No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.

PROSPECTUS

Non-Offering Prospectus

June 3, 2021

NEXTPOINT ACQUISITION CORP.

(to be renamed NextPoint Financial Inc. in connection with its qualifying acquisition with respect to Franchise Group Intermediate L 1, LLC and LoanMe, Inc.)

No securities are being offered pursuant to this prospectus. This prospectus is being filed with the securities regulatory authorities in each of the provinces and territories of Canada, other than Québec, by NextPoint Acquisition Corp. (“ NAC ”), which is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia. NAC was organized for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization, or any other similar business combination involving NAC that will qualify as its “qualifying acquisition”. Since no securities are being sold pursuant to this prospectus, no proceeds will be raised pursuant to this prospectus. NAC completed its initial public offering on August 11, 2020 for gross proceeds of US$200 million. The gross proceeds of the initial public offering were placed in an escrow account and will be released upon consummation of the Transaction (as defined herein) in accordance with the terms and conditions of the Escrow Agreement (as defined herein).

On February 22, 2021, NAC announced that it had entered into definitive purchase agreements with respect to each of Franchise Group Intermediate L 1, LLC (“ Liberty ”) (the “ Liberty Agreement ”) and LoanMe, Inc. (“ LoanMe ”) (the “ LoanMe Agreement ” and together with the Liberty Agreement, the “ Transaction Agreements ”) pursuant to which NAC shall acquire, directly or indirectly, all of the equity interests of each of Liberty and LoanMe (each, a “ Target Business ” and collectively, the “ Target Businesses ”). The acquisition of the Target Businesses by NAC is referred to in this prospectus as the “ Transaction ” and is intended to constitute NAC’s qualifying acquisition pursuant to the Toronto Stock Exchange (the “ Exchange ”) Company Manual (the “ Exchange Company Manual ”). NAC shall be renamed NextPoint Financial Inc. (referred to herein as “ NextPoint Financial ”) in connection with the completion of the Transaction.

Liberty is a leading provider of tax preparation services in the United States and Canada. Liberty’s tax preparation services and related tax settlement products are offered primarily through franchised locations under the “Liberty Tax Service” brand. Liberty also provides an online digital Do-It-Yourself (“ DIY ”) tax program in the United States. See “ The Business of Liberty ”.

The Transaction positions NextPoint Financial as a one-stop financial services destination for consumers and small businesses, a customer demographic that NextPoint Financial believes is currently underserved by traditional financial institutions. The combination of the Target Businesses establishes a financial services platform that NextPoint Financial intends to expand with complementary financial products and services designed for its customers. By increasing the opportunities for financial connectivity with customers, including the Target Businesses’ significant legacy customer bases, NextPoint Financial expects to strengthen and expand customer relationships, diversify and grow revenue sources, and drive value for its shareholders.

Existing shareholders of NAC will continue to hold an interest in NextPoint Financial after giving effect to the Transaction. Following closing, NextPoint Financial will indirectly own 100% of the Target Businesses, subject to the terms of the Transaction Agreements. See “ Corporate Structure – Summary of Transaction Agreements ”.

Upon completion of the Transaction, NextPoint Financial’s share capital will consist of two classes of issued and outstanding shares: common shares (the “ Common Shares ”) and proportionate voting shares (the “ Proportionate Voting Shares ”) (collectively, the “ Shares ”). Proportionate Voting Shares, or fractions thereof, may at any time, subject to the FPI Condition (as defined in this prospectus), at the option of the holder and subject to certain restrictions, be converted into Common Shares at a ratio of one hundred (100) Common Shares per Proportionate Voting Share. Prior to the conversion, each Proportionate Voting Share carries one hundred (100) votes per Proportionate Voting Share (compared to one vote per Common Share) and is entitled to dividends and liquidation distributions in an amount equal to one hundred (100) times the amount distributed in respect of each Common Share. The Common Shares may at any time, at the option of the holder and with the consent of NextPoint Financial, be converted into Proportionate Voting Shares at a ratio of one (1) Proportionate Voting Share for one hundred (100) Common Shares. Other than as set out above, the Common Shares and the Proportionate Voting Shares generally have the same rights pursuant to our articles. Unless otherwise stated, this prospectus assumes conversion of all Proportionate Voting Shares into Common Shares.

Notwithstanding the foregoing, the board of directors of NextPoint Financial (the “ Board ”) may determine that it is no longer in the best interests of NextPoint Financial that the Proportionate Voting Shares be maintained as a separate class of shares of NextPoint Financial and, as a result, in accordance with NextPoint Financial’s articles, all of the outstanding Proportionate Voting Shares would automatically, without any action on the part of the holder, be converted into Common Shares on the basis of one hundred (100) Common Shares for one (1) Proportionate Voting Share, and in the case of fractions of Proportionate Voting Shares, such number of Common Shares as is determined by multiplying the fraction by one hundred (100) as of the such date, and the Board will not be entitled to issue any more Proportionate Voting Shares thereafter.

NAC’s Class A restricted voting shares (“ Class A Restricted Voting Shares ”) are currently listed for trading on the Exchange under the symbol “NAC.U”. The closing price of the Class A Restricted Voting Shares on the Exchange on February 19, 2021, the last trading day before the Transaction Agreements were announced, was US$10.23. The share purchase warrants of NAC (the “ NAC Warrants ”) are also currently listed for trading on the Exchange under the symbol “NAC.WT.U”. The closing price of the NAC Warrants on February 19, 2021, the last trading day before the Transaction Agreements were announced, was US$0.75. The closing price of the Class A Restricted Voting Shares and the NAC Warrants on the Exchange on June 2, 2021, the last trading day before the date of this prospectus, was US$9.98 and US$1.25, respectively. The Exchange has conditionally approved the listing of the Common Shares and the continued listing of the NAC Warrants following closing of the Transaction under the symbols “NPF.U” and “NPF.WT.U”, respectively. Listing of the Common Shares and the continued listing of the NAC Warrants is subject to NAC fulfilling all of the requirements of the Exchange. The completion of the Transaction is conditional upon, among other things, approval by the Exchange.

An investment in NextPoint Financial is subject to a number of risks that should be carefully considered by investors. In reviewing this prospectus, an investor should carefully consider the matters described under the heading “ Risk Factors ”.

As the Transaction is intended to constitute NAC’s qualifying acquisition, holders of Class A Restricted Voting Shares can (conditional on closing) elect to redeem all or a portion of their Class A Restricted Voting Shares provided that they deposit their Class A Restricted Voting Shares for redemption prior to the Redemption Deadline (as defined herein).

A Redeeming Shareholder (as defined herein) is entitled (conditional on closing) to receive an amount per Class A Restricted Voting Share, payable in cash, equal to the pro-rata portion of: (A) the escrowed funds available in the escrow account at the time immediately prior to the redemption deposit deadline, including interest and other amounts earned thereon; less (B) an amount equal to the total of (i) any applicable taxes payable by NAC on such interest and other amounts earned in NAC’s escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by NAC. This redemption amount is anticipated to be US$10.00 per Class A Restricted Voting Share, assuming a June 30, 2021 redemption date.

Original purchasers of Class A Restricted Voting Shares and/or NAC Warrants from the underwriters in NAC’s initial public offering may have a contractual right of action for rescission or damages against NextPoint Financial and certain other persons. See “ Contractual Right of Action ”.

This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Shareholders should be aware that the acquisition, holding and disposition of the securities described in this prospectus may have tax consequences in Canada, the United States and elsewhere depending on each particular shareholder’s specific circumstances. Shareholders should consult their own tax advisors with respect to such tax considerations. See “ Certain Canadian Federal Income Tax Considerations ” and “ Certain United States Federal Income Tax Considerations ”.

No underwriters have been involved in the preparation of this prospectus or performed any review or independent due diligence of the contents of this prospectus.

The head office of NAC is located at 77 Bedford Road, Katonah, New York, 10536, United States and the registered office is located at 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, BC, V7X 1L3, Canada. The head office of NextPoint Financial will be located at 500 Grapevine HWY, Suite 402, Hurst, TX 76054 and the registered office will be located at 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, BC, V7X 1L3.

iii

GLOSSARY OF TERMS .............................................................................................................................................. 1 PROSPECTUS SUMMARY ....................................................................................................................................... 11 NOTICE TO READERS ............................................................................................................................................. 19 Non-IFRS Measures ................................................................................................................................................ 20 Reconciliation of Non-IFRS Measures .................................................................................................................... 20 CAUTION REGARDING FORWARD-LOOKING STATEMENTS ........................................................................ 21 MARKET AND INDUSTRY DATA .......................................................................................................................... 22 TRADEMARKS AND TRADENAMES .................................................................................................................... 23 CORPORATE STRUCTURE ..................................................................................................................................... 24 NextPoint Acquisition Corp. ................................................................................................................................... 24 Summary of Transaction Agreements ..................................................................................................................... 24 Investor Rights Agreement ...................................................................................................................................... 30 Private Placement .................................................................................................................................................... 31 Debt Financing ........................................................................................................................................................ 31 Principal Steps of the Transaction ........................................................................................................................... 32 Related Party Interests ............................................................................................................................................. 33 Redemption Rights .................................................................................................................................................. 35 Use of Proceeds ....................................................................................................................................................... 36 NextPoint Financial ................................................................................................................................................. 37 MARKET OVERVIEW .............................................................................................................................................. 39 THE BUSINESS OF LIBERTY .................................................................................................................................. 52 General .................................................................................................................................................................... 52 Corporate Strategy ................................................................................................................................................... 53 Franchise Model ...................................................................................................................................................... 53 Online Tax Preparation ............................................................................................................................................ 56 Seasonality ............................................................................................................................................................... 56 Information Technology .......................................................................................................................................... 56 Specialized Skill and Knowledge ............................................................................................................................ 56 New Products ........................................................................................................................................................... 56 Employees ............................................................................................................................................................... 56 Competition ............................................................................................................................................................. 57 Intellectual Property ................................................................................................................................................ 57 Regulatory Matters .................................................................................................................................................. 57 THE BUSINESS OF LOANME ................................................................................................................................. 59 Products ................................................................................................................................................................... 59 Credit Criteria and Underwriting ............................................................................................................................. 60 Servicing Policies and Procedures of LoanMe ........................................................................................................ 63 Principal Markets ..................................................................................................................................................... 64 Corporate Strategy ................................................................................................................................................... 65

Financing ................................................................................................................................................................. 65 Information Technology .......................................................................................................................................... 65 Specialized Skill and Knowledge ............................................................................................................................ 66 New Products ........................................................................................................................................................... 66 Cycles and Economic Dependence .......................................................................................................................... 66 Employees ............................................................................................................................................................... 66 Competition ............................................................................................................................................................. 66 Intellectual Property ................................................................................................................................................ 66 Regulatory Matters .................................................................................................................................................. 66 NARRATIVE DESCRIPTION OF THE BUSINESS OF NAC ................................................................................. 70 NARRATIVE DESCRIPTION OF THE BUSINESS OF NEXTPOINT FINANCIAL INC. .................................... 71 Tax Preparation Services ......................................................................................................................................... 71 Lending Products and Services ................................................................................................................................ 72 Strategic Advantages ............................................................................................................................................... 72 Our Growth Strategy ............................................................................................................................................... 75 REGULATORY APPROVALS .................................................................................................................................. 83 SELECTED CONSOLIDATED FINANCIAL INFORMATION .............................................................................. 85 Pro Forma Consolidated Capitalization ................................................................................................................... 85 Summary Pro Forma Consolidated Financial Information ...................................................................................... 85 DIVIDEND POLICY .................................................................................................................................................. 89 MANAGEMENT’S DISCUSSION AND ANALYSIS .............................................................................................. 90 Non-IFRS Measures ................................................................................................................................................ 90 Forward-Looking Statements .................................................................................................................................. 90 DESCRIPTION OF SECURITIES .............................................................................................................................. 91 Common Shares and Proportionate Voting Shares of the Resulting Issuer ............................................................. 91 Advance Notice Requirements for Director Nominations ....................................................................................... 94 EQUITY INCENTIVE PLANS DESCRIPTION ........................................................................................................ 95 Summary of Equity Incentive Plan .......................................................................................................................... 95 RIGHTS TO PURCHASE SECURITIES ................................................................................................................. 101 NAC Warrants ....................................................................................................................................................... 101 LoanMe Agreement ............................................................................................................................................... 102 SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER ............................................... 103 Lock-Up Agreements ............................................................................................................................................ 103 Founders’ Shares ................................................................................................................................................... 103 PRIOR SALES .......................................................................................................................................................... 104 PRINCIPAL SHAREHOLDERS .............................................................................................................................. 105 DIRECTORS AND EXECUTIVE OFFICERS......................................................................................................... 105 Directors ................................................................................................................................................................ 106 Executive Officers ................................................................................................................................................. 107 Other Reporting Issuer Experience ........................................................................................................................ 111

Cease Trade Orders, Bankruptcies, Penalties or Sanctions ................................................................................... 111 Majority Voting Policy .......................................................................................................................................... 111 Forum Selection By-law ........................................................................................................................................ 112 Conflicts of Interest ............................................................................................................................................... 112 Directors’ and Officers’ Liability Insurance .......................................................................................................... 112 DIRECTORS’ AND EXECUTIVE OFFICERS’ COMPENSATION ...................................................................... 113 Named Executive Officers ..................................................................................................................................... 113 Directors ................................................................................................................................................................ 115 INDEBTEDNESS OF DIRECTORS AND OFFICERS ........................................................................................... 117 AUDIT COMMITTEE .............................................................................................................................................. 117 Composition of the NextPoint Financial Audit Committee ................................................................................... 117 Pre-Approval Policies and Procedures .................................................................................................................. 117 External Audit Service Fees .................................................................................................................................. 117 CORPORATE GOVERNANCE ............................................................................................................................... 117 Statement of Corporate Governance Practices ...................................................................................................... 117 Board of Directors ................................................................................................................................................. 118 Mandate of our Board ............................................................................................................................................ 119 Position Descriptions ............................................................................................................................................. 119 Director Term Limits/Mandatory Retirement ........................................................................................................ 119 Diversity ................................................................................................................................................................ 120 Orientation and Continuing Education .................................................................................................................. 120 Nomination of Directors ........................................................................................................................................ 120 Code of Conduct .................................................................................................................................................... 121 Board and Committee Assessment ........................................................................................................................ 121 Audit Committee ................................................................................................................................................... 121 C&CG Committee ................................................................................................................................................. 122 Key Governance Documents ................................................................................................................................. 124 RISK FACTORS ....................................................................................................................................................... 125 Risks Specifically Related to NextPoint Financial’s Business .............................................................................. 125 Risks Related to the Transaction ........................................................................................................................... 139 General Risks related to the Resulting Issuer including Business Structure, Public Company and Tax Status and Capital Financing Policies .................................................................................................................... 141 General Risks ......................................................................................................................................................... 143 CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS ............................................................ 151 Currency Conversion ............................................................................................................................................. 151 Holders Resident in Canada................................................................................................................................... 151 Non-Canadian Resident Holders ........................................................................................................................... 154 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS .................................................. 156 Scope of this Summary .......................................................................................................................................... 156 Inversion Rules ...................................................................................................................................................... 157

General U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Securities by U.S. Holders ..................................................................................................................................... 158 U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Securities by Non-U.S. Holders .................................................................................................................................................. 166 Backup Withholding and Information Reporting .................................................................................................. 167 PROMOTERS ........................................................................................................................................................... 168 LEGAL PROCEEDINGS AND REGULATORY ACTIONS .................................................................................. 169 INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ...................................... 170 AUDITORS ............................................................................................................................................................... 171 External Auditor Service Fees ............................................................................................................................... 171 REGISTRAR AND TRANSFER AGENT AND WARRANT AGENT................................................................... 172 EXPERTS AND INTERESTS OF EXPERTS .......................................................................................................... 173 MATERIAL CONTRACTS ...................................................................................................................................... 174 CONTRACTUAL RIGHT OF ACTION .................................................................................................................. 175 ENFORCEMENT OF JUDGEMENTS AGAINST FOREIGN PERSONS.............................................................. 176 SECURITIES LAW EXEMPTIONS ........................................................................................................................ 177 CERTIFICATE OF NEXTPOINT ACQUISITION CORP. AND PROMOTER ..................................................... C-1 APPENDIX A - NAC FINANCIAL STATEMENTS .............................................................................................. A-1 APPENDIX B - MANAGEMENT’S DISCUSSION AND ANALYSIS OF NAC .................................................. B-1 APPENDIX C - LIBERTY FINANCIAL STATEMENTS ...................................................................................... C-1 APPENDIX D - MANAGEMENT’S DISCUSSION & ANALYSIS OF LIBERTY .............................................. D-1 APPENDIX E - LOANME FINANCIAL STATEMENTS ...................................................................................... E-1 APPENDIX F - MANAGEMENT’S DISCUSSION & ANALYSIS OF LOANME................................................ F-1 APPENDIX G – NEXTPOINT FINANCIAL UNAUDITED PRO FORMA FINANCIAL STATEMENTS ......... G-1 APPENDIX H – MANDATE OF THE BOARD OF DIRECTORS ........................................................................ H-1 APPENDIX I - AUDIT COMMITTEE CHARTER .................................................................................................. I-1

vii

GLOSSARY OF TERMS

“ $0.25 Extraordinary Dividends ” means any dividend, together with all other dividends payable in the same calendar year by NextPoint Financial, that has an aggregate absolute dollar value which is greater than US$0.25 per Common Share, with the adjustment to the applicable price (as the context may require) being a reduction equal to the amount of the excess;

“ 61-101 Requirements ” has the meaning ascribed thereto under “ Corporate Structure – Related Party Interests ”;

“ ACH ” means Automated Clearing House;

“ AD ” means Area Developer;

“ Advance Notice Provisions ” has the meaning ascribed thereto under the heading “ Description of Securities – Advance Notice Requirements for Director Nominations ”;

“ Affiliate ” means an affiliate as defined under NI 45-106, as it exists upon the date hereof;

“ allowable capital loss ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Holders Resident in Canada – Taxation of Capital Gains and Capital Losses ”;

“ Articles ” means, as applicable, the notice of articles and articles of NAC prior to completion of the Transaction and the notice of articles and articles of NextPoint Financial following completion of the Transaction;

“ Audit Committee ” has the meaning ascribed thereto under the heading “ Audit Committee ”;

“ Base Price ” has the meaning ascribed thereto under the heading “ Equity Incentive Plans Description – Summary of Equity Incentive Plan – Grants under the Equity Incentive Plan ”;

“ BCBCA ” means the Business Corporations Act (British Columbia);

“ Bliksum ” means Bliksum, LLC, the sole shareholder of LoanMe;

“ Bliksum Lock-Up Agreement ” has the meaning ascribed thereto under the heading “ Overview – Transaction Agreements – LoanMe Agreement ”;

“ Bliksum Option ” has the meaning ascribed thereto under the heading “ Corporate Structure – Related Party Interests ”;

“ Bliksum Tax Indemnification Agreement ” has the meaning ascribed thereto under the heading “Overview – Transaction Agreements – LoanMe Agreement ”;

“ Board ” means the board of directors of NextPoint Financial;

“ BPJV ” has the meaning ascribed thereto under “ Corporate Structure – Related Party Interests ”;

“ Business Day ” means any day except a Saturday, a Sunday or any other day on which commercial banks are required or authorized to close in Toronto, Ontario, Canada, Vancouver, British Columbia, Canada or New York, New York;

“ C&CG Committee ” means the Compensation, Nominating and Corporate Governance Committee of NextPoint Financial;

“ Canada-U.S. Tax Convention ” means the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended;

“ Canadian Resident Holder ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Holders Resident in Canada ”;

“ CCPA ” means the California Consumer Privacy Act;

“ CDS ” means CDS Clearing and Depository Services Inc.;

“ CDS Participant ” has the meaning ascribed thereto under “ Corporate Structure – Redemption Rights – Process for Redemption by Non-Registered Holders of Restricted Voting Shares ”;

“ CFPB ” means the United States Consumer Financial Protection Bureau;

“ CFPB Rule ” means the CFPB Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule;

“ Chilmark ” has the meaning ascribed thereto under “ Corporate Structure – Related Party Interests ”;

“ Class A Restricted Voting Shares ” means the Class A restricted voting shares in the capital of NAC which are to be automatically converted into Common Shares, and each a “ Class A Restricted Voting Share ”;

“ Class A Restricted Voting Units ” means the Class A restricted voting units offered to the public under the IPO at an offering price of US$10.00 per Class A restricted voting unit, each comprised of one Class A Restricted Voting Share and one-half of a NAC Warrant;

“ Class B Shares ” means the Class B shares in the capital of NAC which are to be automatically converted into Proportionate Voting Shares, and each a “ Class B Share ”;

“ Class B Units ” means the Class B units of NAC, each comprised of one Class B Share and one-half of a NAC Warrant, and each a “ Class B Unit ”;

“ Code ” means the United States Internal Revenue Code of 1986, as amended;

“ Code of Conduct ” has the meaning ascribed thereto under the heading “ Corporate Governance – Code of Conduct ”;

“ Commitment Letter ” has the meaning ascribed thereto under the heading “ Corporate Structure – Debt Financing ”;

“ Common Shares ” means the common shares of NAC, as redesignated under the Transaction at the Effective Time as common shares in the capital of NextPoint Financial, and having the terms and conditions set forth in the Articles, and each a “ Common Share ”;

“ Consumer Loan Credit Criteria ” has the meaning ascribed thereto under the heading “ The Business of LoanMe – Credit Criteria and Underwriting – Consumer Loan Credit Criteria ”;

“ Converted Option ” has the meaning ascribed thereto under the heading “ Corporate Structure – Summary of Transaction Agreements – LoanMe Agreement – Treatment of LoanMe Securities ”;

“ CRA ” means the Canada Revenue Agency;

“ Credit Criteria ” has the meaning ascribed thereto under the heading “ The Business of LoanMe – Credit Criteria and Underwriting ”;

“ Credit Facility ” has the meaning ascribed thereto under the heading “ Corporate Structure – Debt Financing ”;

“ CSO ” means credit service organization;

“ DFPI ” means the California Department of Financial Protection and Innovation;

“ Disclosure and Insider Trading Policy ” has the meaning ascribed thereto under the heading “ Directors’ and Executive Officers’ Compensation – Named Executive Officers – Overview ”;

“ DOJ ” means the United States Department of Justice;

“ DSU ” means deferred share units;

“ DSU Plan ” has the meaning set out under the heading “ Equity Incentive Plans Description – Deferred Share Unit Plan ”;

“ Effective Date ” means the closing date of the Transaction;

“ Effective Time ” means the time upon which the certificate of Merger for the LoanMe Transaction has been examined by and received the endorsed approval of the Secretary of State of the State of Delaware or at such other time set forth in the certificate of Merger;

“ Equity Incentive Plan ” means the equity incentive plan of NextPoint Financial; as described under the heading “ Equity Incentive Plans Description ”;

“ Escrow Agent ” means TSX Trust Company;

“ Escrow Agreement ” means the escrow agreement dated August 11, 2020, among NAC, the Escrow Agent, and the Underwriter;

“ Exchange ” means the Toronto Stock Exchange, or any successor, assign or replacement exchange on which any of NextPoint Financial’s securities are listed from time to time;

“ Exchange Agreement and Undertaking ” means the transfer restrictions agreement and undertaking entered into by the NAC Founders in favour of the Exchange;

“ Exchange Company Manual ” has the meaning ascribed thereto on the face page of this prospectus;

“ FCRA ” means the Fair Credit Reporting Act;

“ FDCPA ” means the Fair Debt Collection Practices Act;

“ FDIC ” means Federal Deposit Insurance Corporation;

“ FFA ” has the meaning ascribed thereto under the heading “ Market Overview – Tax Preparation Market – Paid Tax Preparation Market ”;

“ forward-looking statements ” has the meaning ascribed thereto under the heading “ Caution Regarding ForwardLooking Statements ”;

“ FPI Condition ” has the meaning ascribed thereto under the heading “ Description of Securities – Common Shares and Proportionate Voting Shares of the Resulting Issuer – Conversion Conditions ”;

“ FTC ” means the United States Federal Trade Commission;

“ FTC Act ” means the Federal Trade Commission Act of 1914;

“ Governmental Authority ” means any: (a) country, nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, provincial, local, municipal, foreign or

other government; (c) governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, organization, body or entity and any court or other tribunal); (d) quasigovernmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; (e) applicable stock exchange; or (f) applicable self-regulatory organization;

“ Grants ” has the meaning ascribed thereto under the heading “ Equity Incentive Plans Description – Summary of Equity Incentive Plan - Eligibility ”;

“ Guidelines ” has the meaning ascribed thereto under the heading “ Corporate Governance – Statement of Corporate Governance Practices ”;

“ Holder ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations ”;

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder;

“ IFRS ” means International Financial Reporting Standards as issued by the International Accounting Standards Board;

“ Insider ” has the meaning ascribed thereto in the Exchange Company Manual;

“ Investor Rights Agreement ” has the meaning ascribed thereto under the heading “ Corporate Structure – Investor Rights Agreement ”;

“ IPO ” means NAC’s initial public offering of 20,000,000 Class A Restricted Voting Units offered to the public under NAC’s final long form prospectus dated August 5, 2020;

“ IRS ” means the United States Internal Revenue Service;

“ JTH Financial ” means JTH Financial, LLC, a subsidiary of Liberty;

“ Lenders ” has the meaning ascribed thereto under the heading “ Corporate Structure – Credit Facility ”;

“ Liberty ” means Franchise Group Intermediate L 1, LLC;

“ Liberty Agreement ” means the transaction agreement by and among NAC and Liberty Seller dated as of February 21, 2021, as amended;

“ Liberty Financial Statements ” means, together, the interim combined and consolidated financial statements of Liberty as at, and for the period ended, March 27, 2021, together with the notes thereto and the audited combined and consolidated financial statements of Liberty as at December 26, 2020 and December 28, 2019 and for the year ended December 26, 2020, the Transition Period from May 1, 2019 to December 28, 2019 and the years ended April 30, 2019 and April 30, 2018, together with the notes thereto and the auditors’ report thereon, and attached to this prospectus as Appendix C;

“ Liberty Cash Consideration ” has the meaning ascribed thereto under the heading “ Transaction Agreements – Liberty Agreement – Aggregate Consideration”;

“ Liberty Seller ” means Franchise Group Intermediate L, LLC, the sole member of Liberty;

“ Liberty Seller Allocation Agreement ” has the meaning ascribed thereto under the heading “ Prospectus Summary – Transaction Agreement – Liberty Agreement”;

“ Liberty Seller Lock-Up Agreement ” has the meaning ascribed thereto under the heading “ Prospectus Summary – Transaction Agreement – Liberty Agreement”;

“ Liberty Share Consideration ” has the meaning ascribed thereto under the heading “ Transaction Agreements – Liberty Agreement – Aggregate Consideration”;

“ Liberty Credit Agreement ” has the meaning ascribed thereto under the heading “ The Business of Liberty – Financing – Liberty Credit Agreement ” ;

“ LM Holdco ” has the meaning ascribed thereto under the heading “ Corporate Structure – Summary of Transaction Agreements – LoanMe Agreement – Restructuring of LoanMe ”;

“ LM Holdco Common Stock ” has the meaning ascribed thereto under the heading “ Corporate Structure – Summary of Transaction Agreements – LoanMe Agreement – Treatment of LoanMe Securities ”;

“ LM Holdco Options ” has the meaning ascribed thereto under the heading “ Corporate Structure – Summary of Transaction Agreements – LoanMe Agreement – Restructuring of LoanMe ”;

“ LoanMe ” means LoanMe, Inc.;

“ LoanMe Agreement ” means the agreement and plan of merger by and among NAC, Bliksum, LoanMe and certain of their respective affiliates dated as of February 21, 2021, as amended;

“ LoanMe Financial Statements ” means, together, the interim consolidated financial statements of LoanMe as at, and for the period ended, March 31, 2021, together with the notes thereto and the audited consolidated financial statements of LoanMe for the years ended December 31, 2020, December 31, 2019 and December 31, 2018, together with the notes thereto and the auditors’ report thereon, and attached to this prospectus as Appendix E;

“ Lock-Up Agreement ” has the meaning ascribed thereto under the heading “ Securities Subject to Contractual Restriction on Transfer – Lock-Up Agreements ”;

“ Locked-Up Shareholder ” means each of Liberty Seller and Bliksum;

“ Market Price ” has the meaning ascribed thereto under the heading “ Equity Incentive Plans Description – Summary of Equity Incentive Plan – Definitions ”;

“ Mark-to-Market Election ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations - U.S. Holders – Passive Foreign Investment Company Rules – Default PFIC Rules Under Section 1291 of the Code ”;

“ MCA ” means merchant cash advance;

“ MergerSub ” means NPLM Holdco LLC, a Delaware limited liability company and wholly-owned subsidiary of NAC;

“ MI 61-101 ” means Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ;

“ NAC ” means NextPoint Acquisition Corp.;

“ NAC Financial Statements ” means, together, the interim financial statements of NAC as at, and for the period ended, March 31, 2021, together with the notes thereto and the amended and restated audited financial statements of NAC as at December 31, 2020 and for the period from inception on July 16, 2020 to December 31, 2020, together with the notes thereto and the auditors’ report thereon, and attached to this prospectus as Appendix A;

“ NAC directors ” has the meaning ascribed thereto under the heading “ Contractual Right of Action ”;

“ NAC Founders ” means, collectively, the Sponsor, Frank Amato, Brian Benjamin, George Coleman, Wendy Lane and John Lederer, as the holders of the NAC Founders’ Shares;

“ NAC Founders’ Shares ” means the 5,750,000 Class B Shares issued to the NAC Founders, which are convertible into Proportionate Voting Shares;

“ NAC Shareholders ” means the registered or beneficial holders of the Class A Restricted Voting Shares and the Class B Shares, as the context requires;

“ NAC Sponsor’s Warrants ” means the share purchase warrants in the capital of NAC issued to the Sponsor, and each a “ NAC Sponsor’s Warrant ”;

“ NAC Warrants ” means, collectively, (A) the 10,000,000 share purchase warrants forming part of the Class A Restricted Voting Units, and (B) the 300,000 share purchase warrants forming part of the Class B Units, each of which having been issued under the Warrant Agreement and which, 65 days following the completion of the Transaction, will each entitle the holder thereof to purchase one Class A Restricted Voting Share (which, at such time, will represent one Common Share) at a price of US$11.50, and each a “ NAC Warrant ”;

“ Named Executive Officers ” or “ NEOs ” has the meaning ascribed thereto under the heading “ Directors’ and Executive Officers’ Compensation – Named Executive Officers ”;

“ NASDAQ ” has the meaning ascribed thereto under the heading under “ Directors and Executive Officers - Cease Trade Orders, Bankruptcies, Penalties or Sanctions ”;

“ NextPoint Financial ” means NAC after giving effect to the Transaction and to be renamed “NextPoint Financial Inc.”;

“ NextPoint Financial Unaudited Pro Forma Financial Statements ” means the unaudited pro forma financial statements of NextPoint Financial, after giving effect to the Transaction, as at March 31, 2021, and for the periods ended March 31, 2021 and December 30, 2020, together with the notes thereto, and attached to this prospectus as Appendix G;

“ NextPoint Financial Shareholders ” means the registered or beneficial holders of the Common Shares and Proportionate Voting Shares at the applicable time;

“ NI 51-102 ” means National Instrument 51-102 – Continuous Disclosure Obligations

“ NI 52-110 ” means National Instrument 52-110 – Audit Committees ;

“ NI 58-101 ” means National Instrument 58-101 – Disclosure of Corporate Governance Practices ;

“ Non-Canadian Resident Holder ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Non-Canadian Resident Holders ”;

“ Non-Electing U.S. Holder ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations - U.S. Holders – Passive Foreign Investment Company Rules – Default PFIC Rules Under Section 1291 of the Code ”;

“ Non-Employee Director ” has the meaning ascribed thereto under the heading “ Equity Incentive Plans Description – Deferred Share Unit Plan”;

“ Non-U.S. Holder ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations – U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Securities by Non-U.S. Holders ”;

“ Non-Voting Shares ” has the meaning ascribed to it under the heading “ Corporate Structure – Private Placement ”;

“ Notice Date ” has the meaning ascribed thereto under the heading “ Description of Securities – Advance Notice Requirements for Director Nominations ”;

“ NP 58-201 ” means National Policy 58-201 – Corporate Governance Guidelines ;

“ OCC ” means the United States Office of the Comptroller of the Currency;

“ Odd Lot ” has the meaning ascribed thereto under the heading “ Description of Securities – Common Shares and Proportionate Voting Share of the Resulting Issuer – Take-Over Bid Protection ”;

“ OSC ” means the Ontario Securities Commission;

“ Participant ” has the meaning ascribed thereto under the heading “ Equity Incentive Plans Description – Summary of Equity Incentive Plan – Grants under the Equity Incentive Plan ”;

“ Parties ” means, together, NAC and each of the Target Businesses, and each, a “ Party ”;

“ Per Share Cash Consideration ” has the meaning ascribed thereto under the heading “ Corporate Structure – Summary of Transaction Agreements – LoanMe Agreement – Treatment of LoanMe Securities ”;

“ Per Share Stock Consideration ” has the meaning ascribed thereto under the heading “ Corporate Structure – Summary of Transaction Agreements – LoanMe Agreement – Treatment of LoanMe Securities ”;

“ PFIC ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations - U.S. Holders – Passive Foreign Investment Company Rules ”;

“ PFIC asset test ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations - U.S. Holders – Passive Foreign Investment Company Rules ”;

“ PFIC income test ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations - U.S. Holders – Passive Foreign Investment Company Rules ”;

“ Placement Sub ” has the meaning ascribed to it under the heading “ Corporate Structure – Private Placement ”;

“ PPP ” has the meaning ascribed thereto under the heading “ Market Overview – SME Finance Market ”;

“ Private Placement ” has the meaning ascribed thereto under the heading “ Corporate Structure – Private Placement ”;

“ Programs and Policies ” has the meaning ascribed thereto under the heading “ Notice to Readers ”;

“ Promote Interest ” has the meaning ascribed thereto under the heading “ Corporate Structure – Related Party Interests ”;

“ Proportionate Voting Shares ” means the proportionate voting shares in the capital of NextPoint Financial, and having the terms and conditions set forth in the Articles;

“ PSU ” means performance share units;

“ Purchase Criteria ” has the meaning ascribed thereto under the heading “ The Business of LoanMe – Credit Criteria and Underwriting – Small Business Merchant Cash Advance Products ”;

“ PVS Offer ” has the meaning ascribed thereto under the heading “ Description of Securities – Common Shares and Proportionate Voting Share of the Resulting Issuer – Take-Over Bid Protection ”;

“ QEF Election ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations - U.S. Holders – Passive Foreign Investment Company Rules – Default PFIC Rules Under Section 1291 of the Code ”;

“ RDSP ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Eligibility for Investment ”;

“ Redeeming Shareholder ” means a holder of Class A Restricted Voting Shares who has validly elected to redeem their Class A Restricted Voting Shares in respect of the Transaction in accordance with the redemption rights provided in the constating documents of NAC, and who has not withdrawn such election;

“ Redemption Amount ” means an amount per Class A Restricted Voting Share, payable in cash, equal to the prorata portion of: (a) the escrowed funds available in the escrow account at the time immediately prior to the Redemption Deadline, including interest and other amounts earned thereon; less (b) an amount equal to the total of (i) any applicable taxes payable by NAC on such interest and other amounts earned in the escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by NAC, subject to the limitations described in the IPO prospectus, which is expected to be approximately US$10.00, assuming a June 30, 2021 redemption date;

“ Redemption Deadline ” means the date that is set by NAC as the deadline for the holders of Class A Restricted Voting Shares to deposit their Class A Restricted Voting Shares for redemption in connection with the Transaction, such date currently anticipated to be 21 days following the issuance of a receipt for this Prospectus;

“ Redemption Limitation ” has the meaning ascribed thereto under the heading “ Corporate Structure – Redemption Rights ”;

“ Redemption Notice ” has the meaning ascribed thereto under “ Corporate Structure – Redemption Rights – Process for Redemption by Non-Registered Holders of Restricted Voting Shares ”;

“ Refund Advance ” has the meaning ascribed thereto under the heading “ The Business of Liberty – General ”;

“ Restricted Stock ” has the meaning ascribed thereto under the heading “ Equity Incentive Plans Description – Summary of Equity Incentive Plan – Grants under the Equity Incentive Plan ”;

“ RESP ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Eligibility for Investment ”;

“ Restricted Parties ” has the meaning ascribed thereto under the heading “ Securities Subject to Contractual Restriction on Transfer – Founders’ Shares ”;

“ RRIF ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Eligibility for Investment ”;

“ RRSP ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Eligibility for Investment ”;

“ RSU ” means restricted share units;

“ SBA ” means U.S. Small Business Administration;

“ SCRA ” means the Servicemembers Civil Relief Act;

“ SEC ” means the United States Securities and Exchange Commission;

“ Securities ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations ”;

“ Share Units ” has the meaning ascribed thereto under the heading “ Equity Incentive Plans Description – Summary of Equity Incentive Plan – Grants under the Equity Incentive Plan ”;

“ signatories ” has the meaning ascribed thereto under the heading “ Contractual Right of Action ”;

“ Small Business Loan Credit Criteria ” has the meaning ascribed thereto under the heading “ The Business of LoanMe – Credit Criteria and Underwriting – Small Business Loan Credit Criteria ”;

“ SMEs ” has the meaning ascribed thereto under the heading “ Market Overview – Consumer & Small and MediumSized Enterprises Finance Market ”;

“ Special Pro Rated Grants ” has the meaning ascribed thereto under the heading “ Equity Incentive Plans Description – Summary of Equity Incentive Plan – Termination of Grants ”;

“ Sponsor ” means NextPoint Acquisition Sponsor LLC;

“ Stock Appreciation Rights ” means stock appreciation rights;

“ Subsidiary PFIC ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations - U.S. Holders – Passive Foreign Investment Company Rules ”;

“ Target Businesses ” means, collectively, Liberty and LoanMe, and each, a “ Target Business ”;

“ Target Businesses’ Financial Statements ” means the (i) Liberty Financial Statements attached to this prospectus as Appendix C, and (ii) LoanMe Financial Statements attached to this prospectus as Appendix E;

“ Tax Act ” means the Income Tax Act (Canada), including the regulations promulgated thereunder, as amended;

“ taxable capital gain ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Holders Resident in Canada – Taxation of Capital Gains and Capital Losses ”;

“ Tax Proposals ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations ”;

“ TCPA ” means the Telephone Consumer Protection Act;

“ TFSA ” has the meaning ascribed thereto under the heading “ Certain Canadian Federal Income Tax Considerations – Eligibility for Investment ”;

“ Transaction ” means the acquisition of the Target Businesses by NAC;

“ Transaction Agreements ” means, collectively, the Liberty Agreement and the LoanMe Agreement, and each, a “ Transaction Agreement ”;

“ Transaction Size Exemptions ” has the meaning ascribed thereto under “ Corporate Structure – Related Party Interests ”;

“ Transfer Agent ” means TSX Trust Company;

“ Underwriter ” means Canaccord Genuity Corp.;

“ U.S. Holder ” has the meaning ascribed thereto under the heading “ Certain United States Federal Income Tax Considerations –U.S. Holders ”;

“ USRPHC ” has the meaning ascribed thereto under the heading “ Risk Factors – Risks Related to NextPoint Financial Business Structure – Risk of U.S. Tax Classification as a USRPHC ”;

“ U.S. Securities Act ” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;

“ VCDPA ” means the Virginia Consumer Data Protection Act;

“ Warrant Agent ” means TSX Trust Company;

“ Warrant Agreement ” means the warrant agency agreement between NAC and the Warrant Agent, dated August 11, 2020, as it may be amended from time to time;

“ Warrant Shares ” means Common Shares received upon exercise of NAC Warrants; and

“ Winding-Up ” means the liquidation and cessation of the business of NAC, upon which NAC shall be permitted to use up to a maximum of US$50,000 of any interest and other amounts earned from the proceeds in the escrow account to pay actual and expected costs and expenses in connection with applications to cease to be a reporting issuer and winding-up and dissolution expenses, as determined by NAC.

PROSPECTUS SUMMARY

The following is a summary of this prospectus and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus.

Overview

As of the date of this prospectus, NAC is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia for the purpose of effecting an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization or any other similar business combination involving NAC that will qualify as its “qualifying acquisition”. NAC completed its initial public offering on August 11, 2020 for gross proceeds of US$200 million. The gross proceeds of the initial public offering were placed in an escrow account and will be released upon consummation of the Transaction in accordance with the terms and conditions of the Escrow Agreement.

On February 22, 2021, NAC announced that it had entered into definitive transaction agreements with respect of each of Franchise Group Intermediate L 1, LLC (“ Liberty ”) (the “ Liberty Agreement ”) and LoanMe, Inc. (“ LoanMe ”) (the “ LoanMe Agreement ” and together with the Liberty Agreement, the “ Transaction Agreements ”) pursuant to which NAC shall acquire, directly or indirectly, all of the equity interests of each of Liberty and LoanMe (each, a “ Target Business ” and collectively, the “ Target Businesses ”). The acquisition of the Target Businesses by NAC is referred to in this prospectus as the “ Transaction ” and is intended to constitute NAC’s qualifying acquisition pursuant to the Exchange Company Manual.

Transaction Agreements

The description of the Transaction Agreements, both below and elsewhere in this prospectus, is a summary only, is not exhaustive and is qualified in its entirety by reference to the terms of the Transaction Agreements, which may be found on NAC’s profile on SEDAR at www.sedar.com.

Liberty Agreement

Pursuant to the terms of the Liberty Agreement, NAC will directly purchase all limited liability company interests of Liberty owned by Liberty Seller, as its sole member, and immediately thereafter Liberty will become a whollyowned subsidiary of NAC (together with the other transactions contemplated by the Liberty Agreement, the “ Liberty Transaction ”).

The obligations of both NAC and Liberty Seller to effect the Liberty Transaction are subject to (a) the approval of the Exchange enabling the Transaction to qualify as a “qualifying acquisition” and the listing of the Common Shares on the Exchange, (b) a final receipt for the Prospectus having been issued by or on behalf of the OSC, (c) the conversion of all Class A Restricted Voting Shares and Class B Shares into Common Shares and Proportionate Voting Shares, respectively, (d) the waiting period under the HSR Act (and any extension thereof) having expired or being terminated, (e) no law or order having been entered that prohibits the consummation of the Liberty Transaction, (f) all of the conditions to closing in the LoanMe Agreement being satisfied or waived and (g) the amount of cash held by the Escrow Agent after giving effect to any and all redemptions of Class A Restricted Voting Shares plus the amount of cash the Lenders are prepared to fund shall not be less than $215,000,000.

affiliates (the “ Liberty Seller Allocation Agreement ”), and (vi) Liberty’s Seller’s delivery of evidence that Liberty and its subsidiaries are released from certain liens and obligations under any credit facility of Franchise Group, Inc.; and (b) the obligations of Liberty Seller to effect the Liberty Transaction are subject to (i) all representations and warranties by NAC being true and correct as of the closing of the Liberty Transaction (except in the case of nonfundamental representations and warranties, where the failures of such representations and warranties being true and correct has not had a material adverse effect), (ii) performance by NAC in all material respects of its obligations, (iii) NAC’s delivery of certain certificates and ancillary documents at or prior to the closing of the Liberty Transaction, (iv) NAC’s delivery of the Liberty Cash Consideration (defined herein) and Liberty Share Consideration (defined herein) to Liberty Seller, subject to adjustment (See “ Transaction Agreements-Liberty Agreement-Purchase Price Adjustment ”), and (v) NAC’s delivery of payment to certain third party service providers and lenders.

The Liberty Agreement, and the associated transactions, may be terminated prior to closing by the mutual written consent of the parties. The Liberty Agreement also contains an outside date of July 31, 2021, and may also be terminated if a governmental authority issues an order which permanently restrains, enjoins or prevents the consummation of the Liberty Transaction. Either party may terminate the Liberty Agreement if the other breaches a representation, warranty or covenant such that closing conditions would not be satisfied (so long as the terminating party is not in breach of the Liberty Agreement). See “ Corporate Structure – Summary of Transaction Agreements – Liberty Agreement ” for additional information.

LoanMe Agreement

Pursuant to the terms of the LoanMe Agreement, LM Holdco will become the sole stockholder of LoanMe prior to the Effective Time, and will merge with and into MergerSub, a wholly-owned subsidiary of NAC, with MergerSub continuing as the surviving entity (together with the other transactions contemplated by the LoanMe Agreement, the “ LoanMe Transaction ”).

The obligations of the parties to effect the LoanMe Transaction are subject to (a) the approval of the Exchange enabling the Transaction to qualify as a “qualifying acquisition” and the listing of the Common Shares on the Exchange, (b) a final receipt for this prospectus having been issued by or on behalf of the OSC, (c) the conversion of all Class A Restricted Voting Shares and Class B Shares into Common Shares and Proportionate Voting Shares, respectively, prior to the closing of the Liberty Transaction, (d) no law or order having been entered that prohibits the consummation of the LoanMe Transaction, (e) all of the conditions to closing in the Liberty Agreement being satisfied or waived and (f) the amount of cash held by the Escrow Agent after giving effect to any and all redemptions of Class A Restricted Voting Shares plus the amount of cash the Lenders are prepared to fund shall not be less than $215,000,000.

Additionally, (a) the obligations of NAC and MergerSub to effect the LoanMe Transaction are subject to (i) all representations and warranties of Bliksum and LoanMe being true and correct as of the closing of the LoanMe Transaction (except in the case of non-fundamental representations and warranties, where the failure of such representations and warranties being true and correct has not had a material adverse effect), (ii) performance by LoanMe, LM Holdco and Bliksum in all material respects of their respective obligations pursuant to the LoanMe Agreement, (iii) no material adverse effect having occurred, (iv) certain third party consents and approvals having been obtained, and (vi) Bliksum having executed a Lock-Up Agreement (the “ Bliksum Lock-Up Agreement ”) and the Tax Indemnification Agreement (the “ Bliksum Tax Indemnification Agreement ”), pursuant to which Bliksum will indemnify NAC and its affiliates from and against pre-closing income tax liabilities of LM Holdco, LoanMe and any of its subsidiaries; and (b) the obligations of Bliksum and LM Holdco to effect the LoanMe Transaction are subject to (i) all representations and warranties by NAC and MergerSub being true and correct as of the closing of the Liberty Transaction (except in the case of non-fundamental representations and warranties, where the failures of such representations and warranties being true and correct has not had a material adverse effect), and (ii) performance by NAC and MergerSub in all material respects of their respective obligations pursuant to the LoanMe Agreement.

terminated if any law makes the LoanMe Transaction illegal or a governmental authority issues an order which permanently restrains, enjoins or prevents the consummation of the LoanMe Transaction. Either party may terminate the LoanMe Agreement if the other breaches a representation, warranty or covenant such that closing conditions would not be satisfied (so long as the terminating party is not in breach of the LoanMe Agreement), subject to applicable cure periods. See “ Corporate Structure – Summary of Transaction Agreements – LoanMe Agreement ” for additional information.

Investor Rights Agreement

Upon closing of the Transaction, NextPoint Financial, will enter into agreements (the “ Investor Rights Agreements ”), with each of Liberty Seller and Bliksum, pursuant to which each such party will be granted certain registration rights in respect of the Proportionate Voting Shares (and the Common Shares into which such Proportionate Voting Shares convert) received by them pursuant to the Transaction.

The Investor Rights Agreement with Liberty Seller will provide: (a) that NextPoint Financial take such actions as are reasonable and necessary to permit one individual to serve on the Board subject to satisfaction and compliance with the requirements regarding service as a member of the Board under applicable law, the rules and policies of the Exchange and the practices and policies of Board; (b) for demand registration rights so long as Liberty Seller holds 10% of the issued and outstanding Common Shares (including Common Shares issuable upon conversion of any Proportionate Voting Shares); provided, however, that NextPoint Financial will be required to effect no more than three (3) such demand registrations and each such registration must be reasonably expected to result in aggregate gross proceeds of greater than the lesser of (i) $35 million and (ii) such amount as would enable Liberty Seller to sell all of its remaining Common Shares; (c) customary piggy back registration rights in the event NextPoint Financial files a prospectus or registration statement relating to an offering of Common Shares; (d) a requirement that NextPoint Financial file a short form base shelf prospectus at least 45 days prior to the expiration of the period set forth in the Liberty Seller Lock-Up Agreement; and (e) a requirement that NextPoint file a Form S-3 or Form F-3 registration statement in the event the Common Shares are listed on a national securities exchange in the United States and NextPoint Financial is eligible to file such registration statement. See “ Corporate Structure – Investor Rights Agreement ” for additional information.

The Investor Rights Agreement with Bliksum is expected to provide for substantially the same terms as those contained in the Investor Rights Agreement with Liberty Seller except that Bliksum will not have the right to designate any of our directors. The specific rights granted to Bliksum pursuant to the Investor Rights Agreement will be negotiated in good faith between NextPoint Financial and Bliksum prior to closing of the Transaction.

Private Placement

On February 22, 2021, NAC also announced that it has received commitments to purchase US$25 million of nonvoting shares (“ Non-Voting Shares ”) of a wholly-owned subsidiary of NAC (“ Placement Sub ”) at a price of US$10.00 per Non-Voting Share (the “ Private Placement ”). Investors in the Private Placement include Andrew Neuberger, Brent Turner, members of NAC’s board of directors and hedge fund veteran Leon Cooperman. The consideration for Non-Voting Shares shall be paid at the time that the closing conditions (which include that all conditions precedent to the Transaction in accordance with the Transaction Agreements have been satisfied or waived by the parties) are satisfied, and upon satisfaction of the closing conditions, all Non-Voting Shares will be exchanged for Common Shares on a one for one basis. The Private Placement issuance will occur in conjunction with the closing of the Transaction but is not a condition to the closing of the Transaction. The proceeds of the Private Placement will be available for NAC’s general corporate purposes, including to fund the cash consideration for the Transaction. The Private Placement is subject to the approval of the Exchange. See “ Corporate Structure – Private Placement ” for additional information.

Debt Financing

NAC has entered into a commitment letter (the “ Commitment Letter ”) providing for a new $200 million revolving credit facility from affiliates of BasePoint Capital (the “ Lenders ”) which will become effective as of the Effective Date (the “ Credit Facility ”). Draws under the Credit Facility may be used to fund the cash portion of the purchase

prices payable in the Transaction as well as for working capital and general corporate purposes, including to finance future acquisitions.

The draw period under the Credit Facility will commence on the Effective Date and terminate on the earlier of (i) two years after the Effective Date and (ii) the occurrence of certain triggering events, including the failure of NAC and its subsidiaries to perform their respective obligations under the Credit Facility, and the draw period can be extended for successive incremental one (1) year periods upon agreement of NAC and Lenders. All principal and interest under the Credit Facility will be due and payable on the earlier to occur of (i) the date that is two years following the end of the draw period and (ii) the ten year anniversary of the Effective Date.

Amounts outstanding under the Credit Facility will accrue interest at a rate per annum equal to 12%, which interest will increase by 4.5% upon an event of default. Interest will be payable monthly. A commitment fee of $2 million will be due upon the date of the first draw from the Credit Facility.

The obligations under the Credit Facility will be guaranteed by all existing and newly acquired subsidiaries of NAC, including LoanMe, Liberty and their respective subsidiaries, subject to certain exceptions and will also be secured by all of the assets of the NAC and its subsidiaries, subject to certain exceptions, and will be subordinated only to certain existing and prospective warehouse facilities secured by receivables originated by NAC and its subsidiaries in the normal course of business.

Amounts outstanding under the Credit Facility may be prepaid at any time without any prepayment penalty and the Credit Facility may be terminated at any time so long as the aggregate outstanding balance of all draws has been repaid in full. See “ Corporate Structure – Debt Financing ” for additional information.

Principal Steps of the Transaction

Under the Transaction Agreements, as applicable, prior to the closing of the Transaction, the following principal steps, among other things, will occur:

(a) Bliksum will form LM Holdco and contribute all of the common shares of LoanMe to LM Holdco;
(b) All outstanding LoanMe options will be assumed by LM Holdco and converted into options to purchase LM Holdco Common Stock on the same economic and other terms;
(c) LoanMe will convert to a Delaware limited liability company;
(d) LM Holdco will execute a joinder to the LoanMe Agreement and become a party thereto; and
(e) Investors in the Private Placement will fund the consideration for the Non-Voting Shares and the NonVoting Shares will be issued.

Under the Transaction Agreements, at the closing of the Transaction, the following principal steps, among other things, shall occur:

(a) NAC and Placement Sub will complete an amalgamation under the BCBCA, and each Non-Voting Share of Placement Sub will be exchanged for one Class A Restricted Voting Share;
(b) Class A Restricted Voting Shares and Class B Shares will convert into Common Shares and Proportionate Voting Shares, as applicable;
(c) NAC will purchase all of the limited liability company interests of Liberty;
(d) LM Holdco will merge with and into MergerSub, with MergerSub continuing as the surviving entity; and

(e) Immediately following and as a part of the closing of the Transaction, NAC will contribute all of its interests in MergerSub and Liberty to NPI Holdco, LLC a wholly owned subsidiary of NAC.

Upon closing of the Transaction, the proceeds of the IPO in NAC’s escrow account, which are not to be used to satisfy redemptions of Class A Restricted Voting Shares will be released to NAC in accordance with the Escrow Agreement. See “ Corporate Structure – Principal Steps of the Transaction ” for additional information.

Description of the Business

Board of Directors

Each of the proposed members of the Board is expected to be formally appointed to the Board as at the Effective Time.

Name and Province/State and Country of	Present Principal Occupation
Residence
Andrew Neuberger(2)	Private Investor, Chief Executive Officer and Chairman, NAC
Brent Turner	Chief Executive Officer and President, Liberty
Jonathan Williams	President and Chief Executive Officer, LoanMe
John Lederer(2)	Corporate Director
Jean Birch(2)	Corporate Director
William Minner(1)	Corporate Director
Wendy Lane(1)	Chair, Lane Holdings Inc.
Logan Powell(1)	Dean of Admission, Brown University
Nik Ajagu	Private Investor
Alicia Morga	Chief Executive Officer, No. 8 Media, Inc.

Notes:

(1) Audit Committee Member

(2) Compensation, Nominating and Corporate Governance Committee Member

Risk Factors

An investment in the securities of NextPoint Financial involves certain risks. When evaluating NextPoint Financial and its business, investors should carefully review the information set out in this prospectus.

The risks and uncertainties described are not the only ones NextPoint Financial faces. Additional risks and uncertainties, including those that NextPoint Financial is unaware of or that are currently deemed immaterial, may also adversely affect NextPoint Financial and its business.

Summary of Financial Information

Pro Forma Consolidated Capitalization

deposit (and do not withdraw) their shares for redemption prior to the Redemption Deadline. A description of the redemption rights is included under “ Corporate Structure – Redemption Rights ”. A Redeeming Shareholder is entitled (conditional on closing) to receive the Redemption Amount per Class A Restricted Voting Share. For greater certainty, such amount will not be reduced by the amount of any tax of NAC under Part VI.1 of the Tax Act or the deferred underwriting commissions per Class A Restricted Voting Share held in escrow. This redemption amount is anticipated to be US$10.00 per Class A Restricted Voting Share, assuming a June 30, 2021 redemption date.

The following table sets forth the consolidated capitalization of the Target Businesses as of March 31, 2021 adjusted to give effect to the Transaction assuming different levels of redemption. Since March 31, 2021, other than in the normal course of business, there has been no material change in the equity and debt capital of the Target Businesses, on a consolidated basis.

The table below should be read in conjunction with the NAC Financial Statements, the Target Businesses’ Audited Financial Statements, and the NextPoint Financial Unaudited Pro Forma Financial Statements attached to this prospectus as Appendix A, Appendix C, Appendix E, and Appendix G, respectively.

Cash and cash equivalent Debt Shareholders’ equity(1) Total Capitalization Debt, net of cash	As of March 31, 2020, as adjusted in US$ (in thousands for stated values) after giving effect to the Transaction, and assuming no redemptions of Class A Restricted Voting Shares 41,555 249,989 315,510 315,510 208,434	As of March 31, 2020, as adjusted in US$ (in thousands for stated values) after giving effect to the Transaction, and assuming 25% redemptions of Class A Restricted Voting Shares
		29,543 290,017 265,498 265,498 260,474

Notes:

(1) Excludes Common Shares issuable upon exercise of NAC Warrants.

Summary Pro Forma Consolidated Financial Information

The summary unaudited pro forma consolidated financial statements of NextPoint Financial as at March 31, 2021, and for the periods ended March 31, 2021 and December 30, 2020 has been prepared by NAC to give effect to the Transaction as if it had occurred on March 31, 2021 and December 30, 2020, as applicable. The information has been derived from the NextPoint Financial Unaudited Pro Forma Financial Statements.

This summary pro forma financial information should be read in conjunction with the NAC Financial Statements, the Target Businesses’ Financial Statements, and the NextPoint Financial Unaudited Pro Forma Financial Statements attached to this prospectus as Appendix A, Appendix C, Appendix E, and Appendix G, respectively.

The pro forma financial information has been prepared for illustrative purposes only and may not be indicative of the operating results or financial condition that would have been achieved if the Transaction had been completed on the date or for the periods noted above, nor does it purport to project the results of operations or financial position for any future period or as of any future date. In addition to the pro forma adjustments that comprise this pro forma financial information, various other factors will have an effect on the financial condition and results of operations of NextPoint Financial following the completion of the Transaction, including an adjustment as it relates to the closing of the Transaction which assumes no redemption of Class A Restricted Voting Shares (the actual redemption level is uncertain, but see Note 3 of the NextPoint Financial Unaudited Pro Forma Financial Statements for the illustrative effect of a 25% redemption level). See “ Notes to Pro Forma Condensed Consolidated Combined Financial

Information ” included in Appendix G for a discussion of pro forma adjustments. See also “ Caution Regarding Forward-Looking Statements ”.

Unaudited Pro Forma Consolidated Income Statements

	3 months ended
	Mar 31, 2021 Mar 27, 2021 Mar 31, 2021
	NextPoint Liberty LoanMe	Pro forma adjustments Pro forma combined (no redemption scenario)	Pro forma adjustments Pro forma combined (25% redemption scenario)
Revenues: Interest Income Interest Expense Net Interest Income Income From Unsecured Loans at Fair Value Gain on Sale of Loans Service Revenue Total Revenues Operating Expenses: Employee Compensation Advertising Expense Servicing Expense Provision for Finance Receivable Losses Selling, General and Administrative Impairment on securitized asset Net unrealized loss on change warrants liabilities Amortization of Issuance Cost on Class A Shares Total Operating Expenses Income From Operations Other (Income) Expense: Interest Expense, Net Other (income) expense, Net Income Before Income Taxes Income Tax Expense Net Income	- 956 39,586 - - 8,191 - 956 31,395 - - - - - 1,427 - 75,524 - - 76,480 32,822 - 10,936 3,068 - 4,244 1,208 - - 1,933 - - 21,793 4,698 19,251 2,744 - - 2,356 4,532 - - 1,901 - - 11,132 34,431 33,102 (11,132) 42,049 (280) 2 93 87 - (153) - (11,134) 42,109 (367) - 2,312 (90) (11,134) 39,797 (277)	40,542 8,191 - 32,351 - 1,427 75,524 - 109,302 14,004 5,452 1,933 21,793 (314) 26,379 2,356 4,532 (1,901) - (2,215) 76,449 2,215 32,853 2 184 (153) 2,213 32,821 598 2,820 1,615 30,001	40,542 8,191
			- 32,351 - 1,427 75,524
			- 109,302 14,004 5,452 1,933 21,793 26,379 2,356 4,532 -
			- 76,449
			- 32,853 1,325 1,509 (153)
			(1,325) 31,496 (358) 2,462
			(967) 29,034

	Dec 31, 2020 Dec 26, 2020 Dec 31, 2020 12 Months Ended
	NextPoint (July 16 - Dec 31, 2020) Liberty LoanMe	Pro forma adjustments Pro forma combined (no redemption scenario)	Pro forma adjustments Pro forma combined (25% redemption scenario)
Revenues: Interest Income Interest Expense Net Interest Income Income From Unsecured Loans at Fair Value Gain on Sale of Loans Service Revenue Total Revenues Operating Expenses: Employee Compensation Advertising Expense Servicing Expense Provision for Finance Receivable Losses Selling, General and Administrative Impairment on securitized asset Net unrealized loss on change warrants liabilities Amortization of Issuance Cost on Class A Shares Total Operating Expenses Income From Operations Other (Income) Expense: Interest Expense, Net Other (income) expense, Net Income Before Income Taxes Income Tax Expense Net Income	- 3,624 212,448 - 94 43,025 - 3,530 169,423 - - - - - 13,229 - 119,151 - - 122,681 182,652 - 34,817 9,746 - 11,803 5,698 - - 14,601 - - 107,587 2,469 55,086 10,698 - - 8,108 685 - - 3,022 - - 6,176 101,706 156,438 (6,176) 20,975 26,214 - 5,225 180 - (107) - (6,176) 15,857 26,034 - 1,186 6,899 (6,176) 14,671 19,135	216,072 43,119 - 172,953 - 13,229 119,151 - 305,333 44,563 17,501 14,601 107,587 11,687 79,940 8,108 685 (3,022) - 8,665 272,985 (8,665) 32,348 - 5,405 (107) (8,665) 27,050 (2,339) 5,746 (6,326) 21,304	216,072 43,119
			- 172,953 - 13,229 119,151
			- 305,333 44,563 17,501 14,601 107,587 79,940 8,108 685 -
			- 272,985
			- 32,348 5,300 10,705 (107)
			(5,300) 21,750 (1,431) 4,315
			(3,869) 17,435

Unaudited Pro Forma Consolidated Balance Sheet

As at March 31, 2021

	NextPoint Liberty Tax LoanMe	Pro forma adjustments Pro forma Combined (no redemption scenario)	Pro forma adjustments Pro forma Combined (25% redemption scenario)
	163 19,680 7,029 200,064 - - - 40,716 15,453 - 9,930 - - - 32,414 - - 22,483 37 16,101 1,651 200,263 86,427 79,030 - 2,703 383 - 3,097 - - - 237,747 - 9,063 - - 29,511 5,800 - 7,244 6,182 - 2,043 - 200,263 140,088 329,142 - 401 41,200 - 4,640 1,281 3,356 12,876 4,559 7,583 672 20,798 1,414 10,300 - - - - - 197,385 - - 211,713 38,715 56,037 - 1,627 208,789 - - - - 4,483 5,746 - - - - - - - 2,260 15,779 211,713 47,085 286,351 - 94,113 - 5,860 - 50 698 - - - - - - - (1,110) 110,829 (17,310) - (68,786) (11,451) 93,003 42,791 200,263 140,088 329,142	14,684 41,555 (200,064) - 56,169 9,930 32,414 22,483 17,789 (185,380) 180,340 3,086 3,097 237,747 96,701 105,764 123,589 158,900 13,426 2,043 34,910 704,403 - 41,601 5,921 (2,000) 18,791 7,583 22,884 10,300 - (197,385) - (199,385) 107,080 210,416 - 10,229 - - 43,129 61,168 (156,256) 388,893 (94,113) - 197,385 344,145 25,000 115,900 (50) (698) - - - (109,719) - (3,000) (28,635) 68,786 (8,325) 191,166 315,510 34,910 704,403	(12,012) 29,543 - 56,169 9,930 32,414 22,483 17,789
Current Assets: Cash and Cash Equivalents Restriced cash and securities held in escrow account Current Receivables, Net Unsecured Loans Receivable at Cost Unsecured Loans Receivable at Fair Market Value Investments in Bonds and residual interest in securitized trusts Other Current Assets Total Current Assets Property and Equipment, Net Unsecured Loans Receivable at Cost, Non-Current Unsecured Loans Receivable at Fair Market Value, Non-Current Goodwill, Net Intangible Assets, Net Operating Lease Right-of-Use-Assets Other Non-Current Assets Total Assets Current Liabilities: Current Installments of Long-Term Obligations Current Lease Liabilities Accounts Payable and Accrued Expenses Forward Loan Sale Deposits Other Current Liabilities Class A and B warrants liability [Extra Line 5] Class A Restricted Voting Units Total Current Liabilities Long-Term Obligations, Excluding Current Installments Credit Facility Non-Current Lease Liabilities [Extra Line 6] [Extra Line 7] Other Non-Current Liabilities Total Liabilities Member's Capital Share Capital Contributed Surplus Proportionate Voting Shares Additional Paid-In Capital Accumulated Other Comprehensive Income/(Loss) Retained Earnings Total Equity Total Liabilities and Equity
			(12,012) 168,328 3,086 3,097 237,747 105,764 158,900 13,426 2,043
			(12,012) 692,391
			38,000 79,601 5,921 18,791 7,583 22,884 10,300 - -
			38,000 145,080 210,416 - 10,229 - - 61,168
			38,000 426,893 - (50,012) 294,133 - - - - (28,635)
			(50,012) 265,498
			(12,012) 692,391

NOTICE TO READERS

This prospectus is being filed by NextPoint Acquisition Corp. (“ NAC ”), which is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia. NAC was organized for the purpose of effecting an acquisition of one or more businesses or assets by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization or any other similar business combination involving NAC that will qualify as its “qualifying acquisition”.

On February 22, 2021, NAC announced that it had entered into the Transaction Agreements with respect to the Target Businesses pursuant to which, among other things, NAC shall acquire, directly or indirectly, all of the equity interests of each of the Target Businesses. Existing shareholders of NAC (who, in the case of holders of Class A Restricted Voting Shares (as defined below), do not choose to redeem their shares) will continue to hold an interest in NAC after giving effect to the Transaction (herein referred to as “ NextPoint Financial ”). In connection with the Transaction, NAC will be renamed “NextPoint Financial Inc.”. See “ Corporate Structure ”.

NAC’s Class A restricted voting shares (“Class A Restricted Voting Shares”) and share purchase warrants (the “NAC Warrants”) are currently listed for trading on the Exchange under the symbol “NAC.U” and “NAC.WT.U”, respectively. The closing price of the Class A Restricted Voting Shares and NAC Warrants on the Exchange on February 19, 2021, the last trading day before the Transaction Agreements were announced, was US$10.23 and US$0.75, respectively and the closing price on June 2, 2021, the last trading day before the date of this prospectus, was US$9.98 and US$1.25, respectively. The Exchange has conditionally approved the listing of the Common Shares and the continued listing of the NAC Warrants following closing of the Transaction under the symbols “NPF.U” and “NPF.WT.U”, respectively. Listing of the Common Shares and the continued listing of the NAC Warrants is subject to NAC fulfilling all of the requirements of the Exchange. The completion of the Transaction is conditional upon, among other things, approval by the Exchange. The acquisition of the Target Businesses is intended to constitute NAC’s qualifying acquisition.

Upon completion of the Transaction, NAC’s share capital will consist of two classes of issued and outstanding shares: Common Shares and Proportionate Voting Shares. Proportionate Voting Shares, or fractions thereof, may at any time, subject to the FPI Condition (as defined in this prospectus), at the option of the holder and subject to certain restrictions, be converted into Common Shares at a ratio of one hundred (100) Common Shares per Proportionate Voting Share. Prior to the conversion, each Proportionate Voting Share carries one hundred (100) votes per Proportionate Voting Share (compared to one vote per Common Share) and is entitled to dividends and liquidation distributions in an amount equal to one hundred (100) times the amount distributed in respect of each Common Share. The Common Shares may at any time, at the option of the holder and with the consent of NextPoint Financial, be converted into Proportionate Voting Shares at a ratio of one hundred (100) Common Shares for one (1) Proportionate Voting Share. Other than as set out above, the Common Shares and the Proportionate Voting Shares generally have the same rights pursuant to our articles.

Notwithstanding the foregoing, the Board may determine that it is no longer in the best interests of NAC that the Proportionate Voting Shares be maintained as a separate class of shares of NAC and, as a result, in accordance with the Articles, all of the outstanding Proportionate Voting Shares would automatically, without any action on the part of the holder, be converted into Common Shares on the basis of one hundred (100) Common Shares for one (1) Proportionate Voting Share, and in the case of fractions of Proportionate Voting Shares, such number of Common Shares as is determined by multiplying the fraction by one hundred (100) as of such date, and the Board will not be entitled to issue any more Proportionate Voting Shares thereafter.

This prospectus is being filed in accordance with section 1028 of the Exchange Company Manual in connection with the completion of NAC’s qualifying acquisition. Unless otherwise indicated, this prospectus has been prepared assuming that the Transaction has been completed. References to “NextPoint Financial” in this prospectus are to NAC after giving effect to the Transaction, as the context requires. As a result of the Transaction, NextPoint Financial will indirectly own 100% of the Target Businesses. See “ Corporate Structure ” and “ Risk Factors ”.

The information provided herein concerning NextPoint Financial following the completion of the Transaction is provided as of the date of this prospectus. Accordingly, the information provided herein is subject to change prior or subsequent to the Effective Date. See “ Caution Regarding Forward-Looking Statements ”.

Unless otherwise indicated, references herein to the programs, policies, procedures, practices, guidelines, mandates and plans (collectively, the “ Programs and Policies ”) of NextPoint Financial refer, in each case, to the Programs and Policies of NextPoint Financial which are expected to be formally ratified and adopted by the Board subsequent to the closing of the Transaction. Unless otherwise indicated, the disclosure in respect of the Programs and Policies contained in this prospectus is presented on the assumption that the Programs and Policies have been formally ratified by the Board in such form and have been instituted at NextPoint Financial. Notwithstanding the foregoing, prior to the formal ratification and adoption of each of the Programs and Policies, it is expected that the Board will review and adjust such Programs and Policies to the extent necessary to ensure that the specific requirements of NextPoint Financial and its operations are met. Accordingly, the disclosure contained in this prospectus in respect of such Programs and Policies remains subject to revision prior or subsequent to the Effective Date.

Unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “$” or “US$” are to United States dollars and references to “C$” are to Canadian dollars.

Unless the context otherwise indicates or requires, all references in this prospectus to “we”, “us” or “our” are references to NAC and the business to be carried on by NextPoint Financial following the closing of the Transaction.

The following table sets forth, for the periods indicated, the high, low, average and period-end rates of exchange for one U.S. dollar, expressed in Canadian dollars, based on the daily exchange rate published by the Bank of Canada during the respective periods.

Rate at end of period Average rate during period High rate for period Low rate for period	Year Ended December 31
	2020 2019 2018 C$1.2732 C$1.2988 C$1.3642 C$1.3415 C$1.3269 C$1.2957 C$1.4496 C$1.3600 C$1.3642 C$1.2718 C$1.2988 C$1.2288

On June 2, 2021, the final Business Day prior to the date hereof, the daily average rate of exchange posted by the Bank of Canada for conversion of U.S. dollars into Canadian dollars was US$1.00 equals C$1.2052.

Non-IFRS Measures

This prospectus makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Target Businesses’ financial information reported under IFRS. The Target Businesses use non-IFRS measures including EBITDA, Adjusted EBITDA and Systemwide Revenue and which may be calculated differently by other companies. Such non-IFRS measures and metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. NextPoint Financial also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of companies in similar industries. Management also uses non-IFRS measures and metrics, in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of executive compensation. Securities regulations require such measures to be clearly defined and reconciled with their most directly comparable IFRS measure.

Reconciliation of Non-IFRS Measures

The Target Businesses report certain non-IFRS measures that are used to evaluate the performance of such businesses and the performance of their respective segments, as well as to manage their capital structure. As non-

IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulations require such measures to be clearly defined and reconciled with their most directly comparable IFRS measure. We believe Adjusted EBITDA is a useful measure to assess the performance of the Target Business and NextPoint Financial as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of underlying business performance and other one-time or non-recurring expenses. A reconciliation of Adjusted EBITDA to Net Income for LoanMe is provided under “ NonIFRS Measures ” in LoanMe’s MD&A attached hereto as Appendix F and the following table provides a reconciliation of Adjusted EBITDA to Net Income for Liberty.

Liberty Adjusted EBITDA Reconciliation

(In thousands)	Twelve-months ended	Transition Period from May 1, 2019 to	Twelve-months ended	Twelve-months ended
	December 26, 2020	December 28, 2019	April 30, 2019	April 30, 2018
Net income (loss)	14,671 $	(63,104) $	(4,116) $	9,286 $
Interest expense	5,319	2,618	3,475	3,773
Income tax expense (benefit)	1,186	(2,525)	(88)	5,918
Depreciation and amortization	15,555	11,878	20,722	18,701
EBITDA	36,731 $	(51,133) $	19,993 $	37,678 $
Adjustments:
CEO seperation and related costs	-	-	-	3,503
Executive severance	717	952	933	2,965
Executive recruitment costs	-	-	725	325
Restructuring charges	-	-	7,996	4,586
Shareholder litigation costs	-	61	472	-
Accrued judgments and settlements, net of estimated recoveries	2,607	981	972	529
Corporate governance costs	253	188	303	-
Unsolicited offer costs	-	-	311	-
Divestiture of year- round accounting offices	-	-	1,846	-
Compliance Task Force and related costs	-	-	-	881
Adjusted EBITDA	40,308 $	(48,951) $	33,551 $	50,467 $
Revenue EBITDA Margin (1)	122,775 $ 33%	14,985 $ -327%	132,546 $ 25%	175,479 $ 29%

(1) EBITDA Margin is calculated by dividing adjusted EBITDA by the total revenue for the period.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this prospectus are prospective in nature that constitute forward-looking information and/or forward-looking statements within the meaning of applicable securities laws (collectively, “ forward-looking statements ”). Forward-looking statements include, but are not limited to: statements concerning the completion and proposed terms of, and matters relating to, the Transaction and the expected timing related thereto; the likelihood of the Transaction being completed; the redemption amount in respect of the Class A Restricted Voting Shares; the expected operations, financial results and condition of NextPoint Financial following the Transaction including such things as future business strategy, competitive strengths, goals, operational synergies, product integration, cost savings, expansion and growth of NextPoint Financial’s business, operations and plans; expansion into additional products and markets; expectations of market size and growth in the U.S. and Canada and in the provinces and territories in which the Target Businesses operate or contemplate future operations; expectations for regulatory and/or competitive factors related to the industry in which NextPoint Financial operates generally; general economic trends; statements based on the NextPoint Financial Unaudited Pro Forma Financial Statements; NextPoint Financial’s Programs and Policies; NextPoint Financial’s future objectives and strategies to achieve those objectives; the listing or continued listing of the Common Shares and the NAC Warrants; any market created for NextPoint Financial’s securities; the estimated cash flow, capitalization and adequacy thereof for NextPoint Financial following the Transaction; the expected benefits of the Transaction to, and resulting treatment of, holders of Class A Restricted Voting Shares, Class B Shares and the NAC Warrants; the anticipated effects of the

Transaction; provisions in the Articles; the number of Common Shares and Proportionate Voting Shares outstanding following the Transaction; NextPoint Financial’s compensation of its directors and executive officers; principal steps to the Transaction; the satisfaction of the conditions to consummate the Transaction; as well as other statements with respect to management’s beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forwardlooking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “expect”, “intend”, “estimate”, “anticipate”, “believes”, “should”, “plans” or “continue”, or similar expressions suggesting future outcomes or events.

Forward-looking statements reflect management’s current beliefs, expectations and assumptions and are based on information currently available to management, management’s historical experience, perception of trends and current business conditions, expected future developments and other factors which management considers appropriate. With respect to the forward-looking statements included in this prospectus, NAC and the Target Businesses have made certain assumptions with respect to, among other things: the anticipated approval of the Transaction by the Target Businesses’ equity holders; the anticipated receipt of any required regulatory approvals and consents (including the final approval of the Exchange); the expectation that each of NAC and the Target Businesses will comply with the terms and conditions of the Transaction Agreements; the expectation that no event, change or other circumstance will occur that could give rise to the termination of the Transaction Agreements; that no unforeseen changes in the legislative and operating frameworks for NextPoint Financial will occur; that NextPoint Financial will meet its future objectives and priorities; that NextPoint Financial will have access to adequate capital to fund its future projects and plans; that NextPoint Financial’s future projects and plans will proceed as anticipated; taxes payable; customer growth and pricing; as well as assumptions concerning legislative framework, general economic and industry growth rates, prices, currency exchange, interest rates and competitive intensity and the anticipated ongoing impact of COVID-19.

Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated by such statements. Factors that could cause such differences include, but are not limited to: U.S. and Canadian regulatory landscape, including political risks; risks relating to anti-money laundering laws and regulation; other governmental and environmental regulation; reliance on the expertise and judgment of senior management of NextPoint Financial; and other factors discussed under “ Risk Factors ”.

All forward-looking statements included in and incorporated into this prospectus are qualified by these cautionary statements. Unless otherwise indicated, the forward-looking statements contained herein are made as of the date of this prospectus and, except as expressly required by applicable law, NAC and NextPoint Financial undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Readers are cautioned that the actual results achieved will vary from the information provided herein and that such variations may be material. Consequently, there are no representations by NAC that actual results achieved will be the same in whole or in part as those set out in the forward-looking statements.

MARKET AND INDUSTRY DATA

This prospectus relies on and refers to information regarding various companies and certain market and industry data. NAC and the Target Businesses have obtained this information and industry data from independent market research reports and other publicly available sources. Such reports generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy or completeness of such information is not guaranteed. Although NAC and the Target Businesses believe the market research and publicly available information is reliable, NAC and the Target Businesses have not independently verified and cannot guarantee the accuracy or completeness of that information and investors should use caution in placing reliance on such information.

TRADEMARKS AND TRADENAMES

This prospectus and the information incorporated herein by reference include certain trademarks and trade names that are protected under applicable intellectual property laws. Solely for convenience, trademarks and tradenames referred to in this prospectus may appear without the ® or ™ symbol, but such references are not intended to indicate, in any way, that rights to these trademarks and tradenames will not be asserted, to the fullest extent under applicable law. All trademarks used in this prospectus are the property of their respective owners, whether they appear with or without a ® or ™ symbol.

CORPORATE STRUCTURE

NextPoint Acquisition Corp.

Name, Address and Incorporation

NAC was incorporated under the BCBCA on July 16, 2020. Its head office is located at 77 Bedford Road, Katonah, New York, 10536, United States and its registered office is located at 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, BC, V7X 1L3, Canada. On August 10, 2020, NAC amended its Articles to increase the authorized capital to create an unlimited number of Class A Restricted Voting Shares, an unlimited number of Common Shares and an unlimited number of Proportionate Voting Shares.

Transaction

As of the date of this prospectus, NAC is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia for the purpose of effecting an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization or any other similar business combination involving NAC that will qualify as its “qualifying acquisition”. NAC received US$200 million of gross proceeds from the IPO and such proceeds were placed in an escrow account and will be released upon consummation of the Transaction in accordance with the terms and conditions of the Escrow Agreement.

On February 22, 2021, NAC announced that it had entered into the Transaction Agreements to acquire the Target Businesses, which are intended to collectively constitute NAC’s “qualifying acquisition”.

Subject to obtaining certain approvals and the satisfaction of certain conditions stipulated therein, it is anticipated that these acquisitions will be completed in the second quarter of 2021. There is no assurance that either of the acquisitions of the Target Businesses will be completed or, if completed, will be on terms that are exactly the same as disclosed in this prospectus.

Summary of Transaction Agreements

On February 21, 2021, NAC entered into the following Transaction Agreements to acquire the Target Businesses:

the Liberty Agreement; and
the LoanMe Agreement.

Liberty Agreement

Initially capitalized terms used in this section but not otherwise defined in the prospectus have the meaning set out in the Liberty Agreement, a copy of which is available under NAC’s profile on the SEDAR website at www.sedar.com.

owned subsidiary of NAC (together with the other transactions contemplated by the Liberty Agreement, the “ Liberty Transaction ”).

Aggregate Consideration

The aggregate consideration to be paid in the Liberty Transaction under the Liberty Agreement will consist of:

US$182,055,000 in cash (the “ Liberty Cash Consideration ”); and
73,700 Proportionate Voting Shares (the “ Liberty Share Consideration ”),

subject to adjustment in accordance with the terms of the Liberty Agreement. See “ Transaction Agreements –Liberty Agreement –Purchase Price Adjustment ”.

Purchase Price Adjustment

At the closing of the Liberty Transaction: (A) the Liberty Cash Consideration will be decreased by (i) certain transaction expenses incurred on behalf of Liberty Seller by NAC; and (ii) the net proceeds resulting of certain real property dispositions, if any, by Liberty or its affiliates occurring prior to the closing of the Liberty Transaction; and (B) the Liberty Share Consideration will be decreased as follows, without duplication: (i) if the Liberty Transaction closes on or before April 30, 2021, the Liberty Share Consideration will be decreased by 12,300 Proportionate Voting Shares, (ii) if the Liberty Transaction closes after April 30, 2021 but on or before May 31, 2021, the Liberty Share Consideration will be decreased by 9,300 Proportionate Voting Shares, (iii) if the Liberty Transaction closes after May 31, 2021 but on or before June 30, 2021, the Liberty Share Consideration will be decreased by 6,300 Proportionate Voting Shares, and (iv) if the Liberty Transaction closes after June 30, 2021 but on or before July 31, 2021, the Liberty Share Consideration will be decreased by 3,300 Proportionate Voting Shares. If, notwithstanding the Outside Date, the Liberty Transaction closes on or after August 1, 2021, there will be no reduction in the Liberty Share Consideration. This adjustment is intended to compensate NAC (by way of a reduction to the Liberty Share Consideration) for the amount of cash anticipated to be available for working capital as of the dates set out above, which, instead of remaining available for working capital, will be distributed to the Liberty Seller. Given the seasonal nature of Liberty’s business, the amount of projected cash anticipated to be available is expected to decrease over the periods set out above.

Representations and Warranties

The Liberty Agreement contains customary representations and warranties made by NAC to Liberty Seller, including representations and warranties related to due organization and qualification, capitalization, certain Canadian securities law matters and authorization to enter into the Liberty Agreement and carry out NAC’s obligations thereunder.

In addition, Liberty Seller made customary representations and warranties related to due organization and qualification, capitalization, and authorization to enter into the Liberty Agreement, and also made customary representations and warranties with respect to its business, certain material contracts, ownership of its assets and intellectual property, accuracy of its financial statements, certain employee, franchise and environmental matters, compliance with applicable laws and the lack of any claims, actions or proceedings against Liberty Seller, Liberty and its subsidiaries. The representations and warranties are subject to exceptions set forth in the disclosure schedules, and may be subject to certain qualifications, limitations and exceptions agreed to by the parties.

None of the representations and warranties made by NAC and Liberty Seller will survive the consummation of the Liberty Transaction, and no indemnification may be sought against the parties for any breaches or inaccuracies thereafter.

Pre-Closing Covenants

The Liberty Agreement contains pre-closing covenants made by each party. Each party agrees to cooperate with the other party and use commercially reasonable efforts to take all actions to consummate the transaction, including satisfaction of closing conditions, and receipt of certain governmental authorizations and third-party consents. Additionally, each party will use reasonable best efforts to obtain all consents, authorizations, orders and approvals from all Governmental Authorities necessary to effectuate the Liberty Transaction.

Prior to the closing of the Liberty Transaction, Liberty Seller covenants to cause Liberty and its subsidiaries to conduct their business in the ordinary course and use commercially reasonable efforts preserve the current operations, organization and relationships of their business. Liberty and its subsidiaries are restricted from issuing equity, incurring indebtedness outside of the ordinary course and selling or acquiring material assets, without first obtaining NAC’s prior written consent. Liberty and its subsidiaries are also restricted from issuing any cash dividend or distribution if such dividend or distribution causes Liberty and its subsidiaries to have less than $2,700,000 of cash and cash equivalents at the closing of the Liberty Transaction. Liberty Seller also covenants to allow NAC reasonable access to the assets, books and records of Liberty, and to deliver the written resignations of certain of Liberty’s directors and officers prior to the closing of the Liberty Transaction. Prior to the closing of the Liberty Transaction, Liberty Seller further covenants to change the names of the entities being purchased so that they do not include the words “Franchise Group,” subject to the approval of NAC. Liberty Seller also covenants not to approve, solicit or enter into any discussions regarding acquisition transactions with any third parties.

Prior to the closing of the Liberty Transaction, and except as otherwise contemplated by the LoanMe Transaction (as defined below) or the subscription agreements for the Private Placement, NAC is restricted from, among other actions, redeeming, purchasing or reacquiring any outstanding Class A Restricted Voting Shares or Class B Shares (except as described in the IPO prospectus), issuing additional equity, incurring any indebtedness (other than the Credit Facility), and acquiring or making an investment in any person without first obtaining Liberty Seller’s prior written consent.

Prior to the closing of the Liberty Transaction, NAC covenants that it will use its commercially reasonable efforts to obtain the Credit Facility on the terms and conditions described in the commitment letters governing the terms of the Credit Facility. NAC further covenants not to amend, modify or replace any of the commitment letters governing the terms of the Credit Facility in a manner that would (a) reduce the aggregate amount of the Credit Facility, or (b) impose new or additional conditions precedent or otherwise expand, amend, replace or modify any of the conditions precedent to the receipt of the Credit Facility or any other terms that would reasonably be expected to (i) delay, impair or prevent the consummation of the transaction contemplated hereby, (ii) make the timely funding of the Credit Facility or satisfaction of the conditions to obtaining the Credit Facility materially less likely to occur or (iii) adversely impact the ability of NAC to enforce its rights against other parties to the commitment letters or to draw upon and consummate the Credit Facility. NAC also covenants to keep Liberty Seller informed on a reasonable current basis and detail of the status of the Credit Facility and to notify Liberty Seller (a) of any material breach or default by any party to any commitment letters or definitive documents related to the Credit Facility, (b) of the receipt by NAC of any written notice or other written communication (other than negotiations of the definitive agreements with respect to the Credit Facility) from any Credit Facility source with respect to any breach, default, termination or repudiation by any party to any commitment letter or any definitive document related to the Credit Facility of any provisions of the commitment letters or any definitive document related to the Credit Facility or (c) of the occurrence of an event or development that could reasonably be expected to adversely impact the ability of NAC to obtain all or any portion of the Credit Facility necessary to consummate the transactions contemplated by the Liberty Agreement. In the event that any portion of the Credit Facility becomes unavailable, NAC covenants to use its reasonable best efforts to arrange and obtain alternative financing on terms no less favorable to NAC than those contained in the Credit Facility. Liberty Seller covenants to use commercially reasonable efforts to cooperate with NAC in its efforts to obtain the Credit Facility.

