Wavefront Technology : Third Quarter 2022 Management Discussion and Analysis

Wavefront Technology Solutions Inc.

Quarterly Report

For the third

Quarter ended

May 31, 2022

The following discussion and analysis of financial results should be read in conjunction with the unaudited financial statements and the accompanying notes for the quarters ended May 31, 2022 and 2021 and is based on information available to July 27, 2022. Additional information on Wavefront Technology Solutions Inc.'s (the "Company" or "Wavefront") is available on SEDAR at www.sedar.com.

Management's Discussion and Analysis of Financial

Condition and Results of Operations

MANAGEMENT'S RESPONSIBILITY

Management has prepared this Management's Discussion and Analysis ("MD&A"). The MD&A is based upon Wavefront Technology Solutions Inc.'s (the "Wavefront" or "the Company") financial results prepared in accordance with International Financial Reporting Standard ("IFRS"). The MD&A primarily compares the unaudited financial results for the third quarter ended May 31, 2022, and 2021. Management has established and maintains an accounting and reporting system supported by internal controls designed to safeguard assets from loss or unauthorized use and ensure the accuracy of the Company's IFRS financial records (also see the section titled "Controls and Procedures" page 24). The financial information presented throughout this MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements and related notes for the quarters ended May 31, 2022 and 2021, as well as the audited consolidated financial statements for the years ended August 31, 2021, and 2020 and the related notes.

Unless otherwise indicated, all amounts shown below are in Canadian dollars. Additional information regarding our Company is available on SEDAR, www.sedar.com. Such additional information is not incorporated herein unless otherwise specified and should not be deemed to be made part of this MD&A.

The Audit Committee of the Board of Directors, whose members are independent as defined in National Instrument 52- 110; met to review the unaudited condensed consolidated interim financial statements with Management and has reported to the Board of Directors thereon. On the recommendation of the Audit Committee, the Board of Directors approved the condensed consolidated interim financial statements on July 27, 2022.

NON-IFRSMEASURES

The Company uses IFRS, additional and non-IFRS (or non-generally accepted accounting principles or non-GAAP) measures to make strategic decisions, to set targets and use in operating activities, and as such, believes that the additional and non-IFRS measures provide useful supplemental information to investors. "Working capital," "other technology revenues," and "EBITDA" are measures used by the Company that may not have a standard meaning prescribed by IFRS and may not be comparable to similar measures used by other companies.

• EBITDA, an acronym for earnings before interest, taxes, depreciation, and amortization is calculated by adding back all interest, tax, depreciation, and amortization to net income (loss). EBITDA is a non-IFRS measure, with the most comparable IFRS measure being net income (loss);
• Other technology revenue consists of Primawave®, Performance Drilling and WaveAxe® revenues. Other technology revenues are non-IFRS measures, with the most comparable IFRS measure being revenues; and,
• Working capital is calculated by subtracting current liabilities from current assets. Working capital is a non- IFRS measure with no comparable IFRS measure.

Additional and non-IFRS measures are also viewed as key information by the chief decision maker, the President and Chief Executive Officer, who regularly reviews such measures in making strategic, expense, and capital investment decisions.

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Management's Discussion and Analysis of Financial

Condition and Results of Operations

OVERVIEW OF BUSINESS

Wavefront, an Oil Field Service ("OFS") company, provides leading-edge fluid flow technology marketed under the brand name "Powerwave®." Powerwave is utilized in two primary areas by exploration and production ("E&P") companies - optimized oil and gas well stimulation and Improved/Enhanced Oil recovery ("IOR/EOR"). For well stimulation, Powerwave® has proven to decrease chemical cost and job execution time, thus, minimizing total job cost while positively impacting post-stimulation results. Powerwave has also been shown to reduce CO2 emissions during well stimulations and may be used in CO2 sequestration projects, potentially assisting E&P companies in achieving carbon-neutral targets. In IOR/EOR applications, Powerwave has been shown to improve oil production rates, decrease oil production decline rates, and increase estimated ultimate oil recovery.

Wavefront operates in the global marketplace dealing directly with E&P companies and through a network of international distributors and agents.

