ADCORE Inc.

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MANAGEMENT`S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Dated November 8, 2023

100 King St W Suite 1600 Toronto, Ontario M5X 1G5 https://www.adcore.com/

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

This management’s discussion and analysis (“ MD&A ”) relates to the operating results and financial position and cash flows of Adcore Inc. (the “ Company ” or “ Adcore ”) and its wholly owned subsidiaries (the “ Subsidiaries ”) Podium Advertising Technologies Ltd., (“ Podium ”), Adcore Australia Pty., (“ Adcore AU ”) Adcore US Inc. (“ Adcore US ”), Amphy EdTech Ltd., (“ Amphy ”) and Adcore East Limited (“ Adcore East ”), which holds Adcore China (“ Adcore CH ”), as of and for the three and nine months ended September 30, 2023. This analysis should be read in conjunction with the interim condensed consolidated financial statements of the Company as at and for the three and nine months ended September 30, 2023 (the “ Interim Condensed Consolidated Financial Statements ”). The Interim Condensed Consolidated Financial Statements include the accounts of the Company and the Subsidiaries, and all inter-company balances and transactions have been eliminated on consolidation. For the avoidance of doubt, any reference to the Company in this MD&A fully incorporates and includes any subsidiary of the Company and/or any other future subsidiary of the Company.

The Interim Condensed Consolidated Financial Statements of the Company, and extracts of those financial statements provided in this MD&A are in accordance with International Financial Reporting Standards (“ IFRS ”). References to the symbol “CAD$” mean the Canadian dollar. References to the symbol “NIS” mean the New Israeli Shekel, the official currency of Israel. Except as otherwise set out herein, all amounts expressed herein are in thousands of United States dollars, denominated by “$” or “US$”, the functional currency of the Company. As a result of the rounding of dollar differences, certain total dollar amounts in this MD&A may not add exactly to their constituent amounts. Throughout this MD&A, percentage changes are calculated using numbers rounded as they appear. Readers are cautioned that this MD&A contains certain forward-looking information. Please see the “Forward Looking Statements” section which follows.

The information in this report is dated as of November 8, 2023.

FORWARD-LOOKING STATEMENTS

This MD&A contains “forward looking statements” that reflect the Company’s current expectations and projections about its future results. When used in this MD&A, forward looking statements can be identified by the use of words such as “may”, or by such words as “will”, “intend”, “believe”, “estimate”, “consider”, “expect”, “anticipate”, and “objective” and similar expressions or variations of such words. Forward looking statements are, by their nature, not guarantees of the Company’s future operational or financial performance and are subject to risks and uncertainties and other factors that could cause the Company’s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results, or that estimates or projections will be sustained.

In developing the forward-looking statements in the MD&A, the Company has applied several material assumptions, including the availability of financing on reasonable terms, the Company’s ability and general business and economic conditions. Many risks, uncertainties and other factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, demand for the Company’s products or services, the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other similar factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the MD&A or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, including the risks and uncertainties elsewhere in this MD&A, actual events may differ materially from current expectations. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained in the MD&A are expressly qualified in their entirety by this cautionary statement.

OVERVIEW

Adcore is a digital advertising technology company. Using machine learning artificial intelligence (“ AI ”) technology, Adcore’s suite of software-as-a-service (“ SaaS ”) products provide digital advertisers with smart algorithm-powered automation tools and reporting and analytics in order to help them improve online advertising effectiveness, maximize their return on advertising investment, and scale-up their digital campaigns. Adcore’s customers include customers from Asia-Pacific (hereafter: “APAC”), Europe, the Middle East and Africa (hereafter: “EMEA”), and North America, including enterprise companies, and small- and medium-sized businesses.

Adcore’s technology developers use machine learning, the branch of AI involving systems that learn from data. Large volumes of data are gathered, and Adcore’s proprietary learning algorithms are designed to generalize from that data to other cases of interest. Rapidly shifting data combined with a large volume of data requires training algorithms which are the foundation of Adcore’s search engine marketing platform.

Adcore offers four SaaS solutions and one platform in the EdTech space. SEMDOC² provides advertisers a powerful account auditing solution, utilizing both machine learning and smart algorithms to formulate 52 key insights and metrics on the account and campaign level. SEMDOC²’s powerful visual dashboard gives advertisers a clean and simple user interface to pin-point exact areas of weakness and missed opportunities – guiding them to superior results. Adcore VIEWS is a search automation solution which provides advertisers with a powerful algorithm bid management feature, which utilizes both machine learning and historical data which optimize and manage advertisers’ campaigns in the most efficient manner, ensuring their targets are met as effectively as possible. Adcore VIEWS also gives its users the ability to create and automate their own rule-based campaign management machine, which runs according to each users specified needs. FEEDITOR offers advertisers online shopping automation capabilities. From its ability to automate over one million campaigns to its inventory plugin, FEEDITOR ensures that advertisers’ ads are always up-to-date and in sync with their inventory. FEEDITOR uses machine learning algorithms to ensure that ads are seen at the right place, at the right time, for the right amount of money. Altogether, the Adcore Technology suite combines the industry’s leading automation and machine-learning – in order to ensure that advertisers reach the highest return on investment and scale in the most effective manner.

Effortless Marketing is a holistic marketing solution for Shopify store owners from feed creation and submission to smart campaign creation and performance tracking. Effortless Marketing makes it easy to promote products on Google, Facebook & Microsoft, among others and target shoppers searching for products. The innovative solution is fully customizable and allows store owners to select feed criteria, create ad campaigns, track ad performance and adjust budgeting. The app is a multi-country, multicurrency solution that enables advertisers to maximize product sales at their store by tracking traffic and sales for their digital marketing campaigns, with the option to adjust budgets and goals without leaving the App.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Amphy is one of the world’s most diverse 24/7 live online learning marketplace. With Amphy, learners can choose from over 1,900 classes across 80 categories to grow their passions and skills, expand their children’s learning opportunities, and much more. Instructors on the Amphy platform join a vibrant virtual teacher community that promotes and supports their success through enrichment seminars, marketing and advertising, and a suite of tools that allow them to run their classes hassle-free and focus on their students. Amphy students gain access to high quality, personalized classes accessible from 24/7, as well as join a growing community of lifelong learners.

After the Balance sheet date, on October 7, 2023, an attack was launched against Israel by Hamas (a terror organization) which thrust Israel into a state of war (hereinafter: "The state of war") in Israel and in Gaza strip. The company is continuing with its operations both in Israel and globally, as the state of war had no substantial impact on its operations or business results. The company continues to assess the effects of the state of war on its financial statements and business.

RESULTS OF OPERATIONS

Summary of quarterly results (in thousands of US$):

The following unaudited table sets out selected financial information for the Company on a consolidated basis for the last eight most recently completed quarters. The unaudited quarterly information has been derived from the financial statements:

	September	June	March	December	September	June	March 31,	December
	30, 2023	30, 2023	31, 2023	31, 2022	30, 2022	30, 2022	2022	31, 2021
Total revenues	6,080	5,299	5,044	6,478	5,452	4,057	3,706	7,196
Gross profit	3,673	2,271	2,028	2,763	2,488	1,640	1,601	2,388
Total comprehensive income (loss)	(140)	(311)	(450)	(383)	(213)	(960)	(662)	588
Basic profit (loss) per share	(0.002)	(0.007)	(0.007)	(0.006)	(0.003)	(0.015)	(0.010)	0.009
Diluted profit (loss) per share	(0.002)	(0.007)	(0.007)	(0.006)	(0.003)	(0.015)	(0.010)	0.009