Furthermore, certain employee benefit plans of Franchise Group, Inc. provide that Liberty employees will retain coverage under such plans through the end of the month in which the closing of the Liberty Transaction occurs. NAC covenants to pay all premiums and other costs that employees retained by Liberty following the closing would

have been required to pay for such coverage through the end of the month in which the closing occurs to the same extent such retained employees would have otherwise had to pay had the closing not occurred.

Franchise Group, Inc. has also agreed to indemnify NAC for all pre-closing income taxes applicable to the acquired business.

Conditions to Closing

The obligations of both NAC and Liberty Seller to effect the Liberty Transaction are subject to (a) the approval of the Exchange enabling the Transaction to qualify as NAC’s “qualifying acquisition” and the listing of the Common Shares on the Exchange, (b) a final receipt for the Prospectus having been issued by or on behalf of the OSC, (c) the conversion of all Class A Restricted Voting Shares and Class B Shares into Common Shares and Proportionate Voting Shares, respectively, (d) the waiting period under the HSR Act (and any extension thereof) having expired or being terminated, (e) no law or order having been entered that prohibits the consummation of the Liberty Transaction, (f) all of the conditions to closing in the LoanMe Agreement being satisfied or waived and (g) the amount of cash held by the Escrow Agent after giving effect to any and all redemptions of Class A Restricted Voting Shares plus the amount of cash the Lenders are prepared to fund shall not be less than $215,000,000.

Additionally, (a) the obligations of NAC to effect the Liberty Transaction are subject to (i) all representations and warranties of Liberty being true and correct as of the closing of the Liberty Transaction (except in the case of nonfundamental representations and warranties, where the failure of such representations and warranties being true and correct has not had a material adverse effect), (ii) performance by Liberty in all material respects of its obligations, (iii) no material adverse effect having occurred, (iv) certain third party consents and approvals having been obtained, (v) Liberty Seller’s delivery of certain certificates, resignations and ancillary documents at or prior to the closing of the Liberty Transaction, including but not limited to, the Liberty Seller Lock-Up Agreement, the Allocation Agreement, and the Liberty Seller Allocation Agreement, and (vi) Liberty’s Seller’s delivery of evidence that Liberty and its subsidiaries are released from certain liens and obligations under any credit facility of Franchise Group, Inc.; and (b) the obligations of Liberty Seller to effect the Liberty Transaction are subject to (i) all representations and warranties by NAC being true and correct as of the closing of the Liberty Transaction (except in the case of non-fundamental representations and warranties, where the failures of such representations and warranties being true and correct has not had a material adverse effect), (ii) performance by NAC in all material respects of its obligations, (iii) NAC’s delivery of certain certificates and ancillary documents at or prior to the closing of the Liberty Transaction, (iv) NAC’s delivery of the Liberty Cash Consideration and Liberty Share   Consideration to Liberty Seller, subject to adjustment (See “ Transaction Agreements Liberty Agreement Purchase Price Adjustment ”), and (v) NAC’s delivery of payment to certain third party service providers and lenders.

Termination

LoanMe Agreement

Initially capitalized terms used in this section but not otherwise defined in the prospectus have the meaning set out in the LoanMe Agreement, a copy of which is available under NAC’s profile on the SEDAR website at www.sedar.com.

Pursuant to the terms of the LoanMe Agreement, LM Holdco (as defined below) will become the sole stockholder of LoanMe as of the Effective Time, and will merge with and into MergerSub, a wholly-owned subsidiary of NAC,

with MergerSub continuing as the surviving entity (together with the other transactions contemplated by the LoanMe Agreement, the “ LoanMe Transaction ”).

Aggregate Consideration

The aggregate consideration to be paid in the LoanMe Transaction under the LoanMe Agreement will consist of:

US$18,000,000 in cash; and
48,500 Proportionate Voting Shares,

See “ Transaction Agreements – LoanMe Agreement – Effect of the LoanMe Transaction

Pre-closing LoanMe Restructuring

Prior to the Effective Time, Bliksum, the sole stockholder of LoanMe, will form a new Delaware corporation (“ LM Holdco ”), and will contribute all of the common shares of LoanMe held by Bliksum to LM Holdco. Immediately following such contribution and prior to the Effective Time, all options to purchase common stock of LoanMe will be assumed by LM Holdco and converted into options to purchase common stock of LM Holdco on the same terms and conditions as the LoanMe options (the “ LM Holdco Options ”). Immediately following such conversion and prior to the Effective Time, LoanMe will convert to a Delaware limited liability company and LM Holdco shall execute a joinder to the LoanMe Agreement and become a party to thereto.

Effect of the LoanMe Transaction

Subject to the terms and conditions set forth in the LoanMe Agreement, at the Effective Time:

each share of common stock of LM Holdco (the “ LM Holdco Common Stock ”) outstanding immediately prior to the Effective Time (excluding any shares of LM Holdco Common Stock held by LM Holdco, which will be automatically cancelled and retired at the Effective Time) will be automatically converted into the right to receive (i) a number of Proportionate Voting Shares (the “ Per Share Stock Consideration ”) equal to (x) 48,500 Proportionate Voting Shares reduced by the sum of the number of restricted Common Shares issuable upon the exercise of all Converted Options (defined below) plus 322,805 Common Shares that NAC will issue to certain LoanMe employees following the Effective Time (in each case expressed as a number of Proportionate Voting Shares to reflect that each Proportionate Voting Share is convertible into 100 Common Shares) divided by (y) the number of shares of LM Holdco Common Stock outstanding immediately prior to the Effective Time and (ii) a cash payment equal to US$18.0 million divided by the number of shares of LM Holdco Common Stock outstanding immediately prior to the Effective Time (the “ Per Share Cash Consideration ”).
each LM Holdco Option, whether or not vested, outstanding as of the Effective Time will be converted into an option to purchase Common Shares (each a “ Converted Option ”), on substantially the same terms and conditions as were applicable to such LM Holdco Option immediately prior to the Effective Time (including expiration date, vesting conditions, and exercise provisions), except that such Converted Option will be exercisable for that number of Common Shares equal to the product (rounded down to the nearest whole number) of (A) the number of shares of LM Holdco Common Stock subject to the LM Holdco Option immediately before the Effective Time and (B) the Equity Award Exchange Ratio; and (ii) the per share exercise price for each Common Share issuable upon exercise of the Converted Option will be equal to the quotient (rounded up to the nearest whole cent) obtained by dividing (A) the exercise price per share of such LM Holdco Option immediately before the Effective Time by (B) the Equity Award Exchange Ratio.

Representations and Warranties

The LoanMe Agreement contains customary representations and warranties made by NAC and MergerSub to Bliksum including representations and warranties related to due organization and qualification, capitalization, certain Canadian securities law matters and authorization to enter into the LoanMe Agreement and carry out NAC’s and MergerSub’s obligations thereunder.

In addition, Bliksum made customary representations and warranties related to LoanMe and Bliksum’s due organization and qualification, capitalization, and authorization to enter into the LoanMe Agreement, and also made customary representations and warranties with respect to LoanMe’s business, certain of LoanMe’s material contracts, ownership of LoanMe’s assets and intellectual property, accuracy of LoanMe’s financial statements, certain employee and environmental matters, compliance with applicable laws and the lack of any claims, actions or proceedings against Bliksum or LoanMe. The representations and warranties are subject to exceptions set forth in the disclosure schedules, and may be subject to certain qualifications, limitations and exceptions agreed to by the parties.

None of the representations and warranties made by NAC, MergerSub or Bliksum will survive the consummation of the LoanMe Transaction, and no indemnification may be sought against the parties for any breaches or inaccuracies thereafter.

Pre-Closing Covenants

The LoanMe Agreement contains pre-closing covenants made by each party. Each party agrees to use commercially reasonable efforts to take all actions necessary to consummate the LoanMe Transaction. Additionally, each party will make all filings and submission required under any law and will use reasonable best efforts to obtain all consents, authorizations, orders and approvals from all governmental authorities necessary to effectuate the LoanMe Transaction.

Prior to the closing of the LoanMe Transaction, LoanMe covenants to conduct its business in the ordinary course and use commercially reasonable efforts preserve its current operations, organization and relationships. LoanMe is restricted from issuing equity, incurring indebtedness outside of the ordinary course and selling or acquiring material assets, without first obtaining NAC’s prior written consent. LoanMe also covenants to allow NAC reasonable access to its assets, books and records prior to the closing of the LoanMe Transaction. LoanMe also covenants not to approve, solicit or enter into any discussions regarding acquisition transactions with any third parties.

Prior to the closing of the LoanMe Transaction, and except as otherwise contemplated by the Liberty Transaction or the subscription agreements for the Private Placement, NAC is restricted from, among other actions, redeeming, purchasing or reacquiring any outstanding Class A Restricted Voting Shares or Class B Shares (except as described in the IPO prospectus), issuing additional equity, incurring any indebtedness (other than the Credit Facility), and acquiring or making an investment in any person without first obtaining LoanMe’s prior written consent.

Prior to the closing of the LoanMe Transaction, NAC covenants that it will use its commercially reasonable efforts to obtain the Credit Facility on the terms and conditions described in the commitment letters governing the terms of the Credit Facility. NAC further covenants not to amend, modify or replace any of the commitment letters governing the terms of the Credit Facility in a manner that would (a) reduce the aggregate amount of the Credit Facility, or (b) impose new or additional conditions precedent or otherwise expand, amend, replace or modify any of the conditions precedent to the receipt of the Credit Facility or any other terms that would reasonably be expected to (i) delay, impair or prevent the consummation of the transaction contemplated hereby, (ii) make the timely funding of the Credit Facility or satisfaction of the conditions to obtaining the Credit Facility materially less likely to occur or (iii) adversely impact the ability of NAC to enforce its rights against other parties to the commitment letters or to draw upon and consummate the Credit Facility. NAC also covenants to keep LoanMe informed on a reasonable current basis and detail of the status of the Credit Facility and to notify LoanMe (a) of any material breach or default by any party to any commitment letters or definitive documents related to the Credit Facility, (b) of the receipt by NAC of any written notice or other written communication (other than negotiations of the definitive agreements with respect to the Credit Facility) from any Credit Facility source with respect to any breach, default, termination or repudiation by any party to any commitment letter or any definitive document related to the Credit Facility of any provisions of the commitment letters or any definitive document related to the Credit Facility or (c) of the occurrence of an event or development that could reasonably be expected to adversely impact the ability of NAC to

obtain all or any portion of the Credit Facility necessary to consummate the transactions contemplated by the LoanMe Agreement. In the event that any portion of the Credit Facility becomes unavailable, NAC covenants to use its reasonable best efforts to arrange and obtain alternative financing on terms no less favorable to NAC than those contained in the Credit Facility. LoanMe and LM Holdco covenant to use commercially reasonable efforts to cooperate with NAC in its efforts to obtain the Credit Facility.

Bliksum has also agreed to indemnify us for all pre-closing income taxes applicable to the acquired business.

Conditions to Closing

The obligations of the parties to effect the LoanMe Transaction are subject to (a) the approval of the Exchange enabling the Transaction to qualify as NAC’s “qualifying acquisition” and the listing of the Common Shares on the Exchange, (b) a final receipt for this prospectus having been issued by or on behalf of the OSC, (c) the conversion of all Class A Restricted Voting Shares and Class B Shares into Common Shares and Proportionate Voting Shares, respectively, (d) no law or order having been entered that prohibits the consummation of the LoanMe Transaction, (e) all of the conditions to closing in the Liberty Agreement being satisfied or waived and (f) the amount of cash held by the Escrow Agent after giving effect to any and all redemptions of Class A Restricted Voting Shares plus the amount of cash the Lenders are prepared to fund shall not be less than $215,000,000.

Additionally, (a) the obligations of NAC and MergerSub to effect the LoanMe Transaction are subject to (i) all representations and warranties of Bliksum and LoanMe being true and correct as of the closing of the LoanMe Transaction (except in the case of non-fundamental representations and warranties, where the failure of such representations and warranties being true and correct has not had a material adverse effect), (ii) performance by LoanMe, LM Holdco and Bliksum in all material respects of their respective obligations pursuant to the LoanMe Agreement, (iii) no material adverse effect having occurred, (iv) certain third party consents and approvals having been obtained, and (vi) Bliksum having executed the Bliksum Lock-Up Agreement and the Bliksum Tax Indemnification Agreement; and (b) the obligations of Bliksum and LM Holdco to effect the LoanMe Transaction are subject to (i) all representations and warranties by NAC and MergerSub being true and correct as of the closing of the Liberty Transaction (except in the case of non-fundamental representations and warranties, where the failures of such representations and warranties being true and correct has not had a material adverse effect), and (ii) performance by NAC and MergerSub in all material respects of their respective obligations pursuant to the LoanMe Agreement.

Termination

The LoanMe Agreement, and the associated transactions, may be terminated prior to closing by the mutual written consent of the parties. The LoanMe Agreement also contains an outside date of July 31, 2021, and may also be terminated if any law makes the LoanMe Transaction illegal or a governmental authority issues an order which permanently restrains, enjoins or prevents the consummation of the LoanMe Transaction. Either party may terminate the LoanMe Agreement if the other breaches a representation, warranty or covenant such that closing conditions would not be satisfied (so long as the terminating party is not in breach of the LoanMe Agreement) , subject to applicable cure periods.

Investor Rights Agreement

Upon closing of the Transaction, NextPoint Financial, Liberty Seller and Bliksum will enter into an investor rights agreement (the “ Investor Rights Agreement ”), pursuant to which they will be granted certain registration rights in respect of the Proportionate Voting Shares (and the Common Shares into which such Proportionate Voting Shares convert) received by them pursuant to the Transaction.

Proportionate Voting Shares); provided, however, that NextPoint Financial will be required to effect no more than three (3) such demand registrations and each such registration must be reasonably expected to result in aggregate gross proceeds of greater than the lesser of (i) $35 million and (ii) such amount as would enable Liberty Seller to sell all of its remaining Common Shares; (c) customary piggy back registration rights in the event NextPoint Financial files a prospectus or registration statement relating to an offering of Common Shares; (d) a requirement that NextPoint Financial file a short form base shelf prospectus at least 45 days prior to the expiration of the period set forth in the Liberty Seller Lock-Up Agreement; and (e) a requirement that NextPoint file a Form S-3 or Form F-3 registration statement in the event the Common Shares are listed on a national securities exchange in the United States and NextPoint Financial is eligible to file such registration statement.

Private Placement

In order to ensure that the Issuer has sufficient capital to fund the aggregate purchase price contemplated by the Transaction in circumstances where these are significant redemptions, NAC undertook the Private Placement to be effected through a subsidiary to be incorporated prior to closing of the Transaction. The Private Placement was completed pursuant to the execution, on behalf of each prospective purchaser, of a commitment to acquire, concurrent with the closing of the Transaction, securities of a wholly-owned subsidiary of the Issuer.

The Private Placement will be effected so that the subscribers will ultimately receive the same securities to be acquired by investors that hold Class A Restricted Voting Shares pursuant to the Transaction. After the terms of the Private Placement had been established, Andy Neuberger and John Lederer agreed to participate in the Private Placement as to $5 million and $2 million, respectively. The balance of the offering was funded by parties that were arm’s-length to the Issuer but included Brent Turner who is to be appointed CEO of NextPoint Financial upon the closing of the Transaction.

Debt Financing

interest under the Credit Facility will be due and payable on the earlier to occur of (i) the date that is two years following the end of the draw period and (ii) the ten year anniversary of the Effective Date.

Certain Covenants and Events of Default

The Credit Facility will contain customary covenants and financial covenants requiring the borrower parties to (i) maintain a certain minimum tangible net worth, (ii) have unrestricted cash on hand in certain amounts, (iii) not exceed maximum leverage ratio with respect to the total borrowed debt at the end of each fiscal quarter and (iv) maintain a fixed charge coverage ratio of a certain amount.

The Credit Facility will also contain a number of customary negative covenants, including limiting or restricting the ability of NAC and its subsidiaries to:

file bankruptcy;
amend organizational documents or other material documents;
incur additional indebtedness;
incur liens
enter into transactions with affiliates;
sell assets;
pay dividends;
make certain investments; and
prepay indebtedness.

The aforementioned restrictions will be subject to certain exceptions, including the ability to incur additional indebtedness, liens, investments, dividends, and sale of assets, subject, in each case, to certain conditions.

The Credit Facility will also contain certain customary representations and warranties and events of default.

Principal Steps of the Transaction

Promptly following the issuance a receipt for this prospectus, NAC will: (i) make this prospectus publicly available on its website; (ii) mail a notice of redemption to each holder of Class A Restricted Voting Shares; and (iii) deliver the prospectus to the holders of the Class A Restricted Voting Shares by prepaid mail or electronically in accordance with applicable securities laws. The Redemption Deadline will not occur until the later of: (x) 21 days following the posting of the prospectus and the mailing of the notice contemplated by (i) and (ii); and (y) the third business day following the delivery contemplated by (iii).

Under the Transaction Agreements, as applicable, prior to the closing of the Transaction, the following principal steps, among other things, shall occur:

(a) Bliksum will form LM Holdco and contribute all of the common shares of LoanMe to LM Holdco;

(b) All outstanding LoanMe options will be assumed by LM Holdco and converted into options to purchase LM Holdco Common Stock on the same economic and other terms;
(c) LoanMe will convert to a Delaware limited liability company;
(d) LM Holdco will execute a joinder to the LoanMe Agreement and become a party thereto; and
(e) Investors in the Private Placement will fund the consideration for the Non-Voting Shares and the NonVoting Shares will be issued.

Under the Transaction Agreements, at the closing of the Transaction, the following principal steps, among other things, will occur:

(a) NAC and Placement Sub will complete an amalgamation under the BCBCA, and each Non-Voting Share of Placement Sub will be exchanged for one Class A Restricted Voting Share;
(b) Class A Restricted Voting Shares and Class B Shares will convert into Common Shares and Proportionate Voting Shares, as applicable,;
(c) NAC will purchase all of the limited liability company interests of Liberty;
(d) LM Holdco will merge with and into MergerSub, with MergerSub continuing as the surviving entity; and
(e) Immediately following and as a part of the closing of the Transaction, NAC will contribute all of its interests in MergerSub and Liberty to NPI Holdco, LLC a wholly owned subsidiary of NAC.

Following closing of the Transaction, the Class A Restricted Voting Shares which have not been redeemed will be automatically renamed “Common Shares” with no action taken on the part of the holders thereof, as set forth in the Articles.

NAC expects that expenses relating to the completion of the Transaction as well as funds required for the ongoing operations of NAC going forward will be funded from a combination of cash available to NAC from the IPO plus accrued interest less any amounts used to settle redemptions of Class A Restricted Voting Shares, if any (currently held in escrow), cash on hand, the proceeds of the Private Placement and advances under the Credit Facility.

Related Party Interests

LoanMe

Andrew Neuberger and Frank Amato beneficially own, directly or indirectly, or exercise control or direction over, 64.3% and 2% respectively, of Chilmark Ventures LLC (“ Chilmark ”), which holds an 8.33% economic and voting interest in BP SLL JV LLC (“ BPJV ”). In April 2019, in an arm’s length transaction with a third party, BPJV acquired an option to purchase 90.1% of the sole shareholder of LoanMe, Bliksum, from its sole shareholder, Jonathan Williams, LoanMe’s CEO, on payment of US$5,000 (the “ Bliksum Option ”). Chilmark is also entitled to receive 45% of the proceeds realized by BPJV on the sale of LoanMe once the investors in BPJV have received a 12% return on their investment above their invested capital (the “ Promote Interest ”). Based on the purchase price set out in the LoanMe Agreement, and assuming that (i) BPJV exercises its option to purchase the Bliksum shares; (ii) Bliksum distributes to its shareholders the consideration received from NAC; (iii) BPJV distributes to the holders of its membership interests the consideration received from Bliksum and pays the Promote Interest; and (iv) Chilmark distributes to the holders of its membership interests the consideration received from BPJV (none of which NAC has any control over), NAC has been advised by Mr. Neuberger that Chilmark would expect to be entitled to

receive US$17,609,876 pursuant to the Promote Interest, which would likely be satisfied through delivery of an aggregate of 17,610 Proportionate Voting Shares, of which Messrs. Neuberger and Amato will be entitled to receive 11,446 and 176 shares, respectively as a result of their interests in Chilmark in addition to the return of their original invested capital. If such distributions were to occur, these shares would remain subject to the terms of a lock-up agreement substantially in the form of the Lock-Up Agreement. As of the date hereof, the timing of any such distribution(s) is not known.

Subsequent to the completion of the IPO in August 2020, NAC considered and engaged with a number of potential target companies with the objective of consummating the qualifying acquisition. The efforts of NAC to find a qualifying acquisition progressed at times to the point of engaging in detailed discussions and negotiations. However, NAC was not able to reach an agreement or determined not to proceed with the acquisition of another target business. Neither Mr. Neuberger nor Mr. Amato, separately or together, control BPJV, the consent of which was required for LoanMe to approve the LoanMe Transaction. In connection with obtaining such consent, Chilmark voted in favor of the LoanMe Transaction

In September 2020, in determining to consider a possible transaction with LoanMe, Mr. Neuburger advised the Board, all the members of which other than Mr. Neuberger are free of any conflict of interest with respect to LoanMe, of his and Mr. Amato’s indirect interest in LoanMe. With the advice of counsel, the Board determined that a transaction with LoanMe would not constitute a “related party transaction” under the terms of MI 61-101. Nonetheless, to ensure independent oversight of the potential transaction and to avoid any suggestion of bias, the Board determined that Ms. Wendy Lane, an unconflicted director, would oversee negotiation of the LoanMe Transaction with full access to LoanMe’s management team and diligence materials as well as to NAC’s financial and legal advisors. The Board also determined that, due to the potential appearance of a conflict, Mr. Neuberger would recuse himself from all Board deliberations and voting with respect to the LoanMe Transaction and Mr. Amato would also not participate or vote in connection with any Board deliberations or voting with respect to the LoanMe Transaction.

Over the succeeding months, in parallel with negotiation of the Liberty Transaction, NAC’s management team, with the involvement of Ms. Lane and the assistance of NAC’s legal and financial advisors, conducted its diligence review of LoanMe and negotiated and documented the structure, terms and conditions of the LoanMe Transaction. Throughout this period, the members of the Board were kept apprised of the status and terms of the Transactions through formal meetings and informal discussions and with access to NAC’s legal and financial advisors. Ultimately, on February 18, 2021, the Board met to consider and approve the Transaction Agreements. In connection with the meeting, the Board was presented with substantially final drafts of the Transaction Agreements and supporting materials prepared by NAC’s legal and financial advisors. After substantial review and discussion, the Board unanimously determined, with Mr. Neuberger recusing himself from deliberations and voting with respect to the LoanMe Transaction, that the Transactions were in the best interest of NAC and resolved to approve the Transactions and Transaction Agreements.

Private Placement

With the advice of its financial advisers, NAC's board of directors determined that a private placement that sought to raise aggregate gross proceeds of up to US$25 million through the issuance of shares at a price of US$10.00 per share to ensure that, including the cash available pursuant to the Commitment Letter, the minimum cash conditions contained in the Transaction Agreements would be able to be satisfied in circumstances where there were significant redemptions of Class A Subordinate Voting Shares and therefore provide enhanced deal certainty to its shareholders and the targets was in the best interest of NAC. Subsequently, Messrs Neuburger, Lederer and Coleman advised that they were prepared to participate in the private placement as to approximately $5 million, $2 million and $250,000, respectively. Upon completion of the Private Placement Messrs Neuberger, Lederer and Coleman are expected to personally hold shares aggregating to approximately less than 3%, 1% and 1%, respectively, of the shares of NextPoint Financial, assuming no redemptions.

As Messrs Neuberger, Lederer and Coleman are participating in the Private Placement, the Private Placement constitutes a related party transaction under MI 61-101 and unless an exemption is available, it would be subject to the minority approval and formal valuation requirements set out in MI 61-101 (the “ 61-101 Requirements ”). No other officer, director or insider of NAC is participating in the Private Placement. The Private Placement will be

exempt from the MI 61-101 requirements if neither the fair market value of the subject matter, nor the fair market value of the consideration for the Related Party Transaction exceeds 25% of NAC's market capitalization (the “ Transaction Size Exemptions ”). As neither the fair market value of the subject matter, nor the fair market value of the consideration for the Private Placement exceeds 25% of NAC's market capitalization, the Private Placement qualifies for the Transaction Size Exemptions and is exempt from the MI 61-101 requirements.

Credit Facility

Mr. Neuberger beneficially owns a 2% subordinated equity interest in, and serves in an advisory capacity to, BasePoint Capital LLC, a specialty finance firm he founded in 2009 and later sold before founding NAC, and receives advisory fees from Basepoint of US$225,000 per annum. Mr. Amato is currently an employee of BasePoint.

In February 2020 NAC management determined that, to ensure that it would have sufficient cash available at closing to satisfy the minimum cash requirement contemplated by the LoanMe Agreement and the Liberty Agreement, it was prudent to seek additional financing for the Transaction.

Management met with two US-based banks and subsequently enlisted Jefferies LLC, its exclusive financial advisor, to solicit alternative sources of financing but indicative rates were not in a range that were acceptable to management and the Board. Mr. Neuberger then approached BasePoint Capital LLC concerning its potential interest in providing financing in connection with the Transaction. On February 18, 2021 Mr. Neuberger advised the Board of his interest in BasePoint and of the terms that BasePoint was willing to offer, which were more favourable to NextPoint than those management determined were otherwise available in the market. It was determined that, even though the Commitment Letter did not constitute a “related party transaction” for NAC under the terms of MI 61101 due to Mr. Neuberger’s minimal interest in BasePoint Capital LLC, to ensure independent oversight of the potential transaction and to avoid any suggestion of bias, Ms. Lane would review the final form of the credit facility and Mr. Neuberger would recuse himself from deliberations and voting with respect to the approval of the final form of the credit facility. The Board determined that the Commitment Letter was in the best interest of NAC and resolved to approve the entry into the Commitment Letter.

Prior Valuations

To the knowledge of the directors and officers of NAC, after reasonable enquiry, there have been no “prior valuations” (as defined in MI 61-101) prepared in respect of NAC, the Shares or any material assets of NAC during the 24 months prior to the date of this prospectus.

Redemption Rights

Pursuant to the Articles, holders of Class A Restricted Voting Shares have the right to redeem all or a portion of their Class A Restricted Voting Shares in connection with the Transaction, provided that they deposit their Class A Restricted Voting Shares for redemption prior to the Redemption Deadline. Holders of Class A Restricted Voting Shares whose shares are held through an intermediary may have earlier deadlines for depositing their Class A Restricted Voting Shares for redemption. If the deadline for depositing such shares held through an intermediary is not met by a holder of Class A Restricted Voting Shares, such holder’s shares may not be eligible for redemption.

Subject to applicable law, effective immediately prior to closing of the Transaction, all Class A Restricted Voting Shares validly deposited for redemption shall be redeemed for the Redemption Amount per Class A Restricted Voting Share redeemed, payable in cash. Upon payment in cash of the Redemption Amount (which shall occur no later than 30 calendar days following completion of the Transaction), the holders of the Class A Restricted Voting Shares so redeemed will have no further rights in respect of their Class A Restricted Voting Shares. This redemption amount is anticipated to be US$10.00 per Class A Restricted Voting Share, assuming a June 30, 2021 redemption date. Holders of Proportionate Voting Shares and/or Class B Shares do not have redemption rights with respect to their Proportionate Voting Shares and/or Class B Shares.

Notwithstanding any of the foregoing, no registered or beneficial holder of Class A Restricted Voting Shares (other than CDS), together with any Affiliate thereof or any person acting jointly or in concert therewith, shall be entitled to require NAC to redeem Class A Restricted Voting Shares in excess of an aggregate of 15% of the Class A Restricted Voting Shares issued and outstanding (the “ Redemption Limitation ”). By its election to redeem, each registered holder of Class A Restricted Voting Shares (other than CDS) and each beneficial holder of Class A Restricted Voting Shares will be required to represent or will be deemed to have represented to NAC that, together with any Affiliate of such holder and any other person with whom such holder is acting jointly or in concert, such holder is not redeeming Class A Restricted Voting Share in excess of the Redemption Limitation.

Process for Redemption by Non-Registered Holders of Restricted Voting Shares

A non-registered holder of Class A Restricted Voting Shares who desires to exercise its redemption rights in connection with the Transaction must do so by causing a participant (a “ CDS Participant ”) in the depository, trading, clearing and settlement systems administered by CDS to deliver to CDS (at its office in the City of Toronto) on behalf of the owner, a written notice (the “ Redemption Notice ”) of the owner’s intention to redeem Class A Restricted Voting Shares in connection with the Transaction. A non-registered holder of Class A Restricted Voting Shares who desires to redeem Class A Restricted Voting Shares should ensure that the CDS Participant is provided with notice of his or her intention to exercise his or her redemption privilege sufficiently in advance of the notice date described above so as to permit the CDS Participant to deliver notice to CDS and so as to permit CDS to deliver notice to the Transfer Agent in advance of the required time. The form of Redemption Notice will be available from a CDS Participant or the Transfer Agent.

By causing a CDS Participant to deliver to CDS a notice of the owner’s intention to redeem Class A Restricted Voting Share, an owner shall be deemed to have irrevocably surrendered his, her, or its Class A Restricted Voting Share for redemption and appointed such CDS Participant to act as his, her, or its exclusive settlement agent with respect to the exercise of the redemption right and the receipt of payment in connection with the settlement of obligations arising from such exercise.

Any Redemption Notice delivered by a CDS Participant regarding an owner’s intent to redeem which CDS determines to be incomplete, not in proper form, or not duly executed shall for all purposes be void and of no effect and the redemption right to which it relates shall be considered for all purposes not to have been exercised. A failure by a CDS Participant to exercise redemption rights or to give effect to the settlement thereof in accordance with the owner’s instructions will not give rise to any obligations or liability on the part of NAC to the CDS Participant or to the owner.

If the deadline for depositing Class A Restricted Voting Shares held through an intermediary is not met by holder of Class A Restricted Voting Share, such holder’s Class A Restricted Voting Shares may not be eligible for redemption. Such deadline may be earlier than the Redemption Deadline.

Use of Proceeds

Assuming 25% redemptions of Class A Restricted Voting Shares, NextPoint Financial currently anticipates using the entire proceeds of the IPO in NAC’s escrow account which are to be released upon consummation of the Transaction in accordance with the terms and conditions of the Escrow Agreement as well as the proceeds of the Private Placement to fund the cash consideration payable pursuant to the Transaction Agreements. Notwithstanding the actual level of redemptions, NAC believes it has sufficient cash from the proceeds of the Private Placement and advances available under the Credit Agreement to fund the cash consideration payable on closing of the Transaction. The following table sets out the anticipated cash proceeds of NextPoint Financial assuming 25% redemptions of Class A Restricted Voting Shares and the cash consideration payable under the Transaction Agreements:

	Assuming 25%
	Redemptions (US$
	approx.)
Proceeds from IPO held in escrow ...........................	150,048,000
Proceeds from Private Placement ............................	25,000,000
Total Proceeds................................................. …..	175,048,000
Liberty Cash Consideration........................	182,055,000
Per Share Cash Consideration pursuant to the
LoanMe Agreement..................................................	18,000,000
Total Cash Consideration ......................................	200,055,000

Following closing of the Transaction, NextPoint Financial expects to fund its business strategies consistent with past practice at the Target Businesses; see the MD&A of each of Liberty and LoanMe attached hereto as Appendix D and Appendix F, respectively.

NextPoint Financial

Following the closing of the Transaction, NAC will indirectly own 100% of the Target Businesses. See “ Corporate Structure – NextPoint Financial ” and “ Risk Factors ”.

The head office of NextPoint Financial will be located at 500 Grapevine HWY, Suite 402, Hurst, TX 76054 and the registered office will be located at 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, BC, V7X 1L3, Canada. NextPoint Financial will be a reporting issuer in all of the provinces and territories of Canada, other than Québec.

Inter-corporate Relationships

The organizational chart below indicates the proposed inter-corporate relationships of NextPoint Financial and its material subsidiaries, including their jurisdiction of incorporation in parentheses, immediately following closing of the Transaction.

==> picture [468 x 253] intentionally omitted <==

*Structure does not reflect entity classifications for U.S. federal income tax purposes.

MARKET OVERVIEW

Tax Preparation Market

The tax return preparation business operates in two distinct sectors: paid tax preparation and do-it-yourself (“ DIY ”) preparation. Approximately 53% of U.S. e-filed tax returns during the 2020 tax season were prepared by paid preparers, according to estimates from Liberty informed by IRS data.

Although digital DIY has gained significant market share among DIY filers, assisted returns continue to account for more than half of the total tax preparation market. Paid tax preparation has retained its share of the market due to the continued demand for expert assistance and certainty in filing taxes. Affordable, early access to tax refunds and complementary services is a core part of the paid tax preparation value proposition.

U.S. Tax Filing Composition

==> picture [412 x 180] intentionally omitted <==

Source: Liberty estimates and IRS data.

We expect industry consolidation as we believe many independent tax preparers will look to exit the industry as they confront increased costs, regulatory requirements and demands to provide tax settlement products. We believe that, as a consolidator, we will be a beneficiary of this process and will be able to more efficiently address changing regulatory requirements due to scale and a fully competitive mix of financial products attractive to our customers.

Paid Tax Preparation Market

The paid tax preparation market is highly competitive, with tens of thousands of paid tax return preparers, including H&R Block, Jackson Hewitt, regional and local tax return preparation companies, most of which are independent and some of which are franchised, regional and national accounting firms, and financial service institutions that prepare tax returns as part of their businesses. Independent “mom and pop” businesses comprise the majority of the paid tax preparation market (and present a large market of potential franchisees).

Paid Preparer Market Share

==> picture [222 x 145] intentionally omitted <==

Source: Return Preparer Industry Analysis (Langetieg, Payne, and Vigil); Liberty, Inc. estimates and IRS data.

Many tax return preparation firms are involved in providing refund transfers, refund advances or similar services to the customers and tax return preparation firms are highly competitive with regard to both price and service, while some firms offer services that may include preparation of tax returns at no charge at all.

Competitive challenges stem from the online and software self-preparer market, which include the Free File Alliance (“ FFA ”), a consortium of the IRS and online preparation services which provides free online tax return preparation, and from volunteer and certain state organizations that prepare tax returns at no cost for low-income and other qualified taxpayers. The ability to compete in the tax return preparation business depends on product mix, price for services, customer service, the specific office site locations, local economic conditions, quality of franchisees and their employees, the ability to file tax returns electronically with the IRS, and the availability of tax refund transfer products to offer to customers.

Competition also exists for the sale of tax return preparation franchises with H&R Block, Jackson Hewitt, and other regional franchisors. In addition, franchisors of other high-margin services outside of the tax preparation industry that attract entrepreneurs seeking to become franchisees provide competition in the industry. An ability to continue to sell franchises is dependent on brand image, the products and services to be provided through the network, the relative costs of financing and start-up costs, reputation for quality, and marketing and advertising support. However, we believe that it would be difficult for an additional national competitor to emerge in the market for the foreseeable future as there are no existing smaller competitors in the retail tax preparation market that could challenge the market position of Liberty on a national scale due to the expense and length of time required to develop the infrastructure, systems and software necessary to create and support a nationwide network of tax preparation offices.

Do-It-Yourself Preparation

Online tax business also competes with a number of companies. Intuit, Inc., the maker of Turbo Tax, is the largest supplier of tax preparation software for online tax preparation services. H&R Block and Blucora, Inc., the owner of TaxAct, also have substantial online and software-based products.

Tax Return Market Growth

Tax return volume has consistently grown over time at a 1.14% compound annual growth rate since 2010 and 1.61% compound annual growth rate since 1960, and growth is driven primarily by U.S. population growth. Return growth is relatively insulated from economic downturns and higher unemployment rates as both unemployed and part-time employees are required to file tax returns.

Annual U.S. Tax Returns Filed (Millions)

==> picture [450 x 160] intentionally omitted <==

Source: U.S. Internal Revenue Service (IRS).

Customer Profile

Low-income earners comprise a large proportion of tax return filers, as over half of all U.S. federal income tax return filers earn less than $50,000 annually. Approximately ~80% of Liberty’s customer base earns less than $50,000 annually.

U.S. Federal Tax Return Filers by Income

==> picture [168 x 158] intentionally omitted <==

Represents the income distribution of 2018 U.S. federal income tax filers (for tax year 2017) per the 2019 IRS Databook released in June 2020, which represents the most recent data available.

Tax Preparation Regulatory Environment

The U.S. federal government, various state, local, provincial and foreign governments, and some self-regulatory organizations have enacted statutes and ordinances, or adopted rules and regulations, regulating aspects of Liberty’s business. These aspects include, but are not limited to, commercial income tax return preparers, income tax courses, the electronic filing of income tax returns, the offering of refund transfer products, privacy and data security, consumer protection, advertising, franchising, antitrust and competition, sales methods and banking. These laws require continued monitoring for developments in the regulatory environment.

Federal tax return preparation regulation. Federal law in the U.S. requires tax preparers to, among other things, set forth their signatures and identification numbers on all tax returns prepared by them and retain for three years all tax returns prepared. U.S. federal laws also subject tax preparers to accuracy-related penalties in connection with the

preparation of tax returns. Preparers may be enjoined from further acting as tax preparers if they continually or repeatedly engage in specified misconduct. Additionally, all authorized IRS e-file providers must adhere to IRS e- file rules and requirements to continue participation in IRS e-file. Adherence to all rules and regulations is expected of all providers regardless of where they are published and includes, but is not limited to, those described in IRS Publication 1345, Handbook for Authorized IRS e-file Providers. Various IRS regulations also require tax return preparers to comply with certain due diligence requirements to investigate factual matters in connection with the preparation of tax returns. The IRS conducts audit examinations of authorized IRS e-file providers and tax return preparers, reviewing samples of prepared tax returns to ensure compliance with regulations in connection with tax return preparation activities. From time to time, certain of our franchisees and company-owned offices are the subject of IRS audits to review their tax return preparation activities.

The IRS published final regulations in 2010 that would have imposed mandatory tax return preparer regulations, but federal courts have ruled that the IRS did not have authority to implement those regulations. The IRS has created a voluntary tax preparer certification regime.

In Canada, the provision of income tax return preparation services is generally not subject to the same level of regulatory requirements as in the U.S. In Canada, preparers that file more than 10 federal income tax returns for a fee in a calendar year are required to register and file them electronically with the CRA. The CRA evaluates prospective and existing electronic filers and imposes responsibilities on participants in the electronic filing system, including the need for preparers to annually renew their participation in the electronic filing system, to protect the confidentiality of taxpayer information, and to ensure the accuracy of public communications/advertising. Tax preparers and advisors may also be subject to penalties in connection with their services, especially in connection with the making of false statements that could be used for income tax purposes. Further, the “discounting” of Canadian federal income tax returns (for example, the calculation and payment of part of an anticipated tax refund to a customer before the filing of the corresponding tax return) is subject to specific Canadian federal laws. Among other things, those tax discounting laws limit the consideration a tax discounter may receive in acquiring rights to a taxpayer's tax refund, impose disclosure, filing, and recordkeeping obligations in connection with the discounting transaction, and create a deemed trust for a portion of refunds paid directly to the tax discounter in certain circumstances. Individuals or organizations must also register with the CRA and abide by CRA administrative rules in order to provide tax return discounting services.

State and provincial tax return preparation regulation. Tax return preparation is also subject to regulation at the U.S. state level. The scope and substance of these regulations vary from state to state, but states also conduct examinations and take enforcement action against tax return preparers. From time to time, certain of Liberty’s franchisees and company-owned offices are the subject of state-level audits to review their tax preparation activities. In addition, particularly in the absence of effective IRS regulations imposing mandatory tax return preparer requirements, several states have begun to fill this void by imposing state-level preparer regulatory requirements. We believe Liberty’s in-house certification program exceeds these regulatory requirements.

In Canada, provincial regulation also exists in certain provinces, in addition to or in parallel with the Canadian federal regulations and rules. The scope and substance of provincial regulation and administrative rules vary across provinces. While most Canadian rules pertaining to tax preparation and tax return discounting are centralized at the federal level with the CRA administering most Canadian annual income tax returns, certain provincial regulators also administer specific provincial regulations and rules.

Financial Privacy Regulation

The Gramm-Leach-Bliley Act and related CFPB and FTC regulations require income tax preparers to (1) adopt and disclose consumer privacy notices, (2) provide consumers a reasonable opportunity to control (via “opt-out”) whether their nonpublic personal information is disclosed to unaffiliated third-parties (subject to certain exceptions), and (3) implement reasonable safeguards to protect the security and confidentiality of nonpublic personal information. In addition, the IRS generally prohibits the use or disclosure of taxpayer information by tax return preparers for purposes other than tax return preparation without the prior written consent of the taxpayer. The CFPB or state regulators may issue regulations that apply to our subsidiaries, or certain of our third-party service providers that provide consumer financial services and products. The CFPB or state regulators may examine, and take enforcement actions against, our subsidiaries or our third-party service providers.

Certain states have privacy laws and regulations in addition to the U.S. federal regulations described above. All states have now passed data security breach notice laws, which may require notice to impacted individuals and others if there is unauthorized access to certain sensitive personal information. Several states require income tax return preparers to, among other things, register as a return preparer and comply with certain registration requirements such as testing and continuing education. State regulations may also subject income tax return preparers to accuracy-related penalties in connection with the preparation of income tax returns, and may prohibit preparers from continuing to act as income tax return preparers if they engage in specified misconduct. Certain states have regulations and requirements relating to offering income tax courses. These requirements may include licensing, bonding and certain restrictions on advertising.

In Canada, robust privacy regulation exists at the federal, and in certain cases, the provincial level, in addition to the specific rules that apply in the tax return preparation and discounting context.

Franchise Regulations

Franchising activities in the U.S. are subject to the rules and regulations of the FTC, potential enforcement by the CFPB, and various state laws regulating the offer and sale of franchises. Franchising is not as heavily regulated in Canada and is a purely provincial matter, and similar to the U.S., various Canadian provinces have laws regulating the offer and sale of franchises. The FTC and various U.S. state and Canadian provincial laws require Liberty to furnish to prospective franchisees a franchise disclosure document containing certain prescribed information. This model of mandated disclosure to prospective franchisees is coupled with a duty of good faith and fair dealing owed by each party to the other. In the U.S., a number of states in which we are currently franchising regulate the sale of franchises and require registration of the franchise disclosure document with certain state authorities. Liberty operates under exemptions from registration in several of these states based on net worth and experience. Substantive state and provincial laws regulating the franchisor/franchisee relationship presently exist in a large number of U.S. states and certain Canadian provinces. From time to time in the U.S., bills have been introduced in Congress that would provide for federal regulation of the franchisor/franchisee relationship in certain respects. The state laws often limit, among other things, the duration and scope of non-competition provisions, the ability of a franchisor to terminate or refuse to renew a franchise and the ability of a franchisor to designate sources of supply. From time to time, Liberty may make appropriate amendments to its franchise disclosure document to comply with disclosure obligations under U.S. federal and state laws as well as Canadian provincial laws.

The CFPB Rule discussed above may also apply to loan products offered through Liberty locations.

Consumer & Small and Medium-Sized Enterprises Finance Market

LoanMe’s lending business operates in a subsector of the financial services industry that provides lending products and services to the underserved consumers and small and medium-sized enterprises (“ SMEs ”) in the United States.

Consumer Finance Market

The consumer market is large and growing. In the third quarter of 2020, total U.S. household debt reached $14.4 trillion, an increase of 21.2% since the third quarter of 2010, according to the New York Federal Reserve’s Quarterly Report on Debt and Credit. Among the various types of consumer debt, personal loans were the fastest growing type of consumer debt, growing at a cumulative annual growth rate of 11.7% since third quarter of 2010 according to TransUnion. Despite this rapid growth, a large number of consumers still lack access to adequate credit. According to The Financial Health Network’s U.S. Financial Health Pulse study, there are as many as 178 million Americans who are currently underserved by financial services companies, representing 71% of U.S. consumers.

Total Household Debt

==> picture [328 x 104] intentionally omitted <==

Source: NY Fed Quarterly Report on Debt and Credit, Q3 2020 released in November 2020. Total balance across all accounts, excluding those in bankruptcy.

Outstanding Personal Loans Personal Loan Borrowers by Credit Profile

==> picture [468 x 132] intentionally omitted <==

Source: Q3 2020 Financial Services Industry Insights Report and 2021 Outlook, TransUnion.

We believe the demand for and the lack of access to credit is fueled by several demographic and socioeconomic trends. Due to wage stagnation over the past several decades, the continued impact of the last decade’s financial crisis as well as the onslaught of the COVID-19 pandemic, these consumers are increasingly faced with lack of savings and significant income volatility. According to a May 2019 report from the Federal Reserve, 39% of respondents could not cover an emergency expense of $400 or would cover it by selling something or borrowing money. According to GOBankingRates’s annual savings survey published in 2019, 69% of respondents said they have less than $1,000 in a savings account, up from 58% in 2018. Another study by JPMorgan Chase Institute based on its 40 million U.S. customers reported that the median level customer experienced a 36% change in income month-to-month. We believe LoanMe’s target consumers are facing similar situations. LoanMe’s average customer has an annual income of approximately $40,000, has limited savings and an average Fair Isaac Corporation (FICO) score of 594. The FICO score represents the average credit risk associated with consumers provided by the credit reporting agencies and the general creditworthiness of a borrower, where higher scores suggest a higher likelihood to repay a loan. LoanMe’s target consumers must therefore often rely on credit to fund unexpected expenses, like car and home repairs or medical emergencies. Demand for credit has been suppressed as a result of government subsidies and decreased spending in the wake of COVID-19, but we except demand will return to historic levels in the near to medium term.

A Large Proportion of Americans are Non-Prime & Underserved[(1)] and Lack Materials Savings[(2)]

==> picture [358 x 169] intentionally omitted <==

1. Federal Reserve Bank of New York, Unequal Access to Credit: The Hidden Impact of Credit Constraints, September 2019. 2. Huddleston, Cameron. “Survey: 69% of Americans Have Less Than $1,000 in Savings.” GOBankingRates survey published on Yahoo! Finance, December 16, 2019.

Given many consumer’s limited savings and lack of credit history, they often do not have access to mainstream, competitively-priced banking products. Currently, a wide variety of consumer finance providers including online and branch-based consumer lenders often fail to address the financial needs of these customers. These companies include consumer loan and finance companies, CSOs, credit card companies, auto title lenders, pawn shops and other financial institutions that offer loans on an unsecured as well as on a secured basis. The loan products offered by such institutions may be too expensive relative to the borrower’s ability to pay. Many lenders may sell add-on products, such as credit insurance, that further increase the cost of the loan. Available financing solutions are often structured in a way that force borrowers to become overextended and may have prepayment penalties and balloon payments. There is also indirect competition including bank overdraft facilities and banks’ and retailers’ insufficient funds policies, many of which may be more expensive for consumers to cover their bills and expenses.

A growing number of fintech lenders, including LoanMe, are reaching out to these underserved consumers offering easier access to credit, convenience and more transparency than traditional lenders. According to the Federal Reserve, the rapid growth in unsecured personal loans in recent years can be attributed to the arrival of the fintech lenders. While traditional institutions continue to play an important role in consumer lending, much of the growth since 2013 is driven by loans originated by fintech firms. Transunion estimates that fintech lenders generated over 38% of all personal loans as of Q3 2020 in a dramatic increase from mere 5% in 2013.

We believe the opportunity for our future growth remains very substantial given the size of the underserved market.

Underserved Market Revenue (Billions)

==> picture [376 x 131] intentionally omitted <==

Source: 2019 Financially Underserved Market Size Study by the Financial Health Network.

SME Finance Market

Small businesses form the backbone of the U.S. economy. According to SBA, there are more than 30 million SMEs in the U.S. today, representing close to 99.9% of all businesses. Nearly half of the people who work in the United States own or work for a small business, according to a 2020 SBA report.

Over 30 million[(1)] Small-to-Medium Sized Enterprises Employ Nearly Half of Working Americans[(2)]

==> picture [346 x 155] intentionally omitted <==

1. As of December 31, 2019, according to the United States Small Business Administration.

2. Percentage of the private workforce, in 2017 according to the Statistics of U.S. Businesses (SUSB) Census Bureau.

Despite their importance in the economy, SMEs have long struggled to obtain financing, with 42% of small business bank loan applicants being denied credit or given less than sought, according to the 2014 Independent Business Survey by the Institute of Local Self-Reliance. According to an April 2020 survey of the Federal Reserve’s 12 regional banks, only 35% of small businesses with at least one employee and annual revenue between $100,000 and $1 million had received bank funding in the past five years. For firms with $100,000 or less in annual revenue, the figure dropped to 24%. In 2007, banks held $286 billion in commercial and industrial loans under $250,000, according to the FDIC, however this dropped to $237 billion by 2012 once the effects of the financial crisis translated into steep defaults and tighter credit conditions prevailed. Since then, small business lending has steadily risen, with commercial and industrial loans under $250,000 reaching $286 billion in 2019, finally matching the same level reached over a decade before.

There are several reasons for the widening chasm in credit. Thousands of community banks disappeared since the financial crisis of 2007-2008, both as a result of the strain on the credit system at the time and increasing pressures faced by subscale deposit institutions with brick-and-mortar business models. This has decreased the availability of financing available to many businesses in many small communities across the country. According to the FDIC, the number of FDIC insured banks dropped to just over 5,000 from over nearly 8,000 in 2010. The recent COVID-19 pandemic has exacerbated the situation for many small businesses, with lenders pulling back credit and tightening underwriting standards for small businesses in 2020 to similar degrees seen during the financial crisis.

Decline in FDIC Insured Institutions

==> picture [364 x 126] intentionally omitted <==

Note: Number of insured institutions based on number institutions reported in the FDIC’s Quarterly Banking Profile.

The importance of fintech lenders was especially highlighted during the recent financial assistance provided to small businesses by the Federal Reserve, called the Paycheck Protection Program (“ PPP ”). Many businesses have complained that mainstream banks have shied away from considering applications from businesses that were not existing customers, and those that non-customer businesses did manage to secure funding only did so after significant delays. Many such businesses were, however, able to find assistance through a fintech company. Fintech lenders reacted quickly to deliver funds to small businesses across the nation processing PPP loans at scale and gaining new customers.

Similar to the entrance of consumer fintech lenders, nonbank and SME fintech lenders have ramped up their lending to small businesses over the past five years, filling a void left by banks that backed away from the sector following heavy losses during the financial crisis. Fintech companies, like us, bring a wider reach to a broad network of customers not tied to a physical branch presence. Additionally, fintech lenders can often process applications at lower costs given their tech-enabled nature and leverage alternative data for more sophisticated underwriting.

More broadly, the small-business market continues to grow. Despite initial setbacks and major liquidity challenges faced by SMEs at the outset of the COVID-19 pandemic, SMEs have been resilient. Leading indicators such as business applications show a surge in SME formations in the 3[rd] and 4[th] quarters of 2020, underpinned by innovators capitalizing on the rapid shifts towards a digital economy that the pandemic has accelerated.

Business Applications for the United States

==> picture [348 x 198] intentionally omitted <==

Source: U.S. Census Bureau, seasonally adjusted quarterly business applications for the United States.

We believe the opportunity for our future growth remains very substantial in the SME financial markets given the size of the market for these types of financings.

U.S. Consumer Lending Regulatory Environment

U.S. federal, state and local laws directly and indirectly regulate the alternative financial services industry. Alternative lenders are required to hold lending licenses in various states in which its consumer and small business products are available and must comply with legal and regulatory regimes at the state and federal level applicable to credit transactions and marketing. Certain state laws may, if applicable, regulate interest rates and other charges and require certain disclosures, and may also require licensing for certain activities. All licensing jurisdictions have the authority to supervise and examine the activities of an alternative lender to the extent it holds a license issued by such jurisdiction.

In addition, state laws, public policy and general principles of equity relating to the protection of consumers, including laws addressing debt collection practices and prohibitions against unfair, deceptive and abusive acts or practices may apply to origination, servicing, and collection of loans; such business (including the marketing of bank product loans, origination, servicing and administration of both consumer and business loans) is also subject to other laws, including but not limited to:

the Federal Truth-in-Lending Act and Regulation Z promulgated thereunder, which require certain disclosures to borrowers regarding the terms of their loans and also prohibit mortgage loan originators from, among other things, receiving compensation based upon the relative profitability of a mortgage loan;
the Federal Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit discrimination in the extension of credit on the basis of age, race, color, sex, religion, marital status, national origin, receipt of public assistance or the exercise of any right under the Consumer Credit Protection Act;
the Federal Fair Housing Act, which prohibits discrimination in the sale or rental of housing, including against individuals seeking a mortgage, based on race, color, national origin, religion, sex, familial status, and disability;
the Americans with Disabilities Act of 1990, which prohibits discrimination against individuals with disabilities in all areas of public life, including a lack of an accessible website for products (including loans and other extensions of credit) offered online ;
the Federal Fair Credit Reporting Act and Regulation V promulgated thereunder, and similar state laws, including but not limited to the California Consumer Credit Reporting Agencies Act, which regulate the use and reporting of information related to each applicant’s credit history and imposes restrictions on the marketing of credit products through prescreened solicitations based on consumer report information;
the Federal Fair Debt Collection Practices Act, which regulates debt collection practices by “debt collectors” and prohibits debt collectors from engaging in certain practices in collecting, and attempting to collect, outstanding consumer loans;
the TCPA, which prohibits the use of automated telephone dialing systems to contact mobile devices (including via text messages) without the prior express consent of the called party;
Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1036 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service and analogous state laws prohibiting unfair, deceptive or unconscionable trade practices;

the Federal Holder in Due Course Rule (under the Federal Trade Commission Act), which permits borrowers of certain loans to assert any claims and defenses that they would have against the originator of a loan against subsequent purchasers of such loan;
the Federal Credit Practices Rule (under the Federal Trade Commission Act), which prohibits creditors from using certain contract provisions that the Federal Trade Commission found to be unfair to consumers (including confessions of judgment, waivers of exemption, wage assignments, and security interests in household goods), requires creditors to advise consumers who cosign obligations about their potential liability if the other person fails to pay, and prohibits late charges in some situations;
the CCPA, which provides consumer rights with respect to personal information, imposing obligations to disclose the categories and uses of personal information a business collects and providing consumers a right to access that information, a right to opt out of the sale of personal information and a right to request that a business delete personal information about the consumer subject to certain exemptions. other states and possibly the federal government may adopt laws similar to the CCPA;
the Federal CAN-SPAM Act and the Telemarketing Sales Rule, and analogous state laws;
the privacy provisions of the Gramm-Leach-Bliley Act and the Federal Affiliate Marketing Rule, and analogous state laws, such as the California Financial Information Privacy Act, which include limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to affiliated and nonaffiliated third parties and other privacy laws and regulations;
the Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection;
the SCRA, which allows military members to suspend or postpone certain civil obligations and limits interest rates on certain obligations of servicemembers to 6% per annum;
the Military Lending Act, which caps the maximum annual percentage rate on loans to active duty military servicemembers and their dependents at 36% and exempts such borrowers from mandatory arbitration requirements;
the Federal Electronic Fund Transfer Act and Regulation E promulgated thereunder, as well as rules of payment networks and the National Automated Clearing House Association, which require separate customer authorization for a loan servicer to use preauthorized recurring electronic transfers for customer payments and provide disclosure requirements, guidelines and other restrictions on the electronic transfer of funds to and from consumers’ bank accounts;
the CFPB Rule (Regulation OO), which restricts certain loan repayment practices. The compliance date of Regulation OO is currently stayed pursuant to a court order issued in Community Financial Services Association v. CFPB , No. 1:18-cv-00295 (W.D. Tex. Nov. 6, 2018). As a result, lenders have no obligation to comply with the Rule until the court-ordered stay is lifted;
the Electronic Signatures in Global and National Commerce Act and similar state laws, including, without limitation, the Uniform Electronic Transactions Act , which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and govern the circumstances in which a person may electronically provide disclosures otherwise required to be in writing;
the Bank Secrecy Act and the USA PATRIOT Act, which relate to compliance with anti-money laundering, customer due diligence and record-keeping policies and procedures;
the Mortgage Acts and Practices Rule promulgated under the Federal Trade Commission Act, which specifically prohibits unfair or deceptive practices in mortgage advertising;

the Real Estate Settlement Procedures Act and Regulation X, which require lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. The Act also prohibits specific practices, such as kickbacks, and places limitations upon the use of escrow accounts;
the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (SAFE Act) and Regulation G, and state SAFE Mortgage Licensing Acts, which, among other things, set minimum standards for licensing and registering mortgage loan originators;
the Home Mortgage Disclosure Act and Regulation C, which, among other things, require certain entities to report information on mortgage loan applications to help to identify possible discriminatory lending patterns and to enforce anti-discrimination statutes;
certain state licensing and/or registration requirements;
other state-specific regulations; and
state and federal securities laws.

Additionally, in the case of De La Torre v. CashCall , Inc., in 2017, the Ninth Circuit U.S. Court of Appeals certified the following question to the California Supreme Court: “Can a 96% interest rate on consumer loans of $2500 or more governed by California Finance Code § 22303, render the loans unconscionable under California Finance Code § 22302?” In August 2018, the California Supreme Court answered yes, that the size of the interest rate on a consumer loan of $2,500 or more can render loans unconscionable under Cal. Fin. Code § 22303. However, the Court did not address whether the loans in question were in fact unconscionable. To determine unconscionability courts must conduct an individual analysis of the circumstances of the case and considering the bargaining process and prevailing market conditions.

Legislative bodies, regulatory authorities at various levels of government and voters continue to propose, new rules and regulations impacting the alternative financial services industry. President Biden has nominated FTC Commissioner Rohit Chopra to serve as the new Director of the Consumer Financial Protection Bureau replacing Kathy Kraninger. Expectations are that Chopra will be confirmed. Chopra was a founding member of the CFPB implementation team in 2011 and transitioned into a leadership position as head of the student lending market’s office in 2011. Chopra has served as an FTC Commissioner since May 2018 where he supported aggressive remedies against companies and he has worked to reverse the FTC’s reliance on no-money, no-fault settlements. Expectations are that a Chopra-lead CFPB will involve more aggressive enforcement as well as expansive rulemaking and supervision. Furthermore, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee (HFSC) has indicated based upon her agenda and public statements that the HFSC will focus on strong consumer protections including potentially considering a national 36% annual rate cap and in May 2019, Congresswoman Alexandria Ocasio-Cortez (D-NY) and Senator Bernard Sanders (I-VT) introduced the Loan Shark Prevention Act. This bill limits the annual percentage rate for an extension of consumer credit to 15%.

Small Business Lending Regulatory Environment

Federal laws and regulations impacting our commercial lending business include, among others, portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the Equal Credit Opportunity Act, the FCRA, Economic and Trade Sanctions rules, the Electronic Signatures in Global and National Commerce Act, the Service Members Civil Relief Act, the TCPA, and Section 5 of the FTC Act prohibiting unfair and deceptive acts or practices. In addition, there are other federal laws that do not directly govern our business but with respect to which we have established certain procedures, including procedures designed to protect our platform from being used to launder money.

State legislatures have begun focusing on disclosure requirements for small business finance transactions. California enacted a commercial financing disclosure law in 2018 requiring non-bank providers of commercial loans that are

not secured by real property to provide certain disclosures including an annual percentage rate. This law will become effective once the DFPI adopts implementing regulations. New York enacted similar disclosure legislation in 2020, which is expected to become effective on Jan. 1, 2022. Legislatures in Connecticut and New Jersey are considering similar commercial finance disclosure legislation that would impact commercial loans if adopted.

In addition, the newly enacted California Consumer Financial Protection Law has empowered the DFPI to define and police unfair, deceptive and abusive acts and practices in small business finance. This expansion of unfair, deceptive, or abusive acts or practices authority will impact providers of commercial finance to California small businesses.

We cannot provide any assurances that additional federal, state, provincial or local statutes or regulations will not be enacted in the future in any of the jurisdictions in which we operate. It is possible that future changes to statutes or regulations will have a material adverse effect on our results of operations or financial condition.

THE BUSINESS OF LIBERTY

Liberty was founded in 1997 and is one of the leading providers of tax preparation services in the United States and Canada with approximately 2,700 locations. Although Liberty operates a limited number of Liberty-owned offices each tax season, its tax preparation services and related tax settlement products are offered primarily through franchised locations. The majority of Liberty’s offices are operated under the “Liberty Tax Service” brand. Liberty also provides an online digital Do-It-Yourself (“ DIY ”) tax program in the United States. Liberty’s business involves providing retail federal and state income tax preparation services and related tax settlement products in the United States and Canada.

General

Key Business Lines and Products

Liberty’s principal market is providing tax preparation services for customers in the U.S and Canada through its franchise program and Company-owned operations utilizing special marketing techniques and operating procedures, and platform.

The tax return preparation market is divided into two primary sectors: paid tax preparation and DIY preparation. Approximately 53% of U.S. e-filed tax returns during the 2020 tax season were prepared by paid preparers, Liberty’s primary channel of business. Through Liberty’s franchise and company-owned offices, it offers tax preparation services and related financial products to its tax customers. Liberty’s services and products are designed to provide streamlined tax preparation services for taxpayers who, for reasons of complexity, convenience, or the need for prompt tax refunds, seek assisted tax preparation services. In the 2020 tax season, Liberty and its franchisees accounted for approximately 1.0 million individual tax returns filed through Liberty’s Franchisee U.S. retail offices, approximately 0.2 million business tax returns through its Company-owned U.S. retail offices, approximately 0.4 million individual tax returns filed through its Canadian retail offices, and approximately 0.1 million individual tax returns through its online (DIY) tax programs.

Paid Tax Preparation

Through Liberty-owned offices and franchised locations, customers can utilize tax professionals for federal and state income tax preparation. From simple tax returns to intricate returns for small businesses, Liberty offers customers a professional service to assist with their tax return filing needs.

Do-It-Yourself Preparation

Although online tax preparation, through Liberty’s digital online tax services, represents a small portion of tax returns prepared and the associated revenue, Liberty believes there is a market for customers who wish to prepare their own tax returns using moderately-priced online tax preparation products, and the continued availability of these products may be a part of Liberty’s long-term growth, particularly if Liberty is able to successfully integrate its online and retail tax services. Liberty will seek to grow this portion of its business through the integration of mobile tax preparation and bi-directional SMS messaging.

Impact of COVID-19

The COVID-19 pandemic has affected, and is likely to continue to affect, Liberty’s financial condition and results of operations for the foreseeable future. In most states, Liberty was deemed an essential business and, therefore, a majority its offices have remained open during the pandemic. As of December 26, 2020, none of Liberty’s offices remained closed due to the COVID-19 pandemic out of Liberty’s approximately 2,700 total offices (owned or franchised).

Corporate Strategy

Liberty believes industry consolidation will continue to occur as many independent tax preparers look to exit the industry as they are confronted with increased costs, regulatory requirements and demands to provide tax settlement products. Liberty believes its scale will allow it to be a beneficiary of consolidation due to its ability to efficiently address changing regulatory requirements and its ability to provide a fully competitive mix of financial products that are attractive to its customers. Liberty also believes that it has the best-in-class compliance and risk management programs which distinguishes Liberty from the independent tax preparers.

Liberty’s focus is on growing the number of its franchised offices, increasing the number of tax returns prepared by those offices, and enhancing profitability by offering other complementary services and products that continue to build the brand and increase revenue and profitability both at a corporate and individual level. Liberty’s current and future initiatives include adding complementary products and services in certain offices in its brick-and-mortar footprint. These services may include full calendar programs such as consumer lending, insurance products, bookkeeping services and other products. In addition, Liberty expects that its recent investments in its technology platform, including the roll out of its new mobile app, inclusive of the Liberty Wallet, will increase customer engagement leading to higher retention rates, increased product distribution and increased new customer acquisition. For example, through Liberty Mobile, customers can seamlessly choose how they engage with Liberty, via its brickand-mortar locations, mobile or online.

Franchise Model

Liberty relies on a franchise model for its growth. Under its franchise model, Liberty is able to focus on marketing, franchisee coaching and support, financial product development and other initiatives that assist in driving overall success. In addition, Liberty’s franchise model allows it to grow its retail offices with minimal capital expenditures and low fixed costs. Liberty’s current number of franchised locations is 2,528. The number of franchised locations at the end of 2020 and 2019 was 2,604 and 2,764, respectively. As of April 26, 2021, Liberty had sold six new franchisees and received commitments for a further 13 expansions in 2021; this compares to 1 new franchisee and 8 expansions through the same period in 2020. Full year 2020 new franchises totaled 33 with 41 expansions, which is consistent with past years.

Franchise Territories and Agreements

Under the terms of Liberty’s standard franchise agreement, each franchisee receives the right to operate a tax return preparation business under the Liberty Tax Service brand within a designated geographic territory. Liberty divides the United States into approximately 10,000 potential franchise territories. Each territory has a target population of approximately 30,000 people.

Franchise agreements have an initial term of five years and are renewable. The agreements impose various performance requirements on franchisees, require franchisees to use Liberty provided software and equipment designated by it, and obligate Liberty’s franchisees to operate in their offices in accordance with standards it establishes. Liberty’s agreements require its franchisees to comply with applicable state and federal legal requirements. Although Liberty does not control and is not responsible for any compliance issues that could be caused by its franchisees or their tax preparers, Liberty provides guidance to its franchisees regarding their compliance obligations, including the provision of standard advertising templates, training materials that include detailed compliance information, and systems that alert them to unusual activity. Liberty also uses a variety of means in an attempt to identify potential franchise and tax law compliance issues and require franchisees to address any concerns, including the continued enhancement of a Compliance Department which helps to examine and prevent non-compliance, fraud and other misconduct among its franchisees and employees.

Franchise Fees and Royalties

Franchisees presently have several options for acquiring a new undeveloped territory and are permitted to open more than one office in a territory. The typical franchise fee is $40,000. Liberty may offer special financing programs to qualified franchisees. Its franchise agreement requires franchisees to pay Liberty a base royalty equal to 14% of the franchisee's tax preparation revenue, subject to certain specified minimums. Franchisees are also required to pay Liberty an advertising fee of 5% of their tax preparation revenue.

Franchisee Loans

Liberty provides certain lending and access to capital programs to its franchisees. In addition to allowing franchisees to finance a portion of their franchise fees, Liberty also assists its franchisees in obtaining working capital loans to fund their operations. This indebtedness generally takes one of the following forms:

The unpaid portion of franchise fees, which does not represent a cash advance by Liberty to the franchisee but a financing of the franchise fee, generally payable over four years for territory franchise fees.
Amounts due to Liberty in connection with the purchase of a Liberty-owned office. The notes for these amounts are generally payable over five years following the acquisition.
Access to working capital loans made available to qualified franchisees through a third-party bank generally between May 1 and January 31 each year, which are repayable generally by the end of February. Liberty acts as a servicer of the working capital loan and receive a servicing fee from the third-party bank.

Liberty’s franchise agreements allow it to obtain repayment of amounts due to Liberty from its franchisees through an electronic fee intercept program before its franchisees receive the net proceeds from tax preparation and other fees they have charged to their customers on tax returns associated with tax settlement products. Therefore, Liberty is able to minimize the nonpayment risk associated with amounts outstanding from franchisees by obtaining direct electronic payment in the ordinary course throughout the tax season. The unpaid amounts owed to Liberty from its franchisees and ADs are collateralized by the underlying franchise or area developer agreements and, when the franchisee or area developer owner is an entity, the unpaid amounts owed to Liberty are generally guaranteed by the owners of the respective entity. Accordingly, to the extent a franchisee or AD does not satisfy its payment obligations to Liberty, it may repossess the underlying franchise or area in order to resell it in the future.

Franchisee Support

Liberty provides substantial support to its franchisees in a variety of ways. Liberty’s franchise agreement requires its franchisees to adhere to certain minimum standards, including the use of tax preparation software Liberty provides, the use of computers and other equipment that Liberty selects ( however, Liberty does not sell such equipment ), training requirements, and other criteria. Liberty makes substantial training opportunities available to its franchisees and their prospective employees, and requires each franchisee to send representatives to a three day-long Initial Owners Training seminar before they are allowed to operate a franchise location. Liberty also make intermediate and advanced trainings available to franchisees, offer "Tax School" classes for franchisees and prospective tax preparers, and provide substantial phone and internet-based support, particularly during the tax season. During the tax season, Liberty maintains a fully-staffed operations center, with extended hours, at its corporate headquarters. During the peak tax season, daily conference calls are held in which Liberty shares and allows other franchisees to share recommendations and techniques for improving office performance, and in which Liberty emphasizes the importance of implementing the marketing plan recommended as part of its franchisee training. In light of the COVID-19 pandemic, many franchisee trainings and operational support were offered virtually.

Company-Owned Offices

During the 2020 tax season, Liberty operated 164 company-owned offices, 27 of which were seasonal offices. Liberty prefers to operate through franchise locations, and most of the Liberty-owned offices it operates are offices that have been previously owned by former franchisees who have ceased operations or failed to meet Liberty’s performance standards. Rather than close offices that it believes have the potential to be successful, Liberty operates them as Liberty-owned offices and may re-franchise them at a later date. Liberty’s current mix of franchise and company-owned offices reflects this philosophy.

Financial Products

Liberty expends considerable effort to ensure that its franchisees are able to offer a complete range of tax settlement products to its customers, and to provide its customers choices in these products. Liberty offers these products because it believes that a substantial portion of its prospective customers place significant value on the ability to monetize their expected income tax refund more quickly than filing their tax return without utilizing the services of a paid tax preparer. Liberty offers two types of tax settlement products: refund transfer products and refund-based loans.

Refund Transfer Products . Many of Liberty’s tax customers seek products that will enable them to obtain access to their tax refunds more quickly than they might otherwise be able to receive those funds. Liberty believes that many of its customers are unbanked, in that they do not have access to a traditional banking account, and therefore, cannot make such an account available to the IRS and other tax authorities for the direct deposit of their tax refunds. Additionally, customers may have access to a traditional banking account, but for personal reasons, may prefer not to utilize that account for the deposit of their tax refunds.

A refund transfer product involves direct deposit of the customer's tax refund into a newly established temporary bank account in the customer's name that Liberty establishes with one of its banking partners that have contracted with one of Liberty’s subsidiaries, JTH Financial, LLC (" JTH Financial "). The balance of the customer’s refund, after payment of tax preparation and other fees will be delivered to the customer by paper check, prepaid card, or a direct deposit into a customer’s existing bank account. When the prepaid card option is elected, the card is issued through one of Liberty’s financial product partners and is branded with the Liberty logo. When Liberty delivers a physical refund check to a customer, Liberty is generally able to print the check in one of its retail tax offices on check stock paper within a matter of hours after the electronic deposit of the customer's refund has been made to the customer's temporary account. Liberty also enters into check-cashing arrangements with a number of retail establishments, which facilitate the ability of its customers to monetize their tax refund checks even when they do not have traditional banking relationships.

Liberty believes the continued availability of refund transfers will enable it to continue to offer an adequate mix of tax settlement products to its customers.

Refund-Based Loans . Liberty partners with certain banks to make available a refund-based loan to its customers (“ Refund Advance ”). Approved customers have historically been charged a fee of approximately 36% annual percentage rate for the Refund Advance. Currently, there are no additional requirements for the customer to pay for any additional products, such as a refund transfer, to receive a Refund Advance.

Liberty believes its ability to offer refund transfers and refund-based loans will enable it to continue to meet its customer's needs. The number of customers in Liberty’s U.S. offices receiving its refund transfer products was 48%, 51%, and 51% for the 2020, 2019 and 2018 tax seasons, respectively.

Online Tax Preparation

Although online tax preparation, through Liberty’s digital online tax services, represents a small portion of tax returns prepared and associated revenue, Liberty believes there is a market for customers who wish to prepare their own tax returns using moderately priced online tax preparation products, and the continued availability of these products may be a part of Liberty’s long-term growth, particularly if it is able to successfully integrate its online and retail tax services. Leading with a mobile first strategy, it is expected that this portion of Liberty’s business will grow through the integration of mobile tax preparation and bi-directional SMS messaging.

Seasonality

The tax return preparation business is highly seasonal, and Liberty historically generates most of its revenues during the period from January 1st through April 30th. In the year ended December 26, 2020, 78% of Liberty's revenues were earned from January to April. As noted above the 2020 tax season was extended to July 15 and Liberty earned 93% of revenues from January to July. Liberty generally operates at a loss during the period from May 1[st] through year-end, during which it incurs costs associated with preparing for the upcoming tax season.

Last year, the tax filing deadline was extended from April 30 to July 15 due to the COVID-19 pandemic. The 2021 tax season was recently extended to June 15, 2021 for Texas and Oklahoma and May 15, 2021 for all other states.

Information Technology

Liberty directly or through its designated third party, licenses to franchisees tax preparation computer software for tax return preparation and transmittal of individual and business federal tax and related state tax returns, via electronic filing and the provision of financial products through the Liberty brand to franchisees. Liberty maintains a Disaster Recovery and Business Continuity plan in the event of interruption. Liberty utilizes two separate data centers to host all technology, and those data centers are replicated real-time to minimize downtime in the event of a disaster. Additionally, Liberty adheres to data privacy and cyber security industry best practices, standards, and laws including, but not limited to, IRS Trusted Customer, PCI, NIST, CCPA and STAR. Liberty continually monitors cybersecurity risks and addresses those risks with multiple layers of risk detection and remediation tools and processes.

Specialized Skill and Knowledge

Liberty’s tax professionals provide personal and business tax preparation assistance though its company-owned and franchise operations.

New Products

Liberty offers other relatively new products and services to its customers through third-party providers or affiliates such as consumer lending, identity theft protection, credit restoration services, roadside assistance, telemedicine services.

Employees

As of December 26, 2020, Liberty had 429 employees, consisting of 192 employees in its corporate operations, primarily located in Virginia Beach, Virginia and Hurst, Texas offices and 237 employees at Liberty’s companyowned offices. Many of Liberty’s employees are seasonal and Liberty had 286 corporate employees and 644 employees at Liberty’s company-owned offices as of March 13, 2021. Liberty considers its relationships with its employees to be good.

Competition

The paid tax preparation market is highly competitive. Liberty competes with tens of thousands of paid tax return preparers, including H&R Block, Jackson Hewitt, regional and local tax return preparation companies, most of which are independent and some of which are franchised, regional and national accounting firms, financial service institutions that prepare tax returns as part of their businesses and online preparation services. Liberty’s ability to compete in the tax return preparation business depends on its product mix, price for services, customer service, the specific site locations of its offices, local economic conditions, quality of on-site office management, the ability to file tax returns electronically with the IRS and state tax authorities, and the availability of tax settlement products to offer to its customers.

Liberty also competes for the sale of tax return preparation franchises with H&R Block, Jackson Hewitt, and other regional franchisors. In addition, Liberty competes with franchisors of other high-margin services outside of the tax preparation industry that attract entrepreneurs seeking to become franchisees. Liberty’s ability to continue to sell franchises is dependent on its brand image, the products and services to be provided through its network, the relative costs of financing and start-up costs, its reputation for quality, and its marketing and advertising support.

Intellectual Property

Liberty’s intellectual property includes its branding, franchise base, customer lists and proprietary software. Liberty regards its intellectual property as critical to its success and it relies on trademark, copyright, and trade secret laws in the United States to protect its proprietary rights. Liberty pursues the protection of its service mark and trademarks by applying to register key trademarks in the United States. The initial duration of federal trademark registrations is ten years. Most registrations can be renewed perpetually at 10-year intervals. In addition, Liberty seeks to protect its proprietary rights through the use of confidentiality agreements with employees, consultants, vendors, advisors, and others. Liberty is the owner of several federal service mark registrations including the Lady Liberty logo, “Liberty Tax,” “Liberty Tax Service,” “Liberty Income Tax,” and “Liberty Canada.”

Regulatory Matters

Liberty and its franchisees must comply with laws and regulations relating to its businesses. Regulations and related regulatory matters specific to its tax businesses are:

Tax Return Preparation Regulation;
State and provincial tax return preparation regulation;
Financial Privacy Regulation; and
Franchise Regulations.

See “ Market Overview - Tax Preparation Regulatory Environment ”.

Liberty engages in significant efforts to enhance tax compliance by its franchisees and their preparers, including the use of a franchisee alert system that identifies anomalous patterns, compliance audits of selected offices and returns, additional training requirements and actions taken against problematic preparers (including blacklisting to prevent their hiring by other franchisees and reporting to the IRS).

In December 2019, Liberty entered into a global settlement with the DOJ that resolved their prior investigation of Liberty’s policies, practices and procedures in connection with its tax return preparation activities and tax compliance program. In connection with the settlement, Liberty agreed to make a compliance payment to the IRS in the amount of $3.0 million to be paid in installments over four years, starting with an upfront payment of $1.0 million, followed by a $0.5 million payment on each anniversary thereafter. Liberty also agreed to retain an independent compliance monitor to oversee the implementation of required enhancements to the compliance program. Since entering into the settlement, Liberty has continued to enhance its Compliance Department which is tasked with examining and preventing non-compliance, fraud and other misconduct among Liberty’s franchisees and

their employees and is required to fully cooperate with the independent monitor to ensure Liberty meets the terms of the settlement.

In addition, in the past Liberty’s tax preparation business has been the subject of litigation alleging violations of state-specific refund anticipation loan and other consumer statutes alleging that a refund transfer product represents a form of refund anticipation loan because the taxpayer is “loaned” the tax preparation fee, and that a refund transfer product is, therefore, subject to federal truth-in-lending disclosure and state law requirements regulating refund anticipation loans. Although this litigation was resolved through a settlement, the underlying issue may be the subject of additional regulation and litigation in the future. See “ Risk Factors – Risks Relating to the Tax Return Preparation Business ” in this prospectus for a discussion of the risks associated with these matters.

THE BUSINESS OF LOANME

LoanMe is an online lender and loan marketer that facilitates bank product installment loans, originates unsecured consumer and small business installment loans, offers merchant cash advance facilities (MCAs) and brokers mortgages in the United States. LoanMe conducts its business principally through its mobile-friendly website, www.loanme.com, which allows consumers and businesses to apply for all financial products offered by LoanMe. Since May 2014, LoanMe has completed approximately $2 billion of loan originations, with over 340,000 borrowers. LoanMe’s current loan portfolio is valued at approximately $280 million representing over 43,000 borrowers.

LoanMe was incorporated in the State of Nevada in 2012 and commenced operations in May 2014. LoanMe’s principal offices are located at 1900 S State College Blvd, #300, Anaheim, CA 92806.

Products

To obtain a consumer loan, small business loan, or an MCA from or via LoanMe, a consumer or business must first complete an application. Applications may be submitted at www.loanme.com or by calling the LoanMe call center and having a LoanMe agent assist. During the application process, LoanMe uses proprietary credit decisioning and risk grading algorithms to evaluate and segment the applicant’s risk profile. Applications for MCAs are submitted via dedicated portal.

After the applicant selects their desired product, LoanMe uses an advanced bank verification system, provided by a third-party service provider, enabling lenders to instantly verify a potential borrower's last 90 days of banking information online and in real-time. This also serves as a form of fraud protection because it requires the applicant to successfully log into their bank account with their financial institution. If the applicant’s banking institution is not compatible with the third-party service provider, the applicant is required to provide copies of their bank statements, including a recent transaction history for transaction dates that are not yet available via a bank statement.

LoanMe uses a variety of third-party analytical tools to assess the threat of fraud with respect to each applicant and based on the results of that assessment, may take additional steps. Pursuant to red flag guidelines, certain applications may be escalated for a manual fraud department review in addition to automated fraud checks and underwriting. This manual fraud review includes, among other things, a phone verification interview. If LoanMe determines that additional verification is necessary, a record of the phone interview is reviewed and, if necessary, an additional interview is performed by the head of the fraud department. Utility bills may be requested to verify current addresses.

Once an installment loan application has been approved, the applicant is required to sign a promissory note or purchase agreement via an e-signature. The loan applicant does so by logging into LoanMe’s mobile-friendly website with their user name and password. Often, there is a LoanMe agent on the telephone with the applicant as they review the promissory note and complete the e-signature. After the promissory note is signed, the file is sent to the funding department for review. The funding department reviews the borrower’s banking information to ensure that no additional steps must be taken for successful disbursement of loan proceeds. For non-business products, the funding department will perform a verification of employment before disbursing funds. Typically, this is done by calling the employer listed on the application and verifying employment prior to funding. Funds are disbursed either via a fed wire Monday through Friday or, when possible, pushed to the consumer’s debit card any day or time of the week.

Credit Criteria and Underwriting

Across its lending products, LoanMe utilizes a proprietary credit analysis model that uses a logistical regression methodology to predict the probability of borrower default.

Small Business Loan Products

Unsecured small business installment loans are offered by LoanMe to applicants who meet the Small Business Loan Credit Criteria (as defined below). Loans are currently originated in amounts ranging from $3,500 to $100,000 with terms of up to 120 months.

Small Business Loan Credit Criteria

LoanMe offers small business loans to applicants who satisfy certain underwriting guidelines and credit criteria. LoanMe’s risk management team periodically reviews and revises its underwriting guidelines and credit criteria, generally based on analytic and portfolio monitoring results. Any changes to LoanMe’s underwriting guidelines and credit criteria must go through internal approval.

As of the date hereof, business installment loans are offered to applicants who satisfy the following requirements (the “ Small Business Loan Credit Criteria ”):

All small business loans originated by LoanMe must satisfy the following requirements:

(i) for-profit business entity (including an unincorporated sole proprietorship);
(ii) business bank account in the name of the business;
(iii) trade name other than the individual owner’s or guarantor’s personal name;
(iv) employment identification number different from the individual owner’s or guarantor’s Social Security number (except for sole proprietorships);
(v) 100% personal guarantee of the loan from an individual at least 18 years old that owns at least 25% of the equity in the applicant;
(vi) only one small business loan may be outstanding per borrower and per personal guarantor and only one LoanMe loan (business or consumer) may be outstanding per personal guarantor;
(vii) if the personal guarantor has filed for bankruptcy, it must have a status of “discharged” and not “dismissed”, and late payments after discharge must not exceed 50% of established tradelines;
(viii) the personal guarantor must not currently be in credit counseling or a debt settlement program; and
(ix) small business loans are available in 30 states, as set out below.

LoanMe’s Credit Criteria does not permit business borrowers to have multiple outstanding loans from LoanMe.

The maximum principal balance of a LoanMe Small Business Loan is determined using an applicant’s (i) qualifying average daily balance for the related business bank accounts, (ii) most recent three months of bank account reports, and (iii) calculating a maximum scheduled payment as a factor of such qualifying average daily balance. LoanMe’s underwriting policy excludes certain balances from the calculation. LoanMe underwrites its small business loans using a proprietary calculation of data inputs.

In addition to the Small Business Loan Credit Criteria described above, other criteria and variables are or may be used in credit decisioning, internal scoring and pricing processes (such as average daily balance, business revenue, information relating to past trades, restrictions on loan amounts based on average daily balance, state, and product).

Small Business Exceptions to Credit Policy

Deviations from the approved credit policy are rare and must be approved by senior executive management.

Small Business Origination Fees & Interest Rate

Borrowers pay origination fees out of the proceeds of the loan at the time of funding. Origination fees ranging from 5% to 10% are charged and retained by LoanMe and included in the principal balance of the loan. As of the date hereof, LoanMe small business loans are offered with stated interest rates from 39% to not more than 159%. LoanMe may change the pricing of small business loans from time to time.

Small Business Merchant Cash Advance Products

MCAs are offered by LoanMe to applicants who meet the Purchase Criteria (as defined below).

As of the date hereof, MCAs are offered to applicants who satisfy the following requirements (the “ Purchase Criteria ”):

(i) for-profit business entity (including an unincorporated sole proprietorship);
(ii) business bank account in the name of the business;
(iii) trade name other than the individual owner’s or guarantor’s personal name;
(iv) employment identification number different from the individual owner’s or guarantor’s Social Security number (except for sole proprietorships);
(v) provide a 100% personal guarantee of performance from an individual at least 18 years old that owns at least 25% of the equity in the applicant;
(vi) only one LoanMe MCA or loan may be outstanding per borrower and per personal guarantor and only one LoanMe loan (business or consumer) may be outstanding per personal guarantor;
(vii) if the personal guarantor has filed for bankruptcy, it must have a status of “discharged” and not “dismissed”, and late payments after discharge must not exceed 50% of established tradelines;
(viii) the personal guarantor must not currently be in credit counseling or a debt settlement program;
(ix) consent to daily ACH withdrawals from a business bank account; and
(x) MCAs are available in 21 states, as set out below.

In addition to the Purchase Criteria described above, other criteria and variables are or may be used in the pricing process utilized by LoanMe.

MCA Factor Rates

As of the date hereof, MCAs are offered with a factor rate (being the money factor that is multiplied against the amount purchased, with the resulting calculation determining the business owner’s total repayment amount) of at least 1.15 and not more than 1.59. LoanMe may change the pricing terms for MCAs from time to time.

Consumer Loan Products

Unsecured consumer installment loans are offered by LoanMe to applicants who meet the Consumer Loan Credit Criteria (as defined below). Loans are currently originated in amounts ranging from $1,000 to $20,000 with terms of up to 84 months, and are categorized in the following product tiers: Near Prime Home Owner, Near Prime Non Home Owner and Flex. LoanMe’s Near Prime consumer products are offered at interest rates below 36% and Flex products allow borrowers to tailor the amount borrowed.

Consumer Loan Credit Criteria

LoanMe offers consumer loans to applicants who satisfy certain underwriting guidelines and credit criteria. LoanMe’s risk management team periodically reviews and revises its underwriting guidelines and credit criteria, generally based on analytic and portfolio monitoring results. Any changes to LoanMe’s underwriting guidelines and credit criteria must go through internal approval.

As of the date hereof, consumer installment loans are offered to applicants who satisfy the following requirements (the “ Consumer Loan Credit Criteria ”, and together with the Small Business Loan Credit Criteria, the “ Credit Criteria ”):

(i) applicant must be at least 18 years of age with accompanying official identification
(ii) the checking account used to qualify for the loan must be where the majority of the income is deposited;
(iii) the checking account must be opened for at least 90 days prior to the application date;
(iv) the borrower must not currently be in credit counseling or a debt settlement program;
(v) the checking account’s balance on application date must not be more negative than the net loan proceeds; and
(vi) the applicant’s state of residence must be one of the following for the Near Prime Home Owner and the Near Prime Non Home Owner product tier: Arizona, California, Delaware, Florida, Idaho, Missouri, New Mexico, Utah or South Carolina, and must be one of the following for the Flex product tier: California or South Carolina.

