HIRE Technologies Inc. — Interim / Quarterly Report 2021

Aug 26, 2021

HIRE Technologies Inc.

Condensed Consolidated Interim Financial Statements (Unaudited) June 30, 2021

HIRE Technologies Inc. Condensed Consolidated Interim Statements of Financial Position (Unaudited)

	June 30,	December 31,
	2021	2020
	$	$
Assets
Current assets
Cash	356,795	340,638
Trade and other receivables (notes 3 and 20)	4,049,771	2,541,315
Prepaid expenses	212,237	322,956
	4,618,803	3,204,909
Non-current assets
Property and equipment (note 4)	332,992	410,993
Other receivables (note 3)	473,463	473,463
Goodwill (note 5)	6,070,436	5,100,078
Intangible assets (note 6)	4,569,634	3,755,373
Investments (note 7)	3,391	254,640
	11,449,916	9,994,547
	16,068,719	13,199,456
Liabilities
Current liabilities
Bank indebtedness (note 8)	1,490,000	465,000
Trade and other payables (note 10)	3,934,618	2,232,611
Lease liability (note 11)	143,180	175,374
Convertible debentures (note 13)	1,662,271	2,288,726
Derivatives (note 13)	920,583	6,763,040
	8,150,652	11,924,751
Long-term liabilities
Loans (note 9)	195,472	141,851
Lease liability (note 11)	142,143	215,308
Long-term payables (note 12)	1,788,552	1,368,815
Deferred tax liabilities	808,788	884,891
	2,934,955	2,610,865
	11,085,607	14,535,616
Shareholders’ equity (deficit)
Share capital(note 14)	21,537,811	17,541,250
Reserves(note 15)	1,856,399	1,317,628
Deficit	(18,411,098)	(20,195,038)
	4,983,112	(1,336,160)
	16,068,719	13,199,456
Basis of measurement and going concern (note 2)
Approved by the Board of Directors
“Sean Cleary”	“Jonson Sun”
_____ Director	________ Director

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

HIRE Technologies Inc.

Condensed Consolidated Interim Statement of Income (Loss) and Comprehensive Income (Loss) (Unaudited)

Revenue(note 16) Cost of services(note 21) Gross profit Expenses Selling, general and administrative (note 17) Amortization of intangible assets Interest expense Realized gain on convertible debenture derivatives(note 13) Net unrealized gain on mark-to- market(notes 7 and 13) Income (loss) before income taxes Current income tax expense Deferred income tax expense (recovery) Income tax expense (recovery) Net income (loss) and comprehensive income (loss) for the period Supplemental disclosure Basic earnings (loss) per share Weighted number of shares Fully diluted earnings (loss) per share Weighted number of shares	Three months ended June 30, 2021 $ Three months ended June 30, 2020 $ Six months ended June 30, 2021 $ 6,385,990 2,597,492 11,876,319 3,930,173 2,049,212 7,093,099	Six months ended June 30, 2020 $ 5,500,278 4,261,261
	2,455,817 548,280 4,783,220	1,239,017
	3,488,036 1,591,186 6,251,311 165,991 22,650 290,203 136,627 7,667 209,925	2,992,339 45,300 24,226
	3,790,654 1,621,503 6,751,439	3,061,865
	(1,334,837) (1,073,223) (1,968,219) 2,354 - 423,815 924,712 - 3,495,374	(1,822,848) - -
	(407,771) (1,073,223) 1,950,970	(1,822,848)
	103,727 - 243,134 (47,968) (6,675) (76,104)	- (11,335)
	55,759 (6,675) 167,030	(11,335)
	(463,530) (1,066,548) 1,783,940	(1,811,513)
	(0.01) (0.02) 0.03 63,239,786 48,087,333 61,011,881 (0.02) (0.02) (0.03) 77,518,438 48,087,333 76,377,214	(0.04) 48,087,333 (0.04) 48,087,333

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

HIRE Technologies Inc.

