HIRE Technologies Inc. — Interim / Quarterly Report 2022

Nov 24, 2022

Condensed Consolidated Interim Financial Statements (unaudited) September 30, 2022

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, HIRE Technologies Inc. discloses that an auditor has not reviewed the unaudited condensed consolidated interim financial statements for the periods ended September 30, 2022 and September 30, 2021.

Condensed Consolidated Interim Statements of Financial Position (Unaudited) As at September 30, 2022 and December 31, 2021

	September 30,2022$	December 31,2021$
Assets
Current assetsCashTrade and other receivables (note 4)Sales tax receivable	307,1655,908,952252,672	1,742,8515,543,21884,972
Prepaid expenses	330,052	358,635
	6,798,841	7,729,676
Non-current assetsProperty and equipment (note 5)Goodwill (note 6)Intangible assets (note 6)Investments (note 7)	317,8019,433,7155,007,474288	437,8009,703,4926,291,4491,207
	14,759,278	16,433,948
	21,558,119	24,163,624
Liabilities
Current liabilitiesBank indebtedness (note 8)Trade and other payablesPayroll and bonuses payablePayable to former shareholders of Taylor Ryan (note 10a)Payable to former shareholders of other acquisitions (note 10b)Other accrued liabilitiesLease liability (note 11)Income tax payableDeferred revenueConvertible debentures (note 14)Derivatives (note 14)	1,490,000688,285316,8879,595,0935,496,7822,169,685125,028851,003432,4881,643,023-22,808,274	1,385,000779,8811,986,68850,0003,280,9411,166,377175,391551,64610,1321,682,533169,07411,237,663
Long-term liabilitiesLoans (note 9)Lease liability (note 11)Long-term payables (note 12)Term debt facility (note 13)Deferred tax liabilities	183,335-652,0972,836,3631,175,3164,847,111	188,56789,2314,562,4132,772,2701,293,5328,906,013
	27,655,385	20,143,676
Shareholders' equity(deficit)
Share capital (note 15)Reserves	27,127,0893,115,525	27,073,2732,514,916
Deficit	(36,339,880)	(25,568,241)
	(6,097,266)	4,019,948
	21,558,119	24,163,624

Approved by the Board of Directors Basis of measurement and going concern (note 2(a))

___________________________________ Director ________________________________ Director

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

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

For the periods ended September 30, 2022 and 2021

	Three monthsendedSeptember 30,2022$	Three monthsendedSeptember 30,2021$	Nine monthsendedSeptember 30,2022$	Nine monthsendedSeptember 30,2021$
Revenue(note 17)	7,702,503	7,728,382	26,175,099	19,604,701
Cost of services	4,235,992	4,328,182	13,181,327	11,421,281
Gross profit	3,466,511	3,400,200	12,993,772	8,183,420
Expenses
Selling, general and administrative (note 18)Amortization of intangible assets (note 6)InterestImpairment loss (note 6)Loss on revaluation of contingent consideration,net (note 10)	3,691,672184,354188,5051,398,696133,8405,597,067	3,677,940208,515129,295--4,015,750	12,010,641553,063192,7191,398,6961,912,91916,068,038	9,929,251498,718339,220--10,767,189
Loss from operationsRealized gain on convertible debenturederivatives (note14)Other realized gains(note 15)	(2,130,556)--	(615,550)--	(3,074,266)-19,804	(2,583,769)423,815-
Contingent remuneration(note 10)	(3,020,899)	-	(5,502,852)	-
Profit share(note 10)	(735,770)	-	(1,442,774)	-
Net unrealized gain (loss) on mark-tomarket (note 14)	(167,977)	(88,798)	117	3,406,576
Income (loss) before income taxes	(6,055,202)	(704,348)	(9,999,971)	1,246,622
Current income tax expense	155,301	237,204	889,883	480,338
Deferred income tax expense (recovery)	(46,040)109,261	(19,148)218,056	(118,216)771,667	(95,252)385,086
Net income (loss) and comprehensiveincome (loss)	(6,164,463)	(922,404)	(10,771,638)	861,536
Supplemental disclosure
Basic earnings (loss) per shareWeighted number of sharesFully diluted earning (loss) per shareWeighted number of shares	(0.07)84,645,676(0.07)84,645,676	(0.01)67,402,322(0.01)66,633,858	(0.13)84,144,696(0.13)84,144,696	0.0163,158,330(0.04)68,997,889

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

Condensed Consolidated Interim Statements of Changes in Equity (Unaudited) For the periods ended September 30, 2022 and 2021

