Jasper Commerce Inc. - Interim / Quarterly Report 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS OF JASPER FOR THE THREE MONTH PERIOD ENDED OCTOBER 31, 2022

The following Management's Discussion and Analysis (" MD&A ") for Jasper Commerce Inc. (" Jasper " or the " Company ") provide a review of the results of operations, financial condition, and cash flows of the Company for the three month period ended October 31, 2022. This document should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements, and the accompanying notes, as at and for the 3 months ended October 31, 2022. The financial statements, including the notes thereto, and the financial information presented in this MD&A have been prepared in accordance with International Financial Reporting Standards (" IFRS "). All amounts are stated in Canadian currency unless otherwise indicated. Whenever used in this MD&A, the term " Common Shares " means Class A common shares in the capital of the Company.

The content of this MD&A has been approved by the board of directors of the Company (the “ Board ” or “ Board of Directors ”) on December 16, 2022.

FORWARD LOOKING STATEMENTS AND DISCLAIMER

Certain information set out in this MD&A constitutes forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "hope", "plan", "continue", "estimate", "expect", "may", "will", "intend", "could", "might", "should", "scheduled", "believe" and similar expressions.

Forward-looking statements are based upon the opinions, expectations and estimates of management and, in some cases, information received from or disseminated by third parties, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include such things as the Company's current stage of development, the lack of a track record with respect to the generation of revenues from performance-based arrangements with users, its reliance on third parties and third party technology, the existence of competition, the availability of external financing, the inherent risks associated with research and development activities and commercialization of emerging technologies (such as lack of market acceptance), timing of execution of various elements of the Company's business plan, the availability of human resources, the emergence of competing business models, new laws (domestic or foreign), lack of acceptance by users, management's estimates of project requirements being incorrect, information received from third parties with respect to anticipated transaction volumes being incorrect, a lack of advertising sources for integration into the Company’s platform, management’s understanding of the competitive and regulatory environment being incorrect and the other risk factors noted below under the heading "Business Risks and Uncertainties". Accordingly, readers should not place undue reliance upon the forward-looking information contained herein and the forward-looking statements contained in this MD&A should not be considered or interpreted as guarantees of future outcomes or results.

The Company does not assume responsibility for the accuracy and completeness of the forward-looking statements set out in this MD&A and, subject to applicable securities laws, does not undertake any obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. Jasper's forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statement.

INTRODUCTION AND OVERVIEW

Jasper’s shares trade on the TSX Venture Exchange in Canada, under the symbol “JPIM”. Jasper PIM is a leading Product Information Management (“ PIM ”) solution empowering eCommerce retailers, wholesalers or distributors to centralize, organize and richly merchandise their products from a single central repository. The PIM is a powerful supplement to a merchant’s existing eCommerce storefront (for example, Shopify) or eCommerce marketplace (such as Amazon) that enables them to reach new consumer markets and increase their online sales.

Jasper PIM powered merchants also can save significant time and money using utilities that streamline product data management operations in a way that the other eCommerce systems do not.

With Jasper PIM, eCommerce merchants can schedule promotional pricing in advance, enrich product data with complex imagery, videos and marketing content, manage complex attribution, and setup product relationships between multiple products in order to upsell or cross-sell their goods and services – all from a single dashboard. The PIM also supports the batch management of product information, including support for multiple languages, currencies and inventory locations as well as afford the merchant the ability to manage multiple storefronts or marketplaces quickly and accurately.

Jasper has forged distribution partnerships with some of the most widely used and well-known eCommerce shopping platforms including Shopify, Square and BigCommerce.. These partnerships represent a significant distribution opportunity as the aggregate potential merchant base between them is reported to be well over 1,000,000 eCommerce merchants. Jasper announced its launch on the Square App Marketplace on May 24, 2022 which expands its PIM’s reach into a new distribution channel that has the potential to reach over 4 million merchants in the United States. Assuming applicability to 75% of the SMB segment of that merchant base (i.e., approximately 3 million potential Square customers) even a tiny penetration of this distribution channel would represent significant revenue growth potential for Jasper via this new partnership, which was signed in Q4 Fiscal 2022 (ended July 31, 2022). This new partnership brings the Company’s potential reach to over 4 million merchants.

