AirIQ : Annual MDA – March 31, 2022

AirIQ Inc.

Management's Discussion and Analysis of Financial Condition and Results of Operations for the Year Ended March 31, 2022

The following management's discussion and analysis of the consolidated results of operations and financial condition of AirIQ Inc. ("AirIQ" or the "Company") is made as of July 13, 2022 and should be read in conjunction with the consolidated financial statements as at and for the years ended March 31, 2022 and March 31, 2021 and accompanying notes. The accompanying consolidated condensed financial statements of AirIQ have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The accompanying consolidated financial statements and this management's discussion and analysis have been reviewed by the Company's Audit Committee and approved by the Company's Board of Directors.

The accompanying consolidated financial statements include the accounts of AirIQ and its wholly owned subsidiaries, AirIQ U.S. Holdings, Inc. ("AirIQ Holdings"), AirIQ U.S., Inc. ("AirIQ USA"), and AirIQ, LLC ("AirIQ LLC"). All inter-company balances and transactions have been eliminated on consolidation.

The accompanying consolidated statements of comprehensive income are presented for the year ended March 31, 2022 and include the operating results of AirIQ Inc. and its wholly owned subsidiaries.

As used in this discussion and unless the context otherwise requires, or unless otherwise indicated, all references to "AirIQ", the "Company", "we", "us", "our", or similar expressions, refer to AirIQ Inc. and its consolidated subsidiaries.

The preparation of financial statements and related disclosures in conformity with IFRS requires management to make estimates that affect the reported amounts of assets, liabilities, revenues, expenses and contingencies. Management bases its estimates on historical experience and on other assumptions that are believed, at the time, to be reasonable under the circumstances. Under different assumptions or conditions, the actual results may differ, potentially materially, from those previously estimated. Many of the conditions impacting these assumptions and estimates are outside of AirIQ's control. AirIQ evaluates such estimates and assumptions on a periodic basis.

Unless otherwise noted herein, all amounts are in thousands of Canadian dollars except share and per share information.

FORWARD-LOOKING STATEMENTS

Management's discussion and analysis contains forward-looking information based on management's best estimates and the current operating environment. These forward-looking statements are related to, but not limited to, AirIQ's operations, anticipated financial performance, business prospects and strategies. Forward- looking information typically contains statements with words such as "goal", "anticipate", "believe", "expect", "plan" or similar words suggesting future outcomes. These statements are based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including AirIQ's perception of historical trends, current conditions and expected future developments as well as other factors management believes are appropriate in the circumstances. Such forward-looking statements are as of the date which such statement is made and are subject to a number of known and unknown risks, uncertainties and other factors, which could cause actual results or events to differ materially from future results expressed, anticipated or implied by such forward-looking statements. Such factors include, but are not limited to, changes in market and competition, technological and competitive

AirIQ Inc. - MDA - March 31, 2022
In thousands of Canadian dollars, except share and per share information	1

developments and potential downturns in economic conditions generally, including, without limitation, the impact on local and global markets of epidemic or pandemic diseases, including the current novel coronavirus disease known as COVID-19. Therefore, actual outcomes may differ materially from those expressed in such forward-looking statements. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Other than as may be required by law, AirIQ disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of such information, future events or otherwise.

COMPANY OVERVIEW

AirIQ was incorporated in 1997, and since that time has played a significant role in the North American telematics industry. It is listed on the TSX Venture Exchange ("TSXV") under the symbol "IQ". AirIQ is a supplier of asset management services and its office is located at 1815 Ironstone Manor, Unit 9, Pickering, Ontario, L1W 3W9, Canada.

The Company offers an intuitive web-based platform that provides fleet operators and vehicle owners with a suite of asset management solutions to reduce cost, improve efficiency and monitor, manage and protect their assets. Services are available online or via a mobile app, and include instant vehicle locating, boundary notification, automated inventory reports, maintenance reminders, security alerts and vehicle disabling and unauthorized movement alerts.

For additional information on AirIQ and its products and services, please visit the Company's website at www.airiq.com. The information on AirIQ's website is not considered to be a part of this management's discussion and analysis.

BUSINESS REVIEW

The Company is focusing its efforts and resources on revenue growth and profitability by continuing to offer leading-edge technology solutions for existing and new customers. We continue to focus on recurring revenues, gross profits and improving cash-flows to build a sustainable business, and managing the effects of COVID- 19.

