Alphinat inc. — Management Reports 2025

Jul 30, 2025

1010 rue Sherbrooke St O/W, Suite 718 Montreal (Quebec) Canada H3A 2R&

T: (514) 398-9799
F: (514) 398-9353
www.alphinat.com

ALPHINAT

Management Discussion and Analysis

Alphinat Inc. ("Alphinat" or the "Company") Tiohtiá:ke/Montreal, QC headquarters are situated on the traditional territory of the Kanien'kehà:ka, which has long served as a site of meeting and exchange amongst many First Nations including the Kanien'kehà:ka of the Haudenosaunee Confederacy, Huron/Wendat, Abenaki, and Anishinaabeg. We recognize and respect the Kanien'kehà:ka as the traditional custodians of the lands and waters on which we operate and are committed to promoting diversity and inclusion within our company and community. (TSX Ventures Exchange: NPA.H:NEX) has reported its results for the 3-month period ended May 31, 2025.

General

This MD&A has been prepared as of July 29, 2025. This MD&A should be read in conjunction with our interim unaudited condensed financial statements for the three-month period ended May 31, 2025, prepared in accordance with IAS 34, Interim financial reporting.

These financial statements were prepared by management in accordance with IFRS.

All dollar amounts are expressed in Canadian dollars unless stated otherwise.

This MD&A was prepared based on information available as at July 29, 2025.

Overview - SmartGuide® brings faster agile development with LIVEaiASSIST© and SmartComponents© to the Cloud, Web and mobile and now extends its offering with SmartProfile™ standalone secure Access Management & Single Sign On (SSO) solution.

Alphinat sells SmartGuide® software and SmartGuide solutions which are used for development and delivery of advanced digital services and secure portal solutions for public sector and industry.

SmartGuide® is a drag-and-drop development platform complete with features that many other solutions require developers to code, making applications easier to build, test and maintain. Version 11.5 SmartGuide comes with optional Artificial Intelligence (AI) assisted development accelerator LIVEaiASSIST™ leveraging your choice of large language model subscriptions.

Alphinat specializes in the development and marketing of secure digital solutions for governments and enterprises applications while leveraging Artificial Intelligence (AI) to accelerate creation and deployment of this service, also capturing and utilizing domain knowledge to assist in better user outcome. SmartGuide sites and portals are designed to meet specific user needs while ensuring reuse of the client's investment in computer resources and experience within an organization.

SmartGuide software solutions are used by finance industry, federal, state and many municipal governments with our secure portal technology for enterprise digital service delivery. Designed to leverage existing technologies such as CRM, Document Management, Automated Workflows and other back-office assets.

SmartGuide® software also provides easy support for current accessibility standards with translation capacity supporting multiple languages and can automatically generate customizable documentation of the application being built.

SmartGuide software is designed to be compatible and scalable with leading cloud providers, enabling clients to deploy multiple applications on the same instance to meet critical workload needs.

The Alphinat SmartGuide software platform is designed to allow for enterprise-level security and control over the applications it helps create, including leveraging features such as, artificial intelligence (AI),

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blockchain, unlimited encryption and multi-factor authentication that are specifically designed to thwart information, data and identity theft.

Deployable natively in J2EE or .NET environments, on premises or in the cloud, SmartGuide software solutions can help quickly build interactive web and mobile dialogs that guide people to the relevant response, help them diagnose problems or lead them through a series of defined steps that make it easy to interact and to complete complex or infrequently performed tasks. It is ideally suited for complex digital service offerings.

The public sectors, healthcare, banking, insurance, telecommunications, and others, can benefit from SmartGuide® technology to modernize, automate and make profitable a multitude of business processes by realizing substantial savings compared to solutions tailor-made and coded. For more information on Alphinat or its software suite, please visit www.alphinat.com/en.

Business operations

During the 3-month period ended May 31, 2025, Alphinat focused its efforts on improving its operating cash flow and increasing software sales, including its branded solutions and professional services.

Alphinat has an active diversity policy with 42% of its workforce being 1st or 2nd generation Canadians and being a women lead firm and gender orientation indifferent.

We have also continued to work on expanding our distribution channels and on diversifying our offerings including security and automation features.

In order to accelerate future growth, Alphinat has six main areas of solution deliveries:

1) SmartGuide® Grants and Contributions solution (http://www.smartgrants.ca) was developed in conjunction with a federal department of the Canadian Government. This platform offers unparalleled productivity for federal, state and municipal clients creating calls for grants including financial program creations for applications, adjudication and payments.