Jasper recently released a specialized plugin for the Shopify App Store in order to enable smaller eCommerce merchants a quick-and-easy pathway to install and discover the benefits of PIM. Jasper considers a small merchant to be one having less than $250 thousand USD / annum of aggregate revenues. It is expected that approximately 75% of this distribution channel’s base includes very small merchants that Jasper is uniquely qualified to serve.

Jasper’s primary revenue model is subscription based, where customers sign up for a month-to-month or annual term, agreeing to pay Jasper monthly (or annually) for utilization of the PIM platform. Jasper also helps merchants through professional services to assist them with the setup, management and optimization of their PIM.

PRODUCT AND SERVICES

Jasper PIM 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 source of truth. Jasper’s customers use the PIM as a powerful supplement to their existing eCommerce storefront (for example, Shopify) or marketplace (such as Amazon) to reach new consumer markets and increase their online sales and to save significant time and money using utilities within the PIM that streamline product data management operations.

Jasper’s customers have indicated that they can spend anywhere from 40-60% of their time managing their product or services information as they prepare them for online sale. Products require a name, descriptions, pricing information, attributes, images and video assets, inventory quantities, marketing information, and much more before they’re ready to list on an eCommerce storefront or marketplace (such as Amazon or Walmart).

With Jasper PIM, eCommerce merchants can schedule promotional pricing in advance, enrich product data with complex imagery, videos, and marketing content, manage complex attribution, and setup product relationships between multiple products in order to upsell or cross-sell their goods and services, all through one web-based dashboard. Many Jasper PIM customers enjoy a deep integration between the PIM itself and their existing inventory management, customer relationship management or accounting platform (the “back-office systems”).

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Jasper PIM supports the batch management of product information, including multiple languages, currencies, and inventory/warehouse locations as well, affording the customer utility not found in their other eCommerce storefront or other back-office systems.

Jasper offers four different product lines from a single and scalable software stream, each serving a specific segment of the overall addressable online merchant market, ranging from very small merchants (i.e., those having less than $250 thousand USD / annum of aggregate revenues) all the way to multi-billion-dollar enterprises. Jasper’s addressable market is extensive as its product lines serve the breadth of the global PIM market.

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PARTNERSHIPS

Jasper has forged important strategic partners with industry leading eCommerce agencies, system integrators, and other digital service providers that provide supplemental listing capability to speciality marketplaces (such as Wayfair, Costco, Home Depot, Target, etc.). Jasper’s largest distribution opportunities lie within each of its eCommerce platform relationships (i.e., Square, Shopify and BigCommerce) whereby the aggregate possible user base between them is greater than three million eCommerce merchants. Jasper announced its launch on the Square App Marketplace on May 24, 2022 which will expand its PIM’s reach into a new distribution channel that has the potential to reach to 2 to 3 million merchants in the United States, with the Company’s total channels having a reach to over 4 million merchants.

Jasper recently released a specialized application plugin for the Shopify App Store, in order to enable smaller eCommerce merchants with a quick-and-easy pathway to discover and install the Jasper PIM. Once installed, Shopify merchants can enjoy a 14-day free trial and can self-serve their own setup and support in the form of: online/contextual help, watching how-to-videos, submitting, and reviewing support tickets, live chat in real-time with a Jasper staff member and the ability to book a demo with a salesperson or qualified Jasper solutions engineer for additional paid help (i.e., “white glove service”).

Jasper’s primary revenue model is subscription based, whereby customers sign up for a month-to-month term, annual term or multi-year contract term, agreeing to pay Jasper monthly (or annually) for ongoing usage of the PIM platform. Jasper also earns revenue from carefully curated strategic professional services, offered by qualified Jasper staff to assist Jasper PIM customers, including the setup of the product, training on best-practices, and solution planning with the intent of integrating the PIM with other business systems (including and not limited to) ERPs, CRMs, inventory or warehouse management systems, POS (point of sale) systems, search indexing tool, etc.

SALES AND MARKETING ACTIVITIES

Jasper identifies two primary user personas (i.e., customer demographics) and has created marketing strategies to address each segment separately.

The small business owner/operator craves simplicity, ease of use and high-value (for low cost). They are resilient and prefer to self-serve (versus speak to sales reps) when given the preference.
The marketing or eCommerce manager craves ease of use but also values powerful and configurable features to improve staff workflow efficiency and the ability to connect to many different types of selling channels such as bespoke commerce technologies or boutique sales marketplaces.

