Share Pledge”). Pursuant to the terms of the Share
Pledge, Mr. Paré has agreed to comply with certain covenants in favour of the Company.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 12

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Conversion of Convertible Notes

 

During the first quarter of 2020, the Company issued 6,395,648 shares
as the result of the exercise of the Conversion Option in respect of Convertible Notes having an aggregate principal amount of approximately
$6,404,319. The Company recognized an aggregate Total Interest Payable of approximately $3,323,948 related to this conversion during the
first quarter of 2020.

 

During the fourth quarter of 2020, the Company issued 390,003
shares a as the result of the exercise of the Conversion Option in respect of Notes having an aggregate principal amount of
approximately $388,615. The Company recognized an aggregate Total Interest Payable of approximately $179,850 related to this
conversion during the fourth quarter of 2020.

 

Critical Accounting Policies and Estimates

 

General

 

The preparation of the financial statements requires
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure
of contingent assets and liabilities. These estimates and assumptions are affected by management’s application of accounting policies
and historical experience, and are believed by management to be reasonable under the circumstances. Such estimates and assumptions are
evaluated on an ongoing basis and form the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results could differ significantly from these estimates.

 

Our significant accounting policies are fully described in Note 3 to
our financial statements for the years ended December 31, 2020 and 2019 which are available on SEDAR (www.sedar.com). Certain accounting
policies are particularly important to the reporting of our financial position and results of operations, and require the application
of significant judgment by our management. An accounting policy is deemed to be critical if it requires an accounting estimate to be made
based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different, estimates that reasonably
could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could have a material impact
on the financial statements. We believe that there have been no significant changes in our critical accounting estimates for the twelve
months ended December 31, 2020 from the years presented in our annual financial statements for the years ended December 31,
2019 and 2018.

 

Management believes the following critical accounting policies and
estimates reflect the more significant estimates and assumptions used in the preparation of our consolidated financial statements.

 

Revenue Recognition

 

Revenue represents the amount of consideration the Company expects
to receive for the delivery of products and services in its contracts with customers, net of discounts and sales taxes. The Company reports
revenue mainly under seven revenue categories being, Technology services, Software license, Support and maintenance, SaaS, Professional
services, and Hardware and other.

 

Revenue is recognized upon transfer of control
of products or services to customers at an amount that reflects the transaction price the Company expects to receive in exchange for the
products or services. The Company’s contracts with customers often include the delivery of multiple products and services, which
are generally capable of being distinct and accounted for as separate performance obligations.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 13

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

The accounting for a contract or contracts with a customer that contain
multiple performance obligations requires the Company to allocate the contract or contracts’ transaction price to the identified
distinct performance obligations.

 

Technology services revenue consists of fees charged
for recurring services provided to our customers. Technology service revenue is recognized when the service is delivered to the customer.
The Company has select customers where a flat rate is charged and revenue is recognized on a monthly basis.

 

Software license revenue is comprised of non-recurring license fees
charged for the use of our software products generally licensed under perpetual arrangements and to a lesser extent sale of third - party
license software. The Company sells on-premise software licenses on a perpetual basis. On-premise software licenses are bundled with software
maintenance and support services for a term. The license component and maintenance and support components are each allocated revenue using
their relative estimated stand-alone selling price (SSP). Revenue from the license of distinct software is recognized at the time that
both the right-to-use the software has commenced and the software has been made available to the customer.

 

Support and maintenance and other recurring revenue primarily consist
of fees charged for customer support on our software products post-delivery. Certain of the Company’s contracts with customers contain
provisions that require the customer to agree to first year support and maintenance in order to maintain the active right to use a perpetual
license. Support and maintenance and other recurring revenue primarily consists of fees charged for customer support on software products
post-delivery.

 

Revenue from software-as-a-service (SaaS) arrangements, which allows
customers to use hosted software over a term without taking possession of the software, are provided on a subscription basis. Revenue
from the SaaS arrangement, which includes the hosted software and maintenance is recognized ratably over the term of the subscription.

 

Professional service revenue consists of fees charged for customization,
implementation, integration, training and ongoing services associated with our software products and technology services.

