HIRE Technologies Inc. - Interim / Quarterly Report 2020

==> picture [361 x 40] intentionally omitted <==

Management’s Discussion & Analysis For the Three and Nine Months Ended September 30, 2020

Introduction	1
Cautionary Note Regarding Forward-Looking Information	2
Company Overview	3
Acquisitions & Investments	3
Description of Business	4
General	4
Acquisition Strategy	4
Acquisition Consideration and Integration Recruitment & Staffng Operations	6 6
Non-IFRS Financial Measures	7
Interim MD&A – Quarterly Highlights	10
Selected Annual Information	11
Income Statement Data	11
Balance Sheet Data	11
Discussion of Operations	12
Revenue	12
Cost of Services	13
Gross Margin	13
Operating Expenses	13
Summary of Quarterly Results	14
Liquidity & Capital Resources	15
Off-Balance Sheet Arrangements	16
Related Party Transactions	16
Changes in Accounting Policies	16
Critical Accounting Estimates	17
Risks Arising from Financial Instruments	17
Interest Rate Risk	17
Credit Risk	17
Liquidity Risk	18
Market Risk	18
Disclosure of Outstanding Share Data	18
Risks & Uncertainties	19
Events After Quarter-End	24

/ Introduction

The Management's Discussion and Analysis ("MD&A") provides a review of the financial condition and results of operations of HIRE Technologies Inc. (the "Company" or "HIRE Technologies") for the three and nine months ended September 30, 2020, and should be read in conjunction with the Company's annual audited consolidated financial statements for the years ended December 31, 2019, and December 31, 2018, and the notes thereto and the Company’s unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2020 and the notes thereto. The Company's financial statements and financial information contained in this MD&A are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the IFRS Interpretations Committee. This MD&A has an effective date of November 30, 2020 (the "MD&A Date"). All dollar amounts in this MD&A are reported in Canadian dollars unless otherwise stated.

The Company’s ability to continue as a going concern is dependent upon the achievement of a profitable level of operations and may require the Company to raise additional funds. Although the Company has been successful in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company. Furthermore, the outbreak of the novel strain of coronavirus specifically identified as COVID-19 was declared a pandemic by the World Health Organization. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and the Company’s ability to achieve revenue growth organically, or through the completion of acquisitions as has been done previously, is unknown. These conditions result in material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated interim financial statements and MD&A do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Such adjustments would be material.

>>

Further information about the Company and its operations can be obtained from the offices of the Company or on SEDAR at www.sedar.com.

Q3 2020 / MD&A 1

/ Cautionary Note Regarding Forward-Looking Information

This MD&A contains “forward-looking statements” or “forward-looking information” (collectively referred to hereafter as “forward-looking statements”) within the meaning of applicable Canadian securities legislation.

All statements that address activities, events or developments that HIRE Technologies expects or anticipates will, or may, occur in the future, including statements about HIRE Technologies’ business prospects, future trends, plans, strategies, including, in particular, HIRE Technologies’ acquisition strategy and expense reductions, and the expected benefits thereof are forward-looking statements. In some cases, forward-looking statements are preceded by, followed by or include words such as “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “proposes”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable words.

Although the management of HIRE Technologies believes that the assumptions made and the expectations represented by such statements are reasonable, there can be no assurance that a forward-looking statement herein will prove to be accurate.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of HIRE Technologies to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: risks related to the recent outbreak of COVID-19, which may continue to have material adverse effects on the global financial markets, and its business, financial position, financial performance, and cash flows; the impact on the business of broader economic factors; alignment of HIRE Technologies’ cost structure with revenue; HIRE Technologies’ limited operating history and needs for additional capital; uncertainty relating to liquidity and capital requirements; risks inherent in HIRE Technologies’ acquisition strategy; HIRE Technologies may not be able to obtain financing necessary to implement HIRE Technologies’ business plan; HIRE Technologies may not be able to obtain access to technology necessary to compete in the recruiting industry; HIRE Technologies operates in a highly competitive industry and may be unable to retain clients or market share; barriers to client portability are low; reliance on key management; and compliance with financial reporting and other requirements as a public company. Additional risks and uncertainties applicable to the Company, as well as trends identified by the Company affecting it and the staffing industry can be found in the Company’s continuous disclosure record available on SEDAR. Although HIRE Technologies has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, or intended.

Such cautionary statements qualify all forward-looking statements made in this MD&A. HIRE Technologies undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Q3 2020 / MD&A 2

/ Company Overview

HIRE Technologies, through its direct and indirect material wholly-owned subsidiaries (together the “Group”), PTC Accounting and Finance Inc. (“PTC”), ProVision IT Resources Ltd. (“ProVision”), and The Headhunters Recruitment Inc. (“The Headhunters”) provides human resources services, which consist of temporary and permanent placement services.

/ Acquisitions & Investments

==> picture [144 x 159] intentionally omitted <==

----- Start of picture text -----

was acquired by
in a transaction valued at
$400,000
September 1, 2020
----- End of picture text -----

The Headhunters is a recruitment firm with operations in Toronto, Ottawa, Winnipeg, Regina, Edmonton, and Vancouver. The Headhunters primary areas of focus are accounting & finance, general management, office personnel, human resources, sales & marketing, customer service, operations & supply chain, and engineering. HIRE Technologies acquired The Headhunters for $400,000 and additional consideration to be calculated on September 1, 2022, at 4.0x trailing twelve months EBITDA (as defined in the “Non-IFRS Financial Measures” section of this MD&A) at that time less $400,000 and closing working capital adjustments.

==> picture [144 x 159] intentionally omitted <==

----- Start of picture text -----

was provided with convertible notes by
10% Convertible Note
$200,000 USD
September 29, 2020
----- End of picture text -----

Atlas ID Systems Inc. (“Atlas ID”) is an HR technology company that powers a private and secure COVID-19 risk mitigation platform for employers. The platform enables individuals to voluntarily self-report symptoms, receive COVID-19-related test results, and choose when and with whom to share those results with tamper-proof, fraud-resistant, and end-to-end encrypted technology. On September 29, 2020 HIRE Technologies provided financing by accepting a $200,000 USD convertible note maturing September 30, 2022 bearing interest at 10%. All outstanding principal, and, at Atlas ID’s option, all accrued but unpaid interest on the convertible note, may automatically convert into equity securities of Atlas ID at a price calculated based on the future equity financing price of Atlas ID securities. The note may also convert into securities of Atlas ID at the option of HIRE Technologies or upon an Atlas ID liquidity event. As part of the transaction, HIRE became an exclusive distribution partner in Canada to the Atlas ID product.