Condensed Consolidated Interim Statement of Changes in Equity (Deficit) (Unaudited)

Balance – January 1, 2020 Net loss and comprehensive loss for the period Balance – June 30, 2020 Balance – January 1, 2021 Issuance of common shares from warrants (note 15) Issuance of common shares from debenture conversion (note 14) Issuance of common shares from business combination (note 14) Issuance of common shares to settle acquisition holdback (note 14) Share-based compensation expense (note 15) Net income and comprehensive income for the period Balance – June 30, 2021	Common shares Amount $ Reserves $ Deficit $ 48,087,333 12,561,500 827,314 (9,478,816) - - - (1,811,513)	Total $ 3,909,998 (1,811,513)
	48,087,333 12,561,500 827,314 (11,290,329)	2,098,485
	56,888,479 17,541,250 1,317,628 (20,195,038) 466,918 285,374 (113,549) - 2,609,999 1,779,331 559,482 - 3,143,607 1,791,856 - - 206,709 140,000 - - - - 92,838 - - - - 1,783,940	(1,336,160) 171,825 2,338,813 1,791,856 140,000 92,838 1,783,940
	63,315,712 21,537,811 1,856,399 (18,411,098)	4,983,112

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

HIRE Technologies Inc. Condensed Consolidated Interim Statement of Cash Flows (Unaudited)

Cash provided by (used in) Operating activities Net income (loss) and comprehensive income (loss) for the period Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation Amortization of intangible assets Income tax expense (recovery) Share-based compensation expense Interest expense Realized gain on convertible debenture derivatives Net unrealized gain on mark-to-market Changes in non-cash working capital balances Trade and other receivables Prepaid expenses Trade and other payables Interest paid Investing activities Purchase of property and equipment Financing activities Increase in bank indebtedness Increase in CEBA loans (note 9) Lease payments Earn-out and contingent payments Issuance of common shares Change in cash during the period Cash – Beginning of period Cash – End of period	Six months ended June 30, 2021 $ Six months ended June 30, 2020 $ 1,783,940 (1,811,513) 67,733 106,055 290,203 45,300 (76,104) (11,335) 92,838 - 209,925 24,226 (423,815) - (3,495,374) - (1,531,182) (155,008) 110,719 120,781 2,160,682 (336,147) (110,636) (14,220)
	(921,071) (2,031,861)
	(28,588) -
	1,025,000 80,000 53,620 - (105,359) (170,509) (179,270) (41,113) 171,825 -
	965,816 (131,622)
	16,157 (2,163,483) 340,638 2,304,024
	356,795 140,541

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

1 Nature of business

HIRE Technologies Inc. (the Company or HIRE Technologies), formerly known as Danacore Industries Inc. (Danacore), was incorporated under the Business Corporations Act (British Columbia) on January 10, 2018. The Company’s registered office is 595 Howe St 10th floor, Vancouver, British Columbia V6C 2T5.

The Company, through its direct and indirect wholly owned subsidiaries PTC Accounting and Finance Inc. (PTC), ProVision IT Resources Ltd. (ProVision), The Headhunters Recruitment Inc. (The Headhunters), 2449983 Ontario Inc. (The Kavin Group), Taylor Ryan Inc. (Taylor Ryan), and BTG Holdco Inc. (together the Subsidiaries) provides human resources services, which comprise recurring contract staffing services, onoccurrence permanent placement services, and a software-as-a-service (SaaS) performance management tool.

2 Basis of preparation and going concern

Statement of compliance

These condensed consolidated interim financial statements were prepared by management in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and interpretations as issued by the International Financial Reporting Interpretations Committee (IFRIC), and as applicable to the preparation of condensed consolidated interim financial statements, including IAS 34, Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the December 31, 2020 consolidated financial statements authorized for issue on April 28, 2021.

These condensed consolidated interim financial statements were authorized for issue by the Company’s Board of Directors on August 25, 2021.

Basis of measurement and going concern

These condensed consolidated interim financial statements have been prepared on a going concern basis under the historical cost convention, except for certain financial instruments, which are recorded at fair value. The going concern basis assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. For the six months ended June 30, 2021, the Company incurred negative cash flows from operations of $921,071 and has an accumulated deficit of $18,411,098.

The Company’s ability to continue as a going concern is dependent on the achievement of a profitable level of operations and may require the Company to raise additional funds. Although the Company has previously been successful in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company. Furthermore, the outbreak of the novel strain of coronavirus specifically identified as COVID-19 was declared a pandemic by the World Health Organization and is ongoing. This situation is dynamic and the ultimate duration and magnitude of the impact on the economy and on the Company’s ability to achieve revenue growth organically, or through the completion of acquisitions as has been done previously, is unknown. These conditions result in material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern. These condensed

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

consolidated interim financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Such adjustments would be material.

Basis of consolidation

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries as noted above. Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control. All intercompany balances and transactions are eliminated in full on consolidation.

Functional and presentation currency

These condensed consolidated interim financial statements are presented in Canadian dollars, which is also the functional currency of all the entities within the Company.

Earnings per share

For the three months ended June 30, 2020, and the six months ended June 30, 2020, the adjustments for stock options and warrants (note 15) as applicable for each timer period were anti-dilutive, as their inclusion would result in a lower diluted loss per share. Therefore, the impact of these items was excluded.

