Urbanimmersive Inc.

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MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2020

DATED JANUARY 14, 2021

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

This management’s discussion and analysis of financial position and results of operations ("MD&A"), is prepared as of January 14, 2021, and complements the audited consolidated financial statements of Urbanimmersive Inc. ("Urbanimmersive" or the "Corporation"), including its wholly-owned subsidiary, 8239991 Canada Inc. ("Immersolution"), for the year ended September 30, 2020, which are compared to the year ended September 30, 2019.

All financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS") and all amounts are in Canadian dollars unless otherwise indicated. Additional information is provided in the Corporation's audited consolidated financial statements for the year ended September 30, 2019.

The audited consolidated financial statements and the MD&A have been reviewed by the audit committee and approved by the Corporation’s Board of Directors on January 14, 2021. These documents and more information about the Corporation are available on SEDAR at www.sedar.com.

FORWARD LOOKING STATEMENTS

Certain statements made in this MD&A are forward-looking statements or information. The Corporation is hereby providing cautionary statements identifying important factors that could cause the Corporation's actual results to differ materially from those projected in the forward-looking statements. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "may", "is expected to", "anticipates", "estimates", "intends", "plans", "projection", "could", "vision", "goals", "objective" and "outlook") are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. In making these forward-looking statements, the Corporation has assumed that the current market will continue and grow and that the risks listed below will not adversely impact the business of the Corporation. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes may not occur or may be delayed. The risks, uncertainties and other factors, many of which are beyond the control of the Corporation that could influence actual results are summarized under the heading "Risks and Uncertainties".

Further, unless otherwise noted, any forward-looking statement speaks only as of the date of this MD&A, and, except as required by applicable law, the Corporation does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors and to assess in advance the impact of each such factor on the business of the Corporation, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement.

ABOUT URBANIMMERSIVE

Urbanimmersive is a SaaS business management solution that provides mission-critical solutions to visual content providers serving the real estate residential, commercial, construction, and local business markets. Urbanimmersive’ platform helps customers to increase operational productivity and delivering the full potential of visual content creations through leading-edge websites builder tool, AI-backed image indexing, robust file transfer systems, and interactive visual technology solutions. The firm's core technology is a 3D emulator powered by a visual content recognition post-production algorithm that delivers online and offline alternatives to traditional 3D engines for the creation of immersive digital environments. Learn more at urbanimmersive.com.

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

HIGHLIGHTS

On February 13, 2020, the Company completed the acquisition of Immersolution, a reseller of 3D photography equipment;
For 2020, the Company generated a gross merchant volume (‘GMV’) of $ 9,776k compared to $9 463k in 2019, a 3% increase;
For 2020, the Company generated revenues of $4,594k compared to $4,454k for 2019, a year-overyear increase of $140k or 3.1%. While adjusting for comparison purposes 2019 revenues to reflect the change in billing method for Urbanimmersive in March 2019, 2019 adjusted revenues total $3,569k, an annual increase of $1,025k or 28.7%. This increase is explained by the new sales of 3D photography equipment (+$1,709k) following the acquisition of Immersolution on February 13, 2020 and partly offset by a temporary decrease in software (‘SaaS’) revenues (-$684k or -19%) mainly explained by the significant slowdown in real estate activities from March to July 2020 caused by the social distancing measures related to the Covid-19 crisis;
For 2020, the Company generated a gross margin (before amortization) of $3,146k (68.5%) compared to $3,378k (75.8%) for 2019, a decrease of $232k (-6.9%) or 7.3 points. The decrease of the gross margin in $ is explained by the decrease in SaaS gross margin (-$641k) due to Covid-19 crisis, partly offset by the contribution of Immersolution following its acquisition on February 13, 2020 (+$408k). For 2020, gross margin generated on SaaS revenues totaled $2,738k (94.9%) while gross margin on 3D photography equipment was $408k (23.9%);
For 2020, EBITDA totaled $1,050k compared to $713k for 2019, an improvement of $337k;
For 2020, operating activities generated cash flows of $989k compared to $464k for 2019, an improvement of $525k;
As of September 30, 2020, cash totaled $885k with unused lines of credit of $274k for liquidities totaling $1,159k and working capital totaling +$602k (excluding short-term portion of the longterm debt and non-cash items payable in shares);
In 2020, the Company launched many new innovative products, including its 3D Pocket Website[TM] (February), its immersive 3D tours and floor plans services (September) and its automatic photo edition (HDR) services. Moreover, in June 2020, the Company integrated Local Logic local information and mapping services to its 3D tours;
In February 2020, the Company completed a term loan financing of $1.45 million used primarily to repay the balance of the US denominated term loan of $1.07 million;

OVERVIEW - IMPACT OF COVID-19

During 2020, the emergence of a new strain of coronavirus (Covid-19) resulted in a major global health crisis which continues to affect the global economy and the financial markets. The social distancing measures and confinement imposed on our real estate photographer customers in North America has caused a temporary but significant slowdown in real estate activities and drove our year-over-year SaaS revenues down up to 50% by mid-April. Since then, the Company observed a steady increase in its activities and managed to come back to a pre-crisis level in July 2020, then experiencing a year-over-year growth in its SaaS revenues.

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

The Company has reacted rapidly to the crisis by taking some targeted measures to minimize the impact on the business. Those measures taken during the second and third quarters of the fiscal year include layoffs, temporary salary reductions, a 3-month principal repayment moratory on the $1.4m term loan, tighter working capital management, claims for the Canada Emergency Wage Subsidy ('CEWS') program and a $40k emergency loan. When considering the measures taken rapidly to alleviate the effects associated with Covid-19, its encouraging more recent financial results, current liquidities and sound financial situation, the Company is confident to be in a position to pursue as planned its business plan and commercialization strategy in the future.