The Company’s financial results and revenues may vary from quarter to quarter as a result of a variety of factors, some of which are outside of the Company’s control, such as the COVID-19 pandemic and market demand and conditions. The Company’s revenues depends upon the market conditions. For example, advertisers in the retail sector may spend the largest portion of their advertising budgets during the fourth quarter, in preparation for the holiday shopping season, whereas advertisers in the travel industry may concentrate their spending during the third quarter, to coincide with consumer patterns and trends. The Company’s financial results and revenues varied over the last eight most recently completed quarters also as a result of COVID-19, most notably during the (i) during the three month period ended June 30, 2022, in which the Company’s revenues decreased by 29%, compared to the three month periods ended June 30, 2021. A major reason for the decline in revenue was the company's strategic decision to focus on higher gross margins and avoid revenue from lower margin clients, even if it results in losing clients with lower margins; (ii) during the three month period ended December 31, 2022, the Company’s revenues and cost of revenues decreased by 10% and 23% year over year. However, gross profit increased by 16% due to extensive growth in North America and EMEA regions. During the three month period ended December 31, 2022 the company acquired new clients with higher profitability. (iii) during the three month period ended June 30, 2023 in which the company’s revenue and gross profit increased by 31% and 38%, respectively, compared to the three month period ended June 30, 2022. The increase was mainly driven from the Company’s significant increases in its existing clients across APAC and North America and from new activity in EMEA regions.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

Significant Developments for the three and nine months ended September 30, 2023 and to the date of this report

On February 23, 2023, Adcore announced that it has reached 2023 Google Premier Partner status, the highest tier of the Google Partnership program. The Premier Partner title is reserved for the top 3% of Google advertising partners each calendar year and represents the company’s most exclusive tier of their partnership program. Being selected as a Google advertising partner illustrates a company’s ability to maximize campaign success and drive client growth while demonstrating their expertise on the latest Google Ads products.

On May 17, 2023 , Adcore announced the renewal of its normal course issuer bid (the “ NCIB ”) to purchase up to 3,024,452 common shares of the Company (“ Common Shares ”) for cancellation.

On May 30, 2023 , Adcore announced that Criteo, the Commerce Media company, choose Adcore as Its Preferred Partner in Israel. The Criteo Commerce Media Platform creates an edge for customers’ advertising campaigns, as it combines large-scale commerce data and intelligence to deliver richer consumer experiences from product discovery to purchase.

On June 1, 2023 , Adcore announced that Microsoft advertising selected Adcore as global channel partner of the year. the global channel partner of the year award recognizes the top company that has demonstrated excellence in partnering with Microsoft Advertising.

On June 29, 2023 , Adcore announced that Adcore is recognized under Amazon’s verified partner status. Amazon’s verified partner status expands Adcore’s service offering, providing its customers with a suite of benefits designed to maximize return on advertising investments while also granting access to exclusive events, sponsored programs, and co-marketing support.

On August 8, 2023 , Adcore announced that the Israeli Government Advertising Agency (“IGAA”) has extended its digital advertising contract with Adcore for an additional 10 months at a potential value of CAD $20 million in ad spend. This extension ensures Adcore will oversee the IGAA’s digital marketing for the remainder of this year.

On August 22, 2023 , Adcore announced that it has entered into an agreement to provide digital advertising technology and services for one of Australia’s top online apparel retailers, Runaway The Label. Under the terms of the agreement, Adcore will manage Runaway The Label’s advertising budget, which is expected to invest in the next 12 months between CAD $1.75 million and CAD $2.5 million on ad spend.

On October 12, 2023 , Adcore announced that Mr. Amit Konforty, CPA, currently serving as Adcore’s Director of Finance, has been promoted to be the Chief Financial Officer of the Company effective November 11, 2023. Mr. Konforty will replace Mr. Sadot who has resigned from his position as Chief Financial Officer of the Company effective November 10, 2023 and will depart the Company.

On October 18, 2023 , Adcore announced a new digital advertising contract with a health and wellness company based in Australia. The total advertising spend for this endeavor is for a budget of up to CAD $10 million dollars over an up-to 12-month term of the contract, potentially generating approximately CAD $1 million in revenue for Adcore.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Selected information for the three and nine months ended September 30, 2023, and 2022

The following table provides selected financial information from the Interim Condensed Consolidated Financial Statements of the Company For the three and nine months ended September 30, 2023, and 2022:

Note	Three months ended September 30, 2023	Three months ended September 30, 2022	Three months ended September 30, 2022	Nine months ended September 30, 2023	Nine months ended September 30, 2023
			Unaudited $	in thousands
5	6,080 3,673 2,407 231 2,176 - 125 (4) (121) 19 (140) (0.002) (0.002) 60,382,149 60,382,149	5,452 2,964 2,488 338 1,838 312 513 - (201) 12 (213) (0.003) (0.003) 62,928,181 62,928,181			16,423 9,717 6,706 794 6,404 (492) 508 (37) (963) 33 (996) (0.016) (0.016) 60,387,553 60,387,553

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Revenues

For the three and nine months ended September 30, 2023, total revenues amounted to $6,080 and $16,423, respectively, compared to $5,452 and $13,215 For the three and nine months ended September 30, 2022.

The increase in revenue by $628 and $3,208 for the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022, was driven primarily from the Company’s significant increases in its existing clients activity across APAC and from new activity in EMEA regions.

Cost of revenues

Cost of revenues consist primarily of media costs, account managers salaries and related expenses and others.

For the three and nine months ended September 30, 2023, cost of revenues amounted to $3,673 (60% as a percentage of revenues) and $9,717 (59% as a percentage of revenues), respectively, compared to $2,964 (54% as a percentage of revenues) and $7,486 (57% as a percentage of revenues) For the three and nine months ended September 30, 2022. The increase was driven primarily by the increase in revenues for the three and nine months ended September 30, 2023.

Gross profit

For the three and nine months ended September 30, 2023, gross profit amounted to $2,407 (40% as a percentage of revenues) and $6,706 (41% as a percentage of revenues), respectively, compared to $2,488 (46% as a percentage of revenues) and $5,729 (43% as a percentage of revenues) For the three and nine months ended September 30, 2022. The increase in gross profit for the nine month ended September 30, 2023, was primarily due to the growth in revenue.

Research and development expenses

Expenditure incurred on development activities including the Company’s development is capitalized where the expenditure will lead to new or substantially improved products and only if all the following can be demonstrated: (i) the product is technically and commercially feasible; (ii) the Company intends to complete the product so that it will be available for use or sale; (iii) the Company has the ability to use the product or sell it; (iv) the Company has the technical, financial and other resources to complete the development and to use or sell the product; (v) the Company can demonstrate the probability that the product will generate future economic benefits; (vi) the Company is able to measure reliability the expenditure attributable to the product during the development.

For the three and nine months ended September 30, 2023, the company capitalized expenses of $132 and $455, respectively, to intangible assets under the AdTech activity compared to $136 and $472 For the three and nine months ended September 30, 2022.

For the three and nine months ended September 30, 2023, the company capitalized expenses of $88 and $304, respectively to intangible assets under the EdTech activity compared to $142 and $413 For the three and nine months ended September 30, 2022.

For the three and nine months ended September 30, 2023, research and development expenses amounted to $231 and $794, respectively, compared to $338 and $930 For the three and nine months ended September 30, 2022.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Selling, general and administrative expenses

Selling, general and administrative expenses for the three and nine months ended September 30, 2023 amounted to $2,176 and $6,404, respectively, compared to $1,838 and $5,299 For the three and nine months ended September 30, 2022, an increase of $338 and $1,105. The increase was attributable mainly to an increase in payments made for media partners as part of partnerships’ agreements, and to an increase in headcount related to Selling, general and administrative items.

Operating profit

For the three and nine months ended September 30, 2023, operating loss amounted to nil and $492, respectively, compared to an operating profit of $312 and operating loss of $500 in the three and nine months ended September 30, 2022, respectively. The decrease of $312 or 100% and the decrease of $8 or 2% were mainly attributable to the increase in Selling, general and administrative expenses.