Q3 2020 / MD&A 3

/ Description of Business

General

HIRE Technologies is building a network of staffing, IT and HR consulting firms. HIRE Technologies helps its partners navigate the changing world through growth solutions, focusing on digital transformation. HIRE Technologies’ partnership model emphasizes the identity and independence of its partners’ brands and provides the resources, support and expertise to take their businesses further. HIRE Technologies offers valuable advice and insights to its clients while delivering innovative solutions, enhancing their HR teams, and connecting them with the best people for their businesses.

HIRE Technologies has assembled an experienced management team with a track record of executing on acquisitions and managing firms for profitable growth. The Company creates values by making acquisitions, realizing cross-selling synergies, selling technology solutions to existing clients, and improving the profitability of operating subsidiaries by achieving cost savings through the consolidation of back-office infrastructure.

Management expects that businesses acquired by HIRE Technologies will continue to operate as stand- alone enterprises and be held as direct or indirect subsidiaries of the Company. As at September 30, 2020, HIRE Technologies had acquired three businesses, PTC, ProVision, and The Headhunters.

As stated above, a key component of the Company’s business strategy is to provide acquired businesses with economies of scale by consolidating back-office operations. As such, HIRE Technologies provides financial, strategic, technological, marketing, and administrative services to its subsidiaries.

Acquisition Strategy

==> picture [43 x 37] intentionally omitted <==

==> picture [47 x 35] intentionally omitted <==

==> picture [35 x 35] intentionally omitted <==

Acquire & invest in staffing, HR consulting & technology assets

Integrate the companies into the HIRE model

Optimize & maximize operational efficiences for individual firms

Scale through a network of human capital across different geographies and specialties

Q3 2020 / MD&A

The core of the Company’s strategy is acquisition execution. To this end, HIRE Technologies has defined acquisition parameters and targets for key markets in North America.

In assessing the suitability of target operating businesses and assets, the Company considers numerous operational and strategic factors which may include the following:

Geography: HIRE Technologies currently operates in five provinces servicing clients across Canada. The Company’s current pipeline of prospective acquisitions includes businesses throughout Canada and the United States.

Vertical Integration: HIRE Technologies, through PTC, ProVision, and The Headhunters, currently services a wide range of industries. Given the growth potential and cyclical nature of specific sectors, the Company has identified several different verticals to target to complement its existing business.

Management & Operations: Management is an integral part of the staffing business, and the strength of management is a crucial acquisition decision factor. HIRE Technologies seeks to identify companies with experienced management teams and viable succession plans. The staffing and recruitment industry has limited regulatory and capital barriers to entry, which increases the importance of management’s ability to retain staff and clients. The Company evaluates target businesses based on many factors, including its brand reputation, client list, industry expertise, historical staff turnover, revenue growth, expense control, financial performance, innovativeness, sector specialization, and the potential to realize synergies.

Financial Performance: HIRE Technologies will focus on acquisitions of companies with a track record of sound financial performance.

Synergies: HIRE Technologies searches for targets that present potential operational synergies. Synergies include expenses such as shared office space, marketing, information technology, and infrastructure support, integration of customer relationship management software, training, human resources, and the consolidation of contract administration. Management believes that it has the framework to integrate additional businesses into its current structure.

The Company is continually evaluating other investments that will complement existing business offerings, including back-end operation providers and technology solution providers. If completed, such transactions may provide economies of scale, diversify product offerings, streamline operations, and provide additional customer and client value. As of September 30, 2020, HIRE Technologies has invested in one business, Atlas ID.

Q3 2020 / MD&A 5

Acquisition Consideration & Integration

The Company’s acquisition model includes paying for acquisitions with a combination of cash and shares. Acquisitions may also be structured to accommodate the vendor’s continued involvement and retention of individuals key to the success and viability of the acquired firm. HIRE Technologies’ business model is designed to appeal to owners seeking to leverage the benefits of a partnership with HIRE Technologies to grow their current operations further, both organically and through acquisition. The structure of the Company’s acquisitions, including the proportion of cash and shares as consideration are subject to deal-specific factors including business, legal and taxation advice, and are reviewed and approved by the Company’s Board of Directors.

HIRE Technologies intends to maintain the brand value created by vendors by retaining the identity, specialization, and other success factors of the target firm within its market. The Company proposes to reduce operating expenses of target businesses by adding operating efficiencies and integrating back-end processes across subsidiary operations, while also providing target businesses with additional opportunities for growth through vertical integration, broader geographic coverage, and technological solutions.

Recruitment & Staffing Operations

HIRE Technologies provides recruitment and staffing services through its three operating subsidiaries: PTC, ProVision, and The Headhunters.

PTC and ProVision work on a contingency-based fee structure and specialize in both full-time permanent placement and contract/temporary placement. The experienced teams at PTC and ProVision use a complement of traditional recruitment methods and technology-driven search approaches. PTC and ProVision also provide clients and candidates with market intelligence, insight into technology trends, salary surveys, and broader career counseling.

The Headhunters perform permanent searches on contingency and retainer fee structures. Clients choose The Headhunters because of its Talent Sourcing Team which uncovers passive and hard to find candidates using cutting-edge sourcing techniques as well as its focus on finding the right fit through its proprietary Workstyle & Performance Profile behavioural assessment tool.

Q3 2020 / MD&A 6

/ Non-IFRS Financial Measures

Management analyzes the Group’s financial information from different perspectives including revenue, gross margin, net loss, adjusted net loss, EBITDA, and adjusted EBITDA.