Moreover, significant permanent changes observed in customers behavior and needs combined to the bonified Company’ service offer of new innovative and adapted solutions that customers can benefit, particularly for the fast-growing demand for virtual tours (immersive 3D tours), demonstrate that the Company could emerge even stronger from this crisis by consolidating its market leader position in immersive 3D experience even more.

ACHIEVEMENTS

“Despite a particularly difficult economic context, 2020 was for Urbanimmersive an exceptional year for many reasons. The timely launch of our new innovative 3D immersive solutions combined with the accelerating demand for virtual tours and their democratization has, among other things, enabled the Company to consolidate its leader position in the 3D immersive solutions and solidify its financial situation. In 2020, we continued to innovate while bringing our product portfolio to another level with the additions of innovative solutions such as 3D Pocket Website, 3D tours and floor plans, which the Company now offering a full set of high-quality solutions to our customers. We are very excited about the year to come considering where we are today with our products”, says Ghislain Lemire, President and CEO of Urbanimmersive.

Urbanimmersive Inc.

Management discussion and analysis for the year ended September 30, 2020

OPERATING RESULTS ANALYSIS

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Three-month Three-month
period ended period ended Year ended Year ended
Sept. 30, 2020 Sept. 30, 2019 Sept. 30, 2020 Sept. 30, 2019
In thousands $ In thousands $ In thousands $ In thousands $
Gross Merchant Volume (GMV) * 3,350 2,577 9,776 9,463
Revenues 1,441 864 4,594 4,454
COGS and direct charges 507 48 1,449 1,076
Gross margin
(before amortization) 933 810 3,146 3,378
Amortization 144 132 564 494
Operating expenses 328 363 2,096 2,666
EBITDA 605 453 1,050 713
Other expenses (revenues) 263 51 871 (1,313)
Current and deferred income taxes
(recovered) - (481) 4 (481)
Net income (loss) 182 836 (413) 2,114
Basic net income (loss) per share 0.00 0.01 (0.01) 0.03
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* GMV represents the value of all transactions performed by merchants using Urbanimmersive’s business solutions for invoicing and/or collecting payments for their services

** Change from gross to net billing method for merchants in March 2019

THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2020 COMPARED TO THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2019

Net income for Q4-20 was $182k compared to a net income of $836k for Q4-19, a decrease of $654k which is explained by the following changes:

REVENUES

For Q4-20, the Company generated revenues of $1,441k compared to $864k for Q4-19, a year-over-year increase of $577k or 67%, explained by the sales of 3D photography equipment (+$577k) following the acquisition of Immersolution on February 13, 2020.

GROSS MARGIN (BEFORE AMORTIZATION)

For Q4-20, the Company recorded a gross margin (before amortization) of $933k (64.7%) compared to $810k (93.8%) for Q4-19, an increase of $123k (15.2%) for a decrease of 29.1 points which is explained by the change in product mix for this quarter between SaaS revenues and lower margin new 3D photography equipment sales.

For Q4-20, gross margin generated on SaaS revenues was $794k (91.9%) compared to $816k (94.4%) for Q419 while the gross margin on 3D photography equipment was $141k (24.4%) for Q4-20 (nil for Q4-19).

Q4-20 direct charges of $104k have increased by $56k in comparison to Q4-19 ($48k), which is explained by the addition of credit card processing fees and delivery charges for Immersolution (+$52k) and an increase in credit card processing fees for Urbanimmersive (+$27k) and partly offset by a decrease in subcontracting fees (-$23k).

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

AMORTIZATION

The increase of amortization of $12k between Q4-19 and Q4-20 is mainly explained by the additional investments made on the Company’s transactional platforms (+$495k) this year.

OPERATING EXPENSES

For Q4-20, operating expenses totalled $328k compared to $363k for Q4-19, a decrease of $35k (9.6%). This decrease is explained by a reduction in restructuring charges (-$104k), gain on write off a supplier debt (-$64k), a reduction in rental fees (-$23k), licence and product development (-$15k), equipment rental (-$13k) and subsidiary acquisition costs (-$13k), partly offset by an increase in professional fees (+$49k), sales commissions (+$22k), share and share-based payments (+$28k) and hosting fees (+$20k).

EBITDA

For Q4-20, EBITDA totalled $605k compared to $453k for Q4-19, an increase of $152k which is mainly explained by the increase in the gross margin (+$111k) as well as a reduction in operating expenses (+$35k).

OTHER EXPENSES (REVENUES)

For Q4-20, other expenses totalled $263k compared to other revenues of $51k for Q4-19, a variation of +$212k mainly explained by the change in fair value of embedded derivatives on convertibles debentures and warrants (+$274k), partly offset by write off loss on R&D tax credits (-$86k) and increase in financial expenses ($25k). The increase in financial expenses ($25k) is explained by the increase in theoretical charges on the convertible debenture ($45k), net of a decrease in interest on long-term debts and other financial fees (-$21k).

YEAR ENDED SEPTEMBER 30, 2020 COMPARED TO THE YEAR ENDED SEPTEMBER 30, 2019

Net loss for year ended September 30, 2020 was $413k compared to a net income of $2,114k for the year ended September 30, 2019, a decrease of $2,527k which is explained by the following changes:

REVENUES

For the year ended September 30, 2020, revenues totalled $4,594k compared to $4,454k for the year ended September 30, 2019, an increase of $140k or 3.1%. While adjusting for comparison purposes 2019 revenues to reflect the change in billing method for Urbanimmersive in March 2019, adjusted revenues for the year total $3,569k, an increase of $1,025k or 28.7%. This increase is explained by the sales of 3D photography equipment (+$1,709k) following the acquisition of Immersolution on February 13, 2020 and partly offset by a temporary decrease in software (‘SaaS’) revenues (-$684k or -19%) mainly explained by the significant slowdown in real estate activities from March to July 2020 due to the social distancing and confinement measures related to the Covid-19 crisis.