Jasper employs a mix of traditional marketing, digital marketing, and channel partnership strategies to develop and cultivate its sales pipeline. Quality transactional inbound leads are obtained through Jasper’s self-serve provisioning platform.

DISTRIBUTION

Jasper has established three primary product discovery/distribution channels among three leading eCommerce platforms, specifically Shopify (including Shopify Plus), Square and BigCommerce. Notably, the Shopify app store is the largest present-day distribution opportunity given its installed base and merchant activity level. A report published by Shopify in 2020 indicated that 87% of Shopify merchants make use of the Shopify App Store, and Jasper’s recently released Start-Up product is expected to be of significant interest to smaller merchants.

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Jasper plans to continue to refine its Start-Up product making it increasingly easier for Shopify app store merchants to onboard the solution on their own. Jasper announced its launch on the Square App Marketplace on May 24, 2022, which makes Jasper’s Start-Up PIM available for its own app store users. This is a significant green-field opportunity for Jasper. Square sought out Jasper’s PIM after learning of the (now superseded) Ultralite PIM in the Shopify app store. Square had approximately 2 million customers as of 2017, which has since grown, and could now present an opportunity for over 4 million SMB merchants, as per a recent Square investor presentation. We are optimistic about this new App Marketplace launch as Square’s app store is considered vibrant and heavily utilized by its merchants.

Jasper expects to further evolve its PIM platform by periodically introducing new seamless automation capabilities. For example, Jasper intends to develop a strategic partnership with Intuit QuickBooks Inc., in order to plan and launch a QuickBooks Online (“ QBO ”) PIM integration and app store release with a projected launch date in Q2 Fiscal 2023 (January 2023). This release is expected to contribute approximately 5% of all SMB license revenue during FY 2023 (July 2023). In FY 2024 (July2024), we expect to create a fully self-provisioning bundle of popular commerce products for a very competitive price (~US$500/month).

QBO has approximately 4.5 million customers, and its platform largely caters to SMBs that demand flawless integration experiences with other digital service providers, such as Jasper PIM. Jasper believes that its own PIM, combined with QBO (operating as the SMBs accounting/inventory management back-office) and combined with Shopify or Square eCommerce storefronts will introduce small business eCommerce merchants to a trifecta solution that will bring them unparalleled consumer value and an intuitive user experience.

SIGNIFICANT EVENTS

On February 16, 2022, Jasper completed an RTO transaction pursuant to an agreement between Jasper Interactive Studios Inc. (“ JISI ”) and SaaSquatch Capital Corp. (“ SCC ”) whereby JISI amalgamated with a subsidiary of SCC. The amalgamation constituted a reverse acquisition of SCC by JISI (the subsidiary for legal purposes and the acquirer for accounting purposes). SCC then changed its name to Jasper Commerce Inc. The historical operations, assets, and liabilities of JISI, which is deemed to be the continuing entity for financial reporting purposes, are included as the comparative figures as at and for the quarter ended October 31, 2021.

The RTO and associated concurrent financing had the impact of eliminating the company’s non-Government debt by converting $3,483,000, principal amount, of unsecured debentures plus $125,942 accrued interest into 11,104,447 common shares.

On October 11, 2022, the Company signed a binding share purchase agreement to acquire 100% of the shares of Cartika Internet Solutions Provider Inc. and its affiliated and subsidiary companies (Bacula4Hosts Inc. and Cologlobal Inc.) (collectively “Cartika“) (the “Transaction”). Cartika is a full-service IT infrastructure provider specializing in managed cloud and IaaS support for mid-market businesses. Cartika, located in Toronto, Ontario, has 12 Full Time Equivalents and has been servicing its 200+ customers since 2000. For the 12 months ended December 31, 2021, Cartika had revenues of approximately $1.5 million and EBITDA of $128 thousand. Over 95% of its revenues are recurring. Cartika is expected to be an accretive acquisition and is expected to contribute significantly to Jasper’s revenue and accelerate EBITDA breakeven.