EBITDA and adjusted EBITDA are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS. EBITDA is defined as net income/loss adjusted to exclude interest, taxes, depreciation, and amortization. It provides management with insight into HIRE Technologies’ operating performance without the impact of significant accounting policies related to depreciation and amortization, financing, and taxes. Adjusted EBITDA is defined as EBITDA, excluding restructuring and other non-operating items, unrealized gains and losses on derivative financial instruments recognized as part of financings, and share based compensation expense. Adjusted EBITDA also includes rent payments, which are not accounted for in EBITDA following the adoption of IFRS 16 Leases. Management believes that EBITDA and adjusted EBITDA are useful measures in evaluating the performance of the Group.

Adjusted net earnings (loss) is a non-IFRS measure that does not have a standardized meaning prescribed by IFRS. The Company defines adjusted net earnings (loss) as net earnings (loss) excluding restructuring and other non-operating items, unrealized gains and losses on derivative financial instruments recognized as part of financings, and share based compensation expense. Management believes that adjusted net earnings (loss) is a meaningful metric in assessing the Group’s financial performance.

Period ended >>	3 months ended Sept. 30, 2020	3 months ended Sept. 30, 2019	9 months ended Sept. 30, 2020	9 months ended Sept. 30, 2019
	$	$	$	$
NET LOSS FOR THE PERIOD	(5,942,533)	(923,796)	(7,754,046)	(2,765,734)
Interest Amortization Depreciation Tax	37,753 28,404 41,279 (37,184)	23,085 22,650 41,363 (4,373)	61,979 73,704 147,335 (48,519)	190,632 67,950 135,898 (13,119)
EBITDA	(5,872,281)	(841,071)	(7,519,547)	(2,384,373)
Add: Restructuring & non-operating items Convertible debentures - unrealized loss on fair value of derivative Share based compensation expense Rent expense	676,209 4,908,443 257,700 (26,548)	503,938 - 213,523 (22,252)	2,177,351 4,908,443 257,700 (79,644)	1,296,495 - 567,829 (66,756)
ADJUSTED EBITDA	(56,477)	(145,862)	(255,697)	(586,805)
Adjusted EBITDA as a % of revenue	(2.2%)	(4.8%)	(3.2%)	(6.5%)

Q3 2020 / MD&A 7

Net loss for the quarter was $5,942,533 versus $923,796 for the quarter ended September 30, 2019. $4,908,443 in mark-to-market fair value losses on derivatives recognized as part of the Company’s convertible debenture issuance, gross proceeds of $2,419,000, was the primary driver of the variance. Excluding this non-cash item, net loss for the quarter was $1,034,090. Despite revenue of $2,549,339, which was lower quarter-over-quarter by 16.1%, gross margin improved to $883,317 (September 30, 2019 - $736,458), a result of higher permanent placements relative to contract placements and $140,643 in government stimulus received. Selling, general and administrative expenses of $1,888,434, higher by $269,542 versus $1,618,892 for the quarter ended September 30, 2019, were a result of option issuance expense of $257,700 ($213,523 - September 30, 2019) and restructuring and other non-operating items of $676,209 ($503,938 - September 30, 2019). Excluding these items, selling, general and administrative expenses were essentially flat.

Adjusted EBITDA for the three months ended September 30, 2020 was ($56,477), an improvement of $89,385 over the same period last year. The restructuring & other non-operating items of $676,209 included compensation and expenses paid to employees separated from the Company of $244,330 and $59,570 in expenses from exited business lines. Furthermore, the Company incurred $214,668 in transaction related professional services fees in the third quarter. Finally, $157,767 in external professional services fees were incurred as part of the Company’s operational reorganization. Restructuring & other non-operating items for the three months ended September 30, 2019 of $503,938 was composed of $14,335 in severance payments and $489,603 in external professional services fees.

Net loss for the nine months ended September 30, 2020 was $7,754,046 whereas in 2019, the Company reported a net loss of $2,765,734. $4,908,443 in mark-to-market fair value losses were recognized on derivatives associated with the convertible debt which raised gross proceeds of $2,419,000. Excluding this, net loss was $2,845,603. Year-to-date revenue was $8,049,617, down 10.6% versus $9,005,156 for 2019, while cost of services were better by $901,036 at $5,927,283 (September 30, 2019 - $6,828,319). The improved costing was attributable to higher relative permanent placement activity and the government stimulus received as noted for the third quarter. Gross margin was only slightly lower than the prior year at $2,122,334 (September 30, 2019 - $2,176,837). Total operating expenses of $5,016,456 were higher versus the $4,955,690 reported for the same period last year driven by selling, general and administrative expenses which were $183,665 higher year-over-year partially offset by lower interest expenses of $61,979 versus $190,632 in 2019. Excluding restructuring & other nonoperating items of $2,177,351 ($1,296,495 – September 30, 2019) and share based compensation expenses of $257,700 ($567,829 – September 30, 2019), total operating expenses of $2,581,405 were $509,961 lower compared to 2019.

Adjusted EBITDA for the nine months ended September 30, 2020 was ($255,697), an improvement of $331,108 over the same period last year. The $2,177,351 in restructuring & other non-operating items included compensation and expenses paid to employees separated from the Company of $1,351,575, $614,296 in external professional services fees, and $211,480 in net expenses, including write-offs of bad debt of $87,521, from exited business lines. Restructuring & other non-operating items for the nine months ended September 30, 2019 of $1,296,495 was composed of $1,036,194 in external professional services fees, $210,501 in severance payments, and $49,800 in one-time expenses.

Q3 2020 / MD&A 8

Adjusted net loss removes the impact of restructuring and other non-operating items unrealized markto-market losses on derivatives recognized as part of convertible debenture financing, and share based compensation expense on the Company results. The reconciliation of net loss to adjusted net loss, and the resulting adjusted net loss per share, is presented below.