Near Prime Home Owner and Near Prime Non Home Owner loans are offered in amounts from $3,100 to $15,000 (with an average loan being approximately $6,500). Flex loans are offered in amounts from $1,000 to $20,000 (with an average loan being approximately $4,600).

LoanMe’s credit policy does not permit consumer borrowers to have multiple outstanding loans from LoanMe.

In addition to the Consumer Loan Credit Criteria described above, other criteria and variables are or may be used in the credit decisioning, internal scoring and pricing process utilized by LoanMe (such as other criteria relating to income, restrictions on loan amounts based on residual income, state and product).

Consumer Loan Exceptions to Credit Policy

Deviations from the approved credit policy are rare and must be approved by senior executive management.

Consumer Loan Origination Fees & Interest Rate

Borrowers may pay origination fees out of the proceeds of the loan at the time of funding. The origination fees range from $0 to $75 for the Near Prime product tiers and 0% to 10% of the principal balance for the Flex product tier. The origination fee is advanced to the borrower and included in the principal balance of the related loan.

As of the date hereof, LoanMe consumer loans are offered with a stated interest rate of at least 17.9% and not more than 98%. LoanMe may change the pricing of consumer loans from time to time.

Bank Products

LoanMe acts as a loan finder and marketing agent for a state-chartered bank. A wholly owned subsidiary of LoanMe, InsightsLogic, a Delaware limited liability company, provides back office services for the bank, including applying the bank’s underwriting criteria to loan applications. The credit criteria, fees, and interest rates are set by the bank and are proprietary to the bank.

Servicing Policies and Procedures of LoanMe

Loan Collections

LoanMe is the servicer on its portfolio. LoanMe contracts with a sub-servicer that provides transaction functions. Payments on serviced loans are primarily collected through automated ACH debits from a borrower’s bank account, although payments are also accepted by check, wire, debit card, MoneyGram Express Payment, “Check by Phone”, Western Union Speedpay, Pay Near Me, remotely created checks, and customer walk-ins. All payments received on serviced loans are posted within 24 hours of receipt.

Delinquent loans are either collected by the sub-servicer or a third party collection agency. Subject to accepted servicing practices and specific contractual restrictions, LoanMe’s policies with respect to any delinquent or defaulted loan include (1) pursuing modifications in accordance with LoanMe’s loss mitigation policy (as described below); (2) restructuring the debt; (3) waiving late fees and other charges; (4) forgiving interest or otherwise reducing the amount owed on the loan; (5) pursuing legal action to enforce remedies for default; and (6) charging off such loan in accordance with LoanMe’s charge-off policy (as described below).

MCA Collections

MCA payments are handled via ACH from the business bank account and other methods as appropriate and applicable to a particular circumstance. Delinquent accounts are handled on a case-by-case basis.

Loss Mitigation Policy

LoanMe’s loss mitigation policy provides alternative assistance programs to borrowers who have a legitimate hardship that prevents payment on the loan. Upon collection personnel’s determination that referral for assistance is appropriate, a loan will be referred for loss mitigation. Loss mitigation is available only to borrowers with active loans who demonstrate a willingness and ability to make future payments. Borrowers must show valid hardship supported by financial information such as monthly income and expenses. Loss mitigation may also be offered automatically to customers under certain circumstances.

LoanMe’s loss mitigation program offers three assistance programs: (1) deferment, (2) forbearance, and (3) loan modification. The type of assistance offered is determined based on the borrower’s financial hardship, duration of such hardship, and ability and willingness to pay. All assistance decisions are made in compliance with the Equal Credit Opportunities Act.

Deferment assistance is considered appropriate for borrowers who can still afford their monthly payments but who do not qualify for a repayment plan and are unable to pay the total amount past due. In this case, past due payments are added to the end of the loan by extending the maturity date of the original promissory note.

Forbearance assistance is considered appropriate for the borrower who needs only a temporary reduction in payments. Such assistance is where monthly loan payments are reduced for a specific period of time. Once the forbearance period is complete, the borrower must resume making their regular monthly payments. The amount of any such forbearance reduction is charged off.

Loan modification is considered appropriate for a borrower who can demonstrate that there has been a significant change in their financial situation and can no longer afford current monthly payments. A loan modification adjusts the borrower’s monthly payment for the remaining life of the loan by one or a combination of the following methods: (1) the term of the loan may be extended to lower the customer’s monthly payment, (2) the loan interest rate may be reduced, and (3) in certain extreme cases, upon director or director designee approval, the unpaid principal balance of the loan may be reduced.

LoanMe complies with SCRA. If SCRA applies to a serviced loan, LoanMe would modify the loan’s terms to ensure compliance if a borrower is called to active duty after the date of loan origination.

LoanMe’s policies permit, under certain circumstances, a settlement with a borrower for an amount less than the current payoff amount. Settlements can be either in the form of a lump sum or in installments. Once all payment(s) are received, the borrower has no further obligation on the settled loan. Settlements are used when the collector or loss mitigation specialist (along with management approval) believes that settlement will mitigate larger financial loss. Settlements are considered on a case-by-case basis.

In certain instances, automatic offers may be sent to borrowers to stimulate contact and repayment on loans. Such offers include auto-deferment, auto-modification or auto-settlement. The selection of customers who receive these offers is based on certain loan criteria pre-determined by LoanMe’s management.

In the event a borrower is delinquent but has paid the first scheduled payment and paid two full payments in a span of three months, the borrower would qualify for an automatic re-age. An automatic re-age adjusts the amortization schedule, extending the maturity date of the original promissory note. An automatic re-age does not require the borrower’s consent.

Charge-Off Policy

At the end of each month, LoanMe’s policy is to charge off loans that are 120 days (depending on the product type) delinquent. The charge-off of a loan may be reversed by senior management if it is found there is a valid reason to do so. At the time of charge-off, debt sale market conditions are reviewed to determine the best return for the charged-off accounts. If conditions warrant, the loans may be bundled and sold to an approved accredited debt buyer. If debt market conditions are less than favorable, the loans may be assigned to a third-party collection agency to service and collect on such charged-off loans. If assignment to a third-party collection agency is unsuccessful, such debt may then be recalled and sold. LoanMe’s policy is not to sell any debt that is in dispute. All charge offs are conducted in compliance with regulatory guidelines, applicable laws and LoanMe’s servicing policy.

As mentioned above, LoanMe may use third-party collection agencies to collect on charged off loans. Prior to onboarding third-party collection agencies, LoanMe conducts due diligence on such vendor and determines whether the vendor has adequate infrastructure, training curriculum, and policies and procedures to comply with all applicable laws and regulatory guidelines. LoanMe conducts ongoing monitoring and internal audits of any thirdparty collection agency’s compliance with its services contract and all applicable laws and regulatory guidelines. LoanMe also uses site visits and audits to conduct compliance reviews. All debt buyer/vendors must be fully insured and hold LoanMe harmless from any contingencies after the sale.

Principal Markets

Through LoanMe’s own offerings or bank products, LoanMe is able to originate or facilitate a loan or advance product in all 50 states.

LoanMe small business loan products are currently offered in Alabama, Arizona, California, District of Columbia, Delaware, Hawaii, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Maine, Missouri, Mississippi, North Carolina, Nebraska, New Hampshire, New Jersey, New Mexico, Ohio, Oregon, South Carolina, Utah, Washington, Wisconsin, Wyoming and Virginia.

LoanMe MCAs are currently offered in Alaska, Arkansas, Colorado, Connecticut, Florida, Georgia, Massachusetts, Michigan, Minnesota, Montana, Nevada, New York, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont and West Virginia.

LoanMe currently facilitates loans on behalf of a Utah state-chartered bank in Arizona, Delaware, Florida, Idaho, Indiana, Kentucky, Michigan, Minnesota, Missouri, Mississippi, Montana, Nebraska, New Mexico, Ohio, Oklahoma, Tennessee, Utah and Virginia.

LoanMe offers high interest consumer loans in California and South Carolina. It offers a Near Prime interest rate loan in Arizona, California, Delaware, Florida, Idaho, New Mexico, Missouri, Utah, and South Carolina.

A Credit Access Business (CAB) product is offered in Texas.

LoanMe may begin originating loans or MCAs to applicants that are residents of other states in the future, or, from time to time, LoanMe may cease originating MCAs, consumer, or small business loans to applicants that are residents of certain states based on its ongoing assessment of the costs, benefits, and risks associated with offering products in such states.

Corporate Strategy

To continue to grow its business, LoanMe must continue to increase loan originations by attracting a large number of new borrowers, merchants that meet its lending and MCA standards, and adding new products. LoanMe’s ability to attract qualified borrowers depends in large part on the success of its marketing efforts, particularly as LoanMe continues to grow its marketplace and introduce new loan products. It continues to expand its marketing and loan finder services on behalf of state chartered banks.

LoanMe intends to continue to dedicate significant resources to its marketing efforts, particularly as it continues to grow its marketplace, introduce new loan products, and expand into new states. LoanMe’s ability to attract qualified borrowers depends in large part on the success of these marketing efforts and the success of the marketing channels LoanMe uses to promote its business. LoanMe’s marketing channels include direct mail, social media, affiliates, radio, television, and search engine optimization. LoanMe also markets directly to current and previous borrowers and applicants.

Financing

LoanMe uses retained earnings, unsecured debt, warehouse lines (related to less than prime, small business loans, and bank product participation) loan sales, and securitization of loan portfolios. See “ Liquidity and Cashflows – Overview of Factors Affecting our Liquidity ” in LoanMe’s MD&A attached hereto as Appendix F.

Information Technology

LoanMe has management information systems to originate and administer its loans and other products and services. LoanMe uses a customized lead management and loan origination system for its consumer and small business loans. LoanMe built and maintains (a) multiple application programming interfaces that enable the exchange of data with third party providers to streamline and automate the loan process and (b) an enterprise data warehouse used for reporting and analysis.

LoanMe backs up its data on a daily basis. Primary back-up data is stored on a device located onsite and a replicated copy of the backup is stored in Amazon Web Services. In case of a disaster, LoanMe is able to download the replicated copy and restore it to a different site. LoanMe utilizes market standard information security, anti-virus and anti-malware software to protect against advanced threats such as business email compromise and credential phishing. LoanMe scans all inbound and outbound email messages. LoanMe’s physical network is protected behind an enterprise grade firewall with Intrusion Detection and Prevention enabled. The firewall is constantly scanning all traffic entering and exiting our network.

Specialized Skill and Knowledge

LoanMe has over 17 years’ worth of performance data for unsecured consumer and small business loans.

New Products

Mortgage Broker Launch – Under the brand Lightning Fast Mortgage, LoanMe has entered the mortgage market with a focus on leveraging and implementing the latest fintech solutions with the aim of streamlining and automating traditionally antiquated processes. Some of its recent vendor relationships have given it the ability to directly source paystubs, w2s, tax returns, bank statements and payoff documents. This alleviates a significant borrower burden, adding value to the business and saving time in the process. Within the industry, this gives Lightning Fast Mortgage a competitive advantage, and it allows LoanMe’s loan officers and processors the ability to close a higher volume of business than the average loan officer or processor team.

Lines of Credit – LoanMe plans to offer its customers the added flexibility that comes with a Line of Credit. Unlike its installment products, the Line of Credit is an open-end credit account, which allows borrowers to spend the money, repay it, and spend it again. LoanMe’s product will be revocable where the Line of Credit may be revoked or annulled under specific circumstances, including deterioration of the borrower’s financial circumstances or extreme adverse market conditions.

Cycles and Economic Dependence

LoanMe believes its customers are susceptible to uncertainties and negative trends in the markets driven by, among other factors, general social and economic conditions in the United States and abroad. Economic factors include interest rates, unemployment levels, gasoline prices, upward adjustments in monthly mortgage payments or other debt payments, commercial real estate values, energy prices, the number of personal bankruptcies, the rate of inflation and consumer perceptions of economic conditions generally. Social factors include changes in consumer and business confidence levels and attitudes toward incurring debt, and changing attitudes regarding the stigma of bankruptcy and business failure. Demand for credit has been suppressed as a result of government subsidies and decreased spending in the wake of COVID-19, but we except demand will return to historic levels in the near to medium term.

Employees

As of March 15, 2021, LoanMe had approximately 130 full-time employees.

Competition

The lending market is competitive and evolving. LoanMe primarily competes with traditional financial institutions, such as banks, credit unions, credit card issuers and other consumer, small business lending and specialty finance companies.

Intellectual Property

LoanMe relies on a combination of copyright, trade secret, trademark and other rights, as well as confidentiality procedures and contractual provisions to protect its proprietary technology, underwriting, and credit-decisioning credit data, processes, and other intellectual property.

Regulatory Matters

U.S. federal, state and local laws directly and indirectly regulate LoanMe’s activities. LoanMe is required to hold lending licenses in various states in which its consumer and small business products are available. In conducting its business, LoanMe must comply with legal and regulatory regimes at the state and federal level applicable to credit transactions and marketing. Certain state laws may, if applicable, regulate interest rates and other charges and require certain disclosures, and may also require licensing for certain activities. All licensing jurisdictions have the

authority to supervise and examine the activities of LoanMe to the extent it holds a license issued by such jurisdiction.

In addition, state laws, public policy and general principles of equity relating to the protection of consumers, including laws addressing debt collection practices and prohibitions against unfair, deceptive and abusive acts or practices may apply to LoanMe’s origination, servicing, and collection of loans. LoanMe’s business (including the marketing of bank product loans, origination, servicing and administration of both LoanMe consumer and business loans) is also subject to other laws, including but not limited to:

the Federal Truth-in-Lending Act and Regulation Z promulgated thereunder, which require certain disclosures to borrowers regarding the terms of their loans and also prohibit mortgage loan originators from, among other things, receiving compensation based upon the relative profitability of a mortgage loan;
the Federal Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit discrimination in the extension of credit on the basis of age, race, color, sex, religion, marital status, national origin, receipt of public assistance or the exercise of any right under the Consumer Credit Protection Act;
the Federal Fair Housing Act, which prohibits discrimination in the sale or rental of housing, including against individuals seeking a mortgage, based on race, color, national origin, religion, sex, familial status, and disability;
the Americans with Disabilities Act of 1990, which prohibits discrimination against individuals with disabilities in all areas of public life, including a lack of an accessible website for products (including loans and other extensions of credit) offered online ;
the Federal Fair Credit Reporting Act and Regulation V promulgated thereunder, and similar state laws, including but not limited to the California Consumer Credit Reporting Agencies Act, which regulate the use and reporting of information related to each applicant’s credit history and imposes restrictions on the marketing of credit products through prescreened solicitations based on consumer report information;
the Federal Fair Debt Collection Practices Act, which regulates debt collection practices by “debt collectors” and prohibits debt collectors from engaging in certain practices in collecting, and attempting to collect, outstanding consumer loans;
the TCPA, which prohibits the use of automated telephone dialing systems to contact mobile devices (including via text messages) without the prior express consent of the called party, to the extent that LoanMe uses telephones to contact borrowers in connection with the servicing or collection of loans;
Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1036 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service and analogous state laws prohibiting unfair, deceptive or unconscionable trade practices;
the Federal Holder in Due Course Rule (under the Federal Trade Commission Act), which permits borrowers of certain loans to assert any claims and defenses that they would have against the originator of a loan against subsequent purchasers of such loan;
the Federal Credit Practices Rule (under the Federal Trade Commission Act), which prohibits creditors from using certain contract provisions that the Federal Trade Commission found to be unfair to consumers (including confessions of judgment, waivers of exemption, wage assignments, and security interests in household goods), requires creditors to advise consumers who cosign obligations about their potential liability if the other person fails to pay, and prohibits late charges in some situations;

the CCPA, which provides consumer rights with respect to personal information, imposing obligations to disclose the categories and uses of personal information a business collects and providing consumers a right to access that information, a right to opt out of the sale of personal information and a right to request that a business delete personal information about the consumer subject to certain exemptions. other states and possibly the federal government may adopt laws similar to the CCPA;
the Federal CAN-SPAM Act and the Telemarketing Sales Rule, and analogous state laws, to the extent that LoanMe markets credit or other products and services by use of email or telephone marketing;
the privacy provisions of the Gramm-Leach-Bliley Act and the Federal Affiliate Marketing Rule, and analogous state laws, such as the California Financial Information Privacy Act, which include limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to affiliated and nonaffiliated third parties and other privacy laws and regulations;
the Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection;
the SCRA, which allows military members to suspend or postpone certain civil obligations and limits interest rates on certain obligations of servicemembers to 6% per annum;
the Military Lending Act, which caps the maximum annual percentage rate on loans to active duty military servicemembers and their dependents at 36% and exempts such borrowers from mandatory arbitration requirements;
the Federal Electronic Fund Transfer Act and Regulation E promulgated thereunder, as well as rules of payment networks and the National Automated Clearing House Association, which require separate customer authorization for a loan servicer to use preauthorized recurring electronic transfers for customer payments and provide disclosure requirements, guidelines and other restrictions on the electronic transfer of funds to and from consumers’ bank accounts;
the CFPB Rule (Regulation OO), which restricts certain loan repayment practices. The compliance date of Regulation OO is currently stayed pursuant to a court order issued in Community Financial Services Association v. CFPB , No. 1:18-cv-00295 (W.D. Tex. Nov. 6, 2018). As a result, lenders have no obligation to comply with the Rule until the court-ordered stay is lifted;
the Electronic Signatures in Global and National Commerce Act and similar state laws, including, without limitation, the Uniform Electronic Transactions Act , which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and govern the circumstances in which a person may electronically provide disclosures otherwise required to be in writing;
the Bank Secrecy Act and the USA PATRIOT Act, which relate to compliance with anti-money laundering, customer due diligence and record-keeping policies and procedures;
the Mortgage Acts and Practices Rule promulgated under the Federal Trade Commission Act, which specifically prohibits unfair or deceptive practices in mortgage advertising;
the Real Estate Settlement Procedures Act and Regulation X, which require lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. The Act also prohibits specific practices, such as kickbacks, and places limitations upon the use of escrow accounts;
the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (SAFE Act) and Regulation G, and state SAFE Mortgage Licensing Acts, which, among other things, set minimum standards for licensing and registering mortgage loan originators;

the Home Mortgage Disclosure Act and Regulation C, which, among other things, require certain entities to report information on mortgage loan applications to help to identify possible discriminatory lending patterns and to enforce anti-discrimination statutes;
certain state licensing and/or registration requirements;
other state-specific regulations; and
state and federal securities laws.

Legislative bodies, regulatory authorities at various levels of government and voters continue to propose, new rules and regulations impacting LoanMe’s industry. For example, President Biden has nominated FTC Commissioner Rohit Chopra to serve as the new Director of the Consumer Financial Protection Bureau replacing Kathy Kraninger. Expectations are that Chopra will be confirmed. Chopra was a founding member of the CFPB implementation team in 2011 and transitioned into a leadership position as head of the student lending market’s office in 2011. Chopra has served as an FTC Commissioner since May 2018 where he supported aggressive remedies against companies and he has worked to reverse the FTC’s reliance on no-money, no-fault settlements. Expectations are that a Chopralead CFPB will involve more aggressive enforcement as well as expansive rulemaking and supervision. Furthermore, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee (HFSC) has indicated based upon her agenda and public statements that the HFSC will focus on strong consumer protections including potentially considering a national 36% annual rate cap and in May 2019, Congresswoman Alexandria Ocasio-Cortez (D-NY) and Senator Bernard Sanders (I-VT) introduced the Loan Shark Prevention Act. This bill limits the annual percentage rate for an extension of consumer credit to 15%.

Safeguards and Security

It is the policy of LoanMe to establish adequate controls to safeguard and protect the sensitive personal identification and personal account information of customers. LoanMe’s policy is to ensure that it and all its third party sub-servicers and collection agents operate within the confines of laws and regulatory agency guidelines including, but not limited to, CFPB guidelines, the Fair Debt Collections Practices Act, the Unfair Deceptive and Abusive Practices Act, the Equal Credit Opportunities Act, the Electronic Fund Transfer Act, the Gramm-LeachBliley Act, the California Consumer Privacy Act, and state-specific collection laws.

NARRATIVE DESCRIPTION OF THE BUSINESS OF NAC

NAC is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia. NAC was organized for the purpose of effecting an acquisition of one or more businesses or assets by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization or any other similar business combination involving NAC that will qualify as its “qualifying acquisition”. NAC received US$200 million of gross proceeds from the IPO and such proceeds were placed in an escrow account and will be released upon consummation of the Transaction in accordance with the terms and conditions of the Escrow Agreement.

The Transaction contemplates the acquisition of the Target Businesses. The Transaction Agreements include several closing conditions and accordingly, there can be no assurance that the Transaction will actually be completed or, if it is completed, that it will be on terms that are exactly the same as disclosed in this prospectus. The acquisition of the Target Businesses is intended to constitute NAC’s qualifying acquisition.

NARRATIVE DESCRIPTION OF THE BUSINESS OF NEXTPOINT FINANCIAL INC.

NextPoint Financial will provide retail federal and state income tax preparation services and related tax settlement products in the United States and Canada through its Liberty operating division and will operate as an online lender and loan marketer that facilitates bank product installment loans, originates unsecured consumer and small business installment loans, offers merchant cash advance facilities (MCAs) and brokers mortgages in the United States through its LoanMe operating division. The businesses acquired in the Transaction provide us with immediate scale as our core businesses have over 1.6 million combined historical customers and our distribution infrastructure consists of Liberty’s 2,700 locations across North America as well as our robust digital platforms.

Tax Preparation Services

NextPoint Financial, through its Liberty operating division, will provide retail federal and state income tax preparation services and related tax settlement products in the United States and Canada. We will be focused on growing the number of Liberty offices, increasing the number of tax returns prepared by those offices, and enhancing our profitability by offering other complementary services and products that continue to build our brand and increase revenue. Our initiatives will include adding complementary products and services in our brick-andmortar offices as well as adding to our online offerings. These services may include all-season programs such as consumer lending, insurance products, debt settlement services, bookkeeping services and other products. In addition, we expect investments in our technology platforms, including the roll out of our new mobile app, to increase customer engagement leading to higher retention rates and increases in new customer acquisition. Through our mobile app, customers will be able to seamlessly choose how they engage with us, via our brick-and-mortar locations, mobile or online. We also expect there to be substantial cross-selling opportunities between Liberty and LoanMe.

The tax return preparation market is divided into two primary sectors: paid tax preparation and DIY preparation. Approximately 53% of e-filed U.S. tax returns during the 2020 tax season were prepared by paid tax preparers. Through Liberty’s franchised and company-owned offices, we will offer tax preparation services and related financial products to our tax return preparation customers. These services and products are designed to provide streamlined tax preparation services for taxpayers who, for reasons of complexity, convenience, or the need for prompt tax refunds, seek assisted tax preparation services.

At Liberty, we intend to continue to rely on a franchise model to facilitate growth. Although our competitors rely more heavily on company-owned offices, we believe our best growth prospects can be achieved by increasing our franchisee base and the number of offices operated by franchisees. Under Liberty’s franchise model, we intend to focus on marketing, franchisee coaching and support, financial product development and other initiatives that we believe drive our overall success. Among other benefits, Liberty’s franchise model will allow us to grow our market share with relatively minimal capital expenditures or fixed cost investments.

We also expect to benefit from anticipated industry consolidation as we believe many independent tax preparers will look to exit the industry as they confront increased costs, regulatory requirements and demands to provide tax settlement products. We believe we will be a beneficiary of this consolidation as a result of our ability to efficiently address regulatory change and our intention to offer an array of financial products designed for our customers.

Lending Products and Services

NextPoint Financial, through its LoanMe operating division, will operate as an online lender and loan marketer that facilitates bank product installment loans, originates unsecured consumer and small business installment loans in the United States. We will also offer a merchant cash advance (MCA) product and earlier this year we entered the residential mortgage space through the offering of brokerage services. LoanMe’s loan products are offered on its mobile-friendly website, and, in the near term, will be available at our Liberty locations.

We intend to dedicate significant resources to marketing our loan products, particularly as we introduce new loan products and expand into new states. Our marketing channels are intended to include direct mail, social media, radio, television, and search engine optimization. We also intend to continue to market directly to current and previous borrowers and applicants, and to expand our marketing and loan finding services on behalf of state and nationally chartered United States banks. With respect to our mortgage brokerage business, we intend to work with mortgage originators to offer consumers access to a wide range of rates, loan amounts, and terms.

Strategic Advantages

Complementary product and service offering

We expect our complementary array of financial products and services to allow for continued and expanded engagement with our customer base, thereby driving year-round diversified fee and lending revenue.

Extensive cross-selling opportunities and synergies

The combination of Liberty and LoanMe creates the opportunity to become a one-stop financial services destination for our consumers, with omni-channel solutions reaching the approximately 1.6 million customers of our core businesses. As a result of the Transaction, we will have the ability to offer our full suite of existing and new products and services to our legacy customer base, many of whom we believe currently obtain certain of such products and services from our competitors. Liberty client demographics and LoanMe borrower demographics are virtually identical. Comparing the 43,000 active loan borrowers at LoanMe to the potential of 1.6 million additional Liberty Clients illustrates a strong growth opportunity. We also believe that offering our suite of products and services at our brick-and-mortar locations will drive new customer growth. In addition to these revenue synergies, we expect to achieve significant cost savings as we integrate the Target Businesses.

==> picture [468 x 187] intentionally omitted <==

The “mobilization” of tax services and financial products requires an integrated, multi-channel platform to meet the demands of a dynamic and rapidly changing consumer and marketplace. NextPoint Financial will be positioning to meet the consumer on their terms, allowing them to decide “how they want” to work with us. Through the Liberty Wallet digital application, clients will be able to schedule appointments directly from their mobile device with the

location for the appointment determined by zip code, current location, or default office based on their previous year’s return. Within the app and the online portal Liberty’s “Fast Track” software allows the client to enter information currently provided on the client data sheet and upload documents, and the preparer will then have access to those inputs, streamlining the process end-to-end.

Robust and scalable technology platform

Liberty and LoanMe together have invested over US$21 million during the last two years on a combined basis, including to accommodate multi-platform accessibility, instant loan funding, real-time processing and analytics, and to fully-integrate datastores. Our digital platforms are hosted on premier, cloud-based platforms designed to serve customers conveniently online, through mobile applications or in-person. We believe our IT infrastructure is readily scalable to accommodate our growth.

==> picture [468 x 246] intentionally omitted <==

Strong risk management, compliance and underwriting

Our operating businesses are compliance-focused and actively manage regulatory risk. LoanMe’s compliance department, presently consisting of 15 full time employees and a Chief Compliance Officer, has resolved 14 statelevel examinations since 2015, none of which resulted in fines, and LoanMe has experienced a customer complaint rate of just 0.04% since 2019. In addition, LoanMe’s robust underwriting capabilities have historically driven attractive risk-adjusted yields, as indicated in table below.

==> picture [468 x 275] intentionally omitted <==

(1) %Yield represents interest income divided by consumer and business loans principal balance at the respective year end

(2) %Provision for loan losses represents provision for loan losses divided by unsecured consumer and business loans principal balance at the respective year end

(3) %Risk adjusted yield represents %Yield minus %Provision for loan losses

Risk adjusted yield is a non-IFRS measure which may be calculated differently by other companies. Non-IFRS measures and metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. NextPoint Financial believes that securities analysts, investors and other interested parties frequently use Risk adjusted yield in the evaluation of companies in similar industries. Management also uses risk adjusted yield, in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of executive compensation.

Veteran leadership team

As reflected in the diagram below, senior management of each of Liberty and LoanMe have successfully led their respective organization’s historic growth. These management teams, which will lead our continued operation and growth initiatives, will also benefit from the guidance of our Board, members of which bring significant expertise in finance, retail and franchising.

==> picture [468 x 388] intentionally omitted <==

Our Growth Strategy

Significant growth potential both organic and through acquisitions

The combination of Liberty and LoanMe establishes a financial services platform that we intend to expand with complementary financial products and services designed for our customers. In addition to growth through the crossselling opportunities discussed above, we intend to grow our customer base and revenues by introducing complementary financial products and services, either developed internally or acquired, and to otherwise grow our market share through strategic acquisitions in what we view as fragmented industry. Complementary products and services could include point of sale lending, lines of credit, mobile application subscription services, auto finance, mobile banking, debt settlement services and financial health services.

We intend to grow our brick-and-mortar footprint as well our digital platforms. For example, the Liberty Wallet digital application (which was launched in early 2021) is expected to drive growth and customer retention by allowing customers to interact with Liberty both online and in physical office locations. Similarly, LoanMe’s MCA product (which was launched in early 2021), Near Prime consumer loan product (which was launched in late 2020), and mortgage brokerage business (which was launched in early 2021), will all add to our digital product offerings.

We intend to facilitate our growth both through development and marketing of our own products and services as well as through strategic acquisitions. Our acquisition strategy will focus on products, organizations and management teams that are well-known to management and complementary to our existing business lines and product and service offerings however no discussions regarding potential acquisitions have progressed to the stage that would require disclosure in this Prospectus.

==> picture [468 x 238] intentionally omitted <==

Cross-selling

Growth

NextPoint Financial believes it has an opportunity to achieve certain financial targets as a result of the Transaction. The disclosure set out below includes future oriented financial information (collectively, “ Forward-Looking Information ”). The Forward-Looking Information is not a statement of facts and should not be relied upon as being indicative of future results, and readers of this prospectus, including investors and shareholders, are cautioned not to place undue reliance on the Forward-Looking Information. You are cautioned not to rely on the Forward-Looking Information in making a decision regarding the Transaction, as the Forward-Looking Information may materially differ from actual results.

Neither NAC, LoanMe or Liberty has as a matter of course made public projections as to future sales, earnings, or other results. However, the management of NAC has prepared the prospective financial information set forth below to present the anticipated performance of NextPoint Financial after the close of the Transaction. The accompanying prospective financial information was not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of Nextpoint Financial’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management's knowledge and belief, the expected course of action and the expected future financial performance of NextPoint Financial. However, this information is not fact

and should not be relied upon as being necessarily indicative of future results, and readers of this non-offering prospectus are cautioned not to place undue reliance on the prospective financial information.

You are encouraged to review the financial statements of the Target Businesses included in this prospectus, as well as the financial information in the sections titled “ Selected Pro Forma Consolidated Financial Information ” in this prospectus and not to rely on any single financial measure.

The Forward-Looking Information is based on numerous estimates and assumptions including with respect to general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to the Target Businesses, including operational synergies, product integration and cost savings, all of which are difficult to predict and many of which are beyond NAC’s control. The Forward-Looking Information also reflects assumptions as to certain business decisions that are subject to change. A list of the material assumptions underlying the Forward-Looking Information is included below.

The Forward-Looking Information is inherently subject to significant uncertainties and contingencies, many of which are beyond NAC’s control. The various risks and uncertainties include those set forth in the sections titled “ Caution Regarding Forward-Looking Statements ”, “ Risk Factors ” and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of this prospectus. Accordingly, there can be no assurance that the Forward-Looking Information will be realized or that actual results will not materially differ from those projected. Since the Forward-Looking Information covers multiple years, such information by its nature becomes less reliable with each successive year. The Forward-Looking Information is also subjective in many respects and therefore are susceptible to multiple interpretations based on actual experience and business developments. Furthermore, the Forward-Looking Information speaks only as of the day it is made and does not take into account any circumstances or events occurring after the date it was prepared, including changes in management’s plans or objectives.

Liberty and LoanMe financial statements have historically been prepared in accordance with U.S. GAAP. While the financial statements included herein have been prepared in accordance with IFRS as required by applicable law, the Forward-Looking Information set out below were included in marketing materials used by NAC subsequent to the announcement of the Transaction but prior to the completion of the IFRS conversion. Accordingly, an IFRS Reconciliation has been included to assist readers in understanding the material differences between U.S. GAAP and IFRS. The marketing materials are available on NAC’s SEDAR profile at www.sedar.com.

NextPoint Financial believes it has an opportunity to achieve the following financial targets as a result of the Transaction:

The anticipated tax revenue and loan originations in each of 2021, 2022 and 2023 are set out in the following graphs:

==> picture [445 x 440] intentionally omitted <==

The breakdown by category of the above anticipated total loan originations for each of 2021, 2022 and 2023 is set out below:

Category	2021E	2022E	2023E
Consumer	$63,160,320	$76,800,000	$76,800,000
Near Prime	$13,122,257	$14,400,000	$14,400,000
Small Business	$38,097,748	$131,750,000	$182,750,000
MCA	$15,147,446	$16,200,000	$16,200,000

The anticipated revenue and Adjusted EBITDA in amount and source mix in 2021 are set out in the below chart:

==> picture [478 x 239] intentionally omitted <==

==> picture [482 x 43] intentionally omitted <==

The anticipated revenue and Adjusted EBITDA and Net Income in each of 2021, 2022 and 2023 are set out in the below graphs (which compares to historical EBITDA Margin for Liberty of 33% for the twelve months ended December 26, 2020 and for LoanMe of 39% for the 12 months ended December 31, 2020. EBITDA Margin is calculated by dividing Adjusted EBITDA by the total revenue for the period. For a reconciliation Adjusted EBITDA see “ Notice to Readers – Reconciliation of Non-IFRS Measures ” and for a discussion of the assumptions underlying the anticipated Adjusted EBITDA see below):

Financial Highlights

==> picture [469 x 200] intentionally omitted <==

==> picture [399 x 25] intentionally omitted <==

==> picture [468 x 239] intentionally omitted <==

==> picture [405 x 21] intentionally omitted <==

Pro Forma Total Adjusted EBITDA is computed by adding income tax expense, interest expense and depreciation and amortization expense to combined net income. Certain non-recurring and one-time Liberty Tax expenses related to compliance, stock-based compensation and litigation items are included as addbacks to the 2020 and 2021 EBITDA amounts. The addbacks total $2.9 million for 2020 and $2.7 million for 2021. Differences between IFRS and U.S. GAAP amounts used to derive Adjusted EBITDA are primarily driven by lease expense, provision for credit losses, and mark-to-market methodology. Expenses related to leases are recorded as depreciation expense under IFRS and as rent expense for U.S. GAAP. Under IFRS, the LoanMe provision for credit losses is expensed in the statement of income. Under U.S. GAAP, LoanMe loans more than 120 days past due are charged-off. For LoanMe, unrealized gains and losses from changes in fair value are reported, net of tax, in other comprehensive income under IFRS. Under U.S. GAAP, changes in the fair value of the loans are recorded in the statement of income. This calculation is made on a forwardlooking basis consistent with calculations used for historical Adjusted EBITDA. For a reconciliation of historical Adjusted EBITDA to Net Income (Loss) for Liberty and LoanMe see “ Notice to Readers – Reconciliation of Non-IFRS Measures ”.

The foregoing financial outlook is based on the pro forma operations of NextPoint Financial. The information was developed in good faith by NAC, Liberty and LoanMe management based on their reasonable best estimates and considered the following material assumptions:

with respect to the business of Liberty in the United States:
operating 2,398, 2,473 and 2,573 franchised stores in each of 2021, 2022 and 2023, and 153 company-owned stores over the same periods;
Liberty stores completing 472, 479 and 487 returns per store in each of 2021, 2022 and 2023;
an average net fee per return of $253, $258 and $263 in each of 2021, 2022 and 2023;
operating expenses as percentage of revenue of 79%, 78.2% and 76.6% in each of 2021, 2022 and 2023; and
a tax rate of 29% from 2021 to 2023.
with respect to the business of LoanMe:
originations of $129.4 million, $239.2 million and $290.2 million in each of 2021, 2022 and 2023;
o unpaid principal balances of $197.8 million, $254.9 million and $337.2 million at the end of each of 2021, 2022 and 2023;
an interest income to average unpaid principal balance ratio of 83.7%, 88.8% and 86.2% in each of 2021, 2022 and 2023;

brokered mortgage volume of $191.5 million (reflecting 479 mortgage units), $1,575 million (reflecting 3,938 mortgage units), $5,100 million (reflecting 12,750 mortgage units) in each of 2021, 2022 and 2023;
brokered mortgage fees as a percentage of volume of 1.8% from 2021 to 2023;
operating expenses as percentage of revenue of 69.6%, 68% and 68% in each of 2021, 2022 and 2023; and
a tax rate of 26.8% in 2021 and 26.3% from 2022 to 2023.
with respect to NextPoint Financial:
241, 541 and 841 Liberty locations that offer LoanMe loan products in each of 2021, 2022 and 2023;
Cross-selling synergies as a result of the Transaction resulting in an additional $15.2 million of combined revenue in 2021;
Revenue and expense synergies resulting in an additional $9.6 million of Adjusted EBITDA in 2021; and
pre-tax total cost saving synergies of $8.4 million, $34.3 million and $67.1 million in each of 2021, 2022 and 2023.

NAC, Liberty and LoanMe have also assumed that business and economic conditions affecting the Target Businesses will continue substantially in the ordinary course, including, without limitation, with respect to general industry conditions, competition, regulations, taxes and that there will be no unplanned material changes in the Target Business’s facilities, equipment or customer or employee relations. In addition, the assumptions in respect of Liberty are based on historic Total Returns per Store, Average Net Fee per Return and Operating Expenses as a Percentage of Revenue of 471, $256 and 100.6% and 486, $249 and 80.8% 2019 and 2020, respectively. The assumptions in respect of LoanMe are also based on: historic originations for Consumer and Small Business of $227,460,066 and $124,087,363, respectively, in 2019 and for Consumer, Near Prime, Small Business of $24,727,456, $1,057,966 and $34,330,300, respectively, in 2020; historic repayment rate variance from 1.1% to 3.93%; historic interest income divided by previous month’s unpaid principal balance variance from 3% to 9%; and brokerage fees offered for targeted mortgage products ranging from 175 to 200 basis points. Additionally, with respect to LoanMe, year to date originations for 2021 (as at May 23) for Consumer, Near Prime, Small Business and MCA were 14,843,208, 1,349,543, 4,589,800, 658,098, respectively, and are forecasted for 2021 at 63,160,320, 13,122,257, 38,097,748 and 15,147,446, respectively. LoanMe's operating expenses as a percentage of revenue were 79.8% and 77.9% in 2019 and 2020, respectively. NAC anticipates the margin will improve as a result of a decrease of servicing expenses and a decrease of amount charged off. As provided for in actual results for the period from January to April 2021, operating expenses as a percentage of revenue were in line with forecasts. MCA originations in March 2021, the month MCA was launched by LoanMe, were $282,770, and the related fees were $71,280 (as noted above, year to date total originations were $658,098, and related fees were $181,132). With respect to mortgage originations, since the first quarter in 2021, LoanMe has focused on setting up the procedures and processes, testing and refining the marketing channel productivity and origination work flow, and building partnerships with multiple wholesalers. NAC believes that LoanMe has achieved its goal of creating an efficient, cost-effective approach for mass expansion. As of May 23, 2021, LoanMe had 39 mortgage units in its pipeline. LoanMe plans to significantly increase its marketing efforts targeting not only existing homeowner customers but also Liberty Tax customers. In addition to the two states in which LoanMe is currently licensed, LoanMe is actively pursuing licenses in eight additional states. NAC believes that with these enhanced marketing efforts, niche market focus, and licenses in the additional states, NextPoint Financial can reach the forecasted 479 units in 2021. The assumptions herein with respect to origination activity include provision for: the first quarter being historically the weakest quarter for origination due to tax refunds; and that origination activity was impacted severely by the second round of the stimulus payments in the U.S. distributed in March 2021. NAC's assumptions include that as a full reopening of the economy following closures related to COVID-19 approaches, LoanMe will be able to achieve preCOVID-19 levels by 2022.

The assumptions in respect of synergies of NextPoint Financial are based on Liberty having recently begun offering LoanMe products in 15 Liberty company-owned locations and at least 525 of Liberty's current locations having met the requirements for an individual Liberty office to offer loans. Immediately following the closing of the Transaction, LoanMe products will be made available to the Liberty franchise base; at such time, NAC expects to

pilot the program in a limited number of locations in 2021. In 2022 and 2023, the program is expected to be offered to all permitted locations. This rollout also assumes that 29,862, 104,832 and 180,432 loans will issued in each of 2021, 2022 and 2023, respectively which reflects approximately 124, 194 and 215 loans per location in each such year and installment loans having an average life of 18 months.

The purpose of disclosing the foregoing financial outlook is to provide investors with more information concerning the financial results that NAC, Liberty and LoanMe currently believe are achievable based on the combination of the businesses and growth strategies described above and elsewhere in this prospectus. Readers are cautioned that the information may not be appropriate for other purposes. The foregoing description of NextPoint Financial’s potential financial results and growth opportunities are forward-looking statements for purposes of applicable securities laws in Canada. While these targets are based on underlying assumptions that management believes are reasonable in the circumstances, readers are cautioned that actual results may vary from those described above. See “ Caution Regarding Forward-Looking Statements ” and “ Risk Factors ” elsewhere in this prospectus for a description of the assumptions underlying the forward-looking statements and of the risks and uncertainties that impact the business and which could cause actual results to vary. NextPoint Financial intends to, on at least an annual basis, disclose updates regarding the status of the information provided in the foregoing financial outlook and pursuant to applicable securities laws, NextPoint Financial will be required to disclose events and circumstances that are reasonably likely to cause actual results to differ materially from material forward-looking information as well as the related expected differences. It is expected that the Board and the Audit Committee will be periodically (and not less than quarterly) updated with respect to the Company’s progress against its published forward looking information. Any update by the Company with respect to forward looking information or the withdrawal of such information will be required to be authorized by both the Audit Committee and NextPoint Financial’s disclosure committee.

REGULATORY APPROVALS

It is a condition precedent in favour of each of NAC and the sellers under each Transaction Agreement to the completion of the Transaction that (i) the Exchange shall have approved the Transaction as qualifying as NAC’s “qualifying acquisition” within the meaning of Part X of the Exchange Company Manual, and (ii) clearance is received from the applicable Canadian securities regulators, including the OSC, for this prospectus.

Completion of the Liberty Transaction is also subject to the condition that the waiting period (and any extension thereof) applicable to the consummation of the Liberty Transaction pursuant to the HSR Act will have expired or been terminated. NAC and Liberty have agreed to use their respective reasonable best efforts to cooperate with each other in promptly making all filings and promptly seeking to obtain all consents, authorizations, orders and approvals required from Governmental Authorities under the HSR Act. Under the HSR Act and related rules, the Liberty Transaction may not be completed until notifications have been filed with and certain information has been furnished to the Antitrust Division of the DOJ (the “ Antitrust Division ”) and the FTC and all statutory waiting periods have been satisfied.

At any time before or after the completion of the Liberty Transaction, the Antitrust Division or the FTC could take action under the U.S. antitrust laws, including seeking to prevent the Liberty Transaction, to rescind the Liberty Transaction or to clear the Liberty Transaction subject to the divestiture of assets of NAC or Liberty or subject the Liberty Transaction to other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest including without limitation seeking to enjoin the completion of the Liberty Transaction or permitting completion subject to the divestiture of assets of NAC or Liberty or other remedies. Private parties may also seek to take legal action under the antitrust laws under some circumstances. There can be no assurance that a challenge to the Liberty Transaction on antitrust grounds will not be made or, if such challenge is made, that it would not be successful.

Liberty has previously made certain filings required to be made under the HSR Act and the waiting period there under expired on May 17, 2021.

The following notices to U.S. State and local governmental authorities are required in connection with completion of the Transaction:

In connection with certain state lending licenses held by LoanMe, LoanMe is required to notify the following state regulators of the LoanMe Transaction at least 30 days prior to the closing date of the LoanMe Transaction:
Superintendent of Financial Institutions (Arizona);
Department of Finance, Consumer Finance Bureau (Idaho);
Supervisor of Consumer Credit of the Missouri Division of Finance (Missouri); and
South Carolina Board of Financial Institutions, Consumer Finance Division (South Carolina).
In connection with certain state lending licenses held by LoanMe, LoanMe is required to notify the following state regulators of the LoanMe Transaction as soon as possible after the Effective Time, and make a filing with such regulator as soon as permitted, and as late as immediately following the closing date of the LoanMe Transaction:
State Bank Commissioner (Delaware); and
New Mexico Regulation and Licensing Department, Financial Institutions Division (New Mexico).

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Pro Forma Consolidated Capitalization

As the Transaction is intended to constitute NAC’s qualifying acquisition, holders of Class A Restricted Voting Shares can elect to redeem all or a portion of their Class A Restricted Voting Shares provided that they deposit (and do not validly withdraw) their Class A Restricted Voting Shares for redemption prior to the Redemption Deadline. A description of the redemption rights is included under “ Corporate Structure – Redemption Rights ”. A Redeeming Shareholder is entitled (conditional on closing) to receive the Redemption Amount per Class A Restricted Voting Share. For greater certainty, such amount will not be reduced by the amount of any tax of NAC under Part VI.1 of the Tax Act or the deferred underwriting commissions per Class A Restricted Voting Share held in escrow. The Redemption Amount is anticipated to be US$10.00 per Class A Restricted Voting Share, assuming a June 30, 2021 redemption date.

The following table sets forth the consolidated capitalization of the Target Businesses as of December 31, 2020 adjusted to give effect to the Transaction assuming different levels of redemptions. Since December 31, 2020, other than in the normal course of business, there has been no material change in the equity and debt capital of the Target Businesses, on a consolidated basis.

This table should be read in conjunction with the NAC Financial Statements, the Target Businesses’ Financial Statements and the NextPoint Unaudited Financial Pro Forma Financial Statements attached to this prospectus as Appendix A, Appendix C, Appendix E, and Appendix G, respectively.

Cash and cash equivalent Debt Shareholders’ equity(1) Total Capitalization Debt, net of cash	As of March 31, 2020, as adjusted in US$ (in thousands for stated values) after giving effect to the Transaction, and assuming no redemptions of Class A Restricted Voting Shares 41,555 249,989 315,510 315,510 208,434	As of March 31, 2020, as adjusted in US$ (in thousands for stated values) after giving effect to the Transaction, and assuming 25% redemptions of Class A Restricted Voting Shares
		29,543 290,017 265,498 265,498 260,474

Notes:

(1) Excludes Common Shares issuable upon exercise of NAC Warrants.

Summary Pro Forma Consolidated Financial Information

the date or for the periods noted above, nor does it purport to project the results of operations or financial position for any future period or as of any future date. In addition to the pro forma adjustments that comprise this pro forma financial information, various other factors will have an effect on the financial condition and results of operations of NextPoint Financial following the completion of the Transaction, including an adjustment as it relates to the closing of the Transaction which assumes no redemption of Class A Restricted Voting Shares (the actual redemption level is uncertain, but see Note 3 of the NextPoint Financial Unaudited Pro Forma Financial Statements for the illustrative effect of 25% redemption levels). See “ Notes to Pro Forma Condensed Consolidated Combined Financial Information ” included in Appendix G for a discussion of pro forma adjustments. See also “ Caution Regarding Forward-Looking Statements ”. Following the closing of the Transaction, NextPoint Financial will reflect the assets of the acquired Target Businesses on its balance sheet.

Unaudited Pro Forma Consolidated Income Statements

	3 months ended
	Mar 31, 2021 Mar 27, 2021 Mar 31, 2021
	NextPoint Liberty LoanMe	Pro forma adjustments Pro forma combined (no redemption scenario)	Pro forma adjustments Pro forma combined (25% redemption scenario)
Revenues: Interest Income Interest Expense Net Interest Income Income From Unsecured Loans at Fair Value Gain on Sale of Loans Service Revenue Total Revenues Operating Expenses: Employee Compensation Advertising Expense Servicing Expense Provision for Finance Receivable Losses Selling, General and Administrative Impairment on securitized asset Net unrealized loss on change warrants liabilities Amortization of Issuance Cost on Class A Shares Total Operating Expenses Income From Operations Other (Income) Expense: Interest Expense, Net Other (income) expense, Net Income Before Income Taxes Income Tax Expense Net Income	- 956 39,586 - - 8,191 - 956 31,395 - - - - - 1,427 - 75,524 - - 76,480 32,822 - 10,936 3,068 - 4,244 1,208 - - 1,933 - - 21,793 4,698 19,251 2,744 - - 2,356 4,532 - - 1,901 - - 11,132 34,431 33,102 (11,132) 42,049 (280) 2 93 87 - (153) - (11,134) 42,109 (367) - 2,312 (90) (11,134) 39,797 (277)	40,542 8,191 - 32,351 - 1,427 75,524 - 109,302 14,004 5,452 1,933 21,793 (314) 26,379 2,356 4,532 (1,901) - (2,215) 76,449 2,215 32,853 2 184 (153) 2,213 32,821 598 2,820 1,615 30,001	40,542 8,191
			- 32,351 - 1,427 75,524
			- 109,302 14,004 5,452 1,933 21,793 26,379 2,356 4,532 -
			- 76,449
			- 32,853 1,325 1,509 (153)
			(1,325) 31,496 (358) 2,462
			(967) 29,034

	Dec 31, 2020 Dec 26, 2020 Dec 31, 2020 12 Months Ended
	NextPoint (July 16 - Dec 31, 2020) Liberty LoanMe	Pro forma adjustments Pro forma combined (no redemption scenario)	Pro forma adjustments Pro forma combined (25% redemption scenario)
Revenues: Interest Income Interest Expense Net Interest Income Income From Unsecured Loans at Fair Value Gain on Sale of Loans Service Revenue Total Revenues Operating Expenses: Employee Compensation Advertising Expense Servicing Expense Provision for Finance Receivable Losses Selling, General and Administrative Impairment on securitized asset Net unrealized loss on change warrants liabilities Amortization of Issuance Cost on Class A Shares Total Operating Expenses Income From Operations Other (Income) Expense: Interest Expense, Net Other (income) expense, Net Income Before Income Taxes Income Tax Expense Net Income	- 3,624 212,448 - 94 43,025 - 3,530 169,423 - - - - - 13,229 - 119,151 - - 122,681 182,652 - 34,817 9,746 - 11,803 5,698 - - 14,601 - - 107,587 2,469 55,086 10,698 - - 8,108 685 - - 3,022 - - 6,176 101,706 156,438 (6,176) 20,975 26,214 - 5,225 180 - (107) - (6,176) 15,857 26,034 - 1,186 6,899 (6,176) 14,671 19,135	216,072 43,119 - 172,953 - 13,229 119,151 - 305,333 44,563 17,501 14,601 107,587 11,687 79,940 8,108 685 (3,022) - 8,665 272,985 (8,665) 32,348 - 5,405 (107) (8,665) 27,050 (2,339) 5,746 (6,326) 21,304	216,072 43,119
			- 172,953 - 13,229 119,151
			- 305,333 44,563 17,501 14,601 107,587 79,940 8,108 685 -
			- 272,985
			- 32,348 5,300 10,705 (107)
			(5,300) 21,750 (1,431) 4,315
			(3,869) 17,435

Unaudited Pro Forma Consolidated Balance Sheet

As at March 31, 2021

	NextPoint Liberty Tax LoanMe	Pro forma adjustments Pro forma Combined (no redemption scenario)	Pro forma adjustments Pro forma Combined (25% redemption scenario)
	163 19,680 7,029 200,064 - - - 40,716 15,453 - 9,930 - - - 32,414 - - 22,483 37 16,101 1,651 200,263 86,427 79,030 - 2,703 383 - 3,097 - - - 237,747 - 9,063 - - 29,511 5,800 - 7,244 6,182 - 2,043 - 200,263 140,088 329,142 - 401 41,200 - 4,640 1,281 3,356 12,876 4,559 7,583 672 20,798 1,414 10,300 - - - - - 197,385 - - 211,713 38,715 56,037 - 1,627 208,789 - - - - 4,483 5,746 - - - - - - - 2,260 15,779 211,713 47,085 286,351 - 94,113 - 5,860 - 50 698 - - - - - - - (1,110) 110,829 (17,310) - (68,786) (11,451) 93,003 42,791 200,263 140,088 329,142	14,684 41,555 (200,064) - 56,169 9,930 32,414 22,483 17,789 (185,380) 180,340 3,086 3,097 237,747 96,701 105,764 123,589 158,900 13,426 2,043 34,910 704,403 - 41,601 5,921 (2,000) 18,791 7,583 22,884 10,300 - (197,385) - (199,385) 107,080 210,416 - 10,229 - - 43,129 61,168 (156,256) 388,893 (94,113) - 197,385 344,145 25,000 115,900 (50) (698) - - - (109,719) - (3,000) (28,635) 68,786 (8,325) 191,166 315,510 34,910 704,403	(12,012) 29,543 - 56,169 9,930 32,414 22,483 17,789
Current Assets: Cash and Cash Equivalents Restriced cash and securities held in escrow account Current Receivables, Net Unsecured Loans Receivable at Cost Unsecured Loans Receivable at Fair Market Value Investments in Bonds and residual interest in securitized trusts Other Current Assets Total Current Assets Property and Equipment, Net Unsecured Loans Receivable at Cost, Non-Current Unsecured Loans Receivable at Fair Market Value, Non-Current Goodwill, Net Intangible Assets, Net Operating Lease Right-of-Use-Assets Other Non-Current Assets Total Assets Current Liabilities: Current Installments of Long-Term Obligations Current Lease Liabilities Accounts Payable and Accrued Expenses Forward Loan Sale Deposits Other Current Liabilities Class A and B warrants liability [Extra Line 5] Class A Restricted Voting Units Total Current Liabilities Long-Term Obligations, Excluding Current Installments Credit Facility Non-Current Lease Liabilities [Extra Line 6] [Extra Line 7] Other Non-Current Liabilities Total Liabilities Member's Capital Share Capital Contributed Surplus Proportionate Voting Shares Additional Paid-In Capital Accumulated Other Comprehensive Income/(Loss) Retained Earnings Total Equity Total Liabilities and Equity
			(12,012) 168,328 3,086 3,097 237,747 105,764 158,900 13,426 2,043
			(12,012) 692,391
			38,000 79,601 5,921 18,791 7,583 22,884 10,300 - -
			38,000 145,080 210,416 - 10,229 - - 61,168
			38,000 426,893 - (50,012) 294,133 - - - - (28,635)
			(50,012) 265,498
			(12,012) 692,391

DIVIDEND POLICY

The declaration of cash dividends on Common Shares will be at the sole discretion of Board and will be dependent upon NextPoint Financial revenues and earnings, if any, capital requirements and general financial condition of NextPoint Financial. It is currently anticipated that dividends will not be paid for the foreseeable future.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Please see attached the MD&A of NAC attached hereto as Appendix B and the MD&A of each of Liberty and LoanMe attached hereto as Appendix D and Appendix F, respectively.

The MD&A of NAC and of each of Liberty and LoanMe contain important information about each respective entity’s business and its performance for the relevant periods. The discussion and analysis of such businesses’ respective financial conditions and results of operations covers periods prior to the completion of the Transaction. The MD&A of NAC, Liberty and LoanMe should be read in conjunction with the corresponding financial statements attached to this prospectus as Appendix A, Appendix C, Appendix E, and Appendix G, respectively

Non-IFRS Measures

The MD&A of each of Liberty and LoanMe makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of each of the Target Businesses’ financial information reported under IFRS. Each of the Target Businesses use non-IFRS measures including EBITDA, Adjusted EBITDA and Systemwide Revenue which may be calculated differently by other companies. These non-IFRS measures and metrics are used to provide investors with supplemental measures of the Target Businesses’ operating performance and thus highlight trends in their respective businesses that may not otherwise be apparent when relying solely on IFRS measures. Each of the Target Businesses also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of companies in similar industries. Management of each of the Target Businesses also use non-IFRS measures and metrics, in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of executive compensation. For a discussion of the use of EBITDA, Adjusted EBITDA and Systemwide Revenue and reconciliations thereof to the most directly comparable IFRS measures, see “ Notice to Readers – Non-IFRS Measures ”.

Forward-Looking Statements

Some of the information contained in the MD&A of NAC and each of Liberty and LoanMe contains forwardlooking information. This information is based on management’s reasonable assumptions and beliefs in light of the information currently available and are made as of the date of the MD&A. However, management does not undertake to update any such forward looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors, including those described in “ Risk Factors ” and elsewhere in this prospectus.

NAC cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “ Caution Regarding Forward-looking Statements ” and “ Risk Factors ” elsewhere in this prospectus for a discussion of the uncertainties, risks and assumptions associated with these statements.

DESCRIPTION OF SECURITIES

The following is a summary of the rights, privileges, restrictions and conditions attaching to the Common Shares after giving effect to the Transaction. Following completion of the Transaction, NextPoint Financial will be authorized to issue an unlimited number of Common Shares and Proportionate Voting Shares.

In connection with the filing of this prospectus, NAC has applied to and has been granted by the Canadian provincial securities regulatory authorities an exemption from the provisions of National Instrument 41-101 — General Prospectus Requirements relating to restricted securities. NAC also applied for and has been granted exemptive relief from the requirements under Part 10 of NI 51-102, and from the requirements under Part 2 of OSC Rule 56-501 — Restricted Shares . The relief was granted pursuant to an order dated June 2, 2021.

Common Shares and Proportionate Voting Shares of the Resulting Issuer

Upon completion of the Transaction, NextPoint Financial’s authorized share capital will consist of (i) an unlimited number of Common Shares and (ii) an unlimited number of Proportionate Voting Shares. For further details on the Transaction, see “ Corporate Structure — NextPoint Acquisition Corp. — Transaction ”.

Immediately upon completion of the Transaction, it is anticipated that an equivalent of 22,500,000 Common Shares and 179,700 Proportionate Voting Shares will be issued and outstanding, assuming no redemptions. See “ Conversion Rights and Transfers ” below. All of the Proportionate Voting Shares will be owned or controlled, directly or indirectly, by the NAC Founders, Bliksum, and the Liberty Seller. See “ Corporate Structure — NextPoint Acquisition Corp. — Transaction ”.

Generally, the Common Shares and Proportionate Voting Shares (together, the “ Shares ”) have the same rights, are equal in all respects and will be treated by NextPoint Financial as if they were shares of one class only.

Conversion Rights and Transfers

Issued and outstanding Proportionate Voting Shares, including fractions thereof, may at any time, subject to the FPI Condition (as defined below), at the option of the holder, be converted into Common Shares at a ratio of one hundred (100) Common Shares per Proportionate Voting Share with fractional Proportionate Voting Shares convertible into Common Shares at the same ratio. Further, the Board may determine in the future that it is no longer advisable to maintain the Proportionate Voting Shares as a separate class of shares and may cause all of the issued and outstanding Proportionate Voting Shares to be converted into Common Shares at a ratio of one hundred (100) Common Shares per Proportionate Voting Share with fractional Proportionate Voting Shares convertible into Common Shares at the same ratio and the Board shall not be entitled to issue any more Proportionate Voting Shares under the Articles thereafter. If the Board determines to no longer maintain the Proportionate Voting Shares as a separate class of shares, it is likely that NextPoint Financial will no longer qualify as a “foreign private issuer” (as described below) and will be required to report on and comply with requirements under U.S. securities laws from which it would have been exempt as a “foreign private issuer”.

The Proportionate Voting Shares are not transferrable without Board approval, except to Permitted Holders and in compliance with U.S. securities laws.

Conversion Conditions

The right of the Proportionate Voting Shares to convert into Common Shares is subject to certain conditions in order to maintain NextPoint Financial’s status as a “foreign private issuer” under U.S. securities laws. Unless otherwise waived by NextPoint Financial, the right to convert the Proportionate Voting Shares is subject to the condition that the aggregate number of Common Shares and Proportionate Voting Shares (calculated as a single class) held of

record, directly or indirectly, by residents of the United States (as determined in accordance with Rules 3b-4 and 12g3-2(a) under the Securities Exchange Act of 1934, as amended) may not exceed forty percent (40%) of the aggregate number of Common Shares and Proportionate Voting Shares issued and outstanding after giving effect to such conversions (calculated as a single class) (the “ FPI Condition ”).

A holder of Common Shares may at any time, at the option of the holder and with the consent of NextPoint Financial, convert such Common Shares into Proportionate Voting Shares on the basis of one hundred (100) Common Shares for one (1) Proportionate Voting Share.

No fractional Common Shares will be issued on any conversion of any Proportionate Voting Shares and any fractional Common Shares will be rounded down to the nearest whole number.

For the purposes of the foregoing:

“ Affiliate ” means, with respect to any specified Person, any other Person which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such specified Person.

“ Permitted Holders ” means (i) the initial holders of Proportionate Voting Shares, as applicable, on closing of the Transaction; and (ii) any Affiliate or Person controlled, directly or indirectly, by one or more of the Persons referred to in clause (i) above.

“ Person ” means any individual, partnership, corporation, company, association, trust, joint venture or limited liability company.

A Person is “ controlled ” by another Person or other Persons if: (i) in the case of a company or other body corporate wherever or however incorporated: (A) securities entitled to vote in the election of directors carrying in the aggregate at least a majority of the votes for the election of directors and representing in the aggregate at least a majority of the participating (equity) securities are held, other than by way of security only, directly or indirectly, by or solely for the benefit of the other Person or Persons; and (B) the votes carried in the aggregate by such securities are entitled, if exercised, to elect a majority of the board of directors of such company or other body corporate; or (ii) in the case of a Person that is not an individual or a company or other body corporate, at least a majority of the participating (equity) and voting interests of such Person are held, directly or indirectly, by or solely for the benefit of the other Person or Persons; and “controls”, “controlling” and “under common control with” shall be interpreted accordingly.

Voting Rights

All holders of Shares will be entitled to receive notice of any meeting of shareholders of NextPoint Financial, and to attend, vote and speak at such meetings, except those meetings at which only holders of a specific class of shares are entitled to vote separately as a class under the BCBCA. A quorum for the transaction of business at a meeting of shareholders is present if at least two Persons who are, or who represent by proxy, shareholders who in the aggregate hold at least 25% of the issued shares entitled to be voted at the meeting.

On all matters upon which holders of Shares are entitled to vote:

each Common Share is entitled to one (1) vote per Common Share; and
each Proportionate Voting Share is entitled to one hundred (100) votes per Proportionate Voting Share, and each fraction of a Proportionate Voting Share is entitled to the number of votes calculated by multiplying the fraction by one hundred (100).

The number of votes represented by fractional Proportionate Voting Shares will be rounded down to the nearest whole number. Unless a different majority is required by law or the Articles, resolutions to be approved by holders of Shares require approval by a simple majority of the total number of votes of all Shares cast at a meeting of shareholders at which a quorum is present based on the voting entitlements of each class of Shares described above.

Immediately following the completion of the Transaction, the NAC Founders will collectively own an equivalent of 5,750,000 Common Shares (assuming the conversion of all Proportionate Voting Shares to Common Shares on the basis of one hundred (100) Common Shares for one (1) Proportionate Voting Share) on a non-diluted basis, representing a 14.67% equity and voting interest in NextPoint Financial and the former holders of the Target Businesses’ equity securities will collectively own an equivalent of 12,220,000 Common Shares (assuming the conversion of all Proportionate Voting Shares to Common Shares on the basis of one hundred (100) Common Shares for one (1) Proportionate Voting Share) on a non-diluted basis, representing a 29.11% equity and voting interest in NextPoint Financial.

Dividend Rights

Holders of Shares are entitled to receive dividends out of the assets available for the payment or distribution of dividends at such times and in such amount and form as the Board may from time to time determine, on the following basis, and otherwise without preference or distinction among or between the Shares: each Proportionate Voting Share will be entitled to one hundred (100) times the amount paid or distributed per Common Share (including by way of share dividends, which holders of Proportionate Voting Shares will receive in Proportionate Voting Shares, unless otherwise determined by the Board) and each fraction of a Proportionate Voting Share will be entitled to the applicable fraction thereof. See “ Conversion Rights and Transfers ” above.

Liquidation Rights

In the event of the liquidation, dissolution or winding-up of NextPoint Financial or any other distribution of its assets among its shareholders for the purpose of winding-up its affairs, whether voluntarily or involuntarily, the holders of Shares will be entitled to receive all of NextPoint Financial’s assets remaining after payment of all debts and other liabilities, on the basis that each Proportionate Voting Share will be entitled to one hundred (100) times the amount distributed per Common Share (and each fraction of a Proportionate Voting Share will be entitled to the amount calculated by multiplying the fraction by the amount otherwise payable in respect of a whole Proportionate Voting Share), and otherwise without preference or distinction among or between the Shares. See “ Conversion Rights and Transfers ” above.

Pre-emptive and Redemption Rights

Holders of Shares will not have any pre-emptive or redemption rights.

Subdivision or Consolidation

No subdivision or consolidation of any class of Shares may be carried out unless, at the same time, the Common Shares and Proportionate Voting Shares, as the case may be, are subdivided or consolidated in the same manner and on the same basis, so as to preserve the relative rights of the holders of each class of Shares.

Certain Amendments

In addition to any other voting right or power to which the holders of Common Shares and Proportionate Voting Shares shall be entitled by law or regulation or other provisions of the Articles from time to time in effect, but subject to the provisions of the Articles, holders of Common Shares and Proportionate Voting Shares shall each be entitled to vote separately as a class, in addition to any other vote of shareholders that may be required, in respect of any alteration, repeal or amendment of our Articles which would adversely affect the rights or special rights of the holders of Common Shares or Proportionate Voting Shares, or which would affect the rights of the holders of the Common Shares and the holders of Proportionate Voting Shares differently, on a per share basis, including an amendment to the terms of the Articles that provide that any Proportionate Voting Shares sold or transferred to a Person that is not a Permitted Holder shall be automatically converted into Common Shares.

Pursuant to the Articles, holders of Shares will be treated equally and identically, on a per share basis, in certain change of control transactions that require approval of our shareholders under the BCBCA, unless different

treatment of the shares of each such class is approved by a majority of the votes cast by the holders of the Common Shares and Proportionate Voting Shares, each voting separately as a class.

Issuance of Additional Proportionate Voting Shares

NextPoint Financial may issue additional Proportionate Voting Shares upon the approval of the Board. Approval is not required in connection with a subdivision or consolidation on a pro rata basis as between the Common Shares and the Proportionate Voting Shares.

Take-Over Bid Protection

If an offer is being made for Proportionate Voting Shares (a “ PVS Offer ”) where: (i) by reason of applicable securities legislation or stock exchange requirements, the offer must be made to all or substantially all of the holders of Proportionate Voting Shares in a province or territory of Canada to which the requirement applies; and (ii) no equivalent offer is made for the Common Shares, the holders of Common Shares have the right, pursuant to the Articles, at their option, to convert their Common Shares into Proportionate Voting Shares for the purpose of allowing the holders of the Common Shares to tender to such PVS Offer, provided that such conversion into Proportionate Voting Shares will be solely for the purpose of tendering the Proportionate Voting Shares to the PVS Offer in question and that any Proportionate Voting Shares that are tendered to the PVS Offer but that are not, for any reason, taken up and paid for by the offeror will automatically be reconverted into the Common Shares that existed prior to such conversion.

In the event that holders of Common Shares are entitled to convert their Common Shares into Proportionate Voting Shares in connection with a PVS Offer pursuant to (ii) above, holders of an aggregate of Common Shares of less than one hundred (100) (an “ Odd Lot ”) will be entitled to convert all but not less than all of such Odd Lot of Common Shares into an applicable fraction of one Proportionate Voting Share, provided that such conversion into a fractional Proportionate Voting Share will be solely for the purpose of tendering the fractional Proportionate Voting Share to the PVS Offer in question and that any fraction of a Proportionate Voting Share that is tendered to the PVS Offer but that is not, for any reason, taken up and paid for by the offeror will automatically be reconverted into the Common Shares that existed prior to such conversion.

Advance Notice Requirements for Director Nominations

NextPoint Financial has included certain advance notice provisions with respect to the election of its directors in the Articles (the “ Advance Notice Provisions ”). The Advance Notice Provisions are intended to: (i) facilitate orderly and efficient annual general meetings or, where the need arises, special meetings; (ii) ensure that all shareholders receive adequate notice of director nominations to the Board and sufficient information with respect to all nominees; and (iii) allow shareholders to register an informed vote. Only persons who are nominated by shareholders in accordance with the Advance Notice Provisions will be eligible for election as directors at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called was the election of directors.

Under the Advance Notice Provisions, a shareholder wishing to nominate a director would be required to provide NextPoint Financial notice, in the prescribed form, within the prescribed time periods. These time periods include, (i) in the case of an annual meeting of shareholders (including annual and special meetings), not fewer than 30 days prior to the date of the annual meeting of shareholders; provided, that if the first public announcement of the date (the “ Notice Date ”) of the annual meeting of shareholders is less than 50 days before the meeting date, not later than the close of business on the 15[th] day following the Notice Date; and (ii) in the case of a special meeting (which is not also an annual meeting) of shareholders called for any purpose which includes electing directors, not later than the close of business on the 15th day following the Notice Date, provided that, in either instance, if notice-and-access (as defined in National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer ) is used for delivery of proxy related materials in respect of a meeting described above, and the Notice Date in respect of the meeting is not fewer than 50 days prior to the date of the applicable meeting, the notice must be received not later than the close of business on the 40th day before the applicable meeting.

EQUITY INCENTIVE PLANS DESCRIPTION

Summary of Equity Incentive Plan

NextPoint Financial will adopt the Equity Incentive Plan as a component of its long-term incentive compensation arrangements available for officers, employees and other eligible service providers.

Purpose

The purpose of the Equity Incentive Plan is to (i) promote a further alignment of interests between officers, employees and other eligible service providers of NextPoint Financial and its shareholders, (ii) to associate a portion of the compensation payable to officers, employees and other eligible service providers of NextPoint Financial with the returns achieved by its shareholders; and (iii) to attract and retain officers, employees and other eligible service providers with the knowledge, experience and expertise required by NextPoint Financial. The following is a summary of the material terms of the Equity Incentive Plan. This summary is qualified in its entirety by reference to the terms if the Equity Incentive Plan.

Definitions

“ Market Price ” means, with respect to any particular date:

(i) if the Common Shares are listed on only one stock exchange, the volume weighted average trading price per Common Share on such stock exchange during the immediately preceding five trading days;
(ii) if the Common Shares are listed on more than one stock exchange, the Market Price as determined in accordance with paragraph (i) above for the primary stock exchange on which the greatest volume of trading of the Common Shares occurred during the immediately preceding 20 trading days; and
(iii) if the Common Shares are not listed for trading on a stock exchange, a price which is determined by the Board in good faith to be the fair market value of the Common Shares.

Eligibility

Any individual employed by NextPoint Financial, including a Service Provider (as defined in the Equity Incentive Plan), who, by the nature of his or her position or job is, in the opinion of the Board, in a position to contribute to the success of NextPoint Financial, is eligible to receive grants of options, RSUs, PSUs, Stock Appreciation Rights and Restricted Stock (for the purposes of this section, “ Grants ”) under the Equity Incentive Plan.

Common Shares Subject to the Equity Incentive Plan

The aggregate number of Common Shares that may be issued pursuant to Grants made under the Equity Incentive Plan together with all other security-based compensation arrangements of NextPoint Financial shall be a number equal to 10% of the aggregate number of issued and outstanding Common Shares from time to time (assuming conversion of all Proportionate Voting Shares into Common Shares).

For purposes of computing the total number of Common Shares available for grant under the Equity Incentive Plan or any other security based compensation arrangement of NextPoint Financial, Common Shares subject to any Grant (or any portion thereof) that is forfeited, surrendered, cancelled or otherwise terminated, including if a number of Common Shares covered by an option have not been issued due to the exercise of a tandem Stock

Appreciation Right connected with such option, prior to the issuance of such Common Shares shall again be available for grant under the Equity Incentive Plan.

Additional Equity Incentive Plan Limits

The maximum number of Common Voting Shares that are (i) issued to Insiders within any one-year period, and (b) issuable to Insiders, at any time, under the Equity Incentive Plan, or when combined with all of NextPoint Financial’s other security based compensation arrangements, will not exceed 10% of the number of the aggregate issued and outstanding Common Shares.

Grants under the Equity Incentive Plan

Options issued under the Equity Incentive Plan, unless otherwise designated by the Board, will vest one-third on each of the first three anniversaries of the date of the Grant based on continued employment, and may be exercised during a period determined by the Board, which may not exceed five years. The exercise price for each Common Share subject to an option will be fixed by the Board but under no circumstances may any exercise price be less than 100% of the Market Price on the date of grant of the option. The exercise of options may be subject to vesting conditions, including specific time schedules for vesting and performance-based conditions. In addition, tandem Stock Appreciation Rights may be granted in connection with a grant of options, which are subject to the same terms and conditions of the grant of options. Tandem Stock Appreciation Rights may be exercised only if and to the extent the related options are vested and exercisable, and on exercise of a tandem Stock Appreciation Right, the related option will be cancelled and a participant under the Equity Incentive Plan (for the purposes of this section, a “ Participant ”), will be entitled to the amount in settlement of the tandem Stock Appreciation Rights. Upon exercise, the tandem Stock Appreciation Right will be settled by a cash amount equal to the amount, if any, by which the Market Price on the date of exercise of the tandem Stock Appreciation Right exceeds the exercise price of the related option at the time of the grant. Such amounts may also be payable by the issuance of Common Shares (at the discretion of the Board).

Under the Equity Incentive Plan, Participants may be granted standalone Stock Appreciation Rights, being a right to receive a cash amount equal to the amount, if any, by which the Market Price on the date of exercise of the Stock Appreciation Right exceeds the Market Price at the time of the grant (the “ Base Price ”). Such amounts may also be payable by the issuance of Subordinated Voting Shares (at the discretion of the Board). The exercise of Stock Appreciation Rights may also be subject to conditions similar to those which may be imposed on the exercise of options.

Under the Equity Incentive Plan, Participants may be allocated share units in the form of RSUs or PSUs (collectively, “ Share Units ”), which represent the right to receive an equivalent number of Common Shares or the Market Price on the vesting date. The issuance of such Common Shares may be subject to vesting requirements similar to those described above with respect to the exercisability of options and Stock Appreciation Rights, including such time or performance based conditions as may be determined from time to time by the Board in its discretion. The Equity Incentive Plan provides for the express designation of share units as either RSUs, which have time-based vesting conditions, or PSUs, which have performance-based vesting conditions over a specified period.

Under the Equity Incentive Plan, Participants may be granted Common Shares that are subject to a restriction on the Participant’s free enjoyment of the Common Shares (“ Restricted Stock ”), which restrictions may be based on the passage of time or the satisfaction of performance-based conditions or the occurrence of one or more events or conditions as the Board may determine. Restricted Stock cannot be sold, transferred or assigned while the restrictions remain in effect, although the Participant may vote the Restricted Stock and receive any dividends paid on the Restricted Stock during such period. Restricted Stock is forfeited if the applicable restriction does not lapse prior to the date or the occurrence of the specified event or the satisfaction of the criteria in the Grant agreement.

Termination of Grants

Subject to the terms of the applicable Grant agreement, in the case of a Participant’s termination of employment due to death, or in the case of the Participant’s Disability (as defined in the Equity Incentive Plan) (i) those of the Participant’s outstanding options and Share Units that were granted prior to the year that includes the Participant’s date of death or Disability, as the case may be, that have not become vested prior to such date of death or Disability shall continue to vest and, upon vesting (which in the case of a PSU remains subject to the achievement of the applicable performance conditions and the adjustment of the number of PSUs that vest to reflect the extent to which such performance conditions were achieved), be exercisable (in the case of options) during the 12-month period following such date of death or Disability, as the case may be, as if the Participant had remained employed throughout such period and (ii) those of the Participant’s outstanding options that have become vested prior to the Participant’s date of death or Disability shall continue to be exercisable during the 12-month period following the such date of death or Disability, as the case may be. A pro-rated number of options and Share Units granted to a Participant in the year that includes the Participant’s date of death or Disability shall remain eligible to vest following such date of death or Disability (the “ Special Pro Rated Grants ”). The Special Pro Rated Grants shall continue to vest and, upon vesting (which in the case of a PSU remains subject to the achievement of the applicable performance conditions and the adjustment of the number of PSUs that vest to reflect the extent to which such performance conditions were achieved), be exercisable (in the case of options) during the 12-month period following the Participant’s date of death or Disability, as the case may be, as if the Participant had remained employed throughout such period. The balance of the options and Share Units granted to a Participant in the year that includes the Participant’s date of death or Disability that are not Special Pro Rated Grants shall be forfeited and cancelled as of the Participant’s date of death or Disability, as the case may be.

Subject to the terms of the applicable Grant agreement: (a) in the case of a Participant’s termination without cause, the Participant’s outstanding options that have become vested prior to the Participant’s termination shall continue to be exercisable during the 90-day period following the Participant’s date of termination, while Share Units shall vest on a pro-rated basis based on the term of service (having regard, for PSUs, the extent to which the applicable performance conditions were satisfied); and (b) in the case of a Participant’s resignation, the Participant’s outstanding options that have become vested prior to the date on which the Participant provides notice to NextPoint Financial of his or her resignation shall continue to be exercisable during the 60-day period following the Participant’s date of resignation, but no Share Units that have not vested prior to the date of on which the Participant submits his or her resignation shall vest and all such Share Units shall be forfeited immediately. In the case of a Participant’s termination for cause, any and all then outstanding unvested options and unvested Share Units granted to the Participant shall be immediately forfeited and cancelled, without any consideration therefore, as of the commencement of the day that notice of such termination is given.

In the event that a holder of Restricted Stock is terminated, unless the Grant agreement provides otherwise or as otherwise determined by the Board, all Restricted Stock will be forfeited to NextPoint Financial.

Transferability

No Grants and no rights or interests therein may be assigned, transferred, sold, exchanged, encumbered, pledged or otherwise hypothecated or disposed of by a Participant other than by testamentary disposition by the Participant or the laws of intestate succession. A Participant may designate a beneficiary , in writing, to receive any benefits that are provided under the Equity Incentive Plan upon the death of such Participant.

Capital Changes, Corporate Transactions and Change of Control

The Equity Incentive Plan contains provisions for the equitable treatment of Grants in relation to any capital changes and with regard to a dividend, split, recapitalization, reclassification, amalgamation, arrangement, merger, consolidation, combination or exchange of Common Shares or distribution of rights to holders of Common Shares or any other relevant changes to the authorized or issued capital of NextPoint Financial.

In the event of a Change in Control (for the purposes of this section, as defined in the Equity Incentive Plan) prior to the vesting of a Grant, and subject to the terms of a Participant’s employment agreement and the applicable Grant agreement, the Board shall have full authority to determine in its sole discretion the effect, if any, of a Change in Control on the vesting, exercisability, settlement, payment or lapse of restrictions applicable to a Grant.

Amendment and Termination of the Equity Incentive Plan

The Equity Incentive Plan and any Grant made pursuant to the Equity Incentive Plan may be amended, modified or terminated by the Board without approval of NextPoint Financial Shareholders, provided that no amendment may be made without the consent of a Participant if it adversely affects the rights of the Participant in respect of any Grant previously made to such Participant. For greater certainty, the Equity Incentive Plan may not be amended without NextPoint Financial Shareholder approval to do any of the following:

(a) increase in the maximum number of Common Shares issuable pursuant to the Equity Incentive Plan;
(b) reduce the exercise price of an outstanding option or the Base Price of a standalone Stock Appreciation Right;
(c) extend the maximum term of any Grant made under the Equity Incentive Plan;
(d) amend the assignment provisions described above under “– Transferability ”;
(e) permit a non-employee member of the Board to be eligible for Grants under the Equity Incentive Plan;
(f) increase the number of Common Shares that may be issued or issuable to Insiders above the restriction or deleting the restriction on the number of Common Shares that may be issued or issuable to Insiders;
(g) include other types of equity compensation involving the issuance of Common Shares under the Equity Incentive Plan; or
(h) amend the amendment provisions of the Equity Incentive Plan to amend or delete any of (a) through (g) above or grant additional powers to the Board to amend the Equity Incentive Plan or entitlements without NextPoint Financial Shareholder approval;

provided that, NextPoint Financial Shareholder approval shall not be required for, among other things, the following amendments:

(i) amendments of a “housekeeping” nature;
(j) a change to the vesting provisions of any Grants;
(k) a change to the termination provisions of any Grant that does not entail an extension beyond the original term of the Grant; or
(l) amendments to the provisions relating to a Change in Control.

Deferred Share Unit Plan

NextPoint Financial will adopt a deferred share unit plan for non-employee directors (the “ DSU Plan ”) as a component of NextPoint Financial’s long-term incentive compensation arrangements available for each director of NextPoint Financial who is not an officer or employee of NextPoint Financial, including any non-executive Chair of the Board (“ Non-Employee Director ”). The DSU Plan will be administered by the Board (which may delegate its authority to the C&CG Committee), and the Board will have the authority to interpret and administer the DSU Plan, including in respect of any DSU awarded thereunder. The following discussion is qualified in its entirety by the full text of the DSU Plan.

The DSU Plan will provide Non-Employee Directors with the opportunity to receive their compensation, or a portion thereof, in the form of DSUs, representing, at any particular date, a unit equivalent in value equal to the market price of a Common Share. DSUs granted under the DSU Plan will be credited for the account of the applicable Non-Employee Director to whom such DSUs are issued and shall vest immediately. Each Non-Employee Director who elects to receive DSUs shall be entitled to redeem his or her DSUs following such Non-Employee Director’s death, disability, resignation or retirement from the Board and, if such director becomes an employee of NextPoint Financial, upon his or her termination (with or without cause) as an employee. DSUs may be settled in cash, Common Shares or a combination thereof, in accordance with the terms of the DSU Plan.

The aggregate number of Common Shares that may be issued under the DSU Plan, together with all other securitybased compensation arrangements of NextPoint Financial, shall be a number representing 10% of the aggregate number of issued and outstanding Common Shares from time to time (assuming conversion of all Proportionate Voting Shares into Common Shares). In addition, the aggregate number of Common Shares reserved for issuance under the DSU Plan, in combination with the aggregate equity award value of any grants to Non-Employee Directors that are eligible to be settled in Common Shares under any other security-based compensation arrangement and made other than in lieu of cash fees, shall not exceed 1.0% of the number of issued and outstanding Common Shares. Furthermore, the aggregate equity award value of any grant of DSUs under the DSU Plan for a year, together with the aggregate equity award value of any grants that are eligible to be settled in Common Shares under any other security-based compensation arrangement and made other than in lieu of cash fees, shall not exceed C$150,000.

The maximum number of Common Shares that are (i) issued to insiders within any one year period; and (ii) issuable to insiders, at any time, under the DSU Plan, or when combined with all of NextPoint Financial 's other securitybased compensation arrangements, shall not exceed 10% of the number of the aggregate issued and outstanding Common Shares.

The DSU Plan shall contain provisions for the equitable treatment of DSUs granted under the DSU Plan in relation to any capital changes and with regard to a dividend, split, recapitalization, reclassification, amalgamation, arrangement, merger, consolidation, combination or exchange of Common Shares or distribution of rights to holders of Common Shares or any other relevant changes to the authorized or issued capital of NextPoint Financial. The DSU Plan shall also provide that if DSUs are scheduled to settle during a blackout period, such settlement shall be postponed until the second trading day following the date on which the blackout period ends.

DSUs granted under the DSU Plan are generally not assignable or transferable, whether voluntarily, involuntarily, by operation of law or otherwise, other than by will or the laws of descent and distribution.

The DSU Plan and any grant of DSUs under the DSU Plan may be amended or modified by the Board without approval of shareholders, provided that no such amendment may be made without the consent of a Non-Employee Director if it adversely affects the rights of such director in respect of any amount which such director has elected to receive DSUs or has been granted DSUs. For greater certainty, the DSU Plan may not be amended without shareholder approval to do any of the following:

(a) increase in the maximum number of Common Shares issuable pursuant to the DSU Plan;
(b) increase or remove Non-Employee Director participation limits;
(c) increase the number of Common Shares that may be issued or issuable to Insiders (as defined in the DSU Plan) above the restriction or deleting the restriction on the number of Shares that may be issued or issuable to Insiders;
(d) change the term of any DSU;
(e) reduce the market price in respect of any DSU;
(f) change the categories of individuals eligible to be selected for grants of DSUs;

(g) permit DSUs to be transferable or assignable other than by will or the laws of descent and distribution; or
(h) amend the amendment provision of the DSU Plan to amend or delete any of (a) through (h) or grant additional powers to the Board to amend the DSU Plan or entitlements without shareholder approval;

provided that, shareholder approval shall not be required for, among other things, the following amendments:

(i) amendments of a "housekeeping" nature;
(j) amendments to the terms and conditions of the DSU Plan necessary to ensure that the DSU Plan complies with applicable law and regulatory requirements, including the requirements of any applicable stock exchange, in place from time to time;
(k) amendments to the provisions of the DSU Plan respecting administration of the DSU Plan and eligibility for participation under the DSU Plan;
(l) amendments to the provisions of the DSU Plan respecting the terms and conditions on which DSUs may be granted pursuant to the DSU Plan; and
(m) any other amendments not requiring shareholder approval under applicable laws or the requirements of any applicable stock exchange.

The Board may terminate the DSU Plan at any time but no such termination shall, without the consent of the NonEmployee Directors or unless required by law, adversely affect the rights of a Non-Employee Director with respect to any amount in respect of which a Non-Employee Director has elected to receive DSUs or DSUs which the NonEmployee Director has then been granted under the DSU Plan.

100

RIGHTS TO PURCHASE SECURITIES

NAC Warrants

10,300,000 NAC Warrants are outstanding as of the date of this prospectus. Each NAC Warrant represents a share purchase warrant to acquire a Class A Restricted Voting Share commencing 65 days after the Effective Date (which, at such time, will represent a share purchase warrant to acquire a Common Share), at an exercise price of US$11.50 per share.

The NAC Warrants will expire at 5:00 p.m. (Toronto time) on the day that is five years after the completion of the qualifying acquisition of NAC (which is expected to consist of the Transaction) or may expire earlier upon our Winding-Up or if the expiry date is accelerated.