Under the proposed transaction, Jasper would acquire 100% of the issued and outstanding shares of Cartika in exchange for the following consideration: (i) $300,000 in cash from Jasper’s existing cash balance (ii) $200,000 in a Vendor Take Back, payable over three years with principal and interest payments; and (iii) $1,050,000 in Jasper common shares at the greater of Jasper’s volume weighted average trading price for the ten trading days prior to the closing date, and $0.50 per share; and (iv) up to $1,000,000 over 2 years (“Earn Out” ) conditional upon revenue growth of Cartika payable in Jasper common shares at the greater of Jasper’s volume weighted average trading price for the ten trading days prior to the end of the applicable Earn Out period, and $0.50 per share. In addition to statutory hold periods, all shares issued in conjunction with this Transaction will have a 12 month hold on them in addition to applicable statutory hold periods.

SUBSEQUENT EVENTS

There were no subsequent events to report.

OUTLOOK

Looking forward to fiscal 2023, management expects the revenue growth of the SaaS PIM Subscription business to accelerate. Revenue from professional services will likely decline as a percentage of overall revenue.

OVERALL PERFORMANCE

In the 3 months ended October 31, 2022, Jasper had revenues of $379,726 (2021 - $452,262), a decrease of 16% from the 3 months ended October 31, 2021 and had a net loss of $1,312,382 (2021 - $991,691). Subscription revenue increased year-on-year but there was larger drop in professional services revenue.

SELECTED FINANCIAL INFORMATION

The following table sets out selected financial and share information of the Company for the periods then ended.

KEY FINANCIAL METRICS	3 months ended October 31, 2022 (unaudited)	3 months ended October 31, 2021 (unaudited)
Revenue	379,726	452,262

Expenses
General and Administrative	544,698	391,576
Research and development	337,245	290,371
Sellingand marketing	350,970	238,384
Hosting	104,541	63,859
Customer Support	266,848	158,007
Stock-based compensation	81,155	69,583
Depreciation	13,646	2,421
Foreign exchange loss(gain)	(2,413)	900
Finance costs	(4,582)	228,852
	1,692,108	1,443,953

Net Loss	(1,312,382)	(991,691)

Weighted Average number of Shares Outstanding
	58,079,619	27,069,257
Lossper share(weighted)	(0.02)	(0.04)

	As at Oct 31, 2022	As at July 31, 2022
Total Assets	2,073,778	3,250,220
Total Current Liabilities	1,136,338	1,013,432
Total Non-Current Liabilities	160,893	229,014

RESULTS OF OPERATIONS

Revenues

Jasper’s primary revenue model is subscription based, whereby customers sign up for a month-to-month or annual term, agreeing to pay Jasper monthly (or annually) for ongoing usage of the PIM platform.

The secondary revenue model is from carefully curated strategic professional services, offered by qualified Jasper staff to assist Jasper PIM customers with the setup of the product, training on best-practices, solution planning with the intent of integrating the PIM with other business systems.

Revenues for the 3 months ended October 31, 2022 were $379,726 (2021 revenues were $452,262). Revenues from subscriptions were up 8% year-on-year to $308,554, compared to $285,038 in 2021. Revenues from professional services were down on a year-on-year basis from $167,224 in 2021 to $71,172 in 2022 as the Company is no longer taking on bespoke projects, which tend to generate lower margins.

General and Administration

General and administration consist primarily of the salaries of the CEO, CFO, COO/CTO and administrative support, office costs, various professional services, and advisory. Total expenses were $544,698 (2021 - $391,576) for the 3 months ended October 31, 2022. Increases in expenditure from 2021 to 2022 were primarily in salaries.

Research and Development,

Research and development consist of employee salaries and fees from contractors. These costs totaled $337,245 (2021 –$290,371) for the 3 months ended October 31, 2022. The Company increased investment in employee headcount.

Selling and marketing

Selling and marketing spend was $350,970 (2021 - $238,384) in the 3 months ending October 31, 2022. The Company increased investment in employee headcount.

Hosting

Hosting in the 3 months ending October 31, 2022 was up to $104,541 (2021 – $63,859). The year-on-year increase was due both to an increase in the subscription revenue and more investment being made in the infrastructure. The Company was looking to optimize its current infrastructure to reduce spend as percentage of growing subscription revenue.

Customer support

Customer support spend was $266,848 (2021 –$158,007) in the 3 months ending October 31, 2022. The Company expanded the size of its internal customer support team.