Financial expenses

For the three and nine months ended September 30, 2023, financial expenses amounted to $125 and $508, respectively, compared to $513 and $1,554 For the three and nine months ended September 30, 2022. This decrease was largely attributable to changes in foreign exchange rates.

Financial income

For the three and nine months ended September 30, 2023, financial income amounted to $4 and $37, respectively, compared to nil and $229 For the three and nine months ended September 30, 2022. This decrease was largely attributable to warrants fair market value revaluation.

Taxes on income

The effective Israeli tax rate, which is the primary tax rate of the Company For the three and nine months ended September 30, 2023, and 2022 was 12%.

For the three and nine months ended September 30, 2023, taxes on income amounted to $19 and $33, respectively, compared to $12 and $27 For the three and nine months ended September 30, 2022.

Non-IFRS Financial Measures

This MD&A includes certain measures which have not been prepared in accordance with IFRS such as Adjusted EBITDA. Adjusted EBITDA does not measure of performance under IFRS and should not be considered in isolation or as a substitute for net and comprehensive income or loss prepared in accordance with IFRS or as a measure of operating performance or profitability. Adjusted EBITDA does not have a standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adjusted EBITDA for the three months ended September 30, 2023 and 2022

“Adjusted EBITDA”

refers to operating income after adjusting for depreciation and amortization, share-based compensation expense, transaction costs, adjustments to acquisition related contingent consideration, loss on disposal of assets, impairment of intangible assets, and significant items that are non-operating in nature in order to evaluate Adcore’s core operating performance against prior periods. The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and the other items listed below. It is a key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare the Company’s annual budget, and to develop the Company’s operating plans.

Management believes that this non-IFRS financial measure reflects the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the Company’s business, as it excludes expenses and gains that are not reflective of the Company’s ongoing operating results. Management also believes that this non-IFRS financial measure provides useful information to investors in understanding and evaluating the Company’s operating results and future prospects in the same manner as management believes. This non-IFRS financial measure may not be comparable to other entities.

The non-IFRS financial measures do not replace the presentation of the Company’s IFRS financial results and should only be used as a supplement to, not as a substitute for, the Company’s financial results presented in accordance with IFRS.

The non-IFRS adjustments, and the basis for excluding them from non-IFRS financial measures, are outlined below:

Amortization of Internally Generated Capitalized Development Costs - The Company is required to amortize the intangible assets, included in its IFRS financial statements, related to internally generated capitalized development costs. The amortization of internally generated capitalized development costs are non-cash charges. Management believes that such changes do not reflect the Company’s operational performance. Therefore, the Company excluded amortization of internally generated capitalized development costs to provide investors with a consistent basis for comparing pre- and post-transaction operating results.
Share-Based Payments - this adjustment is for share-based awards granted to certain individuals. They are non-cash and affected by the Company’s historical stock prices which are irrelevant to forward-looking analyses and are not necessarily linked to the Company’s operational performance.
Other non-operational items – Management believes that such changes do not reflect the Company’s operational performance. Therefore, the Company excluded those items, to provide investors with a consistent basis for comparing pre and post-transaction operating results.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

The following table presents the adjusted EBITDA For the three and nine months ended September 30, 2023, and 2022 ($ in thousands):

	Three months ended September 30, 2023	Three months ended September 30, 2022 Nine months ended September 30, 2023	Three months ended September 30, 2022 Nine months ended September 30, 2023	Nine months ended September 30, 2022
		($ in thousands)
Operating (loss) profit Depreciation and amortization Share-based payments Other non-operational items Total Adjustments Adjusted EBITDA
	-	312	(492)	(500)
	153	167	478	614
	24	55	183	305
	-	-	144	158
	177	222	805	1,077
	177	534	313	577

LIQUIDITY AND CAPITAL RESOURCES

The Company’s financial statements have been prepared in accordance with IFRS on the assumption that the Company is a going concern and will continue in operation for the foreseeable future. Hence, it is assumed that the Company has neither the intention nor the need to liquidate and is able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company has experienced profits since inception. In addition, management has determined that additional financing may be required to support operating and investing activities for the foreseeable future as the Company continues to expand its operations.

The Company believes it has sufficient cash resources to meet its current growth and development objectives. Although the Company has relied on revenue generated through its business, external funding may be required to continue growing the existing business and scaling operations. There can be no assurance that adequate funding will be available in the future, or under terms that are favorable to the Company.

The Company’s revenues and operating results may fluctuate from quarter to quarter and from year to year due to a combination of factors, including, but not limited to: access to funds for working capital, the number of securities sold pursuant to any financings and market acceptance of its services.

As of September 30, 2023, cash and cash equivalents & working capital amounted to $5,588 and $5,668 respectively, compared to $6,525 and $6,831, respectively, at the year ended December 31, 2022. The decrease in working capital was largely attributable to the decrease in cash and cash equivalents, which as of September 30, 2023, amounted to $5,588 compared to $6,525 at the prior year end date.

For the nine months ended September 30, 2023, net cash from operating activities amounted to $67 compared to net cash used in operating activities amounting to $3,550 For the nine months ended September 30, 2022. The change was largely attributable to the decrease in net loss, and the decrease in trade receivables.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

For the nine months ended September 30, 2023, Net cash used in investing activities amounted to $775 compared to $927 For the nine months ended September 30, 2022. The decrease was largely attributable to the decrease in capitalized development cost for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

For the nine months ended September 30, 2023, Net cash used in financing activities amounted to $229 compared to $650 For the nine months ended September 30, 2022. The decrease was primarily attributable to the purchase of treasury shares in larger amounts in 2022.

Common Shares

As of September 30, 2023, the Company has 60,288,043 common shares (“ Common Shares ”) issued and outstanding.

Changes in the number of issued Common Shares from December 31, 2022, to September 30, 2023 are as follows:

as follows:	as follows:
Number of Common Shares
Balance December 31, 2022	60,443,699
Common Shares issued–Warrants exercised	-
Common Shares issued–Options exercised	-
Common Shares issued–RSUs settled	279,511
Common Shares cancelled–Non-Course Issuer Bid	(445,500)
Balance September 30, 2023	60,277,710

Incentive Stock Options

The Company has a stock option plan (the “ Plan ”), which is intended to provide an incentive to retain, in the employ of the Company, persons of training, experience, and ability, to attract new employees, officers, directors, consultants and service providers, to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company by providing them with opportunities to purchase ordinary shares of the Company pursuant to the Plan.

The following table reflects the activity with respect to options of the Company For the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022:

Outstanding at beginning of year Granted Exercised Forfeited and cancelled Outstanding at end of period Exercisable options	Nine months ended September 30, 2023 Nine months ended September 30, 2022	Nine months ended September 30, 2023 Nine months ended September 30, 2022	Nine months ended September 30, 2023 Nine months ended September 30, 2022
	Number of options	Weighted average Exerciseprice Number of options Weighted average Exerciseprice
	8,049,081 529,333 - (1,468,333) 7,110,081 6,614,081	CAD 0.37 CAD 0.25 - CAD 0.53 CAD 0.37 CAD 0.32	8,101,081 CAD 0.40 460,000 CAD 0.33 - - (262,000) CAD 0.76 8,299,081 CAD 0.37 7,181,081 CAD 0.33

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Restricted Share Units

The Company has a restricted share unit plan (the “ RSU Plan ”). The Company approved in the nine months ended September 30, 2023, an aggregate grant of 433,758 restricted share units (“ RSUs ”) to directors, senior officers and employees of the Company pursuant to the RSU Plan. Each vested RSU entitles the holder to receive one Common Share for a period of 4 years from the date of grant.

Warrants

The warrants were valued based on the Black Scholes model, when adjusted for dilution. As of June 16, 2023, the warrants have expired. During the nine and three months ended September 30, 2022, no warrants were exercised. As of September 30, 2022, the main parameters used in the process are the expected volatility of 86%, the risk-free rate of 1.01% and expected term range of 1 year.