 

Professional services are typically billed on a time and material basis
and revenue is recognized over time as the services are performed. For professional services contracts billed on a fixed price basis,
revenue is recognized over time based on the proportion of services performed.

 

Hardware revenue include the resale of third party hardware that forms
part of the overall customer solutions. Hardware revenue is recognized when the goods are shipped and received by the customer.

 

Business combinations

 

IFRS 3, Business Combinations (“IFRS 3”), requires business
combinations to be accounted using the acquisition method. Under this method, the cost of an acquisition is measured as the aggregate
of the consideration transferred, measured at acquisition date fair value and the amount of any non- controlling interest in the acquiree.

 

When the Company acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and designation based on the facts and circumstances at the
acquisition date. Business acquisition costs incurred are expensed and included in transaction costs. Measurement period adjustments
are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one
year from the acquisition date) about facts and circumstances that existed at the acquisition date. The excess of (i) the
consideration transferred, the amount of any non- controlling interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the (ii) fair value of the net identifiable assets acquired is recorded as
goodwill.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 14

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Goodwill arising on an acquisition of a business is carried at cost
as established at the date of acquisition of the business less accumulated impairment losses, if any. For the purposes of impairment testing,
goodwill is allocated to each of the Group’s CGUs that is expected to benefit from the synergies of the combination.

 

A CGU 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 CGU is less than
its 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 unit. Any impairment loss for goodwill is recognized
directly in the consolidated statements of loss and comprehensive loss. An impairment loss recognized for goodwill is not reversed in
subsequent periods.

 

On disposal of the relevant CGU, the attributable amount of goodwill
is included in the determination of the profit or loss on disposal. Determining whether goodwill is impaired requires an estimation of
the higher of fair value less costs of disposal and value in use of the CGUs to which goodwill has been allocated. The value in use calculation
requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in
order to calculate present value.

 

Acquired intangible assets

 

Our intangible assets consist of customer relationships, technology,
non-compete and brand acquired in a business combination. These intangible assets are recorded at their fair value at the acquisition
date. We use the income approach to value acquired customer relationships and technology intangible assets, which are the two material
intangible asset categories reported in the financial statements.

 

We use the income approach as a valuation technique that calculates
the fair value of an intangible asset based on the present value of future cash flows that the asset can be expected to generate over
its remaining useful life. The discounted cash flow (“DCF”) is the methodology used, which is a form of the income approach
that begins with a forecast of the annual cash flows a market participant would expect the subject intangible asset to generate over a
discrete projection period. The future cash flow for each of the years in the discrete projection period are then converted to their present
value equivalent using a rate of return appropriate for the risk of achieving the intangible assets’ projected cash flows, again,
from a market participant perspective. The Company relies on the relief-from-royalty method to value the acquired technology and brand
and the Multi-Period Excess Earnings of (“MEEM”) method to value customer relationship assets. After initial recognition,
intangible assets are measured at cost less accumulated amortization and impairment losses.

 

We amortize intangible assets with finite useful lives on a straight-line
basis over their estimated useful lives. The estimated useful life for customer relationships is five to eight years, the estimated useful
life for technology is five years, the estimated useful life for non-compete is based on the term agreement and the estimated useful life
for brand is five years to indefinite. Our amortization methods, useful lives and residual values are reviewed at each financial year
end and adjusted prospectively if appropriate.

 

We test our intangible assets with finite useful lives for impairment
annually and whenever there is an indication that the asset may be impaired. An impairment loss is recognized if the recoverable amount
of the asset is less than the carrying amount. The recoverable amount is the higher of fair value less costs to sell and value in use.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 15

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Estimate of contingent consideration

 

We measure the contingent consideration payable in a business combination
at the estimated fair value at each reporting date. The fair value is estimated based on the range of possible outcomes and our assessment
of the likelihood of each outcome.

 

Accounting for Income Taxes

 

The income tax provision comprises current and deferred tax. Income
tax is recognized in the consolidated statements of loss and comprehensive loss except to the extent that it relates to items recognized
directly in equity, in which case the income tax is also recognized directly in equity.