Use of estimates

The preparation of condensed consolidated interim financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated interim financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the following:

• determination of the recoverable amount for purposes of assessing impairment of goodwill and intangible assets with an indefinite useful life (notes 5 and 6);

• useful life of intangible assets (note 6);

• fair value of Atlas ID (note 7);

• fair value of contingent consideration payable (note 12);

• fair value of derivatives (note 13); and

• fair value of options and warrants (notes 14 and 15).

Actual results could differ from management’s best estimates as additional information becomes available in the future, which may have an impact on future periods.

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements

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Acquisitions

Acquisition of The Headhunters

On September 1, 2020, the Company acquired 100% of the issued and outstanding shares of The Headhunters for total consideration of $955,036, consisting of $400,000 in cash, $64,062 paid in cash as a working capital adjustment and $490,974 in contingent consideration payable. The cash investment in The Headhunters, net of cash acquired, was $239,232.

The fair value of the assets acquired and liabilities assumed was as follows and will be finalized within one year from the acquisition date:

Assets Cash acquired in business combination Trade and other receivables Prepaid expenses Property and equipment Deferred income tax assets Intangible assets Brand Customer relationships Goodwill Liabilities Bank indebtedness Trade and other payables Deferred income tax liabilities on intangible assets Net Consideration Cash Working capital adjustment Contingent consideration Total	$ 160,768 506,186 56,738 6,362 39,557 184,000 345,243 398,918
	1,697,772
	21,905 580,582 140,249
	742,736
	955,036
	400,000 64,062 490,974
	955,036

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

Acquisition of The Kavin Group

On December 11, 2020, the Company acquired 100% of the issued and outstanding shares of The Kavin Group for total consideration of $1,590,636, consisting of $1,026,586 in cash, $200,000 in common shares of the Company (321,543 shares at $0.622 per share), $473,462 to be received as working capital adjustment and $837,512 in contingent consideration payable. The cash investment in The Kavin Group, net of cash acquired, was $983,619.

The provisional fair value of the assets acquired and liabilities assumed was as follows and will be finalized within one year from the acquisition date:

Assets Cash acquired in business combination Trade and other receivables Prepaid expenses Property and equipment Deferred income tax assets Intangible assets Brand Customer relationships Goodwill Liabilities Trade and other payables Deferred income tax liabilities on intangible assets Net Consideration Cash Issuance of common shares Working capital adjustment Contingent consideration Total	$ 42,968 20,668 23,888 10,211 48,078 451,000 309,000 1,148,171
	2,053,984
	261,948 201,400
	463,348
	1,590,636
	1,026,586 200,000 (473,462) 837,512
	1,590,636

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

Acquisition of Taylor Ryan

On December 17, 2020, the Company acquired 100% of the issued and outstanding shares of Taylor Ryan for total consideration of $4,438,912, consisting of $3,290,000 in cash, $822,000 in common shares of the Company (1,031,368 shares at $0.797 per share), and $326,912 to be paid in cash as a working capital adjustment. The cash investment in Taylor Ryan, net of cash acquired, was $3,290,659. Additionally, a contingent remuneration of $1,206,404 was calculated.

The provisional fair value of the assets acquired and liabilities assumed was as follows and will be finalized within one year from the acquisition date:

Assets Trade and other receivables Property and equipment Deferred rent receivable Intangible assets Brand Customer relationships Goodwill Liabilities Bank indebtedness Trade and other payables Lease liabilities Deferred income tax liabilities on intangible assets Net Consideration Cash Issuance of common shares Working capital adjustment Contingent consideration Total	$ 521,475 79,254 83,456 444,000 1,377,000 2,643,441
	5,148,626
	46,028 87,000 85,016 491,670
	709,714
	4,438,912
	3,290,000 822,000 326,912 -
	4,438,912

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements

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Acquisition of Pulsify Inc. assets and liabilities

On April 1, 2021, the Company acquired assets of Pulsify Inc. (Pulsify) and assumed the liabilities of the associated contracts, for a purchase price of $1,500,000 USD or total consideration of $2,027,451, consisting of $1,791,856 in common shares of the Company (3,143,607 shares at $0.57 per share), and earn-out payments estimated to be $235,595. The amounts have been translated to CAD at a foreign exchange rate of 1.2565 USD/CAD.

