Intermap Technologies Corporation — Management Reports 2021

Apr 1, 2021

Management’s Discussion and Analysis

For the year ended December 31, 2020

For purposes of this discussion, “Intermap[®] ” or the “Company” refers to Intermap Technologies[®] Corporation and its subsidiaries.

This management’s discussion and analysis (MD&A) is provided as of March 31, 2021 and should be read together with the Company’s audited Consolidated Financial Statements and the accompanying notes for the years ended December 31, 2020 and 2019. The results reported herein have been prepared in accordance with International Financial Reporting Standards (IFRS) and, unless otherwise noted, are expressed in United States dollars.

These audited consolidated financial statements have been prepared on a going concern basis in accordance with IFRS. The going concern basis of presentation assumes the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.

These consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern basis were not appropriate for these financial statements, then adjustments would be necessary to the carrying amounts of assets and liabilities, the reported expenses and the classifications used in the statements of financial position.

Additional information relating to the Company, including the Company’s Annual Information Form (AIF), can be found on the Company’s Web site at www.intermap.com and on SEDAR at www.sedar.com.

FORWARD-LOOKING STATEMENTS

In the interest of providing the shareholders and potential investors of Intermap Technologies[®] Corporation (“Intermap” or the “Company”) with information about the Company and its subsidiaries, including management’s assessment of Intermap’s[®] and its subsidiaries’ future plans, operations and financing alternatives, certain information provided in this MD&A constitutes forward-looking statements or information (collectively, “forward-looking statements”). Forward-looking statements are typically identified by words such as “may”, “will”, “should”, “could”, “anticipate”, “expect”, “project”, “estimate”, “forecast”, “plan”, “intend”, “target”, “believe”, and similar expressions suggesting future outcomes, and includes statements that actions, events, or conditions “may,” “would,” “could,” or “will” be taken or occur in the future. These forward-looking statements may be based on assumptions that the Company believes to be reasonable based on the information available on the date such statements are made, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties, and other factors which may cause actual results, levels of activity, and achievements to differ materially from those expressed or implied by such statements. The forward-looking information contained in this MD&A is based on certain assumptions and analysis by management of the Company in light of its experience and perception of historical

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trends, current conditions and expected future development and other factors that it believes are appropriate.

The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to, the following: (i) there will be adequate liquidity available to the Company to carry out its operations; (ii) payments on material contracts will occur within a reasonable period of time after contract completion; (iii) the continued sales success of Intermap’s products and services; (iv) the continued success of business development activities; (v) there will be no significant delays in the development and commercialization of the Company’s products; (vi) the Company will continue to maintain sufficient and effective production and software development capabilities to compete on the attributes and cost of its products; (vii) there will be no significant reduction in the availability of qualified and costeffective human resources; (viii) the continued existence and productivity of subsidiary operations; (ix) demand for geospatial related products and services will continue to grow in the foreseeable future; (x) there will be no significant barriers to the integration of the Company’s products and services into customers’ applications; (xi) the Company will be able to maintain compliance with applicable contractual and regulatory obligations and requirements, (xii) superior technologies/products do not develop that would render the Company’s current product offerings obsolete, and (xiii) expected impact of Covid-19 on the Company’s future operations and performance.

Intermap’s forward-looking statements are subject to risks and uncertainties pertaining to, among other things, cash available to fund operations, availability of capital, revenue fluctuations, nature of government contracts, economic conditions, loss of key customers, retention and availability of executive talent, competing technologies, continued listing of its common shares on the Toronto Stock Exchange or equivalent exchange, common share price volatility, loss of proprietary information, software functionality, internet and system infrastructure functionality, information technology security, breakdown of strategic alliances, and international and political considerations, including but not limited to those risks and uncertainties discussed under the heading “Risk Factors” in the annual MD&A and the Company’s other filings with securities regulators. Any one or more of the foregoing factors may be exacerbated by the ongoing COVID-19 pandemic and may have a significantly more severe impact on the Company’s business, results of operations and financial condition than in the absence of such pandemic.

We are closely monitoring the potential effects of the COVID-19 pandemic on our operations and financial performance; however, the extent of impact is difficult to fully predict at this time. We are conducting business with substantial modifications to employee work locations and travel, along with substantially modified interactions with customers. Proceeds from the government assistance programs in the United States and Canada have helped the Company to retain critical talent during this challenging time. We will continue to monitor the impact of the COVID-19 pandemic on all aspects of our business, including customer purchasing decisions, and may take further actions that alter our business operations. The impact of the COVID-19 pandemic on our operational and financial performance will depend on certain developments, including the duration and spread of the virus, the further impact on our customers and our sales cycles, the impact on business development and marketing activities, and further delays in customer projects and activities, all of which are uncertain and cannot

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be predicted. Due to our subscription-based business model for commercial customers and long sales cycle for government customers, the impact may not be fully reflected in our operations until future periods.

The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent, and the Company’s future course of action depends on Management’s assessment of all information available at the relevant time. Except to the extent required by law, the Company assumes no obligation to publicly update or revise any forward-looking statements made in this MD&A, whether as a result of new information, future events, or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company’s behalf, are expressly qualified in their entirety by these cautionary statements.