Period ended >>	3 months ended Sept. 30, 2020	3 months ended Sept. 30, 2019	9 months ended Sept. 30, 2020	9 months ended Sept. 30, 2019
	$	$	$	$
NET LOSS FOR THE PERIOD	(5,942,533)	(923,796)	(7,754,046)	(2,765,734)
Add: Restructuring & other non-operating items Convertible debentures - unrealized loss on fair value of derivative Share based compensation expense Non-recurring rent	676,209 4,908,443 257,700 -	503,938 - 213,523 -	2,177,351 4,908,443 257,700 113,000	1,296,495 - 567,829 -
ADJUSTED NET LOSS	(100,181)	(206,335)	(297,552)	(901,410)
Adjusted net loss per share Weighted number of shares	(0.00) # 48,097,746	(0.01) # 38,712,581	(0.01) # 48,090,829	(0.03) # 34,932,444

Adjusted net loss of $100,181 for the quarter ended September 30, 2020 (September 30, 2019 - $206,335) was a result of $676,209 in restructuring and other non-operating items (September 30, 2019 - $503,938).

For the nine months ended September 30, 2020 adjusted net loss was $297,552 a $603,858 improvement year-over-year and a $0.02 improvement on a per share basis. Attributable to $2,177,351 in restructuring & other non-operating charges as well as $113,000 in rent payments on a terminated lease, the Company believes that its comprehensive reorganization has positioned HIRE Technologies to become a scalable platform for acquisitive growth for the long-term.

Q3 2020 / MD&A 9

/ Interim MD&A – Quarterly Highlights

For the quarter ended September 30, 2020, revenue for the Group was $2,549,339, 16.1% lower than $3,040,243 for the same quarter in 2019, a result driven by a combination of overall market weakness due to COVID-19 impacting summer staffing levels, particularly in the contract space across all verticals, and lower year-over-year results on permanent placements in the accounting and finance vertical. These unfavourable variances were tempered by healthy activity in Western Canada permanent placements across all verticals.
Gross margin was 34.6% as a percentage of revenue, up significantly from 24.2% for the quarter ended September 30, 2019. The 10.4 point increase was due to proportionately higher permanent placements which represented 15.7% of total revenue this quarter versus 5.6% for the quarter ended September 30, 2019) and government stimulus received as part of the Government of Canada’s Canada Emergency Wage Subsidy (“CEWS”).
Adjusted EBITDA was ($56,477) for the quarter ended September 30, 2020 versus ($145,862) for the same quarter in 2019. The $89,385 improvement was a result of the comprehensive reorganization initiated in the first quarter of 2020 with the net impact being materially improved selling, general and administrative spending and the higher gross margins noted above.
Adjusted net loss for the quarter ended September 30, 2020 was $100,181 or $0.00 per share, compared to an adjusted net loss of $206,335, or ($0.01) per share for the same quarter in 2019.
On August 21 and 24, 2020, the Company closed a private placement of unsecured convertible debentures for gross proceeds of $2,419,000. The convertible debentures mature July 31, 2023 and bear interest at 9% per annum payable semi-annually in arrears and are convertible into one common share and common share warrant at $0.30 per unit. Each warrant is exercisable into one common share at $0.60 per common share at any time prior to July 31, 2023.
On September 1, 2020, the Company acquired 100% of The Headhunters for $400,000 and future consideration based on 4.0x trailing twelve months EBITDA calculated on the second anniversary of closing less $400,000 and closing working capital adjustments. The acquisition expands the Group’s presence across Western Canada.
On September 29, 2020, the Company invested in Atlas ID via a 10% $200,000 USD convertible note and entered into a partnership with Atlas ID to be its exclusive distribution partner in Canada.

Q3 2020 / MD&A 10

/ Selected Quarterly Information

Income Statement Data

Period ended >>	3 months ended Sept. 30, 2020	3 months ended Sept. 30, 2019	9 months ended Sept. 30, 2020	9 months ended Sept. 30, 2019
Revenue Cost of services	$ 2,549,339 1,666,022	$ 3,040,243 2,303,785	$ 8,049,617 5,927,283	$ 9,005,156 6,828,319
GROSS MARGIN	883,317	736,458	2,122,334	2,176,837
Gross margin (% of revenue) Operating expenses: Selling, general and administrative Amortization of intangible assets Interest	34.6% 1,888,434 28,404 37,753	24.2% 1,618,892 22,650 23,085	26.4% 4,880,773 73,704 61,979	24.2% 4,697,108 67,950 190,632
OPERATING EXPENSES	1,954,591	1,664,627	5,016,456	4,955,690
Loss from operations before income taxes Convertible debentures - unrealized loss on fair value of derivative	(1,071,274) (4,908,443)	(928,169)	(2,894,122) (4,908,443)	(2,778,853)
LOSS BEFORE INCOME TAXES	(5,979,717)	(928,169)	(7,802,565)	(2,778,853)
Income tax recovery	(37,184)	(4,373)	(48,519)	(13,119)
NET LOSS FOR THE PERIOD	(5,942,533)	(923,796)	(7,754,046)	(2,765,734)
Net loss per share Weighted number of shares	(0.12) # 48,097,746	(0.02) # 38,712,581	(0.16) # 48,090,829	(0.08) # 34,932,444

Balance Sheet Data

Period ended >>	September 30, 2020	December 31, 2019
	$	$
Total assets	6,710,736	6,432,810
Total liabilities	10,196,091	2,522,812
Shareholders’ equity	(3,485,355)	3,909,998

Q3 2020 / MD&A 11

/ Discussion of Operations

Net loss for the quarter ended September 30, 2020 was $5,942,533 (September 30, 2019 - $923,796) and net loss per share was $0.12 (September 30, 2019 – $0.02). Excluding unrealized losses on derivatives recognized as part of the Company’s convertible debenture financing of $4,908,443, net loss was $1,034,090 or $0.02 per share.

For the nine months ended September 30, 2020, net loss was $7,754,046 and net loss per share was $0.16 (September 30, 2019 – a net loss of $2,765,734 and net loss per share of $0.08). Excluding unrealized losses on derivatives recognized as part of the Company’s convertible debenture financing of $4,908,443, net loss was $2,845,603 or $0.06 per share. Variance attribution by line item is detailed in the following sections.

Revenue

The following table shows the breakdown of revenues for the three months and nine months ended September 30, 2020 and September 30, 2019.