The provisional fair value of the assets acquired and liabilities assumed was as follows and will be finalized within one year from the acquisition date:

Assets Intangible assets Brand Technology Goodwill Liabilities Deferred revenue Net Consideration Issuance of common shares Contingent consideration Total	$ 109,316 995,148 970,358
	2,074,822 47,371
	2,027,451
	1,791,856 235,595
	2,027,451

3 Trade and other receivables

Trade and other receivables Allowance for credit losses Current portion Long-term portion	June 30, 2021 $ December 31, 2020 $ 4,555,226 3,032,942 (31,992) (18,164)
	4,523,234 3,014,778
	4,049,771 2,541,315 473,463 473,463
	4,523,234 3,014,778

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements

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The Company measures the allowance for credit losses on its trade receivables using a simplified approach, where the allowance is measured at an amount equal to the lifetime ECLs.

Balance – Beginning of year Provision for credit losses Writeoffs Balance – End of year	June 30, 2021 $ December 31, 2020 $ 18,164 63,229 (13,472) 53,467 27,300 (98,532)
	31,992 18,164

4 Property and equipment

Right-of-use assets $ Computer equipment $ Furniture and equipment $ Cost As at December 31, 2020 459,823 104,424 123,994 Additions - 28,588 - Disposals - (38,856) - As at June 30, 2021 459,823 94,156 123,994 Accumulated depreciation As at December 31, 2020 224,524 49,759 15,211 Depreciation 40,676 15,450 8,385 As at June 30, 2021 265,200 65,209 23,596 Net book value As at December 31, 2020 235,299 54,665 108,783 As at June 30, 2021 194,623 28,947 100,398 Goodwill As at January 1, 2020 Acquisition of The Headhunters Acquisition of The Kavin Group Acquisition of Taylor Ryan As at December 31, 2020 As at January 1, 2021 Acquisition of Pulsify As at June 30, 2021	Right-of-use assets $ Computer equipment $ Furniture and equipment $ 459,823 104,424 123,994 - 28,588 - - (38,856) -	Leasehold improvements $ 12,541 - -	Total $ 700,782 28,588 (38,856)
	459,823 94,156 123,994	12,541	690,514
	224,524 49,759 15,211 40,676 15,450 8,385	295 3,222	289,789 67,733
	265,200 65,209 23,596	3,517	357,522
	235,299 54,665 108,783	12,246	410,993
	194,623 28,947 100,398	9,024	332,992
		$ 909,548 398,918 1,148,171 2,643,441
		5,100,078
		5,100,078 970,358
		6,070,436

5 Goodwill

The Company assessed for indicators of impairment and determined that no indications existed as at June 30, 2021.

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements

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Carrying value of goodwill by CGU

PTC ProVision The Headhunters The Kavin Group Taylor Ryan Pulsify	June 30, 2021 $ December 31, 2020 $ 297,625 297,625 611,923 611,923 398,918 398,918 1,148,171 1,148,171 2,643,441 2,643,441 970,358 -
	6,070,436 5,100,078

6 Intangible assets

Cost As at December 31, 2020 Additions As at June 30, 2021 Accumulated amortization As at December 31, 2020 Amortization As at June 30, 2021 Net book value As at December 31, 2020 As at June 30, 2021	Customer relationships $ Candidate database $ Brand names $ Technology $ 2,141,243 343,000 1,542,000 - - - 109,316 995,148	Total $ 4,026,243 1,104,464
	2,141,243 343,000 1,651,316 995,148	5,130,707
	88,686 182,184 - - 214,124 34,300 - 41,779	270,870 290,203
	302,810 216,484 - 41,779	561,073
	2,052,557 160,816 1,542,000 -	3,755,373
	1,838,433 126,516 1,651,316 953,369	4,569,634

7 Investments

Investment in Atlas ID

On September 29, 2020, the Company invested US$200,000 in a convertible note maturing on September 30, 2022, bearing interest at 10% with Atlas ID Systems Inc. (Atlas ID). All outstanding principal, and, at Atlas ID’s option, all accrued but unpaid interest on the convertible note, may automatically convert into equity securities of Atlas ID at a price calculated based on the future equity financing price of Atlas ID securities. The note may also convert into securities of Atlas ID at the option of HIRE Technologies or on an Atlas ID liquidity event.

• The Government of Canada Rapid Antigen Screening Program For Small & Medium sized Organizations announced May 7, 2021 and other government initiatives to reduce COVID-19 have impacted the commercial viability of the Atlas ID product and services, which was established to provide a mobile app to assist with

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

detection. Accordingly, on May 14, 2021, Atlas ID provided notice that it would cease operations. The Company does not expect to recover the amount invested and a loss of $242,240 has been recognized in net unrealized gain on-mark-to-market in the condensed consolidated interim statement of income (loss) and comprehensive income (loss). Aggregate accrued interest receivable of $16,987 has also been reversed as at June 30, 2021.