BUSINESS OVERVIEW

Intermap is a global geospatial intelligence company, creating a wide variety of geospatial solutions and analytics for its customers. Intermap is a premier worldwide provider of geospatial data solutions.

Intermap currently generates revenue from three primary business activities, composed of i) data acquisition and collection, using proprietary radar sensor technologies, ii) value-added data products and services, which leverage the Company’s proprietary NEXTMap[®] database, together with proprietary software and fusion technologies, and iii) commercial applications and solutions, including a webstore and software sales targeting selected industry verticals that rely on accurate high resolution elevation data.

These geospatial solutions are used in a wide range of applications including, but not limited to, location-based information, risk assessment, geographic information systems (GIS), engineering, utilities, global positioning systems (GPS) maps, oil and gas, renewable energy, hydrology, environmental planning, land management, wireless communications, transportation, advertising, and 3D visualization.

Intermap has the ability to create its own digital 3D geospatial data using its proprietary multi-frequency radar mounted in Learjet aircraft. Intermap’s radar-based technology allows it to collect data at any time of the day, including under conditions such as cloud and tree cover, or darkness, which are conditions that limit most competitive technologies. The Company’s proprietary radar also enables data to be collected over larger areas, at higher collection speeds, and at accuracy levels that are difficult to achieve with competitive technologies.

In addition to data collection, the Company is a world leader in data fusion, analytics, and orthorectification, and has decades of experience aggregating data derived from a number of different sensor technologies and data sources. The Company processes raw digital elevation and image data from its own and other sources to create three high resolution geospatial datasets that provide a ground-true foundation layer upon which accurate value-added products and services can be developed. The three high resolution data sets include digital surface models (DSM), digital terrain models (DTM), and orthorectified radar images (ORI). These datasets are further augmented with additional elevation and resolution data layers

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and served to customers by web service to create other value-added products, such as viewsheds, line of sight maps, and orthorectified mosaic tiles.

Unlike many geospatial companies, because of its unique acquisition and processing capability, Intermap retains exclusive ownership of its high resolution NEXTMap[®] database, which covers the entire globe. Intermap’s NEXTMap database, together with third party data and our in-house analytics team, provide a variety of applications and geospatial solutions for its customers. The NEXTMap database contains a fusion of proprietary multi-frequency radar imagery and data, including unique Interferometric Synthetic Aperture Radar (IFSAR)derived data, proprietary data models, and purchased third-party data, collected from multiple commodity sensor technologies, such as light detection and ranging (LiDAR), photogrammetry, satellite, and other available sources. The NEXTMap database also includes proprietary information developed by our analytical teams such as 3D city models, census data, real-time traffic, 3D road vectors, outdoor advertising assets, weather related hazards, points of interest, cellular towers, flood models and wildfire models.

The Company generates revenue by licensing its geospatial products using its proprietary data, analytics, and applications for specific industries.

FINANCIAL INFORMATION

The following table sets forth selected financial information for the periods indicated.

Selected Annual Information

U.S. $ millions, exceptper share data		2020		2019(1)		2018
Revenue:
Acquisition services	$	1.4	$	6.9	$	8.7
Value-added data		0.9		0.8		4.7
Software and solutions		2.4		2.4		2.4
Total revenue	$	4.7	$	10.1	$	15.8
Operatingloss	$	(5.1)	$	(3.0)	$	(0.1)
Financingcosts	$	(1.3)	$	(2.9)	$	(2.7)
Net income(loss)	$	26.5	$	(4.9)	$	(2.8)
EPS basic	$	1.35	$	(0.28)	$	(0.17)
EPS diluted	$	1.29	$	(0.28)	$	(0.17)
Adjusted EBITDA	$	(2.7)	$	(1.0)	$	2.1
Assets:
Cash, trade receivables, unbilled revenue	$	2.4	$	2.4	$	4.9
Total assets	$	7.6	$	7.8	$	9.8
Liabilities:
Long-term liabilities(includinglease obligations)	$	1.2	$	0.3	$	29.3
Total liabilities	$	6.2	$	37.2	$	34.2

(1) Operating loss, net loss, and Adjusted EBITDA amounts have been recast. See Note 20 to the Consolidated Annual Financial Statements.

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Revenue

Consolidated revenue for the year ended December 31, 2020 totaled $4.7 million, compared to $10.1 million for 2019, reflecting the disruption from the COVID-19 pandemic. The decline was expected, given the economic environment resulting from the pandemic. The Company remains well-positioned to withstand the slowdown and remains confident in the pipeline. Approximately 71% of consolidated revenue was generated outside the United States, compared to 41% for 2019.

Acquisition services revenue for the year ended December 31, 2020 totaled $1.4 million, compared to $6.9 million for 2019. The decrease is due to the nature and timing of government contracting, which was delayed during 2020 due to the impact of uncertainty surrounding the COVID-19 pandemic.

Value-added data revenue increased slightly to $0.9 million for the year ended December 31, 2020 as compared to $0.8 million for 2019.

Software and solutions revenue remained flat at $2.4 million for the years ended December 31, 2020 and 2019. The Company recognized a 4% increase in subscription-based revenue, during a year that included disruption in sales efforts for new subscriptions caused by COVID-19.

