Q3 2021 Management's Discussion and Analysis

Management's Discussion and Analysis

Forward-Looking Information

Except for statements of historical fact relating to TraceSafe Inc. ("TraceSafe", "TSF" or the "Company"), certain statements contained in this MD&A constitute forward-looking information, future oriented financial information, or financial outlooks (collectively "forward looking information") within the meaning of Canadian securities laws. Forward-looking information may relate to this document and other matters identified in the Company's public filings, TraceSafe's future outlook and anticipated events or results and in some cases, can be identified by terminology such as "may", "will", "could", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "projects", "predict", "potential", "targeted", "possible", "continue", "objective" or other similar expressions concerning matters that are not historical facts and include, access to sufficient capital resources, the timing and amount of future development projects, the timing of cash flows, capital and operating expenditures, the timing of receipt of permits, employee relations, availability of financing and any and all other timing, development, operational, financial, economic, legal, regulatory and political factors that may influence future events or conditions. Such forward-looking statements are based on a number of material factors and assumptions, including, but not limited in any manner, those disclosed in any other of TraceSafe's public filings, availability and final receipt of required approvals, licenses and permits, ability to acquire sufficient working capital to complete technology development projects, access to adequate services and supplies, economic conditions, foreign currency exchange rates, interest rates, access to capital and debt markets and associated cost of funds, availability of a qualified skilled work force, positive employee relations, lack of social opposition and legal challenges, and the ability to settle disputes. While TraceSafe considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in other TraceSafe's filings. Forward-looking statements are based upon management's beliefs, estimate, and opinions on the date the statements are made and other than as required by law, TraceSafe does not intend and undertakes no obligation to update any forward-looking information to reflect, among other things, new information or future events.

The following management's discussion and analysis ("MD&A") of TraceSafe Inc. (the "Company"), is prepared as of October 25, 2021, and should be read together with the audited consolidated annual financial statements and related annual MD&A for the year ended December 31, 2020.

For the purpose of preparing this MD&A, Management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in or would reasonably be expected to result in a significant change in the market price or value of the Company's common shares; (ii) there is substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

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Further information about the Company and its operations is available on SEDAR at www.sedar.com.

All amounts in this MD&A are expressed in United States dollars unless otherwise noted.

Description of Business

TraceSafe Inc. was incorporated on December 22, 2010 under the Business Corporations Act of British Columbia as a private company and continued into the British Virgin Islands on December 18, 2013.

The registered office of TSF is Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands.

TraceSafe has a 100% voting interest in Jucca Holdings Limited, Wishland Properties Limited, and TraceSafe Canada Inc. (newly incorporated as of March 1, 2021).

TraceSafe Inc. owns 70% of the voting shares of the subsidiary TraceSafe Asia Pacific Pte Ltd. The Company required a local director to manage the day-to-day operations and who is a representative of the Company. Due to certain agreements related to this arrangement, the Company has functional control and beneficial ownership.

TraceSafe Inc. owns 100% of the voting shares of the subsidiary TraceSafe Technologies Inc. and issued non-voting shares to Wislica Inc. as part of the acquisition transaction that closed on May 12, 2020. As of September 30, 2021, Wisilica owned approximately 9% of the issued and outstanding common shares of TraceSafe Technologies Inc., and 100% of its issued and outstanding preferred shares.

	Jurisdiction of	Date of	Percent	Voting
	Incorporation	Incorporation	Owned	Rights
TraceSafe Inc.	British Virgin Islands	December 22, 2010
Jucca Holdings Limited	British Virgin Islands	February 1, 2013	100%	100%
Wishland Properties Limited	British Virgin Islands	March 5, 2013	100%	100%
TraceSafe Technologies Inc.	Nevada, United States	April 21, 2020	8.2%	100%
TraceSafe Asia Pacific Pte Ltd.	Singapore	August 5, 2020	70%	70%
TraceSafe Canada Inc.	British Columbia,	March 1, 2021	100%	100%
	Canada

Overall Objective

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The Company's strategic focus is providing end-to-end solutions that empower organizations with insights captured from data across the environment and their operations. TraceSafe's full suite of health and safety IoT solutions is currently used in global deployments for clients in the enterprise, government, heavy industry, sports and entertainment and tourism sectors. Close partnerships with innovation and industry leaders have resulted in product developments within specific industries, as well as new product lines and inroads into entirely new markets. Q3 notable industries and developments include:

Cruise lines

With deployments at three major cruise lines, TraceSafe solutions provide value to the cruise industry in the areas of health and safety, efficiency and compliance. This translates into cautionary optimism for TraceSafe as the current opportunities signed through Q3 2021 address volume sales of setup and product delivered to the three major players. TraceSafe's cruise ship clients remain materially impacted from the ongoing COVID-19pandemic and have experienced a period of considerable revenue loss caused by both the pandemic and subsequent exclusion from federal relief. TraceSafe believes that the relationships will continue to invest in TraceSafe's solutions, and a more predictable and consistent pattern will only emerge in Q2/Q3 2022 when fleets move to their pre-pandemicschedules. Some clients may look at short term cost-savingmeasures after the initial purchase but are again likely to look towards TraceSafe as a long-termpartner to streamline operations, enhance guest experience and ensure safety and efficiency at scale in the near future.