Once the NAC Warrants become exercisable, pursuant to the terms of the Warrant Agreement, NextPoint Financial may accelerate the expiry date of the outstanding NAC Warrants (excluding the Warrants issued as part of the Class B Units but only to the extent still held by the Sponsor at the date of public announcement of such acceleration and not transferred prior to the accelerated expiry date, due to the anticipated knowledge by the Sponsor of material undisclosed information which could limit their dealings in such securities) by providing 30 days’ notice if, and only if, the closing price of the Common Shares equals or exceeds US$18.00 per Common Share (as adjusted for stock splits or combinations, stock dividends, $0.25 Extraordinary Dividends, reorganizations and recapitalizations and the like) for any 20 trading days within a 30-trading day period. In the event that the foregoing conditions are satisfied upon or following completion of the Transaction, it is expected that NextPoint Financial will accelerate the expiry date of the NAC Warrants by providing such notice.

If NextPoint Financial accelerates the expiry of the NAC Warrants as described above, the Board will have the option to require all holders that wish to exercise NAC Warrants to do so, in whole or in part, on a cashless basis. In determining whether to require all holders to exercise their NAC Warrants, in whole or in part, on a cashless basis, the Board will consider, among other factors, NextPoint Financial’s cash position and the number of NAC Warrants that are outstanding and the dilutive effect on NextPoint Financial’s shareholders of issuing the maximum number of Common Shares issuable upon the exercise of the NAC Warrants. A cashless exercise means the holder, in lieu of making a cash payment on exercise, will instead surrender its NAC Warrants and receive the number of Common Shares that is equal to the quotient obtained by multiplying (i) the number of Common Shares for which the NAC Warrant is being exercised by (ii) the difference, if positive, between the volume weighted average price of the Common Shares on the Exchange for the 20 trading days immediately prior to (but not including) the date of exercise of the NAC Warrant and the exercise price in effect on the date immediately prior to (but not including) the date of exercise of the NAC Warrant, and dividing such product by the volume weighted average price of the Common Shares on the Exchange for the 20 trading days immediately prior to (but not including) the date of exercise.

The right to exercise will be forfeited unless the NAC Warrants are exercised prior to the date specified in the notice of acceleration of the expiry date. On and after the acceleration of the expiry date, a record holder of a NAC Warrant will have no further rights.

The exercise price and number of shares issuable on exercise of the NAC Warrants may be adjusted in certain circumstances, including in the event of a stock dividend, $0.25 Extraordinary Dividend, or our recapitalization, reorganization, merger or consolidation. The NAC Warrants will not, however, be adjusted for issuances of shares at a price below their exercise price.

NAC Warrants may be exercised only for a whole number of Common Shares. No fractional Common Shares will be issued upon exercise of the NAC Warrants. If, upon exercise of the NAC Warrants, a holder would be entitled to receive a fractional interest in a Common Share, it will, upon exercise, be rounded down to the nearest whole number of Common Shares to be issued to the NAC Warrant holder.

101

The exercise of the NAC Warrants by any holder in the United States, or that is a U.S. Person, may only be effected in compliance with an exemption from the registration requirements of the U.S. Securities Act and applicable State “blue sky” securities laws.

In no event would the NAC Warrants be entitled to escrow account proceeds. The NAC Warrant holders do not have the rights or privileges of holders of Shares and any voting rights until they exercise their NAC Warrants and receive corresponding Common Shares. After the issuance of corresponding Common Shares upon exercise of the NAC Warrants, each holder will be entitled to one vote for each Common Share held of record on all matters to be voted on by shareholders. On the exercise of any NAC Warrant, the NAC Warrant exercise price will be US$11.50, subject to adjustments as described herein.

The Warrant Agent shall, on receipt of a written request of NAC or holders of not less than 25% of the aggregate number of NAC Warrants then outstanding, convene a meeting of holders of NAC Warrants upon at least 21 calendar days’ written notice to holders of NAC Warrants. Every such meeting shall be held in Toronto, Ontario or at such other place as may be approved or determined by the Warrant Agent. A quorum at meetings of holders of NAC Warrants shall be two persons present in person or represented by proxy holding or representing more than 20% of the aggregate number of NAC Warrants then outstanding.

From time to time, NAC and the Warrant Agent, without the consent of the holders of NAC Warrants, may amend or supplement the Warrant Agreement for certain purposes including curing defects or inconsistencies or making any change that does not adversely affect the rights of any holder of NAC Warrants. Any amendment or supplement to the Warrant Agreement that adversely affects the interests of the holders of NAC Warrants may only be made by an “extraordinary resolution”, which is defined in the Warrant Agreement as a resolution either (i) passed at a meeting of the holders of NAC Warrants by the affirmative vote of holders of NAC Warrants representing not less than two-thirds of the aggregate number of the then outstanding NAC Warrants represented at the meeting and voted on such resolution, or (ii) adopted by an instrument in writing signed by the holders of Warrants representing not less than two-thirds of the aggregate number of the then outstanding NAC Warrants.

LoanMe Agreement

Pursuant to the LoanMe Agreement, (i) each LM Holdco Option, whether or not vested, outstanding as of the Effective Time will be converted into an option to purchase Common Shares on substantially the same terms and conditions (including expiration date, vesting conditions, and exercise provisions) as were applicable to such LM Holdco Option immediately before the effective time, subject to the applicable modifications to conversion price and number of Common Shares exercisable set forth in the LoanMe Agreement (as such, a Converted Option); and (ii) shares of Restricted Stock to certain LoanMe employees following the Effective Time will be issued. Following closing of the Transaction, 1,249,998 Converted Options to purchase up to 1,621,949 Common Shares will be outstanding. See “ Corporate Structure – Summary of Transaction Agreements – LoanMe Agreement – Effect of the LoanMe Transaction. ”

102

SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER

The following sets out the anticipated number of securities of NextPoint Financial that will be subject to a contractual restriction on transfer upon the completion of the Transaction. NextPoint Financial has received LockUp Agreements (as defined below) from the former equity holders of the Target Businesses. To the knowledge of NAC and the Target Businesses, no other securities of NextPoint Financial will be held in escrow or will be subject to contractual restrictions on transfer.

Number of Securities Subject to

	Number of Securities Subject to
Designation of Class Common Shares(1)	Contractual Restriction 17,807,805	Percentage of Class
		44.18%(2)

Notes:

(1) Assuming conversion of all Proportionate Voting Shares into Common Shares. See “ Lock-Up Agreements ” and “ Founders’ Shares below for a summary of the contractual restrictions on transfer.
(2) Assumes no redemptions of Class A Restricted Voting Shares. Assuming a 25% redemption level of Class A Restricted Voting Shares, the percentage of Common Shares that would be subject to contractual restrictions on transfer would be approximately 50.44%.

Lock-Up Agreements

In accordance with the Transaction Agreements, each Locked-Up Shareholder entered into a lock-up agreement (a “ Lock-Up Agreement ”) with NAC. Pursuant to the Lock-Up Agreements, each Locked-Up Shareholder shall not transfer any Proportionate Voting Shares (or Common Shares into which such Proportionate Voting Shares may be converted) received as consideration for the Transaction for a period of six months from the date of the closing of the Transaction, subject to certain limited exceptions including (a) transfers to an immediate family member or a trust, (b) transfers to an affiliate, and (c) transfers as part of a take-over bid made to all holders of Proportionate Voting Shares (or Common shares into which such Proportionate Voting Share may be converted).

Founders’ Shares

On the closing of the IPO, the NAC Founders (the “ Restricted Parties ”) entered into the Exchange Agreement and Undertaking pursuant to which each Restricted Party agreed not to transfer any of the NAC Founders’ Shares, Class B Shares or NAC Warrants (including the Class B Shares and NAC Warrants underlying the Class B Units acquired for consideration of US$10.00 per Class B Unit in connection with the IPO) until after the closing of NAC’s qualifying acquisition, in each case other than transfers required due to the structuring of the qualifying acquisition, without the prior consent of the Exchange.

103

PRIOR SALES

During the 12-month period before the date of this prospectus, NAC issued the following shares or securities convertible into shares:

ble into shares:
Issue Date	Number and Type of Security Issues	Issue Price (US$)	Aggregate Gross Proceeds (US$)
July16, 2020	1 Class B Share	10.00	10.00
July 23, 2020	5,913,124 Class B Shares(1)	0.0042	25,000
August 11, 2020	20,000,000 Class A Restricted Voting Units	10.00	200,000,000
August 11, 2020	600,000 Class B Units	10.00	6,000,000
(1) 763,125 Class B Shares were	relinquished following expiry of the IPO over-allotment option.

From August 11, 2020 to September 20, 2020, the Class A Restricted Voting Units were listed on the Exchange and traded under the symbol “NAC.V”. On September 21, 2020, the Class A Restricted Voting Units separated into Class A Restricted Voting Shares and NAC Warrants. The following table sets forth, for the periods indicated, the reported high and low prices and the aggregate volume of trading of the Class A Restricted Voting Units on the Exchange:

Period High ($) August 2020 (11-31) ........................................................................................ US$9.98 September 2020 (1-20) .................................................................................... US$9.99	Low ($) US$9.87 US$9.80	Volume
		2,163,600 51,900

The Class A Restricted Voting Shares are listed on the Exchange and trade under the symbol “NAC.U”. The following table sets forth, for the periods indicated, the reported high and low prices and the aggregate volume of trading of the Class A Restricted Voting Shares on the Exchange:

Period September 2020 (21-30) ................................................................................. October 2020 .................................................................................................. November 2020 .............................................................................................. December 2020 ............................................................................................... January 2021 ................................................................................................... February 2021 ................................................................................................. March 2021 ..................................................................................................... April 2021 ....................................................................................................... May 2021 ........................................................................................................ June 2021 (1-2) ...............................................................................................	High ($) US$9.90 US$9.83 US$9.85 US$10.00 US$10.41 US$10.43 US$10.00 US$10.00 US$9.99 US$9.98	Low ($) US$9.74 US$9.65 US$9.50 US$9.67 US$9.80 US$9.80 US$9.80 US$9.85 US$9.80 US$9.84	Volume
			305,508 1,045,400 310,934 895,944 602,325 1,196,980 1,202,010 312,120 440,052 360,944

The NAC Warrants are listed on the Exchange and trade under the symbol “NAC.WT.U”. The following table sets forth, for the periods indicated, the reported high and low prices and the aggregate volume of trading of the NAC Warrants on the Exchange:

104

Period September 2020 (21-30) ................................................................................. October 2020 .................................................................................................. November 2020 .............................................................................................. December 2020 ............................................................................................... January 2021 ................................................................................................... February 2021 ................................................................................................. March 2021 ..................................................................................................... April 2021 ....................................................................................................... May 2021 ........................................................................................................ June 2021 (1-2) ...............................................................................................	High ($)	Low ($) US$0.50 US$0.31 US$0.45 US$0.55 US$0.63 US$0.75 US$0.65 US$0.76 US$0.85 US$1.20	Volume
	US$0.80 US$0.60 US$0.74 US$0.70 US$0.75 US$1.20 US$1.10 US$1.30 US$1.44 US$1.25		150,342 118,500 2,400 219,750 263,099 74,567 683,945 1,032,650 40,500 2,900

PRINCIPAL SHAREHOLDERS

The following table discloses the names of the persons or entities who, upon completion of the Transaction and assuming that no NAC Shareholders elect to redeem their Class A Restricted Voting Shares, will, to NAC’s and the Target Businesses’ knowledge, beneficially own or control, directly or indirectly, more than 10% of the combined voting rights attached to the Common Shares.

Name Sponsor(4) Liberty Seller Bliksum(6)	Number of Common Shares (1)(3) 5,700,000 7,370,000(5) 4,365,000	Type of Ownership Direct Direct Direct	Percentage of Issued and Outstanding Common Shares(1) (2) 14.14% 18.28% 10.83%	Total Voting Power(1) (2)
				14.14% 18.28% 10.83%

Notes:

(1) Based on an equivalent of 34,720,000 Common Shares, and assuming completion of the Private Placement and conversion of all Proportionate Voting Shares into Common Shares, outstanding upon completion of the Transaction and 0% redemptions of Class A Restricted Voting Shares.

(2) Assuming a level of redemptions of Class A Restricted Voting Shares of 25%, “Percentage of Issued and Outstanding Common Shares” and “Total Voting Power” would be 16.14% for Sponsor, 20.87% for Liberty Seller and 12.36% for Bliksum, respectively.

(3) Excludes Common Shares issuable upon exercise of the NAC Warrants, which are exercisable commencing 65 days after the completion of the Transaction. See “ Rights to Purchase Securities – NAC Warrants ”.

(4) The Sponsor is controlled by Andrew Neuberger.

(5) Assuming no adjustment to the Liberty Share Consideration. See “ Corporate Structure – Summary of Transaction Agreements – Liberty Agreement – Purchase Price Adjustment ”.

(6) It is currently anticipated that Bliksum will distribute to its shareholders the consideration received from NAC, and BPJV will distribute to the holders of its membership interests the consideration received from Bliksum. The timing of any such distribution(s) is unknown.

DIRECTORS AND EXECUTIVE OFFICERS

The names, municipality of residence and positions with NextPoint Financial of the persons who are expected to serve as directors and executive officers of NextPoint Financial after giving effect to the Transaction are set out below. Each of the proposed members of the Board is expected to be formally appointed to the Board as at the Effective Time.

105

Directors

Name and Province/State and Country of Present Principal Occupation Residence

Andrew Neuberger[(2)] Private Investor, Chief Executive Officer and Chairman, NAC New York, U.S.A. Brent Turner Chief Executive Officer and President, Liberty Texas, U.S.A. Jonathan Williams President and Chief Executive Officer, LoanMe California, U.S.A. John Lederer[(2)] Corporate Director Ontario, Canada Jean Birch[(2)] Corporate Director Arizona, U.S.A. William Minner[(1)] Corporate Director Pennsylvania, U.S.A. Wendy Lane[(1)] Chair, Lane Holdings Inc. Massachusetts, U.S.A. Logan Powell[(1)] Dean of Admission, Brown University Rhode Island, U.S.A. Nik Ajagu Private Investor California, U.S.A. Alicia Morga Chief Executive Officer, No. 8 Media, Inc. California, U.S.A.

Notes:

(1) Audit Committee Member

(2) Compensation, Nominating and Corporate Governance Committee Member

The proposed directors of NextPoint Financial set forth above that are not current directors of NAC will not become directors of NextPoint Financial until the completion of the Transaction and they will not be subject to liability as directors of NAC for any misrepresentation in this prospectus. See “ Contractual Right of Action ”.

Thereafter, directors of NextPoint Financial will be elected by NextPoint Financial Shareholders at each annual meeting of NextPoint Financial Shareholders, and will hold office until the next annual meeting of NextPoint Financial, unless: (i) his or her office is earlier vacated in accordance with the Articles; or (ii) he or she becomes disqualified to act as a director.

106

Executive Officers

Name and Residence	Proposed Position with NextPoint	Present Principal Occupation
	Financial
Brent Turner	Chief Executive Officer, Director	Chief Executive Officer and President,
Texas, U.S.A.		Liberty
Jonathan Williams	President of Lending, Director	President and Chief Executive Officer,
California, U.S.A.		LoanMe
Mike Piper	Chief Financial Officer	Chief Financial Officer, Liberty
Virgina, U.S.A.
Ted DeMarino	President of Tax	Chief Operating Officer, Liberty
Texas, U.S.A.
Scott Terrell	Chief Information Officer	Chief Information Officer, Liberty
Texas, U.S.A.
Ghazi Dakik	Chief Legal & Compliance Officer	Chief Legal & Compliance Officer, Liberty
Texas, U.S.A.
Juliet Diiorio	Chief Marketing Officer	Chief Marketing Officer, Liberty
Texas, U.S.A.

Biographies

The following are brief profiles of the proposed directors and executive officers of NextPoint Financial, including a description of each individual’s principal occupation within the past five years or more, as applicable.

Directors

Andrew Neuberger

Andrew Neuberger is our Chairman. Mr. Neuberger founded NAC in 2020 and is its Chief Executive Officer and Chairman. Mr. Neuberger spent most of his early career at Morgan Stanley (1994 – 2008) including as the Global Head of Warehouse Lending for the Securitized Products Group. While at Morgan Stanley, Mr. Neuberger helped grow the warehouse lending business to a $30 billion commitment level at its peak in asset classes such as real estate loans, non-investment grade RMBS/CMBS and other asset-backed products. Mr. Neuberger left Morgan Stanley to form BasePoint in 2009 as he recognized a void and an opportunity in the lending market created by traditional lenders vacating the alternative lending sector following the financial crisis, and as a response to newly created bank regulations that imposed restrictions on bank lending behavior. This situation presented an opportunity for BasePoint to lend to sound companies with better protections and at yields significantly higher than in the past. Throughout Mr. Neuberger’s tenure as chief executive officer of BasePoint, the firm deployed over $4 billion of capital into the specialty finance space (over 73 transactions) in respect of which no participant experienced a loss of principal, while providing a net annual return of approximately 11%. Prior to Morgan Stanley, Mr. Neuberger was an Assistant District Attorney in Richmond County, New York. He has a BA from Lafayette College and a JD from Brooklyn Law School.

Brent Turner

Brent Turner has over 27 years of professional experience in the tax industry. Mr. Turner has served as Chief Executive Officer at Liberty since 2019 and previously served as Executive Vice President, Head of Consumer Lending at MetaBank, a subsidiary of Meta Financial Group, Inc., from 2016 to 2018. In 2011 and 2012, Mr. Turner led the roll-up of several financing businesses that were eventually sold to MetaBank in 2016. From 2005 to 2011, Mr. Turner served as Vice President of Financial Services at Rent-A-Center, a furniture and electronics rent-to-own company, where he led the development of financial services centers and the e-commerce channel of the company. Mr. Turner’s previous roles also include Chief Operating Officer at Financial Payments, LP, Assistant Vice President at Ace Cash Express and President at Quickcash, Inc. Mr. Turner holds a Master of Business

107

Administration from the Cox School of Business at Southern Methodist University and a Bachelor of Arts from West Texas A&M University.

Jonathan Williams

Jonathan Williams has over 29 years of experience in the finance and accounting sector, including expertise in public debt filings, mergers, acquisitions, credit risk management and cash management. Mr. Williams served as President and Chief Executive Officer of LoanMe and has previously held positions with Morgan Stanley, Ameriquest Capital Group and Coldwell Banker. Mr. Williams holds a graduate diploma in accounting and finance from the University of Cape Town.

John Lederer

John Lederer brings merger and acquisition expertise, as well as both Canadian and U.S. public and private company experience to our board. He is the Executive Chairman of Staples, Inc. and a Senior Advisor at Sycamore Partners LLC, a private equity firm (since September 2017). Mr. Lederer was previously associated with Oak Hill Capital, advising it on acquisitions in the retail and consumer goods sectors, and serving on the board of several of its portfolio companies. From 2010 to 2015, he served as the Chief Executive Officer and President of US Foods, Inc., one of the largest food service distributors in the United States where he led a comprehensive rebranding of the company. He served as the Chairman and Chief Executive Officer of Duane Reade Holdings, Inc. from 2008 to 2010, until its sale to Walgreens Boots Alliance, Inc. Prior to Duane Reade Holdings, Inc., he spent 30 years at Loblaw Companies Limited, Canada’s largest food retailer, and held several senior leadership positions including President from 2000 to 2006. He currently serves on the boards of US Foods, Inc., Maple Leaf Foods Inc., and Walgreens Boots Alliance, Inc. He has an undergraduate degree in Economics from York University.

Jean Birch

Jean Birch brings broad experience as an independent public company director in addition to being a veteran C-level operating executive with experience in the consumer sector to our board. Ms. Birch brings more than 20 years of consumer retail experience running large restaurant companies, such as IHOP, Macaroni Grill and Corner Bakery Cafe. Ms. Birch has served as a director of Charlotte’s Web Holdings, a producer of hemp-based cannabidiol wellness products, since July 2020, Jack in the Box, a quick service restaurant chain, since May 2019, a director of CorePoint Lodging, a hotel real estate investment trust, since September 2018, and a Director of Forrester Research, a research and advisory firm, since February 2018. Prior thereto, Ms. Birch served as director of Papa Murphy’s Inc., a restaurant chain, from 2015 through 2019, director of Darden Restaurants, a restaurant chain company, from 2014 through 2016 and director of Cosi, Inc., a restaurant chain, from 2013 through 2016. Ms. Birch is a Board Leadership Fellow, as certified by the National Association of Corporate Directors. In addition, Ms. Birch received an M.B.A. from Southern Methodist University and an B.A. in Economics from the University of Arizona.

William Minner

William Minner brings sector expertise, as well as corporate finance experience to our board. Mr. Minner served as a director of Franchise Group, Inc. from March 2018 to May 2021 and during such time served as chair of the audit committee. Since 1996, Mr. Minner has served as a contract Chief Financial Officer and consultant with responsibilities for finance and administration to over 25 companies. From June 1991 to December 1995, Mr. Minner served as Chairman, President and Chief Executive Officer of Suburban Federal Savings Bank in Collingdale, Pennsylvania. From December 1988 to May 1991, Mr. Minner served in various positions with Atlantic Financial Savings, F.A., including Senior Vice President - Credit and First Vice President - Loan Workout. Previously, Mr. Minner served as Audit Manager and Controller for the mortgage subsidiary of Magnet Bank, FSB from July 1984 to December 1988. Mr. Minner is a Certified Public Accountant. Mr. Minner has substantial experience in the financial services industry, including banking, lending, risk management, treasury management, financial analysis, SEC reporting, taxation, accounting and commercial real estate development. Mr. Minner qualifies as an audit committee financial expert under SEC rules. Mr. Minner received an M.B.A. and M.S. in Accounting from Marshall University.

108

Wendy Lane

Wendy Lane brings investment banking experience and corporate governance expertise to our Board. Ms. Lane has 15 years of investment banking experience at Goldman, Sachs & Co and Donaldson, Lufkin & Jenrette Securities Corporation (DLJ) where she was a Principal and Managing Director. Ms. Lane is a qualified Financial Expert and a recognized expert in governance, compensation, and financial controls and systems, of which topics she speaks on frequently. Over 29 years she has served on eleven boards, three of which were internationally-based, and several of which oversaw transformational change. Ms. Lane chaired the Audit Committee of Laboratory Corporation of America Holdings for 10 years, sat on the Audit Committee of Willis Towers Watson plc and its predecessor for 12 years, founded and chaired the Audit and Risk Committee of private family-held Saudi company Al-Dabbagh Group Holding Co. Ltd., and sat on the Audit Committee of UPM-Kymmene Corporation, a $16 billion Finnish paper, pulp and energy company, for 13 years. She is also a founding individual investor in several companies including Staples, Inc. and Skyhook Wireless, Inc. Her broad range of experience enables her to cross-fertilize ideas between companies and industries. She has a Bachelor of Arts in Mathematics and French (with highest honours) from Wellesley College and a Master of Business Administration from Harvard Business School.

Logan Powell

Logan Powell brings strategic leadership and experience in attracting talented, creative, driven and diverse individuals to our board. Mr. Powell is the Marilyn and Charles H. Doebler IV Dean of Admission at Brown University. He is responsible for the identification, recruitment and selection of all undergraduates seeking entrance to Brown. He leads all related strategic initiatives including data analysis, communications, and process innovation. Mr. Powell is chair of the council of Ivy deans of admission and also serves on several national non-profit advisory boards. Prior to joining Brown, Powell worked as the director of admission at Princeton University. Previously, he served as senior associate dean of admission at Bowdoin College and senior admissions officer at Harvard University. He earned a Master of Business Administration from MIT, a Masters in Education from Harvard University and a Bachelor of Arts from Bowdoin College.

Nik Ajagu

Nik Ajagu is a Bay Area-based investor and entrepreneur. Mr. Ajagu worked at Facebook from 2007 to 2019 where he built out the company’s direct sales operations in the United States, Canada, and Latin America as Head of Media Solutions Americas, and later served as the Facebook’s Global Head of Advertising Technology Partnerships. Prior to Facebook, Mr. Ajagu helped to launch Ecosystem Ventures where he worked from 2005 to 2007, contributing to the growth and development of companies such as Autonet Mobile (acquired by Lear corporation in 2015) and Playspan (acquired by Visa in 2011). Mr. Ajagu has co-founded various companies, including Code and Canvas, a San Francisco-based co-working and arts space in 2013, and Barrel and Ink, a Napa-based company focused on wine and design that launched in 2014. He also previously served on the board of Kabuni, a Vancouver-based e- commerce company from 2015 to 2016. Mr. Ajagu graduated from Princeton University in 2005 with a B.A. in Anthropology and a certificate in African American Studies. He currently lives in San Francisco with his partner and two daughters and is passionate about early childhood education, serving on the board of directors of the New School of San Francisco since 2021, and as President of the San Francisco Council for Parent Participation Nursery Schools since 2020.

Alicia Morga

Alicia Morga is the founder and Chief Executive Officer of No. 8 Media, Inc., which she started in 2016. Formerly, she was the founder and Chief Executive Officer of Consorte Media, Inc., a venture-backed digital marketing company. Prior to Consorte, Ms. Morga worked in venture capital for The Carlyle Group and Hummer Winblad Venture Partners, she was a corporate attorney for Wilson Sonsini Goodrich & Rosati, and an investment banker at Goldman, Sachs & Co. Ms. Morga has been named a Young Global Leader by the World Economic Forum and one of the Most Influential Women in Technology by Fast Company. She holds a J.D. from Stanford Law School and a B.A. from Stanford University.

109

Executive Officers

Mike Piper

Mike Piper has served as Chief Financial Officer at Liberty and previously served as President at JTH Financial, LLC, a financial products subsidiary of Liberty. Mr. Piper brings more than 30 years of broad-based financial, operational, and strategic experience to NextPoint Financial. Prior to his service as Chief Financial Officer at Liberty, Mr. Piper served as Chief Financial Officer at CDYNE Corporation, a provider of data quality and communications web services, and held positions with various publicly held companies and Ernst & Young. Mr. Piper holds a Master of Accountancy from Southern Illinois University.

Ted DeMarino

Ted DeMarino has served as Chief Operating Officer of Liberty since 2019. Mr. DeMarino spent most of his career at Rent-A-Center, where he served as Executive Vice President, Shared Services from 2012 to 2013, Executive Vice President, Operations from 2009 to 2012, and Divisional Vice President from 2003 to 2009. Mr. DeMarino also led the operations teams at other finance services companies.

Scott Terrell

Scott Terrell has over 20 years of professional experience in leading, building and transforming technology teams in a variety of companies and industries. Mr. Terrell served as Chief Information Officer at Liberty and previously served as Chief Information Officer at Chesapeake Life Insurance Company. Prior to joining Chesapeake Life Insurance Company in 2006, Mr. Terrell served as a director at Capgemini Energy. Mr. Terrell holds a Bachelor of Science in Computer Science from Texas Tech University.

Ghazi Dakik

Ghazi Dakik will serve as Chief Legal and Compliance Officer Prior for NextPoint Financial. Prior to holding this role, Mr. Dakik spent four years at MetaBank, where he served as Senior Vice President and Legal Counsel and subsequently as Senior Vice President and General Counsel. Mr. Dakik has previously served in a variety of legal positions at financial services companies, including at Specialty Consumer Services, L.P. and EZCorp. Mr. Dakik holds a Juris Doctor from St. Mary’s University School of Law and a Bachelor of Arts from The University of Texas.

Juliet Diiorio

Juliet Diiorio has served as Chief Marketing Officer at Liberty since 2019. Previously, Ms. Diiorio served as Chief Insurance Officer at Acceptance Insurance for seven years, where she led the product development team, reformulated the underwriting and audit process, and developed the company’s e-commerce business. From 2010 to 2012, Ms. Diiorio served as a Director of Digital Strategy at EZCorp. Ms. Diiorio also previously served as Director of Search, Social and Analytics at LSF Interactive and Vice President of Operations at Info.com.

110

Other Reporting Issuer Experience

The following table sets out the proposed directors of NextPoint Financial that are directors of other reporting issuers (or the equivalent) in Canada or a foreign jurisdiction as of the date hereof:

Name	Name of Reporting Issuer
Andrew Neuberger	NextPoint Acquisition Corp.
John Lederer	NextPoint Acquisition Corp., Maple Leaf Foods Inc., Walgreens Boots Alliance Inc
Jean Birch	CorePoint Lodging Inc., Forrester Research, Inc., Charlotte’s Web Holdings
Wendy Lane	NextPoint Acquisition Corp., Willis Towers Watson plc, CoreLogic,Inc.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of NAC, no proposed nominee for election as a director or proposed executive officer of NextPoint Financial has been, at the date of the prospectus or within the last 10 years: (a) a director, chief executive officer or chief financial officer of any company that, while that person was acting in that capacity, (i) was the subject of a cease trade or similar order or an order that denied the company access to any exemption under securities legislation, for a period of more than 30 consecutive days, or (ii) was the subject of an event that resulted, after that person ceased to be a director or chief executive officer or chief financial officer, in the company being the subject of such an order; or (b) a director or executive of a company that, while that person was acting in that capacity or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets other than Mr. Minner who was a director of Liberty Tax, Inc., when it received notice from The Nasdaq Stock Market LLC (“ NASDAQ ”) on August 01, 2018 that it had determined to delist the Company’s securities from NASDAQ based upon non-compliance with the filing requirement of its audited financial statements and compliance with its SEC reporting obligations, as set forth in Nasdaq Listing Rule 5250(c)(1) and through its relisting on NASDAQ on November 15, 2019.

No proposed director or executive officer of NextPoint Financial has been subject to (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in making an investment decision. NAC’s current director, George Coleman, entered into a settlement agreement with the National Association of Securities Dealers (NASD) in 2002 related to fees which the NASD alleged were improperly charged by his employer. The settlement agreement included a fine of $200,000 and a 60-day suspension.

To the knowledge of NAC, no proposed director or executive officer of NextPoint Financial has, within the 10 years before the date of the prospectus, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director or executive officer except that Jean Birch was a director of Cosi, Inc. prior to and through its Chapter 11 bankruptcy process in 2016. Cosi, Inc. subsequently emerged as a reorganized private company.

Majority Voting Policy

It is expected that NextPoint Financial will adopt a majority voting policy consistent with the Exchange requirements prior to the first uncontested meeting of shareholders at which directors are to be elected.

111

Forum Selection By-law

The Articles include, among other provisions, a provision providing for a forum for adjudication of certain disputes, whereby unless NextPoint Financial approves or consents in writing to the selection of an alternative forum, the courts of the Province of British Columbia and appellate courts therefrom shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of NextPoint Financial, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer of NextPoint Financial to NextPoint Financial, (iii) any action asserting a claim arising pursuant to any provision of the BCBCA or the Articles (as they may be amended from time to time), or (iv) any action asserting a claim otherwise related to the relationships among NextPoint Financial, its affiliates and their respective shareholders, directors and/or officers, but does not include claims related to the business carried on by NextPoint Financial or such affiliates. Any person or entity owning, purchasing or otherwise acquiring any interest, including without limitation any registered or beneficial ownership thereof, in the securities of NextPoint Financial shall be deemed to have notice of and consented to the provisions of the Articles.

Conflicts of Interest

Certain of the proposed directors and executive officers of NextPoint Financial are officers and directors of, or are associated with, other public and private companies. Such associations may give rise to conflicts of interest with NextPoint Financial from time to time. The BCBCA requires, among other things, that the directors and executive officers of NextPoint Financial act honestly and in good faith with a view to the best interest of NextPoint Financial, to disclose any personal interest which they may have in any material contract or transaction which is proposed to be entered into with NextPoint Financial and, in the case of directors, to abstain from voting as a director for the approval of any such contract or transaction. To the extent that conflicts of interest arise, such conflicts are required to be resolved in accordance with the provisions of the BCBCA. See also “ Corporate Structure – Related Party Interests ”, “ Corporate Governance ” and “ Risk Factors ” in this prospectus.

Directors’ and Officers’ Liability Insurance

NextPoint Financial intends to carry a directors’ and officers’ liability insurance policy which will be designed to protect NextPoint Financial and its directors and officers against any legal action which may arise as a result of wrongful acts on the part of directors and/or officers of NextPoint Financial. Such policy will be written with a maximum limit and be subject to a corporate deductible on all claims.

112

DIRECTORS’ AND EXECUTIVE OFFICERS’ COMPENSATION

Named Executive Officers

The following discussion describes the significant elements of the compensation of our chief executive officer, president of lending, chief financial officer, president of tax and chief legal and compliance officer (collectively, the “ Named Executive Officers ” or “ NEOs ”), namely:

Brent Turner, Chief Executive Officer;
Jonathan Williams, President of Lending;
Mike Piper, Chief Financial Officer;
Ted DeMarino, President of Tax; and
Ghazi Dakik, Chief Legal and Compliance Officer.

Overview

To succeed in the dynamic and evolving market NextPoint Financial operates in and to achieve its business and financial objectives, attracting, retaining and motivating a talented team of executive officers is essential. Following completion of the Transaction, NextPoint Financial intends to design our executive officer compensation program to achieve these and the following objectives: attract and retain a talented, high-performing and experienced executive team by providing competitive compensation opportunities; motivate the executive team to achieve NextPoint Financial’s business and financial objectives; align the interests of the executive team with those of NextPoint Financial Shareholders; and balance short-term results and create long-term sustainable value.

NextPoint Financial will offer executive officers cash compensation in the form of base salary and an annual bonus, and at-risk equity-based or equity-like compensation.

The Compensation and Corporate Governance Committee (the “ C&CG Committee ”) will be responsible for overseeing NextPoint Financial’s compensation policies, processes and practices. The C&CG Committee will also seek to ensure that compensation policies and practices provide an appropriate balance of risk and reward consistent with NextPoint Financial’s risk profile. Following completion of the Transaction, the Board intends to establish a written charter for the C&CG Committee setting out its responsibilities for administering compensation programs and reviewing and making recommendations to the Board concerning the level and nature of the compensation payable to directors and executive officers. The C&CG Committee’s oversight will include setting objectives, evaluating performance, and ensuring that total compensation paid to NEOs and various other key executive officers and key managers is fair, reasonable and consistent with the objectives of our philosophy and compensation program.

All of our directors, executives and certain other employees will be subject to our disclosure and insider trading policy (the “ Disclosure and Insider Trading Policy ”), which will prohibit trading in our securities while in possession of material undisclosed information about us. Under this policy, such individuals will also be prohibited from entering into hedging transactions involving our securities, such as short sales, puts and calls. Furthermore, NextPoint Financial will permit such individuals, including the NEOs, to trade in our securities only during prescribed trading windows.

NextPoint Financial will evaluate its philosophy and compensation programs as circumstances require and plans to review compensation on an annual basis. As part of this review process, NextPoint Financial expects to be guided

113

by the philosophy and objectives outlined above, as well as other factors which may become relevant, such as the cost to find a replacement for a key employee.

The compensation expected to be paid to NextPoint Financial’s NEOs for 2021 is summarized below under the heading “Directors’ and Executive Officers’ Compensation— Summary Compensation Table ”.

Benchmarking

NextPoint Financial’s executive team is expected to establish an appropriate comparator group for purposes of setting the future compensation of its NEOs.

Principal Elements of Compensation

The compensation of NextPoint Financial’s executive officers is expected to be comprised of the following major elements: (a) base salary; (b) an annual, discretionary cash bonus; and (c) long-term equity incentives, consisting of Options, RSUs, PSUs and/or other applicable Grants under the Equity Incentive Plan and any other equity plan that may be approved by the Board from time to time. These principal elements of compensation are described below.

Base Salaries

Base salary is provided as a fixed source of compensation for NextPoint Financial’s executive officers. Adjustments to base salaries will be reviewed annually and as warranted throughout the year to reflect promotions or other changes in the scope of breadth of an executive officer’s role or responsibilities, as well as to maintain market competitiveness.

Benefits and Perquisites

Benefits and perquisites are not expected to be a significant element of compensation for the NEOs.

Annual Bonuses

Annual bonuses may be awarded based on qualitative and quantitative performance standards, and will reward performance of NextPoint Financial’s executive officers individually. The determination of an executive officer’s performance may vary from year to year depending on economic conditions and conditions in the industry, and may be based on measures such as stock price performance, the meeting of financial targets against budget, the meeting of acquisition objectives and balance sheet performance.

Equity Incentive Plan

NextPoint Financial’s Equity Incentive Plan provides continual motivation for its officers, employees, consultants and directors to achieve its business and financial objectives and align their interests with the long-term interests of NextPoint Financial’s shareholders. The purpose of the Equity Incentive Plan is to promote greater alignment of interests between employees and shareholders, and to support the achievement of NextPoint Financial’s longer-term performance objectives, while providing a long-term retention element. For further details in respect of the Equity Incentive Plan, please see “ Equity Incentive Plans Description – Summary of Equity Incentive Plan ”.

Summary Compensation Table

The following table sets out information concerning the expected 2021 compensation to be earned by, paid to, or awarded to the NEOs:

114

Name and Principal Position	Year	Salary ($)(1)	Target Bonus ($)(2)	Equity Incentive Plan Grants(3) ($)	All Other Compensation ($)
Brent Turner Chief Executive Officer	2021	850,000	850,000	1,275,000	nil
Jonathan Williams President of Lending	2021	450,000	360,000	450,000	nil
Mike Piper Chief Financial Officer	2021	400,000	320,000	500,000	nil
Ted DeMarino President of Tax	2021	400,000	300,000	400,000	nil
Ghazi Dakik Chief Legal and Compliance Officer	2021	350,000	210,000	350,000	nil

Notes:

(1) Represents the annualized base salary expected to be paid pro rata in respect of 2021; salary rates are effective as of the Effective Date.
(2) Named Executive Officers are anticipated to have the target award values set out in this column. Actual award values are anticipated to generally range from 0% to 100% or higher, of target based on performance goals (specific performance metrics will be determined by the C&CG Committee following closing of the Transaction).
(3) Following closing of the Transaction, annual equity awards are anticipated to be granted under the Equity Incentive Plan to the Named Executive Officers in the target amounts set out in this column. Actual grant values will vary (higher/lower) based on the related year individual and Company performance and the individual's anticipated future role/contribution. The vehicle(s) in which the annual equity awards will be granted are expected to be RSUs and PSUs but will be determined following completion of the Transaction.

Employment Agreements, Termination and Change of Control Benefits

On or prior to closing of the Transaction, we intend to enter into employment agreements with each of our Named Executive Officers setting forth the terms and conditions of their employment. The agreements will provide for initial base salary and bonus targets, and will also include, among other things, provisions regarding confidentiality, non-competition and non-solicitation, as well as eligibility for our benefit plans. The agreements will outline the financial impact of our Named Executive Officers’ termination of employment and any change of control benefits.

Equity Incentive Plan Grants

Directors

Directors’ Compensation

NextPoint Financial intends to implement a director compensation program that attracts and retains global talent to serve on the Board, taking into account the risks and responsibilities of being an effective director. NextPoint Financial’s intent is to provide competitive director compensation through a combination of cash retainers and annual equity Grants for non-employee Board members. In addition, NextPoint Financial also intends to provide additional retainers for committee members and chairs given the additional time commitment, level of responsibility and skill set required for those roles. All directors are entitled to reimbursement of reasonable expenses incurred by

115

them acting in their capacity as directors. NextPoint Financial believes this approach will help to attract and retain strong members for the Board who will be able to fulfill their fiduciary responsibilities without competing interests.

In consideration for serving on the Board, NextPoint Financial intends that each director will be paid an annual retainer of which, 50% of which will be paid in DSUs and up to 50% of which may, at the relevant director’s discretion, be paid in cash or in some combination of cash and DSUs, and will be reimbursed for their reasonable expenses incurred by them acting in their capacity as directors. The chart below outlines our proposed director compensation program for our Non-Employee Directors, who will not receive any additional compensation for serving on the Board. For further details in respect of the DSU Plan, please see “ Equity Incentive Plans Description – Deferred Share Unit Plan ”.

– Deferred Share Unit Plan”.
Position	Type of Fee	Amount Per Year ($)
Chairman Lead Director and Audit Committee Chair C&CG Committee Chair Audit Committee Member C&CG Committee Member Member of the Board	Cash or Equity Retainer(1) Equity Retainer(2) Cash or Equity Retainer(1) Equity Retainer(2) Cash or Equity Retainer(1) Equity Retainer(2) Cash or Equity Retainer(1) Equity Retainer(2) Cash or Equity Retainer(1) Equity Retainer(2) Cash or Equity Retainer(1) Equity Retainer(2)	77,500 77,500 72,500 72,500 75,000 75,000 67,500 67,500 65,000 65,000 62,500 62,500

Notes:

(1) Each Board member may elect to receive up to 100% of his or her cash retainer in the form of DSUs.

(2) The equity retainer is composed of DSUs.

NextPoint Financial will not offer a meeting fee for Board members. The total retainer is deemed to be full payment for the role of director. An exception to this approach would be made in the event of a special transaction or other special circumstance that would require more meetings than are typically required.

The cash and equity retainers will be paid on a quarterly basis on the last day of each quarter, with the number of DSUs to be issued based on the volume weighted average trading price of the Common Shares on the TSX during the immediately preceding trading day. DSUs will only be paid out following a director ceasing to be on the Board.

Outstanding Equity Incentive Plan Grants

The Non-Employee Directors are not expected to be granted any Equity Incentive Plan Grants prior to closing of the Transaction.

116

INDEBTEDNESS OF DIRECTORS AND OFFICERS

None of our directors, executive officers, employees, former directors, former executive officers or former employees or any of our subsidiaries, and none of their respective associates, is, as of the date of this prospectus, indebted to us or any of our subsidiaries or another entity whose indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar agreement or understanding provided us or any of our subsidiaries.

AUDIT COMMITTEE

The following disclosure is based on the present expectations of NextPoint Financial with respect to the formal establishment of the Audit Committee (the “ Audit Committee ”) of the Board (without changes to the proposed composition) and the ratification and adoption of its proposed mandate (without any material modifications) will occur following completion of the Transaction. However, such disclosure remains subject to revision prior or subsequent to the Effective Date. See “ Notice to Readers ” in this prospectus. The proposed mandate of the Audit Committee is set out in Appendix I to this prospectus.

Composition of the NextPoint Financial Audit Committee

NAC’s audit committee is currently comprised of Wendy Lane (Chair), George Coleman and John A. Lederer. On the Effective Date, the Audit Committee will be reconstituted to be comprised of not less than three directors as determined by the Board, initially expected to be William Minner, Wendy Lane and Logan Powell. Each member of the Audit Committee will be independent (as defined in NI 52-110) and none is expected to receive, directly or indirectly, any compensation from NextPoint Financial other than for service as a member of the Board and its committees. All proposed members of the Audit Committee will be financially literate (as defined under NI 52-110).

For the relevant education and experience of each of the members of the Audit Committee, please refer to the biographies of William Minner, Wendy Lane and Logan Powell in “ Directors and Executive Officers — Biographies ” in this prospectus.

Pre-Approval Policies and Procedures

The Audit Committee Mandate will require that the Audit Committee must approve in advance any retainer of the ‐ ‐ auditors to perform any non audit service to NextPoint Financial (together with all non audit service fees) that it deems advisable in accordance with applicable requirements and the Board approved policies and procedures. The Audit Committee intends to consider the impact of such service and fees on the independence of the auditor and may ‐ delegate such pre approval as the Audit Committee may determine and as permitted by applicable Canadian securities laws.

External Audit Service Fees

The Audit Committee will be responsible for recommending to the Board the compensation of NextPoint Financial external auditor of all audit and non-audit services to be provided by NextPoint Financial’s external auditor.

CORPORATE GOVERNANCE

We recognize that good corporate governance plays an important role in our overall success and in enhancing shareholder value and, accordingly, we will be adopting upon closing of the Transaction, certain corporate governance policies and practices. The disclosure set out below describes our approach to corporate governance.

Statement of Corporate Governance Practices

NAC’s corporate governance disclosure obligations are set out in the Canadian Securities Administrators’ NI 58101, NP 58-201 and NI 52-110. These instruments set out a series of guidelines and requirements for effective corporate governance (collectively, the “ Guidelines ”). The Guidelines address matters such as the constitution and independence of corporate boards, the functions to be performed by boards and their committees and the

117

effectiveness and education of board members. NI 58-101 requires the disclosure by each listed corporation of its approach to corporate governance with reference to the Guidelines.

Set out below is a description of NAC’s anticipated approach to corporate governance in relation to the Guidelines.

Board of Directors

Under the Articles, the Board is to consist of a minimum of three (3) and a maximum of twenty (20) directors as determined from time to time by the directors. Upon closing of the Transaction, the Board will consist of 7 directors. Under the BCBCA, a director may be removed with or without cause by a resolution passed by an ordinary majority of the votes cast by shareholders present in person or by proxy at a meeting and who are entitled to vote. The directors will be elected by shareholders at each annual meeting of shareholders, and all directors will hold office for a term expiring at the close of the next annual meeting or until their respective successors are elected or appointed. The Articles provide that, between annual general meetings of shareholders, the directors may appoint one or more additional directors so appointed, but the number of additional directors may not at any time exceed one-third of the number of current directors who were elected or appointed other than as additional directors.

Independence of the NextPoint Financial Board

Under NI 58-101, a director is considered to be independent if he or she is independent within the meaning of NI 52-110. Pursuant to NI 52-110, an independent director is a director who is free from any direct or indirect relationship which could, in the view of the Board, be reasonably expected to interfere with a director’s independent judgment. Based on information provided by each director concerning his or her background, employment and affiliations, the Board has determined that three directors on the Board, namely Andrew Neuberger, Brent Turner and Jonathan Williams will not be considered independent as a result of their respective relationships with NextPoint Financial. Certain members of the Board are also members of the board of directors of other public companies. The Board has not adopted a director interlock policy, but is keeping informed of other public directorships held by its members. The lead independent director shall be appointed and replaced from time to time by a majority of independent directors and shall be an independent director. Discussions will be led by the lead independent director who will provide feedback subsequently to the Chair.

Chairman

Andrew Neuberger will serve as the Chairman of NextPoint Financial. The Chairman’s role will be to coordinate the management, development and effective functioning of the Board and provide leadership. The Chairman and each committee can also engage outside consultants without consulting management. This is designed to ensure they receive independent advice as they feel necessary.

Meeting In-camera

The Board and its committees are expected to hold regularly scheduled meetings at each quarterly board meeting without management and non-independent directors, including Andrew Neuberger, NextPoint Financial’s Chairman. These discussions are intended to generally form part of the committee chairs’ reports to the Board. NextPoint Financial’s Chairman intends to encourage open and candid discussions among the independent directors by providing them with an opportunity to express their views on key topics before decisions are taken. We also expect John Lederer to be appointed lead independent director by the Board, to be responsible for ensuring that the directors who are independent of management have opportunities to meet without management present, as required.

Succession Planning

The C&CG Committee (with the advice of NextPoint Financial’s Chairman) is expected to provide primary oversight of succession planning for senior management, the performance assessment of NextPoint Financial’s CEO, and NextPoint Financial’s CEO’s assessments of the other senior officers. The C&CG Committee is expected to conduct in-depth reviews of succession options relating to senior management positions and, when

118

appropriate, is expected to approve the rotation of senior executives into new roles to broaden their responsibilities and experiences and deepen the pool of internal candidates for senior management positions. The C&CG Committee is expected to develop an emergency succession plan and contingency plan for NextPoint Financial’s CEO for a scenario in which the CEO suddenly and unexpectedly was unable to perform his duties for an extended period.

The independent directors are expected to participate in the assessment of the performance of NextPoint Financial’s CEO every year. The NextPoint Financial Board is expected to approve all appointments of executive officers.

Mandate of our Board

The Board is responsible for supervising the management of the business and affairs of NextPoint Financial, including providing guidance and strategic oversight to management. The Board will adopt a formal mandate in the form set forth in Appendix H that includes the following:

appointing a Chief Executive Officer;
approving the corporate goals and objectives that our Chief Executive Officer is responsible for meeting and reviewing the performance of our Chief Executive Officer against such corporate goals and objectives;
taking steps to satisfy itself as to the integrity of our Chief Executive Officer and other senior executive officers and that our Chief Executive Officer and other senior executive officers create a culture of integrity throughout the organization; and
reviewing and approving management’s strategic and business plans.

Position Descriptions

The Board will adopt a written position description for the Chair, which will set out the Chair’s key responsibilities, including, among others, duties relating to setting Board meeting agendas, chairing Board and shareholder meetings and director development. The Board will adopt a written position description for our lead independent director.

The Board will adopt a written position description for each committee chair which will set out each committee chair’s key responsibilities, including, among others, duties relating to setting committee meeting agendas, chairing committee meetings and working with the respective committee and management to ensure, to the greatest extent possible, the effective functioning of the committee.

The Board will adopt a written position description for the Chief Executive Officer which will set out the key responsibilities of the Chief Executive Officer, including, among other duties in relation to providing overall leadership, ensuring the development of a strategic plan and recommending such plan to the Board for consideration, ensuring the development of an annual corporate plan and budget that supports the strategic plan and recommending such plan to the Board for consideration, and supervising day-to-day management and communicating with shareholders and regulators.

Director Term Limits/Mandatory Retirement

The Board has not adopted director term limits or other automatic mechanisms of board renewal. Rather than adopting formal term limits, mandatory age-related retirement policies and other mechanisms of board renewal, NextPoint Financial will seek to maintain the composition of the Board in a way that provides, in the judgement of the Board, the best mix of skills and experience to provide for overall stewardship.

119

Diversity

Board of Directors

NextPoint Financial recognizes the benefits that diversity brings to an organization. The Board will aim to be comprised of directors who have a range of perspectives, insights and views in relation to the issues affecting NextPoint Financial. This belief in diversity is expected to be reflected in a written Diversity Policy that is expected to be adopted by the Board. The Diversity Policy is expected to state that the Board should include individuals from diverse backgrounds, with regard to, among other things, gender, status, age, business experience, professional expertise, education, nationality, race, culture, language, personal skills and geographic background. Accordingly, consideration of whether the diverse attributes highlighted in the policy are sufficiently represented on the Board will be an important component of the selection process for new Board members. As of the closing of the Transaction, three of the proposed directors of NextPoint Financial, or 30% of the directors, will be female. NextPoint Financial does not intend to establish a target regarding the number of women on the Board. NextPoint Financial believes a target would not be the most effective way of ensuring the Board is comprised of individuals with diverse attributes and backgrounds. NextPoint Financial will, however, evaluate the appropriateness of adopting targets in the future.

Management

NextPoint Financial believes that a diversity of backgrounds, opinions and perspectives and a culture of inclusion helps to create a healthy and dynamic workplace, which improves overall business performance. NextPoint Financial recognizes the value of ensuring that NextPoint Financial has leaders who are women. NextPoint Financial will work to develop its employees internally and provide them with opportunities to advance their careers. For example, NextPoint Financial will build a strategy and execution plan to work towards increasing the representation of women in leadership roles at all levels of the organization. One of the objectives of this initiative will be to ensure that there are highly-qualified women within NextPoint Financial available to fill vacancies in executive officer and other leadership positions. In appointing individuals to its leadership team, both at the corporate level and business vertical level, NextPoint Financial will weigh a number of factors, including the skills and experience required for the position and the personal attributes of the candidates. As of closing of the Transaction, 14% of the proposed executive officers of NextPoint Financial NextPoint Financial will be female. NextPoint Financial does not intend to establish a target regarding the number of women in executive officer or senior leadership positions. NextPoint Financial believes that the most effective way to achieve its goal of increasing the representation of women in leadership roles at all levels of the organization is to identify highpotential women within NextPoint Financial and work with them to ensure they develop the skills, acquire the experience and have the opportunities necessary to become effective leaders. NextPoint Financial will, however, evaluate the appropriateness of adopting targets in the future.

Orientation and Continuing Education

Following the closing of the Transaction, we will implement an orientation program for new directors under which a new director will meet with the Chairman and executive officers. It is anticipated that new directors will be provided with comprehensive orientation and education as to the nature and operation of NextPoint Financial and its business, the role of the Board and its committees, and the contribution that an individual director is expected to make. The chair of each committee will be responsible for coordinating orientation and continuing director development programs relating to the committee’s mandate.

Nomination of Directors

The C&CG Committee’s role will be to recommend to the Board candidates for election as directors and candidates for appointment to Board committees as set out in the mandate of the C&CG Committee. NextPoint Financial’s Chairman is also expected to consult with the C&CG Committee regarding candidates for nomination or appointment to the Board.

120

Code of Conduct

NextPoint Financial will adopt a written code of conduct (“ Code of Conduct ”) in due course following the closing of the Transaction that applies to all of its officers, directors, employees, contractors and agents acting on behalf of NextPoint Financial. The objective of the Code of Conduct will be to provide guidelines for maintaining NextPoint Financial’s and its subsidiaries’ integrity, trust and respect. The Code of Conduct will address compliance with laws, rules and regulations, conflicts of interest, confidentiality, commitment, preferential treatment, financial information, internal controls and disclosure, protection and proper use of NextPoint Financial’s assets, communications, fair dealing, fair competition, due diligence, illegal payments, equal employment opportunities and harassment, privacy, use of company computers and the Internet, political and charitable activities and reporting any violations of law, regulation or the Code of Conduct. The Board will have ultimate responsibility for monitoring compliance with the Code of Conduct. The Code of Conduct will be filed with the Canadian securities regulatory authorities on SEDAR at www.sedar.com.

Board and Committee Assessment

The C&CG Committee’s role is expected to be to assess the effectiveness of the Board as a whole, the committees of the Board and the contribution of individual directors. Directors will be expected to complete self and peer evaluations, peer evaluations and to consider, among other things, the overall functioning and performance of the Board, the Board’s standing committees and oversight thereof, the operational oversight of the Board, management structure and succession issues, the effectiveness of NextPoint Financial’s internal controls and financial reporting, ethics and compliance matters and accountability. The chair of the C&CG Committee will encourage discussion amongst the Board to evaluate the effectiveness of the Board as a whole, its committees and its individual directors. All directors will also be encouraged to make suggestions for improvement of the practices of the Board at any time.

Audit Committee

Upon closing of the Transaction, our Audit Committee will consist of three directors, all of whom are persons determined by the Board to be both independent directors and financially literate within the meaning of NI 52-110. Upon closing of the Transaction, the Audit Committee will be comprised of William Minner, who will act as chair of the Audit Committee, Wendy Lane and Logan Powell. Each of the Audit Committee members has an understanding of the accounting principles used to prepare financial statements and varied experience as to the general application of such accounting principles, as well as an understanding of the internal controls and procedures necessary for financial reporting. For additional details regarding the relevant education and experience of each member of our Audit Committee, see “ Directors and Executive Officers — Biographies ”.

The Board will adopt a written charter in the form set forth in Appendix I, setting forth the purpose, composition, authority and responsibility of the Audit Committee, consistent with NI 52-110. The Audit Committee will assist the Board in fulfilling its oversight of:

our financial statements and financial reporting processes;
our systems of internal accounting and financial controls;
the annual independent audit of our financial statements;
legal and regulatory compliance (including addressing whistle-blowing matters);
reviewing and recommending debt and equity financings, reviewing and monitoring compliance with debt covenants and reviewing the process and reports with which we measure financial results or performance; and
public disclosure items such as quarterly press releases, investor relations materials and other public reporting requirements.

121

It will be the responsibility of the Audit Committee to maintain free and open means of communication between the Audit Committee, the external auditors and the management of NextPoint Financial. The Audit Committee will be given full access to NextPoint Financial’s management, records and external auditors as necessary to carry out these responsibilities. The Audit Committee will have the authority to carry out such special investigations as it sees fit in respect of any matters within its various roles and responsibilities. NextPoint Financial shall provide appropriate funding, as determined by the Audit Committee, for the payment of compensation to the independent auditor for the purpose of rendering or issuing an audit report and to any advisors employed by the Audit Committee.

C&CG Committee

NextPoint Financial expects to establish a C&CG Committee following completion of the Transaction. The C&CG Committee is expected to be comprised of Jean Birch, who will act as chair of the committee, John Lederer and Andrew Neuberger. No member of the C&CG Committee will be one of NextPoint Financial’s officers, and as such, the Board believes that the C&CG Committee will be able to conduct its activities in an objective manner. It is expected that the C&CG Committee will conduct its business on the basis of majority approval, which encourages an objective process for determining compensation.

For additional details regarding the relevant education and experience of each member of the C&CG Committee, including the direct experience that is relevant to each committee member’s responsibilities in executive compensation, see also “ Directors and Executive Officers — Biographies ”.

The members of the C&CG Committee are anticipated to be appointed annually by the Board, and it is expected that each member of the C&CG Committee will serve at the pleasure of the Board until the member resigns, is removed, or ceases to be a member of the Board.

To fulfil its role in developing NextPoint Financial’s approach to compensation issues, it is anticipated that the C&CG Committee shall:

(i) review and approve corporate goals and objectives relevant to CEO compensation;
(ii) evaluate the CEO’s performance in light of those corporate goals and objectives, and make recommendations to the Board with respect to the CEO’s compensation based on its evaluation;
(iii) review the recommendations to the C&CG Committee of the CEO respecting the appointment, compensation and other terms of employment of the CFO, all senior management reporting directly to the CEO and all other officers appointed by the Board and, if advisable, approve and recommend for Board approval, with or without modifications, any such appointment, compensation and other terms of employment;
(iv) administer and interpret NextPoint Financial’s share compensation agreements and its policies respecting the grant of share-based compensation or the sale of shares thereunder, and review and recommend for approval of the Board the grant of share-based compensation thereunder and the terms thereof;
(v) review NextPoint Financial’s pension and retirement arrangements in light of the overall compensation policies and objectives of NextPoint Financial;
(vi) review employment agreements between NextPoint Financial and the CEO, and between NextPoint Financial and executive officers, and amendments to the terms of such agreements shall be subject to review and recommendation by the C&CG Committee and approval by the Board;
(vii) review management’s policies and practices respecting NextPoint Financial’s compliance with applicable legal prohibitions, disclosure requirements or other requirements on making or

122

arranging for personal loans to senior officers or directors or amending or extending any such existing personal loans or transactions;

(viii) recommend to the Board for its approval the terms upon which directors shall be compensated, including the Chair (if applicable) and those acting as committee chairs and committee members;
(ix) review on a periodic basis the terms of and experience with NextPoint Financial’s executive compensation programs for the purpose of determining if they are properly coordinated and achieving the purpose for which they were designed and administered;
(x) review executive compensation disclosure before NextPoint Financial publicly discloses this information;
(xi) submit a report to the Board on human resources matters at least annually; and
(xii) prepare an annual report for inclusion in NextPoint Financial’s management information circular to NextPoint Financial Shareholders respecting the process undertaken by the committee in its review of compensation issues and prepare a recommendation in respect of CEO compensation.

It is expected that the C&CG Committee’s role with respect to corporate governance will include, among other things:

(i) developing and updating a long-term plan for the composition of the Board that takes into consideration the current strengths, competencies, skills and experience of the Board members, retirement dates and the strategic direction of NextPoint Financial, and reporting to the Board thereon at least annually;
(ii) undertaking on an annual basis an examination of the size of the Board, with a view to determining the impact of the number of directors, the effectiveness of the Board, and recommending to the Board, if necessary, a reduction or increase in the size of the Board;
(iii) endeavoring, in consultation with NextPoint Financial’s Chair, to seek to ensure that an appropriate system is in place to evaluate the effectiveness of the Board as a whole, each of the committees of the Board and each individual director of the Board with a view to ensuring that they are fulfilling their respective responsibilities and duties;
(iv) in consultation with Chairman, and CEO, annually or as required, recruiting and identifying individuals qualified to become new Board members and recommending to the Board new director nominees for the next annual meeting of NextPoint Financial Shareholders;
(v) in consultation with Chairman, annually or as required, recommending to the Board, the individual directors to serve on the various committees;
(vi) conducting a periodic review of NextPoint Financial’s corporate governance policies and making policy recommendations aimed at enhancing board and committee effectiveness;
(vii) reviewing overall governance principles, monitoring disclosure and best practices of comparable and leading companies, and bringing forward to the Board a list of corporate governance issues for review, discussion or action by the Board or its committees;
(viii) reviewing the disclosure in NextPoint Financial’s public disclosure documents relating to corporate governance practices and preparing recommendations to the Board regarding any other reports required or recommended on corporate governance;

123

(ix) proposing agenda items and content for submission to the Board related to corporate governance issues and providing periodic updates on recent developments in corporate governance to the Board;
(x) conducting a periodic review of the relationship between management and the Board, particularly in connection with a view to ensuring effective communication and the provision of information to directors in a timely manner;
(xi) reviewing annually the Board Mandate and the mandates for each committee of the Board, together with the position descriptions, if any, of each of Chairman, CEO, director and committee chairs, and where necessary, recommending changes to the Board;
(xii) reviewing and recommending the appropriate structure, size, composition, mandate and members for the committees, and recommending for board approval the appointment of each to board committees;
(xiii) recommending procedures to seek to ensure that the Board and each of its committees function independently of management;
(xiv) monitoring conflicts of interest (real or perceived) of both the Board and management in accordance with the code of conduct (if adopted), and other policies on conflicts of interest and ethics; and
(xv) recommending procedures to permit the Board and each committee of the Board to meet on a regular basis without management or non-independent directors. The C&CG Committee is expected to make recommendations for candidates to the Board and candidates for appointment to various committees of the Board, and in making such recommendations is expected to consider the competencies and skills that the Board considers to be necessary for the Board as a whole to possess, the competencies and skills that the Board considers each existing director to possess, and the competencies and skills each new nominee will bring to the boardroom. It is expected that the responsibility for approving new nominees to Board will fall to the full Board.

It is also expected that the C&CG Committee will be able to make, where appropriate, recommendations for the removal of a director from the Board or from a committee of the Board if he or she is no longer qualified to serve as a director under applicable requirements or for any other reason it considers appropriate.

Key Governance Documents

Following completion of the Transaction, it is expected that many policies and practices will support the corporate framework at NextPoint Financial. The following documents will constitute key components of NextPoint Financial’s corporate governance system and are expected to be made available by NextPoint Financial subsequent to completion of the Transaction:

Board Mandate
Audit Committee Mandate
C&CG Committee Mandate
Majority Voting Policy for Director Elections
Disclosure and Insider Trading Policy
Code of Conduct

124

RISK FACTORS

Risks Specifically Related to NextPoint Financial’s Business

Risks Relating to the Tax Return Preparation Business

NextPoint Financial’s tax return preparation compliance program may not be successful in detecting all problems in NextPoint Financial’s franchisee network, and franchisee non-compliance, fraud and other misconduct and related enforcement action may damage NextPoint Financial’s reputation and adversely affect its business.

Although NextPoint Financial’s tax return preparation compliance program will seek to monitor the activities of franchisees, it is unlikely to detect every problem. While NextPoint Financial will have a variety of measures to enhance tax return preparation compliance as well as its monitoring of these activities, there can be no assurance that franchisees and tax preparers will follow these procedures. From time to time, the federal and/or state authorities may take adverse action against franchisees or preparers related to tax compliance issues, seeking injunctions, damages or even criminal sanctions with respect to such behavior. Failure to detect and prevent tax return preparation compliance issues could expose NextPoint Financial to the risk of government investigation or litigation, result in bad publicity and reputational harm, and could subject NextPoint Financial to remedies and loss of customers that could cause its revenues or profitability to decline.

On December 20, 2019, an Order was entered regarding a settlement between Liberty and the DOJ and IRS (the “ Order ”) that resolved their investigation of Liberty and its subsidiaries, including Liberty’s policies, practices and procedures in connection with its tax return preparation activities and tax compliance program. Pursuant to the terms of the Order, Liberty agreed to retain an independent compliance monitor to oversee the implementation of required enhancements to the compliance program. The monitor will work with NextPoint Financial’s compliance team and may make recommendations for further refinements to improve its tax compliance program. The monitoring period shall be for no less than 36 months from entry of the Order.

Since entering into the Settlement, Liberty has continued to enhance its Compliance Department which is tasked with examining and preventing non-compliance, fraud and other misconduct among Liberty’s franchisees and their employees and is required to fully cooperate with the independent monitor to ensure Liberty meets the terms of the Settlement. Nonetheless, there can be no assurance that NextPoint Financial’s compliance department, the tax return preparation compliance program, or other efforts will be effective in eliminating non-compliance, fraud and other misconduct among its franchisees and/or employees. Accordingly, any such non-compliance, fraud or other misconduct may have a material adverse effect on NextPoint Financial’s reputation, financial conditions, results of operations.

If NextPoint Financial’s financial product service providers become unable or unwilling to enable NextPoint Financial to offer refund transfer products, NextPoint Financial may be unable to offer tax settlement products to its customers.

NextPoint Financial’s ability to offer refund transfer products (as well as other tax settlement products that require the creation of a customer bank account) is dependent on the ability and willingness of its financial product service providers to make available to its customers the bank accounts into which their tax refunds are deposited. If any of the federal or state regulatory authorities with the power to regulate these service providers prevents or makes it

125

more difficult for NextPoint Financial’s service providers to make these bank accounts available to its customers or if the service providers determine that they no longer wish to participate in these transactions, NextPoint Financial may be unable to find alternative service providers that will be willing to provide the required number of bank accounts to its customers. If NextPoint Financial is unable to make bank accounts available for refund transfer products, it will not be able to enable its customers to utilize these accounts for the direct deposit of their federal and state tax returns, which would materially affect its ability to offer tax settlement products to those customers. In addition, statutes applicable to acceptable refund transfer fees are state specific which may adversely affect how NextPoint Financial conducts its business or has conducted its business in the past and may require change to such business practices to otherwise comply with these statutes and could be subject to fines, penalties, or other payments related to past conduct.

The highly seasonal nature of NextPoint Financial’s tax return preparation business may present a number of financial risks and operational challenges which, if it fails to meet, could materially affect its business.

NextPoint Financial’s tax return preparation business is expected to be highly seasonal, with the substantial portion of its revenue expected to be earned in the January through April “tax season” in the United States and Canada each year. The concentration of NextPoint Financial’s revenue-generating activity during this relatively short period presents a number of challenges for it and its franchisees, including:

cash and resource management during the first eight months of its fiscal year, when it generally expects to operate at a loss and incur fixed costs and costs of preparing for the upcoming tax season;
the availability of seasonal employees willing to work for its franchisees for at or near the minimum wage, with minimal benefits, for periods of less than a year;
the success of its franchisees in hiring, training, and supervising these employees and dealing with turnover rates;
accurate forecasting of revenues and expenses because it may have little or no time to respond to changes in competitive conditions, markets, pricing, and new product offerings by competitors, which could affect its position during the tax season;
disruptions in one tax season, including any customer dissatisfaction issues, which may not be discovered until the following tax season; and
ensuring optimal uninterrupted operations during peak season.

If NextPoint Financial experiences significant business disruptions during the tax season or if it or its franchisees are unable to meet the challenges described above, it could experience a loss of business, which could have a material adverse effect on its business, financial condition, and results of operations.

As a result of the highly seasonal nature of the tax return preparation business, among other factors, NextPoint Financial may experience quarterly variations in revenues and operating income. In addition, because NextPoint Financial’s peak tax preparation period straddles the third and fourth quarters, any delay or acceleration in the number of tax returns processed in January may make its year-to-year quarterly comparisons not as meaningful as year-to-year tax season comparisons. To the extent NextPoint Financial’s quarterly results vary significantly from year to year, its stock value may be subject to significant volatility. See also “ The Business of Liberty – Seasonality ” and “ The Business of Liberty – General – Impact of COVID-19 ”.

NextPoint Financial is expected to rely on its own proprietary tax preparation software, and any difficulties in deploying or utilizing its software each tax season could adversely affect its business.

NextPoint Financial is expected to utilize its own tax preparation software, with which Liberty has experienced some difficulties during recent tax seasons. If NextPoint Financial is unable to resolve such difficulties or its tax preparation software were to experience technical failure or development delay in the future, this could have a material adverse effect on its business. Additionally, tax changes made by the federal and state governments each year and changes in tax forms require NextPoint Financial to make substantial changes to its software before the beginning of each tax season. Although NextPoint Financial will engage in extensive testing of its software before deploying it in its franchisees’ tax preparation offices and online, any delays in the availability of IRS forms or instructions or problems with the rollout of the new software each season could delay the ability to file tax returns at

126

the beginning of the tax season and could adversely affect its business. NextPoint Financial also may outsource a significant portion of its tax preparation software, and any difficulties in deploying or utilizing such outsourced software each tax season could similarly adversely affect its business.

NextPoint Financial’s owned offices may not be as successful as its franchised offices.

Historically, almost all Liberty offices have been owned by franchisees, and most Liberty-owned offices operated during a tax season have been offices previously operated by former franchisees. NextPoint Financial’s owned offices may be less successful than its typical franchisee-owned offices because they often represent offices transitioned from a less successful franchisee. For this reason, NextPoint Financial will not be able to obtain the continuity of staffing its owned offices that it expects to experience in its franchisee-owned offices. As part of its business strategy, NextPoint Financial may also take back offices previously operated by franchisees who have elected to exit the system and these offices may face operational and financial challenges which could negatively impact the success of the offices.

The provision of health insurance and other insurance products to customers by NextPoint Financial’s franchisees and their preparers may subject it and its franchisees to additional claims from customers, as well as increased regulatory risk.

As part of its effort to make information about health insurance options available to tax office customers, NextPoint Financial may encourage its franchisees to make licensed insurance agents available in tax offices. A significant number of franchisees have become or arranged for the availability of insurance agents and participated in the writing of health insurance policies for customers. The provision of these insurance services would subject NextPoint Financial’s franchisees to a complex regulatory environment, and to potential claims by customers who may become dissatisfied with the insurance products they obtain. Any failure by NextPoint Financial’s franchisees or their employees to comply with applicable insurance laws and regulations could have an adverse effect on its business and subject its franchisees and it to regulatory complaints, and any failure by its franchisees to provide satisfactory insurance services to customers may adversely affect its customer relationships and its business.

NextPoint Financial is expected to be dependent on the timing of the tax filing season, and disruptions in the opening of the tax season may have a material adverse effect on its results of operations and liquidity.

Historically, the federal tax filing season has begun in mid-January, and both Liberty and its franchisees have begun to prepare tax returns in early January with the ability to electronically file those returns beginning in mid-January. For both the 2013 and 2014 tax seasons, the IRS postponed the first date on which it generally accepted electronic filings until the end of January, and in 2013, also delayed the availability of a significant number of tax forms. These delays at the beginning of the tax season were also replicated at the state level in 2013, because of the reliance of states on tax forms that are dependent upon or subject to changes in federal tax forms. Similarly, the Protecting Americans from Tax Hikes Act of 2015, enacted in 2015 came into effect in 2017, in which the IRS was required to wait until at least February 15, 2017 to issue refunds to taxpayers who claim the Earned Income Tax Credit or the Additional Child Tax Credit. In addition, due to tax reform and the IRS’ modification of forms such as the 1040 and attached schedules, there is the possibility that the IRS’ acceptance of tax returns may face, as of now undetermined, delays. In December 2018, the United States government experienced the longest shutdown in history. As a result, IRS funding of tax refunds and refund products were delayed. In 2020, the IRS extended the tax filing due date to July 15, 2020 and it has extended the filing due date to May 15 (June 15 in Oklahoma and Texas) for 2021, in both cases as a result of the effects of COVID-19. Substantial delays in the opening of the tax filing season or the funding of processed returns in future years could likely have an adverse effect on NextPoint Financial’s revenue and liquidity.

In addition, the enactment of tax legislation occurring late in the calendar year could result in the beginning of tax filing season being delayed or make it difficult for NextPoint Financial to make necessary changes on a timely basis to the software used by its franchisees to prepare tax returns. Any such delays could impact NextPoint Financial’s revenues and profitability in any given year.

NextPoint Financial’s brand could be impaired due to actions taken by NextPoint Financial’s franchisees, their employees or otherwise.

127

NextPoint Financial’s franchisees will operate their businesses under its brand. Because NextPoint Financial’s franchisees will be independent third parties with their own financial objectives, actions taken by them, including breaches of their contractual obligations, and negative publicity associated with these actions, could adversely affect NextPoint Financial’s reputation and brand more broadly. Any actions as a result of conduct by NextPoint Financial’s franchisees, their employees or otherwise which negatively impacts its reputation and brands may result in fewer customers and lower revenues and profits for NextPoint Financial.

Failure to maintain sound business and contractual relationships with its franchisees may have a material adverse effect on NextPoint Financial’s business and its consolidated financial position, results of operations, and cash flows.

NextPoint Financial’s financial success will depend in significant part on its ability to maintain sound business relationships with its franchisees. The support of its franchisees will also be critical for the success of its marketing programs and any new strategic initiatives it seeks to undertake. Deterioration in NextPoint Financial’s relationships with its franchisees or the failure of its franchisees to support its marketing programs and strategic initiatives could have a material adverse effect on its business and its consolidated financial position, results of operations, and cash flows. In addition, the failure of NextPoint Financial’s franchisees to timely renew their franchise agreements could have a material adverse effect on its business and its ability to enforce the franchisees’ contractual obligations.

An increase in the minimum wage may adversely affect the operations of NextPoint Financial’s franchisees.

Many of the seasonal employees expected to be hired by NextPoint Financial’s franchisees for each tax season receive compensation at or near the minimum wage. If NextPoint Financial’s franchisees experience increases in payroll expenses as a result of government-mandated increases in the minimum wage or overtime requirements, their costs of operation may increase at a rate greater than their ability to raise the prices of the services they offer. If this occurs, NextPoint Financial’s franchisees may not be able to maintain seasonal employment at levels that will provide an optimal level of customer service and marketing support, their marketing and advertising programs may be less effective, and their results of operations may be adversely affected, which could, in turn, adversely affect NextPoint Financial’s results of operations.

If credit market volatility affects NextPoint Financial’s financial partners or franchisees, its business and financial performance could be adversely affected.

In recent years, the credit markets experienced unprecedented volatility and disruption, causing many lenders and institutional investors to cease providing funding to even the most creditworthy borrowers or to other financial institutions. If additional credit market volatility prevents NextPoint Financial’s financial partners from providing tax settlement products to its customers, limits the products offered, or results in NextPoint Financial having to incur further financial obligations to support its financial partners, its revenues or profitability could decline. The cost and availability of funds could also adversely impact NextPoint Financial’s franchisees’ ability to grow and operate their businesses, which could cause its revenues or profitability to decline. In addition, future disruptions in the credit markets could adversely affect NextPoint Financial’s ability to sell territories to new or existing franchisees, causing its revenues or profitability to decline.

NextPoint Financial’s success may be tied to the growth and effective operations of its owned locations and franchises, and the franchise operations could adversely affect its business.

NextPoint Financial’s financial success may depend on how effectively it operates its owned locations and how its franchisees operate and develop their businesses. NextPoint Financial will not exercise direct control over the dayto-day operations of its franchises, and its franchisees may not operate their businesses in a manner consistent with its philosophy and standards and may not increase the level of revenues generated compared to prior years. NextPoint Financial’s growth and revenues may, therefore, be adversely affected. There can be no assurance that the training programs and quality control procedures established by NextPoint Financial will be effective in enabling franchisees to run profitable businesses or that it will be able to identify problems or take corrective action quickly enough. In addition, failure by a franchisee to provide service at acceptable levels may result in adverse publicity that can materially adversely affect NextPoint Financial’s reputation and ability to compete in the market in which the franchisee is located. Further, franchisees will be required to prepare tax returns solely through the use of

128

NextPoint Financial’s authorized software. Franchisees’ failure to use the authorized software or conversely, the use of alternative software, could prevent NextPoint Financial from monitoring tax returns prepared by a franchisee for accuracy and may also prevent NextPoint Financial from the opportunity to collect revenue such as royalties.

If NextPoint Financial’s franchisees fail to open locations in new territories or if they are not successful in operating their new locations, its franchise-related revenue and results of operation will be adversely affected.

NextPoint Financial anticipates adding locations to its franchise system each year, but the opening of these locations depends on the purchase of additional territories by its franchisees and the opening of offices in territories previously purchased and newly purchased. Many factors go into opening a new location, including obtaining a suitable location, the availability of sufficient start-up capital, and the ability to recruit qualified personnel to work in new locations. If a significant number of locations that NextPoint Financial expects to be open, fail to open, are delayed, or open in unsuitable locations or with insufficient personnel, the revenue NextPoint Financial expects to receive from royalty payments and the repayment of indebtedness to it by its franchisees will be adversely affected. Because NextPoint Financial will utilize an almost exclusive franchise business model, it may not have the same flexibility to open new offices as its competitors who make greater use of company-owned offices.

NextPoint Financial’s operating results may be adversely affected by the default of its franchisees and ADs on loans made by it or third parties.

NextPoint Financial may extend financing to certain franchisees for initial franchise fees as cash advances for their working capital needs and other purposes. The financing may be in the form of promissory notes payable to NextPoint Financial. There can be no assurance that any franchisee will generate revenue sufficient to repay any or all amounts due nor is there any assurance that any franchisee will be able to repay any amounts due through other means. NextPoint Financial may also extend financing to ADs from time-to-time for a portion of their area development fees. Any failure by the franchisees and ADs to pay these amounts, if the amounts are not recoverable by NextPoint Financial through other means, could have a material adverse effect on its financial performance.

Moreover, in some cases, NextPoint Financial may be liable for office leases or other contractual obligations that have been assumed by purchasers of its owned offices and acquired tax practices. If the franchisees default on thirdparty obligations for which NextPoint Financial continues to have liability, its operating results will be adversely affected.

NextPoint Financial may be held responsible by third parties, regulators, or courts for the action of, or failure to act, by its franchisees and be exposed to possible fines, other liabilities, and bad publicity.

NextPoint Financial may grant its franchisees a limited license to use its registered service marks and, accordingly, there is risk that one or more of the franchisees may be identified as being controlled by NextPoint Financial. Third parties, regulators, or courts may seek to hold NextPoint Financial responsible for the actions or failures to act by its franchisees. The extent to which franchisors should be held responsible for the behavior of their franchisees has become a more significant issue in recent years, with some government agencies taking the position that the extent to which a franchise system establishes requirements for franchisees may justify treating the franchisor as if it “controls” the franchisee’s behavior. Thus, the failure of NextPoint Financial’s franchisees to comply with laws and regulations may expose it to liability and damages that may have an adverse effect on its business.

Disputes with NextPoint Financial’s franchisees may have a material adverse effect on its business.

From time to time, NextPoint Financial may engage in disputes with some of its franchisees, and some of these disputes may result in litigation or arbitration proceedings. Disputes with its franchisees may require NextPoint Financial to incur significant legal fees, subject it to damages, and occupy a disproportionate amount of management's time. A material increase in the number of these disputes, or unfavorable outcomes in these disputes, may have a material adverse effect on NextPoint Financial’s business. To the extent NextPoint Financial has disputes with its franchisees, its relationships with its franchisees could be negatively impacted, which could hurt its growth prospects or negatively impact its financial performance.

129

Federal and state regulators may impose new regulations on non-loan tax settlement products that would make those products more expensive for NextPoint Financial to offer or more difficult for its customers to obtain.

Consumer advocacy organizations and some government officials have asserted that non-loan tax settlement products, such as the refund transfer products NextPoint Financial will offer, should be treated as loan products or otherwise be more heavily regulated. These groups assert that refund transfer products and similar products are loans because most customers complete the payment for their tax preparation and related fees at the time their refund is disbursed, and therefore, the customer has received an extension of credit because of a purported deferral of the tax preparation fees until the refund is received. NextPoint Financial will be subject to a judgment in the State of California that treats refund transfer products that it will provide in California as if they were extensions of credit. If other state or federal courts or agencies successfully require NextPoint Financial to treat refund transfer products as if they are loans or extensions of credit, it may be subject to the cost of additional regulation, including disclosure requirements that could reduce the demand for these products by potential customers and may be subject to limitations on its ability to offer these products, which could materially adversely affect its operations.

NextPoint Financial may be unsuccessful in future litigation alleging that refund transfer products are loans, which could subject it to damages and additional regulation, and have a material adverse effect on its operations and financial results.

In the past, Liberty’s tax preparation business has been the subject of litigation alleging violations of state-specific refund anticipation loan and other consumer statutes alleging that a refund transfer product represents a form of refund anticipation loan because the taxpayer is “loaned” the tax preparation fee, and that a refund transfer product is, therefore, subject to federal truth-in-lending disclosure and state law requirements regulating refund anticipation loans. Although this litigation was resolved through a settlement, the underlying issue may be the subject of additional regulation and litigation in the future. NextPoint Financial may also become subject to existing state regulations governing refund anticipation loans (in the states that have such regulations) and the costs of additional regulation, including disclosure requirements, and it may be subject to limitations on its ability to offer these products. These additional disclosure requirements could reduce the demand for these products by potential customers, and the possible application of state lending and other refund anticipation loan-related statutes and regulations might adversely affect NextPoint Financial’s fee income to the extent those statutes or regulations impose limitations on fees that NextPoint Financial charges in connection with refund transfer products. If it becomes more difficult for NextPoint Financial and its franchisees to offer these products to taxpayers, or if NextPoint Financial is subject to damages in future litigation, it could materially and adversely affect its operations and financial results.

The failure by NextPoint Financial, its franchisees, the financial institutions, and other lenders that provide tax settlement products to NextPoint Financial’s tax preparation customers through it and its franchisees, to comply with legal and regulatory requirements, including with respect to tax return preparation or tax settlement products, could result in substantial sanctions against NextPoint Financial or require changes to its business practices that could harm its profitability and reputation.

NextPoint Financial’s tax return preparation business, including its franchise operations and facilitation of tax settlement products, will be subject to extensive regulation and oversight in the United States by the IRS, the FTC, and by federal and state regulatory and law enforcement agencies and similar entities in Canada. The profitability of the future operations of the tax preparation segment will, therefore, depend in large part on NextPoint Financial’s continued ability to comply with federal and state franchise regulations, and in Canada, on its continued ability to comply with Canadian and provincial franchise regulations. If governmental agencies with jurisdiction over NextPoint Financial’s operations were to conclude that its business practices, the practices of its franchisees, or those of financial institutions and other lenders with which it conducts its business violate applicable laws, NextPoint Financial could become subject to sanctions that could have a material adverse effect on its business, financial condition, and results of operations. These sanctions may include, without limitation:

civil monetary damages and penalties,
criminal penalties, and
injunctions or other restrictions on the manner in which NextPoint Financial conducts its business.

130

In addition, the financial institutions and other providers of tax settlement products to NextPoint Financial’s customers will also be subject to significant regulation and oversight by federal and state regulators, including banking regulators. The failure of these providers to comply with the regulatory requirements of federal and state government regulatory bodies, including banking and consumer protection laws, could affect their ability to continue to provide tax settlement products to NextPoint Financial’s customers, which could have a material adverse effect on its business, financial condition, and results of operations.

NextPoint Financial’s customers’ inability to obtain tax settlement products through NextPoint Financial’s tax return preparation offices could cause its revenues or profitability to decline. NextPoint Financial also may be required to change business practices, which could alter the way tax settlement products are facilitated and could cause its revenues or profitability to decline.

Federal and state legislators and regulators have taken an active role in regulating tax settlement products and, because NextPoint Financial’s ability to offer these products in future tax seasons may be limited, demand for its tax preparation services may be reduced, it may be exposed to additional credit risk, and its business may be harmed.

Financial institutions that provide or otherwise facilitate tax settlement products are subject to significant regulation and oversight by federal and state regulators, including banking regulators. Federal and state laws and regulations govern numerous matters relating to the offering of consumer loan products, such as Refund Advances and consumer deposit products such as refund transfers. From time to time, government officials at the federal and state levels may introduce and enact legislation and regulations proposing to further regulate or prevent the facilitation of refund-based loans and other tax settlement products and take other actions that have the effect of restricting the availability of these products. In July 2011, the CFPB was created by the Dodd-Frank Act to administer and enforce consumer protection laws and regulations in the financial sector. Certain proposed legislation, regulations, and activities by CFPB or other regulators could increase costs to NextPoint Financial, its franchisees, the financial institutions, and other parties that provide its tax settlement products or could negatively impact or eliminate the ability of financial institutions to provide or facilitate tax settlement products through tax return preparation offices.

Even if NextPoint Financial were to develop relationships that allow its customers to obtain refund-related loans through non-bank lenders, the laws and regulations that apply to those financial institutions and NextPoint Financial may make these products more expensive to offer or limit their availability to NextPoint Financial’s customers. In addition, many states have statutes regulating through licensing and other requirements the activities of brokering loans and providing credit services to consumers as well as payday loan laws and local usury laws. Some state regulators are interpreting these laws in a manner that could adversely affect the manner in which tax settlement products are facilitated, or permitted, or result in fines or penalties to NextPoint Financial or its franchisees. Some states are introducing and enacting legislation that would seek to directly apply such laws to the facilitators of refund-based loans. Additional states may interpret these laws in a manner that is adverse to how NextPoint Financial conducts its business or how it has conducted its business in the past, and it may be required to change business practices or otherwise comply with these statutes and could be subject to fines, penalties, or other payments related to past conduct.

Because demand for NextPoint Financial’s products will be related to the complexity of tax return preparation and the frequency of tax law changes, government initiatives that simplify tax return preparation, reduce the need for a third-party tax return preparer, or lower the number of returns required to be filed may decrease demand for NextPoint Financial’s services and financial products.

Many taxpayers seek assistance from paid tax return preparers because of the level of complexity involved in tax return preparation and filing and frequent changes in the tax laws. From time to time politicians and government officials propose measures seeking to simplify the preparation and filing of tax returns. The passage of any measures that significantly simplify tax return preparation or reduce the need for third-party tax return preparers may be highly detrimental to NextPoint Financial’s business. In addition, any changes or other initiatives that result in a decrease in the number of tax returns filed or reduce the size of tax refunds could reduce demand for NextPoint Financial’s products and services, causing its revenues or profitability to decline.

For example, several members of the United States Congress have proposed legislation that would authorize or require the IRS to allow taxpayers to access web-based tax preparation tools that would include “pre-populated” tax

131

return forms that would presumably include data provided to the IRS from other government agencies, such as the Social Security Administration. If these or similar proposals are enacted, many tax customers might elect those services rather than paid tax preparation or the use of fee-based tax software or online tax preparation.

Initiatives that improve the timing and efficiency of processing tax returns could reduce the attractiveness of the tax settlement products offered to NextPoint Financial’s customers and demand for its services.

NextPoint Financial’s performance will depend on its ability to offer access to tax settlement products that increase the speed and efficiency by which its customers can receive their refunds. The U.S. federal government and various state and local municipalities have, from time to time, announced initiatives designed to modernize their operations and improve the timing and efficiency of processing tax returns. For example, during a prior tax season, the United States Department of Treasury introduced a prepaid debit card pilot program designed to facilitate the refund process. If tax authorities are able to significantly increase the speed and efficiency with which they process tax returns, the value and attractiveness of the tax settlement products offered to NextPoint Financial’s customers and demand for its services could be reduced.