Stock based compensation

Stock-based compensation increased to $81,155 in the 3 months ending October 31, 2022 (2021 - $69,583). The increase year-on-year was due to new stock options being issued in the quarters ending April 30, 2022 and October 31, 2022.

Depreciation

Depreciation in the 3 months ending October 31, 2022 were $13,646 (2021 - $2,421). The increase year-on-year was primarily due to the purchasing of computers for new joiners.

Finance costs

In the 3 months ending October 31, 2022, finance costs were negative $ 4,582 (2021 - $228,852). The current period includes interest earned on invested funds, and the prior year includes the cost of debt that was converted to equity on February 16, 2022.

Net Loss

Jasper’s net loss for the 3 months was $1,312,382 (2021 - $991,691).

LIQUIDITY AND CAPITAL RESOURCES

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The reported financial position of the Company presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. As at October 31, 2022, the Company has incurred accumulated deficit

of $17,456,083 since the Company commenced operations in 2010. On October 31, 2022, the Company had a cash balance of $1,168,760 and a working capital surplus of $868,800.

Cash flows from operating activities primarily consist of the Company’s loss before adjusting for certain non-cash items such as depreciation, stock-based compensation and finance costs, and changes in working capital.

Net cash outflows from operating activities for the 3 months ended October 31, 2022 increased to $1,122,658, compared to $625,880 in the 3 months ending October 31, 2021. The increase was due to an uplift in expenditures.

There was cash outflow from financing activities for the 3 months ending October 31, 2022 of $20,663, compared to $153,181 of cash outflows in the 3 months ending October 31, 2021. The primary reason for the decrease was because there was no interest paid on convertible debt. That debt was converted to equity on February 16, 2022. The Company’s ability to continue operations remains dependent upon its ability to: 1) raise additional funds; 2) realize transaction revenues from existing users; and 3) secure new users that provide the Company with adequate funds to cover projected expenditures (or a combination of the foregoing). If the Company does not generate sufficient funds from existing or new customer relationships and is unable to raise additional financing, the Company will have to consider strategic alternatives, which may include, among other things, exploring the monetization of certain intangible assets, modification of planned operating expenditures, or the sale of the Company.

DEBT OBLIGATIONS

The following table sets out the next three years and thereafter of payments of Jasper’s debt obligations:

Debt Obligations as at October 31, 2022		Payments Due	by Year ending October 31	by Year ending October 31	by Year ending October 31
	Total	2023	2024	2025	After 3 years
Business Development Bank of Canada (“BDC”) loan	228,180	130,430	69,530	19,920	8,300
Canada Emergency Business Account (“CEBA”)	60,000	60,000
Total	288,180	190,430	69,530	19,920	8,300

OFF-BALANCE SHEET ARRANGEMENTS

The Company did not have any off-balance sheet arrangements as of October 31, 2022. The Company neither had any commitments for capital expenditures as of October 31, 2022 nor any financing sources arranged, but not yet used.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

On October 31, 2022 and July 31, 2022, the Company holds various forms of financial instruments as follows:

Financial assets/liabilities	Designation	Measurement	October 31,	July 31, 2021
			2022
Cash and cash equivalents	FVTPL	Fair value	1,168,760	2,315,762
Accounts receivable	Loans and receivables	Amortized cost	144,964	226,593
(excluding commodity tax)
Accounts payable and	Other financial liabilities	Amortized cost	893,620	778,401
accrued liabilities
CEBA loan	Other financial liabilities	Amortized cost	60,000	60,000
BDC	Other financial liabilities	Amortized cost	228,180	253,425

The nature of these financial instruments and the Company’s operations exposes Jasper to a number of financial risks, including credit risk, liquidity risk, foreign currency risk and interest rate risk. The Company manages its exposure to these risks by operating in a manner that minimizes its exposure to the extent practical.

Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents and accounts receivable. At October 31, 2022, all of the Company’s cash and cash equivalents were held at a major Canadian bank.

Accounts receivables are subject to normal credit risks. Any amounts not provided for would be considered fully collectible.

Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company 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. See the section titled “Liquidity and Capital Resources” above for further discussion.

The Company 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.

The Company 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.

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

BUSINESS RISKS AND UNCERTAINTIES

The business of the Company is subject to numerous risk factors, including those more particularly described below. An investment in or ownership of Common Shares should be considered highly speculative due to the nature of the Company's business, its current stage of development and the potential requirement for additional financing.

