Emergence Global Enterprises : MD&A Q2 2022

EMERGENCE GLOBAL ENTERPRISES INC.

(FORMERLY VELOCITY DATA INC.)

FORM 51-102F1

MANAGEMENT DISCUSSION AND ANALYSIS

SIX MONTHS ENDED APRIL 30, 2022 AND 2021

The following Management's Discussion and Analysis ("MD&A"), prepared as of June 22, 2022, should be read together with the consolidated financial statements of the Emergence Global Enterprises Inc. (the "Company") for the six months ended April 30, 2022 and 2021 and the related notes attached thereto. These consolidated financial statements and MD&A include the results of operations and cash flows for the six months ended April 30, 2022 and 2021 and the reader must be aware that historical results are not necessarily indicative of the future performance. All amounts are reported in U.S. dollars. The aforementioned documents can be accessed on the SEDAR web site at www.sedar.com.

Unless otherwise stated, financial results are being reported in accordance with International Financial Reporting Standards ("IFRS").

The MD&A contains the term cash flow from operations, which should not be considered an alternative to, or more meaningful than, cash flows from operating activities as determined in accordance with IFRS as an indicator of the Company's performance. The Company's determination of cash flow from operations may not be comparable to that reported by other companies. The reconciliation between profit or loss and cash flows from operating activities can be found in the consolidated statements of cash flows.

Certain statements contained in this MD&A may contain words such as "could", "should", "expect", "believe", "will" and similar expressions and statements relating to matters that are not historical facts but are forward-looking statements. Such forward-looking statements are subject to both known and unknown risks and uncertainties which may cause the actual results, performances or achievements of the Company to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, the receipt of required regulatory approvals, the availability of sufficient capital, the estimated cost and availability of funding for development or maintenance/rehabilitation of the Company's business lines, government IT budgets and economic conditions and other factors.

Description of Business

The Company was incorporated as GTO Resources Inc. on May 10, 2011, under the Business Corporations Act (British Columbia). On August 7, 2014, the Company changed its name to Velocity Data Inc. On February 15, 2020, the Company changed its name from "Velocity Data Inc." to "Emergence Global Enterprises Inc."

On November 29, 2019, a change of control of the Company had been affected by the purchase by Mr. Joe Byrne of a controlling interest of approximately 82% of the outstanding capital of the Company for a total consideration of $500,000. At the time, Mr. Byrne and Claire Byrne have been appointed as board directors. At the time, Mr. Byrne was appointed President and CEO of the Company while Mr. Bates remained as CFO.

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On April 6, 2022, the Company announced that it had finalized a strategic consulting agreement with P&C Ventures Inc. of Lethbridge, Alberta to provide Growth Strategy Services for Emergence Global Enterprises Inc. P&C has significant related industry and background experience together with diverse strategic corporate development and mergers and acquisitions expertise. P&C will work with Emergence's senior leadership team and advise on matters relating to the Company's growth opportunities in conjunction with the deployment of existing and future technologies and capital across key domestic and global markets.

On April 12, 2022, the Company announced that Rick Purdy will become the President of Emergence Global Enterprises Inc. In his role, Rick will oversee the day-to-day direction of the company, focusing on our emerging technologies and business in Western Canada. Mr. Purdy will report to Joseph Byrne, the CEO, and Chairman of the Company.

On April 14, 2022, the Company and Its Vice President and Chief Operating Officer, Brian Payne, agreed to terminate his contract effective immediately to allow Mr. Payne to pursue other interests. Mr. Payne also resigned from the Board of Directors.

The Company's registered office is located at Suite 600 - 1285 West Broadway, Vancouver, BC V6H 3X8.

The Company's Board of Directors is comprised of Joe Byrne, Ameen Ferris, Diego Felipe Rodriguez, Christian Gallant and Cameron Canzellarini.

As at April 30, 2022, the Company had a deficit of $2,765,358 and limited liquidity. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations.

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management's efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Overall Performance and Results of Operations

Six months ended April 30, 2022

Results of Operations

The Company recorded revenues of $685,916 and $417,183 for the six months ended April 30, 2022 and 2021, respectively. The Company recorded net income of $82,427 and net loss of $56,802 for the six months ended April 30, 2022 and 2021, respectively. The increase in the net income was due to the increase in revenue and positive controls on selling, general and administrative expenses.

In addition, the Company recorded interest expense of $1.032 and $3,050 for the six months ended April 30, 2022 and 2021, respectively.

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Overall Performance

As at April 30, 2022, the Company reported total assets of $5,302,481 (October 31, 2021 - $5,057,541), including cash of $84,334 (October 31, 2021 - $207,695). The increase is attributable to the above- mentioned acquisitions as Company consolidates the results of its subsidiaries and recording Goodwill resulting from these acquisitions.

As at April 30, 2022, the Company had liabilities of $2,431,051 (October 31, 2021 - $2,239,891), all of which were current liabilities and is mainly comprised of accounts payable and accrued liabilities, loans payables and due to related parties. The increase is mainly attributed to the consolidation of the acquired subsidiaries.

Cash Flows

During the six months ended April 30, 2021, the Company used cash of $83,633 for operating activities compared to the used cash of $278,480 during the six months ended April 30, 2021. The decrease is mainly attributed to the lack of acquisitions when comparing the same periods of last year.