GROSS MARGIN (BEFORE AMORTIZATION)

For the year ended September 30, 2020, the Company recorded a gross margin (before amortization) of $3,146k (68.5%) compared to $3,378k (75.8%) for the year ended September 30, 2019, a decrease of $222k (-6.6%) and of 7.3 points. This decrease in $ is explained by a decrease in the gross margin generated on SaaS revenues (-$641k) caused by the Covid-19, partly offset by the contribution of Immersolution (+$408k) following its acquisition on February 13, 2020.

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

For the year ended September 30, 2020, gross margin generated on SaaS revenues was $2,738k (94.9%) while the gross margin on 3D photography equipment sales was $408k (23.9%).

For the year ended September 30, 2020, direct charges consist of credit card processing fees ($126k), delivery charges ($81k) and subcontracting fees ($37k).

AMORTIZATION

The increase of amortization of $70k is mainly explained by the amortization of the additional investments made on the Company’s transactional platforms in the recent year.

OPERATING EXPENSES

For the year ended September 30, 2020, operating expenses totalled $2,096k compared to $2,666k for the year ended September 30, 2019, a decrease of $570k (-21.4%). This decrease is explained by a reduction in wage and employee benefits (-$432k), rental fees (-$165k), restructuring charges (-$104k), equipment rental (-$48k), licence and product development (-$35k), office expenses (-$27k) and professional fees (-$20k) along with a write off gain on supplier debt (-$64k), partly offset by an increase in hosting fees (+$134k), sales commissions (+$68k) and share and share-based payments (+$83k).

EBITDA

For the year ended September 30, 2020, EBITDA totalled $1,050k compared to $713k for the year ended September 30, 2019, an improvement of $337k.

OTHER EXPENSES (REVENUES)

For the year ended September 30, 2020, other expenses totalled $871k compared to other revenues of $1,363k for year ended September 30, 2019, a variation of +$2,184k mainly explained by the change in fair value of embedded derivatives on convertibles debentures ($2,145k) and warrants (+$19k) and financial expenses (+$106k), partly offset by a write off loss on R&D tax credits (-$86k).

Urbanimmersive Inc.

Management discussion and analysis for the year ended September 30, 2020

FINANCIAL POSITION ANALYSIS

FINANCIALPOSITIONANALYSIS
	Sept. 30, 2020	Sept. 30, 2019
	In thousands$	In thousands$
Assets	8,953	7,288
Liabilities	6,646	5,384
Equity	2,307	1,904

ASSETS

Total assets at September 30, 2020 totaled $8,953k compared to $7,288k at September 30, 2019, an increase of $1,665k which is mainly explained by an increase in property and equipment (+$996k), cash (+$257k), goodwill (+$225k), intangible assets (+$53k) and the addition of inventories (+$90k).

The increase in property and equipment (+$996k) is explained by the acquisition of a commercial condominium for the Company’s head office (+$987k), including $304k for the office improvements, computer and photography equipment (+$48k) and office furniture (+$18k). The increase in goodwill ($225k) and the addition of inventories (+$90k) are explained by the acquisition of Immersolution. The increase in intangible assets (+$53k) is explained by the capitalization of R&D salaries (+$485k) and the acquisition of Immersolution distribution agreement (+$67k), nets of the disposal of office furniture and leasehold improvements (-$267k) following the office lease termination in January 2020 as well as the amortization for the year (-$499k).

LIABILITIES

Total liabilities at September 30, 2020 were $6,646k compared to $5,384k at September 30, 2019, an increase of $1,262k which is mainly explained by the increase in long-term debts (+$788k), convertible debentures (+$582k), trade and other payables (+$359k), partly offset by a reduction of the used line of credit (-$100k), deferred revenues (-$33k) and a change in the fair value of the embedded derivatives (-$292k) and warrants (-$59k).

The increase in long-term debts (+$788k) is explained by a new loan contracted to finance the acquisition of the Company’s head office commercial condominium (+$669k), the replacement of the US denominated term loan (+$114k) and a new term loan (+$30k) contracted as temporary measure to alleviate the impact of the Covid-19 sanitary crisis.

The increase in convertible debentures (+$582k) is explained by the capitalization of its theoretical interests (+$485k) as well as the amortization of its issuance costs (+$105k).

The increase in trade and other payables (+$359k) is mainly explained by the office improvements payable on the commercial condominium (+$304k), the acquisition of Immersolution (+$190k) and the accrued interests on the convertible debenture (+$114k).

EQUITY

Equity totalled $2,307k at September 30, 2020 compared to $1,904k at September 30, 2019, an increase of $403k. This increase of $403k is mainly explained by an increase in share capital (+$735k) and in the provision for share options and warrants (+$81k), partly offset by the net loss for the year (-$413k).

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

The increase in share capital (+$735k) is explained by the issuance of shares in settlement of interests payable to convertible debenture holders (+$453k), the issuance of shares for the acquisition of Immersolution (+$130k) and compensation to employees paid in shares (+$155k). The increase in the provision for share options and warrants (+$81k) is explained by the recognition of a charge for sharebased payments. Readers are invited to refer to the statement of changes in equity for more details.

On August 26, 2020, the Company issued 1,348,000 common shares at a price of $0.05 per share ($67.4k) as payment of a bonus to employees.

On July 2[nd] , 2020, the Company issued 5,028,629 common shares at a price of $0.045 per share ($226k) in settlement of interests payable to convertible debenture holders and 371,000 common shares ($16k) as payment of salaries to Management and a consultant.

On February 27, 2020, the Company issued 1,046,000 common shares at a price of $0.05 per share ($52.3k) as payment of a bonus to Management.