 

Current tax is the expected tax payable on the taxable income for the
year, using tax rates enacted, or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect
of previous years.

 

Deferred tax is determined on a non-discounted basis using tax rates
and laws that have been enacted or substantively enacted at the end of the reporting period and are expected to apply when the asset is
realized or liability is settled. Deferred tax assets are recognized for deductible temporary differences, unused tax losses and other
income tax deductions to the extent that it is probable the Company will have taxable income against which those deductible temporary
differences, unused tax losses and other income tax deductions can be utilized. The extent to which deductible temporary differences,
unused tax losses and other income tax deductions are expected to be realized is reassessed at the end of each reporting period.

 

In a business combination, temporary differences arise as a result
of differences in the fair values of identifiable assets and liabilities acquired and their respective tax bases. Deferred tax assets
and liabilities are recognized for the tax effects of these differences. Deferred tax assets and liabilities are not recognized for temporary
differences arising from goodwill or from the initial recognition of assets and liabilities acquired in a transaction other than a business
combination which do not affect either accounting or taxable income or loss.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 16

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Reconciliation of Non-IFRS Measures

 

We believe that securities analysts, investors
and other interested parties frequently use non-IFRS measures in the evaluation of performance. Management also uses non-IFRS measures
in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability
to meet our capital expenditure and working capital requirements.

 

The following is a reconciliation of Net Loss
to Adjusted EBITDA, the most directly comparable IFRS measure for the year ended December 31, 2020 and 2019:

 

	 	 	Three months ended December 31	 	 	Year ended December 31	 
	 	 	2020	 	 	2019	 	 	2020	 	 	2019	 
	Net Loss	 	 	(3,857,540	)	 	 	(2,525,682	)	 	 	(11,145,306	)	 	 	(4,524,198	)
	Add:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Depreciation	 	 	98,632	 	 	 	122,753	 	 	 	445,995	 	 	 	528,484	 
	Amortization	 	 	1,431,855	 	 	 	807,852	 	 	 	4,813,248	 	 	 	2,973,945	 
	Interest expense	 	 	491,848	 	 	 	403,153	 	 	 	4,934,517	 	 	 	1,549,904	 
	Current income tax expense	 	 	(565,707	)	 	 	93,580	 	 	 	106,986	 	 	 	93,580	 
	Deferred income tax recovery	 	 	(968,126	)	 	 	5,575	 	 	 	(1,051,018	)	 	 	5,575	 
	EBITDA	 	 	(3,369,038	)	 	 	(1,092,769	)	 	 	(1,895,578	)	 	 	627,290	 
	Accretion and other financing expense	 	 	482,849	 	 	 	219,751	 	 	 	1,216,949	 	 	 	916,734	 
	(Gain) loss on revaluation of conversion feature liability	 	 	834,036	 	 	 	(735,743	)	 	 	1,308,440	 	 	 	(2,330,964	)
	Loss on repayment of long-term debt	 	 	207,657	 	 	 	-	 	 	 	1,497,804	 	 	 	-	 
	Impairment of goodwill and intangibles	 	 	2,258,369	 	 	 	-	 	 	 	2,258,369	 	 	 	-	 
	Other expense (income)	 	 	(7,886	)	 	 	762,345	 	 	 	(10,373	)	 	 	761,235	 
	Business acquisition costs	 	 	-	 	 	 	484,387	 	 	 	19,058	 	 	 	484,387	 
	Stock-based compensation	 	 	87,802	 	 	 	(28,740	)	 	 	725,316	 	 	 	195,113	 
	Foreign exchange (gain) loss	 	 	152,885	 	 	 	54,170	 	 	 	(132,306	)	 	 	217,040	 
	Adjusted EBITDA	 	 	646,674	 	 	 	(336,599	)	 	 	4,987,679	 	 	 	870,835	 

 

Internal Controls over Financial Reporting and
Disclosure Controls and Procedures 

 

