AirIQ : Q2 2022 MD&A

AirIQ Inc.

Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six Months Ended September 30, 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 November 16, 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 interim financial statements of AirIQ have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The accompanying consolidated condensed interim 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 condensed interim 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 condensed interim statements of comprehensive income are presented for the three and six months ended September 30, 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

AirIQ Inc. - MDA - September 30, 2022	1
In thousands of Canadian dollars, except share and per share information

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 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.

Second Quarter Highlights (for the three months ended September 30, 2022 compared to September 30, 2021)

• Recurring revenue of $959 increased by 12% or $100 compared to $859 for the prior year.
• Recurring revenue represented 82% of total revenue compared to 73% in the prior.
• Total revenue of $1,169 remained relatively unchanged compared to $1,179 for the prior year.
• Gross profit of $708 increased by 3% or $23 compared to $685 for the prior year.
• Gross margin of 61% increased by 3% compared to 58% for the prior year.
• EBITDAS of $226 decreased by 13% or $34 compared to $260 for the prior year.
• Net income of $282 increased 22% or $51 compared to $231 for the prior year.
• Cash balance of $2,111 decreased by 7% or $53 compared to $2,275 for the prior year.
• Working capital of $2,766 increased by 2% or $41 compared to $2,725 for the prior year. (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.)

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In thousands of Canadian dollars, except share and per share information

Normal Course Issuer Bid

On June 6, 2022, the Company filed a Notice of Intention to Make a Normal Course Issuer Bid (the "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 TSX Venture Exchange ("TSXV") during the period commencing June 6, 2022 and ending on June 5, 2023. The Company's broker for the bid is Hampton Securities Limited.

During the three and six months ended September 30, 2022, the Company repurchased for cancellation 56,500 and 214,500 common shares, respectively, pursuant to the Bid (three and six months ended September 30, 2021 - 95,500 and 294,000, respectively) for a total purchase price of approximately $15 and $59, or $0.27 and $0.27, respectively, per share (three and six months ended September 30, 2021 - $28 and $82, or $0.29 and $0.28, respectively), and paid broker fees of approximately $nil and $nil, respectively (three and six months ended September 30, 2021 - $1 and $3, respectively), for such repurchase.

Subsequent to the quarter end in October and early November 2022, the Company repurchased for cancellation an additional 146,000 common shares under the Bid for a total of $38, or $0.26 per common share, and additional broker fees in the amount of $nil were paid for the repurchase of the shares. See also note 9(a), Normal Course Issuer Bid.

Stock Option Plan

A total of 1,000,000 common shares of AirIQ were issued from treasury pursuant to the exercise of stock options under the Company's Plan during the six months ended September 30, 2022, for an aggregate consideration of $210. No options were exercised during the three months ended September 30, 2022.

As at November 2, 2022, the Company has a total of 29,367,574 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.

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 three months ended September 30, 2022, remained relatively unchanged at $1,169 from $1,179 for the three months ended September 30, 2021.

Total revenue for the six months ended September 30, 2022 increased 6% to $2,401 from $2,261 for the six months ended September 30, 2021.

Recurring Revenues

Recurring revenue from service contracts of $959 represents an increase of 12% or $100, compared to $859 for the three months ended September 30, 2021. Recurring revenue represented 82% of total revenue for the three months ended September 30, 2022, compared to 73% of total revenue for the three months ended September 30, 2021.

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In thousands of Canadian dollars, except share and per share information

Recurring revenue from service contracts of $1,910 represents an increase of 15% or $249, compared to $1,661 for the six months ended September 30, 2021. Recurring revenue represented 80% of total revenue for the six months ended September 30, 2022, compared to 73% of total revenue for the six months ended September 30, 2021.