On February 13, 2020, the Company issued 2,000,000 common shares at a price of $0.065 ($130k) as consideration paid for the acquisition of Immersolution.

On January 14, 2020, the Company issued 315,000 common shares at a price of $0.06 per share ($18.9k) as payment of a bonus to Management.

On December 31, 2019, the Company issued 3,777,091 common shares at a price of $0.06 per share ($127k) in settlement of interests payable to convertible debenture holders.

On June 30, 2019, the Corporation issued 3,237,500 common shares at a price of $0.07 per share for a total amount of $226,625 in settlement of interests payable to convertible debenture holders. As part of this issuance, the Corporation paid an amount of $1,401 in regulatory fees.

On June 30, 2019, the Corporation issued 535,714 common shares at a price of $0.07 per share for a total amount of $37,500 as a payment of a special bonus to employees and officers. As part of this issuance, the Corporation paid an amount of $232 in regulatory fees.

On December 31, 2018, the Company issued 1,924,280 common shares at a price of $0.09 per share ($173k) in settlement of interests payable to convertible debenture holders.

On November 20, 2018, the Company issued 1,000,000 units at a price of $0.125 per unit for gross proceeds of $125k. Each unit comprises one common share of the Company and one warrant. Each warrant entitles its holder to acquire one common share of the Company at a price of $0.125 per common share until November 20, 2020.

Urbanimmersive Inc.

Management discussion and analysis for the year ended September 30, 2020

CASH FLOW ANALYSIS

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Three-month period Three-month period Year ended Year ended
ended Sept. 30, 2020 ended Sept. 30, 2019 Sept. 30, 2020 Sept. 30, 2019
In thousands $ In thousands $ In thousands $ In thousands $
Operating activities 406 437 989 464
Investing activities (955) (268) (1 354) (324)
Financing activities 560 26 622 (101)
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THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2020 COMPARED TO THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2019.

OPERATING ACTIVITIES

For Q4-20, operating activities generated cash flows of $406k compared to generated cash flows of $437k for Q4-19, a decrease of $31k. This decrease is explained by the variation in non-cash working capital items (-$406k), partly offset by an increase in the net income after non-cash items (+$373k).

INVESTING ACTIVITIES

For Q4-20, investing activities required cash flows of $955k mainly to acquire the Company’s head office commercial condominium and its related office improvements (-$683k) and to improve the Company’s transactional platforms (-$213k) in relation to the launch of the new products such as 3D Pocket Websites[TM] , immersive 3D tours and floor plans and measurements services.

For Q4-19, investing activities required cash flows of $268k mainly to improve the Company’s transactional platforms.

FINANCING ACTIVITIES

For Q4-20, financing activities have generated cash flows of $560k which are mainly explained by new term loans contracted including $669k to finance the acquisition of the commercial condominium and nets of the repayment of long-term debts (-$102k).

For Q4-19, financing activities generated cash flows of $26k mainly explained by the use of the lines of credit (+$100k) and net of capital repayments of the long-term debts (-$74k).

YEAR ENDED SEPTEMBER 30, 2020 COMPARED TO THE YEAR ENDED SEPTEMBER 30, 2019.

OPERATING ACTIVITIES

For the year ended September 30, 2020, operating activities generated cash flows of $989k compared to generated cashflows of $464k for the year ended September 30, 2019, an improvement of $525k. This improvement is explained by the increase by the increase in the net income after non-cash items (+$563k), partly offset by the variation in the non-cash working capital items (-$38k).

INVESTING ACTIVITIES

For the year ended September 30, 2020, investing activities required cash flows of $1,354k to acquire the Company’s head office commercial condominium and office improvements (-$683k) and to improve the Company’s transactional platforms (-$485k) in relation to the launch of the new products such as 3D Pocket

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

Websites[TM] , immersive 3D tours and floor plans and measurements services, the acquisition of Immersolution (-$120k), the purchase of IT equipment (-$48k) and office furniture (-$18k).

For the year ended September 30, 2019, investing activities required cash flows of $324k mainly to improve the Company’s transactional platforms.

FINANCING ACTIVITIES

For the year ended September 30, 2020, financing activities have generated cash flows of $622k which are explained by the new term loans contracted (+$2,149k), net of repayments of long-term debts (-$1,334k), lines of credit (-$133k) and lease liabilities (-$36k) as well as the costs related to the issuance of long-term debts and equity (-$25k).

For the year ended September 30, 2019, financing activities required cash flows of $101k which is explained by the capital repayments of the long-term debts (-$322k), partly offset by the net proceeds of a private placement (+$125k) and the use of the lines of credit (+$100k).

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

OPERATING SEGMENT ANALYSIS

Since the acquisition of Immersolution on February 13, 2020, the Corporation operates two distinct operating segments: Software and Photography Equipment. The Software segment offers a SaaS marketing platform to professional photographers and other immersive visual content providers. The Photographic Equipment segment offers a resale service of 3D photographic equipment.

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Software Photography Equipment
Three-month Three-month Three-month Three-month
period ended period ended period ended period ended
Sept. 30, 2020 Sept. 30, 2019 Sept. 30, 2020 Sept. 30, 2019
In thousands $ In thousands $ In thousands $ In thousands $
Segmented revenues 864 864 577 -
Cost of goods and direct charges (excl. amort.) (71) (48) (436) -
Segmented gross margin 794 816 141 -
Segmented operating expenses (262) (363) (67) -
Segmented operational income (loss) (excl.
amort.) 532 453 74 -
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Software Photography Equipment
Year ended Year ended Year ended Year ended
Sept. 30, 2020 Sept. 30, 2019 Sept. 30, 2020 Sept. 30, 2019
In thousands $ In thousands $ In thousands $ In thousands $
Segmented revenues * 2,885 4,454 1,709 -
Cost of goods and direct charges (excl. amort.) (147) (1,076) (1,301) -
Segmented gross margin 2,738 3,379 408 -
Segmented operating expenses (1,920) (2,666) (176) -
Segmented operational income (loss) (excl.
amort.) 818 713 232 -
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* Change from gross to net billing method for merchants in March 2019

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

QUARTERLY RESULT TRENDS

The operating results for each of the last eight quarters are presented in the following table. Management considers that the information for each of those quarters was determined in the same way as for our audited consolidated financial statements for the year ended September 30, 2020.

