Jasper Commerce Inc. — Interim / Quarterly Report 2024

Apr 2, 2024

Jasper Commerce Inc.

Unaudited Condensed Consolidated Interim Financial Statements For the three and six months ended January 31, 2024 and 2023

(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 financial statements, 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 financial statements in 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 January 31, 2024 and July 31, 2023 (Unaudited)(in Canadian Dollars)

Note January 31, 2024	July 31, 2023
Assets Current assets: Cash and cash equivalents $ 110,634 Accounts receivable 10 74,857 Government tax and subsidy receivable 13 15,934 Contract assets - Prepaid expenses and deposits 56,720	$ 142,853 85,227 104,900 508 74,638
258,145 Non-current assets: Furniture and equipment 3 10,879	408,126 32,575
$ 269,024	$ 440,701
Liabilities Current liabilities: Accounts payable and accrued liabilities $ 619,660 Contract liabilities 159,869 Loanspayable 4 83,920	$ 606,104 54,355 152,360
863,449 Non-current liabilities: Contract liabilities 27,643 Loans payable 4 420,995 Convertible debentures 5 680,340	812,819 28,874 60,995 567,476
1,992,427	1,470,164
Shareholders' deficiency: Share capital 14,671,804 Options reserve 6 341,927 Warrants reserve 6 2,913,385 Conversion feature reserve 6 85,512 Accumulated deficit (19,736,031)	14,671,804 606,210 2,902,412 77,829 (19,287,718)
(1,723,403)	(1,029,463)
$ 269,024	$ 440,701

Nature of operations and going concern (see Note 1) Subsequent events (see Note 14) Approved by: Approved by: “Mag Saad” “Jeffrey Klam” Mag Saad, Director Jeffrey Klam, Director

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

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Jasper Commerce Inc. Condensed Consolidated Interim Statements of Loss and Comprehensive Loss For the three and six months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

		Three months ended Jan 31,	Three months ended Jan 31,	Six months	ended Jan 31,
	Note	2024	2023	2024	2023
Revenues	11	$ 257,401	$ 363,489	$ 543,360	$ 743,215
Expenses
General and administrative		221,177	660,941	461,306	1,205,639
Research and development		56,412	233,496	122,820	570,741
Selling and marketing		179,886	325,473	319,334	676,443
Hosting		56,048	108,257	116,834	212,798
Customer support		62,750	175,554	123,318	442,402
Stock-based compensation	6	(37,433)	3,319	(11,398)	84,474
Depreciation	3	10,737	12,169	21,696	25,815
Foreign exchange loss (gain)		35	2,421	(2,490)	8
Finance costs	12	50,360	1,869	93,138	(2,713)
		599,972	1,523,499	1,244,558	3,215,607
Net loss and comprehensive loss		$ (342,571) $ (1,160,010)		$ (701,198)	$ (2,472,392)
Basic and diluted loss per share		$ (0.01)	$ (0.02)	$ (0.01)	$ (0.04)
Weighted average number of	common
shares - basic and diluted		58,079,619	58,079,619	58,079,619	58,079,619

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

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Jasper Commerce Inc.

Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity (Deficiency) For the six months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

Note	Number of common shares Share capital Options reserve Warrants reserve Conversion feature reserve	Deficit Total
Balance, August 1, 2023 Stock based compensation 6 Stock options expired unexercised Debenture conversion feature Warrants Issued with debentures 6 Comprehensive loss for theperiod	58,079,619 $ 14,671,804 $ 606,210 $ 2,902,412 $ 77,829 - - (11,398) - - - - (252,885) - 10,973 - 7,683 - - - - -	$ (19,287,718) $ (1,029,463) - (11,398) 252,885 - 7,683 10,973 (701,198) (701,198)
Balance, January 31, 2024	58,079,619 $ 14,671,804 $ 341,927 $ 2,913,385 $ 85,512	$ (19,736,031) $ (1,723,403)