As we enter fiscal 2021, we believe our business is slowly rebounding and our pipeline of high probability opportunities has grown 429%, compared to December 31, 2019, with 44% of those opportunities representing repeat customers. Despite the ongoing impact of COVID19, our pipeline is expected to support revenue and Adjusted EBITDA growth in 2021 as compared to the amounts achieved in 2020.

Classification of Operating Costs

The composition of the operating costs on the Consolidated Statements of Income (Loss) and Other Comprehensive Income (Loss) is as follows:

U.S.$millions		2020			2019
Personnel	$		5.4	$	5.9
Purchased services & materials			2.3		4.2
Facilities and other expenses			0.6		0.8
Travel			0.1		0.3
	$		8.4	$	11.2

Personnel

Personnel expense includes direct labor, employee compensation, employee benefits, and commissions. Personnel expense for the years ended December 31, 2020 and 2019, totaled $5.4 million and $5.9 million, respectively.

As of December 31, 2020, 46% of the headcount relates to software and data development, 24% is in the Jakarta Production Center, 15% relates to sales and marketing and 15% is corporate services.

During 2019, the Company notified certain individual employees of its intent to discontinue their employment. The Company incurred $0.3 million in restructuring charges from these reductions.

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Non-cash compensation expense is included in operating costs and relates to the Company’s omnibus incentive plan, share options, and shares granted to employees and non-employees. Non-cash share-based compensation for the years ended December 31, 2020 and 2019, decreased to $104 thousand from $148 thousand, respectively.

Purchased Services and Materials

Purchased services and materials (PS&M) includes (i) aircraft and radar related costs, including jet fuel; (ii) professional and consulting costs; (iii) third-party support services related to the collection, processing and editing of the Company’s airborne radar data collection activities; (iv) third-party data collection activities (i.e. LiDAR, satellite imagery, air photo, etc.); and (v) third-party software expenses (including maintenance and support).

For the years ended December 31, 2020 and 2019, PS&M expense was $2.3 million and $4.2 million, respectively. The decrease was due to decreased spending on acquisition revenue projects during 2020.

Facilities and Other Expenses

For the years ended December 31, 2020 and 2019, facilities and other expenses were $0.6 million and $0.8 million, respectively. The decrease was due to decreased spend on legal and professional fees during 2020.

Travel

For the years ended December 31, 2020 and 2019, travel expense was $0.1 million and $0.3 million, respectively. The decrease was due to decreased travel across all operations.

Government Grants

The Company participated in four government grant programs during 2020 related to COVID19 support and was eligible to receive $0.9 million from the programs (see Note 12 of the consolidated financial statements).

Net Income

Net income improved from a loss of $4.9 million to income of $26.5 million for the years ended December 31, 2020 and 2019, respectively, due to the gain on the modification of debt of $32.1 million (see Note 8(a) of the consolidated financial statements), offset by the reduction in revenue discussed above.

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is not a recognized performance measure under IFRS. The term EBITDA consists of net income (loss) and excludes interest (financing costs), taxes, and depreciation. Adjusted EBITDA also excludes share-based compensation and other non-operating gains or losses. Adjusted EBITDA is included as a supplemental disclosure because Management believes that such measurement provides a better assessment of the Company’s operations on a continuing basis by eliminating certain non-cash charges or gains that are nonrecurring. The most directly comparable measure to Adjusted EBITDA calculated in accordance with IFRS is net income (loss). The following is a reconciliation of the Company’s net loss to Adjusted EBITDA.

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U.S. $ millions		2020		2019(1)
Net income (loss)	$	26.5	$	(4.9)
Financing costs		1.3		2.9
Depreciation of property and equipment		1.1		1.1
Depreciation of right of use assets		0.4		0.5
EBITDA	$	29.3	$	(0.4)
Share-based compensation		0.1		0.2
Restructuring costs		-		0.3
Loss on foreign currency translation		0.1		-
Gain on modification of debt		(32.1)		(1.1)
Gain on disposal of equipment		(0.1)		-
Adjusted EBITDA	$	(2.7)	$	(1.0)

(1) Net loss, depreciation of property and equipment, EBITDA and Adjusted EBITDA amounts have been recast. See Note 20 to the Consolidated Annual Financial Statements.

Adjusted EBITDA for the year ended December 31, 2020 was negative $2.7 million, compared to negative $1.0 million for 2019. The decrease in adjusted EBITDA is primarily attributable to a decrease in revenue.

Financing Costs

Financing costs for the years ended December 31, 2020 totaled $1.3 million, compared to $2.9 million for 2019. Financing costs relate mostly to the accretion of the notes payable interest using the effective interest method. On June 3, 2020, the Company completed a settlement agreement with the note holder (see Note 8(a)) of the consolidated financial statements). The revised note of $1.0 million was paid in full on August 12, 2020.

Depreciation of Property and Equipment

Depreciation expense for property and equipment for the years ended December 31, 2020 and 2019 was $1.1 million for both periods.

Depreciation of Right of Use Assets

Depreciation expense for right of use assets decreased slightly to $0.4 million for the year ended December 31, 2020, compared to $0.5 million during 2019.

Gain on Modification of Debt

Gain on modification of debt was $32.1 million compared to $1.1 million for the years ended December 31, 2020 and 2019. The 2020 gain is due to the settlement agreement with the note holder on June 3, 2020 (see Note 8(a) of the consolidated financial statements). The 2019 gain is a settlement of a promissory note with a service provider.