In accordance with National Instrument (“NI”)
52-109 (Certification of Disclosure in Issuer’s Annual and Interim Filings), the Company's Chief Executive Officer (“CEO”)
and Chief Financial Officer (“CFO”) file a Venture Issuer Basic Certificate with respect to the financial information contained
in the financial statements and accompanying Management’s Discussion and Analysis. The Venture Issuer Basic Certification includes
a ‘Note to Reader’ stating that the CEO and CFO do not make any representations relating to the establishment and maintenance
of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 17

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

As part of our corporate governance
practices, internal controls over financial reporting (“ICFR”) and disclosure controls and procedures
(“DC&P”) have been designed. There has been no formal evaluation of the operation of these controls. The Company has
designed its ICFR to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with IFRS. Management works to mitigate the risk of a material misstatement in
financial reporting; however, a control system, no matter how well conceived or operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.

 

The Company’s DC&P have been designed
to ensure that information required to be disclosed by VIQ Solutions is accumulated and communicated to the Company’s management
as appropriate to allow timely decisions regarding required disclosure. It should be noted that while the Company's CEO and CFO believe
that the Company's DC&P provide a reasonable level of assurance that they are effective, they do not expect that the DC&P or ICFR
will prevent all errors or fraud. There have been no material changes to the internal controls of the Company for the three and twelve
months ended December 31, 2020.

 

Risk Factors

 

COVID-19: COVID-19 was declared
a global pandemic by the World Health Organization on March 11, 2020. Governments around the world have enacted emergency measures
to combat the spread of the virus. These measures which include the implementation of travel bans, self-imposed quarantine periods and
social distancing and closure of businesses have caused material disruption to businesses resulting in an economic slowdown. Governments
and central banks have responded with significant monetary and fiscal interventions designed to stabilize the financial markets. The duration
and impact of the COVID-19 outbreak is unknown at this time and it is not possible to reliably estimate the duration and severity of these
developments.

 

The Company is closely monitoring the impact of
COVID-19 on all aspects of its business.

 

The pandemic may also have an adverse impact on
many of the Company’s customers, including their ability to satisfy ongoing payment obligations to the Company, which could increase
the Company’s bad debt exposure. The future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly
evolving. It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affected and the resulting economic
impact may continue to adversely affect the Company’s results of operations, cash flows and financial position as well as its customers
in future periods, and this impact could be material.

 

The Governments of various jurisdictions in which
we have operations have approved legislation and taken administrative actions intended to aid businesses that have been adversely impacted
by COVID-19, including making grants or credits available to eligible entities to subsidize or offset qualifying expenses, including employee
wages and associated costs, office rent, utilities, in each case subject to limits and other specified criteria. During the twelve months
ended December 31, 2020, we determined that we qualify for an estimated aggregate amount of $4,034,313 of grants from various government
authorities, and recognized such amounts as a reduction in Cost of Sales of $2,830,986 and Selling and Administrative expenses of $1,203,327
during the twelve months ended December 31, 2020. We have either submitted, or expect to submit, claims for such grants. As at December 31,
2020, the amount of grants receivable totaled $69,876. We will continue to evaluate all applicable government relief programs and intend
to apply for subsequent application periods, if we meet the qualification criteria. There can be no assurance that COVID-19 related governmental
assistance to offset our costs will be available in Q1 2021 (or thereafter), and if so whether we will qualify for or receive any such
assistance.

 

Cash-flow: VIQ Solutions'
business operations are subject to all of the risks inherent in the establishment and maintenance of a developing business
enterprise, such as competition and viable operations management. The future earnings and cash flow from operations of the
Company are dependent, in part, on its ability to further develop and market its products. There can be no assurances that the
Company will grow and achieve profitability. The operations of VIQ Solutions have been funded to date by external financing and if
sufficient cash flow from operations or earnings is not generated in the future, additional financing might be required.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 18

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Transition to SaaS Revenue: The
Company is in the process of transitioning its software product offerings from license sales to a SaaS offering. This may cause revenue
levels to decline compared to prior periods. License sales allow the Company to recognize revenue upon the initial sale of the software
to a client. Revenues from SaaS are earned over a period of time contracted with the client and their use of the software. Initial SaaS
revenue will be lower but over the course of the contract will generally be cumulatively higher compared to license sales.