CONTRACTUAL OBLIGATIONS

As of September 30, 2023, the Company had no debt guarantees or long-term obligations, other than leases liabilities.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

TRANSACTIONS WITH RELATED PARTIES

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party’s making of financial or operational decisions, or if both parties are controlled by the same third party. The Company has transactions with key management personal.

The following transactions arose with related parties:

Transaction Management fee to CEO and controlling shareholder Share Based Compensation to CEO and controlling shareholder Liabilities to related parties: Transaction Controlling shareholder	Transaction	For the Nine months period ended September 30, 2023 2022 324 340 4 14 As of September 30, 2023 As of December 31, 2022 40 130
		2023
		324 4 As of September 30, 2023
	Controlling shareholder	40

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

PROPOSED TRANSACTIONS

As of September 30, 2023, and the date hereof, the Company had no disclosable proposed transactions. It is the Company’s policy not to disclose transactions until they are fully executed.

RISKS AND UNCERTAINTIES

The Company’s business is subject to numerous risks and uncertainties, including those described elsewhere in this MD&A, as well as general economic and market risks. The following discussion describes material risks and uncertainties that the Company has identified that may affect the Company’s results of operations and financial condition.

Risks Related to the Business

The Company’s commercial and financial success depends on the success of its current commercial products and platforms, Views, Semdoc, Feeditor, Effortless Marketing and Amphy.

The Company’s future success depends upon building and expanding its commercial international operations in Canada, the United States, Australia, and other international markets, as well as entering additional markets to commercialize all of its products and technologies. If the Company fails to expand the use of its technologies in a timely manner and penetrate the available markets which the products are intended to serve, the Company may not be able to expand its markets and grow revenue, the value of the Company may decline and investors may lose money.

Unanticipated delays or problems associated with the Company’s products and improvements may cause customer dissatisfaction.

The Company’s future success is dependent on its ability to continue to develop and expand its products and technologies and to address the needs of its customers. There may be delays in releasing new the Company products or technologies in the future – any material delays may cause customers to forego purchases of the Company’s products to purchase competitors’ offerings instead.

The Company may need to develop new products and services and rapid technological change could render its systems obsolete.

The industry in which the Company operates is characterized by rapid technological change, frequent new product and service introductions and enhancements, uncertain product life cycles, changes in customer requirements, and evolving industry standards. The introduction of new products and new technologies, the emergence of new industry standards, or improvements to existing technologies could render the Company’s platform obsolete or relatively less competitive.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

The Company’s commercial and financial success depends on market acceptance, and if not achieved will result in the Company not being able to generate revenue to support its operations.

The commercial success of the Company depends, among other things, on market acceptance. The success of the Company’s products and any new products and services that it may launch is dependent upon its ability to attract and retain a critical mass of merchants in potentially diverse geographic locations. The sales cycle for a new merchant can be lengthy. Merchants may not be willing to invest the time and resources necessary to achieve the necessary education and integration required to successfully deploy the Company’s technology. Competitive pricing and market acceptance also depends on the future pricing and availability of competing products and the perceived comparative efficacy of its products. If the Company cannot reach this market, or cannot offer competitive pricing packages, its operating results and revenues will be adversely affected.

A substantial majority of the Company’s revenue depends on search and shopping advertising.

The Company’s customers have historically used its Adcore VIEWS Platform for search and shopping advertising, and a significant amount of the Company’s revenue is derived from users of the platform. Moreover, with Google representing over 92% of worldwide search engine market share according to Statcounter.com, a significant amount of the Company’s revenue depends in fact on Google and its performance as a search engine . The Company expects that the online advertising channels it supports will continue to be a primary channel used by its customers. Should customers lose confidence in the value or effectiveness of these channels, the demand for the ADCORE VIEWS platform may decline. While revenues from social and video advertising have grown rapidly, if the Company fails to gain market traction for its Adcore VIEWS platform for social and video advertising would harm its growth prospects, operating results and financial condition.

A substantial majority of the Company’s revenue depends on major customers.

A significant amount of the Company’s revenue is derived from three major customers, which constituted 51% of the Company’s revenue for the nine months ended September 30, 2023. The Company expects that the working relationship with these five customers will continue to be profitable to all parties. Should any of these three customers lose confidence in the value or effectiveness of the Company’s technology or services, this working relationship could end, and the Company’s revenue would significantly decline.

A substantial amount of the Company’s revenue depends on strategic partnerships with search engine companies.

A significant amount of the Company’s revenue is derived from its strategic partnerships with leading search engines. The Company expects that these strategic partnerships will continue to be profitable to all parties. Any change to or termination of these partnerships or their commercial terms could have a material effect on the Company’s revenues, which could significantly decline as a result of such change or termination.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

The Company may require additional capital to support its operations or the growth of its business, and it cannot be certain that this capital will be available on reasonable terms when required, or at all.

From time to time, the Company may need additional financing to operate or grow its business. The ability to continue as a going concern may be dependent upon raising additional capital from time-totime to fund operations. the Company’s ability to obtain additional financing, if and when required, will depend on investor and lender willingness, its operating performance, the condition of the capital markets and other facts, and the Company cannot assure anyone that additional financing will be available to it on favorable terms when required, or at all. If the Company raises additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of its current stock, and its existing stockholders may experience dilution. If the Company is unable to obtain adequate financing or financing on terms satisfactory to it when it requires it, its ability to continue to support the operation or growth of its business could be significantly impaired and its operating results may be harmed.

The Company’s growth strategy may not achieve the anticipated results.

The Company’s future success will depend on its ability to grow its business, including through commercialization of its products. Growth and innovation strategies require significant commitments of management resources and capital investments and the Company may not grow its revenues at the rate it expects or at all. As a result, the Company may not be able to recover the costs incurred in developing new projects and initiatives or to realize their intended or projected benefits, which could materially adversely affect its business, financial condition or results of operations.

The Company faces substantial competition in the future and may not be able to keep pace with the rapid technological changes which may result from others discovering, developing or commercializing products before or more successfully than the Company. The activities of competing companies, or others, may limit the Company’s revenues.

In general the development and commercialization of new SaaS products is highly competitive and is characterized by extensive research and development and rapid technological change. Market share can shift as a result of technological innovation and other business factors. Commercial opportunities for the Company’s products may be reduced if the Company’s competitors develop or market products or novel technologies that are more effective, are better tolerated, are more accepted by the market, have better distribution channels, or are less costly than that offered by the Company. If those products gain market acceptance, the Company’s revenue and financial results could be adversely affected. If the Company fails to develop new products or enhance existing products, its leadership in the current markets served could erode, and its business, financial condition and results of operations may be adversely affected.

While the Company’s products are unique and novel technologies, there are a number of indirect competitors in the market. Such competitors include large and small companies that may have significant access to capital resources, competitive product pipelines, substantial research and development staffs and facilities, and substantial experience in the market. The Company recognizes the need to invest in research and development to continue to add high-value, differentiated capabilities to expand both the depth and breadth of the Company’s product offering. Management also recognizes the need to ensure customer satisfaction through all phases of the sales cycle and intends to invest in competitive intelligence and analysis as it relates to the dynamics of the market, as well as in trends in technology and in products as they are introduced into the market. However, the Company may not be able to compete with competitors that are more established in the market.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

The Company depends on highly skilled personnel to grow and operate its business. If the Company is not able to hire, retain, and motivate its key personnel, its business may be adversely affected.

The Company’s success depends in part upon a number of key employees, including members of senior management who have extensive experience in the industry. Competition for talented senior management is intense and the Company’s ability to successfully develop and maintain a competitive market position will depend in part on its ability to attract and retain highly qualified and experienced management. The loss of the services of key personnel could have a materially adverse effect on the Company’s business.