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2020 2019
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
In thousands $
$ $ $ $ $ $ $ $
Gross Merchant Volume (GMV) 3,350 2,631 2,203 1,592 2,557 3,094 2,019 1,739
Revenues * 1,441 1,661 891 601 864 1,104 1,226 1,260
Gross margin
(before amortization) 933 944 696 573 816 1,048 732 789
EBITDA 605 352 78 15 466 521 14 (276)
Net income (loss) 182 42 (308) (330) 746 516 59 621
Basic net income (loss) per common share 0.00 0.00 (0.00) (0.00) 0.01 0.01 0.00 0.01
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* Change from gross to net billing for merchants in March 2019

LIQUIDITY AND SOURCES OF FINANCING

As of September 30, 2020, the Company had a cash position of $885k and unused lines of credit of $274k for liquidities totalling $1,159k. The working capital (-$196k) is $442k when excluding the current portion of the long-term debts and lease liabilities ($334k), office improvements payable to be refinanced as longterm debt ($304k) and $602k when excluding the non-cash interests ($114k) and bonus ($46k) payable in shares.

The Company has prepared a budget using assumptions that management considers reasonable. Achieving budgeted results depends mainly on the increase of sales, compliance with the gross operating margin forecast, support of its financial partners, control of general and administrative expense as well as the economical and financial impact resulting from the Covid-19 sanitary crisis which may cause material changes in assets or liabilities and to have a material impact on its future operations. The Company has taken and will continue to take proper actions following these events to minimize the impact on its business. However, it is impossible to determine all the financial implications of these events in the future. Based on its recent financial results and current liquidities, Management believes that the Company will be able to continue to execute its business plan and commercial strategy. Readers are invited to refer to the Risk and Uncertainties section for more information

COMMITMENTS

As part of the EDC guarantee described in Notes 8 and 9, the Company will have to pay a guarantee fee until October 2021, which will require total payments of $41,940. The minimum payments for the next years are $38,640 in 2021 and $3,300 in 2022.

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

INFORMATION ON OUTSTANDING SECURITIES

As of September 30, 2020, the Company’s authorized share capital consists in an unlimited number of common shares of which 87,991,435 are currently outstanding as well as 5,299,250 share options and 10,674,460 warrants.

The number of outstanding share options, as the date of the MD&A, that could be exercised for an equal number of common shares is as follow:

Expirydate Exercise price Number of option outstanding	Expirydate Exercise price Number of option outstanding
$ March 31, 2021 0.160 June 3, 2021 0.170 March 30, 2022 0.200 December 11, 2022 0.130 January 29, 2023 0.125 March 28, 2023 0.080 May 18, 2023 0.100 October 1, 2023 0.130 March 29, 2024 0.075 August 15, 2024 0.075 January 13, 2025 0.060 July 16, 2025 0.060	647,500 50,000 656,750 150,000 100,000 1,350,000 100,000 100,000 770,000 100,000 1,200,000 75,000
	5,299,250

The number of warrants outstanding, as of the date of the MD&A, is as follows:

Expiry date Exercise price Number of warrants outstanding	Expiry date Exercise price Number of warrants outstanding
$ November 20, 2020 0.13 July 30, 2022 0.125 July 30, 2022 0.25 September 4, 2022 0.25	1,000,000 5,141,960 2,582,500 1,950,000
	10,674,460

The Company may also have to issue a total of 36,260,000 common shares in the event that the convertible debentures are exercised.

RELATED PARTY TRANSACTIONS

Please refer to Note 17 of the consolidated financial statements for the year ended September 30, 2020 for key management personnel compensation. The Corporation has not entered into any other related party transaction.

OFF-BALANCE SHEET ARRANGEMENTS

The Corporation has no off-balance sheet arrangements.

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

ESTIMATES, JUDGMENTS AND ASSUMPTIONS

The Corporation prepares its consolidated financial statements in accordance with IFRS, which require management to make estimates and assumptions that affect the amounts of its assets and liabilities, the information provided with regard to future assets and liabilities as well as the amounts of revenues and expenses for the relevant periods.

The elements in the consolidated financial statements that require more use of estimates and judgment are disclosed in Note 5 of audited consolidated financial statements for the year ended September 30, 2020. Actual results may differ from these estimates, but management believes they will not result in material changes versus the results being presented. Readers are invited to refer to the audited consolidated financial statements for the year ended September 30, 2019 for a full description of the significant accounting policies and the most estimates and judgments of the Corporation at that date.

RISKS RELATED TO FINANCIAL INSTRUMENTS

Readers are invited to refer to Note 25 of the audited consolidated financial statements for the year ended September 30, 2020, for a full description of these risks.

RISKS AND UNCERTAINTIES

The following are certain factors relating to the business of the Corporation, which factors investors should carefully consider when making an investment decision concerning securities of the Corporation. These risks and uncertainties are not the only ones facing the Corporation. Additional risks and uncertainties not presently known to the Corporation, or that the Corporation currently deems immaterial, may also impair the operations of the Corporation. If any those risks actually occur, it could have a material adverse effect on the Corporation's business prospects, results of operation and financial condition. In any such case, the market price of the Corporation's shares could decline, and investors may lose all, or part of, their investment.