Proposals to make fundamental changes in the way tax refunds are processed or to impose price limitations on tax preparation, if enacted, could result in substantial losses of customers and other risks.

Some regulators have suggested that it would be appropriate to allow taxpayers to “split” their tax refunds, in a manner that would separate the payment of tax preparation fees from the balance of a customer's refund. In describing these proposals, some advocates have called for a cap on tax preparation fees that would adversely affect the ability of tax preparers to charge market prices for tax services and could reduce income to NextPoint Financial’s franchisees, and therefore, to NextPoint Financial. Other proposals have been advanced that would attempt to reduce tax refund fraud by significantly postponing the speed with which refunds are processed, or even postponing the processing of refunds until after the April 15 federal tax filing deadline. Such a change would likely have the effect of devaluing services that allow tax customers in the early portion of the tax season to receive their refunds on a more expedited basis than is available when electronic filing is not used and could therefore reduce the demand for the services NextPoint Financial and its franchisees provide.

There can be no assurance that these proposals will be enacted at all or in their present form but if enacted, NextPoint Financial’s growth and revenues could be adversely affected.

NextPoint Financial’s participation in government programs designed to speed up access to tax refunds may result in customer loss when the IRS fails to perform.

The IRS has responded to the increase in electronic filing by developing programs designed to reduce a taxpayer’s wait to receive a tax refund. In the past, Liberty participated in some programs offered by the IRS that did not perform as expected, resulting in significant delays in processing refunds for some of its customers. Although NextPoint Financial intends to seek to give its customers quicker access to their refunds, doing so involves the risk of customer dissatisfaction and injury to its reputation in the market if the IRS fails to perform, which is outside its control.

Risks Relating to the Lending Business

NextPoint Financial will be subject to the risks of operating the consumer lending business

NextPoint Financial will operate in an evolving industry, which makes it difficult to accurately assess our future growth prospects. Although our management team has many years of experience in the consumer lending industry, no one can predict how environments will develop. Assessing the future prospects of our business is challenging in light of both known and unknown risks and difficulties we may encounter. Growth prospects in consumer lending can be adversely affected by a wide variety of factors including:

Competition from other online and traditional lenders;

132

An evolving regulatory landscape that could impose limitations that impact the consumer lending products we can offer and service;
Impaired access to important marketing channels such as:
Direct mail;
TV and mass media;
Search engine marketing; and
Strategic partnerships with affiliates;
Changes in consumer behavior, including increasing propensity to prepay loans;
Inadequate access to financing;
Inadequate or incompetent management of cash flow leaving NextPoint Financial illiquid;
Fraudulent borrowing and online theft;
Over-dependence on our personnel and certain third parties with whom we do business;
Exposure and risk associated with any hack or compromise of our systems;
Negative publicity and media attention on NextPoint Financial and the industry;
Inability to recruit and retain qualified personnel necessary to operate our business; and
Fluctuations in the credit markets and demand for credit.

We may not be able to successfully address and overcome these risks should they occur.

If NextPoint Financial is unable to maintain or increase loan originations, the performance of NextPoint Financial may be adversely affected

In order to continue to grow its business, NextPoint Financial must increase loan originations by attracting a large number of new borrowers who meet its lending standards. The number of new borrowers applying for loans may fluctuate based on a number of economic factors, including prevailing interest rates, availability of credit and other general macroeconomic conditions. If there are not sufficient qualified loan requests, this could impact NextPoint Financial’s business results.

If the credit decisioning and scoring models used by NextPoint Financial contain errors or are otherwise ineffective, the performance of the loans offered by NextPoint Financial may be worse than anticipated.

NextPoint Financial’s lending business will be significantly dependent on the ability of the credit decisioning and scoring models used by NextPoint Financial to effectively evaluate an applicant’s credit profile and likelihood of default. These credit decisioning and scoring models assign each loan offered by NextPoint Financial an internal credit score and product tier. NextPoint Financial’s credit decisioning and scoring models are based on algorithms that evaluate a number of factors, including average daily bank account balance, revenue and information relating to past trades. If these models are unable to effectively segment applicants into relative risk profiles, NextPoint Financial may be unable to offer attractive and appropriate interest rates for its customers. Additionally, if these models fail to adequately assess the creditworthiness of borrowers, the loans offered by NextPoint Financial may experience higher than forecasted losses. Although NextPoint Financial will continually refine these algorithms based on new data and changing macro and economic conditions, there is no guarantee that the credit decisioning and scoring models utilized by NextPoint Financial have accurately assessed, or those to be used by NextPoint Financial will accurately assess, the creditworthiness of borrowers. Furthermore, if any of these credit decisioning and scoring models contain programming or other errors, are ineffective or the data provided by applicants or third parties are incorrect or stale, the loan pricing and approval process utilized by NextPoint Financial could be negatively affected, resulting in mispriced or misclassified loans or incorrect approvals or denials of loans. Interest rates set too low may adversely impact the ability of NextPoint Financial to receive returns on its loans that are commensurate with the risks associated with providing such loans.

NextPoint Financial’s inability to determine and manage the risk of customer loan defaults may have a negative impact on its profitability, reputation, solvency, and access to credit and alternative financing sources.

NextPoint Financial’s target market for loan customers have a relatively high credit risk and accordingly a relatively high risk of default and non-repayment. A significant factor in NextPoint Financial’s success will be its ability to determine and manage the risk of customer loan defaults. In the event that NextPoint Financial’s policies and criteria

133

are too restrictive, it may not be able to originate a sufficient amount of loans to sustain operations. In the event that NextPoint Financial’s criteria is too relaxed, the expected increase in loan defaults could have a negative impact on NextPoint Financial’s profitability, reputation, and may even jeopardize NextPoint Financial’s solvency. High customer default rates may also have a negative effect on NextPoint Financial’s access to credit and alternative financing sources, or constitute a default under its then-existing borrowing arrangements.

An accurate assessment of credit risk depends on the accuracy and completeness of data relating to the applicant, much of which is derived from third party sources. If NextPoint Financial is unable to access the third-party data used in its credit scores, such access is limited or the data is outdated, incorrect or incomplete, or it is unable verify information provided by applicants, its ability to evaluate loan applicants will be reduced. Accordingly, it may be unable to accurately determine credit risk and predict probable credit losses, which would negatively impact its business, operating results, financial condition and prospects.

NextPoint Financial’s provision for credit losses may be inadequate.

Determining the appropriate level of the provision for credit losses is an inherently uncertain process and therefore the provision may prove to be inadequate to cover losses in the loan portfolio. Factors that could lead to the inadequacy of the provision may include the inability to accurately underwrite credit risk of new loans, effectively manage collections or anticipate adverse changes in the economy or the occurrence of discrete events that adversely affect specific borrowers, industries, markets or geographic areas. For these reasons, NextPoint Financial cannot provide assurance that its provisions for credit losses will be adequate to cover credit losses in its loan portfolio, and such provisions may not keep pace with changes in the creditworthiness of borrowers.

Borrowers may decide to prepay all or a portion of their loans at any time.

NextPoint Financial will be unable to predict if or when a borrower will prepay a loan. Typically, a borrower’s decision to prepay depends on its continued positive economic performance and the existence of favorable financing market conditions that permit the borrower to replace its existing financing with less expensive capital. As market conditions change frequently, it is very difficult to predict if or when a borrower may deem market and business conditions to be favorable for prepayment. Prepayment of a loan by a borrower may have the effect of reducing the achievable yield on the prepaid funds to a level below that which was anticipated by NextPoint Financial. Such a reduction may occur when NextPoint Financial is unable to invest the funds prepaid by the borrower in other transactions with an expected yield greater than or equal to the yield NextPoint Financial expected to receive from the prepaying borrower.

If NextPoint Financial does not compete effectively in its target markets, its operating results could be harmed.

The lending market is competitive and evolving. NextPoint Financial competes with financial products and companies that attract borrowers. With respect to borrowers, NextPoint Financial primarily competes with traditional financial institutions, such as banks, credit unions, credit card issuers and other consumer, small business lending and specialty finance companies. NextPoint Financial also competes with other lenders and online credit marketplaces. Many of NextPoint Financial’s competitors have significantly greater resources than NextPoint Financial has, operate with different business models, have different cost structures or participate selectively in different market segments.

To continue to grow its business, NextPoint Financial must continue to increase loan originations by attracting a large number of new borrowers who meet its platform’s lending standards. NextPoint Financial’s ability to attract qualified borrowers depends in large part on the success of its marketing efforts, particularly as NextPoint Financial continues to grow its marketplace and introduce new loan products. If any of NextPoint Financial’s marketing channels become less effective, or the cost of these channels were to significantly increase, NextPoint Financial may not be able to attract new borrowers in a cost effective manner or convert potential borrowers and investors into active borrowers. Although NextPoint Financial is currently focused on the personal loan market, it may in the future expand into other financial products. NextPoint Financial incurs expenses and expends resources upfront to develop, acquire and market new financial products. Any new financial products facilitated through NextPoint Financial could fail to attain sufficient market acceptance for many reasons, including:

134

NextPoint Financial’s failure to predict market demand accurately and supply loan products that meet this demand in a timely fashion;
borrowers may not like, find useful or agree with any changes;
defects, errors or failures in NextPoint Financial’s systems;
negative publicity about consumer or commercial financial products originated by NextPoint Financial or NextPoint Financial’s performance or effectiveness;
competition with established financial institutions;
delays in releasing new consumer or commercial financial products offered by NextPoint Financial; and
the introduction or anticipated introduction of competing products by its competitors.

Any failure to successfully address additional market segments and financial products or develop a broader base of borrowers could result in loss of market share or slower growth, which could adversely affect NextPoint Financial’s business, financial condition and results of operations. The adverse effect on NextPoint Financial’s financial results may be particularly acute because of the significant development, marketing, sales and other expenses NextPoint Financial will have incurred in connection with the new loan products or enhancements.

Fluctuations in interest rates could negatively affect NextPoint Financial’s origination volume.

Currently, all consumer and small business loans originated by NextPoint Financial are issued with fixed interest rates. If interest rates rise, potential borrowers could seek to defer loans as they wait for interest rates to settle. If interest rates decrease after a loan is made, borrowers may prepay their loans to take advantage of the lower rates. As a result, fluctuations in the interest rate environment may discourage borrowers from working with NextPoint Financial, which may adversely affect NextPoint Financial’s business.

Negative publicity could adversely affect NextPoint Financial’s business.

Negative publicity about the consumer, bank product, or small business lending industry or NextPoint Financial, including the quality and reliability of NextPoint Financial’s lending business, effectiveness of the credit decisioning or scoring models used by NextPoint Financial, or in the industry generally, changes to NextPoint Financial’s lending business, the ability of NextPoint Financial to maintain and attract new state chartered and nationally charted banks with whom to contract, the effectiveness of NextPoint Financial’s collection efforts (as well as the collection efforts of any applicable sub-servicer or third-party collection agent), statements regarding investment returns, NextPoint Financial’s (or any applicable sub-servicer or third-party collection agent’s) ability to effectively manage and resolve borrower complaints, privacy and security practices, use of loan proceeds by certain borrowers that have obtained loans through NextPoint Financial or marketplace lending platforms for illegal purposes, litigation, regulatory activity and the experience of borrowers with NextPoint Financial services, even if inaccurate, could adversely affect NextPoint Financial’s business and operating results. Any such reputational harm could further affect the behavior of borrowers that have obtained loans from NextPoint Financial, including to reduce the likelihood of such borrowers making payments on their loans. Harm to NextPoint Financial’s reputation can arise from many sources, including employee misconduct, misconduct by NextPoint Financial’s partners (including any applicable sub-servicer or third-party collection agent) or partners of those partners, other lenders, outsourced service providers or other counterparties, failure by NextPoint Financial or its partners to meet minimum standards of service and quality, inadequate protection of borrower information and compliance failures and claims.

NextPoint Financial may incur net losses in the future.

Although LoanMe’s lending business is currently profitable, NextPoint Financial’s efforts to enhance its compliance systems, grow its business, open, test and develop new marketing channels, attract borrowers, and further enhance and develop NextPoint Financial’s products and services, may prove more expensive than NextPoint Financial currently anticipates, and NextPoint Financial may not succeed in increasing its revenue sufficiently to offset these higher expenses. NextPoint Financial may not maintain profitability on a quarterly or annual basis. Adverse developments in NextPoint Financial’s lending business, including continued or increasing net operating losses, may adversely affect NextPoint Financial’s financial condition and results of operations.

135

There can be no assurance that economic conditions will remain favorable for NextPoint Financial’s lending business or that demand for loans or default rates by customers will remain at current levels.

Certain changes in macroeconomic conditions, many of which are beyond NextPoint Financial’s control, can have a negative impact on its customers and its performance. In particular, loss rates on customer loans may increase due to factors such as prevailing interest rates, the rate of unemployment, the level of consumer and business confidence, commercial real estate values, the value of currency, energy prices, changes in consumer and business spending, the number of personal bankruptcies, disruptions in the credit markets and other factors. A significant customer segment for NextPoint Financial will be the non-prime consumer. These customers are more likely to be affected or more severely affected by adverse economic conditions, which can lower collection rates and result in higher charge-off rates and adversely affect NextPoint Financial’s performance, financial condition, and liquidity. NextPoint Financial can predict neither the impact current economic conditions will have on its future results, nor predict when the economic environment will change.

Volatility in the credit markets may also have an adverse effect on NextPoint Financial’s ability to obtain debt financing. In the event of a sudden or unexpected shortage of funds in the banking system, there can be no assurance that NextPoint Financial will be able to maintain necessary levels of funding without incurring high funding costs, a reduction in the term of funding instruments or the liquidation of certain assets. If NextPoint Financial were to be unable to arrange new or alternative methods of financing on favorable terms, it may have to curtail its origination of loans, which could have a material adverse effect on NextPoint Financial’s business, operating results, cash flow, financial condition and prospects.

There can be no assurance that economic conditions will remain favorable for NextPoint Financial’s business or that demand for loans or default rates by customers will remain at current levels. Reduced demand for loans would negatively impact NextPoint Financial’s growth and revenues, while increased default rates by customers may inhibit NextPoint Financial’s access to capital, hinder the growth of the loan portfolio attributable to its products and negatively impact its profitability. Either such result could have a material adverse effect on NextPoint Financial’s business, prospects, results of operations, financial condition or cash flows.

In the United States, certain states have no statutory interest rate limitations on personal loans, while other jurisdictions have a maximum rate.

NextPoint Financial’s cash flow must be carefully managed in order to maintain sufficient liquidity.

NextPoint Financial’s cash flow must be carefully managed, and customer loan repayments scheduled so that there is sufficient liquidity to repay loans and discharge other liabilities as they become due. This may also result in the inefficient or incomplete deployment of NextPoint Financial’s capital into customer loans, as funds may need to be kept in reserve or left idle to meet the timing of such repayments instead of being re-deployed to earn interest revenue. There can be no assurances that the mis-timing of cash flow will not occur, with the result that NextPoint Financial is in default of its repayment obligations and may render NextPoint Financial insolvent, which will have a negative impact on its business, operations, financial condition and prospects.

NextPoint Financial’s access to payment processing systems to disburse and collect loan and financing proceeds and repayments, including the ACH, is critical to its business, and any interruption or limitation on our ability to utilize any of the available means of processing deposits or payments could materially adversely affect our business.

When making loans and providing financing in the United States, NextPoint Financial will utilize several means of depositing proceeds into and collecting repayments from our customers’ bank accounts, including the use of ACH. NextPoint Financial’s business, including loans made through the CSO programs, depends on payment processing systems to collect amounts due by repayments from our customers’ bank accounts when we have obtained authorization to do so from the customer. NextPoint Financial’s transactions are processed by banks, and if these banks cease to provide any of the available means of payment processing services or materially raise rates, we would have to materially alter, or possibly discontinue, some or all of our business if alternative processing methods are not as effective or not available.

136

Previous heightened regulatory scrutiny by the DOJ, the Federal Deposit Insurance Corporation and other regulators, in an action referred to as Operation Choke Point, caused banks and ACH payment processors to cease doing business with certain short-term consumer lenders who were operating legally, without regard to whether those lenders were complying with applicable laws, simply to avoid the risk of heightened scrutiny or even litigation.

NextPoint Financial’s access to payment processing systems could be impaired as a result of actions by regulators to cut off the access to payment processing systems to payday lenders or by rule changes by the National Automated Clearing House Association, which oversees the ACH network. The limited number of financial institutions NextPoint Financial will depend on may choose to discontinue providing ACH processing, remotely created check processing and similar services to us. If access to any of these means of payment processing is impaired, we may find it difficult or impossible to continue some or all of our business, which could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows. If NextPoint Financial is unable to maintain access to needed services on favorable terms, we would have to materially alter, or possibly discontinue, some or all of our business if alternative processors are not available.

Regulatory Risks

Compliance with governmental regulations or newly enacted laws could increase NextPoint Financial’s costs significantly and adversely affect its operating income and financial results.

NextPoint Financial, our third-party service providers, and bank partners, must comply with U.S. federal, state and local regulatory regimes, including those applicable to consumer credit transactions. The industries in which NextPoint Financial operates are subject to federal laws and regulation by one or more federal agencies, including but not limited to the IRS, the CFPB, and the FTC. These activities are also regulated by various state, provincial, local and international laws and agencies of the states and localities in which NextPoint Financial’s products or services are provided. Regulations may prevent or delay the introduction, or require the reformulation, of NextPoint Financial’s products or services, which could result in lost sales and increased costs to NextPoint Financial. Certain U.S. federal and state laws generally regulate interest rates and other charges and require certain disclosures. In particular, we may be subject to the laws set forth under “ Business of LoanMe – Regulatory Matters ” and “ Business of Liberty – Regulatory Matters ”.

If NextPoint Financial or its franchisees fail to comply with marketing and advertising laws, including with regard to direct marketing, it may face significant damages.

NextPoint Financial may rely on a variety of marketing techniques, including telemarketing, email and social media marketing and postal mailings, and will be subject to various laws and regulations in the United States, Canada and internationally that govern marketing and advertising practices. The retention of customers by NextPoint Financial’s business and franchisees, and its ability to attract additional customers franchisees, may depend on the use of these marketing techniques to contact customers and potential franchisees. Legislation in the United States and Canada, including the TCPA, imposes significant restrictions on the ability to utilize telephone calls and electronic messages such as email, SMS and instant messaging, as a means of communication when the prior consent of the person being contacted has not been obtained. This legislation establishes requirements for marketing techniques that may prevent NextPoint Financial from initiating certain types of marketing companies or engaging in select marketing practices, which may limit NextPoint Financial’s marketing outreach and product awareness. In addition, if NextPoint Financial fails to ensure that its own telemarketing and telemarketing efforts are compliant with applicable law, or if its franchisees fail to do so and it is held responsible for their behavior, it may incur significant damages.

U.S. federal, state and local laws will affect the ability to collect amounts due on NextPoint Financial’s consumer lending businesses.

In conducting its loan origination business, NextPoint Financial will need to comply with legal and regulatory regimes (both civil and criminal) applicable to business credit transactions. U.S. federal, state and local laws will directly and indirectly regulate NextPoint Financial’s activities. NextPoint Financial will be required to hold lending licenses in various states in which its consumer and small business products are available. In conducting its lending

137

business, NextPoint Financial must comply with legal and regulatory regimes at the state and federal level applicable to credit transactions and marketing. Certain state laws may, if applicable, regulate interest rates and other charges and require certain disclosures, and may also require licensing for certain activities. All licensing jurisdictions have the authority to supervise and examine the activities of NextPoint Financial to the extent it holds a license issued by such jurisdiction.

In addition, state laws, public policy and general principles of equity relating to the protection of consumers, including laws addressing debt collection practices and prohibitions against unfair, deceptive and abusive acts or practices may apply to NextPoint Financial’s origination, servicing, and collection of loans. NextPoint Financial’s business (including the marketing of bank product loans, origination, servicing and administration of both NextPoint Financial consumer and business loans) is also subject to other laws, including but not limited to:

the Federal Truth-in-Lending Act and Regulation Z promulgated thereunder,;
the Federal Equal Credit Opportunity Act and Regulation B promulgated thereunder;
the Federal Fair Housing Act;
the Americans with Disabilities Act of 1990;
the Federal Fair Credit Reporting Act and Regulation V promulgated thereunder, and similar state laws, including but not limited to the California Consumer Credit Reporting Agencies Act;
the Federal Fair Debt Collection Practices Act;
the TCPA;
Section 5 of the Federal Trade Commission Act, and Section 1036 of the Dodd-Frank Wall Street Reform and Consumer Protection Act;
the Federal Holder in Due Course Rule (under the Federal Trade Commission Act);
the Federal Credit Practices Rule (under the Federal Trade Commission Act);
the CCPA;
the Federal CAN-SPAM Act and the Telemarketing Sales Rule;
the privacy provisions of the Gramm-Leach-Bliley Act and the Federal Affiliate Marketing Rule, and analogous state laws, such as the California Financial Information Privacy Act;
the Bankruptcy Code;
the SCRA;
the Military Lending Act;
the Federal Electronic Fund Transfer Act and Regulation E promulgated thereunder, as well as rules of payment networks and the National Automated Clearing House Association;
the CFPB Rule (Regulation OO);
the Electronic Signatures in Global and National Commerce Act and similar state laws, including, without limitation, the Uniform Electronic Transactions Act;
the Bank Secrecy Act and the USA PATRIOT Act;
the Mortgage Acts and Practices Rule promulgated under the Federal Trade Commission Act;
the Real Estate Settlement Procedures Act and Regulation X;
the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, title V of the Housing and Economic Recovery Act of 2008 (SAFE Act) and Regulation G, and state SAFE Mortgage Licensing Acts;
the Home Mortgage Disclosure Act and Regulation C;
certain state licensing and/or registration requirements;
other state-specific regulations; and
state and federal securities laws.

Additionally, NextPoint Financial’s lending business may be impacted by the implications of De La Torre v. CashCall , Inc. as well as new rules and regulations proposed by legislative bodies, regulatory authorities at various levels of government and by voters. See “ The Business of LoanMe – Regulatory Matters. ”

138

Risks Related to the Transaction

Since each of the NAC Founders will lose their investment in NAC if a qualifying acquisition is not completed, a conflict of interest may arise in determining whether the Transaction is appropriate.

The NAC Founders will not be entitled to redeem their NAC Founders’ Shares in connection with a qualifying acquisition and will not be entitled to access the escrow account in respect thereof upon a Winding-Up of NAC. Similarly, the Sponsor will also not be entitled to redeem its Class B Units (including the securities forming part of such Class B Units) in connection with a qualifying acquisition or entitled to access the escrow account in respect thereof upon a Winding-Up of NAC. As a result, the NAC Founders may have interests in the Transaction that may be different from, or in addition to, the interests of shareholders generally.

Completion of the Transaction is subject to a number of conditions precedent and required approvals.

Some of the conditions precedent that are required in order to complete the Transaction are outside NAC’s control, including, without limitation, (a) certain approvals from the Exchange; and (b) the expiration or termination of any statutory waiting periods under the HSR Act (see “ Corporate Structure – Summary of Transaction Agreements ”). There can be no certainty, nor can NAC provide any assurance, that all conditions precedent to the Transaction will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived. If certain approvals and consents are not received prior the closing of the Transaction, or if certain conditions are not satisfied, NAC and/or the Target Businesses, as applicable, may decide to proceed nonetheless, or it may either delay or amend the implementation of all or part of the Transaction, including possibly delaying the completion of the Transaction in order to allow sufficient time to complete or satisfy such matters. If the Transaction is delayed or not completed, the market price of the Class A Restricted Voting Shares may be materially adversely affected.

The Transaction may be terminated in certain circumstances.

Each of NAC and the Target Businesses has the right to terminate the applicable Transaction Agreement in certain circumstances and not complete the Transaction. Specifically, among other conditions, either of NAC and the applicable Target Business has the right to terminate the applicable Transaction Agreement by mutual consent, by any party if the closing of the Transaction shall not have occurred by July 31, 2021 and if the Transaction in respect of the other Target Business is not completed.

There are certain costs related to the Transaction that must be paid even if the Transaction is not completed.

There are certain costs related to the Transaction, such as those for legal and accounting advisory services and for producing this prospectus that must be paid even if the Transaction is not completed. There are also opportunity costs associated with the diversion of management attention away from the conduct of business in the ordinary course. These costs may have an adverse impact on NAC’s financial position.

Subsequent to the completion of the Transaction, NextPoint Financial may be required to take write-downs or writeoffs, restructuring and impairment or other charges that could have a significant negative effect on the financial condition, results of operations and Common Share price, which could cause investors to lose some or all of their investment.

Although NAC conducted due diligence on each of the Target Businesses, NAC cannot assure that this diligence revealed all material issues that may be present in the Target Businesses’ business, that it would be possible to uncover all material issues through a customary amount of due diligence or that factors outside of either party’s control will not later arise. As a result, NextPoint Financial may be forced to later write down or write-off assets, restructure its operations or incur impairment or other charges that could result in losses. Even if due diligence successfully identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with NAC’s preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on NextPoint Financial’s liquidity, the fact that charges of this nature are reported could contribute to negative market perceptions. In addition, charges of this nature may cause NextPoint Financial to be unable to obtain future financing on favorable terms or at all.

139

There can be no assurance that NextPoint Financial’s securities will be approved for listing on the Exchange following the Transaction, or if approved, that they will be able to comply with the continued listing requirements of the Exchange.

Class A Restricted Voting Shares and the NAC Warrants are currently listed on the Exchange. The Exchange has conditionally approved the listing of the Common Shares and the continued listing of the NAC Warrants following closing of the Transaction under the symbols “NPF.U” and “NPF.WT.U”, respectively. Listing of the Common Shares and the continued listing of the NAC Warrants is subject to NAC fulfilling all of the requirements of the Exchange. If, after the Transaction, the Exchange delists the Common Shares from trading on the Exchange for failure to meet the continued listing requirements, NextPoint Financial and its shareholders could face significant material adverse consequences.

If the Transaction benefits do not meet the expectations of investors or securities analysts, the market price of NextPoint Financial’s securities may decline.

If the benefits of the Transaction do not meet the expectations of investors or securities analysts, the market price of NAC’s securities prior to the Effective Time may decline. The market values of securities at the time of the Transaction may vary significantly from their prices on the date the Transaction Agreements were executed.

In addition, following the Transaction, fluctuations in the price of NextPoint Financial’s securities could contribute to the loss of all or part of investor’s investments. Any of the factors listed below could have a material adverse effect on investments in NextPoint Financial’s securities, and they may trade at prices significantly below the price paid for them.

actual or anticipated fluctuations in NextPoint Financial’s quarterly financial results or the quarterly financial results of companies perceived to be similar;
changes in the market’s expectations about operating results;
success of competitors;
NextPoint Financial’s operating results failing to meet the expectation of securities analysts or investors in a particular period;
operating and stock price performance of other companies that investors deem comparable to NextPoint Financial;
changes in laws and regulations affecting the business;
commencement of, or involvement in, litigation involving NextPoint Financial;
changes in NextPoint Financial’s capital structure, such as future issuances of securities or the incurrence of additional debt;
any major change in NextPoint Financial’s Board or management; and
sales of substantial amounts of Common Shares by directors, executive officers or significant shareholders or the perception that such sales could occur.
In such circumstances, the trading price may not recover and may experience a further decline.

In addition, broad market and industry factors may materially harm the market price of the Common Shares irrespective of operating performance. The stock market in general, and the Exchange in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of the Common Shares, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to NextPoint Financial could depress the share price regardless of NextPoint Financial’s business, prospects, financial conditions or results of operations. A decline in the market price of the Common Shares also could adversely affect its ability to issue additional securities and to obtain additional financing in the future.

NAC Warrants will become exercisable for Common Shares, which would increase the number of shares eligible for future resale in the public market and result in dilution to shareholders.

140

If the Transaction is completed, outstanding NAC Warrants to purchase an aggregate of 10,300,000 Common Shares will become exercisable in accordance with the terms of the Warrant Agreement governing those securities. Each NAC Warrant entitles the holder thereof to purchase one Common Share at an exercise price of US$11.50, subject to anti-dilution adjustments, which will become exercisable only commencing 65 days after the completion of the Transaction. The extent to which such NAC Warrants are exercised will result in dilution to the holders of Common Shares and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such NAC Warrants may be exercised could adversely affect the market price of the Common Shares.

Even if the Transaction becomes effective, there is no guarantee that the NAC Warrants will ever be in-the-money, and the NAC Warrants may expire worthless.

Pursuant to the terms of the Warrant Agreement, the NAC Warrants will be exercisable commencing 65 days following the closing of the Transaction for an exercise price of US$11.50 per Common Share. There is no guarantee that the NAC Warrants will ever be in-the-money prior to their expiration, and as such, the NAC Warrants may expire worthless.

The successful effect of the Transaction and the successful operation of the business thereafter will be largely dependent upon the efforts of certain key personnel, all of whom are expected to stay with NextPoint Financial following the Transaction. The loss of such key personnel could negatively impact the operations and profitability of the post-combination business.

NAC’s ability to successfully effect the Transaction and successfully operate the business is dependent upon the efforts of certain key personnel. Although all of such key personnel are expected to remain with NextPoint Financial following the Transaction, it is possible that NextPoint Financial will lose some key personnel, the loss of which could negatively impact the operations and profitability of the post-combination business.

NAC is a special purpose acquisition corporation, has no operating history and is subject to a mandatory liquidation requirement. As such, there is a risk that NAC will be unable to continue as a going concern and consummate a qualifying acquisition.

NAC is a special purpose acquisition corporation and, as such, has no operating history and is subject to a mandatory liquidation requirement should it fail to consummate a qualifying acquisition within the permitted timeline. Therefore, there is a risk that NAC will be unable to complete a qualifying acquisition should the Transaction not be consummated. Unless NAC extends the permitted timeline, if a qualifying acquisition has not been completed by August 11, 2021, NAC will (i) cease all operations except for the purpose of Winding-Up; and (ii) as promptly as reasonably possible redeem 100% of the Class A Restricted Voting Shares for cash.

General Risks related to the Resulting Issuer including Business Structure, Public Company and Tax Status and Capital Financing Policies

Potential future sales of shares could adversely affect prevailing market prices for the Common Shares.

NextPoint Financial cannot predict the size of future issuances of Common Shares or the effect, if any, that future issuances and sales of Common Shares will have on the market price of the Common Shares. Sales of substantial amounts of Common Shares, or the perception that such sales could occur, may adversely affect prevailing market prices for the Common Shares.

Sales of a substantial number of the Common Shares may cause the price of the Common Shares to decline.

Any sales of substantial numbers of the Common Shares in the public market or the exercise of significant amounts of the NAC Warrants or the perception that such sales or exercise might occur may cause the market price of the Common Shares to decline. The market price of the Common Shares could be adversely affected upon the expiration of lock up periods applicable to certain NextPoint Financial Shareholders.

141

Further equity financing may dilute the interests of NextPoint Financial Shareholders and depress the price of the Common Shares.

If NextPoint Financial raises additional financing through the issuance of equity securities (including securities convertible or exchangeable into equity securities) or completes an acquisition or merger by issuing additional equity securities, such issuance may substantially dilute the interests of NextPoint Financial Shareholders and reduce the value of their investment. The Articles permit the issuance of an unlimited number of Common Shares, and NextPoint Financial Shareholders will have no pre-emptive rights in connection with a future issuance. The Board has the discretion to determine the price and the terms of issue of future issuances. Moreover, additional Common Shares may be issued by NextPoint Financial on the exercise of Grants under NextPoint Financial’s Equity Compensation Plan and upon the exercise of outstanding warrants. The market price of the Common Shares could decline as a result of issuances of new shares or sales by shareholders of Common Shares in the market or the perception that such sales could occur. Sales by NextPoint Financial Shareholders might also make it more difficult for NextPoint Financial itself to sell equity securities at a time and price that it deems appropriate.

NextPoint Financial will be subject to the costs of being a public company .

As a public issuer, NextPoint Financial will be subject to the reporting requirements and rules and regulations under applicable Canadian securities laws and the rules of any stock exchange on which NextPoint Financial’s securities may be listed from time to time. Additional or new regulatory requirements may be adopted in the future. The requirements of existing and potential future rules and regulations will increase NextPoint Financial’s legal, accounting and financial compliance costs, make some activities more difficult, time-consuming or costly and may also place undue strain on its personnel, systems and resources, which could adversely affect its business and financial condition. In particular, NextPoint Financial will be subject to reporting and other obligations under applicable Canadian securities laws, including National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings . These reporting and other obligations place significant demands on NextPoint Financial as well as on NextPoint Financial’s management, administrative, operational and accounting resources. Effective internal controls, including financial reporting and disclosure controls and procedures, are necessary for NextPoint Financial to provide reliable financial reports, to effectively reduce the risk of fraud and to operate successfully as a public company. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm NextPoint Financial’s results of operations or cause it to fail to meet its reporting obligations. If NextPoint Financial or its auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in NextPoint Financial’s consolidated financial statements and materially adversely affect the trading price of the Common Shares and of other listed securities of NextPoint Financial.

NextPoint Financial may lose foreign private issuer status in the future, which could result in significant additional costs and expenses.

NextPoint Financial expects that it will be a “foreign private issuer” (as such term is defined in Rule 405 of Regulation C under the U.S. Securities Act.) and that it will not be subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. NextPoint Financial may in the future lose foreign private issuer status if a majority of its Shares are held in the U.S. and it fails to meet the additional requirements necessary to avoid loss of foreign private issuer status, such as if: (1) a majority of its directors or executive officers are U.S. citizens or residents; (2) a majority of its assets are located in the U.S.; or (3) its business is administered principally in the U.S. If NextPoint Financial loses its foreign private issuer status and decides, or is required, to register as a U.S. domestic issuer, the regulatory and compliance costs will be significantly more than the costs incurred as a Canadian foreign private issuer. In such event, NextPoint Financial would not be eligible to use foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are generally more detailed and extensive than the forms available to a foreign private issuer.

There can be no assurance that NextPoint Financial will not be a passive foreign investment company for any taxable year, which could result in adverse U.S. federal tax consequences to U.S. holders.

If NextPoint Financial is a PFIC for any taxable year (or portion thereof) that is included in the holding period of any U.S. investors, such characterization could result in adverse U.S. tax consequences to U.S. investors. For

142

example, if NextPoint Financial is a PFIC, U.S. investors may become subject to increased tax liabilities under U.S. tax laws and regulations and may become subject to burdensome reporting requirements. The determination of whether or not NextPoint Financial is a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. Specifically, NextPoint Financial will be classified as a PFIC for U.S. tax purposes if either: (1) 75% or more of NextPoint Financial’s gross income in any taxable year is passive income or (2) the quarterly (or, at NextPoint Financial’s election, more frequently than quarterly) average percentage of NextPoint Financial’s assets by value in any taxable year which produce or are held for the production of passive income (which includes cash) is at least 50%. The calculation of the value of NextPoint Financial’s assets will be based, in part, on the market value of NextPoint Financial’s outstanding shares, which is subject to change. In addition, NextPoint Financial’s PFIC status for its past, current and subsequent taxable years may depend on whether it qualified for the PFIC start-up exception (see the section of this prospectus entitled “ Certain United States Federal Income Tax Considerations – U.S. Holders – Passive Foreign Investment Company Rules ”). The application of the start-up exception is uncertain, and there cannot be any assurance that NextPoint Financial will qualify. Accordingly, NextPoint Financial cannot guarantee that it was not a PFIC in 2020, nor can NextPoint Financial guarantee that it will not be a PFIC in the current or any future taxable year.

A further discussion of the PFIC rules can be found below under the heading “ Certain U.S. Federal Income Tax Considerations – U.S. Holders – Passive Foreign Investment Company Rules .” U.S. holders should consult their own tax advisors regarding the U.S. federal income tax consequences of investing in the Securities in their particular circumstances.

The IRS may not agree that NextPoint Financial should be treated as a non-U.S. corporation for U.S. federal income tax purposes.

A corporation is generally considered for U.S. federal income tax purposes to be a tax resident in the jurisdiction of its organization or incorporation. Accordingly, under the generally applicable U.S. federal income tax rules, NextPoint Financial, which is incorporated under the laws of the Province of British Columbia, would be classified as a non-U.S. corporation (and, therefore, not a U.S. tax resident) for U.S. federal income tax purposes. Section 7874 of the Code provides an exception to this general rule under which a non-U.S. incorporated entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes. If NextPoint Financial were to be treated as a U.S. corporation for U.S. federal income tax purposes, it could be subject to substantial liability for additional U.S. income taxes, and the gross amount of any dividend payments to its non-U.S. holders could be subject to U.S. withholding tax.

NextPoint Financial is not currently expected to be treated as a U.S. corporation for U.S. federal income tax purposes as a result of Section 7874. However, the rules for determining ownership under Section 7874 are complex, unclear and the subject of ongoing regulatory change. Accordingly, there can be no assurance that the IRS would not assert a contrary position to those described above or that such an assertion would not be sustained by a court in the event of litigation.

General Risks

Risks associated with recent or future acquisitions.

As part of NextPoint Financial’s overall business strategy, NextPoint Financial intends to pursue strategic acquisitions which could provide additional product offerings, vertical integrations, additional industry expertise or a stronger industry presence in both existing and new jurisdictions. Future acquisitions may expose NextPoint Financial to potential risks, including risks associated with: (i) the integration of new operations, services and personnel; (ii) unforeseen or hidden liabilities; (iii) the diversion of resources from NextPoint Financial’s existing interests and business; (iv) potential inability to generate sufficient revenue to offset new costs; (v) the expenses of acquisitions; or (vi) the potential loss of or harm to relationships with both employees and existing customers resulting from its integration of new businesses. In addition, any proposed acquisitions may be subject to regulatory approval.

143

There can be no assurance that NextPoint Financial will be able to compete effectively with its current and future competitors and increased competition by larger and better-financed competitors could materially and adversely affect the business, financial condition and results of operations of NextPoint Financial.

The tax return preparation industry is characterized by intense competition. There is potential that NextPoint Financial will compete with H&R Block, which is larger and more widely recognized than NextPoint Financial, Jackson Hewitt and with other national and regional tax services and smaller independent tax return preparation services, small franchisors, regional tax return preparation businesses, accounting firms, and financial service institutions that prepare tax returns as part of their business. Additionally, NAC believes that many taxpayers in NextPoint Financial’s target market prepare their own returns and in light of recent tax legislation enacted by the US government and any proposed modifications to the Code which simplify tax preparation, may result in even more taxpayers preparing their own returns. The availability of these alternative options may reduce demand for NextPoint Financial’s products and limit the fees its franchisees can charge, and competitors may develop or offer more attractive or lower cost products and services than NextPoint Financial, which could erode its consumer base.

There is potential that NextPoint Financial will also face increased competitive challenges from the online and software self-preparer market, including the FFA, a consortium of the IRS, online preparation services that provides free online tax return preparation, and volunteer organizations that assist in preparing tax returns at no cost for lowincome taxpayers. In addition, many of NextPoint Financial’s direct competitors offer certain free online tax preparation and electronic filing options, and limited in-office promotions of free or nominal cost tax preparation services. Government tax authorities, volunteer organizations, and direct competitors may elect to expand free and reduced cost offerings in the future. Intense price competition, including offers of free service, could result in a loss of market share, lower revenues, or lower margins. NextPoint Financial’s ability to compete in the tax return preparation business depends on its product offerings, price for services, customer service, the specific site locations of its offices, local economic conditions, quality of on-site office management, the ability to file tax returns electronically with the IRS, and the availability of tax settlement products to its customers.

Competition in the non-prime consumer lending market is based primarily on access, flexibility and cost (interest rates). Consumers are generally able to transition between the different types of lending products that are available in the marketplace to satisfy their need for these different characteristics. NAC expects the competition for nonprime consumer lending will continue to shift for the foreseeable future. While traditional financial institutions are likely to decrease their risk tolerance and move farther away from non-prime lending, regional financial institutions such as credit unions, payday lenders, marketplace lenders and online lenders are expected to continue their expansion into the non-prime market.

The ability to originate new loans could be significantly affected by the activities of other industry participants. New competitors may enter the alternative lending or financial services market or current market participants may significantly increase their activities in this area. There can be no assurance that NextPoint Financial will be able to compete effectively with its current and future competitors in connection with the origination of new loans. If these or other competitors were to engage in aggressive pricing policies, NextPoint Financial may have difficulty originating new loans or could be forced to offer lower rates, both of which could have a material adverse effect on NextPoint Financial. Competitors may offer a broader range of financial and lending services and may be able to leverage their existing customer relationships to offer and sell services that compete directly with NextPoint Financial’s services. Further, competitors may have greater financial, technical, marketing, origination and other resources, and may have greater access to lower cost capital than NextPoint Financial. Additionally, some of NextPoint Financial’s competitors may also be subject to less burdensome licensing and other regulatory requirements. As a result of competition, NextPoint Financial may not be able to attract new customers, retain existing customers, or sustain its rate of growth.

NextPoint Financial may be unable to compete effectively with new and existing competitors, which could adversely affect its revenues and results of operations. In addition, investments required to adjust to changing market conditions may adversely affect NextPoint Financial’s business and financial performance.

144

NextPoint Financial will be dependent on skilled labour .

The ability of NextPoint Financial to compete and grow will be dependent on it and its franchisees having access, at a reasonable cost and in a timely manner, to skilled labour, including a substantial number of seasonal employees for each tax season. The ability of NextPoint Financial and its franchisees to meet their labour needs is subject to many external factors, including competition for qualified personnel, unemployment levels in each of the markets in which it has offices, prevailing wage rates, minimum wage laws, and workplace regulation. NextPoint Financial’s and its franchisees require a substantial number of employees who are willing to become trained as tax preparers, and who have the ability to engage in temporary, seasonal employment. Moreover, in addition to its seasonal employees, NextPoint Financial requires a substantial number of full-time employees who are required to have the technical skills necessary to participate in software development, database management, and other highly technical tasks.

From time to time, the federal, state or provincial governments may consider regulations regarding the education, testing, licensing, certification, and registration of tax return preparers. Although the IRS’ effort to implement a new model for tax return preparer regulation has been declared invalid by a federal appeals court, congressional action authorizing mandatory regulation may be adopted in the future, and various states have begun to fill the void created by the absence of federal tax return preparer regulation by proposing new or enhanced regulatory requirements at the state level. Although it is expected that NextPoint Financial’s training for preparers will already exceed the requirements the IRS had proposed and that states have adopted or have proposed, regulation of tax return preparers could impact NextPoint Financial’s ability to find an adequate number of tax return preparers to meet the demands of its customers and impose additional costs on NextPoint Financial and its franchisees to train tax return preparers, which could cause its revenues and profitability to decline.

No assurances can be given that NextPoint Financial will be successful in maintaining its required supply of skilled labour, including as a result of the COVID-19 pandemic. If NextPoint Financial and its franchisees are not able to hire a sufficient supply of qualified seasonal employees, or if NextPoint Financial is not able to secure employees with the technical skills they require for other purposes, NextPoint Financial’s ability to serve its customers in its offices, to deploy its marketing programs, and to maintain the services that it and its franchisees require may be compromised This could have an adverse effect on the business, financial condition, results of operations or prospects of NextPoint Financial.

NextPoint Financial’s operating results may depend on the effectiveness of its marketing and advertising programs and franchisee support of these programs.

NextPoint Financial’s revenues may be heavily influenced by its brand marketing and advertising. If its marketing and advertising programs are unsuccessful, it may fail to retain existing customers and attract new customers, which could limit the growth of its revenues or profitability or result in a decline in its revenues or profitability. NextPoint Financial may be required to devote significant amounts of capital and human resources in marketing efforts to attract and obtain the acceptance of new customers. Moreover, because franchisees of NextPoint Financial’s tax preparation business will be required to pay NextPoint Financial marketing and advertising fees based on a percentage of their revenues, NextPoint Financial’s marketing fund expenditures may be dependent upon sales volumes of its franchisees.

The support of its franchisees will be critical for the success of NextPoint Financial’s marketing programs and any new strategic initiatives it seeks to undertake in connection with its tax preparation business. Although certain actions will be required of NextPoint Financial’s franchisees under the franchise agreements, there can be no assurance that its franchisees will continue to support its marketing programs and strategic initiatives. The failure of its franchisees to support its marketing programs and strategic initiatives would adversely affect NextPoint Financial’s ability to implement its business strategy and could have a material adverse effect on its business, financial condition, and results of operations.

There can be no assurances that, at any point in time, whether due to changing economic factors, legal regulation or competition, there will be a market for NextPoint Financial’s products and services and that NextPoint Financial will be able to attract a sufficient number of customers required to sustain its operations.

NextPoint Financial may be subject to the risk of litigation.

145

The Target Businesses have been party to litigation in the past and in the future NextPoint Financial may become party to litigation from time to time in the ordinary course of business which could adversely affect its business. Should any litigation in which NextPoint Financial becomes involved be determined against NextPoint Financial, such a decision could adversely affect NextPoint Financial’s ability to continue operating and the market price for the Common Shares and other listed securities of NextPoint Financial. Even if NextPoint Financial is involved in litigation and wins, litigation can redirect significant company resources. Litigation may also create a negative perception of NextPoint Financial’s brand.

NextPoint Financial may be subject to intellectual property risks .

NextPoint Financial may have certain proprietary intellectual property, including but not limited to brands, trademarks, trade names, patents and proprietary processes. NextPoint Financial will rely on this intellectual property, know-how and other proprietary information, and require employees, consultants and suppliers to sign confidentiality agreements. However, these confidentiality agreements may be breached, and NextPoint Financial may not have adequate remedies for such breaches. Third parties may independently develop substantially equivalent proprietary information without infringing upon any proprietary technology. Third parties may otherwise gain access to NextPoint Financial’s proprietary information and adopt it in a competitive manner. Any loss of intellectual property protection may have a material adverse effect on NextPoint Financial’s business, results of operations or prospects.

In addition, third parties may assert infringement claims against NextPoint Financial. Any claims and any resulting litigation could subject NextPoint Financial to significant liability for damages. An adverse determination in any litigation of this type could result in limitations on NextPoint Financial’s ability to use the intellectual property subject to these claims and require NextPoint Financial to design around a third-party’s patent or to license alternative technology from another party.

NextPoint Financial may be subject to the risks associated with fraudulent or illegal activity by its employees, contractors, consultants or franchisees .

NextPoint Financial is exposed to the risk that its employees, independent contractors, consultants and franchisees may engage in fraudulent or other illegal activity. Misconduct by these parties could include (i) intentional, reckless and/or negligent unauthorized conduct that violates government regulations or contractual arrangements, including confidentiality requirements, (ii) the conversion or misuse of funds, documents or data; or (iii) failure to follow our protocol when interacting with customers. As a result, NextPoint Financial could also be perceived to have facilitated or participated in illegal misappropriation of funds, documents or data, or failed to have followed protocol, and therefore be subject to civil or criminal liability. It may not always be possible for NextPoint Financial to identify and deter misconduct by its employees, franchisees and other third parties, and the precautions taken by NextPoint Financial to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting NextPoint Financial from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with applicable laws or regulations or contractual requirements. If any such actions are instituted against NextPoint Financial, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on NextPoint Financial’s business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of NextPoint Financial’ operations, any of which could have a material adverse effect on NextPoint Financial’s business, financial condition, results of operations or prospects.

NextPoint Financial may be subject to risks related to information technology systems, including cyber-attacks.

NextPoint Financial’s operations depend, in part, on how well it and its franchisees protect networks, information technology systems and software against damage from a number of threats, including, but not limited to, cable cuts, natural disasters, intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. NextPoint Financial’s operations also depend on the timely maintenance, upgrade and replacement of networks, information technology systems and software, as well as pre-emptive expenses to mitigate the risks of failures. In addition, NextPoint Financial’s business involves employees and franchisees processing a large number of complex transactions, including transactions that may involve significant dollar amounts or that involve the use or disclosure of personal and business information. NextPoint Financial could be materially adversely affected if

146

transactions are redirected, misappropriated or otherwise improperly executed, if personal and business information is disclosed to unintended recipients or if an operational breakdown or failure in the processing of other transactions occurs, whether as a result of human error, a purposeful sabotage or by means of a fraudulent manipulation of our operations or systems. Any of these and other events could result in information system failures, delays and/or increase in capital expenses.

The failure of information systems or a component of information systems could, depending on the nature of any such failure, materially impact NextPoint Financial’s ability to complete its customers’ tax filings, provide tax settlement products, enter into new lending transactions and service or collect customer accounts and could adversely impact NextPoint Financial’s reputation and results of operations. The Target Businesses have not experienced any material losses to date relating to cyber-attacks or other information security breaches, but there can be no assurance that NextPoint Financial will not incur such losses in the future. NextPoint Financial’s risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, NextPoint Financial may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

The current outbreak of the Novel Coronavirus, or COVID-19, or the future outbreak of any other highly infectious or contagious diseases, could materially and adversely impact or cause disruption to NextPoint Financial’s operations, performance, financial condition, results of operations and cash flows.

A novel strain of coronavirus (COVID-19) was reported to have surfaced in December 2019, and has since spread globally, including to every state in the United States. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including Canada and the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including the industries in which NextPoint Financial operates. COVID-19 (or a future pandemic) could have material and adverse effects on NextPoint Financial’s operations, performance, financial condition, results of operations and cash flows due to, among other factors:

a complete or partial closure of, or other operational issues at, one or more of NextPoint Financial’s businesses resulting from government actions;
the temporary inability of consumers to purchase NextPoint Financial’s products or services due to a number of factors, including but not limited to illness, office closures or limitations on operations (including but not limited to shortened operating hours and social distancing requirements). Quarantine, financial hardship, and “stay at home” orders could severely impact NextPoint Financial’s businesses, financial condition and liquidity;
difficulty accessing equity and debt capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect NextPoint Financial’s access to capital necessary to fund business operations;
changes to timing for tax filings and consumer demand for loans;
increased cyber security threats due to the increased volume of employees working remotely and using online video-conferencing and collaborative platforms; and
the potential negative impact on the health of NextPoint Financial’s personnel, particularly if a significant number of them are impacted, would result in a deterioration in NextPoint Financial ability to ensure business continuity during a disruption.

The COVID-19 pandemic has affected, and is likely to continue to affect, the Target Businesses’ financial condition and results of operations for the foreseeable future. The extent to which COVID-19 impacts NextPoint Financial’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, and the direct and indirect economic effects of the outbreak and containment measures, among others.

147

Additionally, many of the third-party statistics or data presented herein predate the COVID-19 pandemic, and forecasts or estimates may be impacted by economic or regulatory changes resulting from the pandemic.

As of the date of this prospectus, Canada and the United States continue to be impacted by the COVID-19 pandemic. Financial markets and businesses across many industries have experienced significant challenges and it will likely be some time before the duration and ultimate severity of the impact will be known.

Global financial conditions and future economic shocks may impair NextPoint Financial’s financial condition.

Future economic shocks may be precipitated by a number of causes, including a rise in the price of oil, geopolitical instability, pandemics or outbreaks of new infectious diseases or viruses and natural disasters. Any sudden or rapid destabilization of global economic conditions, including as a result of the COVID-19 pandemic, could impact NextPoint Financial’s ability to obtain equity or debt financing in the future on terms favourable to NextPoint Financial. Additionally, any such occurrence could cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. In such an event, NextPoint Financial’s operations and financial condition could be adversely impacted.

Furthermore, general market, political and economic conditions, including, for example, inflation, interest and currency exchange rates, structural changes in the industries in which NextPoint Financial operates, supply and demand for commodities, political developments, legislative or regulatory changes, social or labour unrest and stock market trends will affect NextPoint Financial’s operating environment and its operating costs and profit margins and the price of its securities. Any negative events in the global economy could have a material adverse effect on NextPoint Financial’s business, financial condition, results of operations or prospects.

NextPoint Financial may be subject to risk from changes in the business environment, fundamental changes in demand for NextPoint Financial’s products or services, improper implementation of decisions, execution of NextPoint Financial’s strategy or inadequate responsiveness to changes in the business environment, including changes in the competitive or regulatory landscape.

Strategic risk is the risk from changes in the business environment, fundamental changes in demand for NextPoint Financial’s products or services, improper implementation of decisions, execution of NextPoint Financial’s strategy or inadequate responsiveness to changes in the business environment, including changes in the competitive or regulatory landscape.

NextPoint Financial’s ability to increase its customer and revenue base is contingent, in part, on its ability to grow its consumer loans receivable portfolio, to access customers through new delivery channels, to successfully develop and launch new products to meet evolving customer demands, to secure growth financing at a reasonable cost and to execute with efficiency and effectiveness.

The impact of poor execution by management or an inadequate response to changes in the business environment could have a material adverse effect on NextPoint Financial’s financial condition, liquidity and results of operations.

Management of growth may prove to be difficult.

NextPoint Financial may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. The ability of NextPoint Financial to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. The inability of NextPoint Financial to deal with this growth may have a material adverse effect on NextPoint Financial’s business, financial condition, results of operations or prospects.

NextPoint Financial may not pay dividends.

The declaration and payment of dividends or distributions by NextPoint Financial will be at the discretion of the Board subject to restrictions under applicable laws, and may be affected by numerous factors, including NextPoint Financial revenues, cash flow, financial condition, acquisitions, capital investment requirements and legal,

148

regulatory or contractual restrictions. A failure to pay dividends or a reduction or cessation of the payment of dividends could materially adversely affect the trading price of Common Shares.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about NextPoint Financial or its business, the Common Share trading price and volume could decline.

The trading market for Common Shares will depend in part on the research and reports that securities or industry analysts publish about NextPoint Financial or its business. If no securities or industry analysts commence covering NextPoint Financial, the trading price for Common Shares would be negatively impacted. If NextPoint Financial obtains securities or industry analyst coverage and if one or more of the analysts who cover NextPoint Financial downgrade Common Shares or publish inaccurate or unfavorable research about NextPoint Financial’s business, NextPoint Financial’s trading price may decline. If one or more of these analysts cease coverage of NextPoint Financial or fail to publish reports on NextPoint Financial regularly, demand for Common Shares could decrease, which could cause the Common Share trading price and volume to decline.

The market price of the Common Shares may be highly volatile.

The stock market, from time-to-time, experiences significant price and volume fluctuations unrelated to the operating performance of particular companies, including as a result of the COVID-19 pandemic. Future announcements concerning NextPoint Financial or its competitors, including those pertaining to financing arrangements, government regulations, developments concerning regulatory actions affecting NextPoint Financial, litigation, additions or departures of key personnel, cash flow, and economic conditions and political factors in the United States may have a significant impact on the market price of the Common Shares. In addition, there can be no assurance that the Common Shares will continue to be listed on the Exchange.

The market price of the Common Shares could fluctuate significantly for many other reasons, including for reasons unrelated to NextPoint Financial’s specific performance, such as reports by industry analysts, investor perceptions, or negative announcements by its subscribers, competitors or suppliers regarding their own performance, as well as general economic and industry conditions. For example, to the extent that other large companies within its industry experience declines in their stock price, the share price of the Common Shares may decline as well. In addition, when the market price of a company’s shares drops significantly, shareholders often institute securities class action lawsuits against the company. A lawsuit against NextPoint Financial could cause it to incur substantial costs and could divert the time and attention of its management and other resources.

NextPoint Financial’s officers and directors may be engaged in other business ventures resulting in conflicts of interest.

Certain of NextPoint Financial’s directors and officers are, and may continue to be, or may become, involved in other business ventures through their direct and indirect participation in, among other things, corporations, partnerships and joint ventures, that are or may become competitors of the products and services NextPoint Financial provides or intends to provide. Situations may arise in connection with potential acquisitions or opportunities where the other interests of these directors and officers conflict with or diverge from NextPoint Financial’s interests. In accordance with applicable corporate law, directors who have a material interest in a contract or transaction or a proposed contract or transaction with NextPoint Financial that is material to NextPoint Financial are required, subject to certain exceptions, to disclose that interest and generally abstain from voting on any resolution to approve the transaction. In addition, the directors and officers are required to act honestly and in good faith with a view to NextPoint Financial’s best interests.

However, in conflict of interest situations, NextPoint Financial’s directors and officers may owe the same duty to another company and will need to balance their competing interests with their duties to NextPoint Financial. Circumstances (including with respect to future corporate opportunities) may arise that may be resolved in a manner that is unfavourable to NextPoint Financial.

Certain remedies may be limited to NextPoint Financial .

149

NextPoint Financial’s governing documents may provide that the liability of its members of the Board and its officers is eliminated to the fullest extent permitted under the laws of the Province of British Columbia. Thus, NextPoint Financial and its shareholders may be prevented from recovering damages for certain alleged errors or omissions made by the members of the Board and its officers. NextPoint Financial’s governing documents may also provide that NextPoint Financial will, to the fullest extent permitted by law, indemnify members of its Board and its officers for certain liabilities incurred by them by virtue of their acts on behalf of NextPoint Financial.

NextPoint Financial may have difficulty in enforcing judgments and effecting service of process on directors and officers.

A majority of the directors and officers of NextPoint Financial reside outside of Canada. Some or all of the assets of such persons may be located outside of Canada. Therefore, it may not be possible for investors to collect or to enforce judgments obtained in Canadian courts predicated upon the civil liability provisions of applicable Canadian securities laws against such persons. Moreover, it may not be possible for investors to effect service of process within Canada upon such persons.

Past performance is not indicative of future results.

The prior operational performance of any of the Target Businesses is not indicative of any potential future operating results of NextPoint Financial. There can be no assurance that the historical operating results achieved by any of the Target Businesses or their affiliates will be achieved by NextPoint Financial, and NextPoint Financial’s performance may be materially different.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect NextPoint Financial’s reported financial results or financial condition.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to NextPoint Financial’s business, including but not limited to revenue recognition, impairment of goodwill and intangible assets, inventory, income taxes and litigation, are highly complex and involve many subjective assumptions, estimates and judgments. Changes in these rules or their interpretation, or changes in underlying assumptions, estimates or judgments, could significantly change NextPoint Financial’s reported financial performance or financial condition in accordance with generally accepted accounting principles.

Financial projections may prove materially inaccurate or incorrect.

Any of NextPoint Financial’s financial estimates, projections and other forward-looking information or statements included herein were prepared by NextPoint Financial without the benefit of reliable historical industry information or other information customarily used in preparing such estimates, projections and other forward-looking information or statements. Such forward-looking information or statements are based on assumptions of future events that may or may not occur, which assumptions may not be disclosed herein. Investors should inquire of NextPoint Financial and become familiar with the assumptions underlying any estimates, projections or other forward-looking information or statements. Projections are inherently subject to varying degrees of uncertainty and their achievability depends on the timing and probability of a complex series of future events. There is no assurance that the assumptions upon which these projections are based will be realized. Actual results may differ materially from projected results for a number of reasons including increases in operation expenses, changes or shifts in regulatory rules, undiscovered and unanticipated adverse industry and economic conditions, and unanticipated competition. Accordingly, investors should not rely on any projections to indicate the actual results NextPoint Financial might achieve.

150

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following is, as of the date hereof, a summary of the principal Canadian federal income tax considerations under the Tax Act generally applicable to a beneficial owner (other than a NAC Founder) of Common Shares or NAC Warrants (collectively, the “ Securities ”) following the Transaction who, at all relevant times, for purposes of the Tax Act, deals at arm’s length with, and is not affiliated with, NAC and who holds such Securities as capital property (a “ Holder ”), all within the meaning of the Tax Act. A Security will generally be considered to be capital property to a Holder unless the Holder acquired or holds (or will hold) such Security in the course of carrying on a business of trading or dealing in securities or in a transaction or transactions considered to be an adventure or concern in the nature of trade.

This summary assumes that, at all relevant times, NAC is a resident of Canada and is not controlled by a nonresident person or a group of non-resident persons not dealing with each other at arm's length, all for purposes of the Tax Act. This summary is of a general nature only, and is based on the facts set forth in this prospectus, the current provisions of the Tax Act and the Canada-U.S. Tax Convention, specific proposals to amend the Tax Act (the “ Tax Proposals ”) which have been announced by or on behalf the Minister of Finance (Canada) prior to the date hereof, and an understanding of the current published administrative policies and assessing practices of the CRA. This summary assumes that the Tax Proposals will be enacted in the form proposed and does not take into account or anticipate any other changes in law, whether by way of judicial, legislative or governmental decision or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ materially from the Canadian federal income tax considerations discussed herein. No assurances can be given that the Tax Proposals will be enacted as proposed or at all.

This summary is not exhaustive of all possible Canadian federal income tax considerations applicable to an investment in Securities and is not intended to be, nor should it be construed to be, legal or income tax advice to any particular Holder. Holders are urged to consult their own income tax advisors with respect to the tax consequences applicable to the acquisition, holding and disposition of Securities based on their own particular circumstances.

Currency Conversion

For purposes of the Tax Act, all amounts relating to the ownership or disposition of the Securities must be expressed in Canadian dollars. For purposes of the Tax Act, amounts denominated in a currency other than the Canadian dollar generally must be converted into Canadian dollars using the applicable rate of exchange (for purposes of the Tax Act) quoted by the Bank of Canada on the date such amounts arose, or such other rate of exchange as is acceptable to the Minister of National Revenue (Canada).

Holders Resident in Canada

This portion of the summary applies to a Holder who, for purposes of the Tax Act and at all relevant times, is or is deemed to be a resident of Canada and no other country (a “ Canadian Resident Holder ”). Canadian Resident Holders whose Common Shares do not otherwise qualify as capital property may in certain circumstances make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have their Common Shares and every other “Canadian security” (as defined in the Tax Act) owned by such Canadian Resident Holder in the taxation year of the election and in all subsequent taxation years deemed to be capital property. Canadian Resident Holders should consult their own tax advisors with respect to whether the election is available and advisable in their particular circumstances. NAC Warrants will not be “Canadian securities” for purposes of this election.

This summary is not applicable to a Canadian Resident Holder (a) that is a “financial institution”, as defined in the Tax Act for purposes of the mark-to-market rules, (b) an interest in which would be a “tax shelter investment” as defined in the Tax Act, (c) that is a “specified financial institution” as defined in the Tax Act, (d) which has made an election under the Tax Act to determine its Canadian tax results in a foreign currency, or (e) which has entered or will enter into a “derivative forward agreement” under the Tax Act with respect to any Securities. This summary

151

does not address the possible application of the “foreign affiliate dumping” rules that may be applicable to a Canadian Resident Holder that is a corporation resident in Canada (for the purposes of the Tax Act) and is, or becomes, or does not deal at arm’s length with a corporation resident in Canada that is, or that becomes as part of a transaction or event or series of transactions or events that includes the acquisition of the Securities, controlled by a non-resident person, or a group of non-resident persons not dealing with each other at arm’s length, in each case for purposes of the rules in section 212.3 of the Tax Act. Any such Canadian Resident Holder to which this summary does not apply should consult its own tax advisor with respect to the tax consequences applicable to the acquisition, holding and disposition of Securities.

Exercise or Expiry of NAC Warrants

No gain or loss will be realized by a Canadian Resident Holder of a NAC Warrant upon the exercise of such NAC Warrant. When a NAC Warrant is exercised, the Canadian Resident Holder’s cost of the Common Share acquired thereby will be equal to the adjusted cost base of the NAC Warrant to such Canadian Resident Holder, plus the amount paid on the exercise of the NAC Warrant.

Generally, the expiry of an unexercised NAC Warrant will give rise to a capital loss equal to the adjusted cost base to the Canadian Resident Holder of such expired NAC Warrant. See “ Disposition of Securities ” below.

Dividends on Common Shares

In the case of a Canadian Resident Holder who is an individual (other than certain trusts), dividends received or deemed to be received on the Common Shares will be included in computing the Canadian Resident Holder’s income and will be subject to the gross-up and dividend tax credit rules that apply to taxable dividends received from taxable Canadian corporations.

Provided that appropriate designations are made by NAC, any such dividend will be treated as an “eligible dividend” for the purposes of the Tax Act and a Canadian Resident Holder who is an individual will be entitled to an enhanced dividend tax credit in respect of such dividend. There may be limitations on NAC’s ability to designate dividends and deemed dividends as eligible dividends.

Dividends received or deemed to be received on the Common Shares by a Canadian Resident Holder that is a corporation will be required to be included in computing the corporation’s income for the taxation year in which such dividends are received, but such dividends will generally be deductible in computing the corporation’s taxable income. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received by a Canadian Resident Holder that is a corporation as proceeds of disposition or a capital gain. Canadian Resident Holders that are corporations should consult their own tax advisors having regard to their own circumstances.

A Canadian Resident Holder that is a “private corporation” or a “subject corporation” (each as defined in the Tax Act) may be liable under Part IV of the Tax Act to pay a refundable tax on dividends received or deemed to be received on the Common Shares to the extent that such dividends are deductible in computing the Canadian Resident Holder’s taxable income for the taxation year.

Dividends received by a Canadian Resident Holder who is an individual (other than certain trusts) may result in such Canadian Resident Holder being liable for minimum tax under the Tax Act. Canadian Resident Holders who are individuals should consult their own tax advisors in this regard.

Dispositions of Securities

Upon a disposition or deemed disposition of Common Shares or NAC Warrants (not including upon the exercise of a NAC Warrant or a disposition of Common Shares to NAC unless purchased by NAC in the open market in the manner in which shares are normally purchased by any member of the public in the open market), a capital gain (or loss) will generally be realized by a Canadian Resident Holder to the extent that the proceeds of disposition are greater (or less) than the aggregate of the adjusted cost base of the Common Shares or NAC Warrants, respectively, to the Canadian Resident Holder immediately before the disposition and any reasonable costs of disposition. Such

152

capital gain (or capital loss) will be subject to the treatment described below under “ Holders Resident in Canada — Taxation of Capital Gains and Capital Losses ”.

The adjusted cost base of a Common Share or NAC Warrant to a Canadian Resident Holder acquired at any time will be determined in accordance with the Tax Act by averaging the cost to the Canadian Resident Holder of the Common Share or NAC Warrant, respectively, with the adjusted cost base immediately before that time of all other Common Shares or NAC Warrants, respectively, held by the Canadian Resident Holder as capital property.

Taxation of Capital Gains and Capital Losses

One-half of a capital gain (a “ taxable capital gain ”) must be included in a Canadian Resident Holder’s income. One-half of a capital loss (an “ allowable capital loss ”) is generally required to be deducted by a Canadian Resident Holder against taxable capital gains realized in that year and allowable capital losses in excess of taxable capital gains for the year may be carried back and deducted in any of the three preceding taxation years or in any subsequent year (against taxable capital gains realized in such years) to the extent and under the circumstances described in the Tax Act. If the Canadian Resident Holder is a corporation, any such capital loss realized on the sale of shares may in certain circumstances be reduced by the amount of any dividends, including deemed dividends, which have been received on such shares. Analogous rules apply where a corporation is, directly or indirectly through a trust or partnership, a beneficiary of a trust or a member of a partnership.

Taxable capital gains realized by a Canadian Resident Holder who is an individual may give rise to alternative minimum tax depending on the Canadian Resident Holder’s circumstances.

A “Canadian-controlled private corporation” (as defined in the Tax Act) may be liable to pay a refundable tax on certain investment income, including an amount in respect of a taxable capital gain arising from the disposition of a Common Share or NAC Warrant.

Eligibility for Investment

The Common Shares and the NAC Warrants will be qualified investments for a trust governed by a registered retirement savings plan (“ RRSP ”), a registered retirement income fund (“ RRIF ”), a deferred profit sharing plan, a registered education savings plan (“ RESP ”), a registered disability savings plan (“ RDSP ”) or a tax-free savings account (“ TFSA ”), provided that:

(i) in the case of the Common Shares, the Common Shares are listed on a designated stock exchange for the purposes of the Tax Act (which currently includes the Exchange); and
(ii) in the case of the NAC Warrants:
a. the NAC Warrants are listed on a designated stock exchange for purposes of the Tax Act (which currently includes the Exchange); or
b. the shares to be issued on the exercise of the NAC Warrants are qualified investments as described in (i) above, provided that NAC is not, and deals at arm’s length with each person who is, an annuitant, a beneficiary, an employer or a subscriber under or a holder of such registered plan.

Notwithstanding the foregoing, the holder of a TFSA or RDSP, the subscriber of an RESP or the annuitant under an RRSP or RRIF will be subject to a penalty tax in respect of the Common Shares or NAC Warrants held in the TFSA, RDSP, RESP, RRSP or RRIF, if such Securities are prohibited investments for the TFSA, RDSP, RESP, RRSP or RRIF. A Security will generally be a “prohibited investment” for a TFSA, RDSP, RESP, RRSP or RRIF if the holder of the TFSA or RDSP, the subscriber of an RESP or the annuitant under the RRSP or RRIF does not deal at arm’s length with NAC for the purposes of the Tax Act, or the holder, subscriber or annuitant has a “significant interest” (as defined in subsection 207.01(4) the Tax Act) in NAC. Holders of a TFSA or RDSP, subscribers of an

153

RESP and annuitants under an RRSP or RRIF should consult their own tax advisors as to whether the Common Shares or NAC Warrants will be a prohibited investment in their particular circumstances.

Non-Canadian Resident Holders

This section of the summary applies to a Holder who, for the purposes of the Tax Act and any applicable income tax treaty or convention, and at all relevant times, is not, and is not deemed to be, resident in Canada, and does not use or hold, and is not deemed to use or hold, the Securities in the course of carrying on a business in Canada (a “ NonCanadian Resident Holder ”). This section does not apply to an insurer who carries on an insurance business in Canada and elsewhere. Such Non-Canadian Resident Holders should consult their own tax advisors.

Exercise or Expiry of NAC Warrants

The tax consequences of the exercise and expiry of a NAC Warrant held by a Non-Canadian Resident Holder are the same as those described above under “ Holders Resident in Canada – Exercise or Expiry of NAC Warrants ”.

Dividends on Common Shares

Dividends paid or credited or deemed to be paid or credited to a Non-Canadian Resident Holder on the Common Shares will be subject to Canadian withholding tax. The Tax Act imposes withholding tax at a rate of 25% on the gross amount of the dividend, although such rate may be reduced by virtue of an applicable tax treaty. For example, under the Canada-U.S. Tax Convention, where dividends on the Common Shares are considered to be paid to a NonCanadian Resident Holder that is the beneficial owner of the dividends and is a U.S. resident for the purposes of, and is entitled to all of the benefits of, the Canada-U.S. Tax Convention, the applicable rate of Canadian withholding tax is generally reduced to 15%.

NAC will be required to withhold the applicable withholding tax from any dividend and remit it to the Canadian government for the Non-Canadian Resident Holder’s account.

Dispositions of Securities

A Non-Canadian Resident Holder who disposes of or is deemed to have disposed of Securities will not be subject to income tax under the Tax Act unless the Securities are, or are deemed to be, “taxable Canadian property” (as defined in the Tax Act) of the Non-Canadian Resident Holder at the time of disposition and the Non-Canadian Resident Holder is not entitled to relief under an applicable income tax treaty or convention between Canada and the country of residence of the Non-Canadian Resident Holder.

Generally, provided that the Common Shares are, at the time of disposition, listed on a “designated stock exchange” for purposes of the Tax Act (which currently includes the Exchange), the Securities will not constitute taxable Canadian property of a Non-Canadian Resident Holder unless, at any time during the 60-month period immediately preceding the disposition the following two conditions were met concurrently: (i) 25% or more of the issued shares of any class or series of the capital stock of NAC were owned by one or any combination of (a) the Non-Canadian Resident Holder, (b) persons with whom the Non-Canadian Resident Holder did not deal at arm’s length (for the purposes of the Tax Act), and (c) partnerships in which the Non-Canadian Resident Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships; and (ii) more than 50% of the fair market value of the Common Shares was derived, directly or indirectly, from one or any combination of: (a) real or immovable property situated in Canada, (b) Canadian resource property (as defined in the Tax Act), (c) timber resource property (as defined in the Tax Act) and (d) options in respect of, or interests in any of, the foregoing property, whether or not such property exists. Notwithstanding the foregoing, a Security may otherwise be deemed to be a taxable Canadian property for purposes of the Tax Act.

In the event that any Securities constitute taxable Canadian property of a Non-Canadian Resident Holder and any capital gain that would be realized on the disposition thereof is not exempt from tax under the Tax Act pursuant to an applicable income tax treaty or convention, the income tax consequences discussed above for Canadian Resident Holders under “ Dispositions of Securities ” will generally apply to the Non-Canadian Resident Holder.

154

Non-Canadian Resident Holders should consult their own tax advisor in this regard.

155

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a general summary of certain U.S. federal income tax considerations applicable to a U.S. Holder or Non-U.S. Holder (each as defined below and collectively, “ Holders ”) arising from and relating to the acquisition, ownership and disposition of Common Shares and the exercise, disposition, and lapse of NAC Warrants. This summary does not address any U.S. tax consequences to the NAC Founders, the Sponsor, or any person who has entered into a derivative or forward agreement with respect to any of the Securities or their affiliates. The Common Shares and NAC Warrants may hereinafter be collectively referred to as “ Securities ” and “ Security ” means any one of them.

This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a Holder as a result of the acquisition of Securities. This summary does not take into account the individual facts and circumstances of any particular Holder that may affect the U.S. federal income tax consequences to such Holder, including specific tax consequences to a Holder under an applicable tax treaty. In addition, except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any particular Holder. Each Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition of the Securities.

No opinion from legal counsel or ruling from the IRS has been requested, or will be obtained, regarding the U.S. federal income tax considerations applicable to Holders as discussed in this summary. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.

Scope of this Summary

Authorities

This summary is based on the Code, Treasury Regulations (whether final, temporary, or proposed) promulgated under the Code, published rulings of the IRS, published administrative positions of the IRS, U.S. court decisions and the Canada-U.S. Tax Convention, that are in effect and available, as of the date of this document. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis or prospective basis which could affect the U.S. federal income tax considerations described in this summary. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this summary, the term “ U.S. Holder ” means a beneficial owner of Common Shares or NAC Warrants that is for U.S. federal income tax purposes:

a citizen or individual resident of the United States;
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia;
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

156

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including U.S. Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) are brokers or dealers in securities or currencies or U.S. Holders that are traders in securities that elect to apply a mark-to-market accounting method; (d) have a “functional currency” other than the U.S. dollar; (e) own Securities as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) acquired any Securities in connection with the exercise of employee stock options or otherwise as compensation for services; (g) hold any Securities other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); (h) are partnerships and other pass-through entities (and investors in such partnerships and pass-through entities); or (i) own, have owned or will own (directly, indirectly, or by attribution) 10% or more of the total combined voting power or value of NextPoint Financial’s outstanding shares. This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are: (a) U.S. expatriates or former long-term residents of the U.S.; (b) persons (as defined below) that have been, are, or will be a resident or are deemed to be a resident in Canada for purposes of the Tax Act; (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold any Securities in connection with carrying on a business in Canada; (d) persons whose Securities constitute “taxable Canadian property” under the Tax Act; or (e) persons that have a permanent establishment in Canada for the purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisor regarding the U.S. federal income, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition of Securities.

If an entity or arrangement that is classified as a partnership for U.S. federal income tax purposes holds Securities, the U.S. federal income tax consequences to such entity or arrangement and the owners of such entity or arrangement generally will depend on the activities of such entity or arrangement and the status of such owners. This summary does not address the tax consequences to any such entity or arrangement or owner. Owners of entities or arrangements that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisor regarding the U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of Securities.

Tax Consequences Not Addressed

This summary does not address rules requiring persons that use the accrual method of accounting to include certain amounts in income no later than the time such amounts are reflected on certain financial statements, the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences to U.S. Holders of the acquisition, ownership, and disposition of Securities. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences of the acquisition, ownership, and disposition of Securities.

Inversion Rules

In the event a non-U.S. corporation acquires a U.S. entity or assets of a U.S. entity, under certain circumstances, the corporation may be treated under Section 7874 of the Code as a U.S. corporation for U.S. federal income tax purposes. Based upon the terms of the Transaction, the rules for determining the application of Section 7874 of the Code and the Treasury Regulations promulgated thereunder and certain factual assumptions, we do not expect that NextPoint Financial will be subject to Section 7874 of the Code after the completion of the Transaction. Accordingly, this summary assumes that NextPoint Financial will be treated as a Canadian corporation that is not subject to Section 7874 of the Code during its entire existence. However, there can be no assurances provided by NextPoint Financial that the IRS will not assert that NextPoint Financial is subject to Section 7874 of the Code. If the IRS were successful in such an assertion and NextPoint Financial is treated as a United States corporation, NextPoint Financial generally would be subject to U.S. federal income tax and the U.S. federal income tax consequences to Holders will be materially different than the tax consequences discussed below. Any such U.S. federal corporate tax liability could have a material adverse effect on the results of NextPoint Financial’s

157

operations. The conversion of NextPoint Financial from a Canadian corporation to a U.S. corporation under Section 7874 of the Code may result in the recognition of income or gain by U.S. Holders under Section 367 of the Code and the passive foreign investment company rules discussed below. In addition, dividends paid by NextPoint Financial would be characterized as U.S. source income for purposes of the foreign tax credit rules under the Code. As a result, U.S. Holders generally would not be able to claim a credit for any Canadian tax withheld on such dividends unless, depending on the circumstances, they have excess foreign tax credit limitation due to other foreign source income that is subject to a low or zero rate of foreign tax. Finally, the gross amount of any dividend payments toNextPoint Financial’s non-U.S. holders could be subject to U.S. withholding tax.

Further, if the IRS were successful in the assertion that NextPoint Financial is subject to Section 7874 but is not treated as a U.S. corporation for U.S. federal income tax purposes (as can be the case after certain transactions), Section 7874 of the Code may still have an adverse impact by (i) limiting the ability of the acquired U.S. corporation and its U.S. affiliates to use U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions, (ii) disqualifying dividends paid from preferential “qualified dividend income” rates, (iii) expanding the application of the rules regarding “base erosion payments” that may be subject to a minimum U.S. federal income tax, and (iv) potentially subjecting certain “disqualified individuals” (including officers and directors of a U.S. corporation) to an excise tax on certain stock-based compensation held thereby. Each Holder should consult its own tax advisor regarding the rules under Section 7874 of the Code.

Each Holder should consult its own tax advisor regarding the rules under Section 7874 of the Code.

General U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Securities by U.S. Holders

The following discussion describes the general rules applicable to the ownership and disposition of the Common Shares but such rules are subject in their entirety to the special rules described below under the heading “ Passive Foreign Investment Company Rules ”.

Distributions on Common Shares

A U.S. Holder that receives a distribution, including a constructive distribution, with respect to a Common Share (as well as any constructive distribution on a NAC Warrant as described below) will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of NextPoint Financial’s current or accumulated “earnings and profits,” as computed under U.S. federal income tax principles. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of NextPoint Financial, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the Common Shares and thereafter as gain from the sale or exchange of such Common Shares (see “Sale or Other Taxable Disposition of Common Shares” below). However, NextPoint Financial may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder may be required to assume that any distribution by NextPoint Financial with respect to the Common Shares will constitute ordinary dividend income. Dividends received on Common Shares generally will not be eligible for the “dividends received deduction” generally applicable to corporations. Subject to applicable limitations and provided NextPoint Financial is eligible for the benefits of the Canada-U.S. Tax Convention or the Common Shares are readily tradable on a United States securities market, dividends paid by NextPoint Financial to non-corporate U.S. Holders, including individuals, generally will be eligible for the preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions are satisfied, including that NextPoint Financial not be classified as a PFIC (as defined below) in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.

Sale or Redemption

Subject to the PFIC rules discussed below, a U.S. Holder will generally recognize capital gain or loss on a sale, exchange, redemption (other than a redemption that is treated as a distribution) or other disposition of Common Shares or NAC Warrants equal to the difference between the amount realized upon the disposition and the U.S. Holder’s adjusted tax basis in the shares or warrants so disposed. Such capital gain or loss will be a long-term capital

158

gain or loss if the U.S. Holder’s holding period for the shares disposed of exceeds one year at the time of disposition. Long-term capital gains of non-corporate taxpayers are generally taxed at a lower maximum marginal tax rate than the maximum marginal tax rate applicable to ordinary income. The deductibility of net capital losses by individuals and corporations is subject to limitations.

U.S. Federal Income Tax Consequences of the Exercise and Disposition of NAC Warrants

The following discussion describes the general rules applicable to the exercise, disposition and expiration of the NAC Warrants, but the rules described below are subject in their entirety to the special rules described below under the heading “Passive Foreign Investment Company Rules.”

Investment Unit

The NAC Warrants and Class A Restricted Voting Shares originally purchased with each NAC Warrant (and the Common Share into which such Class A Restricted Voting Share converts) should be treated for U.S. federal income tax purposes as an investment unit consisting of one Common Share and one-half of a share purchase NAC Warrant to acquire one Common Share. For U.S. federal income tax purposes, the purchase price paid for each investment unit will be allocated between the Common Shares and NAC Warrants based on their respective relative fair market values. This allocation will be based upon our determination of the relative values of the NAC Warrants and of our Common Shares. The total issue price of each investment unit was US$10.00, and NAC took the position that US$9.90 was allocable to a Class A Restricted Voting Share (and the Common Share into which such Class A Restricted Voting Share converts) and the remaining US$0.10 to the NAC Warrant. U.S. Holders are urged to consult their tax advisors regarding the U.S. federal income tax consequences of an investment in a unit, and the allocation of the purchase price paid for a unit.

Exercise of NAC Warrants

A U.S. Holder should not recognize gain or loss on the exercise of a NAC Warrant and related receipt of a Common Share. A U.S. Holder’s initial tax basis in the Common Share received on the exercise of a NAC Warrant should be equal to the sum of (a) such U.S. Holder’s tax basis in such NAC Warrant plus (b) the exercise price paid by such U.S. Holder on the exercise of such NAC Warrant. It is unclear whether a U.S. Holder’s holding period for the Common Share should begin on the date that such NAC Warrant is exercised by such U.S. Holder or the date following the day of exercise by the U.S. Holder.

Disposition of NAC Warrants

A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of a NAC Warrant in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in the NAC Warrant sold or otherwise disposed of. Any such gain or loss generally will be a capital gain or loss, which will be long-term capital gain or loss if the NAC Warrant is held for more than one year. Deductions for capital losses are subject to complex limitations under the Code.

Expiration of NAC Warrants Without Exercise

Upon the lapse or expiration of a NAC Warrant, a U.S. Holder will recognize a loss in an amount equal to such U.S. Holder’s tax basis in the NAC Warrant. Any such loss generally will be a capital loss and will be long-term capital loss if the NAC Warrants are held for more than one year. Deductions for capital losses are subject to complex limitations under the Code.

Certain Adjustments to the NAC Warrants

Under Section 305 of the Code, an adjustment to the number of Common Shares that will be issued on the exercise of the NAC Warrants, or an adjustment to the exercise price of the NAC Warrants, may be treated as a constructive distribution to a U.S. Holder of the NAC Warrants if, and to the extent that, such adjustment has the effect of increasing such U.S. Holder’s proportionate interest in the “earnings and profits” or NextPoint Financial’s assets,

159

depending on the circumstances of such adjustment. Adjustments to the exercise price of NAC Warrants made pursuant to a bona fide reasonable adjustment formula that has the effect of preventing dilution of the interest of the holders of the NAC Warrants should generally not be considered to result in a constructive distribution. Any such constructive distribution would be taxable whether or not there is an actual distribution of cash or other property. (See more detailed discussion of the rules applicable to distributions made by the Corporation at “Distributions on Common Shares” above).

Passive Foreign Investment Company Rules

If NextPoint Financial is considered a “passive foreign investment company” within the meaning of Section 1297 of the Code (a “ PFIC ”) at any time during a U.S. Holder’s holding period, the following sections will generally describe the potentially adverse U.S. federal income tax consequences to U.S. Holders of the acquisition, ownership, and disposition of the Securities.

NextPoint Financial generally will be a PFIC for any tax year in which (a) 75% or more of the gross income of NextPoint Financial for such tax year is passive income (the “ PFIC income test ”) or (b) 50% or more of the value of the assets of NextPoint Financial either produce passive income or are held for the production of passive income, based on the quarterly (or, at NextPoint Financial’s election, more frequently than quarterly) average of the fair market value of such assets (the “ PFIC asset test ”). “Gross income” generally includes sales revenues less the cost of goods sold, plus income from investments and from incidental or outside operations or sources, and “passive income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.

Because NextPoint Financial (prior to a business combination) will likely have only passive assets and income, with no current active business, it is possible that NextPoint Financial met the PFIC asset or income test for its initial tax year. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first tax year the corporation has gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two tax years following the start-up year; and (3) the corporation is not, in fact, a PFIC for either of those years. The applicability of the start-up exception to NextPoint Financial is uncertain, and there cannot be any assurance that NextPoint Financial will qualify. After the Transaction, NextPoint Financial may still meet one of the PFIC tests. The actual PFIC status of NextPoint Financial for any tax year will not be determinable until after the end of each such tax year, and accordingly, there can be no assurance that NextPoint Financial will not be considered a PFIC for its start-up year or any future tax year.

If NextPoint Financial is not a PFIC for any tax year, the adverse tax consequences described below with respect to PFICs will not apply.

In any year in which NextPoint Financial is classified as a PFIC, a U.S. Holder will be required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidance may require. In addition to penalties, a failure to satisfy such reporting requirements may result in an extension of the time period during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing such information returns under these rules, including the requirement to file an IRS Form 8621.

For purposes of the PFIC income test and PFIC asset test described above, if NextPoint Financial owns, directly or indirectly, 25% or more of the total value of the outstanding stock of another corporation, it will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition, for purposes of the PFIC income test and PFIC asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that are received or accrued by NextPoint Financial from a “related person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.

Under certain attribution rules, if NextPoint Financial is a PFIC, U.S. Holders will be deemed to own their proportionate share of any of NextPoint Financial’s subsidiaries which is also a PFIC (a “ Subsidiary PFIC ”), and will generally be subject to U.S. federal income tax under the “Default PFIC Rules Under Section 1291 of the Code” discussed below on their proportionate share of any (i) distribution on the shares of a Subsidiary PFIC and

160

(ii) disposition or deemed disposition of stock of a Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC. In addition, U.S. Holders may be subject to U.S. federal income tax on any indirect gain realized on the shares of a Subsidiary PFIC on the sale or disposition of the Securities. Accordingly, U.S. Holders should be aware that they could be subject to tax under the PFIC rules even if no distributions are received and no redemptions or other dispositions of the Securities are made.