Israeli preferred technological plant status and related benefits could change.

In January 1, 2017 a new section was issued to the Israeli Investments Law relating to preferred technological income. The section is applicable to industrial companies, including the Company that apply further preferred enterprise criteria. Accordingly, the Company is entitled to the benefit and therefore is subjected to a corporate tax rate of 12%. Investors should be aware that changes in the preferred enterprise criteria could result in the Company being re-classified as a non-preferred technological plant, which would result in a higher percentage of corporate tax being applied to the Company (23% for the years 2023 and 2022).

Israeli corporate tax rates are subject to regulatory change.

The Israeli corporate tax rate was 23% for the year ended December 31, 2022 and is 23% in 2023. This tax rate could be changed by government decisions and tax regulations, which could have a material effect on the Company’s revenues. These changes could be relevant to the Company in the case the Company would be re-classified as a non-preferred technological plant which would result in the regular Israeli corporate tax rate being applied to the Company.

Limitation of statute on the Company’s tax reports for the years ended December 31, ,2022 and 2021

The general limitation of statute on tax reports in Israel is four years, and therefore the Company’s tax reports for the years ended December 31, 2022 and 2021 could still be assessed by the Israeli Tax Authority, which could result in, among other things, determining that the Company is not a preferred technological plant and by such is subject to a higher percentage of corporate tax (23% for the years ended December 31, 2022 and 2021).

If the Company fails to develop widespread brand awareness cost-effectively, its business may suffer.

The Company believes that developing and maintaining widespread awareness of its brand in a costeffective manner is critical to achieving widespread acceptance of its products. The Company’s marketing efforts are directed at growing brand awareness. Brand promotion activities, although they have been successful in the past, may not generate customer awareness or increase revenues, and even if they do, any increase in revenues may not offset the expenses incurred in brand building. If the Company fails to successfully promote and maintain its brand, or incur substantial expenses in doing so, the Company may fail to attract or retain customers necessary to realize a sufficient return on its brand building efforts, or to achieve the widespread brand awareness that is critical for broad adoption of its products.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Possible failure to realize anticipated benefits of future acquisitions could impact the Company’s business.

The Company may in the future complete acquisitions to strengthen its position in the point-of sale industry and to create the opportunity to realize certain benefits including, among other things, potential cost savings. Achieving the benefits of any future acquisitions depends, in part, on successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner, as well as the Company’s ability to realize the anticipated growth opportunities and synergies from combining the acquired businesses and operations with its own. The integration of acquired businesses requires the dedication of substantial management effort, time and resources which may divert management’s focus and resources from other strategic opportunities and from operational matters during this process. The integration process may result in the loss of key employees and the disruption of ongoing business, customer and employee relationships that may adversely affect the Company’s ability to achieve the anticipated benefits of these and future acquisitions.

There is intense competition in the SaaS and search engine marketing and advertising industry.

The SaaS advertising technology industry is highly competitive and rapidly changing. The Company may be significantly affected by new product introductions and geographic expansion by existing competition and expects that competition will intensify in the future. Specific factors upon which the Company competes include, but are not limited to, functionality of its applications, ease of use, timing for implementation, quality of support and services, and price. The Company’s potential competitors include other companies selling SaaS services and technology in the search engine marketing and advertising space. Many of these potential competitors have significantly greater financial, technical, marketing and other resources than the Company has. Many of them also have longer operating histories, greater name recognition and stronger relationships with merchants and consumers who use or might use a low-valuepayment service. The Company may not be able to compete successfully with these competitors.

There is inherent technology and development risk in the Company’s business and industry.

The Company approach utilizes technology principally architected and developed by the Company. There can be no assurances that the Company will meet its targeted development or integration timelines such that it will be able to offer solutions at competitive pricing, or that the Company can continue to enhance and improve the responsiveness, functionality and features of its technology and enable the solutions to scale at a reasonable cost. In addition, there is a risk that third parties may have applied for or been granted patents for certain processes or technology which the Company has already deployed or intends to deploy, in which case the Company may incur additional costs or be prohibited from using or implementing certain product features or processes in one or more countries. The Company solutions incorporate complex technology and software. Accordingly, they may contain errors, or “bugs”, that could be detected at any point. Such errors could materially and adversely affect the Company’s reputation, resulting in claims and/or significant costs to the Company, and/or cause consumers, merchants, licensees and other parties to abandon the Company’s solutions and impair the Company’s ability to market and sell solutions and services in the future. The costs incurred in correcting any errors and satisfying any such claims may be substantial and could adversely affect the Company’s operating margins. While the Company plans to continually test its solutions for errors and work with customers and merchants through its maintenance support services to identify and correct bugs, errors may be found in the future.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

The Company maintains data on cloud storage servers, which could be the target of a security breach.

The Company’s business faces certain security risks. The Company’s products and services involve storage using cloud-based hosting service and also physical storage. Although data is stored in specialized security groups and are externally encrypted, storage hardware and networking infrastructure is provided by a third party, and security breaches and cyberattacks expose it to a risk of loss of this information, litigation and potential liability. If an actual or perceived breach of security and/or cyberattack occurs, the market perception of the effectiveness of the Company’s security measures could be harmed, the Company could lose users and it may incur significant legal and financial exposure, including legal claims and regulatory fines and penalties. Computer viruses, break-ins, cyberattacks or other security problems could lead to misappropriation of proprietary information and interruptions, delays, or cessation in service to clients. Any failure to adequately address these risks could have an adverse effect on the business and reputation of the Company.

There could be interruptions or delays from cloud servers that could affect the Company’s products or services.

The Company’s products and services involve storage using a third-party cloud-based hosting service. Any damage to, or failure of, the hosting service’s systems generally could result in interruptions in the use of the Company’s products or services. Such interruptions may reduce the Company’s revenue, cause customers to terminate their subscriptions and adversely the Company’s ability to attract new customers. The Company’s business will also be harmed if its customers and potential customers believe its products or services are unreliable.

Control of the Company is concentrated.

Omri Brill, the President, Chief Executive Officer, and Chairman of the Company beneficially owns approximately 68% of the outstanding common shares of the Company. By virtue of his status as the Company’s principal shareholder, by being a director and officer, Mr. Brill exerts controlling influence over the Company’s operations and business strategy, and has sufficient voting power to control the outcome of matters requiring shareholder approval. These matters may include the composition of the board of directors, which has the authority to direct the Company’s business and to appoint and remove officers; approving or rejecting a merger, consolidation or other business combination; raising future capital, and amending the Company’s articles of incorporation, which govern the rights attached to the Common Shares. This concentration of ownership could delay or prevent proxy contests, mergers, tender offers, open-market purchase programs or other purchases of the Company’s shares that might otherwise give shareholders the opportunity to realize a premium over the then-prevailing market price for the Common Shares. This concentration of ownership, and sales by Mr. Brill of a substantial number of Common Shares, could cause the market price of the Common Shares to decline.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

It may be difficult to enforce civil liabilities under Canadian securities laws.

The majority of the directors and officers of the Company are based in Israel, and most of the Company’s assets, and assets of the directors, officers, are located outside of Canada. Therefore, a judgment obtained against the Company or any of these persons, including a judgment based on the civil liability provisions of the Canadian securities laws, may not be collectible in Canada and may not be enforced by an Israeli court. It also may be difficult to effect service of process on these persons in Canada or to assert Canadian securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of Canadian securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not Canadian law is applicable to the claim. If the Canadian law is found to be applicable, the content of applicable Canadian law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against the Company in Israel, it may be difficult to collect any damages awarded by either a Canadian or a foreign court.

Risks Related to Worldwide Economic Conditions

Currency exchange rates fluctuations could adversely affect the Company’s operating results.

