Carl Data : Q2 MD&A for Period Ended December 31, 2021

CARL DATA SOLUTIONS INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2021

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CARL DATA SOLUTIONS INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2021

General

This Management's Discussion and Analysis ("MD&A") of Carl Data Solutions Inc. (the "Company") is dated March 1, 2022 and provides a review of the Company's financial results, from the viewpoint of management, for the period ended December 31, 2021 ("F2022-Q2") compared to the year ended June 30, 2021 ("F2021").

The following information should be read in conjunction with the Company's audited consolidated financial statements with accompanying notes as at and for the year ended June 30, 2021 and the Company's condensed consolidated interim financial statements for the period ended December 31, 2021, which were prepared in accordance with International Financial Reporting Standards ("IFRS").

All dollar figures are expressed in Canadian dollars unless otherwise stated. These documents and additional information on the Company are available on the SEDAR website at www.sedar.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this document constitute "forward-looking statements". When used in this document, the words "may", "would", "could", "will", "intend", "plan", "propose", "anticipate" and "believe", are intended to identify forward-looking statements. Such statements reflect the Company's "forecast", "estimate", "expectation" and similar expressions as they relate to the Company's current views with respect to future events and are subject to certain risks, uncertainties and assumptions.

The forward-looking statements contained in this MD&A are made as of the date hereof and represent the Company's views as of the date of this document. While the Company believes that the expectations reflected in the forward-looking statements and information contained herein are reasonable, no assurance can be given that these expectations, or the assumptions underlying these expectations, will prove to be correct. The Company acknowledges that subsequent events and developments may cause the views expressed herein to change, however, the Company has no intention and undertakes no obligation to update, revise or correct such forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Therefore, there can be no assurance that forward-looking statements contained herein will prove to be accurate as actual results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Description of Business

Carl Data Solutions Inc. was incorporated under the Business Corporations Act (British Columbia) on January 17, 2014. The Company is an Industrial Internet of Things ("IIoT") and Big Data as a Service ("BDaaS") company that provides next-generation collection, storage and analytics solutions for data-centric organizations. Through its subsidiaries Astra Smart Systems Corp. and FlowWorks Inc., the Company helps clients analyze and model environmental data through a robust end-to-end network of custom sensor arrays combined with SaaS-based monitoring, reporting, and predictive modeling applications. The Company works with new cloud-based mass storage services and Artificial Intelligence ("AI") predictive analytics tools to provide the scalability required to effectively monitor vast amounts of data collected by both government and industrial customers. The Company's software solutions save customers time and money by aggregating information from any sensor or source to create decision support systems that offer deep insights into protecting infrastructure and assets with both real-time and AI-enabled predictive capabilities.

The Company is a public company that is listed on the Canadian Securities Exchange ("CSE") (under the symbol: CRL), the

Frankfurt Stock Exchange (under the symbol: 7C5) and the OTCQB (under the symbol: CDTAF). The head office and principal address of the Company is located at Suite 488 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7. The Company's condensed consolidated interim financial statements include the financial statements of the following subsidiaries:

Company	Place of Incorporation	Effective Interest
Extend to Social Media Inc. ("ETS")	British Columbia	100%
FlowWorks Inc. ("FlowWorks")	Washington, USA	100%
Carl Data Solutions PL ("Carl PL")	Poland	100%
i4C Innovation Inc. ("i4C")	British Columbia	100%
Astra Smart Systems Corp. ("Astra")	British Columbia	100%

The Company has all the elements in place to successfully take on the Industrial Internet of things (IIoT) space as required for a wider variety of municipal and industrial infrastructure customers.

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CARL DATA SOLUTIONS INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2021

The Company can respond to the demands and visions of individual utilities within a municipal infrastructure environment delivering smart water and waste solutions that harness not only the world of IIoT sensors and on-site data loggers that are connected to the cloud, but also artificial intelligence algorithms and global predictive data to overlay future demands and imponderables such as weather fluctuations and product of service utilization.

These solutions have been adopted by numerous municipal and industrial infrastructure customers across the US and Canada and are performing well, collecting enormous data sets from IIoT sensors and a myriad of third-party end point devices.