COVID-19

The outbreak of the novel strain of the coronavirus, specifically identified as the COVID-19 pandemic, has caused governments worldwide to enact emergency measures to combat the spread of the virus. The Company applied for and received certain government funding which was integral to the Company’s financial condition. The full extent of the impact of this outbreak and related containment measures on the Company’s operations cannot be reliably estimated at the date these financial statements were approved, and the Company continues to seek available government support.

Substantial Capital Requirements; Liquidity; Going Concern

Because of the costs associated with further development of Jasper's technology and business, and the fact that Jasper's ability to generate revenue will depend on a variety of factors (including the ability of Jasper to meet its development schedule and consumer acceptance of Jasper technologies), additional funds may be required to support Jasper's business. Jasper has accumulated a substantial deficit and continues to have operating losses. These conditions indicate the existence of material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Additional funds (whether through additional equity financing, debt financing or other sources) may not be available (at all or on terms acceptable to Jasper) or may result in significant dilution to Jasper shareholders or significant interest obligations. The inability to obtain additional funds in the short term will have a material adverse effect on Jasper's business, results of operations, and financial condition and could result in the Company ceasing operations.

No Record of Profit

Jasper has incurred significant losses to date, and there can be no assurance that the future business activities of Jasper will be profitable. Since its organization, Jasper has incurred costs to develop and enhance its technology, to establish strategic relationships and to build administrative support systems. Jasper has incurred negative operational cash flow to date. Jasper incurred losses of $1,311,640 for the 3 months ending October 31, 2022 and $991,691 for the 3 months ending October 31, 2021. Jasper's ability to operate profitably and generate positive cash-flow in the future will be affected by a variety of factors (including: its ability to further develop and test its technology on schedule and on budget, the pace at which it secures additional users, the time and expense required for the roll-out of its technology, its success in marketing its applications, the intensity of the competition experienced by Jasper and the availability of additional capital to pursue its business plan, including development of new solutions and services). An inability to generate sufficient funds from operations will have a material adverse effect on Jasper's business, results of operations and financial condition.

Developing Market

Jasper is engaged in the development and marketing of an application that is relatively new and, as such, the primary market for Jasper's applications is underdeveloped and continues to evolve. As is typical in the case of a new evolving industry segment, the demand for the Company's applications is subject to a high level of uncertainty. If the markets for the Jasper applications fail to develop, develop more slowly than expected or become saturated with competitors, or if the Company's applications do not achieve and maintain market acceptance, the Company's business, results of operations and financial condition will be materially adversely affected.

Current Enterprise Value assigned by the Market Liquidity

The actions of all stakeholders in the business may be adversely affected by the current market capitalization of the Company. These stakeholders include users, potential users, competitors, and current or prospective employees. These stakeholders may ascribe a higher business risk to the Company due to its relatively low market capitalization, and any perception of higher risks may have a material adverse effect on Jasper's business, results, and financial condition.

Third-Party Technology

In providing its solutions and services, Jasper is, and will continue to be, dependent on technologies and infrastructure that are beyond Jasper's control, including smartphones, computers, cellular telephone networks, cloud computing services, and payment systems. There can be no assurance that, if weaknesses or errors in third-party software or hardware are detected, Jasper will be able to correct or compensate for such weaknesses or errors. If Jasper is unable to address weaknesses or errors and the Company's technology is therefore unable to meet consumer needs or expectations, Jasper's business, results of operations and financial condition will be materially adversely affected. In addition, there can be no assurance that the Company will continue to have access to required third-party technology on terms acceptable to Jasper. If Jasper is unable to obtain third-party technology on acceptable terms, Jasper's business, results of operations and financial condition will be materially adversely affected.

Rapid Technological Change

The technology industry is subject to rapid change, and the inability of Jasper to adapt to such change may have an adverse effect on Jasper's business, results of operations and financial condition. The effect of new developments and technological changes on the business sector in which Jasper is active cannot be predicted. Such developments would include but are not limited to: change in web browser technology, how mobile advertising is delivered by advertisers and transacted with potential consumers, changes to or the development of alternative payment systems, changes to smartphone technology, a change in the success rate on the application of analytics in advertising, consumer backlash resulting from the collection and use of demographic intelligence, and industry consolidation. Jasper's failure to adapt to any of the above could have a material adverse effect on Jasper's business, results of operations and financial condition.