Period ended >>	3 months ended Sept. 30, 2020	3 months ended Sept. 30, 2019	9 months ended Sept. 30, 2020	9 months ended Sept. 30, 2019
Short-term contracts Permanent placements	$ 2,148,506 400,833	$ 2,871,003 169,240	$ 7,334,391 715,226	$ 8,368,340 636,816
TOTAL	2,549,339	3,040,243	8,049,617	9,005,156

For the quarter ended September 30, 2020, revenue was lower by 16.1%. Contract placements overall were lower by $722,497 or 25.2% versus the same time in 2019. Seasonality impacts the third quarter in the staffing industry with the summer months generally being those with the least demand. This coupled with continued economic weakness resulting from the COVID-19 pandemic impacted our contract and temporary placements and the accounting and finance vertical in particular. Tempering this was comparably better permanent placement activity where the Group was up 136.8% or $231,593 driven by immediate returns on the Group’s expanded presence in Western Canada.

Year-to-date, revenue was down 10.6% versus the prior year. A steady result in our contract information technology vertical, the largest practice area in the group, was overshadowed by $1,135,108 in lower permanent and contract revenues in the accounting and finance vertical yearover year. Notably, the Group’s expansion into Western Canada via acquisition added $373,272 in revenue.

Q3 2020 / MD&A 12

Cost of Services

The cost of services decreased by 27.7% and 13.2%, respectively for the three and nine months ended September 30, 2020, relative to the same periods in 2019. A significantly higher mix of permanent placement revenue relative to contract placement revenue of 15.7% (5.6% in 2019) and 8.9% (7.1% in 2019) for the quarter and nine months ended September 30, 2020, respectively, were the drivers of these improvements. Also included in the cost of services was $140,643 received as part of the CEWS program. The cost of services comprises expenses directly attributable to earning revenue, which will include contractor wages, fees, and taxes for contract and temporary placement services.

Gross Margin

The Group’s gross margin was $883,317 for the quarter ended September 30, 2020, compared to $736,458 for the same period in 2019. As a percentage of revenue, gross margin was 34.6% versus 24.2% for the same period in 2019. As indicated above, the higher gross margin was attributable to a higher mix of permanent placements relative to contract revenue. It was a result of a particularly robust September in Western Canada. The CEWS amount recognized in the quarter was also a factor.

For the nine months ended September 30, 2020 gross margin was $2,122,334 or 26.4% of revenue. On a dollar basis the Company was only marginally down by $54,503 year-over-year as HIRE Technologies was fortunately positioned to benefit from favourable market conditions in both the IT industry sector and the permanent placement market in British Columbia.

Operating Expenses

Selling, general and administrative expenses were $1,954,591 for the quarter ended September 30, 2020, $289,964 higher than $1,664,627 for the same period in 2019. A comprehensive reorganization was initiated in March of this year comprising an examination of vendors, operations, capital management, and headcount, and was completed this quarter with significantly lower operating costs expected going forward. The quarter-over-quarter variance was attributable to $257,700 (September 30, 2019 - $213,523) in option issuance expense as well as $244,204 (September 30, 2019 - $14,335) in severance, non-continuing remuneration, and other one-time employee related items. Interest expense was $37,753 quarter-to-date versus $23,085 for the same period in 2019. The Company had drawn down $1,435,000 on its revolving credit facility as of September 30, 2019 whereas for the quarter ended September 30, 2020, interest expense reflected accrued interest on the convertible debentures issued in August of 2020.

Selling, general and administrative expenses were $4,880,773 for the nine months ended September 30, 2020, 4% higher than $4,697,108 for the same period in 2019. Excluding $2,177,351 ($1,296,495 – 2019) in restructuring and non-operating expenses and $257,700 (567,829 – 2019) in option issuance expense, selling, general and administrative expenses were $387,062 lower in 2020 versus 2019. Interest expenses of $61,979 (September 30, 2019 - $190,632) reflect the capital structure differences noted in the previous paragraph where the Company had substantially more bank indebtedness outstanding year-to-date in 2019.

Q3 2020 / MD&A 13

/ Summary of Quarterly Results

Revenue
Gross Margin
Operating
Expenses
Net Income
(Loss)
Earnings (Loss)
Per Share
$ $ $ $ $ Q3 2020
2,549,339
883,317
1,954,591
(5,942,533)
(0.12)
Q2 2020
2,597,492
548,280
1,621,503
(1,066,547)
(0.02)
Q1 2020
2,902,786
690,737
1,440,362
(744,965)
(0.02)
Q4 2019
2,956,452
662,378
5,117,561
(4,423,318)
(0.13)
Q3 2019
3,040,243
736,458
1,664,627
(923,796)
(0.02)
Q2 2019
2,953,026
774,763
1,771,136
(992,000)
(0.04)
Q1 2019
3,011,887
665,616
1,519,927
(849,938)
(0.03)
Q4 2018
3,526,034
869,855
1,737,329
(855,148)
(0.04)

A summary of notable events is as follows:

Q3 2018: The Company acquired ProVision on August 1, 2018.
Q4 2019: The reverse takeover transaction with Danacore Industries Inc. was completed on December 17, 2019. On December 23, 2019, the Company’s shares began trading on the TSX Venture Exchange (“TSXV”).
Q1 2020: Management initiated a comprehensive reorganization expected to yield significant cost savings while positioning operations favourably for the long-term.
Q3 2020: The Company completed an offering of convertible debentures for gross proceeds of $2,419,000 on August 21 to 24, 2020.
Q3 2020: The Company acquired The Headhunters on September 1, 2020.
Q3 2020: The Company invested in Atlas ID and entered into an exclusive distribution partnership on September 29, 2020.

Q3 2020 / MD&A 14

/ Liquidity & Capital Resources

The Group's cash balances fluctuate significantly from period to period due to the operating subsidiaries’ payroll liabilities. Please see below for a summary of the Group's working capital balances as at September 30, 2020 and December 31, 2019.