Gain on Disposal of Equipment

Gain on disposal of equipment was $0.1 million compared to $Nil for the years ended December 31, 2020 and 2019. The Company disposed of assets with a net book value of $Nil and received cash proceeds of $0.1 million and recognized the gain during the second quarter of 2020.

Amounts Receivable and Unbilled Revenue

Work is performed on contracts that provide invoicing upon the completion of identified contract milestones. Revenue on certain of these acquisition services contracts is recognized using the percentage-of-completion method of accounting based on the ratio of costs

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incurred to date over the estimated total costs to complete the contract. While an effort is made to align payments on contracts with work performed, the completion of milestones does not always coincide with the costs incurred on a contract, resulting in revenue being recognized in excess of billings. These amounts are recorded in the consolidated balance sheets as unbilled revenue.

Amounts receivable and unbilled revenue decreased from $1.2 million at December 31, 2019, to $0.6 million at December 31, 2020. The decrease is due to the timing of billings and cash receipts. The Company reviews the amounts receivable aging monthly and monitors the payment status of each invoice. The Company also communicates with slow paying or delinquent customers on a regular basis regarding the schedule of future payments. At the balance sheet date, $Nil has been reserved as uncollectible as all trade receivable balances greater than 90 days are highly likely to be paid in full by the customer.

Property and Equipment

Property and equipment include aircraft and engines, radar and mapping equipment, furniture and fixtures, leasehold improvements and assets under construction. The decrease of property and equipment from December 31, 2019 of $3.6 million to $2.7 million at December 31, 2020 is mainly due to depreciation of $1.1 million, offset by additions of $0.2 million.

Intangible Assets

Intangible assets include data library products the Company builds with the use of proprietary software and intellectual property for the use in software subscription and data license sales. The increase of intangible assets from December 31, 2019 of $0.6 million to $0.9 million at December 31, 2020 relates to internal labor to build the library.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities generally include trade payables, project-related accruals and personnel-related costs. Accounts payable and accrued liabilities remained constant at $3.1 million at December 31, 2020 and 2019.

		December 31,		December 31,
U.S.$millions		2020		2019
Accounts payable	$	1.6	$	1.4
Accrued liablities		1.5		1.7
	$	3.1	$	3.1

Notes Payable

The decrease in the notes payable balance from December 31, 2019 of $31.9 million to $Nil at December 31, 2020 is due to the settlement agreement with the note holder on June 3, 2020 along with a $1.0 million payment on August 12, 2020 (see Note 8(a) of the consolidated financial statements).

Government Loans

The government loans balance increased from $Nil at December 31, 2019 to $0.5 million at December 31, 2020. The increase is due to new loans available to help off-set the impacts of the COVID-19 pandemic and will be repaid.

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Unearned Revenue and Deposits

The unearned revenue balance at December 31, 2020 increased to $1.6 million from $1.3 million at December 31, 2019. This balance consists of payments received from customers for contracts that are in progress and have not yet fulfilled the necessary revenue recognition criteria. At December 31, 2020 and 2019, 86% and 89% of the total balance, respectively, is related to software and solutions license revenue, in which the license fee is paid upfront for the term of the license. The balance relates to the collection of milestone billings on acquisition services contracts.

QUARTERLY FINANCIAL INFORMATION

Selected Quarterly Information

The following table sets forth selected quarterly financial information for Intermap’s eight most recent fiscal quarters. This information is unaudited, but reflects all adjustments of a normal, recurring nature that are, in the opinion of management, necessary to present a fair statement of Intermap’s consolidated results of operations for the periods presented. Quarter-to-quarter comparisons of Intermap’s financial results are not necessarily meaningful and should not be relied on as an indication of future performance.

For the last eight quarters, the Company has been operating severely undercapitalized and been required to self-finance the advancement of high-growth opportunities in the insurance, aviation and telecommunications verticals. As a result, revenue has been delayed. Management believes an improved capital structure will provide much needed investment in revenue growth.

U.S. $ millions, except per		Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
share data	2019(1)		2019(1)		2019(1)		2019(1)			2020		2020		2020		2020
Total revenue	$	0.8	$	1.9	$	4.2	$	3.2	$	1.6	$	1.2	$	1.0	$	0.9
Depreciation	$	0.3	$	0.3	$	0.3	$	0.2	$	0.3	$	0.3	$	0.3	$	0.2
Financing costs	$	0.7	$	0.7	$	0.7	$	0.8	$	0.8	$	0.5	$	-	$	-
Operating income (loss)	$	(2.2)	$	(1.5)	$	0.6	$	0.1	$	(1.0)	$	(1.4)	$	(1.3)	$	(1.4)
Net (loss) income	$	(2.9)	$	(2.2)	$	(0.1)	$	0.3	$	(1.8)	$	29.2	$	(1.3)	$	0.4
Net (loss) income per share
- basic and diluted	$	(0.17)	$	(0.13)	$	-	$	0.02	$	(0.10)	$	1.79	$	(0.07)	$	(0.26)
Adjusted EBITDA	$	(1.8)	$	(0.8)	$	1.1	$	0.5	$	(0.6)	$	(0.3)	$	(0.9)	$	(0.9)

(1) Depreciation, operating income (loss), and net income (loss) amounts have been recast. See Note 20 to the Consolidated Annual Financial Statements.