With its proven analytics and AI capabilities, the Company is in a good position for strong growth in new vertical markets such as renewable energy utilities, ports, airports, transportation and smart cities.

Going Concern

The Company's condensed consolidated interim financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as recorded in the audited consolidated financial statements. The Company's consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. As at December 31, 2021, the Company had not achieved profitable operations, had accumulated a deficit of $26,349,036 since inception and expects to incur further operating losses in the development of its business. The Company's ability to continue as a going concern is dependent upon the ability to develop its business units, develop marketable software, potentially find, acquire and develop various other business segments with growth potential, its ability to obtain the necessary financing to carry out this strategy and to meet its corporate overhead needs and discharge its liabilities as they come due. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. These events and conditions indicate a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

Recent Events & Overall Performance

Completed Private Placements and Share Issuances

During and subsequent to the period ended December 31, 2021, the Company did not complete any share transactions.

Granting of Stock options

During the period ended December 31, 2021, the shareholders of the Company adopted a stock option plan to replace the plan originally adopted on January 22, 2015. Under the terms of this plan, the total number of share purchase options to be granted and outstanding may not exceed 20% of the total issued and outstanding common shares of the Company at the date of grant. Options may be granted with an exercise price equal to the market price of the common shares less any permitted discount on the grant date, vest according to privileges set at the time the options, have a minimum price of $0.10 and are granted and expire no later than five years from the date of grant.

During and subsequent to the period ended December 31, 2021, the Company did not grant any stock options.

Organization structure changes

On July 19, 2021, Jean Charles Phaneuf, CEO of the Company since January 8, 2021, was appointed as a director of the Company, replacing David Gregory Johnston who resigned as a director but remains as President of the Company.

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CARL DATA SOLUTIONS INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2021

Summary of Quarterly Results

Key financial information for the quarters spanning the two most recent fiscal years is summarized as follows, reported in Canadian dollars:

		December 31,		September 30,		June 30,		March 31,
		2021		2021		2021		2021
Revenue	$	362,880	$	380,970	$	539,942	$	603,676
Operating expenses		977,494		1,070,303		1,608,265		1,675,079
Loss for the period		(615,921)		(691,270)		(1,078,080)		(2,849,394)
Basic and Diluted Loss per share		(0.00)		(0.01)		(0.01)		(0.03)
Assets		2,666,572		3,363,557		4,187,057		4,886,611
Liabilities		973,606		1,094,351		1,406,296		1,437,218
Shareholders' Equity		1,692,966		2,269,206		2,780,761		3,449,393

		December 31,		September 30,		June 30,		March 31,
		2020		2020		2020		2020
Revenue	$	673,848	$	813,874	$	962,974	$	631,531
Operating expenses		1,166,286		1,059,331		1,345,178		1,149,108
Loss for the period		(495,101)		(202,900)		(867,047)		(545,589)
Basic and Diluted Loss per share		(0.01)		(0.00)		(0.01)		(0.01)
Assets		1,766,391		1,782,913		2,857,168		3,546,572
Liabilities		3,192,805		3,079,685		3,963,057		4,405,091
Shareholders' Equity (Deficiency)		(1,426,414)		(1,296,772)		(1,105,889)		(858,519)

Discussion of Operations

Overview

Expenses for the six-month period ended December 31, 2021 of $2,047,797 were largely in line with the comparable period's operating expenditures of $2,225,617. Comparing the financial results and position for the period ended December 31, 2021 to the period ended December 31, 2020 reveals decreases in several non-cash items related to depreciation and amortization of assets and increases in several items related to the expansion of the number of employees and consultants that have been assembled to advance the Company's strategy utilizing the funds raised in the February 2021 unit private placement. Revenue decreased with the completion of the Canada's Digital Technology Supercluster (the "Supercluster") related to the Fresh Water Data Commons Project by $743,872 from $1,487,722 in the period ended December 31, 2021 to $743,850 in the period ended December 31, 2021. Cash on hand decreased by $1,349,599 from $2,903,056 on June 30, 2021 to $1,553,457 on December 31, 2021. Loans payable and convertible notes together increased by $7,443 from a total of $503,577 on June 30, 2021 to $511,020 on December 31, 2021. Total comprehensive loss for the period increased by $584,805 from $717,553 in the period ended December 31, 2020 to $1,302,358 in the period ended December 31, 2021 primarily due to lower revenue in the recent quarters. The cash used in operations increased by $396,090 from $875,067 used in the period ended December 31, 2020 to $1,271,157 used in the period ended December 31, 2021. Overall, shareholder equity decreased by $1,087,795 from $2,780,761 at June 30, 2021 to $1,692,966 at December 31, 2021.