Period ended >>	September 30, 2020	December 31, 2019
Cash Trade & other receivables Prepaid expenses	$ 1,059,890 2,143,669 300,236	$ 2,304,024 1,681,267 314,127
TOTAL CURRENT ASSETS	3,503,795	4,299,418
Trade & other payables Lease liability	1,807,707 144,936	1,727,627 157,221
TOTAL CURRENT LIABILITIES	1,952,643	1,884,848

Working capital	1,551,152	2,414,570

The following table summarizes the Group's cash flows for the nine months ended September 30, 2020 and 2019:

Period ended >>	9 months ended September 30, 2020	9 months ended September 30, 2019
Operating activities Investing activities Financing activities Net increase (decrease) in cash	$ (2,869,880) (507,632) 2,133,378 (1,244,134)	$ (2,960,915) (3,604,317) 6,381,304 (183,928)

The Group's cash flow from operations was a net cash outflow of $1,244,134 for the nine months ended September 30, 2020 (September 30, 2019 – net cash outflow of $183,928), driven by the restructuring costs associated with the Company’s reorganization.

The Group has revolving demand operating facilities with an aggregate credit limit of the lesser of $2,125,000 and the percentages of certain qualified receivables. As of September 30, 2020, there was no amount drawn (September 30, 2019 - $1,435,000).

Q3 2020 / MD&A 15

HIRE Technologies, ProVision, and The Headhunters received Canadian Emergency Business Account loans (“CEBA loans”) totalling $120,000 in aggregate. The CEBA loans bear no interest until December 31, 2022 and bear interest at 5% per annum thereafter and to their December 31, 2025 maturity date. If 75% of the principal is repaid by December 31, 2022, the remaining 25% will be forgiven.

The Group believes that its working capital on hand, combined with available financing, will be sufficient to fund its operations and contractual obligations for the year ended December 31, 2020.

Please see the "Risks Arising from Financial Instruments - Liquidity Risk" section of this MD&A for a schedule of the Group's contractual obligations.

/ Off-Balance Sheet Arrangements

The Group has no off-balance sheet arrangements.

/ Related Party Transactions

The Group considers its related parties to consist of key members of its Board of Directors, senior officers, and companies controlled or significantly influenced by such individuals, which may exert significant influence over the Group's activities.

During the three and nine months ended September 30, 2020, the Company received consulting services from Mr. Eric Loree, an officer of the Company, who was paid $29,003 and $98,669 respectively (September 30, 2019 – $105,942 and $152,142 respectively, paid in cash and common shares).

During the three months ending September 30, 2020 the Company received consulting services from GIC Merchant Bank Corporation, a shareholder with significant influence, and paid $113,000 for these services.

/ Changes in Accounting Polices

There have been no changes in accounting policies since the Company’s June 30, 2020 MD&A.

Q3 2020 / MD&A 16

/ Critical Accounting Estimates

The critical accounting estimates are substantially unchanged from those identified in the Company’s June 30, 2020 MD&A except for the following:

The Company participated in the CEWS program offered by the Government of Canada and received an aggregate $247,973 in government stimulus to date. $140,643 was recognized as a reduction to cost of services and $107,330 was recognized a reduction to selling, general and administrative expenses.

The Company assessed its non-financial assets for indicators of impairment and determined that no indications existed. The Company tested intangible assets with indefinite useful lives and noted that recoverable amounts were not less than carrying amounts. The Company also tested its cash generating units (The Company’s subsidiaries) and allocated goodwill and noted that the units’ recoverable amounts exceeded carrying amounts.

/ Risks Arising from Financial Instruments

The Group is exposed to risks that arise from its use of financial instruments as described below. There has been no change in the way the Group manages risk during the quarter.

Interest Rate Risk

Interest rate risk is the risk that the fair value of a financial instrument’s future cash flows will fluctuate because of changes in market interest rates. The Group's sensitivity to interest rates is currently low due to limited exposure to long-term investment grade interest-bearing debt as at September 30, 2020.

Credit Risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Group's credit risk relates primarily to trade and other receivables, which are initially recognized at the stated amount of the receivable and the convertible note issued to Atlas ID. The carrying amount of financial assets represents the maximum credit exposure.

The Group's exposure to credit risk with its customers is influenced mainly by each customer’s unique characteristics. The Group does not require collateral for sales on credit. The Group does not offer significant credit terms and has not experienced significant credit losses in the past.

Q3 2020 / MD&A 17

The Group monitors its collection experience monthly and ensures a stringent policy is applied to all past due accounts. The Group establishes an allowance for expected credit losses that corresponds to the specific customers’ credit risk, historical trends, and economic circumstances. Subsequent recoveries of amounts previously written off are credited in the consolidated statement of net loss and comprehensive loss. The Group's maximum credit risk is the carrying value of cash and trade and other receivables.

Liquidity Risk

Liquidity risk is the risk that the Group encounters difficulty meeting its obligations associated with its financial liabilities. As at September 30, 2020, most of the Group's liabilities are regular monthly obligations except for the earn-out consideration payable to ProVision's shareholders and contingent consideration payable to The Headhunters’ shareholders (See notes 2(e) and 10 of the unaudited condensed consolidated interim financial statements).

Market Risk

Market risk is the risk that a financial instrument’s the fair value or future cash flows will fluctuate due to changes in the market interest rate. As at September 30, 2020, all financial instrument carrying values approximated fair value.

/ Disclosure of Outstanding Share Data

The Company is authorized to issue an unlimited number of common shares. As at September 30, 2020, the Company had 48,224,195 common shares issued and outstanding, as well as, a total of 6,379,541 warrants (comprised of 4,169,402 warrants issued to subscribers of subscription receipt units under brokered private placements with the balance of 2,210,139 warrants issued as partial consideration for professional services), 3,199,924 incentive stock options, and 1,250,000 deferred share units each exercisable or convertible into one common share. An additional 334,751 warrants, issuable upon the exercise of certain broker warrants, are exercisable into one common share and the convertible debentures are convertible into 8,063,333 units comprised of one common share and one warrant.

Q3 2020 / MD&A 18

/ Risks & Uncertainties

The Group is subject to several risks and uncertainties, each of which could have an adverse effect on its results, business prospects, or financial position. The risks and uncertainties described herein are not the only ones the Group faces. Additional risks and uncertainties, including those that the Group does not know about now or currently deems immaterial, may also adversely affect the Group’s business. If any of the disclosed risks occur, the Group’s business may be harmed, and its financial condition, results of operations and prospects may suffer significantly.

