Jasper Commerce Inc. — Interim / Quarterly Report 2023

Dec 19, 2022

Jasper Commerce Inc.

(formerly SaaSquatch Capital Corp.)

Unaudited Condensed Consolidated Interim Financial Statements

For the three months ended October 31, 2022 and 2021

(Expressed in Canadian Dollars)

No Auditor Review of Interim Condensed Financial Statements

Under Part 4,subsection 4.3(3)(a) of National Instrument 51-102 – Continuous Disclosure Obligations, if an auditor has not performed a review of the condensed interim financialstatements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor. The accompanying unaudited condensed interim financial statements of Jasper Interactive Studios Inc. (the "Company") have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these condensed interim financialstatementsin accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.

Jasper Commerce Inc. Condensed Consolidated Interim Statements of Financial Position As at October 31, 2022 and July 31, 2022 (Unaudited)(in Canadian Dollars)

	Note	October 31, 2022	July 31, 2022
Assets
Current assets:
Cash and cash equivalents		$1,168,760	$ 2,315,762
Accounts receivable	6	144,964	226,593
Government tax and subsidy receivable	12	434,447	385,255
Contract assets		15,059	20,598
Prepaid expenses and deposits		241,908	222,412
		2,005,138	3,170,620
Non-current assets:
Contract assets		893	1,888
Furniture and equipment	3	67,747	77,712
		$ 2,073,778	$ 3,250,220
Liabilities
Current liabilities:
Accounts payable and accrued liabilities		$ 893,620	$ 778,401
Contract liabilities		112,288	101,646
Loans	4	130,430	133,385
		1,136,338	1,013,432
Non-current liabilities:
Contract liabilities		3,143	48,974
Loans	4	157,750	180,040
		1,297,231	1,242,446
Shareholders' deficiency:
Share capital		14,671,804	14,671,804
Options reserve	5	806,411	725,256
Warrants reserve	5	2,754,415	2,754,415
Accumulated deficit		(17,456,083)	(16,143,701)
		776,547	2,007,774
		$ 2,073,778	$ 3,250,220

Nature of operations and going concern (see Note 1) Subsequent events (see Note 14) Approved by: Approved by: "Jon Marsella" "Jeffrey Klam" Jon Marsella, Director Jeffrey Klam, Director

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

Jasper Commerce Inc. Condensed Consolidated Interim Statements of Loss and Comprehensive Loss For the three months ended October 31, 2022 and 2021 (Unaudited)(in Canadian Dollars)

	Note	2022	2021
Revenues	6	$ 379,726	$ 452,262
Expenses
General and administrative		544,698	391,576
Research and development		337,245	290,371
Selling and marketing		350,970	238,384
Hosting		104,541	63,859
Customer support		266,848	158,007
Stock-based compensation	5	81,155	69,583
Depreciation		13,646	2,421
Foreign exchange loss (gain)		(2,413)	900
Finance costs	11	(4,582)	228,852
		1,692,108	1,443,953
Net loss and comprehensive loss		$ (1,312,382)	$ (991,691)
Basic and diluted loss per share		$ (0.02)	$ (0.04)
Weighted average number of common shares -	basic and
diluted		58,079,619	27,069,257

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

Jasper Commerce Inc. Condensed Consolidated Interim Statement of Changes in Shareholders' Equity (Deficiency) For the three months ended October 31, 2022 and 2021 (Unaudited)(in Canadian Dollars)

	Note	Number ofCommonShares	Share capital	OptionsReserve	WarrantsReserve	Deficit	Total
Balance, August 1, 2022Stock based compensation	5	58,079,619-	$ 14,671,804-	$ 725,25681,155	$ 2,754,415-	$ (16,143,701)-	$ 2,007,77481,155
Comprehensive loss for the period		-	-	-	-	(1,312,382)	(1,312,382)
Balance, October 31, 2022		58,079,619	$14,671,804	$ 806,411	$ 2,754,415	$(17,456,083)	$ 776,547

