Kits Eyecare Ltd. Annual Information Form

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Kits Eyecare Ltd. Annual Information Form KITS EYECARE LTD. ANNUAL INFORMATION FORM For the year ended December 31, 2020 Dated March 29, 2021 TABLE OF CONTENTS INTRODUCTION ............................................................................................................................................. 1 CAUTION REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS ......................................... 1 INDUSTRY METRICS ....................................................................................................................................... 2 CORPORATE STRUCTURE .............................................................................................................................. 3 Name, Address and Incorporation ........................................................................................................... 3 Intercorporate Relationships .................................................................................................................... 3 GENERAL DEVELOPMENT OF THE BUSINESS ................................................................................................ 4 Overview of the Business ......................................................................................................................... 4 Three Year History .................................................................................................................................... 7 RISK FACTORS ................................................................................................................................................ 9 Risks Related to the Company ................................................................................................................ 10 Risks Related to the Ownership of Our Shares ....................................................................................... 40 DIVIDENDS .................................................................................................................................................. 43 CAPITAL STRUCTURE ................................................................................................................................... 44 Common Shares...................................................................................................................................... 44 Preferred Shares ..................................................................................................................................... 44 MARKET FOR SECURITIES ............................................................................................................................ 45 Trading Price and Volume ...................................................................................................................... 45 Prior Sales .......................................................................................................................................... 45 CONTRACTUAL RESTRICTIONS ON TRANSFER ............................................................................................ 46 DIRECTORS AND EXECUTIVE OFFICERS ....................................................................................................... 46 Summary .......................................................................................................................................... 46 Biographical Information Regarding the Directors and Executive Officers ............................................ 47 AUDIT COMMITTEE ..................................................................................................................................... 50 Composition .......................................................................................................................................... 50 Charter .......................................................................................................................................... 50 External Auditor Service Fee .................................................................................................................. 51 CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS ......................................................... 51 PROMOTERS ................................................................................................................................................ 52 LEGAL PROCEEDINGS AND REGULATORY ACTIONS .................................................................................... 52 INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS .............................................. 52 REGISTRAR AND TRANSFER AGENT ............................................................................................................ 53 MATERIAL CONTRACTS ............................................................................................................................... 53 INTERESTS OF EXPERTS ............................................................................................................................... 53 ADDITIONAL INFORMATION ....................................................................................................................... 53 INTRODUCTION Unless otherwise stated in this Annual Information Form, all information is given as of December 31, 2020 and all dollar amounts are expressed in Canadian dollars. All references in this Annual Information Form to the "Company", "KITS", "we", "us" or "our" refer to Kits Eyecare Ltd. together with our subsidiaries, on a consolidated basis. References to “Fiscal 2020” refer to our fiscal year ended December 31, 2020. This Annual Information Form contains certain trademarks, which are protected under applicable intellectual property laws and are our property. Solely for convenience, our trademarks and trade names referred to in this Annual Information Form may appear without the ® or TM symbol, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and trade names. All references to dollars or $ are to Canadian dollars unless otherwise indicated. Certain totals, subtotals and percentages throughout this Annual Information Form may not reconcile due to rounding. CAUTION REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS This Annual Information Form contains "forward-looking information" within the meaning of applicable securities laws in Canada. Forward-looking information may relate to our future financial outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. Forward-looking information is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions in respect of the expansion and enhancement of our optical laboratory for glasses and warehouse facilities; the growth of our business and launch of new technologies; our ability to drive sales growth; our ability to maintain, enhance, and grow within our addressable market; our ability to drive ongoing development and innovation of our exclusive brands and product categories; our ability to continue directly sourcing from third party suppliers and manufacturers; our ability to retain key personnel; our ability to maintain and expand distribution capabilities; our ability to continue investing in infrastructure to support our growth; our ability to obtain and maintain existing financing on acceptable terms; currency exchange and interest rates; the impact of competition; the changes and trends in our industry or the global economy; and the changes in laws, rules, regulations, and global standards are material factors made in preparing forward-looking information and management’s expectations. Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as of the date such statements are made, are subject to known and unknown risks, uncertainties,
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