The Company's securities should be considered a highly speculative investment. Investors should carefully consider all of the information disclosed in the Company's regulatory filings before investing in the Company.

The Company’s overall performance and results of operations are subject to several risks and uncertainties. The Company’s management believes that the risks listed below are among the most important to understand the issues that face its financial performance, business, and its approach to risk management.

The Company faces various risks related to the recent outbreak of COVID-19, which may have material adverse effects on the global financial markets, and its business, financial position, financial performance, and cash flows.

In recent years, global credit and financial markets have experienced extreme disruptions, including concerns of, at times, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that significant deterioration in credit and financial markets and confidence in economic conditions will not occur in the future. Any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions could have a material adverse effect on the Company’s business, financial condition, and results. Further, global credit and financial markets have displayed arguably increased volatility in response to recent global events.

The World Health Organization declared COVID-19 a pandemic on March 11, 2020. Beginning in the second half of March 2020, many jurisdictions in North America, including where the Group conducts its operations and derives its revenues, declared states of emergency, imposed quarantines and restrictions on travel, and shut down non-essential businesses resulting in an economic slowdown. While the direct effects of government responses to the pandemic, applied at the federal, provincial, and municipal government levels, are expected to be temporary, the duration and magnitude of measures to combat and contain COVID-19 remain difficult to estimate at this time.

Future crises may be precipitated by many causes, including natural disasters, public health crises, geopolitical instability, changes to energy prices or sovereign defaults. These factors may impact the ability of the Company to obtain equity or debt financing in the future and, if obtained, on terms favorable to the Company. Increased volatility and market turmoil can adversely impact the Company’s operations and the value and price of the Company common shares could be adversely affected.

Q3 2020 / MD&A 19

Also, there is a risk that one or more of the Group’s current service providers may themselves be adversely impacted by difficult economic circumstances, which could have a material adverse effect on the Group’s business, financial condition, results, and prospects.

HIRE Technologies’ business is subject to broader economic factors.

Changes in general economic conditions may adversely affect HIRE Technologies’ business and financial condition. The demand for workforce solutions depends on the state of the economy and the staffing needs of the Group’s clients, which creates uncertainty and volatility. As economic activity slows, the need for temporary and new employees decreases. Significant declines in demand of any region or industry in which HIRE Technologies has a considerable presence may significantly reduce its revenues and profits. Deterioration in economic conditions or the financial or credit markets could also harm the Group’s ability to collect payment for services.

It is difficult for HIRE Technologies to forecast future demand for its services due to the inherent uncertainty in predicting the direction and strength of economic cycles, the terms and nature of future staffing assignments, and its clients’ financial viability. Additionally, HIRE Technologies may experience a decline in revenue before a decline in economic activity is seen in the broader economy. When it is difficult for HIRE Technologies to forecast future demand accurately, HIRE Technologies may not determine the optimal level of personnel and investment necessary to take advantage of growth opportunities profitably.

Alignment of HIRE Technologies’ cost structure with revenue.

HIRE Technologies must ensure that its costs and workforce continue to be proportionate to demand for its services. Failure to align the Group’s cost structure and headcount with net revenue could adversely affect the business, financial condition, and results. HIRE Technologies’ attempts to mitigate the risks of short-term revenue shifts by having a portion of employee compensation based on the employee's business unit results and for management to consolidate revenue and operating profit. HIRE Technologies is a growth company and to facilitate growth it must continually invest in resources and overhead costs ahead of planned revenue. Accordingly, HIRE Technologies may operate with substantial negative cash flow in the future.

HIRE Technologies has a limited operating history and may require additional capital.

HIRE Technologies has incurred operating losses and cash flow deficits since inception. Therefore, HIRE Technologies is subject to many risks common to early-stage enterprises, including undercapitalization, cash shortages, and limitations concerning personnel, financial, and other resources. There is no assurance that HIRE Technologies will be successful, and the likelihood of success must be considered in light of its early stage of operations. To the extent HIRE Technologies has negative operating cash flow in future periods, it may need to allocate a portion of its cash reserves to fund such operating cash flow. HIRE Technologies may also be required to raise additional funds through the issuance of equity or debt securities. There can be no assurance that HIRE Technologies will generate positive cash flow from operations, that additional capital or other types of financing will be available when needed or that these financings will be available on favourable terms.

Q3 2020 / MD&A 20

There is uncertainty relating to liquidity and capital requirements.

The future capital requirements of the Company will depend on many factors, including all matters relating to COVID-19, the number and size of acquisitions consummated (if any), rate of growth of its client base, the costs of expanding into new markets (if any), the growth of the staffing industry and the costs of administration. To meet such capital requirements, the Company may consider additional public or private financing (including the incurrence of debt and the issuance of additional common shares) to fund all or a part of a particular venture, which could entail a dilution of current investors' interest in the Company. There can be no assurance that additional funding will be available or, if available, that it will be available on acceptable terms. If adequate funds are not available, the Company may have to reduce substantially or otherwise eliminate certain expenditures. There can be no assurance that the Company will raise additional capital if its capital resources are depleted or exhausted. Further, due to regulatory impediments and lack of investor appetite, the ability of the Company to issue additional common shares or other securities exchangeable for or convertible into common shares to finance acquisitions may be restricted.

There are risks inherent in HIRE Technologies’ acquisition strategy.