Investment in New Wave Holdings Corp.

On February 1, 2021, The Headhunters were granted 114,963 restricted share units (RSUs) of New Wave Holdings Corp. (New Wave), in exchange for recruitment services. The Company accounts for the investment in New Wave as fair value through profit or loss. New Wave is trading on the Canadian Securities Exchange under the stock symbol SPOR. The investment is classified as level 1 in the fair value hierarchy as at June 30, 2021.

The RSUs were initially assessed at $12,646 on the grant date. Fair value is $3,391 as at June 30, 2021.

8 Bank indebtedness

The Company has a revolving demand operating facility with a credit limit of the lesser of $1,500,000 and percentages of certain qualified receivables calculated at $2,549,842 as at June 30, 2021. The balance outstanding on the facility was $1,490,000 as at June 30, 2021 (March 31, 2021 – $1,385,000). The facility bears interest at the prime rate plus 1.25% per annum and is secured by general security agreements representing a first charge on the Company’s assets.

9

Canada Emergency Business Account (CEBA) loans

On May 12, 2020, HIRE Technologies and ProVision received CEBA loans totalling $80,000. The acquisitions of The Headhunters on September 1, 2020 and Taylor Ryan on December 17, 2020 added another $120,000. The CEBA loans bear no interest until December 31, 2022 and bear interest at 5% per annum thereafter and to their December 31, 2025 maturity date. If 75% of the principal is repaid by December 31, 2022, the remaining 25% will be forgiven.

In October 2020, the Government of Canada announced its intention to expand CEBA loans to $60,000, of which $20,000 will be forgiven if repaid by December 31, 2022. HIRE Technologies, ProVision and The Headhunters received the additional $20,000, respectively. As of June 30, 2021, the total principal outstanding was $260,000 in aggregate.

The CEBA loans assumed from The Headhunters and Taylor Ryan were initially recorded at fair value as part of the purchase price allocation and are subsequently recognized at amortized cost using the effective interest method with a carrying value of $72,979 at June 30, 2021.

The Company used the effective interest method to calculate the carrying value of the CEBA loans received by HIRE Technologies and ProVision and the CEBA expansions received by HIRE Technologies, ProVision and The Headhunters. As at June 30, 2021, the carrying value was $122,493.

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements

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10 Trade and other payables

Trade payables Payroll, bonuses and sales tax payable Payable to former owner of ProVision Earn-out payable to former owner of ProVision Other accrued liabilities	June 30, 2021 $ December 31, 2020 $ 987,881 309,941 1,575,076 851,363 12,262 316,961 69,644 61,707 1,289,755 692,639
	3,934,618 2,232,611

11 Lease liability

The following table presents the lease liability for the Company:

Balance – December 31, 2020 Additions Principal payments Terminations Balance – June 30, 2021	Office premises $ Total $ 390,682 390,682 - - (105,359) (105,359) - -
	285,323 285,323

Interest expense on these lease obligations for the six months ended June 30, 2021 was $7,867. The total cash outflow for the six months ended June 30, 2021 was $113,226, including interest.

The minimum lease payments under the current lease agreements are as follows:

2021 2022 2023 Less: Imputed interest at average 4.9% Current portion Long-term portion	$ 75,689 142,685 80,550
	298,924 13,601
	285,323
	143,180 142,143
	285,323

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements

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12 Long-term payables

Long-term payables
Earn-out payable to former owner of ProVision Contingent consideration and deferred compensation related to acquisitions	June 30, 2021 $ December 31, 2020 $ 5,971 40,327 1,782,581 1,328,488
	1,788,552 1,368,815

13 Convertible debentures

On August 21 and 24, 2020, the Company closed a private placement of unsecured convertible debentures for gross proceeds of $2,419,000. The convertible debentures bear interest at 9% per annum, payable semiannually in arrears in cash or at the option of the Company in shares. The securities mature on July 31, 2023 and are convertible at $0.30 per unit at any time prior to the maturity date with each unit consisting of one common share and one common share purchase warrant with each warrant entitling the holder to purchase one common share at a price of $0.60 at any time prior to the maturity date. The securities can also be converted at the option of the Company after one year should the daily volume weighted average trading price of the Company exceed $0.65 for a period of 10 consecutive trading days. The convertible debentures are a compound financial instrument under IAS 32 – Financial Instruments, and have both a liability and an embedded derivative component. The convertible debentures were recognized at $2,419,000 less $56,930 in warrants and $86,072 in cash paid as finders fees.