The Company is exposed to the effects of fluctuations in currency exchange rates. Since the Company conducts some of its business in currencies other than USD but reports its operating results in USD, it faces exposure to fluctuations in currency exchange rates. Consequently, exchange rate fluctuations between the USD and other currencies could have a material impact on the Company’s operating results.

Downturns in general economic and market conditions may reduce demand for the Company’s products and could negatively affect the Company’s revenue, operating results and cash flow.

Recent events in the financial markets have demonstrated that businesses and industries throughout the world are very tightly connected to each other. Thus, financial developments seemingly unrelated to the Company or to the Company’s industry could materially adversely affect the Company over the course of time. Volatility in the market could hurt the Company’s ability to raise capital. Potential price inflation caused by an excess of liquidity in countries where the Company conducts business may increase the costs incurred to sell the Company’s products and may reduce the Company’s profit margins. As a result of downturns in general economic and market conditions, potential customers may not be interested in purchasing the Company’s products. Any of these events, or other events caused by turmoil in world financial markets may have a material adverse effect on the Company’s business, operating results and financial conditions.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

The Company has its core operations in an emerging market, which carries potential risks to its business.

Emerging market investment generally poses a greater degree of risk than investment in more mature market economies because the economies in the developing world are more susceptible to destabilization resulting from domestic and international developments.

The Company’s core business operations are located in Israel, which has a history of military instability. While there is no current instability, this is subject to change in the future and could adversely affect the Company’s business, financial condition and results of operations.

In particular, fluctuations in the Israeli economy and actions adopted by the government of Israel may have a significant impact on companies operating in Israel, including the Company. Specifically, the Company may be affected by inflation, foreign currency fluctuations, regulatory policies, business, and tax regulations and in general, by the political, social and economic scenarios in Israel and in other countries that may affect Israel.

Catastrophic events and economic, political and market conditions may impact the Company’s business.

In order to deliver advertising campaigns for its customers, the Company maintains servers at co-location facilities in Canada and Israel. Any of its existing and future facilities may be harmed or rendered inoperable by attack or security intrusion by a computer hacker, natural or man-made disasters, including earthquakes, tornadoes, hurricanes, wildfires, floods, nuclear disasters, war, acts of terrorism or other criminal activities, infectious disease outbreaks and power outages, any of which may render it difficult or impossible for the Company to operate its business for some period of time. If the Company were to lose the data stored in its co-location facilities, it could take days or weeks to recover data from multiple sources, and such delay could result in significant negative impact on its business operations, and potential damage to its advertiser and advertising agency relationships. Any disruptions in the Company’s operations could negatively impact its business and results of operations, and harm its reputation. In addition, the Company may not carry sufficient business interruption insurance to compensate for the losses that may occur. Any such losses or damages could have a material adverse effect on the Company’s business, financial condition and results of operations.

Infectious disease outbreaks (including COVID-19, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, BSE, avian influenza, or other material outbreaks of disease) could result in restrictions adversely effecting the Company’s business operations. Such outbreaks may negatively impact the general economic conditions worldwide. As a result of infectious disease outbreaks, the Company could suffer harm to its business, including, but not limited to, significant revenue decreases, should there be a sustained negative impact on economic conditions.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

Inflation may negatively impact the Company.

Over the course of 2022 and 2023, global inflationary pressures increased driven by supply chain disruptions caused by the ongoing COVID-19 pandemic and related lockdowns. Global energy costs have also increased significantly following the invasion of Ukraine by Russia in February 2022. The Company may be impacted by these inflationary pressures in the form of higher costs required for its operations. The Company has made assumptions around the expected costs of these key inputs, and the Company’s actual costs in an inflationary environment may differ materially from those assumptions.

The Company does not believe that inflation has had a material effect on its business, financial condition or results of operations to date; however, if the Company’s operational or labour costs were to become subject to significant inflationary pressures, the Company may not be able to fully offset such higher costs through increased product pricing. The Company’s inability or failure to do so could harm the Company’s business, financial condition and results of operations.

Conflict and Political Instability in Eastern Europe

The current year has been marked by significant market volatility and uncertainty. We believe that continued economic growth will be dependent on a number of factors, including, but not limited to, the continued positive trajectory of the course of the pandemic, a moderation of the pace of inflation and supply chain issues that developed during 2021, and the nature, magnitude, and duration of hostilities stemming from Russia’s invasion of Ukraine, including the effects of sanctions and retaliatory cyber attacks on the world economy and markets. Beginning in November 2021, Russia began to amass troops along the Ukrainian border, heightening military tensions in Eastern Europe. In February 2022, Russia sent troops into pro-Russian separatist regions in Ukraine. The U.S. and/or other countries, including Canada, Germany and Israel may impose sanctions or other restrictive actions against governmental or other entities in Russia. The long-term impacts of the conflict between these nations remains uncertain.

Widespread concern or doubts in the market about the pace or ability of normal economic activity to resume, the potential for prolonged conflict in Ukraine or the broader outbreak of armed conflict in Eastern Europe, the pace, impact, or effectiveness of the actions by governments and centrals banks intended to manage the rate of inflation through interest rate increases and the termination of the quantitative easing program, or the efficacy or adequacy of government measures enacted to support the domestic and global economy, could erode the outlook for macroeconomic conditions, economic growth, and business confidence, which could negatively impact the Company.

The current levels of volatility in global markets due to market participants’ reactions to, and uncertainty surrounding, the magnitude and timing of government and central bank action to be taken in response to heightened inflation, as well as Russia’s invasion of Ukraine. This volatility has resulted in a decline in the level of activity in the financial markets. Continued market volatility or uncertainty related to actions taken or to be taken by central banks, a decline in the global macroeconomic outlook, including as a result of Russia’s invasion of Ukraine and the threat, or outbreak of more widespread armed conflict in Eastern Europe would cause financial market activity to continue to decrease, which could negatively affect the Company’s revenues. In addition, global macroeconomic conditions and Canadian and Israeli financial markets remain vulnerable to the potential risks posed by exogenous shocks, which could include, among other things, political or social unrest or financial uncertainty in the United States and the European Union, complications involving terrorism and armed conflicts around the world, or other challenges to global trade or travel.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Government regulation could adversely affect the Company’s business.

Government regulation may increase the costs of doing business online. Certain legislation has been enacted or is under consideration relating to online advertising and the Company’s management team expects further legislation and regulation related to advertising online, the use of geo-location data to inform advertising, the collection and use of anonymous internet user data and unique device identifiers, such as IP address or mobile unique device identifiers, and other data protection and privacy regulation. Such legislation could affect the costs of doing business online, and may adversely affect the demand for the Company’s offerings or otherwise harm its business, results of operations and financial condition. For example, new laws and regulations in key markets of the Company’s business could impact the Company’s ability to collect, use, retain, protect, disclose, transfer and otherwise process personal information. The EU General Data Protection Regulation (GDPR), The Personal Information Protection and Electronic Documents Act and substantially similar provincial privacy laws in Canada provide that IP addresses are personal information. While the Company takes certain measures to protect the security of information that it collects, uses and discloses in the operation of its business, a data breach would create exposure to potential for claims for damages by consumers whose personal information has been disclosed without authorization. Evolving and changing definitions of personal information in the jurisdictions in which the Company offer its products and technologies, especially relating to classification of machine or device identifiers, location data and other information, have in the past, and may in the future, cause the Company to change business practices, or limit or inhibit the Company’s ability to operate or expand its business. Data protection and privacy-related laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. While the Company takes measures to protect the security of information that it collects, uses and discloses in the operation of its business, and to offer certain privacy protections with respect to such information, such measures may not always be effective.

