Wavefront Technology Solutions Inc. — Interim / Quarterly Report 2021

Jan 30, 2021

Unaudited Condensed Consolidated Interim Financial Statements of

WAVEFRONT TECHNOLOGY SOLUTIONS INC.

Three months ended November 30, 2020 and 2019

TABLE OF CONTENTS

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

TABLE OF CONTENTS CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	TABLE OF CONTENTS CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed consolidated interim statements of financial position		1
Condensed consolidated interim statements of net loss and comprehensive loss		2
Condensed consolidated interim statements of changes in shareholders' equity		3
Condensed consolidated interim statements of cash flows		4
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANICAL STATEMENTS
Note 1	Nature of operations and corporate information	5
Note 2	Statement of compliance and going concern	5
Note 3	Property, plant and equipment	8
Note 4	Right-of-use assets and lease liabilities	8
Note 5	Share capital	10
Note 6	Government Grants	12
Note 7	Loss per share	12
Note 8	Financial instruments	13
Note 9	Segmented information	16

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company is disclosing that its auditors have not reviewed the unaudited condensed consolidated interim financial statements for the periods ended November 30, 2020 and 2019.

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Condensed Consolidated Interim Statements of Financial Position As at November 30, 2020 and August 31, 2020

(Canadian dollars) (Unaudited)

Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables 8 Inventories Prepaid expenses and other current assets NON-CURRENT ASSETS Deposits Property, plant and equipment 3 Right-of-use assets 4 Intangible assets LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Unearned revenue Trade accounts payable and accrued liabilities Lease liabilities SHAREHOLDERS' EQUITY Share capital 5 b Warrants 5 c Contributed surplus 5 e Accumulated other comprehensive income Deficit Going concern 2	November 30, 2020 1,677,646 $ 640,165 76,529 165,833 2,560,173 14,150 454,978 25,059 60,999 3,115,359 $ 107,223 667,375 25,840 800,438 67,299,083 467,716 9,414,471 566,848 (75,433,197) 2,314,921 3,115,359 $	August 31, 2020 1,817,671 $ 764,629 90,859 74,429 2,747,588 14,150 484,883 62,648 62,229 3,371,498 $ 79,639 564,911 64,203 708,753 67,299,083 467,716 9,414,471 567,152 (75,085,677) 2,662,745 3,371,498 $

The accompanying notes are an integral part of these condensed consolidated interim financial statements

Page 1 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Condensed Consolidated Interim Statements of Net Loss and Comprehensive Loss Three month period ended November 30, 2020 and 2019 (Canadian dollars)

(Unaudited)

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November 30, November 30,
Note 2020 2019
Revenue $ 445,760 $ 700,685
Cost of sales 18,442 33,978
Gross Profit 427,318 666,707
General and administrative 601,943 587,233
Sales and marketing 115,257 168,927
Amortization and depreciation 3, 4 78,289 93,669
Research and development 39,004 60,316
834,493 910,145
OPERATING LOSS (407,175) (243,438)
OTHER INCOME (EXPENSES)
Financing costs (1,458) (3,269)
Government grants 6 49,643 -
Financing income 9,894 7,763
Foreign exchange gain (loss) 1,576 (5,838)
59,655 (1,344)
NET LOSS (347,520) (244,782)
OTHER COMPREHENSIVE LOSS
Items that may be reclassified subsequently to net loss
Translation loss on foreign operations (304) (2,463)
COMPREHENSIVE LOSS $ (347,824) $ (247,245)
WEIGHTED AVERAGE NUMBER OF SHARES
Basic and diluted 7 87,572,573 87,572,573
LOSS PER COMMON SHARE
Basic and diluted 7 $ (0.004) $ (0.003)
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The accompanying notes are an integral part of these condensed consolidated interim financial statements

Page 2 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Condensed Consolidated Interim Statements of Changes in Shareholders' Equity Three month period ended November 30, 2020 and 2019

(Canadian dollars)

(Unaudited)