In January 2021, 1,626,666 convertible debentures were converted into 1,626,666 common shares with a fair value of $1,259,122 and 1,626,666 warrants with a fair value of $426,647. In March 2021, 816,666 convertible debentures were converted into 816,666 common shares with a fair value of $452,774 and 816,666 warrants with a fair value of $123,190. In May 2021, 166,667 convertible debentures were converted into 166,667 common shares with a fair value of $67,435 and 166,667 warrants with a fair value of $9,645. The amounts attributed to common shares and warrants are based on relative fair values at each conversion date. The fair value of the warrants was estimated using the Black-Scholes option pricing model. Model inputs included a risk-free rate of 6%, volatility calculated using the weighted average of historical volatility and the S&P/TSX Small Cap Index of 39%, expected dividend yield of $nil, and expected life to July 23, 2023. The portion of transaction costs included in the convertible debentures of $46,288 related to the conversions described above have been reflected in selling, general and administrative expenses.

The convertible debenture is carried at amortized cost and as at June 30, 2021, the convertible debenture is recognized at $1,662,271. Accreted interest for the six months ended June 30, 2021 was $26,039. The derivative was separated as a FVTPL instrument and is remeasured at each reporting period with subsequent changes in fair value recorded in the condensed consolidated interim statements of income (loss) and comprehensive income (loss). As at June 30, 2021, the fair value of the derivative was determined to be $920,583. A gain of $423,815 was recorded on derivatives settled as part of the debenture conversions during the quarter, representing the difference in the fair value between January 1, 2021 and the settlement dates. An unrealized gain of $3,746,869 was recorded on derivatives related to outstanding convertible debentures as at June 30, 2021.

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements

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14 Share capital

Authorized unlimited number of common shares:

As at December 31, 2020 Common shares issued for cash on exercise of warrants and stock options Common shares issued from debenture conversion Common shares issued from business combination Common shares issued to settle acquisition holdback As at June 30, 2021	Common shares Amount $ 56,888,479 17,541,250 466,918 285,374 2,609,999 1,779,331 3,143,607 1,791,856 206,709 140,000
	63,315,712 21,537,811

15 Share-based payments

Stock options and warrants

Share purchase warrants and stock option transactions are summarized as follows:

Outstanding and exercisable as at December 31, 2020 Exercised Issued Expired Outstanding and exercisable as at June 30, 2021	Warrants Number of warrants Weighted average exercise price $ 9,559,517 0.523 (202,475) 0.839 2,609,999 0.600 - -		Stock options
		Number of options 2,663,770 - 895,000 (50,500)	Weighted average exercise price $ 0.267 - 0.537 0.579
	11,967,041 0.654	3,508,270	0.331

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

For the six months ended June 30, 2021, the Company issued 895,000 options that are each exercisable for one common share. The fair value of these options was estimated using the Black Scholes option pricing model. Common model inputs across all issuances were volatility calculated using the weighted average of historical volatility and the S&P/TSX Small Cap Index of 37% and an expected dividend yield of $nil. The unique model inputs and estimated fair values of each issuance are as follows:

• March 22, 2021: 362,000 options exercisable at $0.66 with a maturity date of five years with a calculated fair value of $0.223 using a market price of $0.66, a risk-free rate of 0.99%, and an expected life of five years for a total cost of $80,726. These options immediately vested.

• April 1, 2021: 100,000 options granted for which 50,000 options are immediately exercisable at $0.55 with a maturity date of five years with a calculated fair value of $0.199 using a market price of $0.57, a risk-free rate of 0.97%, and an expected life of five years for a total cost of $9,950 as of June 30, 2021. The remaining 50,000 options will vest contingent on performance targets being met.

• April 16, 2021: 23,000 options exercisable at $0.60 with a maturity date of March 16, 2022 with a calculated fair value of $0.094 using a market price of $0.61, a risk-free rate of 0.18%, and an expected life of one year for a total cost of $2,162.

• April 28, 2021: 400,000 options granted to be exercisable at $0.45 with a maturity date of three years with a calculated fair value of $0.116 using a market price of $0.45, a risk-free rate of 0.48%, and an expected life of three years. The options vest equally on a quarterly schedule beginning July 28, 2021.

• May 5, 2021: 10,000 options granted to be exercisable at $0.66 with a maturity date of five years with a calculated fair value of $0.096 using a market price of $0.45, a risk-free rate of 0.91%, and an expected life of five years. The options vest on November 5, 2021.