Consolidated revenue for the fourth quarter of 2020 totaled $0.9 million, compared to $3.2 million for the same period in 2019, representing a 72% decrease. Substantially all of the decrease relates to government contracting, which was negatively impacted by the COVID-19 pandemic. Approximately 73% of consolidated revenue was generated outside the United States during the fourth quarter of 2020, compared to 67% for the same period in 2019.

Acquisition services revenue for the quarter ended December 31, 2020 totaled $8 thousand, as was expected due to the nature and timing of delays in government contracting due to the

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COVID-19 pandemic, compared to $2.3 million for the same period in 2019. The revenue during 2019 was the execution of a U.S. Government contract.

Value-added data revenue increased to $0.3 million for the quarter ended December 31, 2020 as compared to $0.1 million for the same period in 2019.

Software and solutions revenue decreased slightly to $0.6 million from $0.8 million for the fourth quarters of 2020 and 2019, respectively, reflecting the disruption from COVID-19. While the Company’s software products are sold with one to three-year subscription licenses, the pandemic is affecting prioritization of new license sales but has not had an effect on renewals.

Personnel

Personnel expense for the three-month periods ended December 31, 2020 and 2019, totaled $1.3 million and $1.2 million, respectively.

Non-cash compensation expense for the quarters ended December 31, 2020 and 2019, decreased to $19 thousand from $79 thousand, respectively.

Purchased Services and Materials

For the three-month periods ended December 31, 2020 and 2019, PS&M expense was $0.5 million and $1.0 million, respectively. The decrease was due to continued decreased spending on acquisition revenue projects during 2020.

Facilities and Other Expenses

For the three-month periods ended December 31, 2020 and 2019, facilities and other expenses were $0.2 million and $0.1 million, respectively.

Travel

For the quarters ended December 31, 2020 and 2019, travel expense was $9 thousand and $133 thousand, respectively.

CONTRACTUAL OBLIGATIONS

Contractual obligations include (i) lease obligations on office locations and computer equipment; (ii) project financing; (iii) government loans; and (iv) operating leases on low value equipment. Principal and interest repayments of these obligations are as follows:

	Payments due by Period (US $ thousands)
Contractual obligations Total	Less than 1year 1 - 3years 4 - 5years After 5years
Lease obligations 855 $	316 $ 414 $ 64 $ 61 $
Project financing 188 Government loans 641 Operatingleases 79	- 188 - - 4 147 274 216 79 - - -
Total 1,763 $	399 $ 749 $ 338 $ 277 $

LIQUIDITY AND CAPITAL RESOURCES

Management continually assesses liquidity in terms of the ability to generate sufficient cash flow to fund the business. Net cash flow is affected by the following items: (i) operating activities, including the level of trade receivables, unbilled receivables, accounts payable,

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accrued liabilities and unearned revenue; (ii) investing activities, including the purchase of property and equipment; and (iii) financing activities, including debt financing and the issuance of capital stock.

During the year ended December 31, 2020, the Company generated an operating loss of $5.1 million and incurred negative adjusted EBITDA of $2.7 million. Revenue for the year ended December 31, 2020 was $4.7 million, which is a $5.3 million decrease as compared to the same period in 2019. At December 31, 2020, the Company has a shareholders’ equity of $1.5 million that was mainly generated by the second quarter’s gain on the settlement of debt.

Cash used in operations during the year ended December 31, 2020 totaled $2.0 million, compared to cash provided by operations of $1.7 million during the same period in 2019. The year-over-year increase in cash used is due primarily to the decrease in revenue.

Net cash used in investing activities totaled $0.3 million and $1.2 million for the years ended December 31, 2020 and 2019, respectively. Net cash used in investing activities for both periods related to the purchase of computer related equipment and the capitalization of labor and materials to build the data archive, processing capabilities, and software assets. During 2020, the purchases were offset by $0.1 proceeds on the sale of equipment.

Net cash provided by financing activities totaled $2.9 million for the year ended December 31, 2020 compared to net cash used of $0.6 million during the same period in 2019. The net cash used during the year ended December 31, 2020 resulted from the payment of lease obligations of $478 thousand, repayment of project financing of $300 thousand, issuance costs of $508 thousand and repayment of notes payable of $1.0 million. This was offset by the government loans of $535 thousand, and the private placement proceeds of $4.7 million. The net cash used during the year ended December 31, 2019 was the payment of lease obligations of $552 thousand and repayment of project financing of $50 thousand.

The Company is dependent upon its cash flow from operations to fund its business as it currently has no line of credit or credit facility in place.

The above factors may be exacerbated by the ongoing COVID-19 pandemic and in the aggregate indicate there are material uncertainties which may cast significant doubt about the Company’s ability to continue as a going concern. In response to the COVID-19 pandemic the Company has taken actions to adapt to the current environment using teleconference platforms for trainings, customer meetings and conferences, and manage liquidity by participating in various government support programs, where applicable, including wage subsidies, tax payment deferrals and favorable credit facilities. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully secure sales with upfront payments, and / or obtain additional financing. Failure to achieve one or more of these requirements could have a materially adverse effect on the Company’s financial condition and / or results of operations. The Board of Directors and management continue to take actions to address these issues including the elimination of $32.9 million of debt, raising capital through a private placement and exploring options for additional capital.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Revenue Recognition

Revenue is recognized when a customer obtains control of the good or services. Determining the timing of the transfer of control, at a point in time or overtime, requires judgement.