In addition, while the Company actively attempts to avoid collecting identifiable data about consumers, it may inadvertently receive this information from advertisers or advertising agencies or through the process of delivering advertising and may inadvertently release this information in contravention of applicable privacy legislation. The Company’s failure to comply with applicable laws and regulations, or to protect personal information, could result in enforcement action against the Company, including fines, imprisonment of its officers and public censure, claims for damages by consumers and other affected individuals, damage to the Company’s reputation and loss of goodwill, any of which could have a material adverse impact on operations, financial performance and business. Even without a specific data breach, the perception of privacy concerns, whether or not valid, may harm the Company’s reputation and inhibit adoption of its offerings by current and future advertisers and advertising agencies.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

Conditions in Israel may affect the Company’s business, results of operations and financial condition.

The Company’s core business operations are in Tel Aviv, Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries. As a result, the Company is vulnerable to the political, economic, legal, regulatory and military conditions affecting Israel and the Middle East. Armed conflicts between Israel and its neighbouring countries and territories occur periodically and a protracted state of hostility has, in the past, resulted in security and economic difficulties for Israel. Any such hostilities or escalation thereof, armed conflicts or violence in the region could adversely affect the Company’s business, results of operations and financial condition. To date, such conflicts have not had a material effect on business, results of operations or financial condition. In addition, the Company may be adversely affected by other events or factors affecting Israel such as the interruption or curtailment of trade between Israel and its trading partners, a significant downturn in the economic or financial condition of Israel, a significant downgrading of Israel’s internal credit rating, labour disputes and political instability, including riots and uprisings or the impact of the COVID-19 pandemic on the Israeli economy.

Number of countries, primarily in the Middle East, as well as some Muslim countries, including Malaysia and Indonesia that restrict business with Israel or Israeli companies. There may also be certain countries, businesses or other global movements that may exert pressure on the Company’s partners, customers or others not to do business with Israel or Israeli companies. Furthermore, the Israeli government is currently pursuing extensive changes to Israel’s judicial system. In response to the foregoing developments, critics have voiced concerns that the proposed changes may negatively impact the business and economic environment in Israel. Restrictive laws policies or movements directed towards Israel or Israeli businesses could have a material adverse effect on the Company’s business, results of operations and financial condition.

Generally, under Israeli law, citizens and permanent residents of Israel are obligated to perform military reserve duty for extended periods of time through the age of 45 (or older for citizens with certain occupations) and are subject to being called to active duty at any time under emergency circumstances. In response to increased hostilities, there have been periods of significant call-ups of military reservists. It is possible that there will be additional call-ups in the future, which may include officers and key personnel of the Company, which could disrupt business operations for a significant period of time.

The Company must hold various approvals authorizing its activities in Israel. In order for the Company to carry on business operations in Israel, it must: (i) be registered with the Registrar of Companies; (ii) be registered with the Israel Tax Authorities; and (iii) hold a business license which is issued by the local municipality in which the business operates. Furthermore, in order to carry on operations in accordance with the International Organization for Standardization (“ ISO ”) standards, the Company is also required to hold ISO certificates. Although the Company believes that all such required registrations, certificates and licenses are in good standing as of the date of this MD&A, if renewals or new permits, business licenses, or approvals are required in connection with the Company’s activities and are not granted or are delayed, or if existing permits, business licenses or approvals are revoked or substantially modified, the Company may suffer a material adverse effect. If new standards are applied to renewals or new applications, it could prove costly to the Company to meet any new level of compliance.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

Risks Related to Intellectual Property

The Company’s intellectual property rights are valuable, and any inability to protect them could adversely affect its business.

The Company’s success depends substantially upon the intellectual property that forms the basis of its products, primarily consisting of unpatented proprietary technology, processes, trade secrets, and knowhow, as well as inherent copyright of authorship in the source code developed by the Company, and unregistered trademarks. To protect its intellectual property rights, the Company relies upon trade secret, copyright, trademark, passing-off laws, and other statutory and common law protections in Israel, the United States, and international markets. The Company also protects its intellectual property through the use of non-disclosure agreements and other contracts, disclosure and invention assignment agreements, confidentiality procedures, and technical measures. There can be no assurance that these measures will be successful in any given case, particularly in those countries where the laws do not afford the Company protection for its intellectual property rights as robust as those available under Israeli, Canadian, and United States laws. The Company may be unable to prevent the misappropriation, infringement or violation of its intellectual property rights, breaching any contractual obligations, or independently developing intellectual property that is similar to its own, any of which could reduce or eliminate the Company’s competitive advantages, adversely affect the Company’s revenues, or otherwise harm its business.

Assertions by third parties of infringement or other violations of the Company’s intellectual property rights could result in significant costs and substantially harm the Company’s business and operating results.

Third parties may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against the Company. Any such claim against the Company, even those without merit could cause the Company to incur substantial costs defending against the claim and could distract its management. An adverse outcome of a dispute may require the Company to pay substantial damages, cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others, expend additional development resources to attempt to redesign its services or otherwise develop non-infringing technology, which may not be successful, or enter into potentially unfavourable royalty or license agreements in order to obtain the right to use technologies or intellectual property rights.

Intellectual property claims are expensive and time consuming to defend and if resolved adversely, could have a significant impact on the Company’s business, financial condition, and operating results.

The Company is actively engaged in enforcement and other activities to protect its intellectual property rights. If it became necessary to resort to litigation to protect these rights, any proceedings could be burdensome, costly and divert the attention of management, and the Company may not prevail. Any repeal or weakening of intellectual property laws or diminishment of procedures available for the enforcement of intellectual property rights in Israel, Canada, the United States, or internationally could make it more difficult for the Company to adequately protect its intellectual property rights, negatively impacting their value and increasing the cost of enforcing its rights.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

Adcore Inc.

If the Company is unable to protect the confidentiality of its proprietary information and know-how, the value of its technology and products could be adversely affected.

The Company relies upon unpatented proprietary technology, processes, trade secrets and know-how. Any disclosure to or misappropriation by third-parties of its confidential or proprietary information could enable the Company’s competitors to duplicate or surpass the Company’s technological achievements, potentially eroding its competitive position in the market, and negatively impacting the Company’s business and operating results.

The Company protects its confidential and proprietary information in part through non-disclosure agreements and other contracts, disclosure and invention assignment agreements, with all employees, consultants, advisors and any third-parties, who have access to its confidential and proprietary information, and employs confidentiality procedures and technical measures, there can be no certainty that these measures or procedures will be sufficient to prevent improper disclosure of such confidential and proprietary information, or to prevent it from falling into the hands of the Company’s competitors and other third parties. There can be no certainty that parties to contracts used by the Company to protect its confidential and proprietary information will not be terminated or breached, and the Company may not have adequate remedies for any such termination or breach. Legal remedies may be insufficient or ineffective to meaningfully protect the Company’s confidential and proprietary information or compensate the Company for losses that may occur in the event of unauthorized use or disclosure.

Adverse litigation judgments or settlements resulting from legal proceedings in the normal course of business could reduce the Company’s profits or limit its ability to operate.

The Company is subject to allegations, claims and legal actions arising in the ordinary course of its business, which may include claims by third parties, including employees or regulators. The outcome of many of these proceedings cannot be predicted. If any of these proceedings were to be determined adversely to us, a judgment, a fine or a settlement involving a payment of a material sum of money were to occur, or injunctive relief were issued against the Company, its business, financial condition and results of operations could be materially adversely affected.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The areas requiring the use of estimates and critical judgments that may potentially have a significant impact on the Company’s earnings and financial position are the recognition and amortization of development costs and the useful life of property and equipment and income tax.

