FS Q2 22 MDA: Insights from MiniLuxe Performance

Detailed Overview of MINILUXE’S Management Discussion and Analysis Related to Financial Statements

Insights into MINILUXE’s Financial Performance for the 13 and 26 Weeks Concluded on June 26, 2022

Document Date: August 22, 2022

This Management’s Discussion and Analysis (MD&A) for the thirteen-week and twenty-six-week periods ending June 26, 2022, offers a comprehensive look at the operational activities, performance metrics, and financial standing of MiniLuxe Holding Corp. (“MiniLuxe” or the “Company”). Readers are encouraged to review this discussion alongside the Company’s financial statements for the respective periods and their related notes (the “Interim financial statements”), as well as the audited financial statements, corresponding notes, and MD&A for the fiscal year ending December 26, 2021. The financial reports adhere to International Financial Reporting Standards (IFRS) and are expressed in U.S. dollars, unless stated otherwise. The information within this document is accurate as of August 22, 2022, unless otherwise indicated.

The Company’s fiscal year runs on a 52-week reporting cycle, concluding on the Sunday nearest to December 31st, which may occasionally lead to a 53-week fiscal year. The fiscal year that concluded on December 26, 2021, is commonly referred to as “fiscal 2021,” “FY21,” or similar terms. The 26-week period ending June 26, 2022, is identified as “H1 2022,” while the 13-week period ending on the same date is recognized as “Q2 2022” or similar nomenclature.

In this document, unless explicitly stated otherwise, terms such as “we,” “us,” “our,” “Company,” and “MiniLuxe” refer to MiniLuxe Holding Corp. The content of this MD&A has received approval from the Board of Directors, following the recommendation of its Audit Committee.

Understanding Non-IFRS Financial Measurements

This MD&A includes references to certain non-IFRS measures. These metrics are not recognized under International Financial Reporting Standards (IFRS), lack a standardized definition prescribed by IFRS, and may not be comparable to similar metrics used by other companies. These measures serve as supplementary information to enhance understanding of the Company’s operational results from a management perspective. Therefore, they should not be viewed in isolation or as a substitute for analyzing the Company’s financial data reported under IFRS. For definitions and reconciliations of these non-IFRS measures to the applicable reported metrics, please refer to the “Performance Assessment” and “Selected Consolidated Financial Information” sections within this MD&A.

Analyzing Forward-Looking Statements and Their Implications

Certain declarations within this MD&A that are not based on historical facts are categorized as forward-looking statements as defined by relevant securities laws. These statements encompass, but are not limited to, projections regarding MiniLuxe’s expected revenues, gross margins, earnings, growth rates, success of new products and services, market penetration, and strategic plans. The use of terms such as “may,” “anticipated,” “expected,” “projected,” “targeting,” “estimate,” “intend,” and similar phrases aims to facilitate the identification of these forward-looking statements. Such forward-looking statements do not guarantee future performance and entail both known and unknown risks and uncertainties that could lead to outcomes materially different from historical results or those implied by these statements.

1

Readers are advised that the accuracy of forward-looking statements is not guaranteed, and they should not place undue reliance on any of these projections. Various factors could cause actual results or events to differ significantly from current expectations articulated in these forward-looking statements. These factors include, but are not limited to, MiniLuxe’s history of losses, challenges in achieving and maintaining profitability, competition within the industry, difficulties in enhancing existing products or introducing new offerings, inability to adapt to market trends and shifts in consumer preferences, brand awareness challenges, reputational risks, disruptions from the ongoing impact of COVID-19, licensing and regulatory hurdles, adverse economic conditions affecting revenue and profitability, talent acquisition and retention challenges, involvement in product recalls, and risks associated with capital generation. Other risks include changes in tax and trade legislation, natural disasters, pandemics, geopolitical events, and shifts in accounting standards or interpretations.

All forward-looking statements are subject to the cautionary measures outlined above. MiniLuxe shares this information as of the current date and does not commit to updating any forward-looking statements in response to new information, future events, or otherwise, except as mandated by applicable securities laws.