Acquisition Service Contracts

Revenue from acquisition service contracts is recognized overtime based on the ratio of costs incurred to estimated final contract costs. The use of this method of measuring progress towards complete satisfaction of the performance obligations requires estimates to determine the cost to complete each contract. These estimates are reviewed monthly and adjusted as necessary. Provisions for estimated losses, if any, are recognized in the period in which the loss is determined. Invoices are issued according to contractual terms and are usually payable within 30 days. Revenue recognized in advance of billings are presented as unbilled revenue.

Data Licenses

Revenue from the sale of data licenses in the ordinary course of business is measured at the fair value of the consideration received or receivable. Customers obtain control of data products upon receipt of a physical hard drive or download of the data from a web link provided. Invoices are generated, and revenue is recognized at that point in time. Invoices are generally paid within 30 days.

Software Subscriptions

Software subscriptions are paid at the beginning of the license term. Revenue is recognized overtime, and payments for future months of service are recognized in unearned revenue. While the license agreements are for a fixed term, some agreements also contain a limited number of clicks or uses. If the limit is reached prior to the end of the term, the license ends early.

Use of estimates

Preparing financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from these estimates.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year include the following:

Depreciation and amortization rates

In calculating the depreciation and amortization expense, management is required to make estimates of the expected useful lives of property and equipment and intangible assets.

Amounts receivable

The Company uses historical trends and performs specific account assessments when determining the expected credit losses. These accounting estimates are in respect to the amounts receivable line item in the Company’s consolidated balance sheet. At December 31, 2020, amounts receivables represented 8% of total assets.

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The estimate of the Company’s expected credit losses could change from period to period due to the allowance being a function of the balance and composition of trade receivables. At December 31, 2020, the expected credit losses of trade receivables were $Nil due to less than 10% of the aged trade receivables over 61 days was past due and collected during January 2021.

Share-based compensation

The Company uses the Black-Scholes option-pricing model to determine the grant date fair value of share-based compensation. The following assumptions are used in the model: dividend yield; expected volatility; risk-free interest rate; expected option life; and fair value.

Changes to assumptions used to determine the grant date fair value of share-based compensation awards can affect the amounts recognized in the consolidated financial statements.

Government loans

The Company has received a loan with no stated interest obligation. The valuation and accounting for the zero-interest loan requires the application of management estimates and judgments with respect to the determination of appropriate valuation method applied on initial recognition. The assumptions for estimating fair value of the loan is disclosed in Note 8(b) to the consolidated financial statements.

Revenue

Changes to the assumptions used to measure revenue could impact the amount of revenue recognized in the consolidated financial statements.

Impairment

The carrying value of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable and assesses the impairment for intangible assets not yet available for use on an annual basis. The Company has determined that its long-lived assets belong to two distinct cash-generating units (“CGUs”). The significant assumptions used in determining estimated discounted future cash flows include projected revenues and discount rates. Judgment is required in determining the level at which to test impairment, including the grouping of CGUs that generate cash inflows.

OUTSTANDING SHARE DATA

The Company’s authorized capital consists of an unlimited number of Class A common shares without par value and an unlimited number of Class A participating preferred shares without par value. At the close of business on March 31, 2021, 25,198,529 Class A common shares were issued and outstanding. There are no preferred shares currently issued and outstanding.

As of March 31, 2021, potential dilutive securities include (i) 895,325 outstanding share options with a weighted average exercise price of C$0.81, (ii) 1,239,126 restricted share units, and (iii) 159,002 warrants outstanding with a weighted average exercise price of USD$0.42. Each option and warrant entitles the holder to purchase one Class A common

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share. 139,284 warrants expire on July 31, 2022 and 19,718 warrants expire on August 14, 2022.

INTERNAL CONTROLS AND DISCLOSURE CONTROLS AND PROCEDURES

Internal Control over Financial Reporting

The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have designed, or have caused to be designed under their supervision, internal control over financial reporting as defined under National Instrument 52-109 – Certification of Disclosure in Issuer’s Annual and Interim Filings, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Company’s internal control over financial reporting and have determined, based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (2013) and on this evaluation, that such internal controls over financial reporting were effective at December 31, 2020.

Changes in Internal Control over Financial Reporting

There have been no significant changes in the design of internal control over financial reporting that occurred during the year ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Disclosure Controls and Procedures

The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have designed, or have caused to be designed under their supervision, disclosure controls and procedures to provide reasonable assurance that material information relating to the Company has been made known to them and that information required to be disclosed in the Company’s annual filings, interim filings or other reports filed by it or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified by applicable securities legislation. The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Company’s disclosure controls and procedures and have determined, based on that evaluation, that such disclosure controls and procedures were effective at December 31, 2020.

RISKS AND UNCERTAINTIES

The risks and uncertainties described below are not exhaustive. Additional risks not presently known currently deemed immaterial may also impair the Company’s business operation. If any of the events described in the following business risks actually occur, overall business, operating results, and the financial condition of the Company could be materially adversely affected.