		Number of
		Common		Options	Warrants
	Note	Shares	Share capital	Reserve	Reserve	Deficit	Total
Balance, August 1, 2021		27,069,258	$ 4,220,507	$ 342,458	$ 778,488	$ (8,315,864)	$ (2,974,411)
Stock based compensation	5	-	-	69,583	-	-	69,583
Stock options expired unexercised		-	-	(23,384)	-	23,384	-
Comprehensive loss for the period		-	-	-	-	(991,691)	(991,691)
Balance, October 31, 2021		27,069,258	$ 4,220,507	$ 388,657	$ 778,488	$ (9,284,171)	$ 3,896,519

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

Jasper Commerce Inc. Condensed Consolidated Interim Statement of Cash Flows For the three months ended October 31, 2022 and 2021 (Unaudited)(in Canadian Dollars)

	Note	2022	2021
Cash flows used in operating activities:Loss for the year		$ (1,312,382)	$ (991,691)
Adjustments for items not affecting cash:
Stock-based compensation	5	81,155	69,583
Depreciation		13,646	2,421
Finance costs	11	(4,582)	228,852
Changes in non-cash working capital balances:
Accounts receivable			(120,003)
		81,629
Government tax and subsidy receivable		(49,192)	41,588
Contract assets		5,539	7,241
Prepaid expenses and deposits		(19,496)	12,375
Accounts payable and other liabilities		115,219	180,856
Contract liabilities		(34,194)	(57,102)
		(1,122,658)	(625,880)
Cash flows from financing activities:
Interest received (paid)		4,582	(78,756)
Debenture repayments		-	(50,000)
Loan repayments		(25,245)	(24,425)
		(20,663)	(153,181)
Cash flows used in investing activities:
Purchase of furniture and equipment		(3,681)	-
		(3,681)	-
Net increase in cash and cash equivalents		(1,147,002)	(779,061)
Cash and cashequivalents, beginning of period		2,315,762	1,289,325
Cash and cash equivalents, end of period		$ 1,168,760	$ 510,264

1. Nature of operations and going concern

Jasper Commerce Inc. (formerly SaaSquatch Capital Corp.) (together with its subsidiary, the "Company" or "Jasper") was incorporated on March 22, 2021, under the Business Corporations Act (British Columbia). The Company is domiciled in Canada and its head office, principal address and records office are located at 44 Victoria Street, Suite 820, Toronto, Ontario M5C 1Y2.

On February 16, 2022, SaaSquatch Capital Corp. ("SCC"), a Capital Pool Company as defined in Policy 2.4 of the TSX Venture Exchange, acquired Jasper Interactive Studios Inc. in a reverse takeover transaction ("RTO") (see Note 3) and began trading its common shares on the TSX Venture Exchange under the symbol JPIM.

Jasper is a Software-as-a-service ("SaaS") Product Information Management ("PIM") solution empowering eCommerce retailers, wholesalers or distributors to centralize, organize and richly merchandise their products from a single central repository.

Jasper's ability to continue as a going concern is dependent upon its ability to obtain additional financing to support its operations or to generate sufficient and sustained cash flows from its operating activities. It is not possible to predict whether financing efforts will be successful in the future. Failure to obtain such financing could result in delay or indefinite postponement of the Company's strategic goals. These material uncertainties may cast significant doubt upon the Company's ability to continue as a going concern.

2. Basis of presentation

Statement of compliance

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as set out in the Handbook of Chartered Professional Accountants Canada and are presented in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting. The disclosures contained in these financial statements do not contain all requirements of IFRS for annual financial statements and should be read in conjunction with the annual financial statements for the year ended July 31, 2022.

The unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors on December 16, 2022.

Principles of consolidation

The consolidated financial statements include the accounts of Jasper Commerce Inc. and its wholly owned subsidiary Jasper Interactive Studios Inc. All intercompany transactions and balances have been eliminated on consolidation.

3. Significant accounting policies

The accounting policies applied in these financial statements are consistent with those disclosed in Note 2 to the annual financial statements for the year ended July 31, 2022.

