TraceSafe : Q2 2022 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 Aug 25, 2022 and should be read together with the audited consolidated annual financial statements and related annual MD&A for the year ended December 31, 2021.

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

- 1 -

information available to investors. Management in conjunction with the Board of Directors evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

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 Wishland Properties Limited, and TraceSafe Canada Inc.

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 but retains 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. ("WiSilica") as part of the acquisition transaction that closed on May 12, 2020. As of June 30, 2022, WiSilica owned approximately 92% of the issued and outstanding non voting common shares of TraceSafe Technologies Inc., and 100% of its issued and outstanding preferred shares.

Overall Objective

TraceSafe provides Internet of Things (IoT) solutions transforming large-scale industrial and enterprise operations with unique wearables, industrial-grade sensors and award-winning analytics platform. The Company's hardware solutions, powered by advanced low-power bluetooth beacons, work together with its proprietary software to provide mission-critical data

- 2 -

enabling safer, efficient and sustainable enterprise environments. With presence across North America, Asia and Europe, TraceSafe's solutions are trusted by leading organizations in healthcare, hospitality, construction, events, education and government.

Decarbonization Solutions

TraceSafe is entering into the strategic arena of decarbonization solutions and building solutions to measure, mitigate, offset and report carbon emissions. The objective is to provide a complete carbon management solution for individuals and businesses as the Race To Zero picks up speed. This strategic focus towards 'managed decarbonization' is to help companies take credible climate action using high quality offsets. To this end, TraceSafe acquired an offset marketplace and launched its full suite of carbon management solutions- www.tracesafe.io/shiftcarbon

SafeSite Product Line

Solar-powered sensors manage operational challenges by targeting specific safety concerns in high-risk sectors, like construction sites. The SafeSite Solution includes the identification of hazards and workers' safety knowledge gaps. This solution won Singapore's National Innovation Challenge (NIC), which will provide the Company with a Singapore government grant in Q3/Q4 of 2022. The target markets for this solution are Singapore and Japan.

Security Prowling Audit (SPA) Solution

The Company's Security Prowling Audit solution allows building owners to identify the KPI compliance of contracted security teams. This solution has been implemented in Malaysia's Eco-city and acts as a catalyst for the Company to move into green and smart building services. The Company is also deploying a water discharge monitoring system using smart sensors.

Tier 1 Semiconductor Manufacturer

The Company was responsible for a global deployment of active tags in Semiconductor Manufacturer factories and offices for rapid and efficient contact/social distancing safety measurement policy enforcement. A new product line was created in collaboration with the client to better support their operational needs. The product line addresses Human Resources training and identifies potential training gaps.

Southeast Asian Conglomerate

A large Southeast Asian Conglomerate, primarily focused on technology, defense and engineering, received 120,000 wristbands in 2020 and is now using TraceSafe's software via a monthly subscription model. Revenue estimates for software access and support is almost half a million per quarter.

- 3 -

Selected Financial Information

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

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:

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.

- 4 -

Results of Operations for the Three Months Ended June 30, 2022

Revenue decreased to $816,685 compared to the 2021 comparable period amount of $3,399,309.

Cost of sales decreased significantly to $37,508 compared to the 2021 comparable period amount of $3,010,170.

Gross margin increased significantly to $779,177 compared to the 2021 comparable period amount of $389,139. This was due to a shift in demand from lower margin to higher margin Service Income product line.

Total operating expenses slightly decreased to $1,900,375 compared to the 2021 comparable period amount of $1,994,565.

Market Expansion

Sales and Engineering are focused on pivoting the TraceSafe platform to other data and location-based services. Current areas of expansion are asset tracking, carbon emissions tracking, employee time and attendance, marketing analytics, and worker safety. For customers currently 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 the option of rechargeable batteries. In addition, TraceSafe has expanded into the carbon emissions tracking arena via the acquisition of Offsety, a carbon offset marketplace and calculator. This acquisition enables TraceSafe to market a tool for event organizers, venue owners and sport federations. The calculator will provide unique insights into key sources of emissions at an event, including the impact of individual teams and attendees.

- 5 -