Hardware and Other Revenues

Included in the Company's revenues are:

• Sales of hardware units associated with service contracts of approximately $152 and $369, respectively, during the three and six months ended September 30, 2022, compared to $273 and $458, respectively, during the three and six months ended September 30, 2021.
• Sales of units that were sold without a fixed term service contract of approximately $38 and $91, respectively, during the three and six months ended September 30, 2022, compared to $41 and $129, respectively, for the three and six months ended September 30, 2021.
• Miscellaneous parts, repair, warranty, and lost unit sales of approximately $20 and $31, respectively, during the three and six months ended September 30, 2022, compared to $6 and $13, respectively, for the three and six months ended September 30, 2021.

Gross Profit

Overall, gross profit increased by 3% and 8%, or $23 and $103, to $708 and $1,451, respectively, for the three and six months ended September 30, 2022, compared to $685 and $1,348, respectively, for the three and six months ended September 30, 2021.

Gross margin as a percentage of revenues of 61% and 60%, respectively, for the three and six months ended September 30, 2022, increased or remained flat compared to 58% and 60%, respectively, in the three and six months ended September 30, 2021.

Equipment gross profits decreased by $13 and $4 (or 36% and 5%) to $23 and $77, respectively, during the three and six months ended September 30, 2022, from $36 and $81, respectively, for the three and six months ended September 30, 2021.

Service contract gross profits increased by $36 and $107 or 6% and 8% to $685 and $1,374, respectively, for the three months ended September 30, 2022, from $649 and $1,267, respectively, for the three and six months ended September 30, 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.

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In thousands of Canadian dollars, except share and per share information

Sales and marketing, research and development and general and administrative expenses totalled $482 and $925, respectively, for the three and six months ended September 30, 2022, compared to $425 and $807, respectively, for the three and six months ended September 30, 2021.

The Company recognized certain government grants in the three months ended September 30, 2021. 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 $35 and $79 for the three and six months ended September 30, 2022, when compared to the three and six months ended September 30, 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.

Expense increases for the three months ended September 30, 2022, when compared to the three months ended September 30, 2021 occurred in the following areas: (a) increase in consulting expenses of $12, (b) increase in computer operating costs of $1, (c) increase in commercial, officer and director insurance of $2, (d) increase in rent and maintenance of $3, (e) increase in legal, audit, and tax costs of $9, (f) increase in public reporting costs of $4, (g) increase in bad debt expense of $30, (h) increase in other expenses of $1. These expenses increases were offset by decreases in the following areas: (a) salaries and benefits expense of $5.

Expense increases for the six months ended September 30, 2022 when compared to the six months ended September 30, 2021 occurred in the following areas: (a) increase in salaries and benefits of $35, (b) increase in consulting expenses of $12, (c) increase in commercial, officer and director insurance of $3, (d) increase in rent and maintenance of $8, (e) increase in legal, audit, and tax costs of $14, (f) increase in public reporting costs of $7, (g) increase in bad debt expense of $45. These expenses increases were offset by decreases in the following areas: (a) computer operating costs of $1 and, (b) a reduction in other expenses of $5.

Interest and Other Financing Charges

Net interest expense for the three and six months ended September 30, 2022, was $1 and $2, respectively, compared to $1 and $2, respectively, for the three and six months ended September 30, 2021.

Net interest income for the three and six months ended September 30, 2022, was $6 and $8, respectively, compared to $1 and $2, respectively, for the three and six months ended September 30, 2021.

Depreciation and Amortization

Amortization for the three and six months ended September 30, 2022, was $81 and $160, respectively, compared $76 and $150, respectively, for the three and six months ended September 30, 2021.

Foreign Exchange

For the three and six months ended September 30, 2022, the Company recorded a foreign exchange gain of $141 and $180, respectively, compared to a gain of $47 and $18, respectively, for the three and six months ended September 30, 2021.

Stock Based Compensation

For the three and six months ended September 30, 2022, the Company recorded a stock-based compensation expense of $9 and $10, respectively, compared to $nil and $2, respectively, for the three and six months ended September 30, 2021.

Net Income

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In thousands of Canadian dollars, except share and per share information