Reklaim : Management’s Discussion & Analysis 1Q24

REKLAIM LTD.

Management's Discussion & Analysis

As of March 31, 2024, and 2023

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DATED: May 28, 2024

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS & RESULTS OF

OPERATIONS

The following Management's Discussion and Analysis ("MD&A") should be read in conjunction with the consolidated financial statements ofReklaim("the Company") and the notes to those

statements for the three months ended March 31, 2024. The accompanying condensed consolidated interim financial statements have been prepared and are the responsibility of

Reklaim's management. The consolidated financial statements, including comparatives, have been prepared per International Financial Reporting Standards ("IFRS") as issued by the

International Accounting Standards Board. Dollar amounts are expressed in Canadian dollars unless otherwise noted.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

The following MD&A contains forward-looking information and statements. Except for statements of historical fact that address activities, events, or developments that the Company believes, expects, or anticipates will or may occur in the future, which constitute forward-looking statements. The Company cautions that this MD&A may contain forward-looking statements that involve several risks and uncertainties, including statements regarding the growth of the

Company's user base, the Company's strategic partnerships, the Company's development of revenue generated, the Company's plans to scale its business, the introduction of new products

and features, improvements to user experience on the Reklaim platform, and the outlook for the Company's business and results of operations. Forward-looking statements include those identified by the expressions "will," "may," "should," "continue," "anticipate," "believe," "plan(s)," "estimate," "project," "expect," "intend" and similar expressions to the extent that

they relate to the Company or its management. These risks and uncertainties could cause results to differ materially from those indicated. Such risks and uncertainties include, but are not limited to: the Company may not be successful in acquiring data, adding accounts to its platform, or

converting such accounts to users; the Company's active user base may not grow despite the Company's efforts; the Company may not be able to cultivate strategic partnerships in the future; the Company's revenue may not increase over time; the Company may not be able to scale its

business; the Company may not be successful in obtaining opt-in from the accounts; the Company may not introduce any new products or features; the Company may not be able to improve user experience on the Reklaim platform; and the inability of the Company to implement

its growth strategy. Forward-looking statements are provided to assist external stakeholders in understanding management's expectations and plans relating to the future as of the date of this

MD&A and may not be appropriate for other purposes. Forward-looking statements are made as of the date of this MD&A, and Reklaim disclaims any intention or obligation to update or revise

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any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers should not place undue reliance on the Company's forward-looking

statements.

OVERVIEW OF THE BUSINESS

Every consumer has a data profile circulating in the market today. No consumer has access to

this profile, options for how it should be used, or control over it. Reklaim is focused on changing this for the world's 7 billion consumers. Reklaim's mission is to provide every consumer with

access to their data, to view the data that is in the market, to see what companies are using it for, to see how much revenue is being generated from it, and to provide options for consumers regarding how they would like their data to be used, including direct compensation. The future of data is driven by an acceleration towards privacy that includes the consumer in its decision- making. Reklaim aspires to be the brand facilitating this optionality and control for the consumer.

Consumers in North America can visit the Reklaimmobile application and add an email address or phone number to query what data is circulating on them today. Once validated, Reklaim cross- references this email address or phone number across data and security sources and shows the user the data others exploit. Reklaim is the only company in the world that provides this service. With this transparency now supplied to a consumer, users can place this data in a Reklaim account they control. In a Reklaim account, users can edit, add or remove data from

their profile. They can also opt-out or opt-in to be compensated in exchange for using their data. Should a user opt-in,they will be exposed to 'orders' from brands directly asking explicit

permission to use the data the consumer has shared. If accepted by the consumer, they will receive weekly compensation that they can claim and redeem in various forms, including, but not limited to, crypto, gift cards, fiat via PayPal, or charitable donations. Orders are tied to a business model where the payment to the user goes up when Reklaim sells more data and down when it sells less. Reklaim earns a commission each time data is purchased. The more data in the platform, the more data can be sold. The more data sold, the more money the consumer (and Reklaim) makes, inspiring the consumer to share more data, which drives more sales. This is the Reklaim fly-wheel.

By offering compliant, zero-partydatato brands, agencies, data platforms, and data companies, Reklaim provides an environment where these firms can purchase this data directly from the user, solving relevant compliance, fidelity, privacy, and user consent issues.

Reklaimbelieves there is currently no Direct-to-Consumer("DTC") brand in the consumer data market that provides the services that Reklaim does. By becoming the destination for consumers, its brand will become synonymous with consumer privacy.

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Reklaim Highlights for the three months ended March 31, 2024 (Q1 2024)

• The Company achieved Q1 2024 revenue of $728,427, a slight increase over Q1 2023 revenue of $728,304.
• Gross Margins improved 82% in Q1 2024 from 71% in Q1 2023.
• Achieved recurring revenue of 100% in Q1 2024, up from 91% in Q1 2023
• Positive cash flow from operation of $463,645, an increase of $595,814 over Q1 2023.
• The Company's cash position increased to $554,618 as of March 31, 2024, compared to $57,806 on March 31, 2023.