HIRE Technologies’ business plan includes the active pursuit of accretive business acquisitions in Canada, the United States and internationally consistent with its investment strategy. Such acquisitions involve inherent risks including but not limited to: (a) unanticipated costs; (b) potential loss of key employees of the Company or the business acquired; (c) unexpected changes in business, industry or general economic conditions that affect the assumptions underlying the acquisition; and (d) decline in the value of the acquired business or assets. Further, there can be no assurance that an acquired business will achieve the desired levels of revenue, profitability or productivity or otherwise perform as expected. Any one or more of these factors could cause HIRE Technologies to fail to realize the anticipated benefits of the acquisition in question. Additionally, there can be no assurance that HIRE Technologies will be able to successfully identify suitable acquisition targets and complete acquisitions on terms beneficial to HIRE Technologies and its shareholders. HIRE Technologies’ failure to successfully execute its acquisition strategy could have a material adverse effect on the HIRE Technologies business. Moreover, HIRE Technologies may be required to use available cash, incur debt, issue securities, or a combination of these in order to complete an acquisition. This could affect HIRE Technologies’ future flexibility and ability to raise capital, operate or develop its business and could dilute its existing shareholders’ holdings, as well as, decrease the trading price of the HIRE Technologies’ common shares. In addition, the process of acquiring and integrating companies into HIRE Technologies’ existing business may also result in unforeseen difficulties which may absorb significant management attention, require significant financial resources and be disruptive to operations causing the business and results of operations to suffer materially. There is no assurance that when evaluating a possible acquisition, HIRE Technologies will correctly identify and manage the risks and costs inherent in the business or asset to be acquired.

Q3 2020 / MD&A 21

HIRE Technologies may not be able to obtain the financing necessary to implement its business plan.

A key component of HIRE Technologies’ long-term strategy is to consolidate the highly fragmented staffing and recruiting industry. There is no guarantee that capital markets participants will support HIRE Technologies’ business strategy or that required capital will be available on acceptable terms or at all. A failure to access financing to complete one or more acquisitions could have a material adverse effect on the HIRE Technologies business and the financial condition and results of HIRE Technologies. Also, while business owners continue to show interest in joining HIRE Technologies, there is no assurance that negotiations will result in completed acquisitions.

HIRE Technologies may not be able to obtain access to technology necessary to compete in the recruiting industry.

The success of the business depends on the demand for qualified employees and contractors. Technological improvement leads to automation and robotization of an increasing number of tasks each day. This trend poses a risk to the staffing industry. HIRE Technologies attempts to mitigate this risk by searching for IT focused acquisition targets to broaden its revenue streams and diversify is client base.

Also, HIRE Technologies candidates and clients increasingly demand technological innovation to improve access to and deliver services. HIRE Technologies faces extensive pressure for lower prices and new service offerings and must invest in new technology to remain relevant to its clients and candidates. HIRE Technologies attempts to mitigate this risk by implementing new technologies into its search and retention processes.

HIRE Technologies operates in a highly competitive industry and may be unable to retain clients or market share.

The staffing services industry is highly competitive and the barriers to entry are low. There are many competitors, and new competitors are entering the market regularly. Current and new competitors may be better capitalized, have a more robust operating history, have more expertise, and provide comparable or superior services at the same or lower cost. Also, long-term contracts form a small and declining portion of HIRE Technologies’ revenue. There is no assurance that HIRE Technologies will be able to retain clients or its market share in the future, nor can there be any assurance that it will maintain or increase its current margins, or reach and sustain profitability in light of competitive pressures.

The barriers to client portability are low.

HIRE Technologies’ stability and growth significantly depend on client relationships. In most cases, a small number of people have primary responsibility for a client relationship. There is a risk that when an employee leaves HIRE Technologies, the clients who have established relationships with the departing employee may move the business to the employee’s new employer. If HIRE Technologies is unable to retain important client relationships, its business, financial condition, and results may be adversely affected.

Q3 2020 / MD&A 22

HIRE Technologies is reliant on key management.

The success of HIRE Technologies is dependent upon the ability, expertise, and judgment of its senior management, and in particular Simon Dealy, Eric Loree, and Dan Teguh. Shortages in qualified personnel or the loss of key personnel could adversely affect the financial condition of HIRE Technologies and the results of operations of the business. The loss of any of the Company's senior management or key employees, particularly Mr. Dealy, Mr. Loree or Mr. Teguh could materially and adversely affect HIRE Technologies’ ability to execute its business plan and strategy, and HIRE Technologies may not be able to find adequate replacements on a timely basis, or at all. Further, a loss of key management of a past or future acquiree could materially and adversely impact the anticipated benefits of the acquisition in question.

The Company Needs to Comply with Financial Reporting and Other Requirements as a Public Company.

The Company is subject to reporting and other obligations under applicable Canadian securities laws and TSXV rules, including National Instrument 52-109. These reporting and other obligations place significant demands on the Company’s management, administrative, operational, and accounting resources. Moreover, failure to maintain adequate internal controls could cause the Company to fail to meet its reporting obligations or result in material misstatements in its consolidated financial statements. If the Company cannot provide reliable financial reports or prevent fraud, its reputation and operating results could be materially harmed, which could also cause investors to lose confidence in the Company’s reported financial information, resulting in a lower trading price of its securities. Management does not expect that Company’s internal controls will prevent all error and all fraud. Further, the controls are subject to resource constraints and the benefits of controls must be considered relative to their costs. Due to all control systems’ inherent limitations, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by individual acts of some persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Q3 2020 / MD&A 23

/ Events After Quarter-End

On November 24, 2020, the Company announced a private placement of up to $1,000,000 in equity units at $0.60 per unit. Each unit will include one common share and one half of one share purchase warrant with each whole warrant exercisable for one common share for a period of 24 months at $0.90 per common share. The Company will pay finders fees consisting of nontransferrable warrants entitling the holder to purchase that number of common shares as is equal to 6.5% of the units and a cash payment equal to 6.5% of the gross proceeds raised. Each finders warrant will be exercisable for one common share at a price of $0.60 until 24 months after the date of issue. The proceeds of the financing will be used for the acquisition discussed below.

On November 24, 2020, the Company announced the acquisition of Kavin Talent Management & Recruiting (the “Kavin Group”) for $1,000,000 and additional cash consideration to be calculated on the second anniversary of closing based on trailing twelve month EBITDA. The $1,000,000 payment will be subject to closing working capital adjustment and will be satisfied via $800,000 in cash and $200,000 in common shares of the Company.

Q3 2020 / MD&A 24

TM - Trademark of HIRE Technologies Inc.

/ HIRE Technologies Inc. TSX-V: HIRE hire.company