Understanding the Reverse Takeover (RTO) Transaction

On November 23, 2021, MiniLuxe Inc. (“MiniLuxe”) and MiniLuxe Holding Corp. (“MiniLuxe Holding”), previously known as Rise Capital Corp, executed a reverse takeover transaction (the “RTO Transaction”). This transaction facilitated the acquisition of all outstanding common shares of MiniLuxe by MiniLuxe Holding. Under a Securities Exchange Agreement, all common shares of MiniLuxe were converted into Subordinate Voting Shares and Proportionate Voting Shares of MiniLuxe Holding, resulting in MiniLuxe becoming a wholly owned subsidiary of MiniLuxe Holding. The financial statements are thus presented as a continuation of MiniLuxe, with comparative figures reflecting MiniLuxe’s previous results.

Comprehensive Company Overview

MiniLuxe is recognized as a digital-first, socially-responsible lifestyle brand and talent empowerment platform within the nail and waxing industry. Over the past decade, MiniLuxe has been a pioneer in establishing industry standards for health, hygiene, quality services, and fair labor practices, striving to overhaul the nail care sector, which is often under-regulated. The company’s goal is to emerge as a leading educator and employer of vocational women workers by empowering individuals from Asian-American, Asian-Canadian, and other diverse communities through its talent empowerment platform.

2

The headquarters of MiniLuxe is situated in Boston, Massachusetts, encompassing 20 locations, including 19 studios and one training center, spanning three major U.S. markets. In these facilities, MiniLuxe-trained nail technicians and waxing specialists deliver top-tier nail care and waxing services. Furthermore, MiniLuxe offers a private-label line of cruelty-free, clean nail and body care products that can be purchased in-studio or through their e-commerce platform.

Exploring MiniLuxe’s Diverse Products and Services

MiniLuxe functions as a brand platform encapsulating one primary operating segment that encompasses both Talent revenue and Product revenue.

Talent revenue is obtained from providing self-care services, including nail care, hand and foot therapies, waxing, tweezing, brow and lash tinting, along with the in-studio sale of retail products that feature MiniLuxe’s proprietary line as well as a selection of third-party offerings. Talent revenue is generated both on-site within MiniLuxe’s fleet of 19 studios and training center, and through partner channels. MiniLuxe’s talent operations are managed through fully digitized booking, personalization, and payment systems.

Product revenue is derived from sales of MiniLuxe’s proprietary line of self-care products, sold directly to consumers via MiniLuxe’s e-commerce platform and through various wholesale partners. The proprietary product line includes nail polishes and hand and body care products.

MiniLuxe has updated its revenue presentation concerning talent and product revenue streams in financial statements to accurately reflect retail product sales occurring in talent operations. Retail product sales within MiniLuxe’s studio locations are now included in Talent revenue (previously categorized under Product revenue). This modification does not affect the revenue recognition principles applied or the total overall revenue recognized, and has been reclassified in comparative periods.

Across all of MiniLuxe’s offerings, the company distinguishes itself through a digitally-driven service experience while maintaining a steadfast commitment to high cleanliness standards and fostering a diverse employee base. Key factors contributing to MiniLuxe’s unique offerings include:

• Every MiniLuxe studio is equipped with a “Clean Lab” that employs surgical-grade sterilization techniques to clean metal tools, while all non-metal tools are responsibly disposed of after each service.
• All products within MiniLuxe’s proprietary line and those used in services are formulated with a focus on sustainability, ethical sourcing, and being clean, better, and safer for consumers.
• Nail designers and waxing specialists receive fair compensation reflective of their expertise and professionalism, along with benefits such as healthcare coverage and paid time off.

Key Performance Factors: An In-Depth Look

The performance and future success of MiniLuxe hinge on numerous factors, each presenting unique opportunities and risks. Below, several significant factors are outlined, although this list is not exhaustive.

1All MiniLuxe products are 8-free, meaning they do not contain harmful substances such as formaldehyde, toluene, dibutyl phthalate, formaldehyde resin, camphor, triphenyl phosphate, ethyl tosylamide, or xylene.

3

Moreover, the Company has noted that since March 2020, the COVID-19 pandemic and the resultant government actions to control the virus have impacted numerous factors affecting the Company’s operations and performance. The ongoing effects of both the virus and government responses will rely on future developments that remain unpredictable. In 2022, the Company is starting to observe consumer demand returning to pre-pandemic levels and is actively working towards enhancing operational capacity in its studios. There remains potential for fixed cost leverage at the fleet level as the Company scales back to pre-pandemic capabilities.