2) SmartGuide® Portal Edition for Dynamics 365¹ (http://www.smartd365.com) has optimize the way that clients can now create and deploy online services on top of Microsoft Dynamics 365 CRM solutions. This offering is available in SaaS mode as well as on-premises.

3) SmartGuide® Green House Gas Registry solutions (www.SmartGHGR.ca) is a green fintech solution allowing governments and industry to work together in reducing the harmful effects of greenhouse gas. Alphinat currently has three provincial clients for our SmartGHGR.ca solution.

4) SmartGuide® Claims solutions (www.smartclaims.ca/) was developed in conjunction with a major IT consulting partner, which aims at offering unparalleled productivity to federal, state and municipal clients for financial claims applications, adjudication and settlements for financial compensation and class action settlements.

5) SmartGuide® CIVIC Portal, CIVIC Portal for Permits & Licensing (http://www.permitsmarter.ca) and SmartGuide® Municipal Cloud are Shared Services Cloud solutions and on-premises solutions front ending partner solutions and other digital services for improved user experience for both the cities and their citizens.

6) SmartProfile (www.smartprofile.ca) a secure Access Management and Single Sign On solution, now a standalone solution, built on SmartGuide it provides industry leading flexible for full integration

¹ Dynamics 365 is a trademark of Microsoft Corporation

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and end-user satisfaction. Recently two Ontario municipalities have chosen SmartProfile as their core Access Management Solution to integrate with other municipal digital services and back-office workflows.

The company delivers solutions to various industry, federal, state / provincial agencies and municipalities across North America and Europe. In addition, the company continues to be involved in supporting its partners to ensure the delivery of solutions to government customers.

Alphinat is evolving its partnership strategy with consulting firms and systems integrators to promote and ensure resale and delivery of SmartGuide and SmartGuide solutions, as well as with independent software vendors for Original Equipment Manufacturer for portal (OEM) agreements and with other partners for SaaS services. Management believes that these agreements will help to reduce the sales cycle of the company's products while giving it additional exposure to new potential clients.

Selected quarterly financial data (unaudited)

Period	Q3 2025	Q2 2025	Q1 2025	Q4 2024	Q3 2024	Q2 2024	Q1 2024	Q4 2023
	31-05-2025	28-02-2025	30-11-2024	31-08-2024	31-05-2024	29-02-2024	30-11-2023	31-08-2023
	$	$	$	$	$	$	$	$
Revenue	359,559	182 884	328,714	394 290	256,533	242,715	224 ,738	351,968
Net earnings (Loss)	29,127	(188,216)	105,204	105,743	(43,866)	803	(10,856)	175,956
Basic and diluted EPS	0.00	(0.00)	0.00	0.00	(0.00)	0.00	(0.00)	0.00

Revenue

For the 3-month period ended May 31, 2025, the Company recorded total revenues of $359,559 compared to $256,533 for the same period ended May 31, 2024.

During the period under review, revenues result from new license sales in the amount of $79,943 increased from the 21,000$ license sales recorded for the same period ending May 31, 2024. Software support and maintenance revenue slightly increased to 102,048$ compared to $97,486 in the prior year's period ended May 31, 2024.

Professional services revenues for SmartGuide implementations and training for the 3 months ended May 31, 2025, increased to $183,568 compared to $138,047 for the prior year's 3 months period ended May 31, 2024, as previously announced projects were all advancing toward delivery.

Operating expenses

Operating expenses were increased to $297,143 for the 3-month period ended May 31, 2025, compared to $242,694 for the period ended May 31, 2024, due mainly to an end to voluntary salary cuts in efforts to mitigate losses in prior quarters as well as due to an increased cost for professional fees offset by reduced insurance cost and other administrative expenses.

Expenses related to the cost of services, administrative, selling and development for the three-month period ended May 31, 2025, increased to $294,012 compared to $270,182 for the equivalent period ended May 31, 2024. Non-cash compensation expenses in the form of stock options are $3,131 for the period ended May

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ALPHINAT

31, 2025, and was $12 841 for the corresponding period ended May 31, 2024. For more information on financial charges, see note 11 to the financial statements.

Financing expenses

Financial expenses were $24,287 for the 3-month period ended May 31, 2025, compared to $2,839 for the 3-month period ended May 31, 2024. This increase is mainly attributable to the foreign exchange loss of $17,784 for the 3-month period ended May 31, 2025, compared to $79 in the 3-month period ended May 31, 2024. For more information on financial charges, see note 17 to the financial statements.

Earnings (loss) for the period

The net income for the 3-month period ended May 31, 2025, amounted to $29,127 or $0.00 per common share outstanding compared to a net loss of $(43,866) for the 3-month period ended May 31, 2024, or $0.00 per common share outstanding.