Year End Highlights (for the year ended March 31, 2022 compared to March 31, 2021)

• Recurring revenue of $3,504 for the year ended March 31, 2022 increased by 10% or $315 compared to $3,189 for the prior year period. Recurring revenue represented 80% of total revenue compared to 86% in the prior year.
• Hardware and other revenue of $866 for the year ended March 31, 2022 increased by 67% or $347 compared to $519 for the prior year quarter. Hardware revenue represented 20% of total revenue compared to 14% in the prior year period.
• Total revenue of $4,370 for the year ended March 31, 2022 increased by 18% or $662 compared to $3,708 for the prior year period.
• Gross profit of $2,679 for the year ended March 31, 2022 increased by 7% or $185 compared to $2,494 for the prior year period.
• Gross margin of 61% for the year ended March 31, 2022 decreased by 6% compared to 67% for the prior year period.
• EBITDAS of $909 for the year ended March 31, 2022 decreased by 4% or $34 compared to $943 for the prior year period.
• Net income of $567 for the year ended March 31, 2022 increased 26% or $118 compared to $449 for the prior year period.

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• Cash balance of $1,900 for the year ended March 31, 2022 increased by 4% or $71 compared to $1,829 for the prior year period.
• Working capital of $2,168 for the year ended March 31, 2022 increased by 2% or $41 compared to $2,127 for the prior year period. (Working capital has been calculated by netting current assets, excluding current costs of deferred revenues, and current liabilities, excluding deferred revenue that are non-cash items.)

Normal Course Issuer Bid

The Company filed a Notice of Intention to Make a Normal Course Issuer Bid (the "Bid") with the TSX Venture Exchange ("TSXV") commencing April 13, 2021 and ending on April 12, 2022. Pursuant to the Bid, the Company proposed to purchase through the facilities of the TSXV up to 1,504,253 common shares, representing approximately 5% of the then issued and outstanding common shares of the Company. The Company's broker for the Bid is Hampton Securities Limited.

During the year ended March 31, 2022, the Company purchased 507,000 common shares under the Bid for a total of $144 or $0.28 per common share (March 31, 2021 - 250,000 common shares were purchased for a total of $83 or $0.33 per common share), plus an additional $3 in broker fees were paid for the repurchase of the shares (March 31, 2021 - $3).

During the year ended March 31, 2021, Normal Course Issuer Bid repurchases were made pursuant a bid filed with the TSXV for the period commencing March 27, 2020 and ending on March 26, 2021. The Company's broker for this bid was also Hampton Securities Limited. See Subsequent Events below.

Stock Option Plan

A total of 150,000 common shares of AirIQ were issued from treasury pursuant to the exercise of stock options under the Company's Plan during the fiscal year ended March 31, 2022 for an aggregate consideration of $23 (March 31, 2021 - 506,127 options exercised).

Subsequent Events

Normal Course Issuer Bid

Subsequent to the year end, on June 6, 2022, the Company announced the renewal of its normal course issuer bid to purchase up to 1,486,403 common shares representing 5% of the Company's then current issued and outstanding common shares through the facilities of the TSXV during the period commencing June 6, 2022 and ending on June 5, 2023 (the "Renewal Bid"). As of July 13, 2022, the Company repurchased for cancellation an additional 158,000 common shares pursuant to the Renewal Bid for a total purchase price of approximately $44 or $0.28 per share, and broker fees of approximately $0.25 for such repurchases.

As of July 13, 2022, the Company has a total of 29,570,074 common shares issued and outstanding.

Unless otherwise noted herein, all references to dollar amounts are in Canadian dollars in thousands of dollars except share and per share information.

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SELECTED ANNUAL INFORMATION
Financial Highlights
	Year ended	Year ended	Year ended
	31-Mar-2022	31-Mar-2021	31-Mar-2020
Recurring revenues	$3,504	$3,189	$2,944
Hardware and other revenues	$866	$519	$2,096
Total revenues	$4,370	$3,708	$5,040
Gross profit	$2,679	$2,494	$2,557
Gross profit margin %	61%	67%	51%
Expenses (1)	$1,770	$1,551	$1,650
EBITDAS (2)	$909	$943	$907
Other expenses (3)	$342	$494	$194
Total net income	$567	$449	$713
Income per share, basic	$0.02	$0.02	$0.02
Income per share, diluted	$0.01	$0.01	$0.02

1. Excludes share-based compensation and foreign exchange.
2. EBITDAS represents earnings before interest and non-cash items: depreciation and amortization, impairment of long-lived assets and share-based compensation.
3. Includes non-cash notional charges such as interest, depreciation and amortization and share-based compensation expense.