Understanding the MiniLuxe Brand Identity

The MiniLuxe brand exemplifies consistency, quality, and ethical responsibility. Clients can trust in the hygienic services, equitable working conditions, and serene environment that MiniLuxe offers. The incorporation of MiniLuxe-branded products into the service experience, coupled with a long-standing commitment to providing only non-toxic and cruelty-free polishes in a hygienic setting, sets MiniLuxe apart from competitors.

Implementing an Omni-Platform Strategy for Growth

The Company’s strategic roadmap includes delivering MiniLuxe products and services through multiple channels:

Talent Revenue

• Physical points of presence
• Digital platforms

Product Revenue

Consumer Trends Impacting the Self-Care Market

The self-care market is experiencing positive momentum due to trends such as clean beauty, ethical services, and conscious consumerism, which includes a growing emphasis on diverse and inclusive brands. These trends align seamlessly with MiniLuxe’s foundational principles.

Competitive Landscape Analysis

MiniLuxe operates within the self-care product and service industry, which is significantly fragmented. Much of the competition arises from small, independent salons. While many salons prioritize competitive pricing, MiniLuxe focuses on its core tenets of clean products, a hygienic environment, ethical treatment of employees, and high-quality service. The Company believes that consumers will increasingly seek products and services that align with the MiniLuxe offering. Competition for talent within the industry is robust, and MiniLuxe’s proprietary training program provides a competitive edge in talent acquisition. On the product side, MiniLuxe’s high-quality polishes, clear brand messaging, and targeted market positioning are also differentiating factors.

4

Strategic Acquisition Opportunities

MiniLuxe may explore acquisitions that align strategically and are consistent with the Company’s growth objectives, core values, and disciplined capital management approach. Additionally, MiniLuxe might consider opportunities for joint ventures or other collaborative business efforts with third parties. In Q3 2022, MiniLuxe announced the acquisition of Paintbox, which brings a leading brand in premium nail art and design, proprietary intellectual property related to their iconic look-book, and an additional 260,000 social media followers. For more details, please refer to Subsequent Events.

Understanding the Impact of Seasonality on Business Performance

MiniLuxe’s operations are subject to seasonal fluctuations in certain markets. For instance, in a pre-pandemic year such as 2019, 23% of Talent revenue was generated in Q1, 26% in both Q2 and Q3, and 25% in Q4.

Comprehensive Performance Assessment Insights

When evaluating the performance of MiniLuxe’s business, the Company considers a variety of financial and operational metrics that significantly influence the Company’s results. All figures are reported in U.S. dollars.

Revenue Generation Overview

MiniLuxe derives its revenue from a single operating segment that includes: 1) Talent revenue from operations across the fleet of 19 studios, the training center, and partner channels, as well as the introduction of on-demand services through MiniLuxe Anywhere, and 2) Product revenue from sales of proprietary MiniLuxe products via direct-to-consumer e-commerce and wholesale channels.

The Company recognizes Talent revenue immediately upon the completion of a service or sale of retail products, while Product revenue is recognized post-fulfillment of each order, in compliance with IFRS 15. Historically, the Company has received payment in advance only for gift card sales. Unused gift card balances are recorded as deferred liabilities, and revenue is recognized as these gift cards are redeemed for services.2 The Company does not charge fees on unused gift cards, and they do not expire.

Reported revenue includes all discounts and promotional offerings.

The Company collects and remits sales tax on customer transactions and reports these amounts using the net method in the statement of operations. Consequently, these taxes are not included in gross revenue.

Analyzing Cost of Sales Dynamics

Cost of sales encompasses expenses directly tied to the delivery of both services and products. The cost of sales related to the Company’s Talent segment includes the expenses for products utilized in services and the cost of direct labor, which refers to the immediate service providers. Conversely, the cost of sales associated with MiniLuxe’s Product segment primarily involves the costs associated with acquiring MiniLuxe private label products directly from manufacturers, raw materials, and third-party products purchased at wholesale pricing.

2 Please refer to the accounting policy and estimation process concerning gift card breakage in Note 4 of the audited FY2021 annual financial statements.

5