 

Fluctuations in Periodic Results: The
Company's operating results can vary substantially from period to period. Planned operating expenses are normally targeted to planned
revenue levels for the period and are incurred equally throughout the period. If expenses remain relatively fixed, but the Company's revenues
are less than planned in any quarter, the Company's operating results would be adversely affected for that quarter. In addition, incurring
unplanned expenses could adversely affect operating results for the period in which such expenses are incurred. Failure to achieve periodic
revenue, earnings, and other operating and financial results could result in an immediate and adverse effect on the market price of the
Company's common shares. The Company may not discover, or be able to confirm, revenue or earnings shortfalls until the end of a quarter,
which could result in a greater immediate and adverse effect on the price of the common shares.

 

Additional Financing and Access to Capital:
The Company may need to raise additional funds to bring its potential products to market, enhance our marketing capabilities,
and pursue potential future acquisitions. The Company's future capital requirements will depend on many factors, including continued progress
in its research and development programs, competing technological and market developments, the cost of production scale-up, effective
commercialization activities and arrangements and other factors not within the Company's control. The Company may seek additional funding
through public or private financings.

 

Identify and Acquire Suitable Acquisitions:
The Company may not be able to identify suitable new acquisitions that are available to purchase at a reasonable value. Even if
a suitable acquisition can be identified, the acquisition may not proceed if suitable terms cannot be negotiated. When conducting due
diligence on a potential acquisition, it cannot be assured that all the risks and costs inherent in the business being acquired will be
identified. If an acquisition of an identified business were to proceed in which a portion or all of the consideration consisted of cash,
additional funding may be required through public or private financings if internally generated cash resources are not sufficient.

 

Successfully Integrate Acquired Businesses:
Integration of completed business acquisitions and any future acquisitions involves a number of special risks, including the following:

 

		·	Failure to integrate successfully the personnel, information systems, technology
and operations of the acquired business;

		·	Failure to maximize the potential financial and strategic benefits of the
acquisition;

		·	Failure to realize the expected synergies of the acquired business;

		·	Possible impairment of relationships with employees and clients as a result
of any integration of new businesses and management personnel;

		·	Impairment of goodwill; and

		·	Reductions in future operating results from the amortization of intangible
assets.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 19

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Future acquisitions are accompanied by the risk
that obligations and liabilities of an acquired business may not be adequately reflected in the historical financial statements of the
business and the risk that historical financial statements may be based on assumptions, which are incorrect or inconsistent with the Company’s
assumptions or approach to accounting policies. The acquisition and integration of businesses may not be managed effectively and any failure
to do so could lead to disruptions in the overall activities of the Company, a loss of clients and revenue, and increased expenses. The
Company may acquire contingent liabilities in connection with the acquisitions of business, which may be material. Best efforts are used
to identify and estimate these contingent liabilities and the likelihood that they will materialize but, these estimates could differ
materially from the liabilities actually incurred.

 

Competition: The Company competes
with a number of firms in various business segments. Competitors in Courts, for example, are different from the ones we are competing
against in public safety, medical, and legal. Some of these companies have greater financial, technological, and personnel resources than
those of the Company.

 

International
Operations: The Company's operations are currently located in Canada, the United States, and Australia and its products and services
are sold internationally. There are certain risks inherent in international operations including, but not limited to, remote management,
unexpected changes in regulatory requirements, export restrictions, tariffs and other trade barriers, difficulties in staffing and managing
foreign operations, longer payment cycles, problems in collecting accounts receivable, fluctuations in currency exchange rates, and potential
adverse tax consequences, which could have a materially adverse effect on the Company's business, operating results, and financial condition.

