OneSoft : Management Discussion and Analysis 9 Months ended September 30 2021

2021

Q3

ONESOFT SOLUTIONS INC.

Management's Discussion & Analysis

Three and Nine months ended September 30, 2021

Q3 2021 MANAGEMENT DISCUSSION & ANALYSIS SEPTEMBER 30, 2021

This Management's Discussion and Analysis ("MD&A") is dated November 9, 2021.

INTRODUCTION

This MD&A of the results of operations, cash flows and financial position as at and for the three and nine months ended September 30, 2021, should be read in conjunction with the unaudited, condensed interim consolidated financial statements and accompanying notes for the three and nine months ended September 30, 2021 and the audited consolidated financial statements and notes thereto for the year ended December 31, 2020. The financial statements and additional Company information are available to view on www.sedar.com. References in this MD&A to "OneSoft", the "Company", "OSS", "us", "we", and "our" mean OneSoft Solutions Inc. and its subsidiaries, unless the context otherwise suggests.

The Company's consolidated financial statements are prepared in accordance with International Financial Reporting Standards and include the accounts of OneSoft and its wholly owned subsidiaries, OneBridge Solutions, Inc., OneBridge Solutions Canada Inc. and OneCloudCo Limited. OneSoft's shares trade on the TSX Venture Exchange in Canada, under the symbol "OSS", and are listed on the OTCQB market in the USA, under the symbol "OSSIF".

This MD&A contains forward‐looking information based on certain expectations, projections, and assumptions. This information is subject to many risks and uncertainties, many of which are beyond the Company's control. Users of this information are cautioned that actual results may differ materially. Readers are directed to the "Risks and Uncertainties" on page 12 of this document and to the "Advisory Regarding Forward Looking Information" on page 16.

DEFINITIONS USED IN THIS DOCUMENT

Financial Periods referred to in this document:

• "Fiscal 2021" means the twelve‐month period January 1 through December 31, 2021.
• "H1 2021" means the six‐month period January 1 through June 30, 2021.
• "H2 2021" means the six‐month period July 1 through December 31, 2021.
• "9M 2021" means the nine‐month period January 1 through September 30, 2021.
• "Q1 2021" means the three‐month period January 1 through March 31, 2021.
• "Q2 2021" means the three‐month period April 1 through June 30, 2021.
• "Q3 2021" means the three‐month period July 1 through September 30, 2021.
• "Fiscal 2020" means the twelve‐month period January 1 through December 31, 2020.
• "H1 2020" means the six‐month period January 1 through June 30, 2020.
• "H2 2020" means the six‐month period July 1 through December 31, 2020.
• "9M 2020" means the nine‐month period January 1 through September 30, 2020.
• "Q1 2020" means the three‐month period January 1 through March 31, 2020.
• "Q2 2020" means the three‐month period April 1 through June 30, 2020.
• "Q3 2020" means the three‐month period July 1 through September 30, 2020.

"ARR" means annual recurring revenue which includes revenue from SaaS subscription, data ingestion, Microsoft Azure and specialized functionality module fees associated with CIM, which all typically repeat each month but in varying amounts. ARR is comprised of two components: (a) fixed recurring revenue, which includes CIM subscription fees that remain more or less constant over a contract subscription period; and (b) repeating CIM consumption revenue, which may vary month to month depending upon the number of pipeline inspection files ingested into CIM each month and the consumption of optional software functionality by clients.

"Azure" is Microsoft's cloud computing service which offers a range of software‐as‐a‐service (SaaS), platform‐as‐a‐service (PaaS) and infrastructure‐as‐a‐service (IaaS) options for deploying applications and services on Microsoft‐managed data center infrastructure. OneSoft's software products have been designed to be deployed and operated on Microsoft Azure, the multi‐ faceted, multi‐layered highly secure cloud platform which features ninety plus Cyber security compliance offerings.

"Cognitive Integrity ManagementTM or "CIM" means the Company's software‐as‐a‐service platform that addresses the end‐to‐ end business process flow of oil and gas pipeline integrity processes including assessment planning, integrity compliance, dig management, threat monitoring, data management and analyses of the various datasets that apply to asset integrity.