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Accumulated
Share other comprehensive
capital Warrants Contributed surplus (loss) income Deficit Total
Balance at August 31, 2019 67,299,083 467,716 9,414,471 566,338 (74,425,494) $ 3,322,114
Net Loss - - - - (244,782) (244,782)
Translation loss on foreign operations - - - (2,463) - (2,463)
Balance at November 30, 2019 67,299,083 467,716 9,414,471 563,875 (74,670,276) 3,074,869
Net Loss - - - - (415,401) (415,401)
Translation gain on foreign operations - - - 3,277 - 3,277
Balance at August 31, 2020 67,299,083 467,716 9,414,471 567,152 (75,085,677) 2,662,745
Net Loss - - - - (347,520) (347,520)
Translation loss on foreign operations - - - (304) - (304)
Balance at November 30, 2020 $ 67,299,083 $ 467,716 $ 9,414,471 $ 566,848 $ (75,433,197) $ 2,314,921
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The accompanying notes are an integral part of these condensed consolidated interim financial statements

Page 3 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Condensed Consolidated Interim Statements of Cash Flows Three month period ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

OPERATING ACTIVITIES Net loss Changes to net loss not including cash Amortization and depreciation Impact of foreign translation Interest expense Changes to working capital Change in trade and other receivables Change in trade and other payables Change in unearned revenue Change in inventory Interest paid Change in prepaid expenses Cash (used in) from operating activities FINANCING ACTIVITIES Payment for the principal portion of lease liability Cash used in financing activities INVESTING ACTIVITIES Purchase of property, plant and equipment Cash used in investing activities Foreign exchange loss on cash held in foreign currency NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD CASH AND CASH EQUIVALENTS Cash denominated in CDN Cash denominated in USD Foreign currency translation amount CASH AND CASH EQUIVALENTS, END OF PERIOD	Note 3, 4 3	November 30, 2020 (347,520) $ 78,289 936 (1,458) 124,464 102,464 27,584 14,330 1,458 (91,404) (90,857) (38,363) (38,363) (9,721) (9,721) (1,084) (140,025) 1,817,671 1,677,646 $ 1,426,871 $ 193,425 57,350 1,677,646 $	November 30, 2019 (244,782) $ 93,669 (2,320) (3,269) 170,014 122,925 73,342 27,205 3,269 (148,228) 91,825 (36,515) (36,515) (10,254) (10,254) (118) 44,938 2,598,160 2,643,098 $ 1,828,002 $ 613,362 201,734 2,643,098 $

The accompanying notes are an integral part of these condensed consolidated interim financial statements

Page 4 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

1. NATURE OF OPERATIONS AND CORPORATE INFORMATION

Wavefront Technology Solutions Inc.’s (“Wavefront” or the “Company”) is an oil field service provider focused on offering the oil and gas industry proprietary, providing leading edge technology primarily for oil and gas well stimulation, and applications related to Improved/Enhanced Oil (“IOR/EOR”) recovery. For oil and gas well stimulation, Wavefront’s core technology, marketed under the brand name, “Powerwave[TM] ”, has proven to decrease both chemical cost and job execution time; thus, minimizing total job cost while positively impacting post-stimulation results. In IOR/EOR applications, Powerwave has been shown to improve oil production rates; decrease oil production decline rates; and increase estimated ultimate oil recovery. Wavefront operates in the global marketplace dealing directly with exploration and production (“E&P’s”) companies and through an international network of distributors and agents.

The Company is incorporated under the Canada Business Corporations Act. Its shares are listed on the TSX Venture Exchange under the symbol of WEE, and also trades on the OTCQB International under the symbol of WFTSF.

The address of the registered head office of the Company is 5621 – 70 Street NW, Edmonton, Alberta. The Company is domiciled in Canada.

2. STATEMENT OF COMPLIANCE

a) Statement of compliance

These unaudited condensed consolidated interim financial statements (the “Financial Statements”) have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting using accounting policies under International Financial Reporting Standards (“IFRS”) for interim financial information. These Financial Statements have been prepared using the same accounting policies and methods of computation as the annual consolidated financial statements for the fiscal year ended August 31, 2020.

These Financial Statements were approved for issue on January 27, 2021.

b) Principles of consolidation

These consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its wholly owned subsidiary, Wavefront Technology Solutions USA Inc.). Control is achieved when the Company has the power to, directly or indirectly, govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. Although the Company is domiciled in Canada, the Company’s principal focus is on international

Page 5 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

operations, and as such revenue generation is mainly outside Canada. Revenues derived in Canada for the three months ended November 30, 2020 and 2019 was $nil and $3,150, respectively.

The financial statements of the subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases.

All subsidiary companies are wholly-owned and inter-company transactions, balances, revenues and expenses, and unrealized gains and losses have been eliminated on consolidation.