Revenue from Contracts with Customers IFRS-Principal versus Agent Considerations

Revenue is recognized based on the five-step model outlined in IFRS 15, Revenue from Contracts with Customers. For revenue from direct advertiser customers, management’s judgement is applied regarding the determination of whether the Company is a principal or agent to the transactions. In making, this judgement, management places significant weight on the fact: (1) the Company bears credit risks related to the media buying, as it is contractually required to pay media channels within a negotiated period of time, regardless of whether the Company’s clients pay the Company on time, or at all. Moreover, in some cases the Company’s clients have or may develop higher-risk credit profiles, which may subject the Company to even greater credit risk especially when the Company’s payment cycles to the media channels is relatively short; (2) The Company has full discretion in establishing the price to its customers and sole control of the Costs of the media buying prices, including the campaigns, accounts and media channels’ budget allocation; (3) The Company has the power to use its own advertising technologies and expertise in order to manipulate the media buying process, which is critical to the fulfillment of the customer deliverables; and (4) The Company holds full responsibility towards its clients with regards to the campaigns management and fulfillment.

The Company considered to the extent of Reporting Revenue “Gross versus Net” that it applies to the Company’s revenue arrangements and concluded that the Company acts as the principal in these arrangements and therefore reports revenue earned and costs incurred related to these transactions on a gross basis.

Taxes on income

The Company recognized tax- related assets and liabilities based on the Company’s current understanding of tax laws as applied to the Company’s circumstances. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Amortization of capitalized development costs and the useful life of property and equipment

Intangible assets and property and equipment are amortized or depreciated over their useful lives. Useful lives are based on management’s estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the amounts charged to the statement of comprehensive income in specific periods.

Derivative liability - Warrants

The Company uses the Black-Scholes option-pricing model to estimate fair value at each reporting date. The key assumptions used in the model are the expected future volatility in the price of the common shares and the expected life of the warrants.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

CHANGES IN ACCOUNTING POLICIES

For the nine months ended September 30, 2023, the Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making

Materiality Judgement - On February 11, 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgement, to provide guidance in determining which accounting policy to disclose. The amendments require entities to disclose material accounting policies rather than significant policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements. In assessing the materiality of accounting policy information, entities need to consider both size of the transaction, other events or conditions and the nature of them, even if the related amounts are immaterial. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 8, Accounting Policies, Change in Accounting Estimates and Errors - On February 11, 2021, the IASB issued amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to clarify how to distinguish changes in accounting policies, which must be applied retrospectively, from changes in accounting estimate, which are accounted for prospectively. The amendments clarify the definition of accounting estimates as "monetary amounts in the financial statements that are subject to measurement uncertainty". The amendments clarify that a change in accounting estimate is a change in input or a change in a measurement technique used to develop an accounting estimate, if they do not result in the correction of a prior period error. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 12, Income Taxes - On May 6, 2021, the IASB released Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12). The amendment relates to the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. The objective of this amendment is to narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12, so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining disclosure controls and procedures for the Company as defined under National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings (“ NI 52-109 ”) issued by the Canadian Securities Administrators. Management has designed such disclosure controls and procedures, or caused them to be designed under its supervision, to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to the CEO and the CFO by others within those entities on a timely basis, particularly during the period in which the annual filings are being prepared, so that appropriate decisions can be made regarding public disclosure. As required by NI 52-109, an evaluation of the adequacy of the design (quarterly) and effective operation (annually) of the Company’s disclosure controls and procedures was conducted under the supervision of management, including the CEO and CFO. There have been no changes to the Company’s internal controls over financial reporting during the three months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Adcore Inc.

Management’s Discussion and Analysis for the three and nine months ended September 30, 2023

OUTSTANDING SHARE DATA

As of November 8, 2023, 60,222,710 Common Shares were issued and outstanding. In addition, as of November 8, 2023, there were 7,080,081 stock options outstanding with exercise prices ranging from CAD$0.25 to CAD$2.75 per share and 489,922 RSUs outstanding with exercise price of CAD$0 per share.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The Company’s financial instruments consist solely of cash and cash equivalents, trade and other receivables, accounts payable, accrued liabilities, in addition to warrants liability which are measured at fair value. As of September 30, 2023 there were no significant differences between the carrying value of these items and their estimated fair values because of the short-term nature of these instruments.

ADDITIONAL INFORMATION

Additional information relating to the Company, including its annual information form for the financial year ended December 31, 2022, is posted on SEDAR at www.sedar.com.

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ADCORE Inc. — Management Reports 2023

47658_rns_2023-11-09_353305ab-9f0f-4b23-b5fa-6769c370bf81.pdf

Adcore Inc.

Adcore Inc.

FORWARD-LOOKING STATEMENTS

Adcore Inc.

OVERVIEW

Adcore Inc.

RESULTS OF OPERATIONS

Summary of quarterly results (in thousands of US$):

Adcore Inc.

Adcore Inc.

Selected information for the three and nine months ended September 30, 2023, and 2022

Adcore Inc.

Revenues

Cost of revenues

Gross profit

Research and development expenses

Adcore Inc.

Selling, general and administrative expenses

Operating profit

Financial expenses

Financial income

Taxes on income

Non-IFRS Financial Measures

Adjusted EBITDA for the three months ended September 30, 2023 and 2022

“Adjusted EBITDA”

Adcore Inc.

LIQUIDITY AND CAPITAL RESOURCES

Adcore Inc.

Common Shares

Incentive Stock Options

Adcore Inc.

Restricted Share Units

Warrants

CONTRACTUAL OBLIGATIONS

OFF-BALANCE SHEET ARRANGEMENTS

TRANSACTIONS WITH RELATED PARTIES

The following transactions arose with related parties:

PROPOSED TRANSACTIONS

RISKS AND UNCERTAINTIES

Risks Related to the Business

The Company’s commercial and financial success depends on the success of its current commercial products and platforms, Views, Semdoc, Feeditor, Effortless Marketing and Amphy.

Unanticipated delays or problems associated with the Company’s products and improvements may cause customer dissatisfaction.

The Company may need to develop new products and services and rapid technological change could render its systems obsolete.

Adcore Inc.

The Company’s commercial and financial success depends on market acceptance, and if not achieved will result in the Company not being able to generate revenue to support its operations.

A substantial majority of the Company’s revenue depends on search and shopping advertising.

A substantial majority of the Company’s revenue depends on major customers.

A substantial amount of the Company’s revenue depends on strategic partnerships with search engine companies.

Adcore Inc.

The Company may require additional capital to support its operations or the growth of its business, and it cannot be certain that this capital will be available on reasonable terms when required, or at all.

The Company’s growth strategy may not achieve the anticipated results.

Adcore Inc.

The Company depends on highly skilled personnel to grow and operate its business. If the Company is not able to hire, retain, and motivate its key personnel, its business may be adversely affected.

Israeli preferred technological plant status and related benefits could change.

Israeli corporate tax rates are subject to regulatory change.

Limitation of statute on the Company’s tax reports for the years ended December 31, ,2022 and 2021

If the Company fails to develop widespread brand awareness cost-effectively, its business may suffer.

Adcore Inc.

Possible failure to realize anticipated benefits of future acquisitions could impact the Company’s business.

There is intense competition in the SaaS and search engine marketing and advertising industry.

There is inherent technology and development risk in the Company’s business and industry.

Adcore Inc.

The Company maintains data on cloud storage servers, which could be the target of a security breach.

There could be interruptions or delays from cloud servers that could affect the Company’s products or services.

Control of the Company is concentrated.

Adcore Inc.

It may be difficult to enforce civil liabilities under Canadian securities laws.

Risks Related to Worldwide Economic Conditions

Currency exchange rates fluctuations could adversely affect the Company’s operating results.

Downturns in general economic and market conditions may reduce demand for the Company’s products and could negatively affect the Company’s revenue, operating results and cash flow.

The Company has its core operations in an emerging market, which carries potential risks to its business.

Catastrophic events and economic, political and market conditions may impact the Company’s business.

Adcore Inc.

Inflation may negatively impact the Company.

Conflict and Political Instability in Eastern Europe

Adcore Inc.

Government regulation could adversely affect the Company’s business.

ADCORE Inc. Management Reports 2023