3. Furniture and equipment

	Computer hardware	Office furniture	Total
Cost
July 31, 2022	$ 196,549	$ 46,580	$ 243,129
Additions	3,681	-	3,681
October31, 2022	200,230	46,580	246,810
Accumulated amortization
July 31, 2022	121,263	44,154	165,417
Amortization for the quarter	12,454	1,192	13,646
October31, 2022	133,717	45,346	179,063
Net book value July 31, 2022	75,286	2,426	77,712
Net book value October 31, 2022	$ 66,513	$ 1,234	$ 67,747

4. Loans payable

	Rate of Interest	Maturity	Oct 31, 2022	Jul 31, 2022
BDC Term Loan -03	Floating+2.5%	Apr 2024	$ 52,800	$ 59,400
BDC Term Loan -06	Floating+2%	Mar 2024	15,130	17,800
BDC Term Loan -07	Floating+2%	May 2024	50,920	58,960
BDC Term Loan -08	Floating+1.75%	Apr 2023	41,270	44,225
BDC Term Loan -09	Floating+2%	Mar 2026	68,060	73,040
CEBA Loan		Dec 2023	60,000	60,000
			$288,180	$313,425
Current portion			(130,430)	(133,385)
Non-current			$157,750	$180,040

5. Reserves

Reservesrepresent the value attributable to all unexercised and outstanding stock options and warrants classified within equity.

a) Issued and outstanding common share purchase warrants

	WeightedAverage Exercise
	Note	Price ($)	Number
Outstanding, July 31, 2022and October 31, 2022		0.53	14,383,923

Warrants outstanding as of October 31, 2022 are as follows:

Weighted Average Remaining
Exercise Price ($)	Contractual Life in Years	Outstanding
0.20	1.6	100,000
0.31	0.9	1,063,142
0.33	1.2	571,692
0.49	3.2	2,350,036
0.50	1.6	942,160
0.51	2.6	802,029
0.54	2.7	2,554,874
0.70	1.6	6,000,000

b) Options

Under Jasper's current Stock Option Plan (the "Plan"), its directors may approve the issuance of stock options to directors, officers, employees and consultants of the Company and its affiliates. The aggregate number of shares reserved for issuance under the Plan is up to 10% of the number of outstanding common shares. As at October 31, 2022, 4,666,605 stock options remain outstanding at exercise prices ranging from $0.125 to $0.50 per share. Options for the Company's directors generally vest immediately, while options for employees generally vest ratably over a period of three years. All options have a life of five years and have expiry dates ranging from September 2023 to October 2027.

5. Reserves (continued)

Jasper measures compensation costs associated with stock-based compensation using the fair value method and the cost is recognized over the vesting period of the underlying security. Expected volatilities are based on market data of public companies in a similar industry and of a similar size as Jasper. The fair value of each option is determined at the grant date using the Black-Scholes option valuation model with the following weighted average assumptions:

	Oct 2022
Share price	$ 0.08
Exercise price	$ 0.125
Life	5 years
Annualized volatility	120%
Dividend yield	0%
Risk-free rate	3.71%
Fair value (per option)	$ 0.06

During the three months ended October 31, 2022, $81,155 (2021 – $69,583) was recognized as stock-based compensation in profit and loss. This expense includes a reversal of $8,166 (2021 – $nil) of expenses recognized in a previous period for which the award did not ultimately vest.

At October 31, 2022, the remaining unvested value of the Company's stock options is $258,164 which will be recognized through October 2025.

The following table sets out information concerning stock options issued to employees, consultants, directors and officers that were outstanding at October 31, 2022:

	Weighted AverageExercise Price ($)	Number ofOptions
Outstanding, August 1, 2022	0.49	3,216,605
Forfeited	0.50	(40,000)
Granted	0.125	1,490,000
Outstanding, October31, 2022	0.37	4,666,605

5. Reserves (continued)

The following table summarizes information about the stock options outstanding at July 31, 2022:

	Weighted Average
Exercise Prices per Share	Remaining Contractual	Number of Options	Number of Options
($)	Life in Years	Outstanding	Vested/Exercisable
0.125	5.0	1,490,000	-
0.45	1.7	557,933	557,934
0.50	3.8	2,618,671	755,535
	3.9	4,666,605	1,313,469

6. Related party transactions

A shareholder also has a controlling interest in one of Jasper's customers. During the three months ended October 31, 2022, Jasper earned revenue of $2,925 (2021 – $60,478) from that customer. As of October 31, 2022, Jasper was owed $1,102 (July 31, 2022 – $10,170) from that customer.