	Commonshares	Amount$	Reserves$	Deficit$	Total$
Balance –January 1, 2021	56,888,479	17,541,250	1,317,628	(20,195,038)	(1,336,160)
Issuance of common shares from warrantsIssuance of common shares from debenture	466,918	285,374	(113,549)	-	171,825
conversionIssuance of common shares from business	2,609,999	1,779,331	559,482	-	2,338,813
combinationIssuance of common shares to settle	6,703,477	2,891,856	-	-	2,891,856
acquisition holdbackIssuance of common shares to settle	206,709	140,000	-	-	140,000
interestIssuance of common shares under brokered	204,501	73,620	-	-	73,620
financingIssuance of finder's warrants related to	14,710,292	3,870,678	332,219	-	4,202,897
brokered financing	-	-	104,143	-	104,143
Issuance of lender's warrants	-	-	103,233	-	103,233
Share based compensation expenseNet income and comprehensive income for	-	-	104,438	-	104,438
the period	-	-	-	861,536	861,536
Balance –September 30, 2021	81,790,375	26,582,109	2,407,594	(19,333,502)	9,656,201

	Commonshares	Amount$	Reserves$	Deficit$	Total$
Balance –January 1, 2022	83,888,640	27,073,273	2,514,916	(25,568,241)	4,019,948
Issuance of common shares to settle interest(note 15)Share based payment (note 16)Net loss and comprehensive loss for theperiod	717,536--	53,816--	-600,608-	--(10,771,638)	53,816600,608(10,771,638)
Balance –September30, 2022	84,606,176	27,127,089	3,115,524	(36,339,880)	(6,097,266)

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

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the periods ended September 30, 2022 and 2021

	Nine monthsendedSeptember 30,2022$	Nine monthsendedSeptember 30,2021$
Cash provided by (used in)
Operating activitiesNet income (loss) and comprehensive income (loss) for the periodAdjustments to reconcile net loss to net cash provided by (used in) operating activities	(10,771,638)	861,536
Depreciation (note 5)Amortization of intangible assets (note 6)Income tax expenseShare-based compensation expenseInterest expenseBad debt expenseLoss on revaluation of contingent consideration, net (note 10)Realized gain on convertible debenture derivatives (note 14)Impairment loss (note 6)Other realized gains (note 15)Unrealized gain on mark-to-market – net (note 14)Taxes paidInterest paidChanges in non-cash working capital balancesTrade and other receivablesSales taxes receivable	156,287553,063889,883600,608192,72039,0911,912,919-1,398,696(19,804)(117)(587,898)(467,809)(519,569)(167,700)	118,570498,718385,086104,43865,077--(3,406,576)----(2,795,787)-
Prepaid expensesTrade and other payablesDeferred revenue	28,5834,884,770422,356(1,573,775)	21,9532,647,224-(1,923,576)
Investing activitiesPurchase of property and equipment (note 5)Acquisition of Leaders – purchase price adjustment (note 3a)Acquisition of Leaders – net of cash required (note 3)	(36,288)269,777-	(44,778)-(4,599,569)
	233,489	(4,644,437)
Financing activitiesIncrease in bank indebtedness (note 8)Increase in term debt (note 13)Increase in CEBA loans (note 9)Lease payments (note 11)Earn-out and contingent payments (note 10)Issuance of common shares	105,000--(139,594)(60,806)-	1,020,0003,000,00053,620(142,547)(179,270)4,854,061
	(95,400)	8,605,864
Change in cash during the period	(1,435,686)	2,037,941
Cash – Beginning of period	1,742,851	340,638
Cash – End of period	307,165	2,378,579

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

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 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"), Leaders and Co., Consulting in Governance and Leadership Inc. ("Leaders") and BTG Holdco Inc. ("BTG Holdco" and 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

a) Basis of measurement and going concern

These condensed consolidated interim financial statements have been prepared on a going concern basis in accordance with International Financial Reporting Standards (IFRS) 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 and commitments in the normal course of operations.

For the nine months ended September 30, 2022, the Company incurred negative cash flows from operations of $1,435,686, recorded a loss from operations of $10,771,638 and has an accumulated deficit of $36,339,880. The Company has raised debt and equity financing in previous years in order to pursue acquisitions and fund its ongoing operations.

The Company operates in a highly competitive environment with low barriers to entry in which it is reliant on management's continued ability to retain key employees, source eligible candidates to meet client needs and retain clients or market share. The Company's ability to continue as a going concern is dependent on its ability to execute on its business strategy, the achievement of a profitable level of operations, including streamlining head office overhead expenses and management's ability to manage its working capital, which will require the Company to raise additional funds or obtain alternative financing. 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, be able to settle the related debt or equity service costs through the issuance of additional equity, or that such financing will be on terms acceptable to the Company. The Company is also required to comply with certain financial covenants associated with its term debt facility. 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 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 on the Company's ability to continue as a going concern. These condensed consolidated interim financial statements do not give

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

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.

b) Statement of compliance

The unaudited interim condensed consolidated financial statements of the Company have been prepared by management under International Financial Reporting Standards ("IFRS") in accordance with International Accounting Standard 34, "Interim Financial Reporting" ("IAS 34") as issued by the International Accounting Standards Board ("IASB") and interpretations of the IFRS Interpretations Committee ("IFRIC").