Key Performance Indicators ("KPIs") for Q1 2024

Following our efforts to scale accounts and distribution channels, Reklaim is successfully executing its business-to-business("B2B") strategy of selling unique consumer data to a large

and growing list of clients. Although our business has seasonality (more robust in the fourth calendar quarter), our B2B sales efforts continue to scale. We track our progress with the following KPIs:

• Platform revenue, encompassing 'Audiences' and 'Deals' (Deals combine Reklaim data and publisher inventory in a vertically integrated buy), decreased by 5% in Q1 2024.
• Deal revenue grew 76% in Q1 2024 compared to Q1 2023.
• Identity revenue, representing 30% of total revenue, grew by 14% in Q1 2024 compared with Q1 2023.
• The number of B2B customers grew to 110 in Q1 2024, compared to 109 in Q1 2023.

OBJECTIVES

While the Company anticipates the growth of the number of consumer profiles and data per profile, its focus is on driving increased profitable revenue by selling more of the data it currently has to more brands, agencies, and data companies while simultaneously expanding the distribution of Reklaim data. Profitability continues to be the company's focus. We are not prepared to burn cash on ego-driven metrics or initiatives that add unsustainable revenue or promotional visibility to the company. Investors should understand that the Company will grow as fast as its profitability and cash flow permit.

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Key goals for 2024

• Grow topline revenue at a similar growth rate as experienced in 2023.
• Achieve continued profitability and generate positive cash flow for 2024.
• Reduce the amount of secured debentures outstanding.
• Reduce the number of outstanding warrants through voluntary exercise.
• Expand the number of B2B platforms that carry and expose Reklaim data to their clients.
• Focus on those data elements that require a higher level of compliance and opt-in, such as SPI and Ethnicity, and expand into Health data.
• Support a cash-neutral/cash-positive business by maintaining operating margins and cost controls and maximizing efficiencies in cloud hosting.

As we enter Q2, all 2024 goals mentioned above remain attainable. We have invested in the business to put us in a position to grow the topline on a similar path to 2023 and are confident we will maintain full-year profitability. Our market positioning of focusing on data that requires a higher level of compliance is resonating and is the foundation of our activity. We have agreement on a plan to eliminate the debentures, and we have seen a consistent exercise of warrants throughout 2024. Platforms that carry Reklaim data continue to grow. At the same time, we are eliminating those platforms that do not provide a suitable ROI for Reklaim so we can allocate our time and attention to those platforms that present more opportunities for Reklaim in the future.

Business-to-Business Growth

The Company is focused on increasing the volume of data sold to existing and new clients based on the insights generated from its current data profiles. We expect growth to continue on the same trajectory for upcoming quarters. Since last year, the Company has doubled its sales and client service teams to accelerate revenue opportunities and service existing customers.

Data Augmentation

Through strategic partnerships with data companies, security firms, and publishers, these partners bring their data to Reklaim to augment the fidelity and consent of their data. The result is a zero-cost data acquisition model for Reklaim. Typical use cases for why partners bring their data to Reklaim are adding new identifiers such as email or a mobile ID to an existing profile.

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Adding these variables improves addressability, supplementing the loss of signals such as cookies, mobile IDs, and IP addresses due to privacy regulations and OEM (original equipment manufacturers) changes. Adding additional attributes such as age and gender to an existing profile or gaining 1x1 consent from a user due to the partner's inability to communicate directly with consumers are other reasons companies use Reklaim to augment their data. Reklaim is compensated each time it provides one of these partners with an enhanced profile.

Accounts versus Active Users

In addition to individuals signing up directly to the Reklaim platform, the Company acquires

consented data through partnerships with publishers and data companies. Like Uber and AirB&B, Reklaim aspires to 'own' no data. Instead, it acts as a destination for consumers who can

own and manage their data for a fee, creating an increasingly high-margin,asset-light business model.

After integrating data from its partners, the Company attempts to contact each account to notify

them of how they can access their data while allowing them to take advantage of the income opportunities offered in the Company's ecosystem. Reklaim is the only company today offering

consumers access to historically collected and sold data without their participation. Upon joining

the Reklaim platform, the Company recognizes such an account as active and is integrated into the Company's ecosystem.

If the account opts out, the account is removed from the Company's platform.

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CEO OUTLOOK

The advertising and data market in the USA remains resilient, with major ad agencies reporting1 Q1 growth rates ranging from 5% (Publicis) to -1% (WPP). We anticipate revenue and ad spending will continue to rise sequentially in 2024 from a low in Q1 to a peak in Q4, as we have seen in previous years. Our goal of continuing to grow the company at a similar pace to previous years

remains intact as we continue to see increased traction with our explicitly opt-in data and the overall growth of our vertically integrated 'deals,' which combine Reklaim data with publisher

inventory.