Unearned revenue, which was included in the contract liability balance at the beginning of the fiscal year, that was recognized in the three months ended November 30, 2020 and 2019 was $nil.

c) Recent developments and impact on estimation uncertainty

In March 2020, the World Health Organization declared a global pandemic following the emergence and rapid spread of a novel strain of the coronavirus (“COVID-19”). COVID-19 has had a pervasive adverse impact on the global economy, disruptions to supply chains, and volatility in interest rates.

The pervasiveness of the novel COVID-19 virus and associated pandemic continues to have significant impact on the global economy. Numerous countries have approved and are in the process of distributing various COVID-19 vaccines, and many governments and central banks have also announced significant monetary and fiscal economic stimulation programs. However, the timeframe to complete and eventual efficacy of such measures is currently unknown.

As such there remains uncertainty and risk with respect to the Company, its performance, and estimates and assumptions used by Management in the preparation of its financial results. The expected impacts to the Company’s revenues and results of operations may be material; however, such impacts are not yet fully quantifiable. The negative impacts to the Company’s revenues and results of operations may also be material; however, such impacts are not yet fully quantifiable. As the magnitude of the COVID-19 is continuously evolving, it is currently impracticable to determine the effect that the COVID-19 will have on Management’s judgments, estimates, and assumptions.

The pervasiveness of the novel COVID-19 virus and associated pandemic have also increased the complexity of estimates and assumptions used to prepare the consolidated financial statements, particularly the measuring the recoverable amount of, and the carrying value of an asset.

d) Going concern

These Financial Statements were prepared on a going concern basis. The going concern basis of accounting assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

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WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

At November 30, 2020, the Company had yet to achieve profitable operations, had an accumulated deficit of $75,433,197 (August 31, 2020 - $75,085,677), and for the three month period ended November 30, 2020 had a net loss of $347,520 (November 30, 2019 - $244,782). The impact of the COVID-19, amongst other things, has created a great deal of uncertainty as to the health and timeframe for recovery of the global economy. These resulting material uncertainties, together with the lack of continuing profitable operations may cast significant doubt to continue as a going concern. As a result, whether and when the Company can obtain profitability and positive cash flows from operations for the next twelve months is uncertain.

The Company currently has a working capital of $1,759,735 (August 31, 2020 - $2,038,835).

The ability to continue as a going concern is dependent on the Company’s continued ability to generate quarterly positive cash flows from operations, raise equity and/or obtain loans, or access other credit facilities on terms favorable to the Company, in the future in order to meet liabilities as they come due and enable the Company to continue operations. The ability to continue as a going concern may be adversely impacted by technology adoption rates, sales cycles, the addition or loss of customers, sales per customer, commodity prices, and international trade relations. The outcome of such matters cannot be predicted.

These Financial Statements do not include any adjustments which could be significant to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to obtain equity or debt financings and/or generate profitable operations in the future. Failure to continue as a going concern would require the restatement of assets, liabilities and shareholders’ deficiency on a liquidation basis, which could differ materially from the going concern basis.

e) New standards issued but not yet adopted

The following are the standards, amendments, and interpretations that the Company reasonably expects to be applicable at a future date and intends to adopt when they become effective. The Company is currently considering the impact of adopting these standards, amendments, and interpretations on its consolidated financial statements and cannot reasonably estimate the effect at this time, unless specifically mentioned below.

In January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1). The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. The amendments are effective for annual reporting periods beginning on or after January 1, 2022, with earlier application permitted.

Page 7 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

In May 2020, the IASB issued Onerous Contracts-Cost of Fulfilling a Contract (Amendments to IAS 37). The amendments clarify which costs to include in assessing whether a contract is onerous. The amendments are effective January 1, 2022, with earlier application permitted.

3. PROPERTY, PLANT AND EQUIPMENT

As atNovember30,2020	Tools and equipment	Computer, automotive and office equipment	Leasehold improvements Total
Cost Balance at August 31, 2020 Additions Impactof foreign translation	3,247,524 $ 8,225 (1,152)	807,314 $ 1,496 (1,033)	591,147 $ 4,645,985 $ - 9,721 - (2,185)
Balance at November30,2020	3,254,597	807,777	591,147 4,653,521
Accumulated depreciation Balance at August 31, 2020 Depreciation Impactof foreign translation	(2,835,366) (22,590) 1,053	(768,181) (2,547) 976	(557,555) (4,161,102) (14,333) (39,470) - 2,029
Balance at November30,2020	(2,856,903)	(769,752)	(571,888) (4,198,543)
Net book value Balance at November 30, 2020	397,694 $	38,025 $	19,259 $ 454,978 $

Depreciation expense on property, plant and equipment for the three months ended November 30, 2020 was $39,470 (November 30, 2019 - $56,080).