"CIM Corrosion Management" means the Company's new software functionality under development within CIM to initially address internal corrosion, including the ingestion of corrosion coupon, sampling, pigging, transported material flow velocity and flow mode, and chemical usage data correlated to ILI data to monitor trends, forecast chemical spend, and determine overall program effectiveness. When this module is completed and commercialized CIM users will be able to use CIM Corrosion Management which will be deployed pursuant to the Company's Consumption Economics fee model.

"CIM Risk Management" means the Company's new software functionality under development to embed C‐FER Technologies nine ASME B31.8S threat categories into CIM. The C‐FER probabilistic risk models consist of External Corrosion, Internal Corrosion, Stress Corrosion Cracking, Manufacturing‐Related Defects, Welding/Fabrication Defects, Equipment, Third Party / Mechanical

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Q3 2021 MANAGEMENT DISCUSSION & ANALYSIS SEPTEMBER 30, 2021

Damage, Weather & Outside Force, and Incorrect Operation. When this functionality is completed and commercialized CIM users will be able to use CIM Risk Management which will be deployed pursuant to the Company's Consumption Economics fee model.

"Consumption Economics" means the Company's SaaS deployment and fee model wherein certain software functionality will optionally be accessible for use by CIM users on an as‐required basis. CIM users who elect to utilize the Company's Consumption Economics modules will be charged a fixed monthly fee for access and variable fees based on consumption.

"Deferred Revenue" means prepayments from customers for use of CIM, inclusive of payments received for new contracts offset by CIM fees consumed during the period, which are recognized as earned revenue and it is comprised of "Deferred Revenue - Current", which is expected to be recognized in revenue in the next 12 months and "Deferred Revenue - Non‐current", which is expected to be recognized in revenue after the next 12 months.

"ESG" means Environmental, Social and Governance. ESG criteria are a set of standards for a company's operations that socially conscious investors use to screen potential investments, based on how the company performs as a steward of nature and community.

"IFRS" means International Financial Reporting Standards.

"ILI" means inline inspection [of pipelines]. ILI tools, or "Pigs" (pipeline inspection gauges) are tools equipped with distance measuring and condition measuring devices that are placed in a pipeline and propelled from a launch valve to a receiving valve by the product (typically oil or gas) to inspect pipelines for evidence of internal or external corrosion, deformations, laminations, cracks, or other defects. There are more than 50 tool vendors who provide various measuring technologies such as magnetic flux leakage ("MFL") and ultrasonic ("UT").

"IoT" means the Internet of Things which describes groups of physical objects (each an "IoT Device") that are embedded with sensors, processing ability, software or other technologies that connect with and exchange data with other devices and other systems over the internet. In the pipeline industry, IoT may involve connecting devices such as rectifiers, test posts and leak detection devices to the internet to facilitate remote monitoring and in some cases remote control.

"IP" means intellectual property.

"Management" means the senior executive management team of OneSoft, which include the Company's CEO, COO, CFO and Presidents of the Company's operating subsidiaries.

"Minimally Viable Product" or "MVP" is a core component of the software development methodology described by Eric Ries in his book, The Lean Startup. Utilization of the MVP concept is based on a "build‐measure‐learn" concept to incorporate customer learnings and feedback from the outset to ensure that development resources and efforts expended address only software functionality that is required and desired by customers. OneSoft has used the Lean Startup and MVP methodologiesto develop its solutions throughout its development of the CIM platform.

"OneSoft" means OneSoft Solutions Inc. and includes the accounts of OneSoft and its wholly owned subsidiaries, OneBridge Solutions, Inc., OneBridge Solutions Canada Inc. and OneCloudCo Limited.

"Other Revenue" means revenues from CIM Production Trials, services, software development fees that are invoiced to third parties and miscellaneous other project fees, which may recur at irregular intervals.

"Production Trials" (formerly referred to as "Proof of Concept") are part of the Company's sales process and refers to limited time use of CIM by prospective customers for the purpose of testing, applicability, and assessment of CIM functionality, using their own data.