Revenue

For the six-month period ended December 31, 2021, the Company generated $743,850 in revenues (2020 - $1,487,722) of which $608,301 (2020 - $671,535) related to revenue generated by FlowWorks, $69,049 related to revenue generated by the Company (2020 - $746,138), and $51,500 (2020 - $70,049) related to revenue generated by ETS. Revenue from FlowWorks is comprised of service fees from its web-based application used for data analysis in addition to set-up fees and custom programming service contracts. The Company commenced its work on a project with the Supercluster project during the latter half of the year ended June 30, 2020 and experienced continued growth of revenue as the project continued. The project reached a conclusion in October 2021.

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CARL DATA SOLUTIONS INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2021

Operating Expenses and Other Items

Operating expenses and other items with significant variances and balances include:

Amortization

Amortization for the period ended December 31, 2021 was $40,252 (2020 - $211,017). The amortization expense decreased substantially for the period ended December 31, 2021 as all but one of the Company's intangible assets were fully amortized as at June 30, 2021.

Computer Hosting Costs

Computer hosting costs for the period ended December 31, 2021 were $133,014 (2020 - $255,046) and decreased substantially with the completion of the Supercluster project. Remaining hosting costs are primarily for services provided by FlowWorks.

Consulting fees

Consulting fees for the period ended December 31, 2021 were $627,267 (2020 - $555,897). Consulting fees are primarily used for management and external sales and business development consultants tasked with advancing the Company's strategy utilizing funds raised in the February 11, 2021 private placement.

Depreciation

Depreciation for the period ended December 31, 2021 was $71,785 (2020 - $130,400) and decreased as a result of the termination of i4C's lease and therefore a reduction in right of use assets as compared to the first quarter of the fiscal year ended June 30, 2021.

Interest

Interest for the period ended December 31, 2021 was $7,190 (2020 - $83,860). Interest is charged on convertible notes and loans payable and decreased as the Company settled most of its outstanding loans and convertible debt during the third quarter of the year ended June 30, 2021.

Investor Relations

Investor relations expense for the period ended December 31, 2021 were $48,940 (2020 - $216,400). Investor relations fees have been comparatively low in preparation of future marketing and public relations expenditure targeted at upcoming product launches.

Office and miscellaneous

Office and miscellaneous costs for the period ended December 31, 2021 were $112,030 (2020 - $57,650). The costs increased substantially with the hiring of several new staff and consultants to carry out the Company's operational strategy.

Professional fees

Professional fees for the period ended December 31, 2021 were $156,345 (2020 - $137,972). Professional fees were higher than the prior year as the Company undertook legal work to help with the expansion of the management team.

Share-based payments

Share-based payments for the period ended December 31, 2021 were $214,563 (2020 - $50,324). The expense relates primarily to stock options granted and vested during previous periods and are not expected to be comparable over the periods as the expense is dependent on the timing of grants and vesting schedules.

Salaries and wages

Salaries and wages for the period ended December 31, 2021 were $462,712 (2020 - $404,013). The increase in salaries and wages, as with consulting above, is primarily a result of the expansion of the Company's team to advance the Company's strategy.

Travel

Travel expenses for the period ended December 31, 2021 were $68,880 (2020 - $16,270). Travel increased from the previous year due to several executives visiting the Company's head office in Vancouver from their residences across Canada and for limited in- person sales meetings and tradeshows within North America.

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