Western Investment of Canada : Q1 – March 31, 2023

Interim Management's Discussion and Analysis

Quarterly Highlights

For the period ended March 31, 2023

Dated: May 25, 2023

The Western Investment Company of Canada Ltd.

Management's Discussion and Analysis

Introduction

The Western Investment Company of Canada Limited ("we", "Western," or the "Corporation") is a publicly-traded private equity company based in Western Canada. Our common shares trade on the TSX-V under the trading symbol WI. Our purpose is to create long-term wealth for shareholders by building and maintaining a diversified portfolio of strong, stable, and profitable western-based companies while helping them to grow and prosper. Our strategy is to use our expertise and capital to cultivate already great western Canadian businesses, ultimately contributing to their success and legacy over the long run.

Western's targeted industry verticals align with the industry expertise of the Board of Directors and include: (i) financial services and insurance; (ii) retail and distribution; (iii) human services;

1. agriculture and related services; and (v) special situations. Western's ideal acquisition enterprise value is between $10 million and $100 million, with ownership interest between 25% and 100%. Western will prospect acquisitions from: (i) director and executive networks; (ii) mid- market accounting and merger and acquisition advisors; and (iii) private equity and corporate divestitures.

This Interim Management Discussion and Analysis ("MD&A") provides an update on the Corporation's business activities, financial condition, financial performance, and cash flows since December 31, 2022. The Corporation reports its financial position, financial performance, and cash flows in accordance with International Financial Reporting Standards ("IFRS") in Canadian dollars. The MD&A should be read in conjunction with the audited financial statements of the Corporation, the annual MD&A, for the year ended December 31, 2022. The MD&A was prepared by management of Western and was approved by the Board of Directors on May 25, 2023. Additional information relating to the Corporation, including its Annual Information Form, is available on SEDAR at www.sedar.com.

The following table outlines the acquisitions we have completed as of May 25, 2023;

Investments	Acquisition	Ownership (%)
	Date
GlassMasters ARG Autoglass Two Inc.	December 16, 2016	55.3%
Golden Health Care	September 1, 2017	25.0 - 30.0%
Ocean Sales Group Ltd.	January 1, 2018	75.0%
Foothills Creamery Ltd.	February 28, 2018	49.6%
Fortress Insurance Company	May 6, 2019	28.3%

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First Quarter 2023

The Western Investment Company of Canada Ltd.

Management's Discussion and Analysis

Key Highlights for the period ended March 31, 2022

2023 is off to a good start, with Western reporting its best first-quarter results since inception. Both revenue and net income exceeded all previous comparative periods. A strong position to be in as we head into our two busiest quarters. Management at each of our associates has worked hard to combat the recent inflationary and unstable economic environment. We are seeing improvements in gross margins and growth in sales across many of Western's investees.

After having a record year in 2022, GlassMasters ARG Autoglass Two Inc. ("GlassMasters") has done it again with another record-breaking quarter. Sales exceeded the prior year by 25%. Sales, gross profit, and normalized net income have exceeded every comparative period since the company was acquired in 2016. Future growth is on the horizon, with three new locations coming online in 2023.

Business at Fortress Insurance Company ("Fortress") continues its rapid growth, with a 58% growth in gross premiums written from the comparative period of 2022. The $5.2 million equity offering, completed in late 2022, provided cash and value-added business partners to contribute to Fortress's continuing growth and development. With the investment market recovering, Fortress is realizing gains on its investment portfolio, boosting its profitable underwriting business. Fortress is focused on diversification, expanding its product offerings into liability insurance and the Ontario market.

Foothills Creamery Ltd. ("Foothills") has been working hard at turning their business into the profitable company we know it can be. Results to date in 2023 are a testament to this, as first- quarter gross margins improved from 11% to 21%. An improved pricing strategy should continue this trend and address any ongoing inflation and rebate fluctuations. With high levels of frozen product inventory on hand heading into their busiest two quarters, we are optimistic for a successful year.

Sales at Ocean Sales Group Ltd. ("Ocean Sales") continue to grow, with consumer shows returning to normal levels. Revenue is up 55% from the prior year. The company's focus is currently on finding new and innovative products to bring to market to replace products that have reached maturity.

