7 Company Profile and Core Business

Fiscal Year 2022 Compared to Fiscal Year 2021 Financial Highlights

39 Notes to the Consolidated Financial Statements

In last year's letter, we outlined our optimism for an economic recovery in the second half of our 2022 fiscal year (ending April 30th) and cautioned that it would be a bumpy ride given new variants of the pandemic and differing vaccination rates across North America. We were remarkably accurate in this respect as both of those factors impacted the pace of the economic recovery during the first half of the 2022 calendar year, particularly the pace of workers returning to offices. Additionally, certain geopolitical conflicts arose during the beginning of our fourth quarter which increased uncertainty and further impacted supply chains through additional cost and lead time issues. While we did see quarter over quarter revenue growth throughout the year, the pace of this growth was not at the level we had expected largely as a result of the delay of workers returning to offices, even if hybrid based, and the continued deferral of construction and related projects. Despite these constraints, and the ongoing level of economic uncertainty, we remain of the opinion that economic recovery will continue even if its pace is slowed by actions currently being taken by various governments to blunt the impact of price inflation particularly relating to energy.

Over the past few years, leading accounting firms have written about the "survive, revive and thrive" stages necessary for companies to emerge from the challenges thrust upon them since early 2020. As our work continues on Inscape's revival, we have remained focused on practical strategies to improve our operations for long term success.

Paramount to our revival efforts were management's work to monetize non-core assets, raise cash and retire debt.

Continuing on this theme, several initiatives were completed during the fiscal year:

Throughout, we have protected the health and safety of our employees while continuing to operate our factories in compliance with government restrictions. Effective February 2022, Inscape also implemented our own hybrid work model at all of our locations, as we intend to reflect the work environment that the majority of our customers are adopting. We are proud of our accomplishments in this respect.

None of the above could have been accomplished without the valued contributions of our leadership team, our employees, and our partners, as well as our Board of Directors whose continued support and guidance proved invaluable. We wish to thank all of them for their unwavering commitments during this challenging year.

Director and Chief Executive Officer

The following Management's Discussion and Analysis ("MD&A") of operating results and financial condition of Inscape Corporation and its subsidiaries ("Inscape" or "the Company") for the year ended April 30, 2022 should be read in conjunction with the accompanying Consolidated Financial Statements and Notes for the years ended April 30, 2022 and 2021.

These forward-looking statements include known and unknown risks, uncertainties, assumptions and other factors which may cause actual results or achievements to be materially different from those expressed or implied. The forward-looking statements are subject to risks and uncertainties that may cause the actual results to differ materially from those anticipated in the discussion

(see "RISK FACTORS" for more information).

While management believes that the expectations expressed by such forward-looking statements are reasonable, we cannot assure that they will be correct. In evaluating forward-looking information and statements, readers should carefully consider the various factors which could cause actual results or events to differ materially from those indicated in the forward-looking information and statements. Readers are cautioned that the foregoing

Inscape Corporation (the "Company") is a limited company incorporated in Ontario, Canada, with Class B common shares listed on the Toronto Stock Exchange (TMX).

The Company's registered office is at 67 Toll Road, Holland Landing, Ontario, Canada.

The discussion and analysis are as of July 14, 2022 unless otherwise stated.

Additional information relating to the Company, including the Annual Information Form, is available on SEDAR at www.sedar.com or on our website www.myinscape.com.

In this MD&A, reference is made to EBITDA, which is not a measure of financial performance under International Financial Reporting Standards ("IFRS"). Inscape calculates EBITDA as earnings or loss before interest, taxes, depreciation and amortization. Management believes EBITDA is a useful measure that facilitates period-to- period operating comparisons, and that some investors and analysts use it as well. This measure, as calculated by Inscape, does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other issuers.

Reference is also made to both adjusted net income or loss before taxes and adjusted EBITDA. Adjusted net income or loss before taxes excludes derivative fair value adjustments, unrealized exchange gains or losses, share-based compensation, severance and other non-

recurring expenses such as gains or losses on disposal of capital assets and intangibles, restructuring expenses and proceeds from government subsidies and grants. Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization with the exclusion of derivative fair value adjustments, unrealized exchange gains or losses, share-based compensation, severance and other non- recurring expenses such as gains or losses on disposal of capital assets and intangibles, restructuring expenses and proceeds from government subsidies and grants. Management believes adjusted net income and loss before taxes and adjusted EBITDA are useful measures that facilitate period-to-period operating comparisons. The adjusted net loss before taxes and adjusted EBITDA are a non-GAAP measure, which does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers.

This report includes certain forward-looking statements that are based on the Company's best information and judgments as of the date of this report. Readers are cautioned not to place undue reliance on forward-looking statements found throughout this document. These forward-looking statements are based on our plans, intentions or expectations which are based on, among other things, assumptions about the rate of economic growth in North America, growth expectations for the contract office furniture business and currency fluctuations.

list of important factors is not exhaustive. Furthermore, the Company will update its disclosure upon publication of each fiscal quarter's financial results and otherwise disclaims any obligations to update publicly or otherwise revise any such factors or any of the forward-looking information or statements contained herein to reflect subsequent information, events or developments, changes in risk factors or otherwise.

Since 1888, Inscape has been designing products and services that are focused on the future, so businesses can adapt and evolve without investing in their workspaces all over again. Our versatile portfolio includes systems furniture, storage, and walls - all of which are adaptable and built to last. Inscape's wide dealer network, showrooms in the United States and Canada, along with full service and support for our clients enable us to stand out from the crowd. We make it simple. We make it smart. We make our clients wonder why they didn't choose

The Company reports in two reportable operating segments. The Office Furniture segment includes storage, benching, systems and seating solutions products.

The Walls segment includes architectural and movable walls. The Company's products are manufactured in two facilities: a 313,000 square foot plant in Holland Landing, Ontario, and a 30,000 square foot plant in Jamestown, New York, USA.

Management has reviewed and refi ned its key strategic initiatives during the past fi scal year to assure a fl exible operational foundation and broaden opportunities

Both the Inscape brand and the Office Specialty brand off er strong opportunities to deliver a diff erentiated off ering. Emphasis now is on exploiting the strengths of each and exploring where opportunities exist to best broaden our market share for each individual brand.

Refi ne our Product Off ering

Market forces have changed the demand profi le. Inscape and Office Specialty off erings must play to the Company's core strengths and adapt to new market opportunities for growth. Storage solutions are a key component of such off erings.

Widening the sales opportunity funnel by actively broadening the number of distribution channels for the Company's products is critical. This includes dealer channels; independent rep channels; inside sales team development, and ecommerce channels.

Focus remains on investment in high opportunity and high margin markets. Re-establishing certain off erings nationally while supporting others regionally will create a wider, more sustainable and more robust sales base.

Enable the Company through strategic investments in technology- driven capital equipment and technology-based systems and processes to unlock potential, improve growth, competitiveness, operating performance, and speed to market.

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INSCAPE Corporation published this content on 29 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2022 20:00:01 UTC.