Well stimulation is an operation performed on a well to restore or enhance productivity or improve injection. Well stimulations can be subdivided into two categories: in-well/near wellbore damage removal or deep formation damage removal. Whatever the damage mechanism, the flow characteristics of the oil or gas or water injection well are impeded, directly impacting the economics of an oil and gas field. For in-well/near wellbore damage removal, various stimulation approaches are used to remove scales, such as calcium carbonate or barite, to rid a well of accumulated waxes on tubulars or remove sand fill. Well stimulation to address severe formation damage is accomplished through various techniques, but most commonly, acids are pumped into the rock formation to restore a well's productivity or injectivity. Powerwave-related stimulations employ proprietary tools and methods to optimize acid placement during deep formation damage treatment or effectively remove in-well/near wellbore damage. Depending on the nature of the work, Powerwave® stimulations may take several hours to several days.

With the evolution of environmental, social and governance ("ESG") reporting, it is believed that Powerwave® well stimulations may assist many end-users or E&Ps customers in achieving their environmental targets as Powerwave® has been seen (compared to conventional tools) in reducing average operational time, thereby reducing CO2 emissions, reducing average chemical consumption while increasing post-stimulation outcomes, and increasing the period between re-stimulation of the same well.

IOR/EOR targets stranded or by-passed oil in a reservoir that is difficult to mobilize and produce due to various physical limitations. An IOR/EOR project involves a fluid injection into the reservoir to mobilize by-passed or stranded oil. The fluids injected from a dedicated injection well are meant to "sweep" oil to adjacent producing wells. Physical limitations associated with IOR/EOR applications such as preferential fluid channeling or fluids travelling the least resistance paths often lead to inefficient oil recovery. Based on multiple global field results, Powerwave- aided IOR/EOR programs have improved oil recovery, slowed the rate of oil production decline, and stabilized water injection. IOR/EOR projects are usually 12 months or longer in duration.

Critical components of Wavefront's business model are geographic diversification while focusing on the higher margin / higher rate of capital employed by leveraging the Company's Powerwave® technology. This means the Company will work on projects with E&Ps and leverage other OFS client relations in different geographic regions to increase distribution channels and technology commercialization. In working through other OFS providers as distributors, Wavefront does not need to build and maintain a local presence with field technicians, equipment, or infrastructure in its various geographic markets.

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Management's Discussion and Analysis of Financial

Condition and Results of Operations

Wavefront thus works through distribution, agency, or representation ("Distributor") agreements that encompass representation in 16 countries (but are active in this reporting period in 9 countries) and permits Distributors to market and resell the Company's Powerwave® suite of technologies to end-users or E&Ps. The agreements provide that the Distributor is generally responsible for contracting directly with and fulfilling the provision of goods or services to the end-user, i.e., E&Ps, or their customers. Thus, the Distributor is responsible for the execution and costs of work performance with their customers, including their customers' satisfaction with its general and administrative, sales, and marketing expenses. Wavefront is also not exposed to the credit risk decisions of the Distributor; thus, the Distributor bears all risks and rewards in dealing with its customers. Like any other customer, Wavefront does have credit risk in collections from its Distributors.

Distribution agreements do not generally provide established pricing to end-users or E&Ps in each country. Instead, they offer a pre-negotiated amount that Wavefront can expect to receive for each bundled Powerwave job or service the Distributor provides to the end-user or E&P. The Distributors are entitled to deduct any fees or foreign tax withholdings from any amounts paid to Wavefront. The Company thus recognizes the net amounts received in its revenue recognition. Wavefront is responsible for supplying Powerwave® tools to the Distributor; Powerwave® tool replacement, if needed; certain proprietary inventory items required to rebuild or refurbish Powerwave tools or consumables; and, if needed, all Powerwave® modelling, and the provision of remote technical support.

Wavefront also sells directly to end-users or E&Ps, and other non-distributors, in which case the Company is responsible for fulfilling the provision of goods or services to the end-users, or E&Ps. In dealing with end-users or E&Ps or non-distributors, Wavefront negotiates an amount that it can expect to receive for each bundled Powerwave® job or service.

Wavefront has typically, regardless of dealing with an end-user or E&P directly as a customer or dealing with its Distributors, and despite the type of application or product line (e.g., a Powerwave® stimulation or IOR/EOR project), bundled its services, jobs, or projects, which may include some or all the modelling and programming; tool mobilization and installation; tool rental (or sale); Powerwave licensing; and demobilization. As all Powerwave® components are highly integrated, interrelated, and interdependent and are transferred concurrently to the customer (i.e., regardless of an E&P or non-distributor or a Distributor), the customer only receives economic benefits from the Powerwave service over the licensed and rental periods (i.e., be it a shorter period for Powerwave® stimulation or a longer period for an IOR/EOR project).