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Availability of Capital

Cash generated from its operations may not be enough to satisfy its current liquidity requirements. As such, the Company will require additional capital. The extent of the Company’s future capital requirements will depend on many factors, including, but not limited to, the market acceptance of its products and services, demand for geospatial related products and service, and competition within this industry. No assurance can be given that any such additional funding will be available or that, if available, it can be obtained on terms favorable to the Company.

Revenue Fluctuations

Intermap's revenue has fluctuated over the years. Acquisition services projects, the purchase of value-added data, and the purchase of software and solutions by the Company’s customers are all scheduled per customer requirements and the timing of regulatory and/or budgetary decisions. The commencement or completion of acquisition projects within a particular quarter or year, the timing of regulatory approvals, operating decisions of clients, and the fixed-cost nature of Intermap's business, among other factors, may cause the Company's results to vary significantly between fiscal years and between quarters in the same fiscal year.

Nature of Government Contracts

Intermap conducts a significant portion of its business either directly or in cooperation with the United States government, other governments around the world, and international funding agencies. In many cases, the terms of these contracts provide for cancellation at the option of the government or agency at any time. In addition, many of Intermap's products and services require government appropriations and regulatory licenses, permits, and approvals, the timing and receipt of which are not within Intermap's control. Any of these factors could have an effect on Intermap's revenue, earnings, and cash flow.

Foreign Operations

A significant portion of Intermap's revenue is expected to come from customers outside of the United States and is therefore subject to additional risks, including impacts of the spread of COVID-19 on customer operations, foreign currency exchange rate fluctuations, agreements that may be difficult to enforce, receivables difficult to collect through a foreign country's legal system, and the imposition of foreign-country-imposed withholding taxes or other foreign taxes.

General Economic Trends

The spread of COVID-19 has significantly impacted the global economy and has been characterized as a pandemic by the World Health Organization. The impact of the COVID-19 pandemic and other worldwide economic conditions could have an adverse effect on Intermap’s business, financial condition, or results of operations. Adverse changes in general economic or political conditions in any of the major countries in which the Company does business could also adversely affect Intermap’s operating results.

Key Customers

During 2020, the Company had three key customers that accounted for 40% of total revenue. During 2019, 73% of the revenue was attributable to three key customers. To the extent that

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significant customers cancel or delay orders, Intermap's revenue, earnings, and cash flow could be materially and adversely affected.

Executive Talent

Intermap is focused on aligning its resources with its acquisition services, value-added data and software and solutions revenue opportunities. This realignment requires the retention of executive talent. The Company will continue to invest in training and leadership development to retain talent.

Competing Technologies

With respect to the Company’s software applications, several direct and indirect competitors are currently in the market with product offerings that could be considered at least partially competitive to Intermap’s products. These potential competitors vary in size and could have greater technical and/or financial resources than the Company, to develop and market their products. The financial performance of the Company may be adversely affected by such competition.

Intermap continues to evaluate its data collection capabilities and look for improvements to the performance of its radar technology. Although there are only a few direct Intermap competitors currently, the industry is characterized by rapid technological progress. Intermap's ability to continue to develop and introduce new products and services, or incorporate enhancements to existing products and services, may require significant additional research and development expenditures and investments in support infrastructure.

Another approach to production of digital elevation models is the use of auto correlation software to analyze common points in two or more optical images of the same area taken from different viewing angles. Essentially this is the same principle that is used by technicians as they extract elevation points using stereo photogrammetric techniques, but in this case, it is automated using computer software image matching algorithms. This process is well known and has seen incremental, evolutionary improvement over time. Advances in computing power, coupled with massive storage solutions, may make this technology useful over larger areas in the future, and if so, could represent a significant competing technology.

Any required additional financing needed by the Company to remain competitive with these other technologies may not be available or, if available, may not be on terms satisfactory to the Company.

Common Share Price Volatility

The market price of the Company’s common shares has fluctuated widely in recent periods and is likely to continue to be volatile. A number of factors can affect the market price of Intermap’s common stock including (i) actual or anticipated variations in operating results, (ii) the low daily trading volume of the Company’s stock, (iii) announcement of technological innovations or new products by the Company or its competitors, (iv) competition, including pricing pressures and the potential impact of competitors products on sales, (v) changing conditions in the geospatial and related industries, (vi) unexpected production difficulties, (vii) changes in financial estimates or recommendations by stock market analysts regarding

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Intermap or its competitors, (viii) announcements by Intermap or its competitors of acquisitions, strategic partnerships, or joint ventures, (ix) additions or departures of senior officers, (x) changes in economic or political conditions (xi) the selling of significant holdings by large investors, and (xii) the Company’s ability to meet the continued listing requirements of the Toronto Stock Exchange to maintain the listing of its common shares.

Loss of Proprietary Information

Intermap currently holds patents on the technology used in its operations and relies heavily on trade secrets, know-how, expertise, experience, and the marketing ability of its personnel to remain competitive. Although Intermap requires all employees, consultants, and third parties to agree to keep its proprietary information confidential, no assurance can be given that the steps taken by Intermap will be effective in deterring misappropriation of its technologies. Additionally, no assurance can be given that employees or consultants will not challenge the legitimacy or scope of their confidentiality obligations, or that third parties, in time, could not independently develop and deploy equivalent or superior technologies.

Software Functionality

Defects in the Company’s software applications, delays in delivery, and failures or mistakes in the Company’s software code could materially harm the Company’s business, including customer relationships and operating results.

