ARHT Media : Managements Discussion & Analysis for the three months ended March 31, 2019 and the three months ended April 30th, 2018

Management's Discussion & Analysis

for the three months ended March 31, 2019 and the three months ended April 30th, 2018

(Expressed in Canadian dollars)

ARHT MEDIA INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2019 and the three months ended April 30, 2018

Date:

May 7, 2019

The following Management's Discussion and Analysis ("MD&A") relates to the financial condition and results of operations of ARHT Media Inc. ("we", "our", "us", "ARHT", "AMI" or the "Company") for the three months ended March 31, 2019 and the three months ended April 30, 2018, and should be read in conjunction with the condensed interim financial statements and related notes for the three months ended March 31, 2019 and the three months ended April 30, 2018 and the audited annual consolidated financial statements and related notes for the eleven months ended December 31, 2018 and the twelve months ended January 31, 2018. The condensed interim consolidated financial statements and related notes of ARHT have been prepared in accordance with International Financial Reporting Standards ("IFRS"). Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval ("SEDAR") and are available online under our profile at www.sedar.com.

On January 4, 2019, the Company filed a notice that it had changed its year end from January 31 to December 31 to match the year end of the Company's industry peers and to allow the Company's financial results to be released at the same time as other companies in the industry..

The financial statements and comparatives for this report and fiscal 2019 will present as follows:

• Q1 2019 - 3 months ended March 31, 2019 with comparatives for the 3 months ended April 30, 2018.
• Q2 2019 - 6 months ended June 30, 2019, with comparatives for the 6 months ended July 31, 2018.
• Q3 2019 - 9 months ended September 30, 2019, with comparatives for the 9 months ended October 31, 2018.
• Q4 2019 - 12 months ended December 31, 2019, with comparatives for the 11 months ended December 31, 2018.

The Audit Committee of the Company has reviewed this MD&A and the condensed interim consolidated financial statements for the three months ended March 31, 2019 and the three months ended April 30, 2018, and the Board of Directors approved these documents prior to their release.

CAUTIONARY STATEMENTS

This MD&A includes "forward‐looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of Management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward‐looking statements. While these forward‐looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. Forward‐looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward‐looking statements, including, but not limited to, the following:

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ARHT MEDIA INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2019 and the three months ended April 30, 2018

• The Company's strategies and objectives
• General business and economic conditions
• Changes in technology
• The emergence of additional competitors in the industry
• Financial stability of the Company's customers
• Ability for the Company to keep key employees and customers
• The Company's ability to generate positive cash flow
• The Company's ability to manage growth with respect to a new business opportunity
• The Company's ability to raise capital

Readers are cautioned that the preceding lists of risks, uncertainties, assumptions and other factors are not exhaustive. Events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in or implied by these forward-looking statements. Due to the risks, uncertainties and assumptions inherent in forward‐ looking statements, investors in securities of the Company should not place undue reliance on these forward‐looking statements. The forward‐looking statements contained in this document are made as of the date hereof.

Overview

ARHT Media is the global leader and inventor of the best holographic telepresence experience. Our patented technology allows for the capture, transmission and display of the most lifelike digital human holograms. They are capable of being beamed onto virtually any stage in the world and displayed live for two-way interactions with an audience. They give the viewer an immersive experience that makes them feel as though the speaker is there. The Company's technology is protected by U.S. Patent No. 9,581,962.

ARHT Media trades under the symbol "ART" on the Toronto Venture Stock Exchange as a Tier2 Technology Issuer. The Company has three subsidiaries - ARHT Media (USA) Inc., Be There Networks Inc and ARHT Media (UK) Limited. Both Be There Networks Inc. and ARHT Media (UK) Limited were incorporated in Q1 2019, on January 24, 2019 and February 28, 2019, respectively. The Company has offices in Toronto and demonstration studios in Toronto, New York, Los Angeles and London, UK.

In 2016, the Company entered into an agreement with NetDragon Websoft Inc ("NetDragon") to establish a joint venture to operate in select Asia Pacific markets (the "Joint Venture"). ARHT Asia Limited ("ARHT Asia") was incorporated in Hong Kong on June 22, 2016. NetDragon owns and exercises control over 51% of ARHT Asia and the Company owns 49%. The Joint Venture has demonstration studios in Hong Kong and Fuzhou, China.

The Joint Venture holds an exclusive license to use ARHT's technology for a period of five years in countries within the Asia Pacific region to be mutually agreed upon with NetDragon. The Joint Venture also holds a nonexclusive license to use NetDragon's 99U (mobile instant messaging and learning platform) and NetDragon app store (independent/proprietary app store) technology for a period of five years in countries within the Asia Pacific region also to be mutually agreed upon.

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ARHT MEDIA INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2019 and the three months ended April 30, 2018

Outlook and Strategy

Sales & Marketing:

Since the beginning of 2018, the Company has been aggressively marketing its technology offering to a global list of Fortune 500 companies and educational institutions in various business segments, including corporate-use, education, entertainment, convention centers, hotels & meeting rooms, media and sports verticals. The positive feedback from this group has been encouraging and a robust and growing pipeline of opportunities is emerging, which management intends to convert to significant revenue growth in the upcoming quarters.