For the six months ended June 30, 2021, a share-based compensation expense of $92,838 was recognized in selling, general and administrative expenses.

For the six months ended June 30, 2021, 27,500 issued options expired upon employee resignation and 161,000 expired upon termination of a consulting agreement.

For the six months ended June 30, 2021, 2,609,999 warrants were issued upon conversion of 2,609,999 convertible debenture units with each warrant exercisable at $0.60 for one common share with maturity dates of July 31, 2023 and July 31, 2024.

During the six months ended June 30, 2020, there were no warrants or options issued.

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements

(Unaudited) Error! AutoText entry not defined. June 30, 2021

16 Revenue

The Company has three revenue streams as follows:

Recurring contracts On-occurrence permanent placements Software as a Service	Three months ended June 30, 2021 $ Three months ended June 30, 2020 $ Six months ended June 30, 2021 $ 4,562,376 2,473,127 8,438,061 1,809,733 124,365 3,424,377 13,881 - 13,881	Six months ended June 30, 2020 $ 5,185,885 314,393 -
	6,385,990 2,597,492 11,876,319	5,500,278

On April 1, 2021, the Company began recognizing subscription revenue from clients under SaaS arrangements with Pulsify. Revenue is recognized over the SaaS subscription term. $13,881 was recognized as of June 30, 2021.

17 Nature of expenses

Selling, general and administrative expenses comprise the following:

Salaries Professional fees Office Marketing Depreciation Bad debt expenses Bank charges Travel and entertainment Government assistance (note 21) Severance Disposals

Three months ended June 30, 2021 $ Three months ended June 30, 2020 $ Six months ended June 30, 2021 $ Six months ended June 30, 2020 $ 2,210,054 603,161 4,128,915 1,430,753 624,912 412,793 990,077 639,451 419,340 166,476 780,406 297,981 104,334 18,926 171,047 82,816 34,442 36,602 67,733 106,055 22,408 106,173 47,463 107,784 18,908 6,884 32,817 18,200 3,084 75 15,343 69,203 (28,601) - (61,645) - 42,000 240,096 42,000 240,096 37,155 - 37,155 -

3,488,036 1,591,186 6,251,311 2,992,339

18 Related party transactions

Key management compensation

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

Key management are those persons having authority and responsibility for planning, directing and controlling activities, directly or indirectly, of the Company.

Cash compensation	Three months ended June 30, 2021 $ Three months ended June 30, 2020 $ Six months ended June 30, 2021 $ 147,246 152,262 355,937	Six months ended June 30, 2020 $ 320,809

19 Capital management

The Company’s management is responsible for ensuring that entities in the Company are able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of shareholders’ equity (deficit), which was $4,983,112 as at June 30, 2021 (December 31, 2020 – deficit of $1,336,160); bank indebtedness, which is $1,490,000 (December 31, 2020 – $465,000); CEBA loans with a face value of $260,000 and a carrying value of $195,472 as at June 30, 2021 (December 31, 2020 – face value of $200,000 and a carrying value of $141,851); and convertible debentures, with a face value of $1,636,000 and a carrying value of $1,662,271 as at June 30, 2021 (December 31, 2020 – face value of $2,419,000 and a carrying value of $2,288,726).

The Company’s management develops capital management policies and strategies that are reviewed by the Board of Directors on a quarterly basis. Based on recommendations of the Board of Directors, the Company balances its overall capital structure through the payment of dividends, new share issues and share buybacks as well as the issuance of new debt or the redemption of existing debt. There have been no changes in how the Company manages capital since its formation.

20 Financial instrument risks

The Company is exposed to risks that arise from its use of financial instruments as described below. There has been no change in the way the Company manages risk during the year.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s sensitivity to interest rates is currently low due to limited exposure to long-term investment grade interest-bearing debt as at June 30, 2021.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s credit risk relates primarily to trade and other receivables,

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

which are initially recognized at the stated amount of the receivable and the convertible note issued to Atlas ID. The carrying amount of financial assets represents the maximum credit exposure.

The Company’s exposure to credit risk with its customers is influenced mainly by each customer’s unique characteristics. The Company does not require collateral for sales on credit. The Company does not offer significant credit terms and has not experienced significant credit losses on its continuing operations.

The Company monitors its collection experience monthly and ensures a stringent policy is applied to all past due accounts. The Company establishes an allowance for expected credit losses that corresponds to specific customers’ credit risk, historical trends and economic circumstances. Subsequent recoveries of amounts previously written off are credited in the condensed consolidated interim statements of income (loss) and comprehensive income (loss). The Company’s maximum credit risk is the carrying value of trade and other receivables.