These unaudited interim condensed consolidated financial statements follow the same accounting policies and method of computation as the Company's annual audited consolidated financial statements for the year ended December 31, 2021, except for certain disclosures that are normally required to be included in annual consolidated financial statements which have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the Company's audited annual consolidated financial statements for the year ended December 31, 2021.

These unaudited interim condensed consolidated financial statements were authorized for issue by the Company's Board of Directors on November 22, 2022.

c) 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.

d) 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 revenue and expenses during the reporting period. Estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The judgements, estimates, and assumptions applied in these interim condensed consolidated financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Company's audited annual consolidated financial statements for the year ended December 31, 2021.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

3 Acquisitions

a) Acquisition of Leaders

On August 27, 2021, the Company acquired 100% of the issued and outstanding shares of Leaders for total consideration of $7,327,333, consisting of $4,577,317 in cash, $1,100,000 in common shares of the Company, $592,954 paid in cash as a working capital adjustment, and $1,057,062 in deferred consideration payable. Included in the share purchase agreement are amounts owing that are conditional on employment and based on meeting specific conditions. The cash investment in Leaders, net of cash acquired, was $5,202,346. Contingent remuneration of $200,936 was recognized in selling, general and administrative expenses for the nine months ended September 30, 2022 (see note 10).

The fair value of the assets acquired and liabilities assumed were as follows:

	$
AssetsCash acquired in business combinationTrade and other receivablesPrepaid expensesProperty and equipmentDeferred income tax assetIntangible assets –brandIntangible assets –customer relationshipsGoodwill	87,925856,467-60,172-953,0001,220,0005,047,2308,224,794
LiabilitiesBank indebtednessTrade and other payablesIncome tax payableDeferred income tax liabilities on intangible assets	-212,03468,772616,655897,461
Net	7,327,333
ConsiderationCashIssuance of common sharesWorking capital adjustmentDeferred consideration	4,577,3171,100,000592,9541,057,062
Total	7,327,333

During the year, an additional $398,007 in goodwill was recognized for working capital delivered on closing.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

b) Acquisition of Pulsify Inc.'s 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, 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 fair value of the assets acquired and liabilities assumed were as follows:

	$
AssetsIntangible assets –trademarkIntangible assets –technologyGoodwill	109,316995,148970,358
	2,074,822
LiabilitiesDeferred revenue	47,371
Net	2,027,451
ConsiderationIssuance of common sharesContingent consideration	1,791,856235,595
Total	2,027,451

The Company finalized the purchase price accounting for Pulsify in 2022. During the quarter ended December 31, 2021, a fair value adjustment to $nil was recognized on the initial contingent consideration of $235,595 recorded at acquisition, resulting in a revaluation gain.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

c) Acquisition of Taylor Ryan

On December 17, 2020, the Company acquired 100% of the issued and outstanding shares of predecessor operating companies and holding companies that comprised Taylor Ryan for total consideration of $4,471,169, 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 $359,169 paid in cash as a working capital adjustment. The cash investment in Taylor Ryan, net of cash acquired, was $3,290,659. Contingent remuneration of $5,301,916 was recognized in selling, general and administrative expenses for the nine months ended September 30, 2022 (see note 10).

The fair values of the assets acquired and liabilities assumed were as follows:

	$
AssetsTrade & other receivablesProperty and equipmentDeferred rent receivableIntangible assets –brandIntangible assets –customer relationshipsGoodwill	521,47579,25483,456444,0001,377,0002,732,191
	5,237,376
LiabilitiesBank indebtednessTrade and other payablesLease liabilitiesDeferred income tax liabilities on intangible assets	46,028143,49385,016491,670766,207
Net	4,471,169
ConsiderationCashIssuance of common sharesWorking capital adjustment	3,290,000822,000359,169
Total	4,471,169

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

d) 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 $1,832,817, consisting of $1,026,586 in cash, $200,000 in common shares of the Company (321,543 shares at $0.622 per share), $231,281 receivable as working capital adjustment and $837,512 in contingent consideration payable. The cash investment in Kavin Group, net of cash acquired, was $983,618.

The fair values of the assets acquired and liabilities assumed were as follows:

	$
AssetsCash acquired in business combinationTrade and other receivablesPrepaid expensesProperty and equipmentDeferred income tax assetIntangible assets –brandIntangible assets –customer relationshipsGoodwill	42,968302,76823,88810,21148,078451,000309,0001,108,2522,296,165
LiabilitiesTrade and other payablesDeferred income tax liabilities on intangible assets	261,948201,400463,348
Net	1,832,817
ConsiderationCashIssuance of common sharesWorking capital adjustmentContingent consideration	1,026,586200,000(231,281)837,512
Total	1,832,817

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

e) 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 values of the assets acquired and liabilities assumed were as follows:

	$
AssetsCash acquired in business combinationTrade and other receivablesPrepaid expensesProperty and equipmentDeferred income tax assetIntangible assets –brandIntangible assets –customer relationshipsGoodwill	160,768506,18656,7386,36239,557184,000345,243398,918
	1,697,772
LiabilitiesBank indebtednessTrade and other payablesDeferred income tax liabilities on intangible assets	21,905580,582140,249742,736
Net	955,036
Consideration
CashWorking capital adjustmentContingent consideration	400,00064,062490,974
Total	955,036

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

4 Trade and other receivables

	September30,2022$	December 31,2021$
Trade and other receivablesAllowance for credit losses	6,201,422(61,190)	5,580,468(37,250)
	5,908,952	5,543,218

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.