As noted in our previous MD&A2, as expected, Q1-2024 started slowly but increased throughout the quarter and continued into Q2.

In Q1, we started the year with expanded sales and client service teams, positioning us well for future revenue growth in 2024. Quarter over quarter, the company continues to increase its distribution outlets where Reklaim data can be purchased while adding new clients and returning former clients.

In January3, Google phased out 1% of third-party cookies (impacting about 30 million Chrome users), but later4 announced a delay in the complete deprecation until 2025. Although we did not anticipate the complete removal of cookies in 2024 due to it being an election year, we were surprised by their decision to postpone the removal entirely instead of gradually increasing the depreciation rate while delaying the full phase-out.

One benefit of this cookie delay is that it removed the confusion in the market surrounding this signal loss. This has allowed brands and platforms to focus on how privacy impacts their business today rather than fixating on the uncertain future of cookies-a positive for Reklaim. As a result of this change in focus, we have seen a palatable increase in interest from platforms and brands looking for help navigating this space. For investors new to Reklaim, it's essential to understand that privacy is not a theme on the horizon that we are hoping to capitalize on, but one that is very much inflecting now. For context, in Q1 last year, one US state changed its privacy regulations to be more explicit and consumer-friendly; this has now grown to 16 states. Privacy is accelerating, and Reklaim stands to benefit from this expansion.

• https://www.wsj.com/articles/tech-spending-still-proves-thorny-for-some-advertising-companies-5d8216f2?st=u1vvjdm4yxrha4y
  2 https://drive.google.com/file/d/14OfH4h-rV0UCnOmqdbst1yfXfJhJg0u1/view
  3 https://www.emarketer.com/content/google-turns-off-cookies-30-million-chrome-users-that-s-just-14 https://www.businessinsider.com/google-cookie-removal-delay-update-2024-4

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Exclusion is not a strategy.

In previous MD&As, we discussed the reclassification of data into new categories requiring

explicit consent and its role as a catalyst for Reklaim. This quarter, we will examine how these new data categories are leading to a trend of 'exclusion' among some of the largest brands and

platforms in the USA.

To recap, sensitive personal information (SPI) encompasses data that requires explicit opt-in for its use. Categories reclassified as SPI include, but are not limited to, ethnicity, sexuality, location, credit history, and union membership.

We have identified two main trends in the market regarding SPI in Q1: the first is a general ignorance by brands and agencies of its existence, and the second is exclusion. It is challenging to understand why there is such a low level of awareness about SPI among firms that control significant media spending and are now subject to these changes. The prevailing belief is that privacy laws are evolving so rapidly that there is a delay between their enactment and the implementation by those responsible-primarily advertising agencies. We hope this gap will close over time.

The Reklaim team dedicates substantial effort to educating agency and brand leaders on the necessity of adapting their strategies to comply with the law. However, it would be misleading to claim we are always successful. We are often perplexed to see brands continuing with flawed practices despite being aware of the legal implications. Reklaim believes that most Fortune 500 companies are running marketing campaigns using illegal data due to their agencies' lack of understanding of privacy and a reliance on outdated strategies and vendors. This will not end well.

As a result of this widespread oversight, Reklaim has adjusted its approach over the past few quarters to engage more directly with brands, bypassing agencies in some cases to expedite compliance. When approached directly, we have found that brands appreciate ensuring their brand aligns with legal and privacy standards much more.

The second trend of exclusion is accelerating among firms that are aware of market changes but need a strategy to address them. Rather than adapting, these companies choose to exclude certain states or categories altogether, creating significant gaps in their approach. This is not a viable long-term strategy. In Q1, we observed one of the largest media agencies representing a global packaged goods firm exclude multicultural marketing entirely, despite Hispanics making up 18%, African Americans 13%, and Asians 6% of the U.S. population-nearly 40% combined. Whether this agency's client knows their marketing dollars exclude large segments of consumers and states is unclear. Our guess is no.

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Other first-hand examples from Q1 include:

• A publicly traded DSP is blocking all ad requests from Washington State due to the recently enacted My Health My Data policy, for which they have no solution.
• A significant health-focused marketing agency has removed three states from all client campaigns in response to new health data legislation and a lack of a strategy to tackle these states
• One of the largest data brokers in the USA has ceased multicultural targeting in three states due to its reclassification as SPI.

Excluding states and entire categories of consumers is not a scalable strategy. However, it is encouraging that many of these firms seek partners to help address these gaps. Many believe they have found this partner in Reklaim.

As the market evolves with more privacy regulations, platforms, and brands will seek new partners to address their exclusion strategies. Reklaim, with its direct interaction with consumers, is well-positioned to help, which bodes well for our future.

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