To limit credit risk exposure, the Company places its cash at financial institutions with high quality investment grade credit ratings.

Liquidity risk

Liquidity risk is the risk that the Company may encounter difficulty in meeting its obligations associated with its financial liabilities. As at June 30, 2021, most of the Company’s liabilities are regular monthly obligations except for the earn-out consideration payable to ProVision’s shareholders, the amount payable to the former owner of ProVision and the contingent consideration payable to shareholders of The Headhunters and The Kavin Group as discussed in notes 10 and 12. The Company has the following undiscounted contractual payment obligations:

Remaining trade and other payables Payable to former owner of ProVision Earn-out payments Contingent consideration Lease liability CEBA loans Convertible debenture	2021 $ 2022 $ 2023 $ 1,663,235 - - 12,262 - - 37,366 88,914 125,650 - 1,328,487 - 75,689 142,685 80,550 - 195,472 - 1,662,271 - -	2024 $ - - 62,825 - - - -
	3,450,823 1,755,558 206,200	62,825

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market pricing, foreign currency and interest rates. As at June 30, 2021 and 2020, the carrying value of all financial instrument carrying values approximated fair value.

21 Government assistance

The Company has participated in grants offered by the government of Canada to help offset the negative impact of the COVID-19 pandemic. The Company participated in the Canada Emergency Wage Subsidy (CEWS). program. CEWS provides qualifying companies with a monthly financial support grant based on payroll, subject to certain limits. Eligibility is triggered by and scaled according to the reduction in year-over-year Canadian revenue on a month-by-month basis. As of June 30, 2021, the Company recognized government grant income as a reduction in cost of services in the amount of $56,563 and as a reduction in selling, general and administrative expenses in the amount of $54,405.

The Company also participated in Canada Emergency Rent Subsidy (CERS) program. CERS provides qualifying companies with a subsidy based on eligible expenses, subject to certain limits. Eligibility is triggered by and scaled according to the reduction in year-over-year Canadian revenue on a month-by-month basis. As of June 30, 2021, the Company recognized government grant income as a reduction in selling, general and administrative expenses, in the amount of $7,240. The Company recognized $12,083 as effective interest income on CEBA loans for the six months ended June 30, 2021.

22 Subsequent events

On August 6, 2021, the Company announced a private placement of up to $3,000,000 in equity units at a $0.30 per unit. Each unit will include one common share and one half of one share purchase warrant with each whole warrant exercisable for one common share for a period of 24 months at $0.45 per common share. The Company will pay finders fees consisting of non-transferrable warrants entitling the holder to purchase that number of common shares as is equal to 7% of the units and a cash payment equal to 7% of the gross proceeds raised. Each finders warrant will be exercisable for one common share at a price of $0.30 until 24 months after the date of issue. The proceeds of the financing will be used for the acquisition discussed below.

On August 6, 2021, the Company announced a non-revolving term loan facility with FirePower Capital to be drawn in three tranches at $3,000,000, $1,000,000 and $1,000,000, respectively. The non-revolving term loan facility bears interest at 12% and is secured over all of the present and future property of the Company. As part of the first $3,000,000 tranche of the non-revolving term loan facility, the Company will issue 2,613,493 share purchase warrants to FirePower Capital entitling it to purchase that number of common shares at a price of $0.383 for a period of 36 months after the date of issue with a cashless exercise feature. The Company will issue additional warrants with the remaining tranches with aggregate value equal to 5% of the tranche amount at an exercise price equal to the five-day volume weighted average market price of the common shares of the Company at the time of disbursement plus 10% and subject to the approval of the TSX Venture Exchange. The proceeds of the financing will be used for the acquisition discussed below.

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HIRE Technologies Inc. Notes to Condensed Consolidated Interim Financial Statements (Unaudited) Error! AutoText entry not defined. June 30, 2021

On August 6, 2021, the Company announced the acquisition of Leaders and Co., Consulting in Governance and Leadership Inc. for $6,500,000 consisting of $4,400,000 in cash, $1,100,000 in common shares of the Company and $1,000,000 in earn-out payable over three years in cash subject to maintaining minimum earnings before interest, taxes, depreciation, and amortization over the next three years. The cash payment of $4,400,000 will also be subject to closing working capital adjustment.

On August 6, 2021, the engagement agreement for the brokered convertible debenture financing of up to $5,000,000, announced by the Company on May 12, 2021, between the Company and Eight Capital was mutually terminated.

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