The Corporation and the real estate industry are sensitive to changes in the global economic situation and to the impacts related to a major crisis such as the current health and economic crisis related to COVID-19.

The emergence of a new strain of coronavirus (COVID-19) resulted in a major global health crisis, which continues to affect the global economy and the financial markets at the time of development. These events are likely to cause material changes in assets or liabilities in this fiscal year or to have a material impact on future operations. The Corporation has taken and will continue to take actions following these events to minimize the impact. However, it is impossible to determine all the financial implications of these events in the future.

The Corporation has a history of operating losses and may need additional capital and it may not be able to obtain it, which could adversely affect its liquidity and financial position.

The Corporation has a history of operating losses. To date, the Corporation has primarily been financed through operating revenues, share issuance, debt or convertible debt issuances, bank loans and government assistance. The ability of the Corporation to continue as a going concern basis is dependent on achieving profitable operations and future financing. There can be no assurance that financing will be available in amounts or on terms acceptable to the Corporation, if at all. Any failure by the Corporation to raise additional funds on terms favourable to it could have a material adverse effect on its liquidity, financial condition and the success of its business plan.

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

To raise additional capital, the Corporation may, in the future, offer additional shares or other securities to the public. As a result, shareholders may experience dilution of their interest. The Corporation cannot assure that it will be able to sell shares, or other securities, in any other offering at a price per share that is equal to, or greater than, the price per share paid by existing investors. The price per share at which the Corporation sells additional shares or other securities may be higher, or lower, than the price per share in a previous offering.

The Corporation faces competition, and if it does not compete successfully against new and existing competitors, the Corporation may lose its market share, and its profitability may be adversely affected.

The Corporation competes with other companies offering content exchange platforms to real estate professionals. The Corporation also competes for overall advertising and training spending with other web-based content exchange platforms. In the future, the Corporation may also face competition from new entrants into the real estate market. The Corporation's sector is characterized by relatively low entry costs, as is customary in the content exchange industry. As a result, the Corporation expects competition to intensify in the future as existing competitors introduce new, and more competitive, offerings alongside their existing products, and as market entrants introduce new products into these markets.

Increased competition could reduce the Corporation's operating margins and profitability and result in a loss of market share. Some of the Corporation's existing and potential competitors may have competitive advantages, such as significantly greater financial, marketing or other resources, or exclusive arrangements with major clients, and others may successfully mimic and adopt the Corporation's business model. The Corporation cannot assure investors that it will be able to successfully compete against new or existing competitors.

The Corporation has limited operating history of its current business model, which may make it difficult to evaluate its business and prospects.

The Corporation has a limited operating history of its current business model upon which its viability and sustainability and its acceptance by customers and partners can be evaluated. It is also difficult to evaluate the viability of the Corporation's business model because of the risks frequently encountered by companies using new technologies and operating in new and rapidly evolving markets. The Corporation may be unable to generate sufficient revenue to become profitable and have sustainable positive cash flows.

In addition, the Corporation's quarterly operating results are difficult to predict and may fluctuate significantly from period to period due to numerous factors, such as the cyclic nature of the real estate industry. Finally, its limited history could impact both its expansion projects, due to its limited recognition in the industry across North America, and its ability to broaden its market base.

Fluctuation in currency exchange rates may affect the Corporation's business prospects and revenues.

A portion of the Corporation's revenues may be in foreign currencies, mainly in US dollars, and most of its expenses are in Canadian dollars. Therefore, the Corporation's results will be affected by the fluctuation of the Canadian dollar relative to currencies in which it transacts. This may lead to foreign exchange currency losses which could materially affect financial results.

The Corporation may face increased expenses in order to achieve its growth.

As the Corporation continues its effort to grow and penetrate new markets, it may incur substantial costs and expend substantial resources in connection with any such expansion due to, among other things,

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

different technology standards, legal considerations and cultural differences. The Corporation expansion plans could lead to an increase in fixed costs, notably if the need to open new physical offices arises. Finally, international sales and operations will expose the Corporation to additional risks as well as increase the costs of legal and regulatory compliance.

The Corporation may not be able to manage its current or future operations effectively and efficiently or compete effectively in such markets. The Corporation may also not be able to hire, retain, integrate or motivate its current or new personnel. There can be no assurance that the Corporation will be able to efficiently or effectively manage the growth of its operations, recruit top talent and train its personnel. Any failure to efficiently manage its expansion may materially and adversely affect the Corporation's business and future growth.

The Corporation depends on the leadership and services of key personnel and its business and growth prospects may be severely disrupted if the Corporation loses their services.

The Corporation's future success is dependent on its current and future executive management team. The Corporation relies on their industry expertise, experience and specialized technical knowledge in the Corporation's business operations, including their business vision, management skills, and working relationships with the Corporation's employees, its shareholders and many of the Corporation's customers, suppliers and partners. The Corporation does not maintain key-man life insurance for its key employees. Although all employees have entered into non-competition and non-solicitation agreements, these agreements may not be effective in helping the Corporation retain qualified personnel. If one of them was unable, or unwilling, to continue in his or her present position, the Corporation might not be able to replace this individual easily, or at all. Furthermore, this would result in a time-consuming disruption of the management's resources. As a result, the Corporation's business and growth prospects may be severely disrupted if the Corporation loses personnel or if the Corporation is unable to hire qualified personnel.

If the Corporation is unable to adapt to changing technological trends, it will not be able to compete effectively and will be unable to increase or maintain its revenues, which may materially and adversely affect its business prospects and revenues.