Default PFIC Rules Under Section 1291 of the Code

If NextPoint Financial is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the ownership and disposition of the Securities depend on whether such U.S. Holder makes a “qualified electing fund” or “QEF” election (a “ QEF Election ”) or makes a mark-to-market election under Section 1296 of the Code (a “ Mark-toMarket Election ”) with respect to Common Shares. A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election (a “ Non-Electing U.S. Holder ”) will be taxable as described below.

A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of Common Shares and NAC Warrants and (b) any excess distribution received on the Common Shares. A distribution generally will be an “excess distribution” to the extent that such distribution (together with all other distributions received in the current tax year) exceeds 125% of the average distributions received during the three preceding tax years (or during a U.S. Holder’s holding period for the Common Shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of Common Shares or NAC Warrants of a PFIC (including an indirect disposition of shares of a Subsidiary PFIC), and any excess distribution received on such Common Shares (or a distribution by a Subsidiary PFIC to its shareholder that is deemed to be received by a U.S. Holder) must be ratably allocated to each day in a Non-Electing U.S. Holder’s holding period for the Common Shares. The amount of any such gain or excess distribution allocated to the tax year of disposition or allocation of the excess distribution to years before the entity became a PFIC, if any, would be taxed as ordinary income (and not eligible for certain preferential tax rates, as discussed above). The amounts allocated to any other tax year would be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each such year, and an interest charge would be imposed on the tax liability for each such year, calculated as if such tax liability had been due in each such year. A Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as “personal interest,” which is not deductible.

If NextPoint Financial is a PFIC for any tax year during which a Non-Electing U.S. Holder holds Class A Restricted Voting Units, Common Shares or NAC Warrants, it will continue to be treated as a PFIC with respect to such NonElecting U.S. Holder, regardless of whether it ceases to be a PFIC in one or more subsequent tax years. If NextPoint Financial ceases to be a PFIC, a Non- Electing U.S. Holder may terminate this deemed PFIC status with respect to Common Shares by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code as discussed above) as if such Common Shares were sold on the last day of the last tax year for which NextPoint Financial was a PFIC. No such election, however, may be made with respect to the NAC Warrants.

Under proposed Treasury Regulations, if a U.S. Holder has an option, warrant, or other right to acquire stock of a PFIC (such as the NAC Warrants), such option, warrant or right is considered to be PFIC stock subject to the default rules of Section 1291 of the Code. Under rules described below, the holding period for the Warrant Shares received upon exercise of NAC Warrants will begin on the date a U.S. Holder acquires the Class A Restricted Voting Units. This will impact the availability of the QEF Election and Mark-to-Market Election with respect to the Warrant Shares. Thus, a U.S. Holder will have to account for Warrant Shares and Class A Restricted Voting Shares under the PFIC rules and the applicable elections differently.

QEF Election

A U.S. Holder that makes a QEF Election for the first tax year in which its holding period of its Class A Restricted Voting Shares or Common Shares begins generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to its applicable Class A Restricted Voting Shares or Common Shares. However, a U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such U.S. Holder’s pro rata

161

share of (a) NextPoint Financial’s net capital gain, which will be taxed as long-term capital gain to such U.S. Holder, and (b) NextPoint Financial’s ordinary earnings, which will be taxed as ordinary income to such U.S. Holder. Generally, “net capital gain” is the excess of (a) net long-term capital gain over (b) net short-term capital loss, and “ordinary earnings” are the excess of (a) “earnings and profits” over (b) net capital gain. A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each tax year in which NextPoint Financial is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by NextPoint Financial. However, for any tax year in which NextPoint Financial is a PFIC and has no net income or gain, U.S. Holders that have made a QEF Election would not have any income inclusions as a result of the QEF Election. If a U.S. Holder that made a QEF Election has an income inclusion, such U.S. Holder may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If such U.S. Holder is not a corporation, any such interest paid will be treated as “personal interest,” which is not deductible.

A U.S. Holder that makes a timely QEF Election generally (a) may receive a tax-free distribution from NextPoint Financial to the extent that such distribution represents “earnings and profits” that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s tax basis in the Common Shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election. In addition, a U.S. Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of Common Shares.

The procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such QEF Election is timely. A QEF Election will be treated as “timely” if such QEF Election is made for the first year in the U.S. Holder’s holding period for the Class A Restricted Voting Shares or Common Shares in which NextPoint Financial was a PFIC. A U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income tax return for such year. If a U.S. Holder makes a timely QEF Election with respect to its Class A Restricted Voting Shares, such QEF Election should apply to any Common Shares acquired upon the conversion of the Class A Restricted Voting Shares into Common Shares.

A QEF Election will apply to the tax year for which such QEF Election is made and to all subsequent tax years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election. If a U.S. Holder makes a QEF Election and, in a subsequent tax year, NextPoint Financial ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those tax years in which NextPoint Financial is not a PFIC. Accordingly, if NextPoint Financial becomes a PFIC in another subsequent tax year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any subsequent tax year in which NextPoint Financial qualifies as a PFIC.

As discussed above, under proposed Treasury Regulations, if a U.S. Holder has an option, warrant or other right to acquire stock of a PFIC (such as the NAC Warrants), such option, warrant or right is considered to be PFIC stock subject to the default rules of Section 1291 of the Code. However, a U.S. Holder of an option, warrant or other right to acquire stock of a PFIC may not make a QEF Election that will apply to the option, warrant or other right to acquire PFIC stock. In addition, under proposed Treasury Regulations, if a U.S. Holder holds an option, warrant or other right to acquire stock of a PFIC, the holding period with respect to shares of stock of the PFIC acquired upon exercise of such option, warrant or other right will include the period that the option, warrant or other right was held.

Consequently, under the applicable Treasury Regulations, if a U.S. Holder of Class A Restricted Voting Shares makes a QEF Election, such election generally will not be treated as a timely QEF Election with respect to Warrant Shares and the rules of Section 1291 of the Code discussed above will continue to apply with respect to such U.S. Holder’s Warrant Shares. However, a U.S. Holder of Warrant Shares should be eligible to make a timely QEF Election if such U.S. Holder elects in the tax year in which such Warrant Shares are received to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such Warrant Shares were sold for fair market value on the date such U.S. Holder acquired them by exercising the corresponding NAC Warrant. In addition, gain recognized on the sale or other taxable disposition (other than by exercise) of the NAC Warrants by a U.S. Holder will be subject to the rules of Section 1291 of the Code discussed above. Each U.S. Holder should consult its own tax advisor regarding the application of the PFIC rules to the Securities.

162

U.S. Holders should be aware that, for each tax year, if any, that NextPoint Financial is a PFIC, NextPoint Financial can provide no assurances that it will satisfy the record keeping requirements of a PFIC, or that it will make available to U.S. Holders the information such U.S. Holders require to make a QEF Election with respect to NextPoint Financial or any Subsidiary PFIC. Each U.S. Holder should consult its own tax advisors regarding the availability of, and procedure for making, a QEF Election with respect to NextPoint Financial and any Subsidiary PFIC.

A U.S. Holder makes a QEF Election by attaching a completed IRS Form 8621, including a PFIC Annual Information Statement, to a timely filed U.S. federal income tax return. However, if NextPoint Financial does not provide the required information with regard to NextPoint Financial or any of its Subsidiary PFICs, U.S. Holders generally will not be able to make a QEF Election for such entity and will continue to be subject to the rules discussed above that apply to Non-Electing U.S. Holders with respect to the taxation of gains and excess distributions.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election with respect to Common Shares only if the Common Shares are marketable stock. The Common Shares generally will be “marketable stock” if the Common Shares are regularly traded on (a) a national securities exchange that is registered with the Securities and Exchange Commission, (b) the national market system established pursuant to Section 11A of the Exchange Act (as defined herein) or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and other requirements and the laws of the country in which such foreign exchange is located, together with the rules of such foreign exchange, ensure that such requirements are actually enforced and (ii) the rules of such foreign exchange ensure active trading of listed stocks. If such stock is traded on such a qualified exchange or other market, such stock generally will be considered “regularly traded” for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Provided that the Common Shares are “regularly traded” as described in the preceding sentence, the Common Shares are expected to be marketable stock, although no assurances can be given.

A U.S. Holder that makes a Mark-to-Market Election with respect to its Common Shares generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to such Common Shares. However, if a U.S. Holder does not make a Mark-to-Market Election beginning in the first tax year of such U.S. Holder’s holding period for the Common Shares or such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the Common Shares.

Any Mark-to-Market Election made by a U.S. Holder for the Class A Restricted Voting Shares will also apply to such U.S. Holder’s Common Shares and Warrant Shares. As a result, if a Mark-to-Market Election has been made by a U.S. Holder with respect to Class A Restricted Voting Shares, any Warrant Shares received will automatically be marked-to-market in the year of exercise. Because, under the proposed Treasury Regulations, a U.S. Holder’s holding period for Warrant Shares includes the period during which such U.S. Holder held the NAC Warrants, a U.S. Holder will be treated as making a Mark-to-Market Election with respect to its Warrant Shares after the beginning of such U.S. Holder’s holding period for the Warrant Shares unless the Warrant Shares are acquired in the same tax year as the year in which the U.S. Holder acquired its Class A Restricted Voting Units. Consequently, the default rules under Section 1291 described above generally will apply to the mark-to-market gain realized in the tax year in which Warrant Shares are received. However, the general mark-to-market rules will apply to subsequent tax years.

A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each tax year in which NextPoint Financial is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the Common Shares, as of the close of such tax year over (b) such U.S. Holder’s tax basis in the Common Shares. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the excess, if any, of (i) such U.S. Holder’s adjusted tax basis in the Common Shares, over (ii) the fair market value of such Common Shares (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market Election for prior tax years).

163

A U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holder’s tax basis in the Common Shares to reflect the amount included in gross income or allowed as a deduction because of such Mark- toMarket Election. In addition, upon a sale or other taxable disposition of Common Shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or ordinary loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior tax years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior tax years).

A U.S. Holder makes a Mark-to-Market Election by attaching a completed IRS Form 8621 to a timely filed U.S. federal income tax return. A timely Mark-to-Market Election applies to the tax year in which such Mark-toMarket Election is made and to each subsequent tax year, unless the Common Shares cease to be “marketable stock” or the IRS consents to revocation of such election. Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

Although a U.S. Holder may be eligible to make a Mark-to-Market Election with respect to the Common Shares, no such election may be made with respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as owning because such stock is not marketable. Hence, the Mark-to-Market Election will not be effective to eliminate the interest charge and other income inclusion rules described above with respect to deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary PFIC.

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of Common Shares that would otherwise be tax-deferred ( e.g ., gifts and exchanges pursuant to corporate reorganizations). However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which Common Shares or NAC Warrants are transferred. In addition, these proposed Treasury Regulations are subject to the same uncertainties described above with respect to the proposed Treasury Regulations applicable to options, warrants or other rights to acquire stock of a PFIC.

Certain additional adverse rules will apply with respect to a U.S. Holder if NextPoint Financial is a PFIC, regardless of whether such U.S. Holder makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses Common Shares or NAC Warrants as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such Common Shares or NAC Warrants.

In addition, a U.S. Holder who acquires Common Shares or NAC Warrants from a decedent generally will not receive a “step up” in tax basis of such Common Shares or NAC Warrants to fair market value.

Special rules also apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC. Subject to such special rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit. The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should consult with their own tax advisor regarding the availability of the foreign tax credit with respect to distributions by a PFIC.

The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules (including the applicability and advisability of a QEF Election and Mark-to-Market Election) and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Securities.

Additional Tax Considerations

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign currency or on the sale, exchange or other taxable disposition of Securities generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into

164

U.S. dollars at that time). If the foreign currency received is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who receives payment in foreign currency and engages in a subsequent conversion or other disposition of the foreign currency may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the Common Shares (or with respect to any constructive dividend on the Warrants) generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” Generally, dividends paid by a foreign corporation (including constructive dividends) should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code. However, the amount of a distribution with respect to the Securities that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation is calculated separately with respect to specific categories of income. The foreign tax credit rules are complex, and each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules.

Additional Tax on Passive Income

Certain U.S. Holders that are individuals, estates or trusts (other than trusts that are exempt from tax) will be subject to a 3.8% tax on all or a portion of their “net investment income,” which includes dividends on the Common Shares (or with respect to any constructive dividend on the Warrants), and net gains from the disposition of the Securities. Further, excess distributions treated as dividends, gains treated as excess distributions, and mark-to-market inclusions and deductions are all included in the calculation of net investment income.

Treasury Regulations provide, subject to the election described in the following paragraph, that solely for purposes of this additional tax, that distributions of previously taxed income will be treated as dividends and included in net investment income subject to the additional 3.8% tax. Additionally, to determine the amount of any capital gain from the sale or other taxable disposition of Common Shares that will be subject to the additional tax on net investment income, a U.S. Holder who has made a QEF Election will be required to recalculate its basis in the Common Shares excluding QEF basis adjustments.

Alternatively, a U.S. Holder may make an election which will be effective with respect to all interests in a PFIC for which a QEF Election has been made and which is held in that year or acquired in future years. Under this election, a U.S. Holder pays the additional 3.8% tax on QEF income inclusions and on gains calculated after giving effect to related tax basis adjustments. U.S. Holders that are individuals, estates or such trusts should consult their own tax advisors regarding the applicability of this tax to any of their income or gains in respect of the Securities.

Information Reporting; Backup Withholding Tax

165

Under U.S. federal income tax laws certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person. U.S. Holders may be subject to these reporting requirements unless their Securities are held in an account at certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should consult their own tax advisors regarding the requirements of filing information returns, including the requirement to file IRS Form 8938.

Payments made within the U.S., or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of the Securities generally may be subject to information reporting and backup withholding tax, currently at the rate of 24%, if a U.S. Holder (a) fails to furnish its correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that it has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However, certain exempt persons, such as U.S. Holders that are corporations, generally are excluded from these information reporting and backup withholding tax rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.

The discussion of reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax, and under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisors regarding the information reporting and backup withholding rules.

U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Securities by NonU.S. Holders

This section applies to a Holder that is a “Non-U.S. Holder”. As used herein, the term “ Non-U.S. Holder ” means a beneficial owner of Securities (other than a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) who or that is for U.S. federal income tax purposes:

a non-resident alien individual (other than certain former citizens and residents of the United States subject to U.S. tax as expatriates);
a foreign corporation; or
an estate or trust that is not a U.S. Holder;

but generally does not include an individual who is present in the United States for 183 days or more in the taxable year of disposition. If you are such an individual, you are urged to consult your tax advisor regarding the U.S. federal income tax consequences of the sale or other disposition of our securities.

Dividends (including constructive dividends) paid or deemed paid to a Non-U.S. Holder in respect to its Common Shares generally will not be subject to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the U.S. (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains in the U.S.).

In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our Common Shares and NAC Warrants unless such gain is effectively connected with

166

its conduct of a trade or business in the U.S. (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such Non-U.S. Holder maintains in the U.S.).

Dividends (including constructive dividends) and gains that are effectively connected with the Non-U.S. Holder's conduct of a trade or business in the U.S. (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base in the U.S.) generally will be subject to U.S. federal income tax at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, also may be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

The U.S. federal income tax treatment of a Non-U.S. Holder's exercise of a NAC Warrant or the lapse of a NAC Warrant held by a Non-U.S. Holder, generally will correspond to the U.S. federal income tax treatment of the exercise or lapse of a NAC Warrant by a U.S. Holder, as described above, although to the extent a cashless exercise results in a taxable exchange, the consequences would be similar to those described in the preceding paragraphs above for a Non-U.S. Holder's gain on the sale or other disposition of our Common Shares and NAC Warrants.

Backup Withholding and Information Reporting

Dividend payments with respect to Common Shares and proceeds from the sale, exchange or redemption of Common Shares may be subject to information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes other required certifications, or who is otherwise exempt from backup withholding and establishes such exempt status. A Non-U.S. Holder generally will eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.

Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder's or a Non-U.S. Holder's U.S. federal income tax liability, if any, and may entitle such U.S. Holder or Non-U.S. Holder to a refund, provided that the requisite information is correctly and timely furnished to the IRS. Holders are urged to consult their tax advisors regarding the application of backup withholding and the availability of and procedure for obtaining an exemption from backup withholding in their particular circumstances.

THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF THE SECURITIES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR CIRCUMSTANCES.

==> picture [472 x 42] intentionally omitted <==

167

PROMOTERS

The Sponsor was considered a promoter of NAC within the meaning of applicable securities legislation for the purposes of the IPO. The Sponsor owns, directly or indirectly, 5,700,000 Class B Shares representing approximately 99.13% of the Class B Shares (and 22.14% of all issued and outstanding shares prior to completion of the Transaction). Mr. Neuberger was also considered a promoter of NAC within the meaning of applicable securities legislation since, among other things, the Sponsor is controlled by Mr. Neuberger, Mr. Neuberger is the sole manager of the Sponsor, and Mr. Neuberger was also be directly involved with NAC as Chief Executive Officer and Chairman.

168

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

To the knowledge of NAC, NAC is not a party to any material legal proceedings nor, to NAC’s knowledge, are any such proceedings contemplated by or against NAC. To the knowledge of NAC, following closing of the Transaction, NextPoint Financial, except as disclosed herein, will not be a party to any material legal proceedings nor, to NAC’s knowledge, will any such proceedings be contemplated by or against NextPoint Financial. See “ Risk Factors ” in this prospectus for a description of the risks and uncertainties that impact NextPoint Financial’s business, including risks relating to current and future litigation or regulatory proceedings.

169

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Except as described in the prospectus, none of the proposed directors or executive officers of NextPoint Financial, or any person or company that is expected to beneficially own, or control or direct more than 10% of any class or series of shares of NextPoint Financial, or any associate or Affiliate of any of the foregoing persons, has or has had any material interest in any past transaction within the three years before the date of the prospectus, or any proposed transaction, that has materially affected or would materially affect NextPoint Financial or any of its expected subsidiaries.

170

AUDITORS

The auditor of NAC is Deloitte LLP, Chartered Professional Accountants, Licensed Public Accountants, having an address at Bay Adelaide East, Suite 200, 8 Adelaide West, Toronto, Ontario, M5H 0A9. Deloitte LLP is independent of NAC within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario.

The auditor of Liberty is Deloitte & Touche LLP, having an address of 901 East Byrd Street, Suite 820, Richmond, VA 23219, United States. Deloitte & Touche LLP is independent of Liberty within the meaning of the American Institute of Certified Public Accountants and Rule 204 of the Rules of Professional Conduct of Chartered Professional Accountants.

The auditor of Liberty is Cherry Bekaert LLP, having an address of 222 Central Park Ave, Virginia Beach, VA 23462, United States. Cherry Bekaert LLP was the auditor of Liberty for the period from May 1, 2017 to April 30, 2019. Cherry Bekaert LLP is independent of Liberty within the meaning of the American Institute of Certified Public Accountants and Rule 204 of the Rules of Professional Conduct of Chartered Professional Accountants.

The auditor of LoanMe is Baker Tilly US, LLP, having an address of 18500 Von Karman Ave., 10th floor, Irvine, CA 92612, United States. Baker Tilly US, LLP is independent of LoanMe within the meaning of the American Institute of Certified Public Accountants and Rule 204 of the Rules of Professional Conduct of Chartered Professional Accountants.

Upon completion of the Transaction it is proposed that Deloitte & Touche LLP, having an address of 901 East Byrd Street, Suite 820, Richmond, VA 23219, United States will become the auditor of NextPoint Financial.

External Auditor Service Fees

Audit Fees

The aggregate fees billed by NAC’s external auditor for the financial year ended December 31, 2020 and for the period from July 16, 2020 (date of incorporation) through December 31, 2020 for audit services were approximately $70,834.

Audit-Related Fees

Tax Fees

The aggregate fees billed for tax compliance, tax advice, and tax planning services by NAC’s external auditor for the financial year ended December 31, 2020 and for the period from July 16, 2020 (date of incorporation) through December 31, 2020 were nil.

All Other Fees

171

172 -

REGISTRAR AND TRANSFER AGENT AND WARRANT AGENT

The transfer agent and registrar of the Common Shares and the warrant agent for the NAC Warrants will be TSX Trust Company at its principal offices located at 100 Adelaide Street West #301, Toronto, Ontario, M5H 1S3.

172

EXPERTS AND INTERESTS OF EXPERTS

Certain legal and tax matters will be passed upon at the date of this prospectus by Blake, Cassels & Graydon LLP on NAC’s behalf. As at the date hereof, the partners and associates of Blake, Cassels & Graydon LLP, as a group, beneficially own, directly or indirectly, less than 1% of NAC’s securities.

173

MATERIAL CONTRACTS

The following are the material contracts of NextPoint Financial, other than contracts entered into in the ordinary course of business:

(a) the Liberty Agreement; (b) the LoanMe Agreement; (c) the Investor Rights Agreement; (d) the Lock-Up Agreements; (e) the Commitment Letter; and (f) the Warrant Agreement.

Copies of the above material contracts will be available following completion of the Transaction on NextPoint Financial’s SEDAR profile at www.sedar.com. Set out below are the particulars of certain material contracts not described elsewhere in this prospectus.

174

CONTRACTUAL RIGHT OF ACTION

Original purchasers of Class A Restricted Voting Units from the underwriters in the IPO who continue to hold those securities up to the Redemption Deadline will have a contractual right of action for rescission or damages against NextPoint Financial as well as a contractual right of action for damages alone against: (a) the directors of NAC as of the date hereof are, and as of the Redemption Deadline are expected to be (the “ NAC directors ”), Andrew Neuberger, Frank Amato, George Coleman, Wendy Lane and John Lederer, and (b) every person or company who signs this prospectus, which, for greater certainty, includes the Sponsor as a promoter of NAC (collectively, the “ signatories ”).

In the event that NAC’s qualifying acquisition is completed and if this prospectus or any amendment hereto contains a misrepresentation (as defined in the Securities Act (Ontario)), provided that such claims for rescission or damages are commenced by the purchaser not later than: (a) in the case of an action for rescission, 180 days after the Redemption Deadline, or (b) in the case of an action for damages, the earlier of: (i) 180 days after the plaintiff first had knowledge of the facts giving rise to the cause of action, or (ii) three (3) years after the Redemption Deadline, a purchaser who purchased Class A Restricted Voting Units from NAC’s underwriters in the IPO shall, in respect of the underlying Class A Restricted Voting Shares, as re-designated pursuant to the Transaction as Common Shares, and the underlying NAC Warrants, be entitled to, in addition to any other remedy available at the time to such holder, (i) as against NextPoint Financial, in the case of rescission, the amount paid for such Class A Restricted Voting Units upon surrender of the underlying Class A Restricted Voting Shares and NAC Warrants, and (ii) as against NextPoint Financial, the NAC directors and the signatories, in the case of a damages election, their proven damages.

In addition, the following additional provisions apply to actions against the NAC directors or the signatories:

(i) each has a due diligence defence and the other defences and rights contemplated in section 130 of the Securities Act (Ontario) and at law; and
(ii) each is entitled to be indemnified by NextPoint Financial and the Target Businesses to the maximum extent permitted by law.

This contractual right of action for rescission or damages will, subject to the foregoing, be consistent with the statutory right of rescission or damages described under section 130 of the Securities Act (Ontario). In no case shall the amount recoverable exceed the original purchase price of the Class A Restricted Voting Units. In addition, for non-residents of Canada, the contractual right shall be subject to the same interpretational or constitutional defences, if any, as would apply to a claim against a resident Canadian issuer under section 130 of the Securities Act (Ontario), and, as a result, the argument that non-residents are not entitled to take advantage of the contractual right shall not be precluded.

The NAC directors as at the date of the final prospectus (or any amendment), namely: Andrew Neuberger, Frank Amato, George Coleman, Wendy Lane and John Lederer, will, subject to the terms thereof, be potentially liable for misrepresentations in this final prospectus (as it may be amended) under Part XXIII.1 of the Securities Act (Ontario) and the “contractual right of action” described above. Any directors that are appointed to the board of directors of NextPoint Financial as of or following the closing of the Transaction, and who are not otherwise signing this prospectus, will not be subject to liability as directors of NAC for any misrepresentation in this prospectus or the contractual right of action described under “ Contractual Right of Action ” of this prospectus. Andrew Neuberger, John Lederer and Wendy Lane are the only directors of NextPoint Financial who will be subject to liability for any misrepresentation due to their role as NAC directors. The directors who are currently anticipated to be appointed to the board of directors of NextPoint Financial as of or following the closing of the Transaction, have not undertaken due diligence in respect of the business and affairs of NextPoint Financial.

175

ENFORCEMENT OF JUDGEMENTS AGAINST FOREIGN PERSONS

Certain of NextPoint Financial’s operations and assets will be located outside of Canada, and certain of NextPoint Financial officers and directors, including Andrew Neuberger, Brent Turner, Wendy Lane, William Minner, Jean Birch, Logan Powell, Jonathan Williams, Mike Piper, Ted DeMarino, Scott Terrell, Ghazi Dakik and Juliet Diiorio reside outside of Canada. Although our current directors and officers who reside outside of Canada either have an office in Canada or have appointed Blakes Extra-Provincial Services Inc. as their agent for service of process in Canada, it may not be possible for shareholders to enforce against such persons judgments obtained in Canadian courts predicated on the civil liability provisions of applicable securities laws in Canada. Shareholders are advised that it may not be possible for them to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.

176

SECURITIES LAW EXEMPTIONS

In connection with the filing of this prospectus, NAC applied to and was granted by the Canadian provincial securities regulatory authorities an exemption from the provisions of NI 41-101 relating to restricted securities. NAC was also granted an exemption from the requirements under Part 10 of NI 51-102, and from the requirements under Parts 2 and 3 of OSC Rule 56-501 — Restricted Shares .

The Sponsor is considered a promoter of NAC within the meaning of applicable securities legislation and has therefore signed a certificate of promoter for this prospectus. In connection with our IPO prospectus, the OSC, as principal regulator, informed us that it is of the view that Mr. Neuberger is also a promoter of NAC within the meaning of applicable securities legislation since, among other things, the Sponsor is controlled by Mr. Neuberger, Mr. Neuberger is the sole manager of the Sponsor, and Mr. Neuberger is also the Chief Executive Officer and Chairman of NAC.

177

CERTIFICATE OF NEXTPOINT ACQUISITION CORP. AND PROMOTER

June 3, 2021

This prospectus constitutes full, true and plain disclosure of all material facts relating to the securities previously issued by the issuer as required by securities legislation of each of the provinces and territories of Canada, other than Québec.

NEXTPOINT ACQUISITION CORP.

BY: (SIGNED) “ ANDREW NEUBERGER ” BY: (SIGNED) “ FRANK AMATO ” CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER

ON BEHALF OF THE BOARD OF DIRECTORS

BY: (SIGNED) “ JOHN A. LEDERER” BY: (SIGNED) “ WENDY LANE DIRECTOR DIRECTOR NEXTPOINT ACQUISITION SPONSOR LLC, AS PROMOTER

BY: (SIGNED) “ANDREW NEUBERGER”

MANAGER ANDREW NEUBERGER, AS PROMOTER

BY: (SIGNED) “ ANDREW NEUBERGER ”

C-1

APPENDIX A - NAC FINANCIAL STATEMENTS

(See attached)

A-1

NEXTPOINT ACQUISITION CORP.

UNAUDITED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021 AND

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(Expressed in U.S. Dollars)

A-2

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP.

BALANCE SHEET

AS AT MARCH 31, 2021

(expressed in U.S. dollars)

ASSETS
Cash
Restricted cash and securities held in escrow account (Notes 5 & 11)
Prepaid expenses
Receivable
Total Assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accrued expenses
Class A restricted voting units (Note 6)
Class A and B warrants liability (Note 6)
Loan from Sponsor (Note 15)
Interest payable
Total current liabilities
Total Liabilities
Shareholders' Equity
Share capital, net
Deficit
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity

As at March 31,
2021
As at December
31, 2020
162,583
2,061,206
200,063,689
200,048,169
31,294
53,471
5,270
-
200,262,836
$
202,162,846
$
3,355,798
1,242,849
197,385,414
195,468,634
10,300,000
5,768,000
670,000
-
2,178
-
211,713,390
$
202,479,483
$
211,713,390
$
202,479,483
$
5,859,798
5,859,798
(17,310,352)
(6,176,435)
(11,450,554)
$
(316,637)
$
200,262,836
$
202,162,846
$

The accompanying notes are an integral part of these financial statements

Approved by the Board:

BY: BY: “ ANDREW NEUBERGER ” “ FRANK AMATO ” CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER

A-3

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP.

STATEMENT OF LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(expressed in U.S. dollars)

Revenue Interest Total Revenue Expenses Interest expense Net unrealized loss on change of warrants liabilities Amortization of issuance cost on Class A Shares (Note 6) General and administrative (Note 12) Professional fees Total Expenses Net Loss Weighted average shares outstanding of Class B Shares, basic and diluted Net Loss per Share - basic and diluted	15,520
	15,520 $
	17,698 4,532,000 1,901,259 67,749 4,630,731
	11,149,437 $

	(11,133,917) $
	5,750,000
	(1.94) $

The accompanying notes are an integral part of these financial statements

A-4

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP.

STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(expressed in U.S. dollars)

Balance - December 31, 2020 Net Loss Balance - March 31, 2021		Shares 5,750,000 - 5,750,000		Amount 5,859,798 $ - 5,859,798 $	Retained Deficit (6,176,435) $ (11,133,917) (17,310,352) $	Total Shareholders' Equity
						(316,637) $ (11,133,917)
						(11,450,554) $

The accompanying notes are an integral part of these financial statements

A-5

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP.

STATEMENT OF CASH FLOW

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(expressed in U.S. dollars)

Operating Activities Net loss Amortization of issue costs on Class A Restricted Voting shares Net unrealized loss on change of warrants liabilities Prepaid expenses Accrued interest payable Accrued expenses Receivables Net cash provided by operating activities Investing Activities Investment held in Escrow Net cash used in investing activities Financing Activities Loan from Sponsor Net cash provided by financing activities Net Change in Cash Cash - Beginning of period Cash - End of period	(11,133,917) 1,901,259 4,532,000 22,178 17,698 2,112,949 (5,270)
	(2,553,103)
	(15,520)
	(15,520)
	670,000
	670,000
	(1,898,623) 2,061,206
	162,583

The accompanying notes are an integral part of these financial statements

A-6

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

1. CORPORATE INFORMATION

NextPoint Acquisition Corp. (the “Corporation”) is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization, or any other similar business combination involving the Corporation (a “qualifying acquisition”).

The Corporation was incorporated on July 16, 2020 under the Business Corporations Act (British Columbia), and is domiciled in Canada. The registered office of the company is located at 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, BC, V7X 1L3, Canada.

These financial statements were authorized for issuance by the Board of Directors of the Corporation on May 12, 2021.

2. SIGNIFICANT EVENTS

On August 11, 2020, the Corporation closed its initial public offering (the ‘‘Offering’’) of 20,000,000 Class A restricted voting units (each, a “Class A Restricted Voting Unit”) at an offering price of U.S.$10.00 per Class A Restricted Voting Unit for gross proceeds of $200,000,000 pursuant to the Corporation’s prospectus dated August 5, 2020 (the ‘‘Prospectus’’) and the Corporation commenced trading on the Toronto Stock Exchange (the “Exchange”) under the symbol “NAC.V”.

Each Class A Restricted Voting Unit consisted of one Class A restricted voting share (each, a “Class A Restricted Voting Share” and one-half of a share purchase warrant (each whole share purchase warrant, a “Warrant”). On September 21, 2020 the Class A Restricted Voting Shares and the Warrants comprising the Class A Restricted Voting Units, commenced trading separately on the Exchange under the symbols “NAC.U” and “NAC.WT.U”, respectively. On or immediately following the closing of a qualifying acquisition, each Class A Restricted Voting Share (unless previously redeemed) will be automatically converted into one common share (a “Common Share”) and each Class B share of the Corporation (each a “Class B Share”) will be automatically converted on a 100-for-1 basis into proportionate voting shares of the Corporation, as set forth in the notice of articles and articles of the Corporation (the “Proportionate Voting Shares”). The Warrants will become exercisable, at an exercise price of U.S.$11.50, commencing 65 days after the completion of a qualifying acquisition and will expire at 5:00 p.m. (Toronto time) on the day that is five years after the completion of a qualifying acquisition or earlier, as described in the Prospectus. Once the Warrants become exercisable, the Corporation may accelerate the expiry date of the outstanding Warrants (excluding the Warrants held by the Sponsor (as defined below), as described in the Prospectus) by providing 30 days’ notice, if and only if, the closing price of the Common Shares equals or exceeds U.S.$18.00 per Common Share (as adjusted for stock splits or combinations, stock dividends, extraordinary dividends, reorganizations and recapitalizations and the like) for any 20 trading days within a 30-trading day period. If the Corporation accelerates the expiry of the Warrants, the board of directors of the Corporation has the option to require all holders that wish to exercise their Warrants to do so, in whole or in part, on a cashless basis.

Prior to closing of the Offering (the “Closing”), NextPoint Acquisition Sponsor LLC, the Corporation’s sponsor (the “Sponsor”) and certain of the Company’s directors, Frank Amato, Brian Benjamin, George Coleman, Wendy Lane and John Lederer, the “Founders”, purchased 5,913,125 Class B Shares, also referred to as the “Founders’ Shares”, for an aggregate price of U.S.$25,000, of which 763,125 of the Founders’ Shares were subsequently relinquished. The outstanding Founders’ Shares represent 20% of the issued and outstanding shares of the Corporation (including all Class A Restricted Voting Shares and Class B Shares).

A-7

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

The Sponsor purchased 600,000 Class B units of the Corporation (each a “Class B Unit”) at an offering price of U.S.$10.00 per Class B Unit (for an aggregate purchase price of U.S.$6,000,000) simultaneously with the Closing. Each Class B Unit consists of one Class B Share and one-half of a Warrant.

If the Corporation is unable to consummate a qualifying acquisition within the permitted timeline of 12 months (the “Permitted Timeline”) from the Closing, subject to any extension as described below, the Corporation will be required to redeem each of the outstanding Class A Restricted Voting Shares, for an amount per share, payable in cash, equal to the pro-rata portion (per Class A Restricted Voting Share) of: (A) the escrowed funds available in the escrow account, including any interest and other amounts earned thereon, less (B) an amount equal to the total of (i) any applicable taxes payable by the Corporation on such interest and other amounts earned in the escrow account, (ii) any taxes of the Corporation (including under Part VI.1 of the Tax Act) arising in connection with the redemption of the Class A Restricted Voting Shares, and (iii) up to a maximum of U.S.$50,000 of interest and other amounts earned from the proceeds in the escrow account to pay actual and expected winding-up expenses and certain other related costs (as described herein), each as reasonably determined by the Corporation. The Underwriter will have no right to the deferred underwriting commission held in the escrow account in such circumstances.

Such Permitted Timeline, however, could be extended to up to 36 months with shareholder approval of only the holders of Class A Restricted Voting Shares, by ordinary resolution, with approval by the Corporation’s board of directors. If such approvals are obtained, holders of Class A Restricted Voting Shares, irrespective of whether such holders vote for or against, or do not vote on, the extension of the Permitted Timeline, would be permitted to deposit all or a portion of their Class A Restricted Voting Shares for redemption as described in the Prospectus.

Notwithstanding the foregoing redemption rights, each holder of Class A Restricted Voting Shares, together with any affiliate of such holder or other person with whom such holder or affiliate is acting jointly or in concert, will not be permitted to redeem a number of Class A Restricted Voting Units that is more than 15% of the aggregate number of Class A Restricted Voting Shares issued and outstanding following the Closing. This limitation will not apply in the event a qualifying acquisition does not occur within the Permitted Timeline, or in the event of an extension to the Permitted Timeline.

The Class A Restricted Voting Shares may be considered “restricted securities” within the meaning of such term under applicable Canadian securities laws. Prior to the completion of a qualifying acquisition, holders of the Class A Restricted Voting Shares will not be entitled to vote at (or receive notice of or meeting materials in connection with) meetings held only to consider the election and/or removal of directors and auditors. The holders of the Class A Restricted Voting Shares will, however, be entitled to vote on and receive notice of meetings on all other matters requiring shareholder approval (including the proposed qualifying acquisition, if required under applicable law, and any proposed extension to the Permitted Timeline) other than the election and/or removal of directors and auditors prior to closing of a qualifying acquisition. In lieu of holding an annual meeting prior to the closing of the qualifying acquisition, the Corporation is required to provide an annual update on the status of identifying and securing a qualifying acquisition by way of a press release.

Upon closing of the qualifying acquisition, the Class B Shares will convert on a 100-for-1 basis into Proportionate Voting Shares. Prior to the closing of the qualifying acquisition, the Corporation will not issue any Common Shares or Proportionate Voting Shares. Following the closing of the qualifying acquisition, the Corporation will not issue any Class A Restricted Voting Shares or Class B Shares.

A-8

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

than transfers required due to the structuring of the qualifying acquisition or unless otherwise permitted by the Exchange. Any Class A Restricted Voting Shares purchased by our Founders would not be subject to the restrictions set out in such agreement. The Founders’ Shares purchased by the Founders and the Class B Units (including the Class B Shares or any shares acquired upon exercise of the Warrants forming part of such Class B Units) purchased by the Sponsor will not be subject to relinquishment based on performance.

Upon the Closing, an aggregate of U.S.$200,000,000 from the sale of the Class A Restricted Voting Units, or U.S.$10.00 per Class A Restricted Voting Unit sold to the public, was deposited with TSX Trust Company, as escrow agent, in an escrow account in Canada at a Canadian chartered bank or subsidiary thereof, in accordance with the escrow agreement. Subject to applicable law and payment of certain taxes, permitted redemptions and certain expenses, as further described herein, none of the funds held in the escrow account will be released to the Corporation prior to the closing of a qualifying acquisition.

Following the closing of a qualifying acquisition, the Corporation will use the balance of the nonredeemed Class A Restricted Voting Shares’ portion of the escrow account (less tax liabilities on amounts earned on the escrowed funds and certain expenses directly related to redemptions) (subject to availability, failing which any shortfall shall be made up from other sources) to pay the Underwriter its deferred underwriting commission. The per share amount the Corporation will distribute to holders of Class A Restricted Voting Shares who properly redeem their shares will not be reduced by the deferred underwriting commission we will pay to the Underwriter.

As 100% of the gross proceeds of the Offering and any additional equity raised pursuant to a rights offering are held by the escrow agent in the escrow account, shareholder approval of a qualifying acquisition is not required pursuant to the Exchange rules. As such, and unless shareholder approval is otherwise required under applicable law, we will: (i) prepare and file with applicable securities regulatory authorities a prospectus containing disclosure regarding the Corporation and its proposed qualifying acquisition; (ii) mail a notice of redemption to the holders of the Class A Restricted Voting Shares and make the final prospectus publicly available; and (iii) send by prepaid mail or otherwise deliver the prospectus to the holders of the Class A Restricted Voting Shares, as described in the Prospectus.

The escrowed funds are held to enable the Corporation to (i) satisfy redemptions made by holders of Class A Restricted Voting Shares (including in the event of a qualifying acquisition or an extension to the Permitted Timeline, or in the event a qualifying acquisition does not occur within the Permitted Timeline), (ii) fund the qualifying acquisition with the net proceeds following payment of any such redemptions and deferred underwriting commission, and/or (iii) pay taxes on amounts earned on the escrowed funds and certain permitted expenses. Such escrowed funds and all amounts earned thereon, subject to such obligations and applicable law, will be assets of the Corporation. These escrowed funds will also be used to pay the deferred underwriting commission in the amount of U.S $8,325,000, which (subject to availability, failing which any shortfall shall be made up from other sources) will be payable by the Corporation to the Underwriter upon the closing of our qualifying acquisition provided that a discretionary deferred portion may be used to pay to parties of the Corporation’s choosing, as described in the Prospectus.

A-9

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

Shares by any means permitted by the Exchange, not less than 21 days nor more than 60 days in advance of such deadline, in each case, with effect, subject to applicable law, immediately prior to the closing of a qualifying acquisition, for an amount per share, payable in cash, equal to the pro-rata portion (per Class A Restricted Voting Share) of: (A) the escrowed funds available in the escrow account at the time immediately prior to the redemption deposit deadline, including interest and other amounts earned thereon; less (B) an amount equal to the total of (i) any applicable taxes payable by the Corporation on such interest and other amounts earned in the escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by the Corporation, subject to the limitations described in the Prospectus. If approval of the qualifying acquisition by shareholders is otherwise required under applicable law, holders of Class A Restricted Voting Shares shall have the option to redeem their Class A Restricted Voting Shares irrespective of whether they vote for or against, or do not vote on, the qualifying acquisition. Holders of Class A Restricted Voting Shares will be given not less than 21 days’ notice of the shareholders meeting (if such meeting is required under applicable law) and of the corresponding redemption deposit deadline if such meeting is required. Participants through CDS Clearing and Depositary Services Inc. (“CDS”) may have earlier deadlines for beneficial holders to make deposits of Class A Restricted Voting Shares for redemption. If a CDS participant’s deadline is not met by a holder of Class A Restricted Voting Shares, such holder’s Class A Restricted Voting Shares may not be eligible for redemption.

The Founders will not be entitled to redeem the Founders’ Shares, or, in the case of the Sponsor, the Class B Shares forming part of the Class B Units in connection with a qualifying acquisition or an extension to the Permitted Timeline or entitled to access the escrow account should a qualifying acquisition not occur within the Permitted Timeline, as further described herein. The Founders will, however, participate in any liquidation distribution with respect to any Class A Restricted Voting Shares they may acquire in connection with or following this Offering through possible purchases on the secondary market. Following completion of the qualifying acquisition, the Proportionate Voting Shares into which the Founders’ Shares and Class B Shares underlying the Class B Units are convertible, the Warrants underlying the Class B Units, and the shares issuable on exercise of such Warrants may be subject to certain sale or transfer restrictions in accordance with applicable securities laws and the Exchange’s escrow restrictions.

On February 22, 2021, the Corporation, announced that it had entered into (i) a definitive agreement (the “Liberty Agreement”) by and between the Corporation and Franchise Group Intermediate L, LLC ( “Liberty Seller”), pursuant to which the Corporation shall acquire all of the equity interests of Franchise Group Intermediate L 1, LLC (“Liberty”); and (ii) a definitive agreement by and among the Corporation, NPLM Holdco LLC, a Delaware limited liability company and wholly owned subsidiary of the Corporation (“MergerSub”) and LoanMe, Inc. (“LoanMe”) and certain of its affiliates, pursuant to which the Corporation shall acquire, directly or indirectly, all of the equity of LoanMe (the “LoanMe Agreement” and together with the Liberty Agreement, the “Transaction Agreements”). The acquisition of the Target Businesses (the “Transaction”) are intended to constitute the Corporation’s qualifying acquisition pursuant to the of the Toronto Stock Exchange (the “Exchange”) Company Manual. The completion of the transactions contemplated by the Liberty Agreement and the LoanMe Agreement are each conditional upon the completion of the other and will occur concurrently. On closing of the Transaction, the Company is expected to be renamed “NextPoint Financial Inc.” (as such, “NextPoint Financial”).

Pursuant to the Transaction, the Corporation will acquire Liberty at an enterprise value of approximately $252 million, $182 million of which is payable in cash and the balance of which is payable in the Corporation’s common stock equivalents (subject to adjustment) and the Corporation will acquire LoanMe at an enterprise value of approximately $102 million, $18 million of which is payable in cash, approximately

A-10

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

$49 million of which is payable in the Corporation’s common stock equivalents and the balance of which reflects the assumption of existing corporate net debt at LoanMe.

The Corporation also announced that (i) it has received commitments to purchase US$25 million worth of common share equivalents of the Corporation at a price of US$10.00 per share (the “Private Placement”), the issuance of which will occur in conjunction with the closing of the Transaction (but is not a condition to the closing of the Transaction); and (ii) that it has obtained a commitment for a new US$200 million revolving credit facility (the “Credit Facility”).

The cash portion of the purchase prices payable in the Liberty and LoanMe transactions will be funded with cash remaining on deposit in the escrow account holding the proceeds from the Offering and, to the extent necessary, a combination of the proceeds of the Private Placement and advances against the Credit Facility. The Transaction, which is subject to customary closing conditions, is expected to close in the second quarter of 2021. The Transaction remains subject to satisfaction or waiver of certain customary closing conditions including among other things, the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the approval of the Exchange recognizing the Transaction as the Corporation’s qualifying acquisition, and the issuance of a receipt for a final prospectus on behalf of Canadian securities regulatory authorities.

On April 15, 2021, the Corporation has, in accordance with applicable rules, filed a non-offering preliminary prospectus with the securities regulatory authorities in each of the provinces and territories of Canada (other than Quebec) in respect of its proposed qualifying acquisition described above.

3. BASIS OF PREPARATION

Basis of preparation

These financial statements of the Corporation as at March 31, 2021 and for the three months ended March 31, 2021 have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”) issued as at March 31, 2021 by the International Accounting Standards Board (“IASB”) and with interpretation of the International Financial Reporting Interpretations Committee (“IFRIC”). These financial statements meet the requirements of International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”.

Going concern

Due to its limited working capital position, the Corporation’s ability to continue as a going concern is dependent upon the continued support of its Sponsor, NextPoint Acquisition Sponsor LLC, and/or upon the completion of the Qualifying Transaction or on the approval of an extension of the permitted timeline should the Qualifying Transaction not be completed by August 11, 2021. Under the Exchange rules, the Corporation can seek to borrow up to 10% of the funds in escrow (approximately $20 million) on an unsecured basis from the Sponsor and its affiliates and has borrowed $2 million, of which $670,000 were drawn, as at March 31, 2021 (see note 15). There can also be no assurance that we will be successful in completing our Qualifying Transaction. In the event a Qualifying Transaction does not occur the escrowed cash will be returned to Class A restricted voting unit holders and the Sponsor will have no recourse against the escrowed cash.

These uncertainties cast significant doubt upon the Corporation’s ability to continue as a going concern and the ultimate appropriateness of using accounting principles applicable to a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Corporation be unable to continue as a going concern. If the Corporation is not able to continue as a going concern, the Corporation may be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these financial statements. These differences could be material.

A-11

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

Basis of measurement

The financial statements of the Company have been prepared on a historical cost basis except for certain financial assets and financial liabilities which are carried at fair value. The Corporation’s functional and presentation currency is the U.S. dollar.

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant assumptions were used in determining the fair value of the Class A Restricted Voting Shares and warrants at inception.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial instruments

Financial assets and liabilities are recognized when the Corporation becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or are assigned and the Corporation has transferred substantially all risks and rewards of ownership in respect of the asset. Financial liabilities are derecognized when the related obligation is discharged, cancelled or when it expires.

Management determines the classification of financial instruments at initial recognition with reflection of the business model and cash flow characteristics of the financial instruments. Financial assets are classified at fair value through profit or loss (‘‘FVTPL’’), or at amortized cost. Financial liabilities other than the Warrants are classified at amortized cost.

Financial instruments classified as FVTPL are carried at fair value in the statement of financial position and any gains or losses are recorded in net income in the period in which they arise. Financial instruments classified as FVTPL include cash, as well as cash held in escrow. The Class A Restricted Voting Shares subject to redemption have been classified as liabilities for accounting purposes and are recorded at amortized cost. The Warrants are classified as FVTPL as they include a cashless option as described in Note 3. Other financial assets and liabilities are recognized at amortized cost. Such accounts would include accounts receivable, accounts payable, and accrued liabilities.

Expected credit losses on financial assets at amortized cost

These financial assets are recognized initially at fair value and subsequently measured at amortized cost. At each reporting date, the Corporation measures the loss allowance on these financial assets at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the Corporation shall measure the loss allowance at an amount equal to 12-month expected credit losses. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default in payments are all considered indicators that a loss allowance may be required.

Income tax

A-12

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured at the tax rates that are enacted or substantively enacted to apply in the period when the asset is realized and the liability is settled.

The effect on deferred income tax assets and liabilities of a change in tax rates is recognized within the statement of net income or loss in the period that includes the substantive enactment date. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered.

Per share information

Basic income or loss per Class B share is calculated by dividing the net income or loss by the weighted average number of Class B shares outstanding during the period. The calculation excludes the effect of Class A Restricted Voting Shares, as the Class A Restricted Voting Shares have been classified in these financial statements as financial liabilities and on a fully diluted basis the Class A Restricted Voting Shares are antidilutive.

5. RESTRICTED CASH AND SECURITIES HELD IN ESCROW

The following cash balances were held in escrow at a Canadian chartered bank as at March 31, 2021:

		As at March
		31, 2021
Cash and United Stated Treasury Bills	$	200,063,689

6. CLASS A RESTRICTED VOTING SHARES SUBJECT TO REDEMPTION

Authorization

The Corporation is authorized to issue an unlimited number of Class A Restricted Voting Shares. The holders of Class A Restricted Voting Shares have no pre-emptive rights or other subscription rights and there are no sinking fund provisions applicable to these shares.

Voting Rights

The holders of the Class A Restricted Voting Shares are entitled to vote on and receive notice of meetings on all matters requiring shareholder approval (including any proposed extension to the permitted timeline and approval of a qualifying acquisition if otherwise required under applicable law) other than the election and/or removal of directors and auditors prior to closing of a Qualified Transaction. Prior to a qualifying acquisition, holders of the Class A Restricted Voting Shares are not entitled to vote at (or receive notice of or meeting materials in connection with) meetings held only to consider the election and/or removal of directors and auditors.

Redemption Rights

Only holders of Class A Restricted Voting Shares are entitled to have their shares redeemed and receive the escrow proceeds (net of applicable taxes and other permitted deductions) in the event a qualifying acquisition does not occur within the permitted timeline, in the event of a qualifying acquisition, and in the event of an extension to the permitted timeline.

A-13

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

Classification

The Corporation has classified its Class A Restricted Voting Shares as financial liabilities within the balance sheet. The Corporation recorded a discount to the $200,000,000 of gross proceeds from the Offering in the amount of $5 million representing the fair value of the Warrants, and $2,601,865, representing the transaction costs associated with the Class A Restricted Voting Shares. The aggregate discount of $7,601,865 is being amortized over 12 months using the effective interest rate method. For the three months ended March 31, 2021, the Company recorded $1,901,259 of amortization of the issue costs in connection with the Warrants.

7. SHAREHOLDERS’ EQUITY

The Corporation is authorized to issue an unlimited number of Class B Shares without nominal or par value. The holders of Class B Shares have no pre-emptive rights or other subscription rights and there are no sinking fund provisions applicable to these shares.

Voting Rights

The holders of the Class B Shares are entitled to vote at all meetings of shareholders and on all matters requiring a shareholder vote, with the exception of an extension of the permitted timeline, which will only be voted upon by holders of Class A Restricted Voting Shares.

Redemption Rights

Holders of Class B Shares (including holders of Class B Units), being the Founders, do not have access to, and cannot benefit from, any proceeds held in the escrow account, and as such, do not have any redemption rights with respect to their Class B Shares and/or Class B Units. The Founders (including the Sponsor) will, however, be entitled to such redemption rights using proceeds from the escrow account with respect to any Class A Restricted Voting Shares they may acquire pursuant to or following the Offering.

8. TRANSACTION COSTS

Transaction costs are directly related to the Offering and consist mainly of legal, accounting, printing, filing an underwriting cost. Transaction costs incurred in 2020, from July 16, 2020 (date of incorporation), were allocated between Shareholders’ Equity and shares subject to redemption on the following basis:

Professional fees (Legal, accounting, etc.) Underwriters’ commission Exchange listing Other Total	Class A Restricted Voting Shares Warrants $ 622,544 $ 15,963 1,803,750 46,250 170,696 4,376 4,875 125 $ 2,601,865 $ 66,714	Class B Shares $ 15,202 — — — $ 15,202	Total
			$ 653,709 1,850,000 175,072 5,000 $ 2,683,781

There were no additional transaction costs for the three months ended March 31, 2021. Pursuant to the underwriting agreement for the Offering, the Corporation’s underwriter was entitled to an underwriting commission equal up to $11,000,000 or 5.5% of the gross proceeds of the Class A Restricted Voting Units issued under the Offering. The Underwriter and the Corporation agreed that the commission payable on Closing would be reduced as mutually agreed between the Underwriter and the Corporation for certain investors in the Class A Restricted Voting Units. The Corporation paid $1,850,000, to the Underwriter at the Closing. The balance of the agreed underwriting commission, being $8,325,000, or 4.5% of the gross

A-14

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

proceeds of the Class A Restricted Voting Units as reduced for certain investors as mutually agreed between the Underwriter and the Corporation, has been deferred and will only be paid upon successful completion of a qualifying acquisition. In addition, 1.0% of the gross proceeds (such amount being part of the 4.5% of the gross proceeds deferred underwriting commission) will be payable by the Corporation to such parties as it sees fit, including the Underwriter or to advisors who have assisted with the qualifying acquisition. If no qualifying acquisition is consummated within the Permitted Timeline, such amounts shall not be payable. Due to its association with an uncertain future qualifying acquisition, the contingent liability of deferred underwriting commission balance has not been recorded in the financial statements. Transaction costs were prorated between Class A Restricted Voting Shares, Warrants and Class B Shares by the amount of proceeds received.

9. FINANCIAL INSTRUMENTS

All financial instruments for which fair value is recognized or disclosed are categorized within a fair value hierarchy, described as follows:

Level 1 − Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities

Level 2 − Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means

Level 3 − valuation techniques with significant unobservable market inputs. The cash and cash balance held in escrow are measured using level 1 inputs.

All financial assets at FVTPL are measured using either Level 1or Level 2 inputs.

10. FINANCIAL RISK MANAGEMENT

Market risk

Market risk is the risk that a material loss arises from fluctuations in a financial instrument’s fair value. For purposes of this disclosure, the Corporation segregates market risk into two categories: fair value risk and interest rate risk.

Fair value risk

Fair value risk is the potential for loss from an adverse movement in market prices. The Corporation has minimal fair value risk as the only financial instruments carried at fair value are cash and cash and securities held in escrow, which are short-term U.S. Treasury Bills.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in interest rates. The Corporation’s exposure to interest rate risk is nominal because all of the assets are short-term in nature.

A-15

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

11. CAPITAL MANAGEMENT

The Corporation defines the capital that it manages as its cash and cash and securities balance held in escrow.

		As at
	March 31, 2021
Cash	$	162,583
Restricted cash and securities held in escrow account	$	200,063,689

The Corporation’s primary objective in managing capital is to ensure capital preservation in order to benefit from acquisition opportunities as they arise and to fund redemptions should they occur.

To the extent that the Corporation requires additional funding for general ongoing expenses or in connection with a qualifying acquisition, the Corporation may seek funding by way of unsecured loans from the Sponsor and/or its affiliates, which loans would bear interest at no more than the U.S. dollar prime rate plus 1.0%. The lender under the loans would not have recourse against the funds held in the escrow account, and thus the loans will not reduce the value thereof. Such loans will collectively be subject to a maximum aggregate principal amount equal to 10% of the escrowed funds and may only be repayable in cash no earlier than the closing of the qualifying acquisition. Such loans may only be convertible into shares and/or Warrants in connection with the closing of the qualifying acquisition.

The Corporation may also seek to raise additional funds through a rights offering in respect of shares available to its shareholders, in accordance with the requirements of applicable securities legislation and the Exchange’s rules, and subject to the consent of the Underwriter, subject to the conditions outlined further in the Prospectus.

12. GENERAL AND ADMINISTRATIVE EXPENSES

The Corporation had the following general and administrative expenses for the three months ended March 31, 2021:

Fees to escrow agent Amortization of prepaid expenses Other Total	$ 42,450 22,177 3,122
	$ 67,749

13. INCOME TAXES

Deferred tax assets are only recognized if management has determined that it is probable that such deferred tax assets may be recovered. The recoverability of deferred tax assets is dependent in part on the nature, terms, and conditions of any completed qualifying acquisition. As at March 31, 2021, the Corporation did not have any material tax losses or deferred tax balances.

14. RELATED PARTY TRANSACTIONS

A-16

Unaudited Interim Financial Statements

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at March 31, 2021 and for the three months ended March 31, 2021(expressed in U.S. dollars)

expenses incurred by directors, officers and consultants of the Corporation which are paid by the Sponsor relating to certain activities on the Corporation’s behalf, including identifying and negotiating a qualifying acquisition. For the three months ended March 31, 2021, the Corporation did not pay any such retainer and administrative fees.

15. LOAN FROM SPONSOR

On February 12, 2021, the Sponsor entered into an agreement with the Corporation to advance up to $2 million for the purpose of funding general ongoing expenses of the Corporation (the “Loan Agreement”). The Sponsor advanced $670,000, from the date of the Loan Agreement through March 31, 2021, pursuant to the terms of the Loan Agreement. Interest is payable on the principal amount of the Loan Agreement on or before the maturity date of February 12, 2022 at a rate of 3.25% per annum, which interest shall accrue daily and shall be computed on the basis of the actual number of days elapsed over a 360-day year. The Corporation must repay all principal and accrued interest outstanding on demand on or after the Corporation completes a Qualifying Transaction. The Corporation may prepay the principal outstanding, in whole or in part, at any time without notice or penalty. Pursuant to the Loan Agreement, the Sponsor shall have no recourse against the escrowed funds of the Corporation.

A-17

NEXTPOINT ACQUISITION CORP.

FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND FOR THE PERIOD FROM

JULY 16, 2020 (DATE OF INCORPORATION) THROUGH DECEMBER 31, 2020

Amended and Restated

(Expressed in U.S. Dollars)

A-18

Deloitte LLP Bay Adelaide East 8 Adelaide Street West Suite 200 Toronto, ON M5H 0A9 Canada

==> picture [145 x 28] intentionally omitted <==

Tel: 416-601-6150 Fax: 416 601 6151 www.deloitte.ca

Independent Auditor’s Report

To the Shareholders and the Board of Directors of NextPoint Acquisition Corp.

Opinion

We have audited the amended and restated financial statements of NextPoint Acquisition Corp. (the “Company”), which comprise the restated balance sheet as at December 31, 2020, and the restated statements of loss, shareholders’ equity and cash flows for the period from July 16, 2020 to December 31, 2020, and restated notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020, and its financial performance and its cash flows for the period from July 16, 2020 to December 31, 2020 in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to Note 3 to the financial statements, which describes that the financial statements that we originally reported on March 26, 2021 have been amended and restated and describes the matter that gave rise to the amendment of the financial statements. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the period from July 16, 2020 to December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined that there are no key audit matters to communicate in our auditor’s report.

Other Information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

A-19

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

A-20

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Mervyn Ramos.

==> picture [156 x 45] intentionally omitted <==

Chartered Professional Accountants Licensed Public Accountants April 13, 2021

A-21

NEXTPOINT ACQUISITION CORP.

BALANCE SHEET

AS AT DECEMBER 31, 2020

(expressed in U.S. dollars)

Restated (see Note 3)

ASSETS Cash Restricted cash and securities held in escrow account (Notes 5 & 11) Prepaid expenses Total Assets LIABILITIES AND SHAREHOLDERS' EQUITY Current Accrued expenses Class A restricted voting units (Note 6) Class A and B warrants liability (Note 6) Total current liabilities Total Liabilities Shareholders' Equity Share capital, net Deficit Total Shareholders' Equity Total Liabilities and Shareholders' Equity	2,061,206 200,048,169 53,471
	202,162,846 $
	1,242,849 195,468,634 5,768,000
	202,479,483 $

	202,479,483 $
	5,859,798 (6,176,435)
	(316,637) $

	202,162,846 $

The accompanying notes are an integral part of these financial statements

Approved by the Board:

BY: BY: “ ANDREW NEUBERGER ” “ FRANK AMATO ” CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER

A-22

NEXTPOINT ACQUISITION CORP.

STATEMENT OF LOSS

FOR THE PERIOD FROM JULY 16, 2020 (DATE OF INCORPORATION) THROUGH DECEMBER 31, 2020

(expressed in U.S. dollars)

Restated (see Note 3)

Revenue Interest Total Revenue Expenses Interest expense Net unrealized loss on change of warrants liabilities Amortization of issuance cost on Class A Shares (Note 6) General and administrative (Note 12) Professional fees Total Expenses Net Loss Weighted average shares outstanding of Class B Shares, basic and diluted Net Loss per Share - basic and diluted	48,169
	48,169 $
	48,169 684,714 3,022,330 225,575 2,243,816
	6,224,604 $

	(6,176,435) $
	5,750,000
	(1.07) $

The accompanying notes are an integral part of these financial statements

A-23

NEXTPOINT ACQUISITION CORP.

STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE PERIOD FROM JULY 16, 2020 (DATE OF INCORPORATION) THROUGH DECEMBER 31, 2020

(expressed in U.S. dollars)

Restated (see Note 3)

Balance - July 16, 2020 (date of incorporation) Issuance of Class B Shares to Founders Issuance of Class B Shares to Sponsor Transaction Costs Net Loss Balance - December 31, 2020		Shares - 5,150,000 600,000 - - 5,750,000		Amount - $ 25,000 5,850,000 (15,202) - 5,859,798 $		Deficit - $ - - - (6,176,435) (6,176,435) $	Total Shareholders' Equity
							- $ 25,000 5,850,000 (15,202) (6,176,435)
							(316,637) $

The accompanying notes are an integral part of these financial statements

A-24

NEXTPOINT ACQUISITION CORP.

STATEMENT OF CASH FLOW

FOR THE PERIOD FROM JULY 16, 2020 (DATE OF INCORPORATION) THROUGH DECEMBER 31, 2020

(expressed in U.S. dollars)

Restated (see Note 3)

Operating Activities Net loss Amortization of issue costs on Class A Restricted Voting shares Net unrealized loss on change of warrants liabilities Prepaid expenses Accrued interest payable Accrued expenses Net cash provided by operating activities Investing Activities Investment held in Escrow Net cash used in investing activities Financing Activities Proceeds from sale of Class B shares to Founders Proceeds from sale of Class B shares and warrants to Sponsor Proceeds from sale of Class A Restricted Voting shares Transaction costs allocated to Class A Restricted Voting shares Transaction costs allocated to Class A Warrants Transaction costs allocated to Class B shares Net cash provided by financing activities Net Change in Cash Cash - Beginning of period Cash - End of period	(6,176,435) 3,022,330 684,714 (53,471) 48,169 1,242,849
	(1,231,844)
	(200,048,169)
	(200,048,169)
	25,000 6,000,000 200,000,000 (2,601,865) (66,714) (15,202)
	203,341,219
	2,061,206 -
	2,061,206

The accompanying notes are an integral part of these financial statements

A-25

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

1. CORPORATE INFORMATION

These financial statements which were restated as described in Note 3 were authorized for issuance by the Board of Directors of the Corporation on April 13, 2021.

2. SIGNIFICANT EVENTS

The Sponsor purchased 600,000 Class B units of the Corporation (each a “Class B Unit”) at an offering price of U.S.$10.00 per Class B Unit (for an aggregate purchase price of U.S.$6,000,000)

A-26

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

simultaneously with the Closing. Each Class B Unit consists of one Class B Share and one-half of a Warrant.

The Founders (including the Sponsor) have agreed pursuant to an exchange agreement and undertaking not to transfer any of their Founders’ Shares or Class B Units (or any Class B Shares or Warrants forming part of the Class B Units) until after the closing of the qualifying acquisition, in each case other than transfers required due to the structuring of the qualifying acquisition or unless otherwise permitted by the Exchange. Any Class A Restricted Voting Shares purchased by our Founders would not be subject to the restrictions set out in such agreement. The Founders’ Shares purchased by the Founders

A-27

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

and the Class B Units (including the Class B Shares or any shares acquired upon exercise of the Warrants forming part of such Class B Units) purchased by the Sponsor will not be subject to relinquishment based on performance.

A-28

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

immediately prior to the redemption deposit deadline, including interest and other amounts earned thereon; less (B) an amount equal to the total of (i) any applicable taxes payable by the Corporation on such interest and other amounts earned in the escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by the Corporation, subject to the limitations described in the Prospectus. If approval of the qualifying acquisition by shareholders is otherwise required under applicable law, holders of Class A Restricted Voting Shares shall have the option to redeem their Class A Restricted Voting Shares irrespective of whether they vote for or against, or do not vote on, the qualifying acquisition. Holders of Class A Restricted Voting Shares will be given not less than 21 days’ notice of the shareholders meeting (if such meeting is required under applicable law) and of the corresponding redemption deposit deadline if such meeting is required. Participants through CDS Clearing and Depositary Services Inc. (“CDS”) may have earlier deadlines for beneficial holders to make deposits of Class A Restricted Voting Shares for redemption. If a CDS participant’s deadline is not met by a holder of Class A Restricted Voting Shares, such holder’s Class A Restricted Voting Shares may not be eligible for redemption.

3. BASIS OF PREPARATION AND RESTATEMENT

Basis of preparation

These financial statements of the Corporation as at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) through December 31, 2020 have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”) issued as at December 31, 2020 by the International Accounting Standards Board (“IASB”) and with interpretation of the International Financial Reporting Interpretations Committee (“IFRIC”).

Basis of measurement

Restatement

The Corporation has restated these financial statements which it had originally filed on Sedar.com on March 29, 2021. The Corporation noted that the warrants issued with the Class A Restricted Voting Shares and the warrants issued to the Sponsor could be exercised on a cashless basis as described in Note 2. As a result of this cashless option the warrants have to be classified as a liability at fair value through profit and loss (‘FVTPL”) as they fail the ‘fixed for fixed’ requirements prescribed in IAS 32. As a result of this change there were a number of other balance sheet and income statement items that were impacted as follows:

a) The allocation of the proceeds raised in the Offering of $200 million have been allocated between the Class A Restricted Voting Units and the warrants based on the market price of the respective

A-29

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

security on September 21, 2020 on the first day of trading. Previously these were allocated based on first fair valuing the Class A shares using a discounted cash flow approach and allocating the balance of the proceeds to the warrants which were classified as equity.

b) The warrants issued to the Class A shareholders and the Sponsor are accounted for at FVTPL and are carried at the December 31, 2020 closing prices of the respective securities.
c) Transactions costs have been allocated to the Class A and warrants based on the revised balances of these two instruments.
d) The changes in a) and b) above resulted in a change to the initial carrying value of the Class A shares, and this impacted the effective interest amortization of the Class A shares on the income statement.

The impact on the financial statements due to the above changes were as follows (in $’000):

	As originally filed	Restated
Balance Sheet
Class A Restricted Voting Units	$198,425	$195,469
Class A and B Warrants	Nil	$5,768
Share Capital	$6,049	$5,860
Deficit	($3,554)	($6,176)
Statement of Loss
Change in fair value of warrants	Nil	$685
Amortization of issuance costs on Class A shares	$1,085	$3,022
Net Loss	($3,554)	($6,176)
Net Loss per Share – basic and diluted	$(0.62)	$(1.07)

The restatement did not result in any changes to the net cash flows from operating, investing and financing activities.

Use of estimates

A-30

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial instruments

Expected credit losses on financial assets at amortized cost

Income tax

The Corporation follows the balance sheet method to provide for income taxes. The balance sheet method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured at the tax rates that are enacted or substantively enacted to apply in the period when the asset is realized and the liability is settled.

Per share information

A-31

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

statements as financial liabilities and on a fully diluted basis the Class A Restricted Voting Shares are antidilutive.

5. RESTRICTED CASH AND SECURITIES HELD IN ESCROW

The following cash balances were held in escrow at a Canadian chartered bank as at December 31, 2020:

	As	at December
		31, 2020
Cash and United Stated Treasury Bills	$	200,048,169

6. CLASS A RESTRICTED VOTING SHARES SUBJECT TO REDEMPTION

Authorization

Voting Rights

Redemption Rights

Classification

The Corporation has classified its Class A Restricted Voting Shares as financial liabilities within the balance sheet. The Corporation recorded a discount to the $200,000,000 of gross proceeds from the Offering in the amount of $5 million representing the fair value of the Warrants, and $2,601,865, representing the transaction costs associated with the Class A Restricted Voting Shares. The aggregate discount of $7,601,865 is being amortized over 12 months using the effective interest rate method. For the period from July 16, 2020 (date of incorporation) through December 31, 2020, the Company recorded $3,022,330 of amortization of the issue costs in connection with the Warrants.

A-32

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

7. SHAREHOLDERS’ EQUITY

Voting Rights

Redemption Rights

8. TRANSACTION COSTS

Transaction costs are directly related to the Offering and consist mainly of legal, accounting, printing, filing an underwriting cost. Transaction costs incurred from July 16, 2020 (date of incorporation) through December 31, 2020 were allocated between Shareholders’ Equity and shares subject to redemption on the following basis:

Professional fees (Legal, accounting, etc.) Underwriters’ commission Exchange listing Other Total	Class A Restricted Voting Shares Warrants $ 622,544 $ 15,963 1,803,750 46,250 170,696 4,376 4,875 125 $ 2,601,865 $ 66,714	Class B Shares $ 15,202 — — — $ 15,202	Total
			$ 653,709 1,850,000 175,072 5,000 $ 2,683,781

Pursuant to the underwriting agreement for the Offering, the Corporation’s underwriter was entitled to an underwriting commission equal up to $11,000,000 or 5.5% of the gross proceeds of the Class A Restricted Voting Units issued under the Offering. The Underwriter and the Corporation agreed that the commission payable on Closing would be reduced as mutually agreed between the Underwriter and the Corporation for certain investors in the Class A Restricted Voting Units. The Corporation paid $1,850,000, to the Underwriter at the Closing. The balance of the agreed underwriting commission, being $8,325,000, or 4.5% of the gross proceeds of the Class A Restricted Voting Units as reduced for certain investors as mutually agreed between the Underwriter and the Corporation, has been deferred and will only be paid upon successful completion of a qualifying acquisition. In addition, 1.0% of the gross proceeds (such amount being part of the 4.5% of the gross proceeds deferred underwriting commission) will be payable by the Corporation to such parties as it sees fit, including the Underwriter or to advisors who have assisted with the qualifying acquisition. If no qualifying acquisition is consummated within the Permitted Timeline, such amounts shall not be payable. Due to its association with an uncertain future qualifying acquisition, the contingent liability of deferred underwriting commission balance has not been recorded in the financial statements. Transaction costs were

A-33

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

prorated between Class A Restricted Voting Shares, Warrants and Class B Shares by the amount of proceeds received.

9. FINANCIAL INSTRUMENTS

All financial instruments for which fair value is recognized or disclosed are categorized within a fair value hierarchy, described as follows:

Level 1 − Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities

Level 3 − valuation techniques with significant unobservable market inputs. The cash and cash balance held in escrow are measured using level 1 inputs.

All financial assets at FVTPL are measured using either Level 1or Level 2 inputs.

10. FINANCIAL RISK MANAGEMENT

Market risk

Fair value risk

Interest rate risk

11. CAPITAL MANAGEMENT

The Corporation defines the capital that it manages as its cash and cash and securities balance held in escrow.

		As at
	December 31,
		2020
Cash	$	2,061,206
Restricted cash and securities held in escrow account	$	200,048,169

A-34

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

The Corporation’s primary objective in managing capital is to ensure capital preservation in order to benefit from acquisition opportunities as they arise and to fund redemptions should they occur.

12. GENERAL AND ADMINISTRATIVE EXPENSES

The Corporation had the following general and administrative expenses for the period from July 16, 2020 (date of incorporation) through December 31, 2020:

Retainer and Administrative fees Travel Fees to escrow agent Amortization of prepaid expenses Other Total	$ 125,000 35,572 25,841 36,469 2,693
	$ 225,575

13. INCOME TAXES

Deferred tax assets are only recognized if management has determined that it is probable that such deferred tax assets may be recovered. The recoverability of deferred tax assets is dependent in part on the nature, terms, and conditions of any completed qualifying acquisition. As at December 31, 2020, the Corporation did not have any material tax losses or deferred tax balances.

14. RELATED PARTY TRANSACTIONS

The Corporation will pay a retainer fee to each of its directors other than Andrew Neuberger in the amount of U.S.$50,000 and may pay up to U.S.$10,000 (plus applicable taxes) per month to our Sponsor for administrative and related services. The Corporation further reimburses the Sponsor for any out-of-pocket expenses incurred by directors, officers and consultants of the Corporation which are paid by the Sponsor relating to certain activities on the Corporation’s behalf, including identifying and negotiating a qualifying acquisition. For the period from July 16, 2020 (date of incorporation) to December 31, 2020, the Corporation paid $125,000 of such retainer and administrative fees.

15. SUBSEQUENT EVENT

A-35

NEXTPOINT ACQUISITION CORP. NOTES TO THE FINANCIAL STATEMENTS

As at December 31, 2020 and for the period from July 16, 2020 (the date of incorporation) to December 31, 2020 (expressed in U.S. dollars), Restated (see Note 3)

Holdco LLC, a Delaware limited liability company and wholly owned subsidiary of the Corporation (“MergerSub”) and LoanMe, Inc. (“LoanMe”) and certain of its affiliates, pursuant to which the Corporation shall acquire, directly or indirectly, all of the equity of LoanMe (the “LoanMe Agreement” and together with the Liberty Agreement, the “Transaction Agreements”). The acquisition of the Target Businesses (the “Transaction”) are intended to constitute the Corporation’s qualifying acquisition pursuant to the of the Toronto Stock Exchange (the “Exchange”) Company Manual. The completion of the transactions contemplated by the Liberty Agreement and the LoanMe Agreement are each conditional upon the completion of the other and will occur concurrently. On closing of the Transaction, the Company is expected to be renamed “NextPoint Financial Inc.” (as such, “NextPoint Financial”).

A-36

APPENDIX B - MANAGEMENT’S DISCUSSION AND ANALYSIS OF NAC

(See attached)

B-1

NEXTPOINT ACQUISITION CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS

As at and for the three months ended March 31, 2021

(Expressed in U.S. Dollars)

B-2

MANAGEMENT’S DISCUSSION & ANALYSIS

The following discussion of performance, financial condition and future prospects should be read in conjunction with the unaudited interim financial statements (the “ Interim Financial Statements ”) of NextPoint Acquisition Corp. (the “ Corporation ”) for the three months ended March 31, 2021 and the accompanying notes thereto.

This Management’s Discussion and Analysis (“ MD&A ”) has been prepared with an effective date of May 13, 2021. The Interim Financial Statements have been prepared by management in accordance with International Financial Reporting Standards (“ IFRS ”) issued as at March 31, 2021 by the International Accounting Standards Board (“ IASB ”) and with interpretation of the International Financial Reporting Interpretations Committee (“ IFRIC ”). The Interim Financial Statements meet the requirements of International Accounting Standard 34, “Interim Financial Reporting”. The Corporation’s financial information is expressed in United States dollars unless otherwise specified. In addition to reviewing this MD&A, readers are encouraged to read the Corporation’s public information filings available on the Corporation’s profile on the System for Electronic Document Analysis and Retrieval (“ SEDAR ”) at www.sedar.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document may contain “ forward-looking statements ” (as defined under applicable securities laws). These forward-looking statements relate to future events or future performance including with respect to the Corporation’s objectives and priorities for fiscal year 2021 and beyond, and strategies or further actions with respect to the Corporation, a qualifying acquisition (as defined below) and the Corporation’s business operations, financial performance and condition.

Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “target”, “intend”, “could” or the negative of these terms or other comparable terminology. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and many factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating forward-looking statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, market and general economic conditions and the risks and uncertainties discussed in the section entitled “Risk Factors” in the Corporation’s Annual Information Form dated March 26, 2021 (the “AIF” ).

The forward-looking statements contained in this MD&A are presented for the purpose of assisting investors in understanding business and strategic priorities and objectives of the Corporation as at the periods indicated and may not be appropriate for other purposes. Forward-looking statements contained in this MD&A are not guarantees of future performance and, while forward-looking statements are based on certain assumptions that the Corporation considers reasonable, actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Corporation. Prospective investors are cautioned to consider these and other factors carefully when making decisions with respect to the Corporation and not place undue reliance on forward looking statements. Circumstances affecting the Corporation may change rapidly. Except as may be expressly required by applicable law, the Corporation does not undertake any obligation to update publicly or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

NATURE OF ACTIVITIES

The Corporation is a special purpose acquisition corporation incorporated on July 16, 2020 under the laws of the Province of British Columbia for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization, or any other similar business combination involving the Corporation (a “ qualifying acquisition ”). The registered office of the Corporation is located at 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, BC, V7X 1L3, Canada. The head office of the Corporation is located at 77 Bedford Road, New York, 10536, United States.

B-3

INITIAL PUBLIC OFFERING

On August 11, 2020, the Corporation closed its initial public offering (the “ Offering ”) of 20,000,000 Class A restricted voting units (each, a “ Class A Restricted Voting Unit ”) at an offering price of $10.00 per Class A Restricted Voting Unit for gross proceeds of $200,000,000 pursuant to the Corporation’s prospectus dated August 5, 2020 (the “ Prospectus ”), and the Corporation commenced trading on the Toronto Stock Exchange (the “ Exchange ”) under the symbol “NAC.V”.

Each Class A Restricted Voting Unit consisted of one Class A restricted voting share (each, a “ Class A Restricted Voting Share ”) and one-half of a share purchase warrant (each whole share purchase warrant, a “ Warrant ”). On September 21, 2020 the Class A Restricted Voting Shares and the Warrants comprising the Class A Restricted Voting Units, commenced trading separately on the Exchange under the symbols “NAC.U” and “NAC.WT.U”, respectively. On or immediately following the closing of a qualifying acquisition, each Class A Restricted Voting Share (unless previously redeemed) will be automatically converted into one common share (a “ Common Share ”) and each Class B share of the Corporation (each, a “ Class B Share ”) will be automatically converted on a 100-for-1 basis into proportionate voting shares of the Corporation, as set forth in the notice of articles and articles of the Corporation (the “ Proportionate Voting Shares ”). The Warrants will become exercisable, at an exercise price of $11.50, commencing 65 days after the completion of a qualifying acquisition and will expire at 5:00 p.m. (Toronto time) on the day that is five years after the completion of a qualifying acquisition or earlier, as described in the Prospectus. Once the Warrants become exercisable, the Corporation may accelerate the expiry date of the outstanding Warrants (excluding the Warrants held by the Sponsor (as defined below), as described in the Prospectus) by providing 30 days’ notice, if and only if, the closing price of the Common Shares equals or exceeds $18.00 per Common Share (as adjusted for stock splits or combinations, stock dividends, extraordinary dividends, reorganizations and recapitalizations and the like) for any 20 trading days within a 30-trading day period.

Prior to closing of the Offering (the “ Closing ”), NextPoint Acquisition Sponsor LLC, the Corporation’s sponsor (the “ Sponsor ”) and certain of the Corporation’s directors, Frank Amato, Brian Benjamin, George Coleman, Wendy Lane and John Lederer, the “ Founders ”, purchased 5,913,125 Class B Shares, also referred to as the “ Founders’ Shares ”, for an aggregate price of $25,000, of which 763,125 of the Founders’ Shares were subsequently relinquished. The outstanding Founders’ Shares represent 20% of the issued and outstanding shares of the Corporation (including all Class A Restricted Voting Shares and Class B Shares).

The Sponsor purchased 600,000 Class B units of the Corporation (each a “ Class B Unit ”) at an offering price of $10.00 per Class B Unit (for an aggregate purchase price of $6,000,000) simultaneously with the Closing. Each Class B Unit consists of one Class B Share and one-half of a Warrant.

If the Corporation is unable to consummate a qualifying acquisition within the permitted timeline of 12 months (the “ Permitted Timeline ”) from the Closing, subject to any extension as described below, the Corporation will be required to redeem each of the outstanding Class A Restricted Voting Shares, for an amount per share, payable in cash, equal to the pro-rata portion (per Class A Restricted Voting Share) of: (A) the escrowed funds available in the escrow account, including any interest and other amounts earned thereon, less (B) an amount equal to the total of (i) any applicable taxes payable by the Corporation on such interest and other amounts earned in the escrow account, (ii) any taxes of the Corporation (including under Part VI.1 of the Income Tax Act (Canada)) arising in connection with the redemption of the Class A Restricted Voting Shares, and (iii) up to a maximum of $50,000 of interest and other amounts earned from the proceeds in the escrow account to pay actual and expected winding-up expenses and certain other related costs (as described herein), each as reasonably determined by the Corporation. Canaccord Genuity Corp., as underwriter to the Corporation (the “ Underwriter ”), will have no right to the deferred underwriting commission held in the escrow account in such circumstances.

B-4

be permitted to redeem a number of Class A Restricted Voting Units that is more than 15% of the aggregate number of Class A Restricted Voting Shares issued and outstanding following the Closing. This limitation will not apply in the event a qualifying acquisition does not occur within the Permitted Timeline, or in the event of an extension to the Permitted Timeline.

The Founders (including the Sponsor) have agreed pursuant to an exchange agreement and undertaking not to transfer any of their Founders’ Shares or Class B Units (or any Class B Shares or Warrants forming part of the Class B Units) until after the closing of the qualifying acquisition, in each case other than transfers required due to the structuring of the qualifying acquisition or unless otherwise permitted by the Exchange. Any Class A Restricted Voting Shares purchased by the Founders would not be subject to the restrictions set out in such agreement. The Founders’ Shares purchased by the Founders and the Class B Units (including the Class B Shares or any shares acquired upon exercise of the Warrants forming part of such Class B Units) purchased by the Sponsor will not be subject to relinquishment based on performance.

Upon the Closing, an aggregate of $200,000,000 from the sale of the Class A Restricted Voting Units, or $10.00 per Class A Restricted Voting Unit sold to the public, was deposited with TSX Trust Company, as escrow agent, in an escrow account in Canada at a Canadian chartered bank or subsidiary thereof, in accordance with the escrow agreement. Subject to applicable law and payment of certain taxes, permitted redemptions and certain expenses, as further described herein, none of the funds held in the escrow account will be released to the Corporation prior to the closing of a qualifying acquisition.

Following the closing of a qualifying acquisition, the Corporation will use the balance of the non-redeemed Class A Restricted Voting Shares’ portion of the escrow account (less tax liabilities on amounts earned on the escrowed funds and certain expenses directly related to redemptions) (subject to availability, failing which any shortfall shall be made up from other sources) to pay the Underwriter its deferred underwriting commission. The per share amount the Corporation will distribute to holders of Class A Restricted Voting Shares who properly redeem their shares will not be reduced by the deferred underwriting commission we will pay to the Underwriter.

B-5

and all amounts earned thereon, subject to such obligations and applicable law, will be assets of the Corporation. These escrowed funds will also be used to pay the deferred underwriting commission in the amount of $8,325,000, which (subject to availability, failing which any shortfall shall be made up from other sources) will be payable by the Corporation to the Underwriter upon the closing of our qualifying acquisition provided that a discretionary deferred portion may be used to pay to parties of the Corporation’s choosing, as described in the Prospectus.

Consummation of the qualifying acquisition will require approval by a majority of the Corporation’s directors unrelated to the qualifying acquisition. In connection with seeking to complete a qualifying acquisition, the Corporation will provide holders of Class A Restricted Voting Shares with the opportunity to redeem all or a portion of their Class A Restricted Voting Shares, provided that they deposit their shares for redemption prior to the deadline specified by the Corporation, following public disclosure of the details of the qualifying acquisition and prior to the closing of the qualifying acquisition, of which prior notice had been provided to the holders of the Class A Restricted Voting Shares by any means permitted by the Exchange, not less than 21 days nor more than 60 days in advance of such deadline, in each case, with effect, subject to applicable law, immediately prior to the closing of a qualifying acquisition, for an amount per share, payable in cash, equal to the pro-rata portion (per Class A Restricted Voting Share) of: (A) the escrowed funds available in the escrow account at the time immediately prior to the redemption deposit deadline, including interest and other amounts earned thereon; less (B) an amount equal to the total of (i) any applicable taxes payable by the Corporation on such interest and other amounts earned in the escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by the Corporation, subject to the limitations described in the Prospectus. If approval of the qualifying acquisition by shareholders is otherwise required under applicable law, holders of Class A Restricted Voting Shares shall have the option to redeem their Class A Restricted Voting Shares irrespective of whether they vote for or against, or do not vote on, the qualifying acquisition. Holders of Class A Restricted Voting Shares will be given not less than 21 days’ notice of the shareholders meeting (if such meeting is required under applicable law) and of the corresponding redemption deposit deadline if such meeting is required. Participants through CDS Clearing and Depositary Services Inc. (“ CDS ”) may have earlier deadlines for beneficial holders to make deposits of Class A Restricted Voting Shares for redemption. If a CDS participant’s deadline is not met by a holder of Class A Restricted Voting Shares, such holder’s Class A Restricted Voting Shares may not be eligible for redemption.

SIGNIFICANT EVENTS

On February 22, 2021, the Corporation, announced that it had entered into (i) a definitive agreement (the “ Liberty Agreement ”) by and between the Corporation and Franchise Group Intermediate L, LLC ( “ Liberty Seller ”), pursuant to which the Corporation shall acquire all of the equity interests of Franchise Group Intermediate L 1, LLC (“ Liberty ”); and (ii) a definitive agreement by and among the Corporation, NPLM Holdco LLC, a Delaware limited liability company and wholly owned subsidiary of the Corporation (“ MergerSub ”) and LoanMe, Inc. (“ LoanMe ”) and certain of its affiliates, pursuant to which the Corporation shall acquire, directly or indirectly, all of the equity of LoanMe (the “ LoanMe Agreement ” and together with the Liberty Agreement, the “ Transaction Agreements ”). The acquisition of the Target Businesses (the “ Transaction ”) are intended to constitute the Corporation’s qualifying acquisition pursuant to the of the Toronto Stock Exchange (the “ Exchange ”) Company Manual. The completion of the transactions contemplated by the Liberty Agreement and the LoanMe Agreement are each conditional upon the completion of the other and will occur concurrently. On closing of the Transaction, the Company is expected to be renamed “NextPoint Financial Inc.” (as such, “ NextPoint Financial ”).

B-6

stock equivalents (subject to adjustment) and the Corporation will acquire LoanMe at an enterprise value of approximately $102 million, $18 million of which is payable in cash, approximately $49 million of which is payable in the Corporation’s common stock equivalents and the balance of which reflects the assumption of existing corporate net debt at LoanMe.

The Corporation also announced that (i) it has received commitments to purchase US$25 million worth of common share equivalents of the Corporation at a price of US$10.00 per share (the “ Private Placement ”), the issuance of which will occur in conjunction with the closing of the Transaction (but is not a condition to the closing of the Transaction); and (ii) that it has obtained a commitment for a new US$200 million revolving credit facility (the “ Credit Facility ”) from a private specialty finance lender.