As a technology company, Wavefront must support the marketing efforts of its Distributors. The ideal marketing approach for Powerwave® would be for Wavefront personnel or its Distributors' business development team to approach a single or group of engineers who could readily accept the merits of the technology and implement it accordingly. However, the ease of such a marketing approach is not a reality. For most E&Ps, multiple groups must satisfy various criteria before approving a field trial and ongoing work. For example, the production engineering team may wish to implement Powerwave® for stimulation work; however, the reservoir engineering team may be unconvinced of the utility of the technology; hence the stimulation may not proceed. Alternatively, a research and technology team charged with bringing new technology to an E&P may identify Powerwave® as a unique opportunity for the E&P to exploit or improve oil and gas well stimulation efforts or even a derivative of Powerwave® for enhancing oil recovery by water or CO2 flooding. Even though the research and technology team may have identified Powerwave as a possible gamechanger for the E&P, the reservoir and production engineering teams must also be convinced. As such, marketing Powerwave® to end-users is a multi-pronged approach that may impact the sales cycle.

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Management's Discussion and Analysis of Financial

Condition and Results of Operations

For water or CO2 flooding projects, the Company has seen sales cycles from introduction to purchase order and implementation of up to 12 months. For Powerwave® well stimulations, sales cycles may range from several days to several months.

Wavefront's patent portfolio encompasses i) a utility patent(s) related to the general process of dynamic fluid injection (i.e., the Powerwave® process) where there is communication with the wellbore and geological structure; and ii) design patents covering specific tool designs that provide for dynamic fluid injection. Wavefront's patents were registered in various jurisdictions where the Company anticipated future work and have various expiry dates. As a result, the Company generates revenues in some countries where it does not have registered patents. Still, it is protected by its licenses, non-compete and non-circumvent agreements, and other intellectual properties (such as the proprietary Powerwave® model), etc.

In addition to the patent portfolio, the Company's intellectual properties include "know-how" or trade secrets required to install and properly operate Powerwave® tools. A proprietary model details predictive outcomes and operating protocols for Powerwave® well stimulations related to specific reservoir conditions. In certain geographic regions, the proprietary model may be more integral to the Company's current business than its patents. As Distributors essentially re-sell to their customers, Wavefront provides training for Distributor personnel in the use of Powerwave® tools. However, all Powerwave® modelling and job programming are tightly controlled and performed only by certain Wavefront personnel at the Company's head office in Edmonton, AB.

Wavefront endeavours to continuously develop new technologies and seek new patents, and as such, the Company's intellectual property portfolio will continue to evolve.

OUTLOOK

While the recent highs in oil prices have bode well for record profits by major oil companies, and there are some positive signs of improved global drilling activities, the well stimulation market remains stagnant in the geographical regions the Company and its distributors serve. The Company remains guarded about its growth prospects in the near term. Until uncertainty is removed from client operations and clients have consistent well stimulation campaigns, Wavefront may experience a continued period of revenue contraction.

In the fourth quarter of 2021 and the first quarter of 2022, Wavefront saw new opportunities evidenced by multiple well stimulation packages awarded by various US-based clients; however, for numerous reasons, these well stimulation packages have seen sporadic activities, thus, negatively impacting revenue. In previous Company disclosures, Wavefront identified supply chain issues related to equipment shortages, inflation in tubular goods, and shortages of crucial equipment and consumable materials that were impacting activity levels and, thus, Wavefront's near-term business opportunities. Much of these issues remain unresolved. Further, many E&Ps have been refraining from ramping up production; instead, opting to return cash to shareholders through dividends, debt repayment and share buybacks. This also impacts the volume of well stimulation work conducted by the E&Ps.

Moreover, the geopolitical situation in Eastern Europe intensified with Russia's invasion of Ukraine on February 24, 2022. The Russian war in Ukraine continues to evolve as military action proceeds, and Western sanctions are imposed, exacerbating the ongoing global economic challenges, including sanctions against the importation of Russian crude oil, gas, and liquefied natural gas ("LNG"); foreign exchange implications; rising inflation; and additional supply chain issues.

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