All related party transactions are measured at the amounts agreed upon between the related parties.

7. Key Management Compensation

	2022	2021
Salaries	$ 193,785	$ 120,129
Stock-based compensation	19,831	60,145
	$ 213,616	$ 180,274

Key management includes the senior officers of the Company and directors.

8. Financial instruments

a) Classification of financial instruments

		Carrying Value($)	Fair Value($)
	Classification	October31, 2022	October31, 2022
Financial assets:
Cash and cash equivalents	Amortized cost	1,168,760	1,168,760
Accounts receivable	Amortized cost	144,964	144,964
Financial liabilities:
Accounts payable and accrued liabilities	Amortized cost	893,620	893,620
Loans payable (Note 4)	Amortized cost	288,180	288,180

b) Fair value of financial instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the loans payable approximate their fair values due to the immediate or short-term maturity of these financial instruments.

Financial instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The hierarchy is summarized as follows:

• Level 1 Quoted prices (unadjusted) in active markets for identical assets and liabilities.
• Level 2 Inputs that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices) from observable market data.
• Level 3 Inputs for assets and liabilities not based upon observable market data.

There were no transfers between Level 1, Level 2, or Level 3 for the three months ending October 31, 2022 and 2021.

9. Financial risk management

a) Currency risk

Jasper operates internationally and is exposed to risk from changes in foreign currency rates. Foreign currency risk arises from the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the Canadian dollar. The Company sells PIM software subscriptions and consulting services in both Canadian and foreign currencies. The sale of software and services in foreign currencies gives rise to the risk that the Company's income and cash flows may be adversely impacted by fluctuations in foreign exchange rates. Certain purchases of services and equipment are also made in non-Canadian currencies. The Company does not actively manage this risk and uses its natural hedge to mitigate, to the extent possible, the impact of foreign exchange fluctuations.

9. Financial risk management (continued)

Jasper is primarily exposed to foreign exchange risk from transactions in U.S. dollars. The sensitivity analysis of its exposure to currency risk has been determined based on a hypothetical change in the foreign exchange rates taking place at the reporting date. Fluctuations of 10% in the exchange rates for these currencies, when compared to the Canadian dollar, are not expected to individually have a material effect on the Company's results of financial performance.

b) Credit risk

Credit risk is the risk of financial loss to Jasper if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company's financial assets that are exposed to credit risk consist primarily of cash and cash equivalents and accounts receivable.

At October 31, 2022, all Jasper's cash and cash equivalents were held at one major Canadian bank.

In the normal course of business, Jasper continuously monitors the financial condition of its customers and reviews the credit history of each new customer. As of October 31, 2022, two customers represented 37% (July 31, 2022 – four customers represented 59%) of the Company's trade receivables. The Company is using the simplified expected credit losses method to estimate its provision for credit losses, which considers the specific credit risk of its customers, the expected lifetime of its financial assets, historical trends and economic conditions.

The following table provides the details of the aged receivables and the related expected credit losses:

		1 to 30	31 to 60	61 to 90	Over 90
Balance, October31, 2022	Current	days	days	days	days	Total
Accounts receivable	$ 84,183	$ 15,328	$47,232	$ 5,500	$ 55,770	$ 208,013
Expected credit losses	-	-	(1,779)	(5,500)	(55,770)	(63,049)
	$ 84,183	$ 15,328	$ 45,453	$0	$ 0	$ 144,964
		1 to 30	31 to 60	61 to 90	Over 90
Balance, July 31, 2022	Current	days	days	days	days	Total
Accounts receivable	$ 71,480	$ 46,040	$ 5,462	$ 5,501	$ 162,929	$ 291,412
Expected credit losses	-	-	-	-	(64,819)	(64,819)

For the three months ending October 31, 2022, Jasper reflected expected credit losses of $nil (2021 – $39,056) in the consolidated statements of operations and comprehensive loss which are included in selling and marketing expenses.