	September30,2022$	December 31,2021$
Balance –Beginning of periodProvision for credit lossesWrite offs	37,25039,091(15,151)	18,164201,920(182,834)
Balance –End of period	61,190	37,250

5 Property and equipment

	Right-of-useassets$	Computerequipment$	Furnitureandequipment$	Leaseholdimprovements$	Total$
Cost
As at December 31, 2021Addition	521,786-	138,00836,288	161,681-	28,731-	850,20636,288
As at September30, 2022
	521,786	174,296	161,681	28,731	886,494
Accumulated depreciation
As at December 31, 2021Depreciation	328,96789,260	20,30939,765	41,02020,641	22,1116,620	412,407156,286
As at September30, 2022	418,227	60,074	61,661	28,731	568,693
Net book valueAs at December 31, 2021	192,819	117,699	120,661	6,621	437,800
As atSeptember30, 2022	103,559	114,222	100,020	-	317,801

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

6 Intangible assets and goodwill

	Goodwill$	Customerrelationship$	Candidatedatabase$	Brandnames$	Technology$	Totalintangibleassets$
CostAs at December 31,
2021	9,703,492	3,361,243	343,000	2,604,344	995,146	7,303,733
Addition (see note 3a)	398,007	-	-	-	-	-
As at September 30,2022	10,101,499	3,361,243	343,000	2,604,344	995,146	7,303,733
AccumulatedamortizationAs at December 31,
2021	-	612,228	250,784	-	149,272	1,012,284
Impairment	667,784	-	-	96,480	634,432	-
Amortization	-	412,379	13,832	-	126,852	553,063
As at September 30,2022	-	1,024,607	264,616	96,480	910,556	2,964,043
Net book valueAs at December 31,
2021	9,703,492	2,749,015	92,216	2,604,344	908,319	6,291,449
As at September 30,2022	9,433,715	2,336,636	78,384	2,507,864	84,590	5,007,474

Impairment testing for goodwill, customer relationships, candidate database and brand names

For the purposes of annual impairment testing, goodwill is allocated to the group of CGUs expected to benefit from the synergies of the business combinations in which the goodwill arises as set out below and is compared to their recoverable amounts. The Company has determined that its CGUs are PTC, ProVision, The Headhunters, The Kavin Group, Taylor Ryan, Pulsify, and Leaders, which are considered the smallest identifiable group of assets that generate cash flows that are largely independent of the cash flows from other assets in the group.

The Company assessed for indicators of impairment for goodwill and indefinite life intangible assets at every interim period. This assessment included a review of current and expected performance, market conditions and trends and changes to the Company's share price and market capitalization. As at September 30, 2022, indicators of impairment were identified at Pulsify and the recoverable amount of this CGU was approximately $100,000, which was lower than the carrying amount of $1,498,696. This resulted in an impairment loss of $1,398,696 for the period ended September 30, 2022.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

Carrying value of goodwill by CGU

	September 30,2022$	December 31,2021$
PTC	297,625	297,625
ProVision	611,923	611,923
The Headhunters	398,918	398,918
The Kavin Group	343,251	343,251
Taylor Ryan	2,734,768	2,734,768
Leaders	5,047,230	4,649,223
Pulsify	-	667,784
	9,433,715	9,703,492

7 Investments

Investment in New Wave Holdings Corp.

On February 1, 2021, The Headhunters was granted 114,963 restricted share units (RSUs) of New Wave Holdings Corp. (New Wave), in exchange for recruitment services. New Wave is listed on the Canadian Securities Exchange under the stock symbol SPOR.

The RSUs were initially assessed at $12,646 on the grant date. The fair value was $288 as at September 30, 2022 (December 31, 2021 - $1,207).

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 $3,225,809 as at September 30, 2022 (December 31, 2021, - $3,472,298). The balance outstanding on the facility was $1,490,000 as at September 30, 2022 (December 31, 2021 – $1,385,000). See Note 23 "Subsequent Events" for information regarding amendments that changed certain aspects of this revolving demand operating facility. 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 Canadian Emergency Business Account ("CEBA") loans

On May 12, 2020, HIRE Technologies and ProVision received CEBA loans totaling $80,000. The acquisitions of The Headhunters on September 1, 2020 and Taylor Ryan on December 17, 2020 added another $120,000 in total principal outstanding for a total aggregate amount of $200,000 outstanding as at December 31, 2020. 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.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

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. During 2021, HIRE Technologies, ProVision and The Headhunters each received the additional $20,000, respectively. As of September 30, 2022, the total principal outstanding was $260,000 in aggregate (December 31, 2021 - $260,000).