"SaaS" means software‐as‐a‐service.

"SOC 2" refers to the comprehensive internal control reporting framework developed by the American Institute of Certified Public Accountants for service organizations. OneBridge Solutions has engaged an independent third‐party auditor to assess and test the internal controls the Company has established in and around its CIM solution relating to criteria of security to ensure the Company complies with the SOC 2 set of standards. Certification of compliance with SOC 2 is intended to meet the demands of customers who seek detailed information and require assurance about internal controls prior to their approval of CIM for their internal use and uploading of their confidential data into it.

"TAM" means total addressable market (also referred to as total available market), which is an estimate of total overall revenue generation potential of a product or service available to all market participants.

NON‐IFRS MEASUREMENTS

The Company defines Adjusted EBITDA as earnings before interest, income taxes, stock option expense, depreciation, amortization, and impairment charges. Readers are cautioned that Adjusted EBITDA should not be construed as an alternative to comprehensive income or loss as determined in accordance with IFRS. A table on page 16 reconciles Adjusted EBITDA with comprehensive income or loss. Management uses Adjusted EBITDA as a measure of cash generation in its budgeting and financial reporting processes, recognizing that it does not reflect working capital and other balance sheet changes.

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Q3 2021 MANAGEMENT DISCUSSION & ANALYSIS SEPTEMBER 30, 2021

HIGHLIGHTS IN THE PERIOD ENDING SEPTEMBER 30, 2021.

Sales and Revenue

• Revenue for Q3 2021 was $1,232,900, an increase of 55.1% or $437,902 over Q3 2020. The revenue increase resulted from the addition of new customers year over year and a higher level of activity by almost all customers. A decrease in the effective average U.S. quarterly average foreign exchange rate from 1.33 last year to 1.26 this year negatively affected revenue by approximately $43,029.
• Revenue for the nine months ended September 30, 2021, was $3,240,482, an increase of $150,527 (4.9%) from the same period last year. While the Company has added seven new customers since this time last year, the increase in revenue was muted by two factors. In Q1 2020, an unusually large number of data logs were loaded into CIM in the month of February 2020 during a new Client's initial CIM implementation. The client remains very active, but at a reduced level in the current year. A decrease in the average effective year‐to‐date U.S. foreign exchange rate from 1.35 last year to 1.25 this year has negatively affected revenue by approximately $223,296.
• The chart below shows CIM revenue for the past twenty‐one quarters. As previously stated, revenue in Q1 2020 was unusually high due to a new client loading a large number of new and historic logs during their initial implementation of CIM in that quarter. The pace of revenue growth then slowed in Q2 2020 during the initial stages of the Covid‐19 pandemic before resuming its upward trend commencing in Q3 2020 and continuing to date. Q3 2021 revenue was 74% of the record high revenue in Q1 2020.
• We anticipate that quarterly revenue will continue to vary until our client base increases to a point where quarterly revenue becomes sufficiently high that the effect of revenue from initial CIM implementations is not noticeable. We have also determined and now recommend that it is more advantageous for our new customers to ingest new and historical data logs into CIM at a more moderate pace during the CIM initial implementation phase, which we expect will likely result in more consistent CIM utilization patterns over the longer term.
• Management believes that the most important metric in the chart is the dotted line, which illustrates CIM's compounded annual revenue growth rate of 82.7%, based on linear growth over 5.25 years. Management is focused on increasing CIM ARR and other revenues which we believe will increase future Company value for shareholders.
• Most of the Company's clients choose to estimate their CIM consumption for the next year and pay for it at the start of that period. The Company's Deferred Revenue at the end of Q3 2021 totaled $1,937,757, as compared to $413,546 and $2,346,147, respectively, as at Fiscal 2020 year‐end and Q2 2021 quarter‐end.

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Q3 2021 MANAGEMENT DISCUSSION & ANALYSIS SEPTEMBER 30, 2021

2021 Financial Metrics

Year‐to‐date financial metrics are summarized in the table below, with comparisons to the same period last year. OneSoft tracks revenues in two main categories, ARR and Other Revenue, as defined herein.

