Wavefront Technology : 2021 Management Discussion & Analysis

Wavefront Technology Solutions Inc.

Annual & Fourth

Quarter Report for the

Fiscal Year & Period Ended

August 31, 2021

The following discussion and analysis of financial results should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the years ended August 31, 2021 and 2020 and is based on information available to December 6, 2021. 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 Standards ("IFRS"). The MD&A primarily compares the audited financial results for the year ended, and fourth quarter ended August 31, 2021 to August 31, 2020. 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 IFRS financial records (also see section titled "Controls and Procedures" page 32). The financial information presented throughout this MD&A should be read in conjunction with consolidated financial statements.

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.

Deloitte LLP, an independent firm of Chartered Public Accountants, has been engaged, as approved by a vote of shareholders at the Company's most recent annual general meeting, as external auditors of the Company. The Independent Auditors' Report to the shareholders, which describes the scope of their examination and expresses their opinion, is presented in the consolidated financial statements.

The Audit Committee of the Board of Directors, whose members are independent as defined in National Instrument 52-

1. Audit Committee, meet to review the consolidated financial statements with management and the auditors, and has reported to the Board of Directors thereon. On the recommendation of the Audit Committee, the Board of Directors has approved the audited consolidated financial statements.

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 WaveAxeTM 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 as the chief decision maker, being 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 technology primarily focused on optimized oil and gas well stimulation and Improved/Enhanced Oil recovery ("IOR/EOR"). For oil and gas well stimulation, Wavefront's core technology, marketed under the brand name, "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 thereby potentially assisting Exploration and Production ("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 increasing estimated ultimate oil recovery. Wavefront operates in the global marketplace dealing directly with exploration and production ("E&P's") companies, and through a network of international distributors and agents.

Powerwave is marketed in two primary areas to exploration and production ("E&P") companies:

1. Well stimulation; and,
2. IOR/EOR.

A 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 is impeded which directly impacts 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 to remove sand fill. Well stimulation to address deep formation damage are accomplished through a variety of techniques but most commonly acids are pumped into the rock formation to restore a wells 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 to achieve their environmental targets as Powerwave has been seen (compared to conventional tools) to reduce average operational time, thereby reducing CO2 emissions, reduce average chemical consumption while increasing post-stimulation outcomes, and increase the time period between re-stimulation of the same well.

IOR/EOR targets stranded or bypassed oil in reservoir which is very difficult to mobilize and produce due to various physical limitations. The common theme in IOR/EOR approaches is the injection of a fluid that mobilizes bypassed oil. IOR/EOR projects are usually 12 months or longer in duration.

Key components of Wavefront's business model are geographic diversification, while focusing on the higher-margin higher rate on capital employed by leveraging the Company's Powerwave technology. This means the Company will not only work on projects with E&Ps but 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 the various geographic markets it serves.

Wavefront thus works through distribution, agency, or representation ("Distributor") agreements that encompass representation in 16 countries (but are active in this reporting period in 6 countries), and permits Distributors to market

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Management's Discussion and Analysis of Financial

Condition and Results of Operations

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, and thus, the Distributor is responsible for the execution and costs of work performance with their customers, inclusive of their customer's satisfaction for its entire 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 for established pricing to end users or E&Ps in each country but instead provide 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, however, 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 modeling, 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 of 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 if 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 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 reality. In most cases for most E&Ps there are multiple groups that must have various criteria satisfied before approving not only a field trial but also on-going 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 to 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 both the reservoir and production engineering teams must also be convinced. As such marketing Powerwave to end users is a multi-pronged approach which 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 well bore and geological structure; and, ii) design patents which cover 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, but is protected by its licenses, non-compete and non-circumvent agreements, 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 to properly operate Powerwave tools, and a proprietary model which details predictive outcomes and operating protocols for Powerwave well stimulations as related to specific reservoir conditions. The proprietary model, in certain geographic regions, may be more integral to the Company's current business than its patents. As Distributors essentially re-sell to their customers, Wavefront provides training of Distributor personnel in the use of Powerwave tools. However, all Powerwave modelling, and job programming is tightly controlled and is performed only by certain Wavefront personnel at the Company's head office in Edmonton, AB.

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

OUTLOOK

Oil prices have recovered significantly from their negative pandemic lows of April 2020. Moving forward the outlook for oil prices will be largely driven by global economic recovery tied to the world's continued progress on keeping COVID-19 infection and mortality rates low. However, another COVID-19 variant such as the newly name Omicron variant with its associated fears of high infection and mortality rates may derail global economic recovery and apply downward pressure on oil prices - although likely not to the lows of April 2020. While there is optimism for higher, more sustainable oil prices the range of possibilities is large and is reflective of overall uncertainty surrounding COVID-19 and global economic recovery.

Although there has been positive upward movement in oil prices, and it may be expected the E&P companies would accelerate much needed well work; however, there are supply chain issues that continue to loom large and cast doubt on timing of pending E&P activity. Such supply chains issues included but are not limited to access to well stimulation fluids such as acid, coiled tubing reels, rig replacement parts, and so on. The expected timeframe for such supply chain issues to be resolved remains unclear and as such may impact Wavefront's activity levels in the coming months. While Wavefront has seen new opportunities arise as is evidenced in recent, multiple well stimulation packages being awarded, the Company remains wary about its growth prospects in the near term and may continue to experience a period of revenue contraction in several areas we serve.

While there has been considerable pricing pressure on OFS companies even before the global pandemic the sector continues to grapple with existing margins and reduced E&P spending in traditional core business as the E&Ps transition new sustainability options. With the broadening move towards decarbonization associated with human- induced effects on climate change OFS companies must adapt and move outside of traditional oilfield services to sectors in the low-carbon space. Wavefront has identified two areas in the low-carbon space where its existing

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