On January 12, 2022, the Government of Canada announced that the repayment deadline for CEBA loans to qualify for partial loan forgiveness is being extended from December 31, 2022 to December 31, 2023 for all eligible borrowers in good standing. The Company, as a CEBA borrower in good standing, will extend repayment to December 31, 2023. The Company will continue to recognize the CEBA loans as long-term.

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 $84,165 at September 30, 2022 (December 31, 2021 - $78,522). The difference between the fair value and the stated amount on initial recognition was recorded as goodwill.

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 September 30, 2022, the carrying value was $99,170 (December 31, 2021 - $110,045). The difference between fair value and the amounts received was recorded as government assistance.

10 Payable to former shareholders of Taylor Ryan and other acquisitions

(a) Payable to former shareholders of Taylor Ryan

	September 30,2022$	December 31,2021$
Contingent remuneration payable to former shareholders of Taylor
Ryan	9,212,323	50,000
Profit share payable to former shareholders of Taylor Ryan	382,770	-
	9,595,093	50,000

Contingent remuneration payable to the former shareholders of Taylor Ryan reflects earn-out amounts owing to the former shareholders, which are contingent on continued employment. The amount payable was estimated using cash-flows for the 12-month period preceding the second anniversary of the closing of the transaction. The fair value of the contingent remuneration was $9,212,323 as at September 30, 2022.

The aggregate contingent remuneration recorded for the nine months ended September 30, 2022 was $5,502,852 (September 30, 2021 – $nil).

The profit share payable to the former shareholders of Taylor Ryan reflects amounts payable but not settled, provided specific performance target conditions in the share purchase agreement are met. The profit share recorded for the three months and nine months ended September 30, 2022 was $735,770 and $1,442,774, respectively (September 30, 2021 – $nil).

See Note 23 "Subsequent Events" for information regarding the disposition of these amounts in Q4.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

b) Payable to former shareholders of other acquisitions

	September 30,2022$	December 31,2021$
Payable to former shareholders of ProVisionEarn-out payable to former shareholder of ProVisionContingent consideration to former shareholders of The HeadhuntersDeferred consideration to former shareholders of LeadersContingent remuneration payable to former shareholders of LeadersNet payable to former shareholders of The Kavin Group	4,770-4,782,948413,332263,60332,129	18,48841,8232,727,252398,58662,66732,125
	5,496,782	3,280,941

The payable to the former shareholders of ProVision consists of the earn-out payable but not settled totalling $4,770 ($18,488 – December 31, 2021). Earn-out payable to the former shareholders of ProVision is contingent consideration payable calculated for the period from January 1, 2022 until July 31, 2022. The fair value of the earn-out payable was $nil as at September 30, 2022.

The deferred consideration payable to the former shareholders of Leaders reflects payments of $413,333, $386,666, and $333,333 on each of the first, second, and third anniversaries of the closing of the transaction for a total of $1,133,332. The deferred consideration is payable provided specific conditions, including an adjustment should earnings before interest, taxes, depreciation, and amortization (EBITDA) not exceed a threshold of $1,100,000, in the share purchase agreement are met. A total of $1,065,430 has been recognized as a liability, with $413,332 included in short-term, and $652,098 included in long-term payables (see note 12 and note 23).

The contingent consideration payable to the former shareholders of The Headhunters was estimated using cash flows for the trailing twelve-month period preceding the second anniversary of the closing of the transaction. The fair value of the contingent consideration was $4,782,948 as at September 30, 2022, which reflects a revaluation loss of $155,948 for the three months ended September 30, 2022 and $2,055,696 for the nine months ended September 30,2022.

The contingent remuneration payable to former shareholders of Leaders was estimated using cash flows for the trailing twelve-month period preceding the first anniversary of the closing of the transaction. The fair value of the contingent remuneration was $263,603 as at September 30, 2022 (see note 23).

The payable to former shareholders of The Kavin Group consisted of contingent consideration estimated using cash flows for the trailing twelve months prior to the second anniversary of the closing date of the transaction. The contingent consideration was revalued to $263,410 as at September 30, 2022. The former shareholders of The Kavin Group owe the Company $231,281 from the working capital adjustment calculated at closing, which is netted against contingent consideration.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

11 Lease liability

The following table presents the lease liability for the Company:

	Officepremises$	Total$
Balance –December 31, 2021Principal payments	264,622(139,593)	264,622(139,593)
Balance –September30, 2022	125,028	125,028

On the acquisition of Taylor Ryan on December 17, 2020, the Company assumed the sublease of one of its offices. The right-of-use asset for this office had a remaining economic life of 21 months on closing, which corresponds to the terms of the sublease. The sublease has been recognized as a finance lease and, consequently, the Company has derecognized the right-of-use asset. $16,566 is included in trade and other receivables as rent receivable.

The Company received $12,596 in aggregate sub-lease income from the sublease of right-of-use assets for the three months ended September 30, 2022.