		Three months ended:		Nine months ended:
OneSoft SaaS Metrics		Q3 2021		Q3 2020		Q3 2021		Q3 2020
Revenue as reported in the Financial Statements	$	1,232,900	$	794,998	$	3,240,482	$	3,089,955
Revenue categorization:
Annual Recurring Revenue ("ARR")	$	1,171,920	$	751,707	$	3,019,129	$	2,954,801
Other Revenue	$	60,980	$	43,291	$	221,353	$	135,154
Total Revenue	$	1,232,900	$	794,998	$	3,240,482	$	3,089,955
Direct Costs	$	296,061	$	205,612	$	803,749	$	730,912
Gross Profit	$	936,839	$	589,386	$	2,436,733	$	2,359,043
Direct Costs as % of ARR and Other Revenue		24%		26%		25%		24%
Gross Profit as % of ARR and Other Revenue		76%		74%		75%		76%
ARR as % of Total Revenue		95%		95%		93%		96%
ARR Growth (Qtr / Qtr, YTD / YTD)		56%		19%		2%		60%

• Gross profit as a percentage of sales has been approximately 76% of revenue for the last year. We have prioritized provision of services for new clients for minimal revenue to achieve our prime objective of onboarding new clients to positively influence new CIM sales. Management is selectively instituting product support charges in Fiscal 2021 to improve the gross margin for services revenue. We believe that ongoing development and use of new client on‐ boarding tools may also reduce labour costs incurred from services staff implementing new clients in the future.
• Gross profit was $347,453 higher in Q3 2021 than in Q3 2020. Total operating expenses after cost capitalization were almost the same value as in Q3 2020 and other expenses were $47,178 higher than in Q3 2020. As a result of the higher gross profit, the net loss was $294,082 less than in Q3 2020 at $704,744 versus $998,826 in Q3 2020.
• Cash flow used in operating activities for the nine months ended September 30, 2021, was $920,791 as compared to cash use of $2,463,924 in the same period last year with the biggest difference being generation of $2,159,116 more cash from deferred revenue this year.
• At September 30, 2021, cash totaled $6.5 million ($7.2 million at December 31, 2020). Working capital (current assets less current liabilities) was $5.0 million ($6.2 million at December 31, 2020), and the Company has no debt. Assuming no significant changes in current business strategies and cash consumption, Management believes the Company has sufficient cash on hand to fund its business and growth strategies as envisioned.

OneBridge Technology Roadmap Update

Innovation Lab business and product development activities continued in Q3 2021 in accordance with the Company's strategies stated in detail in the Fiscal 2020 MD&Apublished on March 24, 2021. Management is considering various alternatives to accelerate development to increase the breadth of CIM functionality and its speed to market, including potential joint venture initiatives and/or acquisition of certain technology components that are more cost effective to license or acquire than to develop internally.

On April 27, 2021 we announced that the Company entered into a technology sharing agreementwith C‐FER Technologies ("C‐ FER"), to integrate C‐FER's quantitative risk models into the CIM platform, resulting in the development of CIM Risk Management. Demand for this functionality by pipeline companies appears to be strong as they seek to improve operational practices through digital transformation and replacement of outdated index‐based risk solutions with performance‐based quantitative and probabilistic models that can more accurately assess pipeline risks.

Use of CIM Risk Management will be optional for clients and will be priced using a Consumption Economics model. Clients may pay a monthly subscription fee to access CIM Risk Management and a fee will also be assessed for each data log to which the risk functionality is applied. CIM Risk Management is currently scheduled to be commercialized with Probability of Failure ("POF") functionality in Q1 2022, one of C‐FER's 9 risk models. Subsequently, the Company intends to add Consequence of Failure ("COF") functionality to enable customizable client‐specific requirements.

Subsequent to the quarter‐end, the Company embarked on development of CIM Corrosion Management, a functionality module that will be commercialized and priced using the concept of the Consumption Economics model. The decision to proceed was made following preliminary investigation started in the Company's Innovation Lab (the "Lab") in late 2019, followed by

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