SafeSite Solutions

TraceSafe's SafeSite solution automates health and safety protocols to empower a connected, efficient workforce. With wearable safety sensors and easy integration with existing systems, developers and contractors can rely on SafeSite to provide safe worksites and more. Together with client partner Boustead Projects, TraceSafe has achieved real-timeon-site worker movement through integrated smart sensing and was named winner of the Singapore National Innovation Challenge.

Security Prowling Audit (SPA) Solution

Safe and secure property management includes regular check-ins at designated locations by security guards. TraceSafe has equipped buildings in both Singapore and Malaysia with automatic sensors that detect activity, enabling security guards to check-in for KPI compliance. This project has sharpened TraceSafe's product innovation vision, helping the Company focus on optimizing its solutions for smart buildings: using the IoT ecosystem to improve energy efficiency and reduce costs associated with property management.

Tier 1 Semiconductor Manufacturer

With more than 60,000 devices deployed across all global worksites of this Tier 1 Semiconductor Manufacturer, the TraceSafe platform is being used to analyze contact tracing for facilities management. A new TraceSafe product line was also created to better support this client's operational needs.

Southeast Asian Conglomerate:

A large Southeast Asian Conglomerate primarily focused on technology, defense and engineering, received 30,000 TraceSafe wristbands in 2020 and is now using TraceSafe's platform on a subscription

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basis (under the Software-as-a-Service model, or SaaS). Revenue estimates for software access and support is $470K per quarter. This client is currently under contract through November 30, 2021.

Selected Financial Information

The following tables provide selected annual and quarterly financial information in accordance with IFRS. All amounts are expressed in US Dollars.

		Total Operating	Comprehensive	Loss per
Three Months Ended	Total Revenue	Expenses	Income	Share
March 31, 2019	-	(144,585)	(144,585)	(0.01)
June 30, 2019	-	(215,581)	(215,581)	(0.01)
September 30, 2019	-	(130,650)	(130,650)	(0.01)
December 31, 2019	-	(197,357)	(197,357)	(0.01)
March 31, 2020	-	(833,383)	(833,383)	(0.04)
June 30, 2020	516,274	(962,019)	(940,397)	(0.03)
September 30, 2020	1,085,291	(878,243)	(511,341)	(0.02)
December 31, 2020	1,833,332	(3,585,483)	(5,439,911)	(0.13)
March 31, 2021	1,287,175	(4,051,679)	(4,017,808)	(0.08)
June 30, 2021	3,399,309	(5,206,159)	(1,806,850)	(0.01)
September 30, 2021	5,964,623	(1,383,933)	1,061,630	0.03

Development

In order to meet customer requirements and improve the quality of its products, TraceSafe has continuous development and engineering costs. A breakdown of these costs is as follows:

Period		Development &
		Engineering Expense
April 1 - June 30, 2020	$	430,052
July 1 - September 30, 2020		402,633
October 1 - December 31, 2020		333,337
January 1 - March 31, 2021		455,914
April 1 - June 30, 2021	$	441,077
July 1 - September 30, 2021		496,422

Dividend Payment

Since its incorporation, the Company has not paid any cash dividends on its outstanding common shares. Any future dividend payment will depend on the Company's financial needs to fund its programs, future growth, and any other factors the board may deem necessary to consider. It is highly unlikely that any dividends will be paid in the near future.

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Results of Operations for the Three Months Ended September 30, 2021

Revenue increased to $5,385,642 compared to the 2020 comparable period amount of $1,085,291. Current year-to-date revenue is $9,075,578, which surpasses total revenue in 2020 of $3,559,959.

Cost of sales increased to $3,430,539 compared to the 2020 comparable period amount of $637,034.

$51,409 was accrued for the 2020 year end audit. Accrued was not reversed in Q1 when the invoice was received. Accrual was reversed in Q3.

$160,679 was accrued in January 2021 for expected expenses for 2020. Expenses were never realized and expenses are now reversed.

Interest increased to $164,575 compared to the 2020 comparable period amount of $86,863. This is due to fluctuations in the usage of the receivables factoring facility.

Market Expansion

Sales and Engineering are focused on pivoting the TraceSafe platform to other data, IoT, and location- based services. Current areas of expansion are asset tracking, employee time and attendance, marketing analytics, ESG tracking, and worker safety. For customers using TraceSafe's contact tracing hardware in the coming months, developments have been made to include add-ons to the various TraceSafe devices, such as including RFID access control modules and providing the option of rechargeable batteries.

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