Interest expense on these lease obligations for the nine months ended September 30, 2022 was $6,650 (September 30, 2021 – $11,152). The total cash outflow for the nine months ended September 30, 2022 was $142,106, including interest (September 30, 2021 – $153,699).

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

	$
20222023	37,03890,738
Less: imputed interest at average 4.9%	127,7762,748
	125,028
Current portionLong-term portion	125,028-
	125,028

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

12 Long-term payables

	September 30,2022$	December 31,2021$
Contingent remuneration to former shareholders of Taylor RyanDeferred consideration to former shareholders of Leaders (note 10)	-652,097	3,910,407652,006
	652,097	4,562,413

The deferred consideration to former shareholders of Leaders was revalued to $1,065,431 as at September 30, 2022, of which $652,097 is payable in 2023 and 2024.

13 Term debt facility

On August 5, 2021, the Company entered into a non-revolving term facility, from an arm's-length provider of private capital (Lender) of $5,000,000 that can be drawn in three tranches of $3,000,000, $1,000,000, and $1,000,000 to be used for acquisitions. On August 27, 2021, the Company used $3,000,000 to fund a portion of its acquisition of Leaders. The loan bears interest at 12% per annum with monthly interest payments until August 27, 2024, at which point the entire facility comes due. See Note 23 "Subsequent Events" for information regarding amendments that changed certain aspects of this term debt facility. Financial covenants on the facility include (1) maximum debt to trailing six month annualized adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA") of 3.5x starting at February 27, 2022; (2) from August 27, 2021 to February 27, 2022 minimum trailing three month average adjusted EBITDA of $100,000 measured monthly; and (3) minimum debt service coverage ratio of 1.40:1.00 calculated as (a) trailing six month annualized adjusted EBITDA less capital expenditures divided by (b) current debt obligations and distributions to shareholders. As of the date of these Financial Statements, the Company is in compliance with the financial covenants currently in effect and applicable. The term debt facility was recognized at $3,000,000 adjusted for $154,078 in transaction costs and $103,233 in warrants (note 16) issued to the Lender with these amounts amortized using the effective interest method. The carrying value at September 30, 2022 was $2,836,363 (December 31, 2021 – $2,772,270).

14 Convertible debentures

On August 21 and 24, 2020, the Company closed a private placement of 8,063,333 unsecured convertible debentures for gross proceeds of $2,419,000. The convertible debentures bear interest at 9% per annum, payable semi- annually 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 hybrid financial instrument under IFRS 9 – Financial Instruments, and have both a liability

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

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 $1,276,347 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 were reflected in selling, general and administrative expenses.

The convertible debenture is carried at amortized cost and as at September 30, 2022, the convertible debenture is recognized at $1,643,660 ($1,682,533 – December 31, 2021). Accreted interest, net of coupon payment, for the nine months ended September 30, 2022 resulted in an adjustment of $38,873. The derivative was separated as a FVTPL instrument and is remeasured at each reporting period with subsequent changes in fair value recorded in the consolidated statements of loss and comprehensive loss. As at September 30, 2022 the fair value of the derivative was determined to be $nil ($169,074 – December 31, 2021). There were no realized gains recorded as there were no derivatives settled as part of the debenture conversions during the nine months ended September 30, 2022 (September 30, 2021 – $423,815). An unrealized loss of $169,074 was recorded on derivatives related to outstanding convertible debentures as at September 30, 2022 (September 30, 2021 - $3,406,576). 5,453,334 convertible debentures remain outstanding as a September 30, 2022 (September 30, 2021 – 5,453,334).

	Convertibledebenture#	Convertibledebenture$	Derivative$
December 31, 2021	5,453,334	1,682,533	169,074
Conversion	-	-	-
Accretion, net of coupon payment		(39,510)	-
Mark-to-market	-	-	(169,074)
September30, 2022	5,453,334	1,643,023	-

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

15 Share capital

Authorized unlimited number of common shares:

	Commonshares$	Amount$
As at December 31, 2021	83,888,640	27,073,273
Common shares issued to settle debenture interest	717,536	53,816
As at September30, 2022	84,606,176	27,127,089

Common shares issued during the nine months ended September 30, 2022

On July 20, 2022, the Company issued 717,536 common shares to settle the debenture interest of $73,620 from the outstanding units of the convertible debenture. A realized gain of $19,804 was recognized on the settlement.

16 Share based payments

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

		Warrants		Stockoptions
	Number ofwarrants	Weightedaverageexerciseprice$	Number ofoptions	Weightedaverageexerciseprice$
December 31, 2021	18,251,365	0.54	3,351,286	0.34
IssuedExpired	--	--	2,940,000(1,088,846)	0.090.58
Exercisable as atSeptember30, 2022	18,251,365	0.41	5,202,400	0.32
Unvested as atSeptember30, 2022	-	-	517,500	0.14
Outstanding atSeptember30, 2022	18,251,365	0.41	5,719,900	0.32

Share based compensation expense of $150,609 consist of the options, restricted share units, and deferred share unit issued and vested during the nine months ended September 30, 2022.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

Of the total, $117,125 was recorded for 2,940,000 options during the period. A Black-Scholes option pricing model was used to estimate the option issuance expense based on market price of $0.08 to $0.45, risk-free rate of 0.48% to 3.2% and volatility of $36.6% to 40.9%.