Assets

Cash amounted to $12,188 as at May 31, 2025 compared to $131,602 as at August 31, 2024.

As at May 31, 2025 accounts receivable and other receivables amounted to $616,210 compared to $342,686 as at August 31, 2024. This increase is due to an increase in project deliveries resulting in increased total trade receivables of $394,039 as at May 31, 2025 compared to $103,165 as at August 31, 2024 and also from an increase in tax credits receivables of $203,660 as at May 31, 2025 compared to $114,874 as at August 31, 2024 as described in note 5 of the financial statements.

As at May 31, 2025, prepaid expenses amounted to $50,001 compared to $35,968 as at August 31, 2024, reflecting a increase in prepaid insurance fees.

As of May 31, 2025, to reflect IFRS 16, a right-of-use asset of $145,321 for the rental of head office premises was recognized, as explained in Note 8 of the financial statements. As of August 31, 2024, this amount was $0.

Liabilities

The bank overdraft as of May 31, 2025, is $0 and $0 as of August 31, 2024.

Accounts payable and accrued liabilities are $824,149 as at May 31, 2025, compared to $862,693 as at August 31, 2024. The difference is mainly due to reduced Canadian accounts payable to $101,366 as at May 31, 2025, compared to $211,706 as at August 31, 2024, partially offset by an increase in salaries and benefits accrued of $240,232 as at May 31, 2025, compared to $179,034 as at August 31, 2024, as explained in note 9 of the financial statements.

Deferred revenues were $409,765 as of May 31, 2025, compared to $173,326 as of August 31, 2024, because of an increase in prepaid professional services and support contracts.

As of May 31, 2025, in order to recognize outstanding lease obligations under IFRS 16 for the Company's head office a liability of $148,142 is recorded as explained in Note 8 of the financial statements. As of August 31, 2024, this amount was $0.

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ALPHINAT

Shareholders' equity

As of May 31, 2025, the number of common shares outstanding of the company amount to 63,148,956. As of the date of this report, the number of common shares outstanding of the company amount to 63,148,956 as disclosed in Note 10 of the financial statements.

Options and warrants

During the 3-month period ended May 31, 2025, 0 options expired and 0 were issued. As of May 31, 2025, there were 5,650,000 stock options outstanding at an average exercise price of $0.08 with a weighted contractual life of 39 months. As of the date of this report, there were 5,650,000 options outstanding as explained in note 11 to the financial statements.

During the quarter ended May 31, 2025 no warrants were issued, had expired or were cancelled. As at May 31, 2025 there were 0 warrants outstanding. As of the date of this report, there were 0 warrants outstanding.

Liquidity and solvency

Bank overdraft amounted to $0 as at May 31, 2025, compared to $0 as at August 31, 2024.

As presented in Note 1 to our financial statements, a "going concern" note is a requirement of CPA auditors to cover their potential exposure to professional disclosure liabilities and highlight the financial risks that exist for the Company. The Company is responsible for preparing financial statements in accordance with IFRS, and the requirement to present a "going concern" note in certain situations arises from IFRS. We continue to operate efficiently and have focused on activities with the greatest certainty of cash generation so that we can maintain viable operations.

To finance its operations, the Company relies on receipts from accounts receivable, future contracts for major license sales and professional services related to these licenses and on-going projects. There is a risk that the company will not be able to obtain the funds necessary to meet its obligations.

The liquidity shortfalls were covered during the 3-month financial period ended May 31, 2025, by the support of suppliers, creditors and government authorities who tolerated late payments. These situations indicate the existence of significant uncertainties that could cast significant doubt on the Company's ability to continue its operations.

The company believes that, given the funds available, and with an operating profit before the generation of non-cash items, as well as the signature of contracts resulting from the initiatives in progress, will allow it to recruit the additional personnel necessary for its expansion, and thus its financial obligations as they become due.

Related party transactions

Key management compensation

The compensation of the principal officer, being the President, in the form of salaries and bonuses, for the three-month period ended May 31, 2025, was $66,777 ($55,195 for the three-month period ended May 31, 2024). The Chief Financial Officer's compensation in the form of professional fees, for the three-month period ended May 31, 2025, was $3,015 ($2,895 for the three-month period ended May 31, 2024).

The compensation of the principal officer, being the president, in the form of salaries, for the nine-month period ended May 31, 2025, was $203,744 ($139,653 for the nine-month period ended May 31, 2024). The Chief Financial Officer's compensation in the form of professional fees, for the nine-month period ended May 31, 2025 was $8,610 ($10,890 for the nine-month period ended May 31, 2024).