Competition

Jasper is subject to competition from other organizations (many of which have substantially greater human and financial resources) and there can be no assurance that Jasper will be able to compete effectively in its target markets. Technologies do exist that are competitive with the Company's offerings. Certain organizations with substantially greater financial and human resources than the Company have active research and development initiatives involving the development and implementation of consumer online and mobile buy/sell/trade solutions. The inability of Jasper to preserve existing users and secure additional users due to competitive technologies will have a material adverse effect on Jasper's business, results of operations and financial condition.

In addition, advances in communications technology as well as changes in the marketplace and the regulatory environment are constantly occurring and any such change could have a material adverse effect on Jasper.

Need for Research and Development

To achieve its business objectives and obtain market share and profitability, Jasper will need to continually research, develop and refine the Company's applications. Many factors may limit Jasper's ability to develop and refine required technologies or to create, acquire or negotiate access to new technologies. Jasper may also be exposed to marketplace resistance to new technology and services. Any failure of Jasper to develop new technologies or refine its existing technologies or offer new applications could have a material adverse effect on Jasper's business, results of operations and financial condition.

Defects and Liability

The software utilized to deliver the Company's applications is complex and sophisticated and may contain design defects or software errors that are difficult to detect and correct. There can be no assurance that the Company's technologies will be free from errors or defects, or, if discovered, that Jasper will be able to successfully correct such errors in a timely manner or at all. Errors or failures in the Company's technologies could result in loss of or delay in market acceptance and usage of the Company's applications and correcting such errors and failures could require significant expenditures. Because of the competitive nature of the marketplace in which the Company’s applications is delivered, the reputational harm resulting from errors and failures could be very damaging to Jasper. The consequences of such errors and failures could have a material adverse effect on Jasper's businesses, results of operations and financial condition.

Patents and Other Intellectual Property

Competitors may have filed patent applications or hold issued patents relating to services or processes competitive with those of Jasper. Others may independently develop similar services or duplicate unpatented elements of the Company's technologies.

Jasper's success will be largely dependent upon its ability to protect its proprietary technologies. Jasper relies upon copyrights, trademarks, and trade secrets to protect its intellectual property. Where appropriate, Jasper also enters into non-disclosure agreements with persons to whom it reveals proprietary information. Any failure or inability on the part of Jasper to protect its intellectual property could have a material adverse effect on Jasper's business, results of operations and financial condition.

Jasper may be required to engage in litigation in the future to enforce or protect its intellectual property rights or to defend against claims of invalidity and Jasper may incur substantial costs as a result. Any claims or litigation initiated by Jasper to protect its intellectual property could result in significant expense to Jasper and diversion of the efforts of Jasper's technical and management resources, whether or not the claims or litigation are determined in favor of Jasper.

Ability to Manage Growth

Responding to consumer demands, expansion into other geographical markets and targeted growth in Jasper's business has placed, and is likely to continue to place, significant strains on Jasper's administrative and operational resources and increased demands on its management, internal systems, procedures and controls. If Jasper experiences rapid acceptance of its applications, the need to manage such growth will add to the demands on Jasper's management, resources, systems, procedures and controls. There can be no assurance that Jasper's administrative infrastructure, systems, procedures and controls will be adequate to support Jasper's operations or that Jasper's officers and personnel will be able to manage any significant expansion of operations. If Jasper is unable to manage growth effectively, Jasper's business, operating results and financial condition will be materially adversely affected.

Personnel Resources

Jasper is (and will continue to be) reliant upon its management and technical personnel in all aspects of its business, including to anticipate and address consumer demands in areas such as software development, customer service, marketing, finance, strategic planning and management. There can be no assurance that qualified management or technical personnel will be available to Jasper in the future. The loss of services of any of the Company's management or technical personnel could have a material adverse effect on its business, results of operations and financial condition.