Note Number of Common Shares Share capital Options Reserve Warrants Reserve Deficit	Total
Balance, August 1, 2022 58,079,619 $ 14,671,804 $ 725,256 $ 2,754,415 $ (16,143,701) Stock based compensation 6 - - 84,474 - - Comprehensive loss for theperiod - - - - (2,472,392)	$ 2,007,774 84,474 (2,472,392)
Balance, January 31, 2023 58,079,619 $ 14,671,804 $ 809,730 $ 2,754,415 $ (18,616,093)	$ (380,144)

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

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Jasper Commerce Inc. Condensed Consolidated Interim Statement of Cash Flows For the six months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

Note 2024	2023
Cash flows used in operating activities: Loss for the year $ (701,198) Adjustments for items not affecting cash: Stock-based compensation 6 (11,398) Depreciation 21,696 Finance costs 12 93,138 Changes in non-cash working capital balances: Accounts receivable 10,370 Government tax and subsidy receivable 88,966 Contract assets 508 Prepaid expenses and deposits 17,918 Accounts payable and other liabilities (60,926) Contract liabilities 104,283	$ (2,472,392) 84,474 25,815 (2,713) 74,855 (34,079) 15,828 132,082 32,534 (28,920)
(436,643)	(2,172,516)
Cash flows from financing activities: Proceeds from loans 4 412,864 Interest received (paid) Loan repayments (8,440)	- 2,713 (50,490)
404,424	(47,777)
Cash flows used in investing activities: Purchase of furniture and equipment -	(3,806)
-	(3,806)
Net increase in cash and cash equivalents (32,219) Cash and cash equivalents,beginningofperiod 142,853	(2,224,099) 2,315,762
Cash and cash equivalents, end ofperiod $ 110,634	$ 91,663

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

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

1. Nature of operations and going concern

Jasper Commerce Inc. (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 15 Wellesley Street West, Suite 214, Toronto, Ontario, M4Y 0G7. The Company’s common shares trade 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, 2023.

The unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors on April 2, 2024.

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.

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, 2023.

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

3. Furniture and equipment

	Computer hardware Office furniture Total
	Cost July 31, 2023 $ 200,355 $ 46,580 $ 246,935 Additions - - -
	January 31, 2024 200,355 46,580 246,935
	Accumulated amortization July 31, 2023 167,780 46,580 214,360 Amortization for theperiod 21,696 - 21,696
	January 31, 2024 189,476 46,580 236,056
	Net book value July 31, 2023 $ 32,575 - $ 32,575 Net book value January 31, 2024 $ 10,879 - $ 10,879

4. Loans payable

4. Loans payable
Rate of Interest	Maturity Jan 31, 2024	Jul 31, 2023
BDC Term Loan-03 Floating+2.5% BDC Term Loan-06 Floating+2% BDC Term Loan-07 Floating+2% BDC Term Loan-08 Floating-1.75% BDC Term Loan-09 Floating+2% CEBA Loan 5% PromissoryNote 8%	Apr 2025 $ 30,800 Sep 2024 6,230 Nov 2024 24,120 Oct 2026 32,305 Sep 2026 51,460 Dec 2026 60,000 Dec 2026 300,000	$ 33,000 7,120 26,800 33,315 53,120 60,000 -
Currentportion	504,915 (83,920)	213,355 (152,360)
Non-currentportion	$ 420,995	$ 60,995

BDC loans are guaranteed by a former director of the Company. The maturity dates on this schedule are updated to reflect BDC’s August 24, 2023 agreement to defer principal payments and to defer the maturity dates of each loan. On December 21, 2023 six (6) notes issued to a shareholder were combined into one loan of $300,000 due December 21, 2026 bearing interest at 8% payable semi-annually in arrears commencing with June 21, 2024.

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

5. Convertible debentures

Rate of interest	Maturity Principal amount Amortized cost Jan 31, 2024	Amortized cost Jul 31, 2023
Debenture 1 12.0% Debenture 2 15.0%	Feb 2028 $ 900,000 $ 588,245 Dec 2026 $ 115,500 $ 92,095	$ 567,476 -
Currentportion	- -	-
Non-currentportion	$ 1,015,500 $ 680,340	$ 567,476

Debenture 1: Each convertible debenture is convertible at the holder's option into fully-paid common shares at any time prior to the maturity date at a conversion price of $0.10 per common share. If the volume weighted average price of the Company’s common shares for any 60-day period prior to the maturity date equals or exceeds $0.35 per common share then any outstanding convertible debentures at that time automatically will be converted into common shares at the then applicable conversion price effective the 60th day of such period. The convertible debentures are secured obligations of the Company and have a floating charge over the Company's assets.