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The compensation of key officers and directors, in the form of stock options, for the three-month period ended May 31, 2025, was $0 ($1,178 for the three-month period ended May 31, 2024).

The compensation of key officers and directors, in the form of stock options, for the nine-month period ended May 31, 2025 was $0 ($4,218 for the nine-month period ended May 31, 2024).

These transactions were carried out in the normal course of business. Information on related party transactions is presented in note 19 to the financial statements.

Financial instruments

Information on financial instruments is presented in note 12 to the financial statements.

Subsequent events

No subsequent events are reported.

Risks and uncertainties

The main uncertainty relates to the length of the sales cycle in the market sectors where the Company has thus far concentrated the bulk of its efforts.

Several factors could impact actual results and cause them to be different from expected results. These factors include the Company's ability to develop new markets and partnerships and its dependence on a limited number of customers.

Alphinat has limited financial resources and could require additional cash resources that may not be available or be available under conditions deemed unacceptable to the Company.

The significant value of Alphinat's internet tools and solutions could draw attention from players who can deploy considerable means to develop competing products, which would affect Alphinat's business potential.

The Company uses and intends to continue to use various measures such as copyrights, trademarks, trade secrets legislation, confidentiality agreements and other contractual terms in order to establish, to maintain and to protect its intellectual property rights. Unauthorized parties could attempt to copy certain of the Company's products or portions of its products or to obtain what is considered as proprietary information. With increased competition, there is a greater risk that other companies will attempt to produce new substitute products or technologies.

Revenue recognition

Professional service revenues are recognized according to the percentage-of-completion method. Work in progress is established by taking into account services rendered that have not yet been invoiced. Any payment received before services are rendered is recorded as deferred revenue.

Fees from software products, after-sales technical support and other services are normally allocated among the various elements based on vendor-specific evidence of the fair value of each element and the Company recognizes the revenue for each element when revenue recognition criteria are met. To determine the fair value of each element, the Company uses the requested price for an element when it is sold separately and any other information considered to be relevant.

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Revenues from software licenses are recognized when there is persuasive evidence of a valid arrangement, the software product has been delivered and accepted from the client and no significant obligations from the Company remain. The after-sales technical support is recognized on a straight-line basis over the contractual service period and revenues from other services are recognized as the services are rendered.

Stock option agreements

The Company provides stock option and stock-based compensation plan that is described in note 11 to the financial statements.

Continuous disclosure process and disclosure controls

The Company files its financial statements, management discussions and analyses, press releases and other required documents in the SEDAR database at www.sedar.com.

The Company's shares are listed on the TSX Venture Exchange under stock symbol NPA.H:NEX.

The Company issued its code of ethics that was sent to all employees by the Chief Executive Officer. The company instructs all employees invited to contact the audit committee directly if they are aware of information that could potentially impact the Company's financial statements.

Given Alphinat's current size, it is difficult to ensure segregation of all management duties. However, the Chief Executive Officer's direct involvement in the business on a daily basis compensates for this weakness, as he is able to exercise more effective oversight than in a larger entity as well as by the having a chief financial officer to oversee all financial reporting.

Outlook

Governments worldwide are increasingly integrating AI into digital services to enhance efficiency, personalize citizen experiences, and drive smarter, data-informed policymaking. SmartGuide with LIVEaiASSIST makes this process easier and less costly than other competing and less flexible solutions.

The Company's SmartGuide® solutions suite is the result of years of experience with customers who also see the need to customize access to their data and processes based on users' needs and situation regardless of where the computer systems were located. This capability is crucial for making it easier for citizens and businesses to deal with the governments, and large institutions whose operations lead to many complex procedures. The Company is actively working to build on this added value and to establish an integrated support, training and service delivery plan for its software solution.

There is a strong potential for Alphinat's "turnkey" solution in the public and private sector markets. Indeed, in most large institutions with the number of retirements anticipated over the coming decade, the increasing number of procedures, their increasing complexity, and the reduction of operating budgets, require an improvement in the public and private sector's productivity while users press for a radical simplification of the administrative burden.

Forward-looking statements

This MD&A contains forward-looking statements regarding the Company. These forward-looking statements are inherently subject to certain risks and uncertainties that could cause actual results to be materially different from those suggested by these statements.

The Company believes that these forward-looking statements were based on premises that were reasonable at the time they were made. However, readers are warned that future assumptions, several of which are beyond management's control, could otherwise prove to be incorrect.

Readers are invited to refer to SEDAR (www.sedar.com) for additional information on the Company.