The market for its Marketplace and Content Management System ("CMS") platforms requires the Corporation to continuously identify new technology trends and the needs of customers, which may require the Corporation to develop new features and enhancements for its platforms. Furthermore, even though few similar services are currently being offered to real estate professionals, competitors may develop new, or improved, technological responses to the real estate problematics that the Corporation addresses. Furthermore, the Corporation may fail to respond to these changing technology needs and to implement such changes on its products or fail to do so in a timely manner. The new systems and the update of the existing ones may not gain popularity with customers or may not maintain any achieved popularity. In such case, the Corporation's competitors, or future entrants into the market who do take advantage of such initiatives, could gain a competitive advantage over the Corporation.

The Corporation's long-term strategy might impact its short-term results.

The Corporation aims at providing long-term solutions to its customers and partners. In order to achieve this goal, the Corporation will prioritize research and development investments, over other investments, which may impair its short-term results. The Corporation may also be required to incur development and acquisition costs in order to keep pace with new technology but the Corporation may not have the financial resources necessary to fund and implement future technological innovations or to replace obsolete technology, which may materially and adversely disrupt its business. In addition, in order to expand its business, the Corporation will need to invest in finding new ways to widen its market base. In order to do

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

so, the Corporation might need to invest in educating some industry actors in order to create a competitive advantage for its technological solutions. Furthermore, the Corporation may need to invest to increase both the value generated for customers and partners as well as the accessibility of its services in order to reach new customers and partners.

Failure to manage the Corporation's growth could strain the Corporation's management, operations and other resources and the Corporation may not be able to achieve anticipated levels of growth, which could materially and adversely affect the Corporation's business and growth potential.

The Corporation plans to continue to rapidly expand its operations. These plans will continue to result in substantial demands on the Corporation's management, operations and other resources. To manage its growth, the Corporation must develop and improve its existing administrative and operational systems and its financial and management controls and further expand, train and manage its work force.

The Corporation may be subject to intellectual property infringement claims, which may force the Corporation to incur substantial legal expenses and, if determined adversely against the Corporation, may materially disrupt its business.

The Corporation cannot be certain that its platforms or other aspects of its business do not, or will not, infringe upon patents, copyrights or other intellectual property rights held by third parties. The Corporation may become subject to legal proceedings and claims from time to time relating to the intellectual property of third parties in the ordinary course of its business. Furthermore, the potential expansion of its activities in multiple jurisdictions may increase the risks of infringement on its intellectual property. The Corporation may incur substantial expenses in defending against these third-party infringement claims, regardless of their merit. Consequently, management may not be able to dedicate its time and resources on growth strategies, which may materially and adversely disrupt its business.

If the Corporation is found to have violated the intellectual property rights of third parties, it may then be forced to abandon applications or registrations for intellectual property protection, modify or discontinue production of its products in certain countries, or operate under different trademarks. The Corporation could be required to obtain a license from a third party holding the patent or other intellectual property right, if such third party agrees to give the Corporation a license to develop, manufacture, use, sell, offer for sale or market the products. Finally, the Corporation could also be limited in the marketing of new products. Successful infringement or licensing claims against the Corporation may result in substantial monetary liabilities, which may materially and adversely disrupt its business.

The Corporation may be subject to, and may expend significant resources in defending against, actions and civil and regulatory suits based on the products, content and services it provides.

Although the Corporation requires its users to comply, at all times, with all applicable laws, the Corporation has no assurance that its customers and partners do not provide items and content which may infringe third party intellectual property rights, privacy laws or other laws and regulations. Furthermore, the Corporation may be liable, or alleged to be liable, to third parties if the visual content is found to be indecent, misleading, negligent, fraudulent, defamatory or otherwise illegal. In the event that a customer, supplier or partner's content is in breach of such rights or regulations, the Corporation may be required to cease providing the relevant content to prevent any other infringement. In addition to the content hosted by the Corporation, customers are invited to provide reviews and feedback on their experience with suppliers. These comments, over which the Corporation has no control other than in its efforts to monitor them, might also expose the Corporation to potential liability. Any alleged liability could also harm the Corporation's business by damaging its reputation, requiring the Corporation to incur legal costs in defence, exposing the Corporation to awards of damages and costs and diverting management's attention

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

which could have an adverse effect on the Corporation's business, results of operations and its financial condition.

Finally, given the sensitive nature of some of the information hosted on its Marketplace and CMS platforms, the Corporation is subject to privacy protection requirements. This legal framework is ever changing and the compliance with its various requirements may lead to increased financial obligations in the future as well as expose the Corporation to reputational damages. The Corporation's marketing strategies will also need to be tailored to comply with the various anti-spam regulations in Canada as well as in the various jurisdictions where the Corporation intends to develop its operations.

The Corporation's growth and success also depend on its capacity to protect its intellectual property and have its rights respected in the event of infringement.

The ability of the Corporation to successfully protect its exclusive methods and technology is important for its success. The Corporation relies, in part, on trade secrets and contractual restrictions, such as confidentiality agreements and licenses, but there is no assurance that they will constitute adequate protection against competitors' products and trademarks. The Corporation intends to promote its trademarks aggressively in order to build goodwill and to develop improvements to its products, which may be subject to legal protection. The Corporation's efforts could be unsuccessful and these improvements might not qualify for legal protection or produce a competitive advantage for the Corporation. Competitors may also produce products similar to those of the Corporation without infringing on its intellectual property rights. Competitors and other third parties could infringe on the Corporation's intellectual property rights which could result in significant litigation expenses. These expenses would reduce the Corporation's cash flow. The Corporation may lose potential or existing customers, suppliers or partners if it is not successful in protecting its intellectual property rights against such third-party infringements.

The Corporation's failure to maintain existing relationships or obtain new relationships with partners would harm the Corporation's business and prospects.