Business Model:

Historically, the Company had been focused on the sale of its products and services on a one-offevent-driven basis, which has been an ideal way to market and showcase our products. Going forward ARHT's business model will consist of a combination of events (but not the high-risk event production business) and hardware sales, complemented by recurring revenues associated with the use of the Company's proprietary software through broadcast fees and annual license fee for access to the network and software upgrades. This shift in the business model is expected to significantly increase the Company's revenues long term, providing operating leverage as the network of revenue generating display and capture locations roll out globally. This will also contribute to EBITDA and net earnings growth. Based on recent transactions and preliminary discussions, as well as demonstrations of the technology, there is meaningful interest from a variety of parties and this new business model appears to resonate well within key target verticals.

To achieve our growth business objectives, the Company will focus on the following distribution channels

• MICE - Meetings, Incentives, Conferences and Events This sector is largely served by AV companies, who deliver technology to enhance corporate meetings, training sessions, trade shows and corporate events. In August 2018, the Company licensed their technology to Dorier Inc., the largest AV company in the world.
• Education - This is a large potential market for ARHT Media's current technology suite. Universities, Colleges,
  High Schools and other forms of formal education should all have ARHT Media display and capture suites to deliver the best lecturers and educators to students globally. The museum and science centre markets should also be early adapters of our technology. Holographic technology allows educational institutes to deliver their best professors to the rest of the world. In August 2018, the Company installed the first permanent ARHT Media Capture Studio and Display at Imperial College London. A subsequent launch event in November 2018, generated media coverage in over 350 markets. In December 2018 the Company entered into a global marketing partnership with the Ontario Science Centre to promote ARHT's technologies to museums and science center's worldwide.
• Media and Entertainment- The Company has done demos for executives from most of the major Hollywood studios, and has introduced technology to movie exhibitors from around the world. The Company has also received interest from television networks and the music industry. This sector will take longer to roll out but will be a cornerstone of brand building and is expected to lead to significant recurring revenues. The first two activations in this sector were contracted in Q4 2018 for events in Mexico City and Sao Paulo Brazil with Warner Brothers Pictures, featuring Jason Momoa, star of Aquaman.
• SEPS - Single Events and Professional Services. With our new display technology and business model we have reduced the entry level price of delivering an event from approximately $80k to $25k, even less if delivered through an internal network. We will continue to execute high-profile Single Events, which may be one time or repeated events as they are profitable and a great form of marketing. The Company was recently contracted to install its first permanent Capture Studio at the Los Angeles offices of global thought leader Peter Diamandis. The Company has executed several events that featured Mr. Diamandis this year.

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ARHT MEDIA INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2019 and the three months ended April 30, 2018

Short Term Priorities:

• Sales - management's focus will be on sales, especially those that build out networks for recurring revenues in the MICE, Education, Media & Entertainment and SEPS verticals.
• Third Party Technical Training & Certification Program - the Company is implementing a program to train third party operators on our capture, display and broadcast technology. The first formal third-partytraining program was completed in March 2019. This is a high priority for the Company as a growing network of third- party technical partners will allow management to reduce delivery costs and meet the growing demand for the execution of events.
• Delivery - developing systems to enable AV partners to incorporate the Company's technology into their events.
• Strategic Partnerships - the Company is exploring strategic partnerships, including re-seller arrangements, that can significantly increase revenues in markets where it does not have an established presence.
• Breakeven - focus on generating positive cash flows by the latter part of 2019.

Highlights for the three months and through the date of this report

• In January 2019, the Company closed the third tranche of its previously announced non-brokered private placement. The Company issued a total of 26,843,335 units at a purchase price on $0.09 for gross proceeds of $2,415,900. Each unit is comprised of one common share of the Company and one common share purchase warrant. Each Warrant will be exercisable to purchase one additional common share of the Company at a price of $0.13 per share for a period of 36 months following the closing. $612,500 of the private placement closed in January 2019, $1,803,400 closed in November and December 2018.
• The Company incorporated two new subsidiaries: Be There Networks Inc. on January 24, 2019 and ARHT Media (UK) Limited on February 28, 2019.
• In April 2019, The Company achieved another tremendous milestone by placing second in the 3rd Annual China (Shenzhen) Innovation & Entrepreneurship International Competition. The Company was initially shortlisted from over 190 Canadian entries during the Toronto competition held in March, 2019, and invited to the final rounds alongside over 130 other innovators from around the world. The Company competed in the Internet of Things category winning second place and RMB 100,000 (approx. $20,000). Over 40 venture capital organizations who participated as judges during the international competition came together to form a venture capital fund pool of RMB25 billion to carry out portfolio investment on outstanding competition projects.
• In April 2019, the Company began operations from its new demonstration studio located in London, UK.
• In May 2019, the Company announced plans to issue up to $800,000 principal amount of secured debentures of the Company. The Debentures will be secured against the assets of the Company and will bear interest at the rate of 12% per annum. The Debentures will mature on the earlier of: (i) 12 months from the date of issuance; and (ii) the date upon which ARHT completes a private placement financing raising gross proceeds of no less than $2 million. The Company will also issue 1,400 warrants per $1,000 principal amount of Debenture. Each warrant will entitle the holder thereof to acquire one common share of the Company at an exercise price of $0.21 for a period of 12 months.

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