At September 30, 2022 and 2021, summaries of options outstanding are as follows:

September 30, 2022

Range of exercise prices	Numberoutstanding#	Weightedaverageexerciseprice$	WeightedaverageremaininglifeYears
$0.09to $0.20	3,351,924	0.12	3.99
$0.39to $0.66	1,850,516	0.44	2.39
	5,202,440	0.23	3.42

September 30, 2021

Range of exercise prices	Numberoutstanding#	Weightedaverageexerciseprice$	WeightedaverageremaininglifeYears
$0.19 to $0.39$0.52to $0.66	2,413,286844,000	0.260.55	3.593.76
	3,257,286	0.34	3.64

At September 30, 2022 and 2021, summaries of warrants outstanding are as follows:

September 30, 2022

Range of exercise prices	Numberoutstanding#	Weightedaverageexerciseprice$	WeightedaverageremaininglifeYears
$0.30to $0.39$0.45 to $0.60$0.70to $0.90	3,772,14811,021,7913,440,626	0.360.490.20	1.570.780.20
	18,234,565	0.41	0.83

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

September 30, 2021

Range of exercise prices	Numberoutstanding#	Weightedaverageexerciseprice$	WeightedaverageremaininglifeYears
$0.19 to $0.50$0.60 to $0.90	13,140,3189,702,833	0.370.73	1.421.12
	22,843,151	0.52	2.06

Deferred and Restricted share units

On December 17, 2019, the Company assumed the obligations to issue up to 1,250,000 Company common shares issuable under the terms of a deferred share unit plan, which remain outstanding as at September 30, 2022.

On June 28, 2022, the Company entered into obligations to issue up to 1,637,778 Company common shares, through 287,778 restricted share units and 1,350,000 deferred share units with a vesting date of June 28, 2023 under the terms of the Company's Long Term Incentive Plan. Of the total share based compensation, $33,484 in share based compensation expense was recognized as at September 30, 2022, using the graded vesting method where the estimated fair value of the restricted share units and deferred share units is amortized, by tranche, on a straight line basis over the vesting period, and accumulates in Reserves until settlement.

17 Revenue

The Company's revenue can be classified as follows:

	Three monthsendedSeptember30,2022$	Three monthsendedSeptember30,2021$	NinemonthsendedSeptember30,2022$	NinemonthsendedSeptember30,2021$
Recurring contract placements
and SaaSOn-occurrence permanent	4,817,217	5,155,745	15,646,975	13,607,687
placements	1,805,462	1,840,631	7,322,832	5,265,008
Executive searches	1,079,824	732,006	3,205,292	732,006
	7,702,503	7,728,382	26,175,099	19,604,701

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

18 Nature of expenses

The selling, general and administrative expenses comprised the following:

	Three monthsendedSeptember30,2022$	Three monthsendedSeptember30,2021$	NinemonthsendedSeptember30,2022$	NinemonthsendedSeptember30,2021$
Compensation	2,801,206	2,636,033	8,882,233	6,764,948
Professional fees	455,222	553,869	952,124	1,543,946
Office	197,686	376,188	1,326,282	1,143,152
Marketing	100,317	139,317	449,254	310,364
Bad debt expense (recovery)	-	(1,081)	39,091	46,382
Depreciation	54,752	37,395	156,287	118,570
Bank charges	23,716	20,659	55,718	53,476
Travel and entertainmentGovernment assistance (see	58,773	5,121	99,516	20,464
note21)	-	(89,561)	-	(151,206)
Severance	-	-	-	42,000
Disposals	-	-	-	37,155
	3,691,672	3,677,940	12,010,641	9,929,251

19 Related party transactions

Key management compensation

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

	Three monthsendedSeptember30,2022$	Three monthsendedSeptember30,2021$	NinemonthsendedSeptember30,2022$	NinemonthsendedSeptember30,2021$
Salaries, bonuses and others	334,652	129,007	1,041,487	499,996
Sharebased compensation	32,756	-	104,534	-
	367,408	129,007	1,146,021	499,996

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

20 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' deficit of $6,097,266 (December 31, 2021– equity of $4,019,948); bank indebtedness, which is $1,490,000 (December 31, 2021 – $1,385,000); CEBA loans with a face value of $260,000 and a carrying value of $183,335 (December 31, 2021 – $188,567); $3,000,000 drawn on an interest only term loan facility with a carrying value of $2,836,363 (December 31, 2021– $2,772,270); and convertible debentures, with a face value of $1,636,000 and a carrying value of $1,643,023 (December 31, 2021– $1,682,533).

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 buy backs 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.

21 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 period ended September 30, 2022.

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 September 30, 2022.