Debenture 2: Each convertible debenture is convertible at the holder's option into fully-paid common shares at any time prior to the maturity date at a conversion price of $0.05 per common share before December 21, 2025 and at $0.10 per common share thereafter. The convertible debentures are secured obligations of the Company and have a floating charge over the Company's assets.

6. Reserves

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

a) Issued and outstanding common share purchase warrants

Weighted Average Exercise Price($)	Number
Outstanding, August 1, 2023 0.30 Issued December 21, 2023 0.05 Expired 0.24	31,796,781 2,194,500 (682,528)
Outstanding, January 31, 2024 0.28	33,308,753

7,042,160 warrants expired in February 2024. These had a combined weighted average exercise price of $0.67.

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

6. Reserves (continued)

Warrants outstanding as of January 31, 2024 are as follows:

	Weighted Average Remaining
Exercise Price ($)	Contractual Life in Years	Outstanding
0.05	2.6	2,670,500
0.10	3.0	18,000,000
0.20	0.0	100,000
0.49	1.7	2,331,946
0.50	0.0	942,160
0.51	1.1	802,029
0.54	1.2	2,462,118
0.70	0.0	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 January 31, 2024, 5,034,989 stock options remain outstanding at exercise prices ranging from $0.05 to $0.50 per share. Options may vest immediately or may vest ratably over a period of three years. All options have a life of five years and have expiry dates ranging from April 2024 to December 2028.

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.

During the three months ended January 31, 2024, ($37,433) (2022 – $3,319) was recognized as stock-based compensation in profit and loss. This expense includes a reversal of $50,215 (2022 – $62,589) of expenses recognized in a previous period for which the award did not ultimately vest.

At January 31, 2024, the remaining unvested value of the Company’s stock options is $29,383 which will be recognized through May 2026.

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

6. Reserves (continued)

The following table sets out information concerning stock options issued to employees, consultants, directors and officers that were outstanding at January 31, 2023:

Weighted Average Exercise Price ($)	Number of Options
Outstanding, August 1, 2023 0.24 Issued December 22, 2023 0.05 Expired 0.50 Forfeited 0.24	5,099,964 2,450,000 (139,484) (2,375,491)
Outstanding, January 31, 2024 0.14	5,034,989

The following table summarizes information about the stock options outstanding at January 31, 2024:

Exercise Prices per Share ($) Weighted Average Remaining Contractual Life in Years	Number of Options Outstanding Number of Options Vested/Exercisable
0.05 3.0 0.13 0.4 0.45 0.0 0.50 0.2	3,375,000 2,450,000 743,333 436,667 139,483 139,483 777,173 631,023
3.7	5,034,989 3,657,173

c) Conversion feature

Both debentures referenced in Note 5, include a conversion feature. The conversion feature reserve on the Statement of Changes in Shareholders’ Equity, consists of the option value assigned to the convertible debentures. For Debenture 1, $77,829, and for Debenture 2, $7,683 the option value was estimated using the Black-Scholes option valuation model and included an appropriate allocation of financing costs and tax adjustments.

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

7. Related party transactions

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

8. Key management compensation

Ended January 31, 2024 (6 Mths)	2023 (6 Mths)
Salaries $ 183,450 Stock-based compensation (25,077)	$ 283,050 26,545
$ 158,373	$ 309,595

Key management includes the senior officers of the Company.

9. Financial instruments

a) Classification of financial instruments

		Carrying Value ($)	Fair Value ($)
	Classification	January 31, 2024	January 31, 2024
Financial assets:
Cash and cash equivalents	Amortized cost	110,634	110,634
Accounts receivable	Amortized cost	74,857	74,857
Financial liabilities:
Accounts payable and accrued liabilities	Amortized cost	619,660	619,660
Loans payable (Note 4)	Amortized cost	504,915	482,084
Convertible debentures (Note 5)	Amortized cost	680,340	784,065

b) Fair value of financial instruments

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

The fair values for loans payable and convertible debentures are estimated assuming a market rate of interest for arms-length debt would be 25%.