 

Proprietary Intellectual Property: The
Company relies on protecting its proprietary intellectual property in part through confidentiality agreements with its corporate resellers,
strategic partners, employees, consultants and certain contractors. There can be no assurance that these agreements will not be breached,
that the Company will have adequate remedies for any breach, or that the Company's trade secrets will not otherwise become known or independently
discovered by its competitors. It is possible that the Company's products or processes will infringe, or will be found to infringe, on
patents not owned or controlled by the Company. If any relevant claims of third-party patents are upheld as valid and enforceable, the
Company could be prevented from practicing the subject matter claimed in such patents or would be required to obtain licenses or redesign
its products and processes to avoid infringement. There can be no assurance that such licenses would be available at all or on terms commercially
reasonable to the Company or that the Company could redesign its products or processes to avoid infringement. Litigation may be necessary
to defend against claims of infringement or to protect trade secrets. Such litigation could result in substantial costs and diversion
of management efforts regardless of the results of such litigation and an adverse result could subject the Company to significant liabilities
to third parties, require disputed rights to be licensed or require the Company to cease using such technology.

 

Product Liability Exposure: The
Company faces an inherent business risk of exposure to product liability and other claims in the event that the development or use
of its technology or prospective products is alleged to have resulted in adverse effects. While the Company has taken, and will
continue to take, what it believes are appropriate precautions, there can be no assurance that it will avoid significant liability
exposure. Although the Company currently carries product liability insurance, there can be no assurance that the Company has
sufficient coverage or can obtain sufficient coverage at a reasonable cost. An inability to obtain product liability insurance at an
acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of
products developed by the Company. A product liability claim could have a material adverse effect on the Company's business
financial condition and results of operations.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 20

 

     

     

    

 

VIQ SOLUTIONS
INC.

 

VIQ Solutions Inc.

Management’s Discussion and Analysis of Financial Condition
and

Results of Operations for 2020

 

Volatility of Stock Price and Absence of
Dividends: The market price of the Company's common shares, like that of the common shares of many other software companies, has
been and is likely to be somewhat volatile. Factors such as the Company’s strategic alliances or its competitors', announcements
of technological innovations or new products by the Company or its competitors, governmental regulatory actions, developments with the
Company's collaborators, developments concerning patent or other proprietary rights of the Company or its competitors (including litigation),
period-to-period fluctuation of the Company's operating results, changes in estimates of the Company's performance by securities analysts,
market conditions for shares of software companies in general and other factors not within the control of the Company could have a significant
adverse impact on the market price of the Company’s common shares. The Company has never paid cash dividends on its common shares
and does not anticipate paying any cash dividends in the foreseeable future.

 

Foreign Currency Fluctuations: Our
monetary assets and liabilities denominated in currencies other than the United States dollar will give rise to a foreign currency gain
or loss reflected in our comprehensive earnings. To the extent the Canadian dollar or Australian dollar weakens against the United States
dollar, we may incur foreign exchange losses. Such losses would be included in our financial results and, consequently, may have an adverse
effect on our share price. As we currently have a global client base, a significant portion of our income is in US dollars and Australian
dollars. However, a significant part of our expenses are currently generated in Canadian dollars, and we expect this will continue for
the foreseeable future. The exchange rates between the Canadian dollar, the US dollar and the Australian dollar are subject to daily fluctuations
in the currency markets and these fluctuations in market exchange rates are expected to continue in the future. Such fluctuations affect
both our consolidated revenues as well as our consolidated costs. Also, changes in foreign exchange rates may affect the relative costs
of operations and prices at which we and our foreign competitors sell products in the same market. We do not currently have any currency
hedging through financial instruments.

 

Disclosure of Outstanding Share
Data

 

VIQ Solutions Inc. common shares trade on
the TSX Exchange under the symbol “VQS” and VQSLF on the OTCQX in the United States. The Company is authorized to issue
an unlimited number of common shares without par value. As at April 14, 2021 there were (i) 24,893,638 common shares
issued and outstanding, (ii) 939,600 stock options outstanding with a weighted average exercise price per common share of $2.84
CAD expiring between 2021 and 2025, (iii) 66,667 deferred share units outstanding with an average exercise price per common
share of $1.20 CAD with no expiry date.

 

Subsequent Events

 

The Company received proceeds of approximately
$2,307,000 from the exercise of 1,123,878 warrants and 178,333 stock options in January and February of 2021. The exercise
prices of the warrants ranges from C$2.06 to $3.24 and the exercise prices of the stock options ranges from C$1.20 to C$2.20.

 

	 	 
	MANAGEMENT DISCUSSION & ANALYSIS	PAGE 21

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