As at November 30, 2020 property, plant and equipment includes tools and equipment under construction, with a recorded value of $nil (August 31, 2020 - $3,781) that was not being depreciated.

4. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

The Company’s leases consist of a lease for its office and warehouse space, and various short-term and/or low value leases for other equipment, such as cellular phones and office equipment.

The Company leases a building for its office and warehouse space in Edmonton, Alberta. The original lease was 10 years, with the remaining lease term having five months, expiring January 31, 2021. The building lease does not include a lease extension option. In a previous reporting period, the Company entered into a new lease for a period of five years commencing February 1, 2021.

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WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

The Company reassesses leases when a significant event or a significant change in circumstances within the Company’s control has occurred.

Additions Depreciation Payment As at August 31, 2020	Right-of-use asset Lease liability
	Building Total
	62,648 $ (64,203) $ - - (37,589) - - 38,363
As at November 30, 2020	25,059 $ (25,840) $

Amounts recognized in the condensed consolidated interim statement	Three months ended	Three months ended
of net loss and comprehensive loss		November 30, 2020
Depreciation expense on right-of-use asset	$	37,589
Interest expense on lease liabilities		637
Expense related to variable lease payments not included in the
measurement of the lease liability		14,884
Expense related to leases of low value assets		4,336
Expense related to leases of short-term leases		-
Total	$	57,446

Variable lease payments include operating and maintenance expenses, property taxes, and other variable costs. The estimated balance of future variable lease payments is estimated to approximate $9,923. Overall, the variable payments constitute up to 27.6% of the Company’s entire lease payments.

Amounts recognized in consolidated statements	Three months ended	Three months ended
of cash flows		November 30, 2020
Cash payments for interest portion of lease liabilities	$	637
Cash payments for leases not included in measurement of lease liability		14,884
Cash outflows in operating activities		15,521
Cash payments for the principal portion of lease liabilities		37,589
Cash outflows in financing activities		37,589
Total cash outflows for leases	$	53,110

Page 9 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

The Company also leases cellular telephone and other equipment with terms of three years or shorter. These leases are generally short-term or for low-value assets that the Company has elected not to recognize in the right-of-use assets and lease liabilities.

5. SHARE CAPITAL

The Company’s authorized and issued share capital is as follows:

a) Authorized share capital

Unlimited common shares without par value.

b) Issued common shares

The Company’s issued share capital is as follows:

The changes in the Company’s outstanding common shares were as follows:

The changes in the Company’s outstanding common shares were	as follows:
Balance,beginningofperiod	November 30,2020
	Stated Number capital 87,572,573 67,299,083 $
Balance, end of period	87,572,573 67,299,083 $

c) Share purchase warrants

Balance, August 31, 2020 Balance, November 30, 2020	Number	Weighted average Amount exercise price
	4,341,333 4,341,333	467,716 $ 0.24 $ 467,716 $ 0.24 $

(i) As part of the Private Placement in fiscal 2018, subscribers received 4,341,333 Warrants, with each Warrant being exercisable for one common share of the Company at an exercise price of $0.45 for a period of 12 months after the closing date, expiring July 17, 2019; provided that, commencing on the date that is four months and one day after the closing of the Offering, if the volume weighted average trading price of a common share on the Exchange is at a price equal to or greater than $0.65 for a period of more than 20 consecutive trading days.

Page 10 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

During the year ended August 31, 2019, the Company extended the Warrants term by one year, such that their expiry is July 17, 2020. All other terms of the Warrants remained the same.

During the current fiscal ended August 31, 2020, the Company elected to further extend the term of the 4,341,333 Warrants one additional year to July 17, 2021, and to decrease the exercise price of 3,712,592 of those Warrants from $0.45 to $0.20 per share. In accordance with TSX Venture Exchange (“TSX-V”) policies re-priced insider Warrants were restricted to 10% of the re-priced Warrants; and thus, the remaining 628,741 warrants had no reduction in exercise price.