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.

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

• Level 3 Inputs for assets and liabilities not based upon observable market data.

Jasper’s loans and debentures are measured on initial recognition using level 3 inputs.

There were no transfers between Level 1, Level 2, or Level 3 for the three months ending January 31, 2024 and 2023.

10. 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.

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 January 31, 2024, 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 January 31, 2024, two customers represented 58% (July 31, 2023 – 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.

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

10. Financial risk management (continued)

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

Balance, January 31, 2024 Current	1 to 30 days	31 to 60 days	61 to 90 days	Over 90 days Total
Accounts receivable $ 64,550 Expected credit losses -	$ 3,272 -	$6,345 -	- -	$ 690 $ 74,857 - -
$ 64,550	$ 3,272	$ 6,345	$ 0	$ 690 $ 74,857
Balance, July 31, 2023 Current	1 to 30 days	31 to 60 days	61 to 90 days	Over 90 days Total
Accounts receivable $ 41,269 $ 25,016 Expected credit losses (6,277) -		$ 12,665 -	$ 6,277 -	$ 6,277 $91,504 (6,277)
$ 34,992 $ 25,016		$ 12,665	$ 6,277	$ 6,277 $ 85,227

For the six months ending January 31, 2024, Jasper reflected credit losses of $nil (2023 – $nil) in the consolidated statements of operations and comprehensive loss which are included in selling and marketing expenses.

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 January 31, 2024, Jasper had current liabilities of $258,145, cash of $110,634, and working capital deficit of $605,304. The Company’s financial liabilities are due as follows:

Measured To July 31, 2024	2025 2026 2027	2028
AP and accrued liabilities $ 619,660 Loans payable 42,200 $900,000 Conv Debenture 1 - $115,500 Conv Debenture 2 -	- - - $ 64,340 $ 32,040 $ 366,335 - - - - - $ 92,095	- - $ 588,245 -
Total $ 661,860	$ 64,340 $ 32,040 $ 458,430	$ 588,245

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

11. 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 six months ended January 31, 2024, Jasper earned revenue attributed to the following product categories based on the main product or service sold to the customer:

2024	2023
SaaS PIM subscriptions $ 524,991 Professional services 18,369	$ 633,903 109,312
Total $ 543,360	$743,215

Geographic information

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

2024	2023
United States $ 339,963 Canada 50,061 Rest of world 153,336	$ 245,229 75,251 131,782
Total $ 543,360	$452,262

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

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Jasper Commerce Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three months ended January 31, 2024 and 2023 (Unaudited)(in Canadian Dollars)

12. Finance costs

Finance costs comprise the following:

2024	2023
Interest on convertible debentures $ 56,390 Accretion on convertible debentures 21,519 Interest on loans 15,417 Interest earned on invested funds (188)	- - $ 10,738 (13,451)
Total $ 93,138	$(2,713)

13. Government support

During the year ended July 31, 2021, Jasper received $60,000 of loan proceeds in connection with the CEBA program. As at January 31, 2024 this loan amount is included in Loans under non-current liabilities.

The Government tax and subsidy receivable of $15,934 (July 31, 2023 – $104,900) is comprised of GST/HST receivable of $15,417 (July 31, 2023 – $24,026) and a Scientific Research and Experimental Development Receivable of $nil (July 31, 2023 – $80,874).

14. Subsequent events

On February 13, 2024 Jasper obtained consent, from 67.8% of the holders of “Debenture 1”, to a waiver of the payment of the 2024 Interest Obligation provided that the 2024 Interest Obligation shall compound and bear interest from the date the 2024 Interest Obligation is due at the rate of 12% per annum and the 2024 Interest Obligation plus accrued interest thereon shall be due and payable by the Corporation one year following the date on which the 2024 Interest Obligation is due, as applicable, on the Convertible Debentures.

Accrued interest of $ 101,263 on these debentures are treated as “current” in these financial statements as this consent occurred after the close of the period. This amount is no longer current.

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