The cash portion of the purchase prices payable in the Liberty and LoanMe transactions will be funded with cash remaining on deposit in the escrow account holding the proceeds from the Offering and, to the extent necessary, a combination of the proceeds of the Private Placement and advances against the Credit Facility. The Transaction, which is subject to customary closing conditions, is expected to close in the second quarter of 2021. The Transaction remains subject to satisfaction or waiver of certain customary closing conditions including among other things, the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (and any extension thereof), the approval of the Exchange recognizing the Transaction as the Corporation’s qualifying acquisition, and the issuance of a receipt for a final prospectus on behalf of Canadian securities regulatory authorities.

On April 15, 2021, the Corporation, in accordance with applicable rules, filed a non-offering preliminary prospectus with the securities regulatory authorities in each of the provinces and territories of Canada (other than Quebec) in respect of its proposed qualifying acquisition described above.

SELECTED QUARTERLY INFORMATION

Below is selected information from the statement of income for the three months ended March 31, 2021, as well as for the two previously completed quarters since the Corporation was incorporated on July 16, 2020.

Revenue Interest Total Revenue Expenses Interest expense Net unrealized loss on change of warrant liability Amortization of Issuance Cost on Class A Shares General and administrative Professional fees Total Expenses Net Loss Weighted average shares outstanding of Class B Shares, basic and diluted Net Loss per Share - basic and diluted	For the three months ended March 31, 2021 For the three months ended December 31, 2020 From July 16 (date of inception) to September 30, 2020 $ 15,520 34,931 13,238	For the three months ended March 31, 2021 For the three months ended December 31, 2020 From July 16 (date of inception) to September 30, 2020 $ 15,520 34,931 13,238
		15,520 34,931 13,238 17,698 34,931 13,238 4,532,000 684,714 - 1,901,259 1,882,940 1,139,390 67,749 100,375 125,200 4,630,731 2,142,778 101,038
	$	11,149,437 4,845,738 1,378,866
	$	(11,133,917) (4,810,807) (1,365,628)
		5,750,000 5,750,000 5,750,000
	$	(1.94) (.83) (0.24)

RESULTS OF OPERATIONS

During the three months ended March 31, 2021, the Corporation did not conduct commercial operations and was focused on the identification and evaluation of businesses or assets to acquire and there were no notable events that occurred during the reporting periods presented.

B-7

For the three months ended March 31, 2021, the Corporation realized a net loss of $(11,133,917). This represents a loss of approximately $(1.94) per share. This Loss was primarily affected by:

net unrealized loss on change of warrants liabilities of $4,532,000;
amortization of issuance cost on Class A Shares of $1,901,259; and
professional fees of $4,630,731.

The funds raised relating to Class A Restricted Voting Units totaling $200,000,000 have been held in cash and cash equivalents in the escrow account. For the three months ended March 31, 2021, the Corporation earned interest income of $15,520 on this balance.

GENERAL AND ADMINISTRATIVE EXPENSES

The Corporation had the following general and administrative expenses for the three months ended March 31, 2021:

Fees to escrow agent Amortization of prepaid expenses Other Total	$ 42,450 22,177 3,122
	$ 67,749

TRANSACTION COSTS

Transaction costs are directly related to the Offering and consist mainly of legal, accounting, printing, filing and underwriting costs. Transaction costs incurred in 2020, from July 16, 2020 (date of incorporation), were allocated between shareholders’ equity and shares subject to redemption on the following basis:

Professional fees (Legal, accounting, etc.) Underwriters’ commission Exchange listing Other Total	Class A Restricted Voting Shares $ 622,544 1,803,750 170,696 4,875 $ 2,601,865 $	Warrants $ 15,963 46,250 4,376 125 66,714	Class B Shares $ 15,202 — — — $ 15,202	Total
				$ 653,709 1,850,000 175,072 5,000 $ 2,683,781

There were no additional transaction costs for the three months ended March 31, 2021. Pursuant to the underwriting agreement for the Offering, the Underwriter was entitled to an underwriting commission equal up to $11,000,000 or 5.5% of the gross proceeds of the Class A Restricted Voting Units issued under the Offering. The Underwriter and the Corporation agreed that the commission payable on Closing would be reduced as mutually agreed between the Underwriter and the Corporation for certain investors in the Class A Restricted Voting Units. The Corporation paid $1,850,000, to the Underwriter at the Closing. The balance of the agreed underwriting commission, being $8,325,000, or 4.5% of the gross proceeds of the Class A Restricted Voting Units, as reduced for certain investors as mutually agreed between the Underwriter and the Corporation, has been deferred and will only be paid upon successful completion of a qualifying acquisition. In addition, 1.0% of the gross proceeds (such amount being part of the 4.5% of the gross proceeds deferred underwriting commission) will be payable by the Corporation to such parties as it sees fit, including the Underwriter or to advisors who have assisted with the qualifying acquisition. If no qualifying acquisition is consummated within the Permitted Timeline, such amounts shall not be payable. Due to its association with an uncertain future qualifying acquisition, the contingent liability of deferred underwriting commission balance has not been recorded in the Interim Financial Statements. Transaction costs were prorated between Class A Restricted Voting Shares, Warrants and Class B Shares by the amount of proceeds received.

B-8

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION

Below is selected information from the statement of cash flow for the three months ended March 31, 2021.

Operating Activities Net loss Amortization of issue costs on Class A Restricted Voting shares Net unrealized loss on change of warrant liability Prepaid expenses Accrued interest payable Accrued expenses Receivables Net cash provided by operating activities Investing Activities Investment held in Escrow Net cash used in investing activities Financing Activities Loan from Sponsor Net cash provided by financing activities Net Change in Cash Cash – Beginning of period Cash – End of period	$ (11,133,917) 1,901,259 4,532,000 22,178 17,698 2,112,949 (5,270)
	$ (2,553,103)
	$ (15,520)
	$ (15,520)
	$ 670,000
	$ 670,000
	$ (1,898,623) 2,061,206
	$ 162,583

Below is selected information from the balance sheet of the Corporation as at each of March 31, 2021 and the Corporation’s most recently completed financial year-end.

Assets Cash Restricted cash and securities held in escrow account Prepaid expenses Receivable Total Assets Liabilities and Shareholders’ Equity Current Accrued expenses Class A restricted voting units Class A and B warrants liability Loan from Sponsor Interest payable Total current liabilities Total Liabilities Shareholders’ Equity Share capital, net Deficit Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity	As at March 31, 2021 As at December 31, 2020 $ 162,583 $ 2,061,206 200,063,689 200,048,169 31,294 53,471 5,270 -
	$ 200,262,836 $ 202,162,846
	$ 3,355,798 $ 1,242,849 197,385,414 195,468,634 10,300,000 5,768,000 670,000 - 2,178 -
	$ 211,713,390 $ 202,479,483
	$ 211,713,390 $ 202,479,483
	$ 5,859,798 $ 5,859,798 (17,310,352) (6,176,435)
	$ (11,450,554) $ (316,637)

	$ 200,262,836 $ 202,162,846

B-9

CAPITAL MANAGEMENT

The investment held in escrow includes the $200,000,000 in funds raised relating to Class A Restricted Voting Units and accrued interest totaling $63,689. In accordance with the terms of the Offering, all amounts raised through the issuance of the Class A Restricted Voting Units were deposited into the escrow account and can only be released upon certain prescribed conditions being met, as further described herein and in the Prospectus.

The Corporation’s objective is to execute a qualifying acquisition, the terms of which are determined by the Corporation to be favourable and provided that the target business or assets forming the qualifying acquisition have a fair market value of at least 80% of the assets held in the escrow account at the time the agreement is entered into (excluding the deferred underwriting commission and applicable taxes payable on interest and other amounts earned in the escrow account). The fair market value of the target businesses or assets will be determined by the Corporation’s board of directors based upon one or more valuation methods generally accepted by the financial community (including, without limitation, actual and potential sales, earnings, cash flow and book value).

As of the date of filing the Corporation does not have any off-balance sheet financing arrangements and has not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

SHARE CAPITAL

As of the date of this MD&A, the Corporation had 20,000,000 Class A Restricted Voting Shares, 5,750,000 Class B Shares and 10,300,000 Warrants issued and outstanding.

RELATED PARTY TRANSACTIONS

The Corporation will pay a retainer fee to each of its directors other than Andrew Neuberger in the amount of $50,000 and may pay up to $10,000 (plus applicable taxes) per month to our Sponsor for administrative and related services. The Corporation further reimburses the Sponsor for any out-of-pocket expenses incurred by directors, officers and consultants of the Corporation which are paid by the Sponsor relating to certain activities on the Corporation’s behalf, including identifying and negotiating a qualifying acquisition. For the three months ended March 31, 2021, the Corporation did not pay any such retainer and administrative fees.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

For further information about the accounting policies used by the Corporation, please refer to the Interim Financial Statements and notes thereto as at and for the three months ended March 31, 2021, which have been prepared in accordance with IFRS and with interpretation of the IFRIC. The Interim Financial Statements have been prepared on a historical cost basis, except for certain financial instruments which are carried at fair value.

B-10

Critical accounting estimates represent estimates made by management that are, by their very nature, uncertain. Management evaluates its estimates on an ongoing basis. Such estimates are based on assumptions that management believes are reasonable under the circumstances, and these estimates form the basis for making judgments about the carrying value of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. A summary of the significant accounting policies used by management in the preparation of its financial information is provided in Note 4 to the Interim Financial Statements.

CONTROLS AND PROCEDURES

As at March 31, 2021, an evaluation was carried out, under the supervision of and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined under National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings (“ NI 52-109 ”). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as at March 31, 2021.

Management, including the Chief Executive Officer and the Chief Financial Officer, have designed internal control over financial reporting as defined under NI 52-109 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management evaluated, under the supervision of and with the participation of the CEO and the CFO, the effectiveness of our internal control over financial reporting as at March 31, 2021, based on the principles set out in the Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, the CEO and CFO concluded that our internal control over financial reporting was designed and operating effectively as at March 31, 2021 and that there were no material weaknesses in the internal control over financial reporting.

There were no changes made in our internal control over financial reporting that occurred during the three months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

MANAGING RISK

Due to its limited working capital position, the Corporation’s ability to continue as a going concern is dependent upon the continued support of the Sponsor, and/or upon the completion of a qualifying acquisition or on the approval of an extension of the Permitted Timeline should a qualifying acquisition not be completed by August 11, 2021. Under the Exchange rules, the Corporation can seek to borrow up to 10% of the funds in escrow (approximately $20 million) on an unsecured basis from the Sponsor and its affiliates and has borrowed $2 million, of which $670,000 were drawn, as at March 31, 2021. There can also be no assurance that we will be successful in completing a qualifying acquisition. In the event a qualifying acquisition does not occur the escrowed cash will be returned to Class A Restricted Voting Unit holders and the Sponsor will have no recourse against the escrowed cash.

These uncertainties cast significant doubt upon the Corporation’s ability to continue as a going concern and the ultimate appropriateness of using accounting principles applicable to a going concern. If the Corporation is not able to continue as a going concern, the Corporation may be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the Interim Financial Statements. These differences could be material.

Except as otherwise disclosed in this MD&A and in the Interim Financial Statements, there have been no significant changes to the nature and scope of the risks faced by the Corporation as described in the AIF, which is available on the Corporation’s profile on SEDAR at www.sedar.com. Such business risks should be considered by interested parties when evaluating the Corporation’s performance and its outlook.

May 13, 2021

B-11

NOTICE TO READER

NextPoint Acquisition Corp. (the “Corporation”) is amending its management’s discussion and analysis (“MD&A”) for the period from inception on July 16, 2020 to December 31, 2020 to reflect the restatement of the audited financial statements filed on March 29, 2021. Accordingly, updates have been made to the Corporation’s MD&A as previously filed to clarify and provide additional disclosure regarding the following:

The Corporation noted that the warrants issued with the Class A Restricted Voting Shares and the warrants issued to the Sponsor could be exercised on a cashless basis as described in Note 2. As a result of this cashless option the warrants have to be classified as a liability at fair value through profit and loss (‘FVTPL”) as they fail the ‘fixed for fixed’ requirements prescribed in IAS 32. As a result of this change there were a number of other balance sheet and income statement items that were impacted as follows:

a) The allocation of the proceeds raised in the Offering of $200 million have been allocated between the Class A Restricted Voting Units and the warrants based on the market price of the respective security on September 21, 2021 on the first day of trading. Previously these were allocated based on first fair valuing the Class A shares using a discounted cash flow approach and allocating the balance of the proceeds to the warrants which were classified as equity.
b) The warrants issued to the Class A shareholders and the Sponsor are accounted for at FVTPL and are carried at the December 31, 2020 closing prices of the respective securities.
c) Transactions costs have been allocated to the Class A and warrants based on the revised balances of these two instruments.
d) The changes in a) and b) above resulted in a change to the initial carrying value of the Class A shares, and this impacted the effective interest amortization of the Class A shares on the income statement.

The impact on the financial statements due to the above changes were as follows (in $’000):

	As originally filed	Restated
Balance Sheet
Class A Restricted Voting Units	$198,425	$195,469
Class A and B Warrants	Nil	$5,768
Share Capital	$6,049	$5,860
Deficit	($3,554)	($6,176)
Statement of Loss
Change in fair value of warrants	Nil	$685
Amortization of issuance costs on Class A shares	$1,085	$3,022
Net Loss	($3,554)	($6,176)
Net Loss per Share – basic and diluted	$(0.62)	$(1.07)

The restatement did not result in any changes to the net cash flows from operating, investing and financing activities.

B-12

NEXTPOINT ACQUISITION CORP.

MANAGEMENT’S DISCUSSION AND ANALYSIS

As at December 31, 2020

and for the period from inception on July 16, 2020 to December 31, 2020

(Expressed in U.S. Dollars) Amended and Restated

B-13

MANAGEMENT’S DISCUSSION & ANALYSIS

The following discussion of performance, financial condition and future prospects should be read in conjunction with the financial statements (the “ Financial Statements ”) of NextPoint Acquisition Corp. (the “ Corporation ”) for the period from inception on July 16, 2020 through December 31, 2020 and the accompanying notes thereto.

This Management’s Discussion and Analysis (“ MD&A ”) has been prepared with an effective date of April 13, 2021 The Financial Statements have been prepared by management in accordance with International Financial Reporting Standards (“ IFRS ”) and with interpretation of the International Financial Reporting Interpretations Committee (“ IFRIC ”). The Corporation’s financial information is expressed in United States dollars unless otherwise specified. In addition to reviewing this MD&A, readers are encouraged to read the Corporation’s public information filings available on the Corporation’s profile on the System for Electronic Document Analysis and Retrieval (“ SEDAR ”) at www.sedar.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “target”, “intend”, “could” or the negative of these terms or other comparable terminology. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and many factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating forward-looking statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, market and general economic conditions and the risks and uncertainties discussed in the section entitled “Risk Factors” in the Corporation’s annual information form dated March 26, 2021 (the “ AIF ”).

NATURE OF ACTIVITIES

B-14

INITIAL PUBLIC OFFERING

B-15

The Founders (including the Sponsor) have agreed pursuant to an exchange agreement and undertaking not to transfer any of their Founders’ Shares or Class B Units (or any Class B Shares or Warrants forming part of the Class B Units) until after the closing of the qualifying acquisition, in each case other than transfers required due to the structuring of the qualifying acquisition or unless otherwise permitted by the Exchange. Any Class A Restricted Voting Shares purchased by the Founders would not be subject to the restrictions set out in such agreement. The Founders’ Shares purchased by the Founders and the Class B Units (including the Class B Shares or any shares acquired upon exercise of the Warrants forming part of such Class B Units) purchased by the Sponsor will not be subject to relinquishment based on performance.

B-16

SUBSEQUENT EVENTS

B-17

The Corporation also announced that (i) it has received commitments to purchase US$25 million worth of common share equivalents of the Corporation at a price of US$10.00 per share (the “ Private Placement ”), the issuance of which will occur in conjunction with the closing of the Transaction (but is not a condition to the closing of the Transaction); and (ii) that it has obtained a commitment for a new US$200 million revolving credit facility (the “ Credit Facility ”) from a private specialty finance lender.

The cash portion of the purchase prices payable in the Liberty and LoanMe transactions will be funded with cash remaining on deposit in the escrow account holding the proceeds from the Offering and, to the extent necessary, a combination of the proceeds of the Private Placement and advances against the Credit Facility. The Transaction, which is subject to customary closing conditions, is expected to close in the second quarter of 2021. The Transaction remains subject to satisfaction or waiver of certain customary closing conditions including among other things, the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (and any extension thereof), the approval of the Exchange recognizing the Transaction as the Corporation’s qualifying acquisition, and the issuance of a receipt for a final prospectus on behalf of Canadian securities regulatory authorities.

SELECTED ANNUAL INFORMATION

Below is selected information from the statement of income for the period from inception on July 16, 2020 through December 31, 2020. There is no comparative interim period available as the Corporation was incorporated on July 16, 2020.

Revenue Interest Total Revenue Expenses Interest expense Net unrealized loss on change of warrant liability Amortization of Issuance Cost on Class A Shares General and administrative Professional fees Total Expenses Net Loss Weighted average shares outstanding of Class B Shares, basic and diluted Net Loss per Share - basic and diluted	For the period from Inception on July 16, 2020 to December 31, 2020 $ 48,169
	48,169 48,169 684,714 3,022.330 225,575 2,243,816
	$ 6,224,604
	$ (6,176,435)
	5,750,000
	$ (1.07)

RESULTS OF OPERATIONS

During the period the Corporation did not conduct commercial operations and was focused on the identification and evaluation of businesses or assets to acquire and there were no notable events that occurred during the reporting periods presented.

From inception on July 16, 2020 through December 31, 2020, the Corporation realized a net loss of $6,176,435. This represents a loss of approximately $1.07 per share. This Loss was primarily affected by:

The amortization of the Class A Restricted Voting Shares issuance costs of $3,022,330;

B-18

8 -
The net unrealized loss on change in fair value of the warrant liability of $684,714;
Professional fees of $2,243,816 as well as general and administrative expenses of $225,575 incurred in negotiating, evaluating, conducting due diligence and closing on potential qualifying acquisitions as well as payments to our directors and for the utilization of office space, utilities and administrative support; and
Interest income of $48,169 earned on cash balances held in escrow accounts from the issuance of Class A Restricted Voting Shares.

The funds raised relating to Class A Restricted Voting Units totaling $200,000,000 have been held in cash and cash equivalents in the escrow account. During the period from inception on July 16, 2020 through December 31, 2020, the Corporation earned interest income of $48,169 on this balance.

Transaction costs are directly related to the Offering and consist mainly of legal, accounting, printing, filing and underwriting costs. Transaction costs incurred from July 16, 2020 (date of inception) through December 31, 2020 were allocated between shareholders’ equity and shares subject to redemption on the following basis:

Professional fees (Legal, accounting, etc.) Underwriters’ commission Exchange listing Other Total	Class A Restricted Voting Shares $ 622,544 1,803,750 170,696 4,875 $ 2,601,865 $	Warrants $ 15,962 46,250 4,376 125 66,714	Class B Shares $ 15,202 — — — $ 15,202	Total
				$ 653,709 1,850,000 175,072 5,000 $ 2,683,781

Pursuant to the underwriting agreement for the Offering, the Underwriter was entitled to an underwriting commission equal up to $11,000,000 or 5.5% of the gross proceeds of the Class A Restricted Voting Units issued under the Offering. The Underwriter and the Corporation agreed that the commission payable on Closing would be reduced as mutually agreed between the Underwriter and the Corporation for certain investors in the Class A Restricted Voting Units. The Corporation paid $1,850,000, to the Underwriter at the Closing. The balance of the agreed underwriting commission, being $8,325,000, or 4.5% of the gross proceeds of the Class A Restricted Voting Units, as reduced for certain investors as mutually agreed between the Underwriter and the Corporation, has been deferred and will only be paid upon successful completion of a qualifying acquisition. In addition, 1.0% of the gross proceeds (such amount being part of the 4.5% of the gross proceeds deferred underwriting commission) will be payable by the Corporation to such parties as it sees fit, including the Underwriter or to advisors who have assisted with the qualifying acquisition. If no qualifying acquisition is consummated within the Permitted Timeline, such amounts shall not be payable. Due to its association with an uncertain future qualifying acquisition, the contingent liability of deferred underwriting commission balance has not been recorded in the Financial Statements. Transaction costs were prorated between Class A Restricted Voting Shares, Warrants and Class B Shares by the amount of proceeds received.

GENERAL AND ADMINISTRATIVE EXPENSES

The Corporation had the following general and administrative expenses for the period from July 16, 2020 (date of incorporation) through December 31, 2020:

Retainer and Administrative fees Travel Fees to escrow agent Amortization of prepaid expenses Other Total	$ 125,000 35,572 25,841 36,469 2,693
	$ 225,575

B-19

SELECTED QUARTERLY INFORMATION

For the period from Inception on July 16, 2020 to September 30, 2020 (Restated)

For the three months ended December 31, 2020 (Restated)

$	13,238	$	34,931
	13,238 13,238 1,139,390 125,200 101,038		34,931 34,931 684,714 1,882,940 100,375 2,142,778
$	1,378,866	$	4,845,738
$	(1,365,628)	$	(4,810,807)
	5,750,000		5,750,000
$	(0.24)	$	(0.83)

From September 30, 2020 through December 31, 2020, the Corporation realized a net loss of $4,810,807. This represents a loss of approximately $0.83 per share. This loss was primarily affected by:

The amortization of the Class A Restricted Voting Shares issuance costs of $1,882,940;
The net unrealized loss on the change in the fair value of the warrants $684,714;
Professional fees of $2,142,778 as well as general and administrative expenses of $100,375 incurred in negotiating, evaluating, conducting due diligence and closing on potential qualifying acquisitions as well as payments to our directors and for the utilization of office space, utilities and administrative support; and
Interest income of $34,931 earned on cash balances held in escrow accounts from the issuance of Class A Restricted Voting Shares.

CAPITAL MANAGEMENT

The investment held in escrow includes the $200,000,000 in funds raised relating to Class A Restricted Voting Units and accrued interest totaling $48,169. In accordance with the terms of the Offering, all amounts raised through the issuance of the Class A Restricted Voting Units were deposited into the escrow account and can only be released upon certain prescribed conditions being met, as further described herein and in the Prospectus.

B-20

10 -

SHARE CAPITAL

As of the date of this MD&A, the Corporation had 20,000,000 Class A Restricted Voting Shares, 5,750,000 Class B Shares and 10,300,000 Warrants issued and outstanding.

RELATED PARTY TRANSACTIONS

The Corporation will pay a retainer fee to each of its directors other than Andrew Neuberger in the amount of $50,000 and may pay up to $10,000 (plus applicable taxes) per month to our Sponsor for administrative and related services. The Corporation further reimburses the Sponsor for any out-of-pocket expenses incurred by directors, officers and consultants of the Corporation which are paid by the Sponsor relating to certain activities on the Corporation’s behalf, including identifying and negotiating a qualifying acquisition. For the period from July 16, 2020 (date of incorporation) to December 31, 2020, the Corporation paid $125,000 of such retainer and administrative fees.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

For further information about the accounting policies used by the Corporation, please refer to the Financial Statements and notes thereto as at and for the period ended December 31, 2020, which have been prepared in accordance with IFRS and with interpretation of the IFRIC. The Financial Statements have been prepared on a historical cost basis, except for certain financial instruments which are carried at fair value.

B-21

11 -

CONTROLS AND PROCEDURES

As at December 31, 2020, an evaluation was carried out, under the supervision of and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined under National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings (“ NI 52-109 ”). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as at December 31, 2020.

Management, including the Chief Executive Officer and the Chief Financial Officer, have designed internal control over financial reporting as defined under NI 52-109 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management evaluated, under the supervision of and with the participation of the CEO and the CFO, the effectiveness of our internal control over financial reporting as at December 31, 2020, based on the principles set out in the Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, the CEO and CFO concluded that our internal control over financial reporting was designed and operating effectively as at December 31, 2020 and that there were no material weaknesses in the internal control over financial reporting.

There were no changes made in our internal control over financial reporting that occurred during the period from inception on July 16, 2020 to December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

MANAGING RISK

Except as otherwise disclosed in this MD&A and in the Financial Statements, there have been no significant changes to the nature and scope of the risks faced by the Corporation as described in the AIF, which is available on the Corporation’s profile on SEDAR at www.sedar.com. Such business risks should be considered by interested parties when evaluating the Corporation’s performance and its outlook.

April 13, 2021

B-22

APPENDIX C - LIBERTY FINANCIAL STATEMENTS

(See attached)

==> picture [40 x 32] intentionally omitted <==

C-1

Franchise Group Intermediate L 1, LLC

Interim Condensed Consolidated Financial Statements (unaudited)

As of March 27, 2021 and December 26, 2020 and for the Three Months Ended March 27, 2021 and March 28, 2020

C-2

Franchise Group Intermediate L 1, LLC.

Table of Contents	Table of Contents
Interim Condensed Consolidated Financial Statements (unaudited) ......................................................... 3
Interim	Condensed Consolidated Income Statements ............................................................................ 3
Interim	Condensed Consolidated Statements of Comprehensive Income .............................................. 4
Interim	Condensed Consolidated Balance Sheets .................................................................................. 5
Interim	Condensed Consolidated Statements of Changes in Member’s Equity ..................................... 6
Interim	Condensed Consolidated Statement of Cash Flows ................................................................... 7
Notes to the Interim Condensed Consolidated Financial Statements ......................................................... 8
Note 1	-Basis of the Preparation and Accounting Policies .................................................................... 8
Note 2	-Revenue from Contracts with Customers ................................................................................. 9
Note 3	-Accounts and Notes Receivable ............................................................................................... 10
Note 4	-Financial Instruments ............................................................................................................... 12
Note 5	-Property, Plant, and Equipment, Net ........................................................................................ 15
Note 6	-Goodwill and Intangible Assets ................................................................................................ 15
Note 7	-Assets Held for Sale ................................................................................................................. 15
Note 8	-Income Taxes ........................................................................................................................... 15
N ote 9	-Transactions with Related Parties ............................................................................................ 16
Note 10-Commitments and Contingencies ........................................................................................... 17
Note 11-Geographic Information ........................................................................................................ 18
Note 12-Selling, General and Administrative Expenses ...................................................................... 19

2 C-3

Franchise Group Intermediate L 1, LLC. Interim Condensed Consolidated Income Statements (unaudited) For the three months ended March 27, 2021 and March 28, 2020

(In thousands, $USD)	Notes	Three Months Ended
		March 27, 2021 March 28, 2020
Revenue:
Franchise fees		$ 374 $ 506
Area Developer fees		117 1,021
Royalties and advertising fees		37,594 41,448
Financial products		23,009 27,439
Interest income		956 1,956
Assisted tax preparation fees, net of discounts		9,434 12,250
Electronic filing fees		1,814 2,028
Other revenues		3,182 2,970
Total revenues	2	76,480 89,618
Operating expenses:
Employee compensation and benefits		10,936 11,950
Selling, general, and advertising expenses	12	10,132 11,489
Area Developer expense		5,001 7,330
Advertising expense		4,244 6,813
Depreciation and amortization		4,118 3,204
Total operating expense		34,431 40,786
Operating income		42,049 48,832
Finance costs	4	(93) (1,328)
Foreign currency transaction gain (loss)		153 (35)
Income before income tax		42,109 47,469
Income tax expense	8	2,312 547
Net income		$ 39,797 $ 46,922

3 C-4

Franchise Group Intermediate L 1, LLC.

Interim Condensed Consolidated Statements of Comprehensive Income (unaudited) For the three months ended March 27, 2021 and March 28, 2020

(In thousands, $USD)	Notes	Three Months Ended
		March 27, 2021 March 28, 2020
Net income		$ 39,797 $ 46,922
Items that may be subsequently reclassified to profit or loss
Net (loss)/gain on interest rate swap agreement		(48) 73
Net loss on foreign currency forward contracts		(17) —
Exchange (loss)/gain on translation of foreign operations		(222) 867
Total other comprehensive income (loss)		(287) 940
Total comprehensive income		$ 39,510 $ 47,862

4 C-5

Franchise Group Intermediate L 1, LLC.

Interim Condensed Consolidated Balance Sheets

As of March 27, 2021 and December 26, 2020

(In thousands, $USD)	Notes	As of
		March 27, 2021 December 26, 2020
Current assets
Cash and cash equivalents		$ 19,680 $ 2,722
Current trade receivables, net	3	50,646 33,502
Assets held for sale	7	3,755 3,540
Other current assets		10,123 3,235
Income tax receivable	8	2,223 2,223
Total current assets		86,427 45,222

Non-current assets
Goodwill	6	9,063 8,719
Intangible assets	6	29,511 29,598
Property, plant, & equipment, net	5	2,703 2,755
Non-current trade receivable, net	3	3,097 3,909
Right-of-use assets		7,244 7,506
Net investments in sublease		859 873
Deferred tax assets	8	182 182
Other non-current assets		1,002 1,116
Total non-current assets		53,661 54,658
Total assets		140,088 99,880

Equity and liabilities
Liabilities
Current liabilities
Long-term obligations, current	4	401 1,298
Current financial liabilities		4,640 4,702
Due to Area Developers (ADs)		6,556 2,077
Income taxes payable	8	3,136 823
Deferred revenue - current	2	4,625 9,628
Accounts payable and accrued expenses		12,876 13,827
Related party payable	10	6,481 6,475
Total current liabilities		38,715 38,830

Non-current liabilities
Long-term obligations, non-current	4	1,627 1,662
Non-current financial liabilities		4,483 4,759
Deferred revenue - non-current	2	2,260 2,329
Total non-current liabilities		8,370 8,750
Total liabilities		47,085 47,580

Member’s Equity
Member’s capital		94,113 53,697
Accumulated Other Comprehensive Income (Loss)		(1,110) (1,397)
Total equity		93,003 52,300
Total equity and liabilities		$ 140,088 $ 99,880

5 C-6

Franchise Group Intermediate L 1, LLC.

Interim Condensed Consolidated Statements of Changes in Member’s Equity (unaudited) For the three months ended March 27, 2021 and March 28, 2020

(In thousands, $USD)	Member’s Capital	Accumulated other comprehensive loss Net gain/ (loss) on interest rate swap agreement Net gain on forward contracts related to foreign currency exchange rates Foreign Exchange Conversion Total Member’s Equity	Accumulated other comprehensive loss Net gain/ (loss) on interest rate swap agreement Net gain on forward contracts related to foreign currency exchange rates Foreign Exchange Conversion Total Member’s Equity	Accumulated other comprehensive loss Net gain/ (loss) on interest rate swap agreement Net gain on forward contracts related to foreign currency exchange rates Foreign Exchange Conversion Total Member’s Equity
		Net gain/ (loss) on interest rate swap agreement	Net gain on forward contracts related to foreign currency exchange rates
Balance at December 26, 2020	$ 53,697	$ (145)	$ —	$ (1,252)$ 52,300
Net income	39,797	—	—	— 39,797
Other comprehensive income	—	48	17	222 287
Total comprehensive income	39,797	48	17	222 40,084
Stock-based compensation	64	—	—	— 64
Contribution from/distribution to parent	555	—	—	— 555
Balance at March 27, 2021	$ 94,113	$ (97)	$ 17	$ (1,030) $ 93,003

(In thousands, $USD)	Member’s Capital	Accumulated other comprehensive loss Net gain/ (loss) on interest rate swap agreement Net gain/ (loss) on forward contracts related to foreign currency exchange rates Foreign Exchange Conversion Total Member’s Equity	Accumulated other comprehensive loss Net gain/ (loss) on interest rate swap agreement Net gain/ (loss) on forward contracts related to foreign currency exchange rates Foreign Exchange Conversion Total Member’s Equity	Accumulated other comprehensive loss Net gain/ (loss) on interest rate swap agreement Net gain/ (loss) on forward contracts related to foreign currency exchange rates Foreign Exchange Conversion Total Member’s Equity
		Net gain/ (loss) on interest rate swap agreement	Net gain/ (loss) on forward contracts related to foreign currency exchange rates
Balance at December 28, 2019	$ 36,407	$ (42)	$ —	$ (1,496)$ 34,869
Net income	46,922	—	—	— 46,922
Other comprehensive loss	—	(73)	—	(867) (940)
Total comprehensive income (loss)	46,922	(73)	—	(867) 45,982
Stock-based compensation	118	—	—	— 118
Contribution from/distribution to parent	627	—	—	— 627
Balance at March 28, 2020	$ 84,074	$ (115)	$ —	$ (2,363) $ 81,596

C-7

Franchise Group Intermediate L 1, LLC.

Interim Condensed Consolidated Statements of Cash Flows (unaudited)

For the three months ended March 27, 2021 and March 28, 2020

(In thousands, $USD)	Notes	Three Months Ended
		March 27, 2021 March 28, 2020
Cash flows from operating activities:
Net income		$ 39,797 $ 46,922
Adjustments for:
Provision for doubtful accounts		1,189 1,623
Depreciation and amortization		4,118 2,893
Amortization of debt issuance costs		— 311
Impairment of goodwill and other assets		— 254
Gain on sale of property, equipment, and software		(63) —
Stock-based compensation		64 118
Gain on bargain purchases and sales of Company-owned offices		(623) (808)
Equity in gain of affiliate		— 88
Change in operating assets and liabilities
Accounts, notes, and interest receivable and deferred revenue		(23,759) (11,167)
Bank products receivable and other assets		(6,598) (13,554)
Accounts payable and accrued expenses		1,576 6,732
Due to ADs		4,823 7,206
Net cash generated from operating activities		20,524 40,618
Investing activities
Issuance of operating loans to franchisees and ADs		(35) (28,212)
Payments received on operating loans to franchisees and ADs		808 47,800
Purchases of Company-owned offices, AD rights, and acquired customer lists		(132) (2,251)
Proceeds from sale of Company-owned offices and AD rights		277 950
Purchases of property, equipment, and software		(2,673) (625)
Net cash generated from investing activities		(1,755) 17,662
Financing activities
Repayment of other long term-obligations		(934) (94)
Repayment of lease liabilities		(1,525) (1,246)
Repayment of mortgages and term loan		— (79,260)
Borrowings under revolving credit facility		— 42,000
Payment for debt issue costs		— (699)
Transfer to/from parent company, net		592 438
Net cash used in financing activities		(1,867) (38,861)
Foreign exchange gains/(losses) on cash and cash equivalents		56 (1,335)
Net increase in cash and cash equivalents		16,958 18,084
Cash and cash equivalents at beginning of quarter		2,722 8,714
Cash and cash equivalents at end of quarter		$ 19,680 $ 26,798

Supplemental disclosure of cash flow information
Cash inflow from interest		$ 1 $ 67
Cash outflow from interest		$ (12) $ (997)
Cash paid for taxes, net of refunds		$ — $ —

7 C-8

Franchise Group Intermediate L 1, LLC. Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Note 1 - Basis of the Preparation and Accounting Policies

Nature of the Business

Franchise Group Intermediate L1, LLC. (the "Company"), a Delaware limited liability company, is a holding company engaged through its subsidiaries as a franchisor and, to a lesser degree, an operator of a system of income tax preparation offices located in the United States of America (the "U.S.") and Canada. The Company is a wholly owned subsidiary of Franchise Group, Inc. (the “Parent” or “Member”).

Through its system of income tax preparation offices, the Company also facilitates refund-based tax settlement financial products, such as refund transfer products in the U.S. and personal income tax refund discounting in Canada. The Company also offers online tax preparation services.

The Company provides a substantial amount of lending to its franchisees and area developers ("ADs"). The Company allows franchisees and ADs to defer a portion of the franchise fee and AD fee, which are paid over time. The Company also offers its franchisees working capital loans to assist in funding their operations between tax seasons. The tax return preparation business is highly seasonal, and the Company historically generates most of its revenues during the period from January 1 through April 30.

During the quarter ended March 28, 2020, there was a global outbreak of a novel strain of coronavirus, (“COVID-19”). As a result of the COVID-19 pandemic, on March 21, 2020, the federal tax filing deadline in the U.S. for individual 2019 tax returns was extended from April 15, 2020 to July 15, 2020, and substantially all U.S. states with an April 15 individual state income tax filing requirement similarly extended their respective deadlines. In Canada, the deadline for individuals to file was extended to June 1, 2020. During the quarter ended March 27, 2021, the federal tax filing deadline in the U.S. for individual 2020 tax returns was extended from April 15, 2021 to May 17, 2021. In addition, governments around the world have taken a variety of actions to contain the spread of COVID-19. Jurisdictions in which the Company operates imposed, and continue to impose, various restrictions on its business, including capacity and other operational limitations, social distancing requirements, and in limited instances required the Company to close certain offices. These events have impacted the typical seasonality of the Company’s business and the comparability of its financial results.

Basis of Presentation

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual combined and consolidated financial statements at December 26, 2020.

The unaudited interim condensed consolidated financial statements were approved by the Member and were authorized for issue by the Member on June 3, 2021.

Sale of the Company

On February 21, 2021, Franchise Group Inc. entered into a definitive agreement with NextPoint Acquisition Corp. (“NextPoint”), a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia ("Purchaser") to sell the Company (the “Transaction”) for a total preliminary purchase price of $243.0 million, consisting of approximately $182.0 million in cash and an equity interest in NextPoint worth an estimated $61.0 million at the time of signing. In connection with the Transaction, Franchise Group Inc. expects to enter into a transition service agreement with NextPoint, pursuant to which each party will provide certain transition services to each other. The Transaction is expected to close in the second quarter of 2021.

8 C-9

Franchise Group Intermediate L 1, LLC.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

The Transaction constitutes NextPoint’s qualifying acquisition and must be approved by a simple majority (greater than 50%) of the votes cast, in person or by proxy, by the holders of voting shares at a special meeting of NextPoint’s shareholders.

New standards, interpretations, and amendments adopted by the Company

The accounting policies adopted in preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual combined and consolidated financial statements for the year ended December 26, 2020, expect for the adoption of new standards effective December 27, 2020. One amendment, Interest Rate Benchmark Reform - Phase II, is effective for the first time in 2021, but has no material impact on the unaudited interim condensed consolidated financial statements of the Company. The Company has not early adopted any standard, interpretation, or amendment that has been issued but is not yet effective. See the Company’s annual combined and consolidated financial statements for the year ended December 26, 2020 for further details on the Interest Rate Benchmark Reform - Phase II amendment, as well as a complete list of standards that have been issued but not yet effective.

Note 2 – Revenue from Contracts with Customers

Contract balances

The following table reflects advanced payments from service providers and the estimated franchise and AD fees, expected to be recognized in the future related to performance obligations that are unsatisfied, as follows:

(In thousands)	As of
	March 27, 2021 December 26, 2020
Within one year	$ 4,625 $ 9,628
More than one year	$ 2,260 $ 2,329

The following table provides information about receivables and contract liabilities (deferred revenue) from contracts with customers:

(In thousands)	As of
	March 27, 2021 December 26, 2020
Receivables, net	$ 53,743 $ 37,411
Contract liabilities	$ 6,885 $ 11,957

Significant changes in deferred revenue are as follows:

Significant changes in deferred revenue are as follows:
(In thousands)	Three Months Ended
	March 27, 2021 March 28, 2020
Deferred revenue at beginning of period	$ 11,957 $ 6,504
Revenue recognized during the period - amounts included in contract liabilities at the beginning of the year	(5,227) (2,211)
Revenue recognized during the period - amounts excluded from contract liabilities at the beginning of the year	(45) (1)
New deferred revenue recognized during period	200 190
Deferred revenue at end of period	$ 6,885 $ 4,482

9 C-10

Franchise Group Intermediate L 1, LLC.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Note 3 - Accounts and Notes Receivable

The Company provides select financing to ADs and franchisees for the purchase of franchises, areas, Company-owned offices, and operating loans for working capital and equipment needs. The franchise-related notes generally are payable over five years and the operating loans generally are due within one year. Most notes bear interest at 12%.

Notes and interest receivable, net of unrecognized revenue, are presented in the condensed consolidated balance sheets as follows:

(In thousands)	As of
	March 27, 2021 December 26, 2020
Accounts receivable - current	$ 45,925 $ 27,624
Notes receivable – current, net	9,702 11,788
Interest receivable, net of uncollectible amounts	1,498 2,172
Allowance for doubtful accounts - current	(6,479) (8,082)
Current trade receivables, net	50,646 33,502
Notes receivable - non-current, net	3,368 4,859
Allowance for doubtful accounts - non-current	(271) (950)
Non-current trade receivables, net	$ 3,097 $ 3,909

The adequacy of the expected credit losses allowance is assessed on a regular basis and adjusted as deemed necessary. Management believes the recorded allowance is adequate based upon its consideration of the estimated value of the franchises and AD areas, which collateralize the receivables. Any adverse change in the individual franchisees' or ADs' areas could affect the Company's estimate of the allowance.

10 C-11

Franchise Group Intermediate L 1, LLC.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands)	As of
	March 27, 2021 December 26, 2020
Impaired:
Accounts receivable	$ 9,517 $ 9,466
Notes and interest receivable, net of unrecognized revenue	3,698 6,770
Less amounts due to ADs and franchisees	(188) (133)
Amounts receivable less amounts due to ADs and franchisees	13,027 16,103

Expected credit loss for credit impaired accounts and notes receivable	5,495 6,502

Non-impaired:
Accounts receivable	36,408 18,158
Notes and interest receivable, net of unrecognized revenue	10,870 12,049
Less amounts due to ADs and franchisees	(6,616) (2,550)
Amounts receivable less amounts due to ADs and franchisees	40,662 27,657

Expected credit loss for not credit impaired accounts and notes receivable	1,255 2,530

Total:
Accounts receivable	45,925 27,624
Notes and interest receivable, net of unrecognized revenue	14,568 18,819
Less amounts due to ADs and franchisees	(6,804) (2,684)
Amounts receivable less amounts due to ADs and franchisees	53,689 43,759

Total expected credit loss	$ 6,750 $ 9,032

Activity in the total expected credit loss for the quarters ended March 27, 2021 and March 28, 2020 were as follows:

(In thousands)	Three Months Ended
	March 27, 2021 March 28, 2020
Balance at beginning of quarter	$ 9,032 $ 10,222
Provision for expected credit losses	1,189 1,623
Write-offs	(3,248) (2,301)
Foreign exchange	(223) (137)
Balance at end of quarter	$ 6,750 $ 9,407

11 C-12

Franchise Group Intermediate L 1, LLC.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Note 4 – Financial Instruments

Financial assets and financial liabilities are initially recognized at fair value when the Company becomes a party to the contractual provision of the financial instrument.

The Company’s financial instruments consist of cash and cash equivalents, receivables, derivative assets, accounts payable, long-term obligations, and derivative liabilities. In view of their nature, the fair value of most of the financial instruments approximates their carrying amounts.

Financial assets

The settlement date is used for initial recognition and derecognition of financial assets as these transactions are generally under contracts whose terms require delivery within the time frame established by regulation or convention in the marketplace (regular-way purchase or sale). Financial assets are derecognized when substantially all the Company’s rights to cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

Financial assets such as accounts receivable are initially measured at the transaction price if the accounts receivables do not contain significant financing components or if the practical expedient was applied as specified in IFRS 15.63. Financial assets are initially recognized at fair value plus directly attributable transaction costs. However, when a financial asset measured at FVTPL is recognized, the transaction costs are expensed immediately. Subsequent remeasurement of financial assets is determined by their categorization, which is revisited at each reporting date.

Financial liabilities

Financial liabilities are initially recognized at fair value through profit or loss, and in the case of loans and borrowings and payables, net of transaction costs incurred. Subsequent to initial measurement, financial liabilities are recognized at amortized cost. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognized in the condensed consolidated income statement over the contractual terms using the effective interest rate method. This category includes the following classes of financial liabilities: accounts and other payables, lease liabilities and other financial liabilities.

Financial liabilities at amortized cost are classified as current or non-current depending whether these are due within 12 months after the balance sheet date or beyond. Financial liabilities are derecognized (in full or partly) when either the Company is discharged from its obligation, they expire, are cancelled or replaced by a new liability with substantially modified terms.

12 C-13

Franchise Group Intermediate L 1, LLC. Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Initial recognition and measurement of financial instruments

(In thousands)		As of March 27, 2021	As of March 27, 2021
	At amortized cost	At FVTPL	At FVOCI Total
Classes
Cash and cash equivalents	$ 19,680	$ —	$ — $ 19,680
Receivables	53,743	—	— 53,743
Total financial assets	73,423	—	— 73,423
Accounts payable	928	—	— 928
Long-term obligations	2,028	—	— 2,028
Derivative liabilities	—	—	97 97
Total financial liabilities	2,956	—	97 3,053
Net financial position	$ 70,467	$ —	$ (97) $ 70,370

(In thousands)		As of December 26, 2020	As of December 26, 2020
	At amortized cost	At FVTPL	At FVOCI Total
Classes
Cash and cash equivalents	$ 2,722	$ —	$ — $ 2,722
Receivables	37,411	—	— 37,411
Total financial assets	40,133	—	— 40,133
Accounts payable	2,487	—	— 2,487
Long-term obligations	2,960	—	— 2,960
Derivative liabilities	—	—	145 145
Total financial liabilities	5,447	—	145 5,592
Net financial position	$ 34,686	$ —	$ (145) $ 34,541

Long-Term Obligations

On May 16, 2019, the Company entered into a new credit agreement (the "Liberty Tax Credit Agreement") which provided for a $135.0 million senior revolving credit facility, a $10.0 million sub-facility for the issuance of letters of credit, and a $20.0 million swingline loan sub-facility. On October 2, 2019, the Company amended the Liberty Tax Credit Agreement dated May 16, 2019 to extend the maturity date to October 2, 2022, from the original maturity date of May 31, 2020 and decrease the aggregate amount of commitments from $135.0 million to $125.0 million as of October 2, 2019. The Liberty Tax Credit Agreement included customary affirmative, negative, and financial covenants, including delivery of financial statements and other reports and maintenance of existence. On February 14, 2020, the Company amended certain provisions of the Liberty Tax Credit Agreement to provide for the gradual reduction of the commitments under the Liberty Tax Credit Agreement, and terminated the facility on April 30, 2020. The Company was in compliance with all debt covenants as of March 28, 2020.

Financial liabilities at March 27, 2021 and December 26, 2020 were as follows:

13 C-14

Franchise Group Intermediate L 1, LLC.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands)	As of March 27, 2021 December 26, 2020 $ 1,656 $ 1,691 372 1,269 2,028 2,960 401 1,298 $ 1,627 $ 1,662
Mortgage note payable to a bank in monthly installments ranging from $10 to $14 including interest at LIBOR plus 1.85%, which was 1.85% at April 25, 2020, through December 1, 2026; at that time a balloon payment of $779 is payable; subject to a prepayment penalty; collateralized by land and building.
Amounts due to former ADs, franchisees and third parties at zero percent interest; due May 2020 through June 2022.
Total long-term obligations
Less current installments
Total long-term obligations, excluding current installments, net

Finance costs, net

(In thousands)	Three Months Ended
	March 27, 2021 March 28, 2020
Interest on term loan payables, mortgage, and credit facility	$ 8 $ 1,254
Interest on lease liabilities	93 103
Interest income from the investment in the sublease	(8) (29)
Total finance costs, net	$ 93 $ 1,328

Fair value hierarchy of financial instruments

The Company classifies the fair value of its financial instruments in the following hierarchy, based on the inputs used in their valuation:

Level 1: the fair value of financial instruments quoted in active markets is based on their quoted closing price at the balance sheet date. Examples include exchange-traded commodity derivatives and financial assets such as investments in publicly traded equity and debt securities.
Level 2: the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques using observable market data. Such valuation techniques include discounted cash flows, standard valuation models based on market parameters for interest rates, yield curves or foreign exchange rates, dealer quotes for similar instruments and use of comparable arm’s length transactions. For example, the fair value of forward exchange contracts, currency swaps and interest rate swaps are determined by discounting estimated future cash flows.
Level 3: the fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs). When the fair value of unquoted instruments cannot be measured with sufficient reliability, the Company carries such instruments at cost less impairment, if applicable.

14 C-15

Franchise Group Intermediate L 1, LLC.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands)	As of
	March 27, 2021 December 26, 2020
Cash and cash equivalents	$ 19,680 $ 2,722
Prices quoted in active markets (Level 1)	19,680 2,722
Derivative liabilities	(97) (145)
Valuation techniques based on observable market data (Level 2)	(97) (145)
Accounts receivable	40,716 22,255
Notes and interest receivable	13,027 15,156
Accounts payable	(928) (2,487)
Long-term obligations	(2,028) (2,960)
Valuation techniques based on unobservable market data (Level 3)	50,787 31,964
Total financial instruments at fair value	$ 70,370 $ 34,541

There have been no significant transfers between the different hierarchy levels in any of the periods presented in the unaudited interim condensed consolidated financial statements.

Note 5 – Property, Plant and Equipment, net

During the three months ended March 27, 2021, the Company acquired Property, Plant and Equipment (“PP&E”) at a cost of $2.0 million, disposed of PP&E with a historical cost of $0.3 million and accumulated depreciation of $0.3 million, and incurred depreciation expense of $0.4 million. During the three months ended March 28, 2020, the Company acquired PP&E at a cost of $0.9 million and incurred depreciation expense of $0.3 million.

Note 6 – Goodwill and Intangible Assets

During the three months ended March 27, 2021, the Company recognized amortization expense of $2.3 million related to intangible assets, acquired goodwill and intangible assets totaling $2.3 million, disposed of goodwill and intangible assets with a historical cost of $1.9 million and accumulated amortization of $0.5 million, and recognized a loss on disposal of $0.6 million. During the three months ended March 28, 2020, the Company recognized amortization expense of $1.5 million related to intangible assets, acquired goodwill and intangible assets totaling $4.1 million, disposed of goodwill and intangible assets with a historical cost of $1.3 million and accumulated amortization of $0.3 million, and recognized a loss on disposal of $0.8 million.

Note 7 - Assets Held for Sale

Assets Held for Sale mainly represent the Company’s owned buildings currently being marketed for sale. Changes in the carrying amounts of assets held for sale for the three months ended March 27, 2021 was as follows:

(In thousands)	Three Months Ended
	March 27, 2021
Balance at December 26, 2020	$ 3,540
Transfer in from PP&E – Gross	215
Balance at March 27, 2021	$ 3,755

Note 8 – Income Taxes

Overview

Income taxes recognized in the unaudited interim condensed consolidated financial statements reflect the Company’s best estimate of the outcome based on the facts known at the balance sheet date in each individual country. These facts may

15 C-16

Franchise Group Intermediate L 1, LLC.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

include but are not limited to change in tax laws and interpretation thereof in the various jurisdictions where the Company operates. They may have an impact on the income tax as well as the resulting assets and liabilities.

Total income tax expense for the three months ended March 27, 2021 and March 28, 2020 was $2.3 million and $0.5 million, respectively. The year-to-date effective tax rates for the three months ended March 27, 2021 for the United States and Canada are 4.7% and 27.4%, respectively. The year-to-date effective tax rates for the three months ended March 28, 2020 for the United States and Canada was 0.0% and 26.5%, respectively. The effective tax rates were lower in the three months ended March 28, 2020 compared to the three months ended March 27, 2021 due to temporary U.S. federal income tax law changes for net operating losses provided by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The low effective tax rate for the United States is the result of expected utilization of tax losses carried forward to the current financial year for which no deferred tax had been recognized at the beginning of the fiscal year.

Note 9 – Transactions with Related Parties

Transactions entered into between the Company and Parent are related party transactions. Transactions with the Parent include various services and administration functions provided by the Parent, cash management including treasury functions provided by the Parent and filing and payment of federal and state taxes for the business. These transactions are recorded at cost.

Services provided by the Parent

The Company has allocated costs for services and administrative functions provided by the Parent, which include, but are not limited to executive management, legal, finance, marketing, and human resources. The allocations are generally determined using a percentage of system-wide revenue. Management of the Company and Parent consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to the Company. These allocations may not, however, reflect the expense the Company would have incurred as a standalone company for the periods presented.

For the three months ended March 27, 2021 and March 28, 2020, a total of $0.6 million and $1.2 million corporate expenses have been allocated to the Company by the Parent. These corporate expenses are mainly related to professional fees, board of directors and corporate executives’ compensation, and salaries and compensation for the legal, finance, marketing and human resources departments.

(In thousands)	Three Months Ended
	March 27, 2021 March 28, 2020
Employee compensation and benefits	$ 441 $ 542
Professional fees and insurance	— 654
Reversal of costs incurred on behalf of the Parent	150 —
Total charge, net	$ 591 $ 1,196

Related party payables amount to $6.5 million and $6.5 million as of March 27, 2021 and December 26, 2020, which relate to professional services provided by third parties but paid by the Parent. Such expenses are presented in selling, general and administrative expenses in the interim condensed consolidated income statements.

M. Brent Turner’s Consulting and Services Agreement

16 C-17

Franchise Group Intermediate L 1, LLC. Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Turner was appointed as President and Chief Executive Officer of the Company. The Company is a participant in the following related party transactions with Mr. Turner:

Revolution Financial Tax Program Agreement . The Company entered into a one-year Tax Program Agreement (the “Revolution Tax Program Agreement”) with Revolution effective as of November 20, 2020. The Revolution Tax Program Agreement allows Revolution to use Liberty’s tax preparation systems, certain identified intellectual property licensed from Liberty, and other expertise from Liberty to offer tax preparation services to consumers in Revolution locations. Pursuant to the terms provided in the Revolution Tax Program Agreement, (i) Revolution will pay to Liberty 60% of the Gross Receipts (as defined in the Revolution Tax Program Agreement) generated by the tax preparation services provided as part of the program, (ii) the Company will pay up to $5,000.00 per Revolution location towards the cost associated with replacing the exterior signage of Revolution locations with Liberty branded signage, and (iii) the Company will pay 60%, and Revolution will pay 40%, of the costs associated with local store marketing materials. As of March 27, 2021, the Company had earned less than $0.1 million in royalties related to the Revolution Tax Program Agreement.

Revolution Financial Loan Program Agreement . The Company entered into a one-year Loan Program Agreement (the “Revolution Loan Program Agreement”) with Revolution effective as of December 2, 2020. The Revolution Loan Program Agreement provides that Revolution will use its lending platform and expertise to offer consumer lending in Liberty locations. Pursuant to the terms provided in the Revolution Loan Program Agreement, the Company and/or its franchisees will pay to Revolution a one-time fee of ten thousand dollars ($10,000) software license fee for each location that participates in the program. Revolution shall pay a management fee to the Company and/or franchisee in an amount equal to fifty percent (50)% of the monthly Net Revenue (as defined in the Revolution Loan Program Agreement) during each calendar month (or portion thereof). As of March 27, 2021, the Company had not earned any revenue or incurred any expenses related to the Revolution Loan Program Agreement.

Revolution Financial Canada Loan Program Agreement . The Company entered into a Loan Program Agreement with Revolution (the “Revolution Canada Loan Program Agreement”) commencing on January 31, 2021 and continuing until April 30, 2021. Under the Revolution Canada Loan Program Agreement, the Company, is (i) arranging for Revolution to provide up to $20.0 million of loans to its Canadian franchisees to fund the tax rebate discounting services, and (ii) agreeing to provide various services in connection with loans, including facilitating repayment of loans from the tax refund proceeds. In addition to providing loan servicing, the Company is paying Revolution $0.2 million as a facility arrangement fee. At the conclusion of the term of the Loan Program Agreement, Revolution shall pay to the Company a servicing fee in an amount equal to the difference between $0.2 million minus the aggregate interest and origination fees received by Revolution from participating franchisees in connection with the loans; provided, however, that (i) if such difference is a negative number, Revolution shall pay Liberty $0.2 million, and (ii) if there exists any principal loan losses at such time, Revolution may offset such principal loan losses against any servicing fee due to the Company. As of March 27, 2021, the Company had not earned any revenue or incurred any expenses related to the Revolution Canada Loan Program Agreement.

Note 10 – Commitments and Contingencies

In the ordinary course of operations, the Company or the Parent may become or is party to claims and lawsuits that are considered to be ordinary, routine litigation, incidental to the business, including claims and lawsuits concerning the preparation of customers' income tax returns, the fees charged to customers for various products and services, relationships with franchisees, intellectual property disputes, employment matters, and contract disputes. Although the Company cannot provide assurance that it will ultimately prevail in each instance, it believes the amount, if any, it will be required to pay in the discharge of liabilities or settlements in these claims will not have a material adverse impact on its condensed consolidated results of operations, financial position, or cash flows except as provided below, which include any updates to disclosures included within the combined and consolidated financial statements at December 26, 2020.

17 C-18

Franchise Group Intermediate L 1, LLC. Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Class-Action Litigation

Rene Labrado v. JTH Tax, Inc. On July 3, 2018, a class-action complaint was filed in the Superior Court of California, County of Los Angeles by a former employee for herself and on behalf of all other “similarly situated” persons. The Complaint alleges, among other things, that the Company allegedly violated various provisions of the California Labor Code, including: unpaid overtime, unpaid meal period premiums, unpaid rest premiums, unpaid minimum wages, final wages not timely paid, wages not timely paid, non-compliant wage statements, failure to keep pay records, unreimbursed business expenses and violation of California Business and Profession Code Section 17200. The Complaint seeks actual, consequential and incidental losses and damages, injunctive relief and other damages. The Company highly disputes the allegations set forth in the Complaint and filed a motion to dismiss. On May 29, 2019, the Court denied the Company’s motion to dismiss, but granted the Company leave to file a motion to strike. The Company filed a motion to strike and on August 20, 2019, the Court granted in part and denied in part the Company’s motion. The Court provided the Company with twenty days to file its answer to the Complaint and lifted the discovery stay. The Company answered the complaint and discovery in this matter is ongoing. The Company has engaged in mediation and has accrued $1.2 million related to this case as of December 26, 2020 and March 27, 2021, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets.

Convergent Mobile, Inc. v. JTH Tax, Inc.

On August 26, 2019, Convergent Mobile, Inc. (“Convergent”) filed a complaint in the Superior Court of the State of California, County of Sonoma, against the Company (the "California Complaint"). The California Complaint alleges that the Company breached a contract between it and Convergent, and Convergent has asserted counts for breach of contract, promissory estoppel, and breach of the covenant of good faith and fair dealing. The California Complaint generally seeks damages according to proof, special damages according to proof, interest, attorneys’ fees and cost. The Company removed the matter to the federal district court for the Northern District of California and filed a motion to dismiss and motion to strike. On January 16, 2020, the Court vacated the previously scheduled hearing on Company’s motion to dismiss and motion to strike and stated a written opinion would be forthcoming. On April 22, 2020, the Court granted in part and denied in part the Company’s motion to dismiss. The Court denied the Company’s motion to strike. The Company filed its answer and counterclaim against Convergent. On December 3, 2020 the Court entered a Case Management Order whereby the Court set a tentative trial date to start on either March 15, 2021 or March 29, 2021 and a pre-trial conference scheduled for either February 26, 2021 or March 12, 2021. The Company also filed a motion for partial summary judgment in December of 2020. The Court held oral arguments on that motion in January 19, 2021, which remains pending before the Court. The Court held a trial in this matter during the week of March 29, 2021. The Parties filed their post-trial briefs with the Court on April 12, 2021. On April 23, 2021, the Court ruled in favor of the plaintiff and awarded a judgement of approximately $0.7 million.

Note 11 – Geographic Information

Sales by geographic location are as follows:

(In thousands)	Three Months ended	Three Months ended
	March 27, 2021 March 28, 2020
United States	$ 74,118	$ 85,904
Canada	2,362 3,714
Total	$ 76,480	$ 89,618

18 C-19

Franchise Group Intermediate L 1, LLC.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Non-current operating assets by geographic location are as follows:

Non-current operating assets by geographic location are as follows:
(In thousands)	As of
	March 27, 2021 December 26, 2020
United States	$ 48,414 $ 48,113
Canada	966 1,338
Total	$ 49,380 $ 49,451

Sales have been based on the geographic location of customers and non-recurring assets have been based on the geographic location of the assets. Non-current assets for this purpose consist of property, plant and equipment, net, right-of-use assets, net investment in sublease, goodwill and intangible assets, net.

Note 12 – Selling, general, and administrative expenses

Selling, general and administrative expenses for the three months ended March 27, 2021 and March 28, 2020 are as follows:

(In thousands)	Three Months ended
	March 27, 2021 March 28, 2020
Professional fees	$ 1,548 $ 1,656
Software, computer and office supplies	3,644 4,024
Bad debt expense	1,189 1,623
Bank fees	143 158
Travel and entertainment expense	196 391
Rebate expense	2,196 2,607
Insurance	199 236
Repairs and Maintenance	180 198
Other	837 596
Total selling, general and administrative expenses	$ 10,132 $ 11,489

19 C-20

Franchise Group Intermediate L 1, LLC

Combined and Consolidated Financial Statements

As of December 26, 2020, and December 28, 2019 and for the Year Ended December 26, 2020, Transition Period from May 1, 2019 to December 28, 2019, and Years Ended April 30, 2019 and April 30, 2018

C-21

Independent Auditor’s Report

To the Shareholders of Franchise Group Intermediate L 1, LLC Virginia Beach, Virginia

Opinion on the Financial Statements

We have audited the combined income statements, statements of comprehensive income, changes in member’s equity and cash flows of Franchise Group Intermediate L 1, LLC and its subsidiaries (the “Company”) for the years ended April 30, 2019 and 2018, and the related notes to the combined financial statements, including a summary of significant policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial performance of the Company and its cash flows for each of the years ended April 30, 2019 and 2018, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian Generally Accepted Auditing Standards (“Canadian GAAS”) and auditing standards generally accepted in the United States of America (“U.S. GAAS”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and the United States of America, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises the information, other than the financial statements and our auditor’s report thereon, in Management’s Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management of Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the applicable financial reporting framework, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing these financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to a going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

C-22

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with Canadian GAAS or U.S. GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users take on the basis of these financial statements.

As part of an audit in accordance with Canadian GAAS and U.S. GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risk of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of control.
Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure, and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and time of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

/s/ Cherry Bekaert LLP

Virginia Beach, Virginia, USA June 3, 2021

C-23

Independent Auditors’ Report

To the Shareholders of Franchise Group Intermediate L 1, LLC

Opinion

We have audited the combined and consolidated financial statements of Franchise Group Intermediate L 1, LLC and its subsidiaries (the “Company”), which comprise the combined and consolidated balance sheets as of December 26, 2020 and December 28, 2019, the combined and consolidated income statements, and combined and consolidated statements of comprehensive income (loss), changes in member’s equity and cash flows for the year ended December 26, 2020 and the transition period from May 1, 2019 to December 28, 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 26, 2020 and December 28, 2019, and its financial performance and its cash flows for the year ended December 26, 2020 and the transition period from May 1, 2019 to December 28, 2019 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”) and auditing standards generally accepted in the United States of America (“U.S. GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and the United States of America, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Matter

The financial statements for the years ended April 30, 2019 and 2018 were audited by another auditor who expressed an unmodified opinion on those financial statements on June 3, 2021.

Other Information

C-24

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian GAAS and U.S. GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion.

C-25

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies and material weaknesses in internal control that we identify during our audit.

/s/ Deloitte & Touche LLP

Richmond, Virginia, USA June 3, 2021

C-26

Franchise Group Intermediate L 1, LLC.

Table of Contents	Table of Contents
Combined and Consolidated Financial Statements................................................................................. 3 Combined and Consolidated Income Statements................................................................................. 3 Combined and Consolidated Statements of Comprehensive Income.................................................. 4 Combined and Consolidated Balance Sheets....................................................................................... 5 Combined and Consolidated Statements of Changes in Member’s Equity.......................................... 6 Combined and Consolidated Statement of Cash Flows....................................................................... 7 Notes to the Combined and Consolidated Financial Statements............................................................. 8 Note 1-Basis of the preparation and accounting policies................................................................... 8 Note 2–Revenue from contracts with customers............................................................................... 17 Note 3-Accounts and Notes Receivable............................................................................................. 19 Note 4-Financial Instruments............................................................................................................. 22 Note 5-Property, Plant and Equipment, net........................................................................................ 28 Note 6-Leases.................................................................................................................................... 29 Note 7-Goodwill and Intangible Assets............................................................................................. 32 Note 8–Assets Held for Sale.............................................................................................................. 34 Note 9–Restructuring Expense......................................................................................................... 34 Note 10–Member’s Equity................................................................................................................. 35 Note 11– Income Taxes ..................................................................................................................... 35 Note 12–Stock Compensation Plan................................................................................................. 38 Note 13–Transactions with Related Parties..................................................................................... 42 Note 14–Commitments and Contingencies...................................................................................... 44 Note 15–Geographic Information..................................................................................................... 47 Note 16–Selling, general and administrative expenses……………………………………………... 47 Note 17–Events after the Combined and Consolidated Balance Sheet.............................................. 48

	Note 10–
	Note 11– Note 12–
	Note 13–
	Note 14–
	Note 15–
	Note 16–
	Note 17–

2 C-27

Franchise Group Intermediate L 1, LLC. Combined and Consolidated Income Statements

For the Year Ended December 26, 2020, Transition Period Ended December 28, 2019, and Years Ended April 30, 2019 and April 30, 2018

(In thousands, $USD)	Twelve Months Ended December 26, 2020	Transition Period From May 1, 2019- December 28, 2019	Twelve Months Ended	Twelve Months Ended
			April 30, 2019	April 30, 2018
Revenue:
Franchise fees	1,055 $	922 $	2,766 $	3,917 $
Area Developer fees	3,206	2,447	3,146	11,155
Royalties and advertising fees	56,753	3,212	63,716	68,559
Financial products	31,824	676	33,478	47,225
Interest income	3,624	3,950	8,189	9,895
Assisted tax preparation fees, net of discounts	15,893	1,144	14,611	26,645
Electronic filing fees	2,666	119	2,675	2,154
Other revenues	7,754	2,515	3,965	5,929
Total revenues 2	122,775	14,985	132,546	175,479
Operating expenses:
Employee compensation and benefits	34,817	19,428	40,413	47,930
Area Developer expense	9,627	456	15,584	16,564
Advertising expense	11,803	4,240	12,532	12,326
Depreciation and amortization	15,555	11,878	20,722	18,701
Selling, general and administrative expenses	29,904	42,031	43,911	61,044
Total operating expense	101,706	78,033	133,162	156,565
Operating income (loss)	21,069	(63,048)	(616)	18,914
Finance costs 4	(5,319)	(2,618)	(3,475)	(3,773)
Foreign currency transaction (loss) gain	107	37	(113)	63
Income (loss) before income tax	15,857	(65,629)	(4,204)	15,204
Income tax expense (benefit) 11	1,186	(2,525)	(88)	5,918
Net income (loss)	14,671 $	(63,104) $	(4,116) $	9,286 $

3 C-28

Franchise Group Intermediate L 1, LLC. Combined and Consolidated Statements of Comprehensive Income For the Year Ended December 26, 2020, Transition Period Ended December 28, 2019, and Years Ended April 30, 2019 and April 30, 2018

(In thousands, $USD) Notes	Twelve Months Ended December 26, 2020	Transition Period From May 1, 2019- December 28, 2019	Twelve Months Ended	Twelve Months Ended
			April 30, 2019	April 30, 2018
Net income (loss)	$ 14,671	$ (63,104)	$ (4,116)	$ 9,286
Items that may be subsequently reclassified to profit or loss Net gain/(loss) on interest rate swap agreement, net of taxes of ($24), ($15), ($23), and $22 respectively 4, 10 Exchange gain/(loss) on translation of foreign operations 10
	(103)	(40)	(36)	59
	244	410	(527)	680
Total other comprehensive income	141	370	(563)	739
Total comprehensive income (loss)	$ 14,812	$ (62,734)	$ (4,679)	$ 10,025

4 C-29

Franchise Group Intermediate L 1, LLC. Combined and Consolidated Balance Sheets As of December 26, 2020 and December 28, 2019

(In thousands, $USD)	Notes	As of	As of
		December 26, 2020	December 28, 2019
Current assets
Cash and cash equivalents		2,722 $	8,714 $
Current trade receivables, net	3	33,502	60,228
Assets held for sale	8	3,540	-
Other current assets		3,235	2,698
Income tax receivable	11	2,223	2,222
Total current assets		45,222	73,862

Non-current assets
Goodwill	7	8,719	9,780
Intangible assets	7	29,598	25,389
Property, plant & equipment, net	5	2,755	6,264
Non-current trade receivables, net	3	3,909	5,868
Right-of-use assets	6	7,506	8,523
Net investment in sublease	6	873	929
Deferred tax assets	11	182	873
Other non-current assets		1,116	4,363
Total non-current assets		54,658	61,989
Total assets		99,880	135,851

Equity and liabilities
Liabilities
Current liabilities
Long-term obligations, current	4	1,298	60,729
Current financial liabilities	6	4,702	4,874
Due to Area Developers (ADs)	1	2,077	3,224
Income taxes payable	11	823	328
Deferred Revenue - current	2	9,628	3,252
Accounts payable and accrued expenses		13,827	9,324
Related party payable	13	6,475	7,857
Total current liabilities		38,830	89,588

Non-current liabilities
Long-term obligations, non-current	4	1,662	2,017
Non-current financial liabilities	6	4,759	6,125
Deferred revenue - non-current	2	2,329	3,252
Total non-current liabilities		8,750	11,394
Total liabilities		47,580	100,982

Member's Equity
Member's Capital	10, 13	53,697	36,407
Accumulated other comprehensive loss	10	(1,397)	(1,538)
Total equity		52,300	34,869
Total equity and liabilities		99,880 $	135,851 $

5 C-30

Franchise Group Intermediate L 1, LLC.

Combined and Consolidated Statements of Changes in Member’s Equity

For the Year Ended December 26, 2020, the Transition Period Ended December 28, 2019, and Years Ended April 30, 2019 and April 30, 2018

(Inthousands, $USD)	Notes	Member's Capital	Accumulated other	Foreign Exchange Conversion comprehensive loss	Total Member's Equity
			Net gain/(loss) on interest rate swap agreement
Balance at May 1, 2017		118,539 $	(25) $	(2,059) $	116,455 $
Cumulative effect of adopted accounting standards, net		(10,619)	-	-	(10,619)
Net income		9,286	-	-	9,286
Other comprehensive income		-	59	680	739
Total comprehensive income		9,286	59	680	10,025
Stock-based compensation, net of deferred taxes	12	1,607	-	-	1,607
Transfer to/from parent company, net		(9,505)	-	-	(9,505)
Balance at April 30, 2018		109,308	34	(1,379)	107,963
Net loss		(4,116)	-	-	(4,116)
Other comprehensive loss		-	(36)	(527)	(563)
Total comprehensive loss		(4,116)	(36)	(527)	(4,679)
Stock-based compensation, net of deferred taxes	12	1,591	-	-	1,591
Transfer to/from parent company, net		(2,274)	-	-	(2,274)
Balance at April 30, 2019		104,509	(2)	(1,906)	102,601
Net loss		(63,104)	-	-	(63,104)
Other comprehensive income (loss)		-	(40)	410	370
Total comprehensive income (loss)		(63,104)	(40)	410	(62,734)
Stock-based compensation, net of deferred taxes	12	556	-	-	556
Contribution from/distribution to parent	11, 13	(5,554)	-	-	(5,554)
Balance at December 28, 2019		36,407	(42)	(1,496)	34,869
Net income		14,671	-	-	14,671
Other comprehensive income (loss)			(103)	244	141
Total comprehensive income (loss)		14,671	(103)	244	14,812
Stock-based compensation, net of deferred taxes	12	387	-	-	387
Contribution from/distribution to parent	11, 13	2,232	-	-	2,232
Balance at December 26, 2020		53,697 $	(145) $	(1,252) $	52,300 $

6 C-31

Franchise Group Intermediate L 1, LLC.

Combined and Consolidated Statements of Cash Flows

For the Year Ended December 26, 2020, Transition Period Ended December 28, 2019, and Years Ended April 30, 2019 and April 30, 2018

(In thousands, USD)	Notes	Twelve Months Ended December 26, 2020	Transition Period From May 1, 2019-	Twelve Months Ended	Twelve Months Ended
			December 28, 2019	April 30, 2019	April 30, 2018
Cash flows from operating activities:
Net income (loss)		$ 14,671	$ (63,104)	$ (4,116)	$ 9,286
Adjustments for:
Provision for doubtful accounts		5,255	5,374	9,112	12,052
Depreciation and amortization		15,555	11,878	20,722	18,701
Amortization of debt issuance costs		4,046	1,558	38	155
Impairment of goodwill and other assets		305	20,213	453	2,962
Loss on sale of property, equipment, and software		132	900	5,833	5,261
Stock-based compensation expense	12	387	556	1,590	1,607
Loss (gain) on bargain purchases and sales of Company-owned offices		(2,084)	(1,106)	694	(2,401)
Equity in (gain) loss of affiliate		-	115	(63)	(71)
Deferred tax expense (benefit)	11	691	(2,391)	(1,096)	3,078
Change in operating assets and liabilities
Accounts, notes, and interest receivable and deferred revenue		12,371	3,625	(913)	(12,584)
Bank products receivable and other assets		(1,563)	15,042	(3,487)	921
Accounts payable and accrued expenses		3,940	(1,579)	(955)	2,296
Due to ADs		379	(11,301)	447	(1,446)
Other operating assets and liabilities, net		834	3,127	(3,553)	(4,622)
Net cash generated from (used in) operating activities		54,919	(17,093)	24,706	35,195
Investing activities
Issuance of operating loans to franchisees and ADs		(34,136)	(22,485)	(68,283)	(73,796)
Payments received on operating loans to franchisees and ADs		50,291	827	67,556	72,647
Purchases of Company-owned offices, AD rights, and acquired customer lists		(6,587)	(3,491)	(229)	(2,926)
Proceeds from sale of Company-owned offices and AD rights		1,349	279	1,229	451
Purchases of property, equipment, and software		(4,850)	(1,135)	(2,939)	(5,388)
Sales of property, equipment, and software		293	-	-	-
Net cash provided by (used in) investing activities		6,360	(26,005)	(2,666)	(9,012)
Financing activities
Repayment of other long term-obligations		(3,563)	(13,053)	(7,502)	(7,432)
Repayment of lease obligation		(5,780)	(3,818)	(7,577)	(7,550)
Borrowings under revolving credit facility		42,000	59,260	123,615	178,251
Repayments under revolving credit facility		(101,260)	-	(123,615)	(178,251)
Payment for debt issue costs		(699)	(4,602)	-	-
Contribution from/distribution to parent		2,108	(9,123)	(2,262)	(9,402)
Net cash generated from (used in) financing activities		(67,194)	28,664	(17,341)	(24,384)
Effect of foreign exchange rate changes		(77)	165	(238)	296
Net increase/(decrease) in cash and cash equivalents		(5,992)	(14,269)	4,461	2,095
Cash and cash equivalents at beginning of year		8,714	22,983	18,522	16,427
Cash and cash equivalents at end of year		$ 2,722	$ 8,714	$ 22,983	$ 18,522

Supplement disclosure of cash flow information
Cash inflow from interest		$ 2,835	$ 363	$ 3,938	$ 5,761
Cash outflow from interest		$ (1,549)	$ (742)	$ (2,734)	$ (3,383)
Cash paid for taxes, net of refunds		$ (81)	$ (20)	$ (4,031)	$ (7,393)

7 C-32

Franchise Group Intermediate L 1, LLC. Notes to Combined and Consolidated Financial Statements

Note 1 - Basis of the Preparation and Accounting Policies

Nature of the Business

Starting on July 10, 2019, SiempreTax, LLC, and JTH Tax, LLC, which comprised the Liberty Tax operations, assets and liabilities, were contributed to a newly formed entity Franchise Group Intermediate L1, LLC controlled by Franchise Group, Inc. Prior to July 10, 2019, SiempreTax, LLC and JTH Tax, LLC were the two operating entities under Franchise Group, Inc.

On October 1, 2019, the Company changed its fiscal year to a 4-4-5 retail calendar ending the last Saturday of December of each year. Therefore, these Combined and Consolidated Financial Statements of the Company are as of December 26, 2020 and December, 28, 2019, and for the year ended December 26, 2020, the period from May 1, 2019 to December 28, 2019 (the “Transition Period”), and for the years ended April 30, 2019 and April 30, 2018.

During the first few months of the Company’s fiscal year ended December 26, 2020, there was a global outbreak of a novel strain of coronavirus, (“COVID-19”). As a result of the COVID-19 pandemic, on March 21, 2020, the federal tax filing deadline in the U.S. for individual 2019 tax returns was extended from April 15, 2020 to July 15, 2020, and substantially all U.S. states with an April 15 individual state income tax filing requirement similarly extended their respective deadlines. In Canada, the deadline for individuals to file was extended to June 1, 2020. In addition, governments around the world have taken a variety of actions to contain the spread of COVID-19. Jurisdictions in which the Company operates imposed, and continue to impose, various restrictions on its business, including capacity and other operational limitations, social distancing requirements, and in limited instances required the Company to close certain offices. These events have impacted the typical seasonality of the Company’s business and the comparability of its financial results.

Basis of Presentation

The Combined and Consolidated Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The historical information in these financial statements are those of SiempreTax, LLC and JTH Tax LLC, which comprise the Liberty Tax operations, assets and liabilities for the years ended April 30, 2019 (“fiscal year 2019”) and April 30, 2018 (“fiscal year 2018”) and as of July 10, 2019 that were contributed to the Company. The financial information in these financial statements as of December 26, 2020 (“fiscal year 2020”) and December 28, 2019, and for the year ended December 26, 2020, and the Transition Period, are those of Franchise Group Intermediate L1, LLC. When the equity reorganization occurred, the Company recognized the assets and liabilities at the carrying value in the Parent’s financial statements immediately prior to such transfer.

8 C-33

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

The Combined and Consolidated Financial Statements were approved by the Member and were authorized for issue by the Member on June 3, 2021.

The Combined and Consolidated Income Statements include all revenues and costs directly attributable to the Company and an allocation of expenses from the Parent related to administrative functional expenses. The Parent allocates these costs to the Company using methodologies that management believes are appropriate and reasonable. However, these costs may not be indicative of amounts that would have been incurred if it had operated independently of the Parent

Transactions with the Parent and the subsidiaries of the Parent have been reflected in these Combined and Consolidated Financial Statements as related party transactions. Refer to “Note 13 - Transactions with Related Parties” for further detail. All intracompany accounts and transactions within the Company have been eliminated. The Parent’s net investment in the Company is presented as Member’s equity on the Combined and Consolidated Balance Sheets following the equity reorganization discussed above.

Current and deferred income taxes and related tax expense have been determined based on the stand-alone results by applying International Accounting Standards (“IAS”) 12, Income Taxes, as if the business were a separate corporate taxpayer (i.e., following the separate-return methodology). Additionally, current income taxes payable calculated by the Company in applying the separate return methodology are deemed to have been remitted, in cash, to the Parent in the period the related tax expense was recorded.

As the Company is a limited liability company, it does not have units or shares, and its members’ interest is held solely by the Parent. Accordingly, we have not presented earnings per share of Franchise Group Intermediate L1, LLC.

Principles of Consolidation

The Combined and Consolidated Financial Statements include the accounts of Franchise Group Intermediate L1, LLC and all entities that it controls. The Company controls an entity: i) when it has the power to direct the activities of the entity that have the most significant impact on the entity’s risks and/or returns; ii) where it is exposed to significant risks and/or returns arising from the entity; and iii) where it is able to use its power to affect the risks and/or returns to which it is exposed. This includes all wholly owned subsidiaries where the Company has control and ownership of all majority of voting rights. The Company’s subsidiaries are wholly owned and consist of the following: Franchise Group Intermediate L2, LLC, Siempre Tax LLC, JTH Tax LLC, Liberty Credit Repair LLC, Wefile LLC, JTH Court Plaza LLC, LTS Properties LLC, JTH Financial LLC, LTS Software LLC, JTH Tax Office Properties LLC, 360 Accounting Solutions LLC, JTH Properties 1632 LLC, Liberty Tax Holding Corporation Canada and Liberty Tax Service, Inc. Canada.

Functional and presentation currency

The Company’s functional currency is the currency of its primary economic environment. The Combined and Consolidated Financial Statements are presented in U.S. dollars, which represent the Company’s presentation currency, and all amounts have been rounded to the nearest thousand, unless otherwise noted.

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at year-end rates. Any resulting exchange differences are taken to the combined and consolidated income statement.

Assets and liabilities of the Company’s Canadian operations reported in Canadian dollars are translated into U.S. dollars at year-end exchange rates. Income and expenses are translated into U.S. dollars at the annual weighted average rates of exchange.

Differences arising from the translation of net assets of foreign operations, together with differences arising from the translation of the net results for the year of foreign operations, are presented in accumulated other comprehensive income in the Combined and Consolidated Balance Sheets.

9 C-34

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Segment Reporting

The Company has identified two operating segments, U.S. operations and Canadian operations based on geographies. Although there are two operating segments, each segment is engaged in providing tax return preparation and related services and products. These two operating segments, which have similar gross margin and sales trends, have been aggregated into a single reportable segment because both segments are similar in the nature of services offered, production process, type of customer, the distribution methods, and the regulatory environment in which they operate.

Significant and Critical Accounting Policies

The Company has consistently applied the following accounting policies to all periods presented in these Combined and Consolidated Financial Statements. Additional accounting policies are discussed in the relevant notes to the Combined and Consolidated Financial Statements.

Estimates

The preparation of the Combined and Consolidated Financial Statements requires company management to exercise judgement and to make estimates and assumptions that affect the application of policies, reported amounts of revenues, expenses, assets and liabilities and disclosures. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing basis. Actual results may differ from these estimates.

Deferred Revenue

Deferred revenue represents the expected amount of cash to be received for AD and franchise fees in excess of the revenue recognized to date.

Financial Instruments

Financial assets – Classes and categories

The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The Company classifies financial assets in the following categories:

measured at amortized cost;
measured at fair value through other comprehensive income (abbreviated as FVOCI); and
measured at fair value through the combined and consolidated income statement (abbreviated as FVTPL, fair value through profit or loss).

For an equity investment that is not held for trading, the Company may irrevocably elect to classify it as measured at FVOCI. This election is made at initial recognition on an investment by investment basis.

Financial assets – Recognition and derecognition

Accounts receivables are initially measured at the transaction price if the accounts receivables do not contain significant financing component or if the practical expedient was applied as specified in IFRS 15.63.

10 C-35

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Financial assets – Measurement

Financial assets are initially recognized at fair value plus directly attributable transaction costs. However, when a financial asset measured at FVTPL is recognized, the transaction costs are expensed immediately. Subsequent remeasurement of financial assets is determined by their categorization, which is revisited at each reporting date.

Financial assets – Impairment

The Company assesses whether its financial assets carried at amortized cost and FVOCI are impaired on the basis of expected credit losses (“ECL”). The majority of the Company’s financial assets subject to expected credit losses are accounts and note receivables. See “Note 3- Accounts and Notes Receivable” for further discussion of impairments related to accounts and notes receivables.

The Company recognizes lifetime expected credit losses for accounts receivables. For notes receivable, the Company recognizes lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. Lifetime expected credit losses represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month expected credit losses represents the portion of lifetime expected credit losses that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The expected credit losses on these financial assets are estimated based on the Company’s historical credit loss experience, adjusted for certain factors and considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Typically, the measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default based on various probability-weighted scenarios.

Accounts receivable are considered to be past due if unpaid 30 days after billing and notes receivable are considered past due if unpaid 90 days after due date. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is in default when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovering the contractual cash flows. The amount of expected credit losses are updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument and are presented in selling, general and administrative expenses in the Combined and Consolidated Income Statement. Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

Financial liabilities – Classes and categories

All financial liabilities are measured subsequently at amortized cost using the effective interest method or at FVTPL.

Financial liabilities – Recognition and derecognition

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

11 C-36

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is recognized in profit or loss as the modification gain or loss within other gains and losses.

Financial liabilities – Measurement

Financial liabilities are initially recognized at amortized cost using the effective interest method. However, when a financial liability measured at FVTPL is recognized, the issuance costs are expensed immediately. Subsequently, any gains or losses arising on changes in fair value will be recognized in profit or loss to the extent that they are not part of a designated hedging relationship. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other gains and losses’ line item in profit or loss.

Derivative Instruments and Hedging Activities

The Company recognizes all derivative instruments as either assets or liabilities in the balance sheet at their respective fair values. For derivatives designated in hedging relationships, changes in fair value are either offset through earnings against the change in fair value of the hedged item attributable to the risk being hedged or recognized in accumulated other comprehensive loss to the extent the derivative is effective at offsetting the changes in cash flows being hedged until the hedged item affects earnings.

The Company only enters into a derivative contract when it intends to designate the contract as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk; the derivative expires or is sold, terminated, or exercised; the cash flow hedge is de-designated because a forecasted transaction is not probable of occurring; or management determines to remove the designation of the cash flow hedge.

In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the balance sheet and recognizes any subsequent changes in its fair value in earnings. When it is no longer probable that a forecasted transaction will occur, the Company discontinues hedge accounting and recognizes immediately in earnings gains and losses that were accumulated in other comprehensive loss related to the hedging relationship.

12 C-37

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Leases

The Company’s lease portfolio primarily consists of leases for its retail store locations and office space. The Company also leases certain office equipment. The Company subleases some of its real estate leases, for which it evaluates classification as either an operating lease or a finance lease by reference to the right-of-use asset arising from the head lease. In the case of a sublease being classified as finance, the Company derecognizes the right-of-use asset relating to the head lease, recognizing the net investment in the sublease, and retaining the lease liability relating to the sublease. The Company determines if an arrangement is a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset. Leases with an initial term of 12 months or less are not recorded on the combined and consolidated balance sheets.

For leases with an initial term in excess of 12 months, lease right-of-use assets and lease liabilities are recognized based on the present value of the future lease payments over the committed lease term at the lease commencement date. The Company uses the effective interest rate method to subsequently account for the lease liability, generally resulting in front-loaded lease expense, while the right-of-use asset is generally amortized on a straight-line basis. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate and the information available at the lease commencement date in determining the present value of future lease payments. Most leases include one or more options to renew and the exercise of renewal options is at the Company’s sole discretion. The Company does not include renewal options in its determination of the lease term unless the renewals are deemed to be reasonably certain at lease commencement. Lease right-of-use assets are depreciated on a straight-line basis over the lease term and are periodically reviewed for impairment losses. The Company applies IAS 36, Impairment of Assets, to determine whether a right-of-use asset is impaired, and if so, the amount of the impairment loss to recognize.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are maintained in bank deposit accounts, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in its cash and cash equivalents balances.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful lives of the assets.