Golden Health Care ("Golden") has maintained revenue levels, with rent increases countered by a drop in occupancy. While occupancy at one of our homes has improved, another has dropped below expectations. Inflation has impacted the cost of care, and attracting staff has been challenging. Management is focused on improving occupancy and is working with the provincial government to obtain funding for high-level care.

The $803,568 improvement in net income this quarter is an indication of the hard work that has gone on to improve earnings from each of our associates. We believe we have solid management and strategic plans in place and are working closely with each company to further improve profitability. Looking into 2023, we expect to see revenue growth and improved margins as inflation begins to stabilize.

A top priority for Western will be addressing the convertible debentures coming due in early 2024. We are in early discussions with key stakeholders to develop our plan to meet this coming

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First Quarter 2023

The Western Investment Company of Canada Ltd.

Management's Discussion and Analysis

obligation, which by its nature, is a material liquidity risk. We believe we can provide an attractive proposal to current debenture holders for renewal.

Review of Western's Operations and Financial Results

The financial highlights of the Corporation are:

	Three months ended	Three months ended
	March 31, 2023	March 31, 2022
Financial results ($)
Revenue	544,236	(249,864)
Professional fees	47,151	94,798
Regulatory fees	11,794	12,602
Management salaries	105,980	95,367
Share based compensation	-	-
Interest	184,285	155,979
Other expenses	6,750	6,682
Total expenses	355,960	365,428
Net income (loss)	188,276	(615,292)
Net income (loss) per share	0.006	(0.020)
	March 31, 2022	December 31, 2022
Financial position ($)
Working capital	(3,795,525)	261,774
Total assets	18,658,336	18,615,425
Operating loan	1,041,357	1,200,316
Loans and convertible debentures	4,879,293	4,883,174
Shareholders' equity	12,556,825	12,377,424
	March 31, 2023	December 31, 2022
Western Share Count Information
Common shares issued and outstanding	30,262,756	30,287,756

Western earned equity income of $348,387, a significant improvement from our equity loss in the first quarter of 2022, thanks to a successful first quarter for most of our associates. Revenue is also boosted in 2023 from the restructuring undertaken at GlassMasters, which now provides Western with regular interest income.

Expenses continue to be relatively stable, with higher professional fees in the prior period of 2022 related to the GlassMasters share disposition. Interest expense has increased over time with rising interest rates.

With the convertible debentures' maturity one year away, they are now recorded as a current liability, affecting our working capital. Management is actively working to address this maturity.

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First Quarter 2023

The Western Investment Company of Canada Ltd.

Management's Discussion and Analysis

In the coming year, we are optimistic that our equity income will improve as the economy stabilizes. We expect steady growth in the insurance business and expansion at GlassMasters. We are focused on returning Foothills to profitability.

Net Asset Value

To provide our shareholders with an idea of the actual value of our investments, we completed a market value assessment of each associate company as at December 31, 2022. For accounting purposes, each investment is recorded based on the equity method of accounting, whereby the investment is initially recognized at cost and adjusted thereafter for our share of the investee's profit or loss. The methods used to determine the market value estimate of each associate are outlined below. We believe providing this estimate gives our investors better insight into the true underlying value of their investment in Western.

The market value assessment shows the value of our equity investments is significantly above the current carrying value. If we adjust our net book value as at December 31, 2022, to account for the inherent market value of our investments, the value per share is $0.67 (2021 - $0.82).

This is well above the current market price of our shares, demonstrating the true value our shareholders hold. The decline in market value from the prior year is consistent with what many other private equity companies are seeing with the difficult economic conditions currently faced by businesses and increased interest rates. We expect that net asset value will remain a dynamic number with improving results and increased stability.

Below is a comparison of the carrying value of our associates with the estimated market value as at December 31, 2022:

	Original		Estimated	Unrealized
$	purchase price	Carrying Value	Market Value	Gain
Golden Health Care	4,738,192	4,781,768	6,750,000	1,968,232
Fortress Insurance Company	1,690,000	2,575,686	5,170,000	2,594,314
Ocean Sales Group Ltd.	3,450,000	-	175,000	175,000
Foothills Creamery Ltd.	3,251,000	2,450,120	3,100,000	649,880
GlassMasters ARG Autoglass
Two Inc.	4,010,000	7,529,849	10,170,000	2,640,151
Total value of investment in
associates	17,139,192	17,337,423	25,365,000	8,027,577

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First Quarter 2023