Liquidity and Capital Resources

The Company's consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at April 30, 2022, the Company had a cash balance of $84,334 and working capital deficit of $842,723. These factors raise doubt as to the Company's ability to continue as a going concern. Management's plans include (i) continue the integration plan of our acquisitions and continue grow the business and (iii) attempting to develop new business or product lines. The Company's consolidated financial statements do not include any adjustments, which could be material in nature, relating to the recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Selected Financial Information

The following tables provide a brief summary of the Company's financial operations. For more detailed information, refer to the condensed interim consolidated financial statements for the six months ended April 30, 2022 and 2021, which can be found on SEDAR. This information has been prepared in accordance with IFRS and is presented in U.S. Dollars, which is the functional currency of the Company.

Management believes adjusted EBITDA provides a more useful measure of company performance. This is because there are several measures included in GAAP net income or loss which are related to interest. We consider these items to be unrelated to operating income and performance.

However there is a limitation in using EBITDA; each company may use a different definition of EBITDA and, therefore, it is hard to compare them to each other. For example, our company might use different add- backs to net loss than our competitors, thus making it more difficult to compare the two entities to each other. We compensate for this by regularly including EBITDA in our filings so that our performance can be measured over time.

We therefore advise readers to refer to the condensed interim consolidated financial statements as the format of those is standardized and uniform in comparison with any other company reportable under IFRS. In these financial statements, we show net income of $82,427 and net loss of $56,802 for the six

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months ended April 30, 2022 and 2021, respectively. In addition, working capital ratios and other liquidity measures, total debt and debt/equity ratio are common measures used by companies to measure performance. EBITDA amounts are not opined to by the auditors but are a management tool.

Selected Quarterly Financial Information
		For the Six Month Period Ending
		30-Apr-22	30-Apr-21
		$	$
	Total Revenue	685,916	417,183
	Net Income (Loss)	82,647	(56,802)
	Earnings (Loss) per Share	0.00	0.01
	Total Assets	5,302,481	5,057,541
	Total Liabilities	2,431,051	2,239,891

Share Capital

Authorized: Unlimited number of voting common shares

Unlimited number of preferred shares

1. On March 31, 2022, the Company issued 6,469,306 common shares for the acquisition of certain assets of J-Cal Investments
2. On April 6, 2022, the Company issued 15,112,971 common shares to various employees and management for the contractual payment of services performed for the Company
3. On April 12, the Company issued 10,850,000 common shares to for the acquisition of vertical growing technology from O Grow Investments Inc.
4. On April 12, 2022, the Company issued 15,976,500 common shares to various employees and management as part of employment agreements signed between each member of management and the Company.

Stock Options

As at April 30, 2022 and 2021, the Company has nil and nil outstanding stock options.

Accounting Policies and Estimates

The significant accounting policies of the Company are disclosed in Note 2 to the audited consolidated financial statements. Certain accounting policies require that management make appropriate decisions with respect to the formulation of estimates and assumptions that affect the reported amounts of assets, liabilities, and revenues and expenses. Management reviews its estimates regularly.

Revenue Recognition

Revenue from product sales is measured at the fair value, net of estimated customer returns and allowances at the time of recognition. The estimates of fair value are based on the Company's historical experience with each customer and the specifics of each arrangement.

Revenue from product sales is recognized when the risks and rewards of ownership have been transferred to the buyer (which generally occurs upon shipment) and collectability of the related receivables is

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reasonably assured. Revenue is recognized when (a) it can be measured reliably; (b) it is probable that the economic benefits associated with the transaction will flow to the Company; and (c) the costs incurred or to be incurred can be measured reliably.

Stock-Based Compensation

The Company measures compensation expense for all share-based payment awards, including stock options granted to employees, directors, and non-employees based on the estimated fair values on the date of each grant. The fair value of each stock option granted is estimated using the Black-Scholes- Merton option valuation model. Stock-based compensation is recognized on a straight-line basis over the requisite service period, net of estimated forfeitures.

Financial Instruments

Fair Values

The fair values of other financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and secured borrowings approximate their carrying values due to the relatively short-term maturity of these instruments.

IFRS 9 sets out requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39, Financial Instruments: Recognition and Measurement.

IFRS 9 introduces a new expected credit loss ("ECL") model for all financial assets in scope of the impairment requirements. The new ECL will result in an allowance for credit losses being recorded on financial assets irrespective of whether there has been an actual loss event.

The Company adopted the amendments to IFRS 9, effective November 1, 2018 using the full retrospective method, with no significant impact on the Company's consolidated financial statements.

Credit risk

Credit risk refers to the possibility that a customer or counterparty will fail to fulfill its obligations under a contract and, as a result create a financial loss for the Company. The Company establishes an allowance for doubtful accounts as determined by management based on its assessment of collection; therefore, the carrying amount of accounts receivable generally represents the maximum credit exposure. As at April 30, 2022 and 2021, the Company has determined that no allowance for doubtful accounts is required. The provision for doubtful accounts, if any, is included in selling, general and administrative expenses in the consolidated statements of earnings (loss), and is net of any recoveries that were provided for in prior years. Credit risks also exist in cash and cash equivalents. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company currently settles its financial obligations out of cash. The ability to do this relies on the Company raising debt or equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs.

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