Internet and System Infrastructure Functionality

The end customers of the Company’s software applications depend on internet service providers, online service providers and the Company’s infrastructure for access to the software applications the Company provides to its customers. These services are subject to service outages and delays due to system failures, stability or interruption. As a result, the Company may not be able to meet a satisfactory level of service as agreed to with its customers, which could have a material adverse effect on the Company’s business, revenues, operating results and financial condition.

Information Technology Security

The Company’s software applications are dependent on its ability to protect its computer equipment and the information stored in its data centers against damage that may be caused by fire, power loss, telecommunication failures, unauthorized intrusion, computer viruses, disabling devices and other similar events. A failure in the Company’s production systems or a disaster or other event affecting production systems or business operations, both internally and externally, could result in a disruption to the Company’s software services. Such a disruption could also impact the Company’s reputation and cause it to lose customers, revenue, face litigation, or necessitate customer service/repair work that would involve substantial costs and could ultimately have a material impact on the Company.

Intermap’s geospatial database is a valuable asset to the Company. While Intermap has invested in database management, information technology security, firewalls, and offsite duplicate storage, there is a risk of a loss of data through unauthorized access or a customer violating the terms of the Company's end user licensing agreements and distributing unauthorized copies of its data. Intermap has, and will continue to invest, in both legal

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resources to strengthen its licensing agreements with its customers and in overall information technology protection.

Cybersecurity

The Company’s software applications and geospatial database are dependent upon protection against damage or loss that may be caused by a cyberattack. Loss or theft of the Company’s geospatial database could result in lost revenue or the ability of a competitor to provide competing software solutions. A hostile Denial of Service (DoS) action could disrupt the Company’s software services. Such a disruption could impact the Company’s reputation and cause it to lose customers, revenue, face litigation, or necessitate customer service/repair work that would involve substantial costs and could ultimately have a material impact on the Company.

Intermap has invested in database management, information technology security, and firewalls to mitigate the risk of loss or theft of the Company’s data. Further investments have been made to prevent DoS activities and improvements to the software services’ defenses against such attacks.

The Company undertakes periodic reviews of its information technology infrastructure and security policies using the SANS CIS Critical Security Controls as a framework. The areas of focus for review pertain to user and system authentication and access; internal network configuration and security; data storage resiliency and security; and hosted application access security. These periodic reviews serve to proactively shore up areas of vulnerability and ensure policies are effective and enforced. However, the risk cannot be eliminated entirely, and the Company has invested in insurance to mitigate loss in the event of a cyberattack.

Exporting Products – Political Considerations

Intermap’s data collection systems contain technology that is classified as a defense article under the International Traffic and Arms Regulations. All mapping efforts undertaken outside the United States, therefore, constitute a temporary export of a defense article, requiring prior written approval by the United States Department of State for each country within which mapping operations are to be performed. The Company does not currently anticipate that requirements for export permits will have a material impact on the Company's operations, although either government policy or government relations with select foreign countries may change to the point of affecting the Company's operational opportunities.

Environmental Regulation

Changes in environmental regulation could have an adverse effect on the Company’s airborne data acquisition services business. For example, requirements for cleaner burning aircraft fuel could result in increased costs which could impact the Company’s pricing model for acquisition services projects. The complexity and breadth of environmental and climate change related issues make it extremely difficult to predict the potential impact on the Company. Compliance with environmental regulation can be costly, and non-compliance can result in fines, penalties and loss of licenses.

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Political Instability

Political or significant instability in a region where Intermap is conducting data collection activities, or where Intermap has clients, could adversely impact Intermap's business.

Regulatory Approvals

The development and application of certain of the Company's products requires the approval of applicable regulatory authorities. A failure to obtain such approval on a timely basis, or material conditions imposed by such authority in connection with the approval, would materially affect the prospects of the Company.

Aircraft / Radar Lost or Damaged

Although the Company believes that the probability of one of the Company's aircraft or radar sustaining significant damage or being lost in its entirety is extremely low, such damage or loss could occur. The Company expects to have available to it, for data collection purposes, one additional aircraft at any given time. The risk to the Company of loss from the damage of an aircraft is therefore considered to be minimal. In the event that a radar mapping system is lost in its entirety through the destruction of the aircraft, it would take the Company approximately six to nine months to replace the lost equipment, if required.

Global Positioning System (GPS) Failure

GPS satellites have been available to the commercial market for many years. The continued unrestricted access to the signals produced by these GPS satellites are helpful, but not required, in the collection of the Company's IFSAR data. A loss of GPS would have such a global impact that it is believed that controlling authorities would almost certainly make another system available to GPS receivers in relatively short order.

Information Openly Available to the Public

The Company accesses information available to the public via the Internet and may incorporate portions of such information into its products. If a source of public information determined that the Company was profiting from free information, there is risk it could seek compensation.

Force Majeure

The Company's projects may be adversely affected by risks outside the control of the Company including labor unrest, civil disorder, war, subversive activities or sabotage, fires, floods, explosions or other catastrophes, epidemics, or quarantine restrictions.

Additional Information

Additional risk factors may be detailed in the Company’s Annual Information Form, which can be found on the Company’s Web site at www.intermap.com and on SEDAR at www.sedar.com.

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