The accompanying Consolidated Statements of Comprehensive Income are presented for the year ended March 31, 2022 and 2021, comparatively, and include the operating results of AirIQ Inc. and its wholly owned subsidiaries.

Unless otherwise noted herein, all references to dollar amounts are in Canadian dollars in thousands of dollars except share and per share information.

RESULTS OF OPERATIONS

Revenues

Total revenue consists of airtime services, hardware, components and miscellaneous parts, repair, warranties and sales related to lost units.

Revenue from airtime services are recognized as services over the life of the contract as services are provided; revenue from hardware, components and miscellaneous parts, repairs and lost unit sales that are independent of the provision of airtime services are recognized upon delivery; and revenue from hardware, components and miscellaneous parts and warranties sold as part of airtime service contracts are recorded as deferred revenue and recognized over the initial term of the service contract.

Total revenue for the year ended March 31, 2022, increased 18% to $4,370 from $3,708 for the year ended March 31, 2021. The impact of the change in the U.S. to CAD dollar exchange rate was not material.

Recurring Revenues

Recurring revenue from service contracts of $3,504 represents an increase of 10%, compared to $3,189 for the year ended March 31, 2021. Recurring revenue represented 80% respectively, of total revenue for the year ended March 31, 2022 compared to 86% of total revenue for the year ended March 31, 2021.

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Hardware and Other Revenues

Included in the Company's revenues are:

• Sales of hardware units associated with service contracts of approximately $156, during the year ended March 31, 2022, compared to $159 during the year ended March 31, 2021.
• Sales of units that were sold without a fixed term service contract of approximately $666, during the year ended March 31, 2022 compared to $353, for the year ended March 31, 2021.
• Miscellaneous parts, repair, warranty and lost unit sales of approximately $44 during the year ended March 31, 2022, compared to $7 for the year ended March 31, 2021.

Gross Profit

Overall, gross profit increased by 7%, or $185, to $2,679, for the year ended March 31, 2022 compared to $2,494 for the year ended March 31, 2021.

Gross margin as a percentage of revenues of 61% for the year ended March 31, 2022 decreased compared to 67%, respectively, in the prior year period.

Equipment gross profits increased by approximately 335%, or $104 to $73, during the year ended March 31, 2022 from ($31), for the year ended March 31, 2021.

Service contract gross profits increased by approximately 3%, or $81 to $2,606 for the year ended March 31, 2022 from $2,525 for the year ended March 31, 2021.

Expenses and Other Items

Expenses include sales and marketing costs, general and administrative expenses and engineering and research expenses.

"Sales and marketing" expenses include all salaries and related costs of marketing, sales, client care, account management and other direct expenses such as advertising, marketing and sales support materials, trade show and other travel costs.

"Engineering and research" expenses consist of costs associated with acquired and internally developed software and device hardware, including fees to independent contractors and salaries and related expenses of personnel engaged in these activities.

"General and administrative" expenses include salaries and related costs including finance, information technology and administrative personnel. In addition, general and administrative expenses include rent and occupancy costs, professional fees, insurance, investor relations, directors' fees, regulatory filing fees, travel and costs related to board of directors or committee activities.

Sales and marketing, research and development and general and administrative expenses totalled $1,770 for the year ended March 31, 2022 compared to $1,551 for the year ended March 31, 2021.

The Company recognized certain government grants in the year ended March 31, 2022. Government grants are recognized in the accompanying consolidated statements of income and comprehensive income as an offset against expenses for which they were intended to subsidize. Grants recognized within the period included the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and the Canada Emergency Business Account loan. Details are provided in "Impact of COVID-19" below.

Overall, these expenses increased by $219 for the year ended March 31, 2022 when compared to the year ended March 31, 2021, primarily due to reductions in wage and related expenses resulting from the Company's application for assistance under the Canada Emergency Wage Subsidy discussed in the "Impact of COVID-19" below.

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