Consistent with the TSX-V policies, the amended Warrants that are repriced will include an accelerated expiry clause such that their exercise period will be reduced to 30 days if, for any ten consecutive trading days during their unexpired term, the closing trading price of the common shares of the Company exceeds $0.25 per share.

d) Stock-based compensation plan

The Company maintains an Employee, Director, Officer and Consultant Stock Option Plan under which the Company may grant incentive stock options for up to 10,771,558 shares of the Company at an exercise price not be less than the “Discounted Market Price” (as defined in the policies of the TSX Venture Exchange), provided that the exercise price shall not be less than $0.05 per share. All stock options awarded are exercisable for a period of up to ten years and vest, at a minimum, in equal tranches at three month intervals over a period of eighteen months.

Movements in stock options during the period

A summary of the status of the Company’s Stock Option Plan is presented below:

Outstanding, beginning of period Forfeited	November30,2020
	Number Weighted average exercise price
	1,975,000 $ 0.28 (100,000) 0.28
Outstanding, end of period	1,875,000 $ 0.28

Of the 100,000 stock options that expired unexercised during the reporting period, 100,000 were issued to a fomer Directors of the Company.

Page 11 of 16

WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

Fair value of stock options granted during the period

The fair value for the compensation costs of stock options issued to both employees and nonemployees were calculated using the Black-Scholes option pricing model resulting in an additional charge to general and administrative expense with a corresponding increase in share based payment reserve.

During the three months ended November 30, 2020 and 2019, the Company incurred $nil in compensation expense relating to outstanding stock options.

e) Contributed surplus

Balance, beginning ofperiod	November 30,2020
	9,414,471 $
Balance, end of period	9,414,471 $

6. GOVERNMENT ASSISTANCE

In response to the COVID-19 pandemic, governments have established various programs to assist companies through this period of uncertainty, like the implementation of the Canada Emergency Wage Subsidy (“CEWS”) program. The Company recorded a non-refundable contribution under CEWS program for an amount of $49,643 (November 30, 2019 - $nil), with $41,003 included in accounts receivable (August 31, 2020 - $31,944).

7. LOSS PER SHARE

The weighted average number of common shares outstanding for basic and diluted loss per share is 87,572,573 (November 30, 2019 – 87,572,573).

In determining diluted loss per share, the weighted average number of shares outstanding for the period ended November 30, 2020 excluded nil (November 30, 2019 – 408,604) for stock options and warrants eligible for exercise where the average market price of the common shares for the year exceeds the exercise price because the result was anti-dilutive in both periods.

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WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

8. FINANCIAL INSTRUMENTS

a) Categories of financial instruments

The Company has classified its financial instruments as follows:

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November 30, August 31,
2020 2020
Financial assets
Cash and cash equivalents $ 1,677,646 $ 1,817,671
Trade and other receivables 640,165 764,629
Deposits 14,150 14,150
Financial liabilities
Unearned revenue 107,223 79,639
Trade accounts payable and accrued liabilities 667,375 564,911
Lease liabilities 25,840 64,203
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b) Foreign currency risk

The following table provides an indication of the Company’s exposure to changes in the value of the U.S. dollar relative to the Canadian dollar as at and for the periods ended November 30, 2020 and August 31, 2020. The analysis is based on financial assets and liabilities denominated in U.S. dollars at the statement of financial position date (“statement of financial position exposure”), and U.S. dollar denominated revenue and operating expenses during the year (“operating exposure”).

Financial assets Cash and cash equivalents Trade and other receivables Financial liabilities Unearned revenue Trade accounts payable and accrued liabilities	November 30, August 31, 2020 2020 U.S.Dollars U.S.Dollars 193,425 $ 224,585 $ 450,405 583,039 (95,453) (48,086) (123,805) (62,684)
Net statement of financial position exposure	424,572 696,854

Based on the Company’s foreign currency exposure, as noted above, with other variables unchanged, a 5% change in the Canadian dollar against the US dollar as at November 30, 2020 would have impacted the comprehensive net loss by $21,229 (August 31, 2020 - $34,843).

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WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

c) Credit risk

Assets that subject the Company to credit risk consist primarily of cash and cash equivalents, trade and other receivables, and, if applicable, any indemnifications. The Company applies the simplified approach to trade and other receivables and recognizes a loss allowance provision based on lifetime expected credit losses (“ECLs”). The loss provision is based on the Company’s historical collection and loss experience and incorporates forward-looking factors, where appropriate. The loss provision is included in administrative costs in the Financial Statements and is net of any recoveries that were provided for in a prior period.