Potential Fluctuations in Quarterly Operating Results

Jasper expects to be exposed to significant fluctuations in quarterly operating results caused by many factors, including: changes in the demand for and or usage of the Company's applications, the introduction of competing technologies, market acceptance of enhancements to the Company's applications, delays in the introduction of enhancements to the Company's applications, changes in Jasper's pricing policies or those of its competitors, the mix of solutions and services sold, foreign currency exchange rates and general economic conditions. Such fluctuations could have a material adverse effect on Jasper's business, results of operations and financial condition.

Risk of Industry Consolidation

Jasper may have established working relationships that are undermined by a business combination or other transaction with another business in the marketplace. This could have a material adverse effect on Jasper's business, results of operations and financial conditions.

Government Regulation

The marketplace within which Jasper operates is in constant flux in relation to government regulation. Areas being regulated include regulation relating to online payments, privacy, restricted category (or class) of goods for resale, consumer protection laws, and opt-in requirements for mobile applications. Regulation is also being considered for use and application of consumer demographic information for mobile advertising purposes and other areas impacting on mobile advertising. The consequences of such regulation or changes to such regulation could have a material adverse effect on Jasper’s business, results of operations and financial condition.

OUTSTANDING SHARE DATA

Jasper’s outstanding share capital consists of common shares. The Company is authorized to issue an unlimited number of common shares. As at October 31, 2022, the Company had 58,079,619 (July 31, 2022 – 58,079,619) common shares outstanding.

On February 16, 2022, immediately prior to an RTO transaction, Jasper split its issued and outstanding common shares on the basis of one pre-split common share for approximately 13.95 post-split common shares, which resulted in a change in the number of common shares outstanding from 1,940,681 to 27,069,258. The issued and outstanding common shares, warrants and options have been retroactively restated to reflect this share split.
On February 16, 2022, as part of an RTO transaction, Jasper issued 6,500,000 common shares and 100,000 common share purchase warrants in exchange for all the issued and outstanding common shares of SCC. In addition, the Company issued 1,440,784 common shares as a finder’s fee for the RTO transaction.
On February 16, 2022, concurrent with the RTO transaction, Jasper completed a brokered private placement for aggregate gross proceeds of $6,000,000 at a price of $0.50 per unit. Each unit consisted of one common share and one-half common share purchase warrant, resulting in an issuance of 12,000,000 common shares.
On February 16, 2022, a total $3,483,000 principal amount of convertible debentures and $125,942 accrued interest automatically converted into equity as part of the RTO transaction at a price equal to the price of new equity offered concurrently less a 35% discount. This resulted in an issuance of 11,104,447 common shares at a conversion price of $0.325.
On March 25, 2022 Jasper paid $15,000 to repurchase 34,870 common shares from a former shareholder.

As at October 31, 2022 Jasper had 14,383,933 (October 31, 2021 – 7,341,773) share purchase warrants outstanding with an approximate weighted average exercise price of $0.53.

On February 16, 2022, in connection with the RTO transaction Jasper issued 100,000 warrants to shareholders of SCC with each warrant exercisable for approximately 5 years at a price of $0.20.
On February 16, 2022, concurrent with the RTO transaction, Jasper completed a brokered private placement for aggregate gross proceeds of $6,000,000 at a price of $0.50 per unit. Each unit consisted of one common share and one-half common share purchase warrant, resulting in an issuance of 6,000,000 warrants, with each warrant exercisable for 2 years at a price of $0.70.
On February 16, 2022, in connection with the brokered private placement, Jasper issued 942,160 broker warrants with each warrant exercisable for 2 years at a price of $0.50

As at October 31, 2022 Jasper had 4,666,605 (July 31, 2022 – 3,216,605) stock options outstanding with an approximate weighted average exercise price of $0.37 per share.

RELATED PARTY TRANSACTIONS

A shareholder also has a controlling interest in three of Jasper’s customers. During the year ended October 31, 2022, Jasper earned revenue of $2,925 (2021 – $60,478) from those customers. As of October 31, 2022, Jasper was owed $1,102 (October 31, 2021 – $32,911) from those customers.

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

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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s unaudited interim condensed consolidated financial statements for the 3 months ended October 31, 2022 and October 31, 2021 were prepared in accordance with IFRS, as issued by the International Accounting Standards Board (" IASB "). Please refer to Note 2 of the Company's audited financial statements for a detailed discussion regarding the significant accounting policies relied upon in the preparation of the financial statements, the application of critical estimates and judgements in the preparation of the financial statements and recent accounting pronouncements.