The Corporation's ability to generate revenues outside of its immediate geographic market depends largely upon its ability to maintain and expand a network of partners and their ability to successfully commercialise the Corporation's suite of products. This, in turn, requires that the Corporation develop knowledge of the key players in the countries and regions where it wants to conduct business. If the Corporation fails to maintain its relationships with partners, or fails to develop new relationships with partners, its revenues could decline and its efforts to develop international sales, and its reputation, could suffer.

The Corporation is dependent on its relationships with a limited number of partners.

The Corporation relies on its partners for a significant percentage of the Corporation's revenue. Its dependence on these partners may increase in the future as the Corporation pursues its strategy of increasing penetration of some of these partners' existing markets. Furthermore, large customers and partners may move their technology assignments from one service provider to another or may divide their assignments among two or more service providers which would decrease the Corporation's revenues. Finally, service agreements being on a short-term basis make it difficult for the Corporation to evaluate the spending of current customers and partners for the next fiscal years and plan accordingly.

A significant reduction in the spending by, or the loss of one or more of, the Corporation's largest customers or partners, could have a material adverse effect on its prospects, business, financial condition and results of operations if not replaced by new customers or partners or an increase in business from existing customers or partners.

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

There is uncertainty relating to the ability of the Corporation to enforce its rights under the representative or licensing agreements.

The Corporation intends to enter into representative or licensing agreements with partners in foreign jurisdictions which are subject to various legal obligations. If a representative or licensing agreement is breached, the Corporation may incur additional costs for determining its rights and obligations under the agreement under applicable foreign laws and to enforce the agreement in a foreign jurisdiction. The Corporation may not be able to enforce such rights or may determine that it would be too costly to enforce such rights.

The Corporation may derive a significant amount of its revenues from activities which are sensitive to changes in economic conditions.

Given the nature of its target market, the Corporation is directly affected by the performances and trends of the residential real estate industry and the cyclical nature of home-buying patterns. As such, overall economic conditions as well as the fluctuations of the mortgage interest rates, property access requirements and broker-free sales trends could adversely impact its market base and results.

The Corporation's services and products could suffer delays, failures or damage due to events that are beyond the Corporation's control, which could adversely affect its reputation and operating results.

The Corporation's information technology systems and infrastructures may be subject to damage or interruption following natural or man-made disasters such as earthquakes, floods, fires, power loss and sabotage, as well as interruptions from technology malfunctions arising from telecommunications failures, computer viruses, security breaches or cyber-attacks. Given that the Corporation hosts some of its content on third-party cloud providers' systems, sometimes located in the United States, and third-party credit card processing service providers, these risks could also be triggered by cyber-attacks on these third parties' systems. Even if those disruptions were to be found to result from those third parties, there can be no assurance that the Corporation would not be liable or would be able to enforce its contractual provisions against these third parties. Other potential service interruptions may result from unanticipated service requests or unanticipated forms of use from customers, suppliers or partners, which could result in the Corporation being unable to provide its hosting services, grant access to its content or incur significant data losses. Furthermore, the proliferation of viruses and cyber-attacks in the recent years, both deliberate and unintentional, could result in important remediation costs, increased security costs and loss in confidence by industry professionals. The Corporation may incur substantial costs in order to address, repair or replace hardware and software. Prolonged disruption of the Corporation's systems may reduce its efficiency or taint its entire operations, which could materially adversely affect its business. Data losses may also financially expose the Corporation and lead to mandatory disclosures of such a breach.

Urbanimmersive Inc. Management discussion and analysis for the year ended September 30, 2020

The market price of the shares may be volatile, which may make it difficult for holders to resell the shares when desired or at attractive prices.

In addition to market and industry factors, the price and trading volume for the shares may be highly volatile for specific business reasons. Factors such as variations in the Corporation's revenues, earnings and cash flow, announcements of new investments, cooperation arrangements or acquisitions, and fluctuations in market prices for the Corporation's services could cause the market price for the shares to change substantially. The Corporation's operating results may be below the expectations of public market analysts and investors. If this were to occur, then the market price of the shares would likely significantly decrease. Any of these factors may result in large and sudden changes in the volume and price at which the shares will trade. The Corporation cannot give any assurance that these factors will not occur in the future. Prospective investors should be aware that the value of an investment in the Corporation may go down as well as up and that the market price of the shares may not reflect the underlying value of the Corporation. Investors may therefore realize less than, or lose all of, their investment. The sale, or availability for sale, of substantial amounts of the shares could adversely affect their market price.

Sales of substantial amounts of the shares in the public market or the perception that these sales could occur, could adversely affect the market price of the shares and could materially impair the Corporation's future ability to raise capital through offerings of shares.

The return on investment from the shares depends on any future appreciation in the market price of the shares.

The Corporation currently intends to invest its future earnings, if any, to fund its growth. Any future determination to pay dividends on the shares would be at the discretion of the board of directors and would depend on, among other things, the Corporation's results, surplus, financial condition, solvency tests and other factors that the board of directors may deem relevant. Since the Corporation does not intend to pay dividends in the foreseeable future, the investors' ability to receive a return on their investment will depend on any future appreciation in the market price of the shares. There is no assurance that their shares will appreciate in price.

There may be a limited market for the shares.

The shares are currently listed on the TSXV. However, there may be a limited and volatile market for the shares, which may make it difficult for investors to resell the shares when desired, or at attractive prices. Financial markets have, in the past, experienced significant price and volume fluctuations that have particularly affected market prices, even though the performances, underlying asset values and prospects of the affected companies were healthy.

Accordingly, the market price of the shares may decline even if the Corporation's results have not changed.

Management believes it monitors these risks very closely. It is constantly watching each of these elements and takes the necessary action to mitigate its risks.

Readers are referred to the more detailed information described in other disclosure documents filed with the applicable Canadian securities regulatory authorities and available at www.sedar.com.

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Urbanimmersive Inc. — Management Reports 2021

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