Trade receivables are included in trade and other receivables on the statements of financial position and consist of the following:

Trade and other receivables Current Past due but not impaired Aged between 31 - 90 days Aged between 91 - 120 days Agedgreater than 121 days	November 30, August 31, 2020 2020 202,355 $ 304,525 $ 157,037 77,126 159,357 - 123,166 384,739
Total trade and other receivables Allowance for doubtful accounts	641,915 766,390 (1,750) (1,761)
	640,165 $ 764,629 $

Reconciliation of allowance for doubtful accounts:

Balance, beginning of period Increase in allowance Net of write-offs and recoveries Impact of foreignexchange	November 30, August 31, 2020 2020 (1,761) $ - $ - - - (1,761) 11 -
Balance, end of period	(1,750) $ (1,761) $

The maximum exposure to credit risk at the reporting date by geographical region was (carrying amount):

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WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

North America Middle East Other International	November 30, August 31, 2020 2020 85,776 $ 50,118 $ 550,606 687,372 3,783 27,139
	640,165 $ 764,629 $

d) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities as they become due. The Company manages liquidity risk through various sources, including cash generated from operations, cash management and by monitoring forecasted cash flows.

The timing of undiscounted cash flows of financial liabilities based on the earliest date on which the Company may be required to pay is outlined below.

Contractual commitments Trade accounts payable and accrued liabilities Commitments and variable lease paymentsi Lease liabilitiesi	0 to 3 4 to 12 Years After 5 months months Year 2 3 to 5 years
	29,915 $ - $ - $ - $ - $ 262,404 404,971 - - - 14,884 34,730 59,537 178,610 24,807 26,000 39,867 119,600 379,058 53,625
	333,203 $ 479,568 $ 179,137 $ 557,668 $ 78,432 $

• i) The Company entered into a new lease for a period of five years commencing February 1, 2021. For the term of the new five-year lease, the total estimated commitments and variable lease payments are estimated to be $303,550, with the future lease liabilities estimated at $591,175. The new lease commitments are included in the above table.

The pervasiveness of the novel COVID-19 virus and associated pandemic continues to have significant impact on the global economy. Numerous countries have approved and are in the process of distributing the various COVID-19 vaccines, and many governments and central banks have also announced significant monetary and fiscal economic stimulation programs. However, the timeframe to complete and eventual efficacy of such measures is currently unknown.

These factors, amongst others, are likely to have a negative impact on the Company’s credit and liquidity risks, as well as, maintaining revenues and earnings, cash flows, and Wavefront’s financial condition.

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WAVEFRONT TECHNOLOGY SOLUTIONS INC. Notes to the Condensed Consolidated Interim Financial Statements Three months ended November 30, 2020 and 2019 (Canadian dollars) (Unaudited)

9. SEGMENTED INFORMATION

The Company is an oil field service provider and operates with one reportable segment that covers all aspects of the Company’s business.

Wavefront considers the basis on which it is organized, including the economic characteristics and geographic areas, in identifying its reportable segment. The operating segment(s) of the Company is defined as component(s) of the Company for which separate financial information is available and is evaluated regularly by the chief operating decision maker in allocating resources and assessing performance. The chief operating decision maker of the Company is the President and Chief Executive Officer. The Company has one group of similar products due to having a similar underlying technology, class of customers, and economic characteristics.

Geographic information

North America Middle East Other International		Revenue	November 30, August 31, 2020 2020 2,363,524 $ 2,471,202 $ 724,805 854,142 27,030 46,154 Assets
	November 30, 2020	November 30, 2019
	53,128 $ 383,393 9,239	39,841 $ 571,145 89,699
	445,760 $	700,685 $	3,115,359 $ 3,371,498 $

For its geographic segments, the Company has allocated assets based on their physical location and revenue based on the location of the customer. Of the revenues recognized for the three months ended November 30, 2020 in the Middle East, revenues of $292,357 (November 30, 2019 - $330,900) were derived from Kuwait, and revenues of $91,036 (November 30, 2019 - $239,063) were derived from the Kingdom of Saudi Arabia; whereas of the revenues recognized in North America, $53,128 (November 30, 2019 - $36,691) were derived from the United States of America.

Significant customers

Sales in the three-month period ended November 30, 2020 from the top three customers amounted to $292,357, $65,273 and $27,990, which represented 65.6%, 14.6% and 6.3%, respectively, of total revenue. Sales in the three-month period ended November 30, 2019, from the top three customers amounted to $335,725, $280,016 and $30,498, which represented 47.8%, 46.6% and 4.3%, respectively, of total revenue.

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