9. Financial risk management (continued)

c) Liquidity risk:

Liquidity risk is the risk that Jasper will not be able to meet its obligations as they fall due (see also Note 1).

Jasper manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. Senior management is also actively involved in the review and approval of planned expenditures.

As at October 31, 2022, Jasper has current liabilities of $1,136,338, cash of $1,168,760, and working capital of $868,800. The Company's financial liabilities are due as follows:

To October 31,	2023	2024	2025	2026	2027
Accounts payable and accrued liabilities	$ 893,620	$-	$-	$-	$-
Loans	130,430	69,530	19,920	8,300	-
	$ 1,024,050	$ 69,530	$ 19,920	$ 8,300	$-

10. Segmented information

Jasper identified its operating segment based on the financial information that is reviewed and used by executive management (collectively, the Chief Operating Decision Maker, or "CODM") in assessing performance and in determining the allocation of resources. The CODM considers the business from a single operating segment perspective and assess the performance of the segment-based measures of profit and loss as well as assets and liabilities.

As the operations are a single segment, all amounts disclosed in the consolidated financial statements represent segment amounts.

Product categorization information

For the three months ended October 31, 2022, Jasper earned revenue attributed to the following product categories based on the main product or service sold to the customer:

	2022	2021
SaaS PIM subscriptions	$ 308,554	$ 285,038
Professional services	71,172	167,224
Total	$379,726	452,262

For the three months ended October 31, 2022, the Company earned 1% (2021 – 13%) of its revenue from a customer controlled by a shareholder (see Note 6).

10. Segmented information (continued)

Geographic information

Jasper earned revenue attributed to the following regions based on the geographical location of the customer:

	2022	2021
United States	$ 209,521	$ 245,229
Canada	33,959	75,251
Rest of world	136,246	131,782
Total	$ 379,726	$ 452,262

All of the Company's non-current assets are located in Canada.

11. Finance costs

Finance costs comprise the following:

	2022	2021
Interest and accretion on debentures		230,576
Interest on loans	5,123	5,096
(Gain) Loss on settlement of debentures		(5,896)
Fair value adjustments		(924)
Interest earned on invested funds	(9,705)	-
	$ (4,582)	$ 228,852

12. Government support

During the prior year, the Canadian federal government made certain government support programs available to eligible entities as part of its COVID-19 economic response plan. The Company applied and received support under the Canada Emergency Wage Subsidy ("CEWS") and Canada Emergency Business Account ("CEBA") programs. Each applicant's eligibility for these programs is subject to validation and detailed verification by the federal government. Due to nature of the eligibility requirements and related calculations, it is possible that the eligibility requirements may not be considered to be met upon validation, and as such the benefits received may be repayable.

During the three months ended October 31, 2022, the Company received $nil of wage subsidies in connection with the CEWS program (2021 – $36,474). These amounts are included in salaries that are related to general and administrative, research and development and sales and marketing.

During the prior year, the Company received $60,000 of loan proceeds in connection with the CEBA program. As at October 31, 2022 this loan amount is included in Loans under non-current liabilities.

The Government tax and subsidy receivable of $434,447 (2021 - 385,255) is comprised of GST/HST receivable of $180,868 (2021 – nil) and a Scientific Research and Experimental Development Receivable of $253,579 (2021- $385,255).

13. Contingencies

A former employee commenced proceedings against Jasper by way of Notice of Action issued December 17, 2021 and subsequent Statement of Claim filed January 14, 2022. The claim against Jasper seeks $1,000,000 in damages for wrongful dismissal, breach of contract, tortious conduct and/or negligent misrepresentation, a declaration pursuant to section 248 of the OBCA and an order compelling Jasper to purchase the employee's shares in Jasper. Jasper is contesting the action and believes the case is without merit. A reliable estimate of the amount of any payment required by the Company cannot be made at this time and therefore the Company has not recorded a provision for this amount.

14. Subsequent events

There were no subsequent events to report.