H-Source Holdings Ltd (HSCHF)

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H-Source MD&A

The most important announcement early in Q4 is our partnering with EY (one of the “Big 4” global service providers) to deploy the H-Source software platform on the EY OpsChain Blockchain platform. We are jointly marketing opportunities related to supply chain transformation for medical supplies, equipment, and pharmaceuticals. This is core to our strategic plan to pivot to more software engagements. The joint projects will include license fees, transaction fees, and success or shared risk fees. We expect revenue from this initiative starting late Q1 of 2020. We are bringing a global nutraceutical distributor live on the H-Source platform in Europe and Canada late in Q4 of 2019. This is a project that showcases our global functionality including:

1.Ability to host and transact in the European Union with localization for language and currency

2.Track and trace capability for FDA and Swiss medical products

3.Provide a Canadian distribution network for products in local currency

4.Positive impact in 2020 as we help the distributor expand its global operations. We have added 20 independent sales representatives as of mid-November of 2019. We hope to see impacts from these representatives in Q1 of 2020.

Currently, H-Source pursues its growth strategy by:

•Continue with the Pilot of the H-Source/EY platform on OpsChain

•Add experienced software professionals to assist with software engagement acquisition and delivery experience on a variable compensation model (“eat what you kill”) based on profitability

•Expand existing software engagement pipeline for the joint H-Source/EY product offering

•Deploying independent sales representatives in select markets to enhance sales and convert contracted facilities to active facilities on the H-Source platformoFocusing on listing products that turn faster at predictable prices and marginsoOffering additional enhanced services to our clients where H-Source provides additional touch –labor for higher transaction fees with the addition of independent sales representatives

•Continue to expand Nutraceutical clients

•Maintaining Joint Marketing relationships with multiple state hospital associations and metropolitan hospital councils and associations

•Licensing our platform to medical facilities plus transaction fees

•Distributing products from third parties or Original Equipment Manufacturers (“OEM”) thru the platform