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, which are initially recognized at the stated amount of the receivable. 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 ECLs that corresponds to specific customers' credit risk, historical trends and economic circumstances. Subsequent recoveries of amounts previously written off are

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

credited in the consolidated statements of loss and comprehensive 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.

Concentration of credit risk

The Company has one significant customer that comprised a total of 36% of its revenue for the three months and 33% for the nine months ended September 30, 2022 (September 30, 2021 – 27% and 25%). No other customers exceeded 10% of revenue during the current or prior period. This customer comprised 15% of the Company's accounts receivable balance as at September 30, 2022 (December 31, 2021– 15%).

Liquidity risk

Liquidity risk is the risk that the Company may encounter difficulty in meeting its obligations associated with its financial liabilities. This risk is exacerbated by the current economic climate. As at September 30, 2022, most of the Company's liabilities are regular monthly obligations except for the contingent consideration payable to the former shareholders of The Headhunters (see note 10(b)), deferred consideration payable to the former shareholders of Leaders (see notes 10(b) and note 12), and contingent remuneration payable to the former shareholders of Leaders and Taylor Ryan (see note 10(a) and note 10(b)). In Q4, the Company has divested Taylor Ryan, opened discussions with the former shareholders of The Headhunters and The Leaders regarding forbearance of certain maturing obligations, launched efforts to refinance its senior debt, and undertaken efforts to raise additional equity and debt capital (see note 23). There is no assurance that the Company will be able to obtain forbearance, adequate financing, or be able to settle the related debt or equity service costs through the issuance of additional equity, or that such financing will be on terms acceptable to the Company. The Company has the following undiscounted contractual payment obligations:

	2022$	2023$	2024$	2025$
Trade and other payables	3,174,857	-	-	-
Contingent consideration	4,819,848	-	-	-
Contingent remuneration	9,475,926	189,000	207,650	219,050
Deferred consideration	413,333	386,666	333,333	-
Profit sharepayable	382,770	-	-	-
Lease liability	37,038	90,738	-	-
CEBA loans	-	180,000	-	-
Convertible debentures	-	1,636,000	-	-
Term debt facility	-	-	3,000,000	-
	18,303,771	2,482,404	3,540,983	219,050

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 September 30, 2022, the carrying value of all financial instrument carrying values approximated fair value.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

22 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 September 30, 2022, the Company recognized government grant income as a reduction in cost of services in the amount of $nil (September 30, 2021 – $94,475) and as a reduction in selling, general and administrative expenses in the amount of $nil (September 30, 2021 – $127,468).

The Company recognized $5,232 as effective interest income on CEBA loans for the nine months ended September 30, 2022 (September 30, 2021 – $31,918).

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 September 30, 2022, the Company recognized government grant income as a reduction in selling, general and administrative expenses, in the amount of $nil (September 30, 2021 - $23,738).

23 Subsequent events

On October 7, 2022, the Company announced the sale of Taylor Ryan, and the transaction was cashless. The purchasers received 100% of the shares of Taylor Ryan Inc., and will receive transitional services from HIRE after closing, for a period no longer than 12 months. In exchange, the Company received releases from obligations to pay contingent remuneration and profit share payable totaling $9,595,093. In Q4, the Company expects to record reductions in assets and liabilities related to Taylor Ryan, and this sale transaction will result in a gain, that will be recorded in Q4 2022. The numbers are considered provisional, subject to final audit.

As part of the transaction, certain changes were made to the Company's senior secured lending facilities. The Company made a payment of $300,000 to the Revolving Demand Operating Facility (Note 8) and the credit limit was reduced to $1,200,000, with subsequent paydowns and lowered credit limits of $200,000 scheduled for December 2022 through February 2023. The Term Debt Facility (Note 13) was amended to require paydowns of $300,000 scheduled for February 2023 through May 2023. Additionally, the Company purchased certain receivables of Taylor Ryan Inc. in exchange for a $1.0 million secured promissory note bearing interest at 8% per annum and maturing on October 7, 2025. Collections on the purchased Taylor Ryan receivables will be paid 70% to paydown the Term Debt Facility and 30% to paydown the Taylor Ryan promissory note. The Taylor Ryan promissory note will rank junior to the Company's senior secured lending facilities.

During October 2022 and November 2022, the Company has opened discussions with the former shareholders of The Headhunters and The Leaders regarding payment, forbearance, or restructuring, of unpaid matured obligations to those parties (see Note 10 and Note 21). Those discussions are on-going.

Notes to Condensed Consolidated Interim Financial Statements (Unaudited) September 30, 2022 and 2021

The Company has undertaken the task of replacing its senior lenders with new financing, the sources of which have yet to be finalized but which may include a combination of factoring, bank loans, private placement of equity capital and private placement of debt capital, or other possible sources of capital.

There is no assurance that the Company will be able to obtain forbearance, adequate financing, or be able to settle the related debt or equity service costs through the issuance of additional equity, or that such financing will be on terms acceptable to the Company.