Goodwill

Goodwill represents the excess of costs over fair value of net assets of businesses acquired. The cash generating unit for the acquisition of assets from various franchisees is considered to be the franchise territory, and these assets are operated as Company-owned offices. Goodwill is not amortized, but instead tested for impairment at least annually. Goodwill is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. The Company performed its annual impairment testing, during the first week of July, during each of the years ended December 26, 2020, April 30, 2019, and April 30, 2018, as well during the Transition Period.

13 C-38

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Intangible Assets and Asset Impairment

Amortization of intangible assets is calculated using the straight-line method over the estimated useful lives of the assets, generally from two to ten years. Long-lived assets, such as property, equipment, and software, and other purchased intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Certain allowable costs of software developed or obtained for internal use are capitalized and typically amortized over the estimated useful life of the software. The Company applies IAS 36, Impairment of Assets, to determine whether long-lived assets are impaired and account for any identified impairment loss.

Employee benefits

The Company records the cost of its employee stock-based compensation as compensation expense in its combined and consolidated income statements. Compensation costs related to stock options are based on the grant-date fair value of awards using the Black-Scholes-Merton option pricing model and considering forfeitures. Compensation costs related to restricted stock units are based on the grant-date fair value and are amortized using the accelerated method over the vesting period. The Company recognizes compensation costs for an award that has a graded vesting schedule using the accelerated method over the requisite service period for each of the award tranches. The Company reflects the excess tax benefits related to exercise of stock options as additional paid-in capital on its combined and consolidated balance sheets and as financing cash flows on its combined and consolidated statements of cash flows.

AD expense

AD fees consist primarily of the AD’s share of royalties and franchise fees in their territories. The Company expenses AD fees in the period incurred. Amounts due to ADs are recorded in Due to Area Developer on the combined and consolidated balance sheet.

Advertising expense

Advertising costs consist primarily of direct mail, radio, print media and online advertisements intended to attract new franchisees and customers. The Company expenses advertising costs in the period incurred.

Current and Deferred Income Taxes

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities via the Parent using the separate-return method. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the jurisdictions where the Company operates and generates taxable income. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit or loss.

Deferred income tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, except:

When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

14 C-39

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available, against which the temporary differences can be utilized.

The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items.

Significant Accounting Judgements and Estimates

The preparation of the Combined and Consolidated Financial Statements in conformity with IFRS requires management to make accounting judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing basis. Actual results may differ from these estimates.

Other disclosures relating to the Company’s exposure to risks and uncertainties includes:

Financial instruments risk and policies – “Note 4 – Financial Instruments” of the Combined and Consolidated Financial Statements.
Sensitivity analysis disclosures – “Note 1 – Basis of the Preparation and Accounting Policies” sub header Significant and Critical Accounting Policies , “Note 4 – Financial Instruments”, and “Note 7 – Goodwill and Intangible Assets”.

Judgements

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the Combined and Consolidated Financial Statements.

Provision for expected credit losses

The ECL method is applied in determining the allowance for credit losses on the Company’s accounts receivable and notes receivable. The key inputs in the measurement of ECL provision, all of which are subject to accounting judgements, estimates and assumptions are discussed below in “Note 1 – Basis of the Preparation and Accounting Policies” and “Note 3 – Accounts and Notes Receivable” of the Combined and Consolidated Financial Statements.

Impairment on nonfinancial assets

15 C-40

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

immaterial. The fair value is determined based on an operating multiple discussed in further detail below. See “Note 1 – Basis of the Preparation and Accounting Policies” sub header Goodwill and Intangible Assets and Asset Impairment and “Note 7 - Goodwill and Intangible Assets” of the Combined and Consolidated Financial Statements for further information.

The areas where estimates and assumptions have the most significant effect on the amounts recognized in the Combined and Consolidated Financial Statements are as follows:

Share-based payments

The Company’s Parent from time to time issues share based payments to employees of the Company. Compensation costs related to stock options are based on the grant-date fair value of awards using the Black-Scholes option pricing model and considering forfeitures. Management exercises judgement in determining certain inputs to this model including expected volatility, forfeiture rates, and expected dividend yield. Variation in actual results for any of these inputs will result in a different fair value of the stock options as compared to the original estimate. See “Note 12 - Stock Compensation Plan” for further information.

Fair value of franchisees and company-owned stores

The Company uses an operating multiple that is updated annually to estimate the fair value of the franchisees or AD’s collateral when using the ECL model. See “Note 3 – Accounts and Notes Receivable” for further information surrounding the estimates and judgements used in the ECL model. To develop this operating multiple the Company uses a market approach to determine fair value. The Company utilizes the Franchisee to Franchisee Method under the market approach, which is further supplemented by an income related approach.

The Company also uses the operating multiple in estimating the fair value of the underlying company owned store to determine if the fair value of the non-financial assets less cost to dispose exceed the carrying amount of the non-financial assets. See “Note 7 - Goodwill and Intangible Assets” for further information.

Modifications to Existing Accounting Standards

Amendments to IFRS 3: Definition of a Business

The amendments to IFRS 3 clarified that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarified that a business can exist without including all of the inputs and processes needed to create outputs. The amendments apply to annual reporting periods beginning on or after January 1, 2020. These amendments had no material impact on the December 26, 2020 consolidated financial statements of the Company.

Amendments to IFRS 16: COVID-19 Related Rent Concessions

On May 28, 2020, the IASB issued COVID-19-Related Rent Concessions - amendment to IFRS 16 Leases. The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the COVID-19 related rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification. The amendments apply to annual reporting periods beginning on or after June 1, 2020. Earlier application is permitted. The Company has elected to adopt this amendment, which has not had a material impact on the consolidated financial statements.

16 C-41

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform – Phase II

On August 27, 2020, The IASB published “Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) related to the modification of financial assets, financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure requirements applying IFRS 7 to accompany the amendments regarding modifications and hedge accounting. These amendments are effective for annual periods beginning on or after January 1, 2021, with earlier application permitted. The Company has not early adopted this amendment and does not expect it to have a material impact on the consolidated financial statements.

Note 2 – Revenue from contracts with customers

Performance Obligations

Information about the Company’s revenue streams and related performance obligations are summarized below:

Initial franchise fees

Typically, franchise rights are granted to franchisees for an initial term of five years with an option to renew at no additional cost. In exchange for initial franchise fees, royalties and advertising fees, the Company is obligated by its franchise agreements to provide training, an operations manual, site selection guidance, tax preparation software, operational assistance, tax and technical support, the ability to perform electronic filing, and marketing and advertising. The services that the Company provides related to the initial franchise fees the Company receives from franchisees do not contain separate and distinct performance obligations from the franchise right. Accordingly, initial franchise fees, as constrained for amounts the Company does not expect to collect, will be recognized over the initial term of the franchise agreement, which is generally five years. The Company believes the straight-line method provides a faithful depiction of the transfer of goods or services. Initial franchise fees are due upon the execution of the franchise agreement or if financed with the Company over the term of the promissory note which generally correlates with the franchise agreement term of five years.

17 C-42

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

AD fees

The rights to develop a new territory are granted to an AD for an initial term of six or ten years with an option to renew at no additional cost. AD fees, as constrained for amounts the Company does not expect to collect, are recognized as revenue on a straight-line basis over the initial contract term of each AD agreement. Amounts due to ADs for their services under an AD agreement are expensed as the related franchise fees and royalty revenues are recognized. AD fees are due upon the execution of the agreement or if financed with the Company over the term of the promissory note which generally correlates with the AD agreement term of seven to ten years.

The Company also sells a developed territory and simultaneously grants the right to operate as the exclusive AD in such developed territory to a new AD for an initial term of six years or ten years. The transaction price, as constrained for amounts the Company does not expect to collect, is recognized as revenues over the initial term of the AD agreement. The Company believes the straight-line method provides a faithful depiction of the transfer of goods or services.

Royalties and advertising fees

Royalties and advertising fees, which are based on a percentage of the franchisees’ sales, are recognized at the time the underlying sales occur. The Company has elected to use the right to invoice practical expedient for recognition of minimum royalties. The Company believes the franchisees’ sales provides a faithful depiction of the transfer of goods or services. Royalties and advertising fees are due within thirty days.

Financial products

Revenue from financial products represents fees the Company earns for the facilitation of refund transfer and refund-based advance loan products provided by a third-party financial institution. Financial product revenue is recorded when the Company has delivered on all performance obligations associated with the facilitation of refund transfers and advance loans. Performance obligations are considered satisfied when the return is accepted by the Internal Revenue Service (“IRS”) for refund transfers and when the loan is approved by the bank for advance loans. Refund transfer products and refund-based advance loans are recorded on a net basis as the Company is acting as an agent. This is due to the bank maintaining full discretion in establishing pricing and because the bank is primarily responsible for fulfilling the promise to provide the products, while Liberty is a facilitator operating on the financial institution’s behalf.

Interest income on notes to franchisees and area developers

Interest income on notes receivable is recognized based on the stage of the expected credit losses impairment model in accordance with IFRS 9. IFRS 9 requires the Company to recognize 12 months of expected credit losses upon initial recognition of the receivable, referred to as Stage 1. Stage 2 occurs when there is significant deterioration of credit quality and requires the Company to recognize the lifetime expected credit losses of the receivable. Stage 3 occurs when the credit quality has deteriorated to a level at which a credit loss actually occurs and also requires the Company to recognize the lifetime expected credit losses of the receivable.

For notes receivables that are in Stage 1 and Stage 2, interest income is recognized based on the gross carrying amount of the note receivables. For notes receivables that are in Stage 3, interest income is recognized on the net carrying amount of the note receivable. Interest income on accounts receivable is recognized based on the outstanding receivable balance over 30 days old, net of an allowance. Interest income on notes receivable is due per the terms of the underlying promissory note and interest income related to overdue accounts receivable is due immediately.

Assisted tax preparation fees

Assisted tax preparation fees, net of discounts, are recorded at the time the return is filed. The related discounts are recorded as reductions to revenues. Assisted tax preparation fees are due upon the filing of the customers tax return.

18 C-43

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

Electronic filing fees

Electronic filing fees are recorded in the period the tax return is electronically filed. The electronic filing fees, net of the franchisees’ share in such fees, are recorded as revenues in the combined and consolidated income statements. Electronic filing fees are due upon the filing of the customers tax return.

(In thousands)	As of
	December 26, December 28, 2020 2019 $ 9,628 $ 3,252 $ 2,329 $ 3,252
Within one year
More than one year

The Company has applied the practical expedient in IFRS 15.121 which allows the Company to not disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.

Contract balances

The following table provides information about receivables and contract liabilities (deferred revenue) from contracts with customers:

As of December 26, December 28, (In thousands) 2020 2019 Receivables, net 37,411 66,096 Contract liabilities 11,957 6,504 gnificant changes in deferred revenue are as follows: Twelve Months Ended Transition Period from May 1, 2019 (In thousands) December 26, 2020 to December 28, 2019	As of December 26, December 28, (In thousands) 2020 2019 Receivables, net 37,411 66,096 Contract liabilities 11,957 6,504 gnificant changes in deferred revenue are as follows: Twelve Months Ended Transition Period from May 1, 2019 (In thousands) December 26, 2020 to December 28, 2019	As of December 26, December 28, (In thousands) 2020 2019 Receivables, net 37,411 66,096 Contract liabilities 11,957 6,504 gnificant changes in deferred revenue are as follows: Twelve Months Ended Transition Period from May 1, 2019 (In thousands) December 26, 2020 to December 28, 2019
		to December 28, 2019
Deferred revenue at beginning of period	$ 6,504	$ 8,654
Revenue recognized during the period - amounts included in contract liabilities at the beginning of the year	(4,229)	(3,265)
Revenue recognized during the period - amounts excluded from contract liabilities at the beginning of the year	(32)	(104)
New deferred revenue recognized during period	9,714	1,219
Deferred revenue at end of period	$ 11,957	$ 6,504

Significant changes in deferred revenue are as follows:

19 C-44

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Note 3 - Accounts and Notes Receivable

Notes and interest receivable, net of unrecognized revenue, are presented in the combined and consolidated balance sheets as follows:

(In thousands)	As of
	December 26, December 28, 2020 2019
Accounts receivable - current	27,624 $ 30,925 $
Notes receivable – current, net	11,788 35,744
Interest receivable, net of uncollectible amounts	2,172 2,898
Allowance for doubtful accounts - current	(8,082) (9,339)
Current trade receivables, net	33,502 60,228
Notes receivable - non-current, net	4,859 6,751
Allowance for doubtful accounts - non-current	(950) (883)
Non-current trade receivables, net	3,909 $ 5,868 $

Most of the notes receivable that are due from the Company's franchisees and AD, are collateralized by the underlying franchise territory or AD area and when the franchise or AD is an entity, are guaranteed by the owners of the respective entity. The debtors' ability to repay the notes is dependent upon both the performance of the tax preparation industry as a whole and the individual franchise or AD areas. Accounts and notes receivables are recognized initially at their transaction price and subsequently measured at amortized cost less loss allowance subject to the expected credit losses credit impairment model under IFRS 9. When estimating the ECL of the accounts and notes receivables, the Company considers all contractual terms of the financial instrument over the expected life of the financial instrument and the potential recovery from the sale of collateral held or other credit enhancements that are integral to the contractual terms. Management considers specific accounts and notes receivable to be credit impaired if the net amounts due exceed the fair value of the underlying franchise at the time of the annual valuation and estimates an allowance for doubtful accounts based on that excess. Consistent with the Company’s current internal definition of default, an accounts or notes receivable is deemed impaired only if it is determined that the likelihood of collecting substantially all of the accounts or notes receivable and accrued interest is not probable and therefore has a detrimental impact on the estimated future cash flows, notwithstanding how many days are past due. In establishing the fair value of the underlying franchise, management considers a variety of factors including recent sales of Company-owned stores, recent sales between franchisees, net fees of open offices earned during the most recently completed tax season, and the number of unopened offices. While not specifically identifiable as of the balance sheet date, the Company's experience also indicates that a portion of other accounts and notes receivable are also impaired and therefore reserved, because management does not expect to collect all principal and interest due under the current contractual terms. Net amounts due include contractually obligated accounts and notes receivable plus accrued interest, net of unrecognized revenue, reduced by the allowance for uncollected interest, amounts due to ADs, related deferred revenue, and amounts owed to the franchisee by the Company.

20 C-45

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

The measurement of expected credit losses is a function of the probability of default, loss given default and the exposure at default. The Company will evaluate a range of possible expected credit losses outcomes by stressing upward and downward the market multiple considered to estimate the fair value of the franchisee (i.e., the fair value of the collateral). The Company also considers that changes in expected credit losses should be directionally consistent with changes in related observable data from period to period consistent with trends observed on payment status and macroeconomic data such as changes in unemployment rates, domestic GDP, etc.

(In thousands)	As of
	December 26, 2020	December 28, 2019
Impaired: Accounts receivable Notes and interest receivable, net of unrecognized revenue Less amounts due to ADs and franchisees
	$ 9,466	$ 9,183
	6,770	4,225
	(133)	(253)
Amounts receivable less amounts due to ADs and franchisees	16,103	13,155

Expected credit loss for credit impaired accounts and notes receivable	6,502	996

Non-impaired:
Accounts receivable Notes and interest receivable, net of unrecognized revenue Less amounts due to ADs and franchisees	18,158	21,742
	12,049	41,168
	(2,550)	(3,859)
Amounts receivable less amounts due to ADs and franchisees	27,657	59,051

Expected credit loss for not credit impaired accounts and notes receivable	2,530	9,226

Total:
Accounts receivable Notes and interest receivable, net of unrecognized revenue Less amounts due to ADs and franchisees	27,624	30,925
	18,819	45,393
	(2,683)	(4,112)
Amounts receivable less amounts due to ADs and franchisees	43,759	72,206

Total expected credit loss	$ 9,032	$ 10,222

21 C-46

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Activity in the total expected credit loss for the year ended December 26, 2020 and Transition Period was as follows:

(In thousands)	Twelve Months Ended	Transition Period from May 1, 2019
	December 26, 2020	to December 28, 2019
Balance at beginning of year	$ 10,222	$ 12,053
Provision for expected credit losses	5,255	5,375
Write-offs	(6,432)	(7,252)
Foreign exchange	(13)	46
Balance at end of year	$ 9,032	$ 10,222

Note 4 – Financial Instruments

Financial assets and financial liabilities are initially recognized at fair value when the Company becomes a party to the contractual provision of the financial instrument.

The Company’s financial instruments consist of cash and cash equivalents, receivables, derivative assets, accounts payables, long-term obligations, and derivative liabilities. In view of their nature, the fair value of most of the financial instruments approximates their carrying amounts.

Financial assets

Financial assets such as accounts receivables are initially measured at the transaction price if the accounts receivables do not contain significant financing components or if the practical expedient was applied as specified in IFRS 15.63. Financial assets are initially recognized at fair value plus directly attributable transaction costs. However, when a financial asset measured at FVTPL is recognized, the transaction costs are expensed immediately. Subsequent remeasurement of financial assets is determined by their categorization, which is revisited at each reporting date.

Financial liabilities

Financial liabilities are initially recognized at fair value through profit or loss, and in the case of loans and borrowings and payables, net of transaction costs incurred. Subsequent to initial measurement, financial liabilities are recognized at amortized cost. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognized in the combined and consolidated income statement over the contractual terms using the effective interest rate method. This category includes the following classes of financial liabilities: accounts and other payables, lease liabilities and other financial liabilities.

22 C-47

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Initial recognition and measurement of financial instruments

(In thousands)		As of December 26, 2020	As of December 26, 2020
	At amortized cost	At FVTPL	At FVOCI	Total
Classes
Cash and cash equivalents	$ 2,722	$ -	$ -	$ 2,722
Receivables	37,411			37,411
Total financial assets	40,133	-	-	40,133
Accounts payable	2,487	-	-	2,487
Long-term obligations	2,960	-	-	2,960
Derivative liabilities	-	-	145	145
Total financial liabilities	5,447	-	145	5,592
Net financial position	$ 34,686	$ -	$(145)	$ 34,541

(In thousands)		As of December 28, 2019	As of December 28, 2019
	At amortized cost	At FVTPL	At FVOCI	Total
Classes
Cash and cash equivalents	$ 8,714	$ -	$ -	$ 8,714
Receivables	66,096			66,096
Total financial assets	74,810	-	-	74,810
Accounts payable	1,832	-	-	1,832
Long-term obligations	62,746 - 64,578	- - -	-	62,746
Derivative liabilities			58	58
Total financial liabilities			58	64,636
Net financial position	$ 10,232	$ -	$(58)	$ 10,174

Long-Term Obligations

On May 16, 2019, the Company entered into a new credit agreement (the "Liberty Tax Credit Agreement") which provided for a $135.0 million senior revolving credit facility, a $10.0 million sub-facility for the issuance of letters of credit, and a $20.0 million swingline loan sub-facility. On October 2, 2019, the Company amended the Liberty Tax Credit Agreement dated May 16, 2019 to extend the maturity date to October 2, 2022, from the original maturity date of May 31, 2020 and decrease the aggregate amount of commitments from $135.0 million to $125.0 million as of October 2, 2019. The Liberty Tax Credit Agreement included customary affirmative, negative, and financial covenants, including delivery of financial statements and other reports and maintenance of existence. As of December 28, 2019, the Company had $59.3 million outstanding borrowings under its credit facility and borrowed an additional $42.0 million during fiscal 2020. On February 14, 2020, the Company amended certain provisions of the Liberty Tax Credit Agreement to provide for the gradual reduction of the commitments under the Liberty Tax Credit Agreement and terminated the facility on April 30, 2020. The Company was in compliance with all debt covenants as of December 28, 2019.

23 C-48

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

Financial liabilities at December 26, 2020 and December 28, 2019 were as follows:

(In thousands) Revolving credit facility	As of	As of
	December 26, 2020 $ -	December 28, 2019
		$ 59,259
Mortgage note payable to a bank in monthly installments ranging from $10 to $14 including interest at LIBOR plus 1.85%, which was 1.85% at April 25, 2020, through December 1, 2026; at that time a balloon payment of $779 is payable; subject to a prepayment penalty; collateralized by land and building.	1,691	1,826
Amounts due to former ADs, franchisees and third parties at zero percent interest; due May2020 through May2022.	1,269	1,661
Total long-term obligations	2,960	62,746
Less current installments	1,298	60,729
Total long-term obligations, excluding current installments, net	$1,662	$2,017

Aggregate maturities of long-term debt at December 26, 2020 were as follows:

(In thousands)	December 26, 2020
2021	$ 1,298
2022	255
2023	149
2024	155
2025	160
Thereafter	943
Total long-term debt	$ 2,960

Finance costs, net

(In thousands)	Twelve Months Ended December 26, 2020	Transition Period From May 1, 2019 to December 28, 2019	Twelve Months Ended	Twelve Months Ended
			April 30, 2019	April 30, 2018
Interest on term loan payables, mortgage, and credit facility	$ 4,977	$ 2,351	$ 3,023	$ 3,181
Interest on lease liabilities	395	296	563	734
Interest income from the investment in the sublease	(52)	(29)	(111)	(142)
Total finance costs, net	$ 5,319	$2,618	$ 3,475	$ 3,773

24 C-49

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Fair value hierarchy of financial instruments

The Company classifies the fair value of its financial instruments in the following hierarchy, based on the inputs used in their valuation:

Level 1: the fair value of financial instruments quoted in active markets is based on their quoted closing price at the balance sheet date. Examples include exchange-traded commodity derivatives and financial assets such as investments in publicly traded equity and debt securities.
Level 2: the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques using observable market data. Such valuation techniques include discounted cash flows, standard valuation models based on market parameters for interest rates, yield curves or foreign exchange rates, dealer quotes for similar instruments and use of comparable arm’s length transactions. For example, the fair value of forward exchange contracts, currency swaps and interest rate swaps are determined by discounting estimated future cash flows.
Level 3: the fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs). When the fair value of unquoted instruments cannot be measured with sufficient reliability, the Company carries such instruments at cost less impairment, if applicable.

As of

(In thousands)	December 26, 2020	December 28, 2019
Cash and cash equivalents	$2,722	$8,714
Prices quoted in active markets (Level 1)	2,722	8,714
Derivative liabilities	(145)	(58)
Valuation techniques based on observable market data (Level 2)	(145) 22,255 15,156	(58)
Accounts receivable		26,773
Notes and interest receivable		39,323
Accounts payable	(2,487)	(1,832)
Long-term obligations	(2,960)	(62,746)
Valuation techniques based on unobservable market data (Level 3)	31,964	1,518
Total financial instruments at fair value	$ 34,541	$ 10,174

There have been no significant transfers between the different hierarchy levels in any of the periods presented in the Combined and Consolidated Financial Statements.

Financial Risks, Capital Risks and Related Risk Management

In the course of its business, the Company is exposed to a number of financial risks: credit risk, liquidity risk and market risk. This note presents the Company’s objectives, policies and processes for managing its financial risk and capital.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises on financial assets (liquid, noncurrent and derivative) and on accounts and other receivables.

25 C-50

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Financial instruments that could potentially subject the Company to concentrations of credit risk consist of accounts and notes receivable with its franchisees. The Company manages such risk by evaluating the financial position and value of the franchisees as well as obtaining the personal guarantee of the individual franchisees. At December 26, 2020 and December 28, 2019, there were no significant concentrations of credit risk associated with any individual franchisee or group of franchisees. Accounts receivables are subject to credit limits, control and approval procedures. Due to its large number of customers, the Company is not exposed to material concentrations of credit risk on its accounts receivables (see Note 3).

Nevertheless, commercial counterparties are constantly monitored following the similar methodology used for financial counterparties.

The maximum exposure to credit risk resulting from financial activities, without considering netting agreements and without taking into account any collateral held or other credit enhancements, is equal to the carrying amount of the Company’s financial assets.

Liquidity risk management

Liquidity risk is the risk that a company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. Such risk may result from inadequate market depth or disruption. After the transaction with the Parent, the Company managed this risk through the Parent’s approach to cash management and financing.

Market risk management

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates. The market risk associated with interest rates is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The Company assesses interest rate risk by continually identifying and monitoring changes in interest rates that may adversely impact expected future cash flows and by evaluating hedging opportunities. The Company maintains risk management control systems to monitor interest rate risk attributable to both the Company's outstanding or forecasted debt obligations and forecasted revenues as well as the Company's offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates and foreign currency rates on the Company's future cash flows.

Derivative financial instruments

The Company’s derivatives consist of currency forwards and interest rate swaps, which are used to manage exposures to foreign exchange and cash flows.

Derivatives are initially recognized at fair value. They are subsequently remeasured at fair value on a regular basis and at each reporting date as a minimum, with all their gains and losses, realized and unrealized, recognized in the income statement unless they are in a qualifying hedging relationship.

Hedge accounting

The Company designates and documents the use of derivatives as hedging instruments against changes in fair values of recognized assets and liabilities (fair value hedges) and highly probable forecast transactions (cash flow hedges). The effectiveness of such hedges is assessed at inception and verified at regular intervals and at least on a quarterly basis to ensure that an economic relationship exists between the hedged item and hedging instrument.

The Company excludes from the designation of the hedging relationship the hedging cost element. Subsequently, this cost element impacts the income statement at the same time as the underlying hedged item.

26 C-51

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

Cash flow hedges

The Company uses cash flow hedges to mitigate the risk on its variable denominated interest rate debt instruments and foreign currency risks of its recognized assets and liabilities. The effective part of the changes in fair value of hedging instruments is recognized in other comprehensive income, while any ineffective part is recognized immediately in the combined and consolidated income statement. Ineffectiveness may result from changes in the timing of the forecast transactions than were originally foreseen. When the hedged item results in the recognition of a non-financial asset or liability, the gains or losses previously recognized in other comprehensive income are included in the measurement of the cost of the asset or of the liability. Otherwise the gains or losses previously recognized in other comprehensive income are recognized in the combined and consolidated income statement at the same time as the hedged transaction.

From time to time, the Company uses interest-rate-related derivative financial instruments to manage its exposure related to changes in interest rates on its variable-rate line of credit and forward contracts to manage its exposure to foreign currency fluctuation related to short-term advances made to its Canadian subsidiary. The Company does not speculate using derivative instruments nor does it enter into derivative instruments for any purpose other than cash flow hedging.

By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company money, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty money, and therefore, the Company is not exposed to the counterparty's credit risk in those circumstances. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high-quality counterparties. The derivative instruments entered into by the Company do not contain credit risk-related contingent features.

Interest rate swap agreements . In December 2016, in connection with obtaining a mortgage payable to a bank, the Company entered into an interest rate swap agreement, with a notional amount of $2.2 million, equal to the mortgage amount, which allows it to manage fluctuations in cash flow resulting from changes in the interest rate on the mortgage. This swap effectively changes the variable-rate of the Company's mortgage into a fixed rate of 4.12%. The Company has designated this swap agreement as a cash flow hedge. At December 26, 2020, the fair value of the interest rate swap is $0.1 million and is included in "Accounts payable and accrued expenses" on the accompanying combined and consolidated balance sheets. The interest rate swap expires in December 2026.

Forward contracts related to foreign currency exchange rates. In connection with short-term advances made to its Canadian subsidiary related to personal income tax refund discounting, the Company entered into forward contracts to eliminate the exposure related to foreign currency fluctuations. Under the terms of the forward currency contracts, the exchange rate for repayments is fixed at the time advance is made and the advances are repaid prior to April 30 of each year. These forward contracts are designated as cash flow hedges. At December 26, 2020 and December 28, 2019 there were no remaining forward contracts outstanding. During the year ended December 26, 2020 and the Transition Period, these foreign currency hedges were effective and, therefore, no amounts were recognized in the combined and consolidated income statements.

27 C-52

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

Note 5 – Property, Plant and Equipment, net

Property, Plant and Equipment (“PP&E”) at December 26, 2020 and December 28, 2019 was as follows:

Cost or valuation (In thousands)	Land and land improvement	Building and building improvements	Leasehold improvement	Furniture, fixtures, and equipment	Construction in Progress	Total
At April 30, 2019	$ 1,413	$ 8,206	$ 120	$ 5,656	$ -	$15,395
Additions	-	-	67	184	221	472
Acquisition of franchisees	-	-	-	-	-	-
Transfer to/from CIP	-	14	-	-	(14)	-
Disposals	(19)	(247)	-	(132)	-	(398)
Exchange differences	-	-	2	19	-	21
At December 28, 2019	$ 1,394	$ 7,973	$ 189	$ 5,727	$ 207	15,490
Additions	-	329	-	316	517	1,162
Acquisition of franchisees	-	-	-	-	-	-
Transfer to/from CIP	-	-	322	-	(322)	-
Transfer to asset held for sale (AHFS)	(670)					(8,082)
		(6,656)	-	(756)	-

Disposals	(134)	(100)		(347)	(207)	(788)
Exchange differences	-	-	2	11	-	13
At December 26, 2020	$ 590	$ 1,546	$ 513	$ 4,951	$ 195	$ 7,795

Depreciation and impairment
At April 30, 2019	$ 23	$ 3,844	$ 120	$ 5,105	$ -	$9,092
Depreciation charge for the year	1	271	1	139	-	412
Disposals	(3)	(159)	-	(132)	-	(294)
Foreign exchange	-	-	2	14	-	16
At December 28, 2019	$ 21	$ 3,956	$ 123	$ 5,126	$ -	$ 9,226
Depreciation charge for the year	1	308	5	196	-	510
Impairment	-	-	-	-	-	-
Disposals	(7)	(81)	-	(347)	-	(435)
Transfer to AHFS	(12)	(3,505)	-	(755)	-	(4,272)
Foreign exchange			1	10	-	11
At December 26, 2020	$ 3	$ 678	$ 129	$ 4,230	$ -	$ 5,040
Net book value
At December 26, 2020	$587	$868	$384	$721	$195	$2,755
At December 28, 2019	1,373	4,017	66	601	207	6,264

28 C-53

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

The useful lives are as follows:

Building	15 - 30 years
Land Improvements	15 years
Furniture, fixtures, and equipment	3 - 7 years
Leasehold improvements	lesser of the lease term or the estimated useful lives of the assets
Land is not depreciated

Useful lives, components, and residual amounts are reviewed annually. Such a review takes into consideration the nature of the assets, their intended use including but not limited to the closure of company-owned stores and the evolution of the technology and competitive pressures that may lead to their obsolescence. Impairment of PP&E are presented in selling, general and administrative expenses in the combined and consolidated income statements.

Note 6 – Leases

Lessee

The Company assesses whether a contract is or contains a lease at inception of the contract. This assessment involves the exercise of judgement about whether it depends on a specified asset, whether the Company obtains substantially all the economic benefits from the use of that asset, and whether the Company has the right to direct the use of the asset.

The Company recognizes a right-of-use (ROU) asset and a lease liability at the lease commencement date, except for shortterm leases of 12 months or less which are expensed in the combined and consolidated income statement on a straight-line basis over the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease. If this rate cannot be readily determined, the Company uses an incremental borrowing rate specific to the country, term and currency of the contract. Lease payments can include fixed payments; variable payments that depend on an index or rate known at the commencement date; and extension option payments or purchase options which the Company is reasonably certain to exercise. The lease liability is subsequently measured at amortized cost using the effective interest rate method and remeasured (with a corresponding adjustment to the related ROU asset) when there is a change in future lease payments in case of renegotiation, changes of an index or rate or in case of reassessment of options.

At inception, the ROU asset comprises the initial lease liability, initial direct costs and the obligations to refurbish the asset, less any incentives granted by the lessors. The ROU asset is depreciated, generally straight-line over the shorter of the lease term or the useful life of the underlying asset. The ROU asset is subject to testing for impairment if there is an indicator for impairment, as for owned assets.

The Company also subleases some of its real estate leases, for which it evaluates classification as either an operating lease or a finance lease by reference to the right-of-use asset arising from the head lease. In the case of a sublease being classified as finance, the Company derecognizes the right-of-use asset relating to the head lease, recognizing the net investment in the sublease, and retaining the lease liability relating to the sublease.

29 C-54

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Description of lease activities

Real estate leases

The Company leases office space for its corporate owned stores as well as for certain franchisees. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

Equipment leases

The Company also leases equipment that are insignificant to the total leased asset portfolio.

Below are the carrying amounts of the right-of-use assets including net investment in sublease recognized and the movements during the period:

(In thousands)	Real estate $ 9,271	Equipment $ 476	Total
At May 1, 2019			$ 9,747
Additions	2,787	22	2,809
Depreciation	(3,106)	(134)	(3,240)
Foreign exchange	135	1	136
At December 28, 2019	9,087	365	9,452
Additions	3,685	160	3,845
Depreciation	(4,826)	(223)	(5,049)
Foreign exchange	131	-	131
At December 26, 2020	$ 8,077	$ 302	$ 8,379

Impairment of right-of-use assets is presented in selling, general and administrative expenses in the combined and consolidated income statements.

Below are the carrying amounts of the lease liabilities and the movements during the period:

(In thousands)	Real estate $ 11,210	Equipment $ 465	Total
At May 1, 2019			$ 11,675
Additions	2,787	22	2,809
Accretion of interest	284	12	296
Payments	(3,667)	(151)	(3,818)
Foreign exchange	37	-	37
At December 28, 2019	10,651	348	10,999
Additions	3,685	160	3,845
Accretion of interest	380	13	393
Payments	(5,548)	(232)	(5,780)
Foreign exchange	5	-	5
At December 26, 2020	$9,173	$ 289	$9,462
Current	$ 4,544	$ 158	$ 4,702
Non-current	$ 4,629	$ 131	$ 4,760

30 C-55

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Other lease disclosures

As of December 26, 2020, maturities of lease liabilities are as follows:

(In thousands)
2021	$ 4,968
2022	3,010
2023	1,332
2024	401
2025	147
Thereafter	51
Total undiscounted lease payments	9,909
Less: imputed interest	(447)
Total lease liabilities	$ 9,462

The following are the amounts recognized in net income:

(In thousands)	Twelve Months Ended December 26, 2020	Transition Period From May 1, 2019 to December 28, 2019	Twelve Months Ended	Twelve Months Ended
			April 30, 2019	April 30, 2018
Depreciation expense of right-of-use assets	$ 5,049	$ 3,240	$ 7,095	$ 7,248
Impairment expense of right-of-use assets	-	-	615	801
Interest expense on lease liabilities	393	296	563	734
Expense relating to short-term leases	59	13	121	3,409
Variable lease payments	826	566	1,119	806
Sublease income Total amount recognized in net income	(1,786) $ 4,541	(1,508) $ 2,607	(2,978) $ 6,535	(4,484)
				$ 8,514

The total cash outflow for leases amounted to $5.8 million, $3.8 million, $7.6 million, and $7.6 million for the year ended December 26, 2020, the Transition Period, and years ended April 30, 2019 and April 30, 2018, respectively.

There are not significant lease commitments for leases not commenced for the year ended December 26, 2020.

Lessor

The Company currently subleases certain leased offices to its franchisees. The subleases are classified as operating and financing leases by the sublessor under IFRS 16. These leases have terms ranging from less than one year to 7 years.

31 C-56

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

Sublease income

(In thousands) Operating lease income	Twelve Months Ended December 26, 2020 $ 935	Transition Period From May 1, 2019 to December 28, 2019 $ 1,204	Twelve Months Ended	Twelve Months Ended
			April 30, 2019 $ 1,344	April 30, 2018
				$ 2,765
Finance lease income on the net investment in the lease	851	304	1,634	1,719
Total sublease income	$1,786	$1,508	$2,978	$4,484

Maturity analysis - undiscounted finance lease income as of December 26, 2020

(In thousands)
2021	609
2022	271
2023	114
2024	14
2025	-
Thereafter	-
Total future minimum lease payments receivable	1,008
Unearned finance income	(135)
Net investment in sublease	873

Note 7 – Goodwill and Intangible Assets

Goodwill

Goodwill is initially recognized during a business combination and is subsequently measured at cost less impairment.

Intangible assets

Intangible assets consist of customer lists from third parties and franchisees, reacquired franchise rights, AD rights, tradenames, non-compete agreements and software.

32 C-57

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

Components of goodwill and amortizable intangible assets as of December 26, 2020 and December 28, 2019 were as follows:

Cost (In thousands)	Goodwill	Customer lists from third parties	Trad e- name s	Customer Contracts	Customer lists from franchisees	Re- acquired rights	Non- compete agreements	AD rights	Software	Total intangible assets
At April 30, 2019	6,662	1,027	108	-	2,015	1,660	-	32,271	56,554	93,635
Additions	-	-	326	36	-	-	109	4,992	897	6,360
Acquisition of franchisees	3,656	-	-	-	1,505	1,096	-	-	-	2,601
Disposals	(465)	-	-	-	(221)	(189)	-	-	(50,132)	(50,542)
Foreign exchange	23	-	-	-	3	4	-	-	-	7
At December 28, 2019	9,876	1,027	434	36	3,302	2,571	109	37,263	7,319	52,061
Additions	-	-	-	-	-	-	-	9,136	9,088	18,224
Acquisitions of franchisees	1,759	-	-	-	577	548	-	-	-	1,125
Disposals	(2,810)	-	(33)	(36)	(1,003)	(2,046)	(28)	(6,394)	(4,881)	(14,421)
Foreign exchange	(10)	-	-	-	(4)	(8)	-	(25)	(2)	(39)
At December 26,2020	$ 8,815	$ 1,027	$401	$ -	$ 2,872	$ 1,065	$ 81	$ 39,980	$ 11,524	$ 56,950

Amortization and impairment
At April 30, 2019	96	1,027	52	-	1,288	1,380	-	14,173	30,227	48,147
Amortization	-	-	-	24	346	346	9	2,238	4,876	7,839
Impairment	-	-	17	-	-	-	-	-	20,196	20,213
Disposals	-	-	-	-	(111)	(108)	-	-	(49,318)	(49,537)
Foreign exchange	-	-	-	-	4	6	-	-	-	10
At December 28, 2019	96	1,027	69	24	1,527	1,624	9	16,411	5,981	26,672
Amortization	-	-	46	12	580	724	26	7,407	745	9,540
Impairment	-	-	-	-	-	-	-	-	-	-
Disposals	-	-	(6)	(36)	(585)	(1,823)	(12)	(6,374)	-	(8,836)
Foreign exchange	-	-	-	-	-	(4)	-	(20)	-	(24)
At December 26, 2020	$ 96	$ 1,027	$109	$ -	$ 1,522	$ 521	$ 23	$ 17,424	$ 6,726	$ 27,352

Net book value
At December 26, 2020	$ 8,719	$ -	$ 292	$ -	$ 1,350	$ 544	$ 58	$ 22,546	$ 4,798	$ 29,598
At December 28, 2019	$ 9,780	$ -	$ 365	$ 12	$ 1,775	$ 947	$ 100	$ 20,852	$ 1,338	$ 25,389

Impairment of goodwill and intangible assets

Impairment of goodwill and intangible assets is presented in selling, general and administrative expenses in the combined and consolidated income statements.

Goodwill is tested for impairment at least annually and when there is an indication of impairment. Finite life intangible assets are tested when there is an indication of impairment.

33 C-58

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

The annual impairment test is performed at the cash generating unit (CGU) level. The Company defines its CGU for goodwill impairment testing based on the way that it monitors and derives economic benefits from the acquired goodwill, which is at the individual store level. The impairment test is performed by comparing the carrying value of the assets of the CGU with their recoverable amount, based on the fair value of the underlying franchise less costs of disposal. In estimating the fair value of the CGU used to determine the recoverable amount the Company uses an operating multiple that is updated annually. The operating multiple is developed using a market approach referred to as the Franchisee to Franchisee Method as further supplemented by an income related approach. A ten percent change in the operating multiple would equate to a less than $0.1 million change for the year ended December 26, 2020 and the Transition Period. An impairment loss in respect of goodwill is never subsequently reversed.

The Company performed its annual impairment review of goodwill and recorded impairment of $0.3 million, $0.4 million, and $0.1 million for the years ended December 26, 2020, April 30, 2019, and April 30, 2018, respectively. No impairment was recorded for the Transition Period.

Software includes both internally developed software and purchased software. Included in software are $0.03 million and $0.7 million of assets that had not been placed into service at December 26, 2020 and December 28, 2019, respectively. During the Transition Period, the Company wrote off $20.2 million of internally developed software that was no longer in use.

Note 8 - Assets Held for Sale

Assets Held for Sale mainly represent the Company’s owned buildings currently being marketed for sale. Changes in the carrying amounts of assets held for sale for the fiscal year ended December 26, 2020 was as follows:

(In thousands) Balance at beginning of year	Twelve Months Ended
	December 26, 2020
	$ -
Transfer in from PP&E – Gross	8,082
Accumulated depreciation	(4,272)
Disposal	(270)
Balance at end of year	$3,540

Note 9 – Restructuring Expenses

During the year ended April 30, 2018, the Company began restructuring initiatives involving a review of Company-owned stores and service providers to improve the Company's overall long-term profitability. The Company incurred approximately $8.0 million and $4.6 million of expenses for years ended April 30, 2019 and April 30, 2018 related to these initiatives. The expenses incurred are presented in the selling, general and administrative expenses line item in the combined or consolidated income statements. The restructuring initiatives were completed in October 2018. The composition of all costs incurred related to the restructuring initiatives for the years ended April 30, 2019 and April 30, 2018 were as follows:

Expense(In thousands)		Twelve months ended April 30, 2019	Twelve months ended April 30, 2019
	Cash	Accrued Expenses	Non-cash	Total Expense
Contract termination costs - maintenance	$ 37	$ -	$ -	$ 37
Property and intangible impairments and exit costs	2,282	1,467	4,210	7,959

34 C-59

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

Total

$2,319 $1,467 $4,210 $7,996

Expense (In thousands)		Twelve months ended April 30, 2018	Twelve months ended April 30, 2018
	Cash	Accrued Expenses	Non-cash	Total Expense
Contract termination costs - maintenance	$715	$1,359	$-	$2,074
Contract termination costs - impairment	-	-	549	549
Property and intangible impairments and exit costs	254	-	1,500	1,754
Employee termination costs	209	-	-	209
Total	$ 1,178	$ 1,359	$ 2,049	$ 4,586

The property and intangible impairments and exit costs, which were primarily recorded in assets held for sale, were comprised of expenses related to lease obligations and non-cash charges associated with intangible write-downs.

Note 10 – Member’s Equity

Member’s capital

Member’s capital is comprised of equity transactions with the Parent. As discussed in Note 1, at the formation of the Company in July 2019, the assets and liabilities of SiempreTax, LLC and JTH Tax, LLC were transferred by the Parent to the Company. The historical Member’s capital shown for the periods prior to the equity reorganization consist of the Combined Member’s Capital of the SiempreTax, LLC and JTH Tax, LLC.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss at December 26, 2020, December 28, 2019, April 30, 2019 and April 30, 2018 are as follows.

(In thousands)		As of	As of
	December 26, 2020	December 28, 2019	April 30, 2019	April 30, 2018
Foreign currency adjustment	(1,252) $	(1,496) $	(1,906) $	(1,379) $
Interest rate swap agreements, net of tax of ($24), ($15), ($23), and $22, respectively	(145)	(42)	(2)	34
Total accumulated other comprehensive loss	(1,397) $	(1,538) $	(1,908) $	(1,345) $

Note 11 – Income Taxes

Overview

Income taxes recognized in the Combined and Consolidated financial statements reflect the Company’s best estimate of the outcome based on the facts known at the balance sheet date in each individual country. These facts may include but are not limited to change in tax laws and interpretation thereof in the various jurisdictions where the Company operates. They may have an impact on the income tax as well as the resulting assets and liabilities.

Tax Cuts and Jobs Act of 2017

35 C-60

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

The Company is subject to a 21% statutory income tax rate on its U.S. income for years ended December 28, 2019 and December 26, 2020. However, on December 20, 2017, the United States Congress passed legislation making significant changes to income taxation at the federal level for individuals, pass-through entities, and corporations. The legislation, known as the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law by the President on December 22, 2017. For corporations, the changes include a reduction in the statutory rate on taxable income from 35% to 21%, and a move from a worldwide tax system to a modified territorial tax system for companies with foreign operations. This tax rate change, effective on January 1, 2018, resulted in a U.S. federal income tax rate of 30.4% for purposes of computing the Company’s U.S tax liability for the year ended April 30, 2018.

Under the territorial system, except in certain situations or for certain types of income, earnings from foreign operations will generally no longer be subject to U.S. taxation under the Tax Act. The law accommodates the move from the previous worldwide tax system by providing for a one-time transition tax on the undistributed post-1986 earnings of foreign subsidiaries as of either November 2, 2017 or December 31, 2017, whichever undistributed earnings amount is greater. Other provisions of the Tax Act allow for immediate expensing of investments in property, plant, and equipment, and impose limitations on the deductibility of interest, executive compensation, meals and entertainment, and lobbying expenses.

The most significant effect of the Tax Act on the Company's financial statements for the year ended April 30, 2018 reporting period is an adjustment of recorded deferred tax assets and liabilities to the tax rates at which the deferred taxes are expected to reverse in the future and a liability recorded for U.S. income taxes on undistributed foreign earnings expected to be paid under the one-time transition tax provisions of the Tax Act.

Deferred tax assets and liabilities

The Company remeasured certain deferred tax assets and liabilities based on the income rates at which they were expected to reverse in the future (which was generally 21%), by recording an income tax benefit of $1.1 million at April 30, 2018, which is included as a component of income tax benefit (expense) in the combined or consolidated income statement.

One-time transition tax

The one-time transition tax is based on the Company’s total post-1986 earnings and profits, the tax on which the Company previously deferred from U.S. income taxes under U.S. tax law. The Company recorded its one-time transition tax liability for its foreign subsidiaries, resulting in a transition tax liability of $1.4 million at April 30, 2018. The Company had elected to pay its transition tax over the eight-year period provided in the Tax Act.

Global intangible low-taxed income (GILTI)

The Tax Act subjects a U.S. shareholder to tax on GILTI earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. While the IASB did not issue similar guidance, the Company elected to follow the FASB guidance for purposes of IFRS reporting and elected to account for GILTI in the year the tax is incurred as a period cost.

36 C-61

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

The major components of income tax expense (benefit) for the year ended December 26, 2020, the Transition Period, and the years ended April 30, 2019, and April 30, 2018 are as follows:

(In thousands)	Twelve Months Ended	Transition Period May 1, 2020-	Twelve Months Ended	Twelve Months Ended
	December 26, 2020	December 28, 2019	April 30, 2019	April 30, 2018
Income (loss) before income tax	$ 15,857	$ (65,629)	$ (4,204)	$ 15,203

*Current income tax:*
Current income tax charge	495	(119)	992	2,840
Adjustments in respect of current income tax of previous year	-	-	16	-

*Deferred income tax:*
Relating to origination and reversal of temporary differences	4,426	(20,727)	(1,096)	4,003
Adjustments in respect of tax rate changes	-	(21)	-	(925)
Adjustments in respect of remeasurement of deferred assets and liabilities	(3,735)	18,342	-	-
*Income tax expense (benefit) reported in the statement* *of profit or loss*	$1,186	$ (2,525)	$ (88)	$5,918

Reconciliation of tax expense and the income (loss) before income tax multiplied by the Company’s U.S. domestic statutory income tax rate for the year ended December 26, 2020, the Transition Period, and the years ended April 30, 2019, and April 30, 2018, are as follows:

(In thousands)	Twelve Months Ended	Transition Period May 1, 2020-	Twelve Months Ended
	December 26, 2020	December 28, 2019	April 30, 2019 April 30, 2018
Income (loss) before income tax	$ 15,857	$ (65,629)	$ (4,204) $ 15,203
U.S. federal tax at statutory rate at 21% (2018: 30.4%)	3,330	(13,782)	(883) 4,622
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit	1,025	(5,811)	(368) 834
Remeasurement of deferred taxes	(3,735)	18,342	- -
Nondeductible expenses	(260)	(969)	196 139
Stock compensation expense	-	-	801 100
Rate change	-	-	- (927)
Transition tax	-	-	- 1,408
Other	826	(305)	166 (258)
*Income tax expense (benefit) reported in the statement* *of profit or loss*	$1,186	$ (2,525)	$ (88) $ 5,918

37 C-62

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

The tax effect of temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities that give rise to significant portions of deferred tax assets and liabilities as of December 26, 2020 and December 28, 2019 are as follows:

As of December 26, December 28, (In thousands) 2020 2019 Deferred tax assets: Intangibles, Franchise $ 1,658 $ - Lease liabilities 4,399 2,671 Allowance for doubtful accounts 3,140 2,092 Deferred revenue 562 1,364 Net operating loss - 627 Other deductible temporary differences 407 239 Total deferred tax assets 10,166 6,993 Deferred tax liabilities: Intangibles, Other (3,497) (2,777) Right of use asset (4,258) (2,401) Property, equipment and software (U.S.) (1,619) (569) Prepaid assets (610) (373) Total deferred tax liabilities (9,984) (6,120) *Net deferred tax asset / (liability)* $ 182 $ 873 temporary differences and unused tax losses for which deferred tax assets have not been recogniz low. The unrecognized tax losses related to U.S. federal taxes have an indefinite carryforward per Twelve Months Ended Transition Period from May 1, 2019 to December 26, December 28, (In thousands) 2020 2019	As of December 26, December 28, (In thousands) 2020 2019 Deferred tax assets: Intangibles, Franchise $ 1,658 $ - Lease liabilities 4,399 2,671 Allowance for doubtful accounts 3,140 2,092 Deferred revenue 562 1,364 Net operating loss - 627 Other deductible temporary differences 407 239 Total deferred tax assets 10,166 6,993 Deferred tax liabilities: Intangibles, Other (3,497) (2,777) Right of use asset (4,258) (2,401) Property, equipment and software (U.S.) (1,619) (569) Prepaid assets (610) (373) Total deferred tax liabilities (9,984) (6,120) *Net deferred tax asset / (liability)* $ 182 $ 873 temporary differences and unused tax losses for which deferred tax assets have not been recogniz low. The unrecognized tax losses related to U.S. federal taxes have an indefinite carryforward per Twelve Months Ended Transition Period from May 1, 2019 to December 26, December 28, (In thousands) 2020 2019
	December 26, December 28, 2020 2019
Unused tax net operating losses	$ 11,119 $ 12,365
Deductible temporarydifferences	3,803 5,992
*Unrecognized deferred tax assets (liabilities)*	$ 14,922 $ 18,357

A summary of temporary differences and unused tax losses for which deferred tax assets have not been recognized is shown in the table below. The unrecognized tax losses related to U.S. federal taxes have an indefinite carryforward period.

The majority of the unrecognized deferred tax asset related to unused tax net operating losses pertain to U.S. federal losses that do not have an expiration date. The unrecognized deferred tax assets related to other deductible temporary differences related to unexercised non-qualified stock options, unvested restricted stock units, and intangibles that also have no expiration date.

Note 12 – Stock Compensation Plan

Stock Options of the Parent

The following information reflects stock options, restricted stock units, and performance restricted stock units issued by the Parent to employees of the Company and the related disclosures.

38 C-63

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

In August 2011, the Board of Directors approved the JTH Holding, Inc. 2011 Equity and Cash Incentive Plan. Employees and outside directors are eligible to receive awards and a total of 2,500,000 shares of Class A common stock were authorized for grant under the plan. In December 2019, this plan was terminated and replaced by the Franchise Group, Inc. 2019 Omnibus Incentive Plan.

The following table summarizes the information for options granted in the year ended December 26, 2020, the Transition Period, and the years ended April 30, 2019, and April 30, 2018.

December 26, 2020	December 26, 2020	December 28, 2019 April 30, 2019 April 30, 2018	December 28, 2019 April 30, 2019 April 30, 2018	December 28, 2019 April 30, 2019 April 30, 2018
Weighted-average fair value of options granted - $ 4.66 $ 2.18 $ 3.16
Dividend yield - -% 5.3% - 7.2% 4.5% - 5.9%
Expected volatility	-	44.9%	38.3% - 44.7%	36.8% - 51.3%
Expected terms - 5 years 5 - 6 years 5 - 6 years
Risk-free interest rates	-	1.7%	2.7% - 2.8%	1.9% - 2.1%

The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the awards is indicative of future trends, which may not necessarily be the actual outcome.

Stock option activity during the year ended December 26, 2020, the Transition Period, and the years ended April 30, 2019 and April 30, 2018, were as follows:

Outstanding at May 1, 2017	Number of options 1,387,331	Weighted average exerciseprice
		$ 18.02
Granted	272,502	13.25
Exercised	(9,000)	10.51
Forfeited or expired	(1,178,330)	17.22
Outstanding at April 30, 2018	472,503	17.41
Granted	704,514	10.20
Exercised	(14,069)	10.90
Forfeited or expired	(366,704)	17.99
Outstanding at April 30, 2019	796,244	10.88
Granted	-	-
Exercised	(207,802)	10.60
Forfeited or expired	(216,497)	12.87
Outstanding at December 28, 2019	371,945	9.88
Granted	-	-
Exercised	(50,278)	10.35
Forfeited or expired	-	-
Outstanding at December 26, 2020	321,667	$ 9.82

Intrinsic value is defined as the fair value of the stock less the cost to exercise. The total intrinsic value of options exercised in the year ended December 26, 2020, the Transition Period, and years ended April 30, 2019 and April 30, 2018 was $0.6 million, $0.3 million, $0.1 million and $0.1 million, respectively. Stock options vest from the date of grant to five years after the date of grant and expire from four to five years after the vesting date.

39 C-64

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Non-vested stock options (options that had not vested in the period reported) activity during the year ended December 26, 2020, the Transition Period, and the years ended April 30, 2019 and 2018 was as follows:

Outstanding at May 1, 2017	Nonvested options 678,118	Weighted average exercise price
		$ 15.88
Granted	272,502	13.25
Vested	(563,118)	14.61
Forfeited	(120,069)	20.73
Outstanding at April 30, 2018	267,433	14.27
Granted	704,514	10.20
Vested	(92,207)	9.49
Forfeited	(225,226)	14.22
Outstanding at April 30, 2019	654,514	10.35
Granted	-	-
Vested	(374,942)	10.77
Forfeited	(152,905)	10.55
Outstanding at December 28, 2019	126,667	8.83
Granted	-	-
Vested	(63,333)	8.83
Forfeited	-	-
Outstanding at December 26, 2020	63,334	$ 8.83

At December 26, 2020, unrecognized compensation cost related to non-vested stock options was less than $0.1 million. These costs are expected to be expensed through the year ended December 25, 2021.The following table summarizes information about stock options outstanding and exercisable at December 26, 2020.

Range of Exercise Prices 0.00 - 10.89	Options outstanding	Options outstanding	Options exercisable	Options exercisable
	Number of options outstanding 217,500	Weighted average exercise price $8.77 12.01 $9.82	Number of options exercisable 154,166 104,167 258,333	Weighted average exercise price
				$ 8.74
10.90 - 16.38	104,167			12.01
	321,667			$ 10.06

40 C-65

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Restricted Stock Units of the Parent

The Parent has awarded restricted stock units to its non-employee directors and certain employees of the Company. Restricted stock units are valued at the closing stock price the day preceding the grant date. Restricted stock units vest ratably over a threeyear period. Compensation costs associated with these restricted shares are amortized on a straight-line basis over the vesting period and recognized as an increase in additional paid-in capital. At December 26, 2020, unrecognized compensation cost related to restricted stock units was $0.3 million. These costs are expected to be recognized through the year ended December 25, 2021.

Restricted stock activity during the year ended December 26, 2020, the Transition Period, and the years ended April 30, 2019 and 2018, was as follows.

		Number of RSUs Weighted Average Fair Value at Grant Date
Balance at May 1, 2017		176,396 $ 13.61
Granted		147,991 12.21
Vested		(28,029) 13.04
Forfeited		(78,200) 13.34
Balance at April 30, 2018		127,030 12.48
Granted		147,991 10.4
Vested		(28,029) 13.47
Forfeited		(78,200) 12.31
Balance at April 30, 2019		168,792 10.56
Granted		- -
Vested		(80,549) 10.73
Forfeited		(36,122) 10.72
Balance at December 28, 2019		52,121 10.17
Granted		- -
Vested		(27,014) 10.19
Forfeited		(2,647) 11.68
Balance at December 26, 2020		22,460 $ 9.98

41 C-66

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Performance Stock Units of the Parent

The Parent has awarded performance stock units (“PSU”) to its corporate executives and certain Franchise Group Intermediate L1, LLC. employees. The following represents the rollforward of the PSUs awarded to the Company’s employees.

Performance Stock Units

	Number of PSUs Weighted Average Fair Value atGrant Date	Number of PSUs Weighted Average Fair Value atGrant Date
Balance at May 1, 2019	-	$ 0.00
Granted	28,500 14.40
Vested	- 0.00
Forfeited	- 0.00
Balance at December 28, 2019	28,500	14.40
Granted	- 0.00
Vested	- 0.00
Forfeited	(2,000) 14.40
Balance at December 26, 2020	26,500	$ 14.40

Stock Compensation Expense

The Company recorded $0.4 million, $0.6 million, $1.6 million and $1.6 million, of expense related to stock awards for the year ended December 26, 2020, the Transition Period, and the years ended April 30, 2019, and April 30, 2018, respectively.

Note 13 – Transactions with Related Parties

Services provided by the Parent

For the year ended December 26, 2020, and the Transition Period, a total of $3.9 million and $1.1 million corporate expenses have been allocated to the Company by the Parent. These corporate expenses are mainly related to professional fees, board of directors and corporate executives’ compensation, and salaries and compensation for the legal, finance, marketing and human resources departments. Further, during the Transition Period, $7.0 million of corporate expenses have been charged back by the Company to the Parent for costs incurred on behalf of the Parent, related to business acquisitions of the Parent. Therefore, the net chargeback to the Parent amounts to $5.9 million for the Transition Period. For the years ended April 30, 2019 and 2018 there were no such allocations or chargebacks.

42 C-67

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

(In thousands)	Twelve Months Ended Transition Period From May 1, 2019 December 26, 2020 to December 28, 2019
Employee compensation and benefits	2,121 $ 513 $
Professional fees and insurance	1,325 629
Chargeback for costs incurred on behalf of the Parent	- (7,012)
Reversal of costs incurred on behalf of the Parent	450 -
Total charge, net	3,896 $ (5,870) $

Related party payables amount to $6.4 million and $7.8 million for the year ended December 26, 2020 and Transition Period which relate to professional services provided by third parties but paid by the Parent. Such expenses are presented in selling, general and administrative expenses in the combined or consolidated income statements.

M. Brent Turner’s Consulting and Services Agreement

M. Brent Turner served as a consultant of the Company from September 2018 until June 2019. On June 9, 2019, the Company appointed Mr. Turner as interim Chief Executive Officer of the Company. Subsequently, on October 2, 2019, Mr. Turner was appointed as President and Chief Executive Officer of the Company. The Company is a participant in the following related party transactions with Mr. Turner:

Revolution Financial Services Agreement. The Company entered into a one-year Services Agreement (the “Revolution Agreement”) with Revolution Financial, Inc. (“Revolution”) effective as of August 23, 2019. Mr. Turner serves as the Chief Executive Officer of Revolution. The Revolution Agreement provides for certain transition services, including leased office space and information technology personnel. Pursuant to the terms as provided in the Revolution Agreement, fees for each of the services provided by Revolution are calculated based on the actual costs for each applicable service to be paid by the Company. For the transition services provided by the Company in retail locations, which includes the provision of space and staffing, Revolution will pay the Company 50% of net revenue. The Revolution Agreement expired on August 23, 2020. During the life of the Revolution Agreement the Company did not earn any revenue or receive any payments under the agreement.

Revolution Financial Tax Program Agreement . The Company entered into a one-year Tax Program Agreement (the “Revolution Tax Program Agreement”) with Revolution effective as of November 20, 2020. The Revolution Tax Program Agreement allows Revolution to use Liberty’s tax preparation systems, certain identified intellectual property licensed from Liberty, and other expertise from Liberty to offer tax preparation services to consumers in Revolution locations. Pursuant to the terms provided in the Revolution Tax Program Agreement, (i) Revolution will pay to Liberty 60% of the Gross Receipts (as defined in the Revolution Tax Program Agreement) generated by the tax preparation services provided as part of the program, (ii) the Company will pay up to $5,000.00 per Revolution location towards the cost associated with replacing the exterior signage of Revolution locations with Liberty branded signage, and (iii) the Company will pay 60%, and Revolution will pay 40%, of the costs associated with local store marketing materials. As of December 26, 2020, the Company had not earned any revenue or incurred any expenses related to the Revolution Tax Program Agreement.

43 C-68

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Revolution a one-time fee of ten thousand dollars ($10,000) software license fee for each location that participates in the program. Revolution shall pay a management fee to the Company and/or franchisee in an amount equal to fifty percent (50)% of the monthly Net Revenue (as defined in the Revolution Loan Program Agreement) during each calendar month (or portion thereof). As of December 26, 2020, the Company has not earned any revenue or incurred any expenses related to the Revolution Loan Program Agreement.

Michael S. Piper

On December 16, 2019, Mr. Piper, the Company’s chief financial officer, purchased 39,620 shares of the Parent’s common stock for $0.5 million under a subscription agreement with the Parent. On February 7, 2020, Mr. Piper purchased 123,529 shares for $2.1 million under subscription agreement plans with the Parent.

Nicole Ossenfort’s (Chief Executive Officer through June 9, 2019) franchise agreement

Ms. Ossenfort, together with her husband, Scott Ossenfort, jointly own a Company franchise through JL Enterprises. All transactions between the Company and Ms. Ossefort's entity are conducted on an arms-length basis and any amounts due are immaterial.

Shaun York’s (Chief Operating Officer through September 6, 2019) AD agreement

Through the Transition Period, Mr. York had an AD arrangement with the Company that was conducted through Yorkompany LLC. All transactions between the Company and Mr. York's entity were conducted on an arms-length basis and the amounts due were immaterial. In March 2020, Mr. York sold his AD arrangement back to the Company.

Note 14 – Commitments and Contingencies

In the ordinary course of operations, the Company or the Parent may become or is party to claims and lawsuits that are considered to be ordinary, routine litigation, incidental to the business, including claims and lawsuits concerning the preparation of customers' income tax returns, the fees charged to customers for various products and services, relationships with franchisees, intellectual property disputes, employment matters, and contract disputes. Although the Company cannot provide assurance that it will ultimately prevail in each instance, it believes the amount, if any, it will be required to pay in the discharge of liabilities or settlements in these claims will not have a material adverse impact on its combined or consolidated results of operations, financial position, or cash flows except as provided below.

Eastern District of New York Securities Litigation

This case consolidated two previously filed cases on July 12, 2018. The case, among other things, asserts that the Parent’s SEC filings over a multi-year period failed to disclose the alleged misconduct of the individual defendants and that disclosure of the

44 C-69

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

alleged misconduct caused the Company’s stock price to drop and, thereby harm the purported class of stockholders. The class period is alleged to be October 1, 2013 through February 23, 2018. The defendants filed a joint motion to dismiss the Consolidated Amended Class-Action Complaint on September 17, 2018 which was granted on January 17, 2020. The Plaintiff filed their notice to appeal to the United States Court of Appeals for the Second Circuit on February 19, 2020. The Second Circuit set an expedited briefing schedule for the appeal. Appellant’s brief was filed on May 5, 2020 and Appellant’s opposition brief was filed June 9, 2020. On September 30, 2020, the Court of Appeals for the Second Circuit affirmed the January 17, 2020 decision by the District Court for the Eastern District of New York, dismissing the Consolidated Amended Class Actions Complaint with prejudice.

Franchise Litigation

JTH Tax, Inc. and SiempreTax LLC v. Gregory Aime, Aime Consulting, LLC, Aime Consulting, Inc. and Wolf Ventures, Inc.

The Company filed suit in the United States District Court for the Eastern District of Virginia against the defendants, former Company franchisees.

On September 13, 2018, the Fourth Circuit issued a mandate that the judgment of the Fourth Circuit entered August 8, 2018 takes effect as of the same date of said filing. The matter was sent back to the District Court to recalculate damages consistent with the Fourth Circuit’s decision. On November 29, 2018, the Court issued an order awarding Aime approximately $0.3 million in damages.

Before the District Court on remand, the parties briefed the question of what damages remained in place after the Court of Appeals’ ruling. On November 30, 2018, the District Court ruled that the Company remained liable to Aime for $0.3 million in damages. On December 28, 2018, Aime filed a motion for reconsideration of the District Court’s November 30, 2018 Order. On April 9, 2019, the Court entered judgment for an amount of $0.3 million. On April 12, 2019, Aime filed a motion to amend the judgment, to increase it by $0.1 million. On June 13, 2019, the Court denied the motion for reconsideration, but granted the motion to amend and increased the amount of the judgment to include the $0.1 million. The Court issued its opinion on June 25, 2019. The Company filed a notice of appeal with the Fourth Circuit Court of Appeals on July 19, 2019. Aime filed his notice of cross-appeal on July 25, 2019. On January 4, 2021 the Fourth Circuit Court of Appeals ruled in favor of Company reversing the District Court’s granting of nominal damages and increase of the judgment. The Fourth Cirucit Court of Appeals denied Aime’s cross-appeal in its entity. The matter was remanded to the District Court on February 22, 2021. The case was then mutually resolved by the Parties, which required the Company to pay approximately $0.09 million. On April 6, 2021 the District Court entered an Order granting the Parties Joint Stipulation of Dismissal with Prejudice. As of December 26, 2020 and December 28, 2019, the Company had accrued $0.3 million in connection with this case, which is included in accounts payable and accrued expense on the combined and consolidated balance sheets.

Class-Action Litigation

45 C-70

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

in mediation and has accrued $1.2 million as of December 26, 2020, which is included in accounts payable and accrued expenses on the combined and consolidated balance sheets.

DOJ and IRS Matters

On December 3, 2019, the DOJ initiated a legal proceeding against the Company, in the U.S. District Court for the Eastern District of Virginia. Also, on December 3, 2019, the DOJ and the Company filed a joint motion asking the court to approve a proposed order setting forth certain enhancements to the Company's compliance program and requiring the Company to retain an independent monitor to oversee the implementation of the required enhancements to the compliance program. The monitor will work with the Company's compliance team and may make recommendations for further refinements to improve the tax compliance program. As part of the proposed order, the Company also agreed that it would not rehire or otherwise engage the Company’s former chairman, John T. Hewitt, under whose supervision the conduct at issue occurred, and agreed not to grant Mr. Hewitt any options or other rights to acquire equity in the Company, or to nominate him to the Company’s Board of Directors. On December 20, 2019, the Court granted the joint motion for the proposed order and the confidentiality motion, which fully resolved the legal proceeding initiated by DOJ.

In addition, the Company entered into a settlement agreement resolving the previously disclosed investigation by the IRS with respect to the tax return preparation activities of the Company’s franchise operations and Company-owned stores. Pursuant to that agreement, the Company agreed to make a compliance payment to the IRS in the amount of $3.0 million, to be paid in installments over four years, starting with an upfront payment of $1.0 million, followed by a $0.5 million payment on each anniversary thereof.

The Company expects that the increased costs to enhance its compliance program could exceed $1.0 million per year over several years, in addition to the costs necessary to resolve the investigation.

Convergent Mobile, Inc. v. JTH Tax, Inc.

46 C-71

Franchise Group Intermediate L 1, LLC.

Notes to the Combined and Consolidated Financial Statements

Note 15 – Geographic Information

Sales by geographic location are as follows:

(In thousands)	Twelve Months Ended December 26, 2020	Transition Period From May 1, 2019 to December 28, 2019	Twelve Months Ended
			April 30, 2019 2018
United States	$ 114,862	$ 13,559	$ 124,611 $ 167,272
Canada	7,913	1,426	7,935 8,207
Total	$ 122,775	$ 14,985	$ 132,546 $ 175,479

Non-current operating assets by geographic location are as follows:

As of December 26, December 28, (In thousands) 2020 2019 United States $ 48,113 $ 46,369 Canada 1,338 4,516 Total $ 49,451 $50,885 Sales have been based on the geographic location of customers and non-recurring assets have been based on the geograph location of the assets. Non-current assets for this purpose consist of property, plant and equipment, net, right-of-use assets, n investment in sublease, goodwill and intangible assets, net. Note 16 – Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 26, 2020, the Transition Period, and the years end April 30, 2019 and April 30, 2018 are as follows: Twelve Months Ended Transition Period From May 1, 2019 - December 26, December 28, April 30, April 30, (In thousands) 2020 2019 2019 2018 Twelve Months Ended	As of December 26, December 28, (In thousands) 2020 2019 United States $ 48,113 $ 46,369 Canada 1,338 4,516 Total $ 49,451 $50,885 Sales have been based on the geographic location of customers and non-recurring assets have been based on the geograph location of the assets. Non-current assets for this purpose consist of property, plant and equipment, net, right-of-use assets, n investment in sublease, goodwill and intangible assets, net. Note 16 – Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 26, 2020, the Transition Period, and the years end April 30, 2019 and April 30, 2018 are as follows: Twelve Months Ended Transition Period From May 1, 2019 - December 26, December 28, April 30, April 30, (In thousands) 2020 2019 2019 2018 Twelve Months Ended	As of December 26, December 28, (In thousands) 2020 2019 United States $ 48,113 $ 46,369 Canada 1,338 4,516 Total $ 49,451 $50,885 Sales have been based on the geographic location of customers and non-recurring assets have been based on the geograph location of the assets. Non-current assets for this purpose consist of property, plant and equipment, net, right-of-use assets, n investment in sublease, goodwill and intangible assets, net. Note 16 – Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 26, 2020, the Transition Period, and the years end April 30, 2019 and April 30, 2018 are as follows: Twelve Months Ended Transition Period From May 1, 2019 - December 26, December 28, April 30, April 30, (In thousands) 2020 2019 2019 2018 Twelve Months Ended	As of December 26, December 28, (In thousands) 2020 2019 United States $ 48,113 $ 46,369 Canada 1,338 4,516 Total $ 49,451 $50,885 Sales have been based on the geographic location of customers and non-recurring assets have been based on the geograph location of the assets. Non-current assets for this purpose consist of property, plant and equipment, net, right-of-use assets, n investment in sublease, goodwill and intangible assets, net. Note 16 – Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 26, 2020, the Transition Period, and the years end April 30, 2019 and April 30, 2018 are as follows: Twelve Months Ended Transition Period From May 1, 2019 - December 26, December 28, April 30, April 30, (In thousands) 2020 2019 2019 2018 Twelve Months Ended	As of December 26, December 28, (In thousands) 2020 2019 United States $ 48,113 $ 46,369 Canada 1,338 4,516 Total $ 49,451 $50,885 Sales have been based on the geographic location of customers and non-recurring assets have been based on the geograph location of the assets. Non-current assets for this purpose consist of property, plant and equipment, net, right-of-use assets, n investment in sublease, goodwill and intangible assets, net. Note 16 – Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 26, 2020, the Transition Period, and the years end April 30, 2019 and April 30, 2018 are as follows: Twelve Months Ended Transition Period From May 1, 2019 - December 26, December 28, April 30, April 30, (In thousands) 2020 2019 2019 2018 Twelve Months Ended
			April 30, 2019	April 30, 2018
Professional fees	6,263 $	6,759 $	11,163 $	8,269 $
Software, computer and office supplies	8,743	4,190	6,110	5,625
Bad debt expense	5,226	5,375	9,112	12,052
Restructuring expense	-	-	7,996	4,586
Impairment	305	20,123	453	2,962
Bank fees	1,240	347	681	12,630
Travel and entertainment expense	939	1,601	1,994	2,437
Rebate expense	2,777	238	1,572	1,931
Insurance	712	680	1,073	900
Repairs and maintenance	625	407	730	892
Other	3,074	2,311	3,027	8,760
Total selling, general and administrative expenses	29,904 $	42,031 $	43,911 $	61,044 $

Note 16 – Selling, General and Administrative Expenses

Selling, general and administrative expenses for the year ended December 26, 2020, the Transition Period, and the years ended April 30, 2019 and April 30, 2018 are as follows:

47 C-72

Franchise Group Intermediate L 1, LLC. Notes to the Combined and Consolidated Financial Statements

Note 17 – Events after the Combined and Consolidated Balance Sheet Date

The Company evaluated events or transactions occurring after December 26, 2020 that would have a material impact on the accounting or presentation of the accompanying Combined and Consolidated Financial Statements.

Sale of the Company

48 C-73

APPENDIX D - MANAGEMENT’S DISCUSSION & ANALYSIS OF LIBERTY

(See attached)

D-1

Franchise Group Intermediate L 1, LLC

Management Discussion and Analysis

As at December 26, 2020 and December 28, 2019

and Interim results for the Three Months Ended March 27, 2021 and March 28, 2020

(Expressed in U.S. Dollars)

D-2

MANAGEMENT’S DISCUSSION & ANALYSIS

The following discussion of performance, financial condition and future prospects should be read in conjunction with the audited financial statements as of December 26, 2020 and December 28, 2019 and for the year ended December 26, 2020, the Transition Period from May 1, 2019 to December 28, 2019 and the years ended April 30, 2019 and April 30, 2018 (the “ Financial Statements ”) of Franchise Group Intermediate L 1, LLC (“ Liberty ” or the “ Company ”), and the unaudited interim condensed consolidated financial statements as of March 27, 2021 and December 26, 2020, and for the three months ended March 27, 2021 and March 28, 2020 (“ Interim Financial Statements ”) of the Company.

The Annual Financial Statements have been prepared by management in accordance with International Financial Reporting Standards (“ IFRS ”) and with interpretation of the International Financial Reporting Interpretations Committee (“ IFRIC ”). The Interim Financial Statements have been prepared by management in accordance with International Accounting Standards (“ IAS ”) 34, Interim Financial Reporting . The Company’s financial information is expressed in United States dollars unless otherwise specified.

Throughout this MD&A, all references to “fiscal 2020”, “fiscal 2019” and “fiscal 2018” refer to our fiscal years ended December 26, 2020, April 30, 2019 and April 30, 2018, respectively. References to the “ Transition Period ” are to our eight-month period from May 1, 2019 through December 28, 2019, due to our fiscal year change in October 2019 from an April 30 year end to a 4-4-5 retail calendar year with our year end being the last Saturday of December of every year. Due to the timing of the change in fiscal years, the Transition Period does not include a tax season, and as such all references to the “2020 tax season”, “2019 tax season” and “2018 tax season” refer to the tax seasons that occurred during our fiscal 2020, 2019 and 2018 years, respectively. All references to “year” or “years” are the respective fiscal year or years ended December 26 or April 30, respectively, unless otherwise noted, and all references to “tax season” refer to the period between January 1 and April 30 of the referenced year.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document may contain “ forward-looking statements ” (as defined under applicable securities laws). These forward-looking statements relate to future events or future performance including with respect to the Company’s objectives and priorities for fiscal year 2020 and beyond, and strategies or further actions with respect to the Company, the Company’s business operations, financial performance and condition.

Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “target”, “intend”, “could” or the negative of these terms or other comparable terminology. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and many factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating forward-looking statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, market and general economic conditions and the risks and uncertainties discussed in the section entitled “Risk Factors” in NextPoint Acquisition Corp’s final non-offering prospectus dated June 3, 2021 (the “ Prospectus ”).

D-3

guarantees of future performance and, while forward-looking statements are based on certain assumptions that the Company considers reasonable, actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Company. Prospective investors are cautioned to consider these and other factors carefully when making decisions with respect to the Company and not place undue reliance on forward looking statements. Circumstances affecting the Company may change rapidly. Except as may be expressly required by applicable law, the Company does not undertake any obligation to update publicly or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

NON-IFRS FINANCIAL MEASURES

This MD&A makes reference to certain non-IFRS financial measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as additional information to complement the IFRS financial measures contained herein by providing further metrics to understand the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial results reported under IFRS. We use non-IFRS financial measures to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also use non-IFRS financial measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements.

COMPANY OVERVIEW

The Company is one of the leading providers of tax preparation services in the United States and Canada with approximately 2,700 locations. Our tax preparation services and related tax settlement products are offered primarily through franchised locations, although we operate a limited number of Company-owned offices for each tax season. The majority of the Company’s offices are operated under the “Liberty Tax Service” brand.

Sources of Revenue

Our revenue primarily consists of the following components:

Franchise Fees: Our standard franchise fee per territory is $40,000, and we offer our franchisees flexible structures and financing options for franchise fees. Franchise fees are recognized as revenue on a straightline basis over the initial contract term of the franchise agreement, with the cumulative amount of revenue recognized not to exceed the expected amount of cash to be received.
Area Developer (“AD”) Fees: Our fees for AD areas vary based on our assessment of the revenue potential of each AD area, and also depend on the performance of any existing franchisees within the AD area being sold. Our ADs generally receive 50% of franchise fees, royalties, and a portion of the interest income derived from territories located in their area. AD fees are recognized as revenue on a straight-line basis over the initial contract term of each AD agreement, with the cumulative amount of revenue recognized not to exceed the expected amount of cash to be received.
Royalties: Our franchise agreements require franchisees to pay us a base royalty typically equal to 14% of the franchisees' tax preparation revenue, subject to certain specified minimums.
Advertising Fees: Our franchise agreements typically require all franchisees to pay us an advertising fee of 5% of the franchisees' tax preparation revenue, which we use primarily to fund collective advertising efforts.

D-4

Financial Products: We offer two types of tax settlement financial products: refund transfer products, which involve providing a means by which a customer may receive his or her refund more quickly and conveniently, and easy advances. We earn fees from the arranging of the sale of these financial products.
Interest Income: We earn interest income from our franchisees and ADs related to both indebtedness for the unpaid portions of their franchise and AD fees, and for other loans we extend to our franchisees related to the operation of their territories. We also earn interest on our accounts receivable.
Assisted Tax Preparation Fees: We earn tax preparation fees, net of discounts, directly from the operation of Company-owned offices in the U.S. and Canada.
Electronic Filing Fee: We earn fees for the electronic filing of federal returns prepared in U.S. franchiseeowned offices.

How We Assess Our Business

We utilize several metrics to measure and track the performance and progress of our business, certain of which are not recognized under IFRS. See “Non-IFRS Financial Measures” in this MD&A. In evaluating our performance, management focuses on the following metrics, which we believe are key to our success:

Industry Metrics

Net change in permanent office locations . The change in permanent office locations from year to year is a function of opening new offices, offset by locations that are closed by us or our franchisees. Opening new permanent offices can be accomplished by the sale of new territories or the opening of permanent offices in previously sold territories. As a result of a reduction in new territory sales, the closure of under-performing offices, as well as the termination of franchise agreements with several large franchisees, we and our franchisees operated 117 fewer permanent locations during the 2020 tax season compared to the 2019 tax season. During the 2019 tax season, on a net basis, we and our franchisees operated 491 fewer permanent offices compared to the 2018 tax season.
Number of returns prepared. We strive to provide our franchisees with the resources and training needed to grow their own revenue, which is primarily driven by the number of returns prepared. We and our franchisees prepared a total of approximately 1.6 million returns in our U.S. and Canada offices in fiscal 2020, which was a decrease of 8.8% from fiscal 2019, primarily due to fewer offices being in operation. We and our franchisees prepared a total of approximately 1.7 million returns in our U.S. and Canada offices in fiscal 2019, which was a decrease of 7.4% from fiscal 2018, primarily due to fewer offices being in operation.
Tax settlement products obtained by U.S. customers. The total percentage of our U.S. customers obtaining a refund transfer product was 48%, 51%, and 51% for the 2020, 2019 and 2018 tax seasons, respectively. As we have demonstrated the ability to offer products, we have been successful in obtaining more favorable terms from outside vendors. Each year we analyze available tax settlement product solutions to balance risk and maximize profits per product.
Company-owned stores. We operate Company-owned offices and may resell them to a qualified franchisee or elect to continue to operate them as a Company-owned office. Going forward, the number of Companyowned offices may increase if we reacquire more offices from existing franchisees and do not find a suitable buyer to take over the office or elect to operate the office as a Company-owned office. During fiscal 2019 and 2018, we closed Company-owned offices as part of our restructuring initiatives. We incurred

D-5

approximately $8.0 million and $4.6 million of expenses related to restructuring initiatives in fiscal 2019 and 2018, respectively.

Non-IFRS Measures

Systemwide revenue. Systemwide revenue, which is an operating measure not in accordance with IFRS, includes sales of both Company-owned and franchised offices. We believe systemwide revenue is useful in assessing consumer demand for our services and products, the overall success of the Liberty Tax brand and, ultimately, the performance of the Company. Our royalty revenue is computed as a percentage of sales made by our franchised offices, less certain deductions. Accordingly, sales by our franchisees have a direct effect on our royalty revenue and profitability. In addition, our systemwide revenue reflects the size of the Liberty Tax system, and because the size of our franchise system drives our management and infrastructure needs, systemwide revenue data helps us assess those needs in comparison to other companies in our industry and other franchise operators.

Our systemwide revenue in the U.S. decreased by 13.5% from fiscal 2019 to fiscal 2020 and decreased 6.8% from fiscal 2018 to fiscal 2019. We experienced a 2.7% decrease in average net fee per return filed in the U.S. from $256 in fiscal 2019 to $249 in fiscal 2020 and a decrease of 10.2% in number of tax returns filed in the U.S. processed from approximately 1.3 million in fiscal 2019 to 1.2 million in fiscal 2020. We experienced a 3.9% increase in average net fee per return filed in the U.S. from $247 in fiscal 2018 to $256 in fiscal 2019 and a decrease of 10.3% in number of tax returns filed in the U.S. from approximately 1.5 million in fiscal 2018 to approximately 1.3 million in fiscal 2019.

SELECTED FINANCIAL INFORMATION

The following tables set forth selected combined and consolidated financial information derived from our audited combined and consolidated financial statements as at December 26, 2020 and December 28, 2019 and for the year ended December 26, 2020, Transition Period from May 1, 2019 to December 28, 2019, and years ended April 30, 2019 and April 30, 2018, the accompanying notes thereto, and the Interim Financial Statements, prepared in accordance with IFRS. The selected financial information below may not be indicative of Liberty’s future performance.

Results of Operations

Three months ended March 27, 2021 compared to three months ended March 28, 2020

Financial Results . The table below sets forth the components and changes in our operating income and net income for the three months ended March 27, 2021 and March 28, 2020.

income for the three months ended March 27,	2021 and March 28, 2020.	2021 and March 28, 2020.
(In thousands)	Three Months Ended		Change
	March 27, 2021	March 28, 2020	$ %
Operating income	42,049 $	48,832 $	(6,783) $	-14%
Net income	39,797 $	46,922 $	(7,125) $ -15%

Revenues . The table below sets forth the components and changes in our revenue for the three months ended March 27, 2021 and March 28, 2020.

D-6

(In thousands)	Three Months Ended	Three Months Ended	Change	Change
	March 27, 2021	March 28, 2020	$	%
Franchise Fees	374 $	506 $	(132) $	-26%
Area developer fees	117	1,021	(904)	-89%
Royalities and advertising fees	37,594	41,448	(3,854)	-9%
Financial products	23,009	27,439	(4,430)	-16%
Interest income	956	1,956	(1,000)	-51%
Assisted tax preparation fees, net of discounts	9,434	12,250	(2,816)	-23%
Electronic filing fees	1,814	2,028	(214)	-11%
Other	3,182	2,970	212	7%
Total Revenue	76,480 $	89,618 $	(13,138) $	-15%

Our total revenue decreased by $13.1 million, or 15%, for the three months ended March 27, 2021 compared to the three months ended March 28, 2020. This decrease was primarily due to the following:

a $0.9 million reduction in AD fees as a result of fewer ADs due to repurchases in fiscal 2020, as well as prior year sales that were fully recognized over the life of the original AD agreement;
a $3.9 million decrease in royalties and advertising fees due to a reduction in the number of tax returns filed by our franchisees due to the delay in the start of the 2021 tax season compared to the 2020 tax season;
a $4.4 million decrease in financial products due to a reduction in the number of tax returns filed by our franchisees and Company-owned stores due to the delay in the tax season described above;
a $1.0 million decrease in interest income due to MetaBank becoming the lender for working capital loans to our franchisees for the 2021 tax season where historically we were the lender; and
a $2.8 million decrease in assisted tax preparation fees, due to a reduction in the number of tax returns filed in our Company-owned stores due to the delay in the start of the tax season.

Operating Expenses . The table below sets forth the components and changes in our operating expenses for the three months ended March 27, 2021 and March 28, 2020.

(In thousands)	Three Months Ended	Three Months Ended	Change	Change
	March 27, 2021	March 28, 2020	$	%
Employee compensation and benefits expense	10,936 $	11,950 $	(1,014) $	-8%
Area developer expense	5,001	7,330	(2,329)	-32%
Advertising expense	4,244	6,813	(2,569)	-38%
Depreciation and amortization	4,118	3,204	914	29%
Selling, general and administrative expenses	10,132	11,489	(1,357)	-12%
Total operating expenses	34,431 $	40,786 $	(6,355) $	-16%

Our total operating expenses decreased by $6.3 million, or 16% for the three months ended March 27, 2021 compared to the three months ended March 28, 2020. This decrease was primarily due to the following:

a $1.0 million reduction in employee compensation and benefits, due to decreased head count, support costs and Company-owned employee incentives related to the delay in tax season;

D-7

a $2.3 million reduction in AD expense due to AD buybacks in 2020 as well as a reduction in the number of tax returns filed by our franchisees due to the delay in the start of the 2021 tax season;
a $2.6 million reduction in advertising expense due to the delay in the start of the tax season requiring less up front advertising as well as an effort by the Company to extend marketing efforts over more months due to the anticipation of the extension of the 2021 tax season due to COVID-19;
a $1.3 million reduction in selling, general and administrative expense due to a reduction of $0.4 million in bad debt expense due to better collections from franchisees, a $0.4 million reduction in rebate expense due to fewer tax returns filed by our franchisees due to the delay in the start of the 2021 tax season, a $0.4 million reduction in software, computer and office supplies due delayed tax software licensing fees as a result of the delay in the start of the 2021 tax season, partially offset by
a $0.9 million increase in depreciation and amortization related to AD and Company-owned store buybacks and capitalized technology projects placed in service at the end of 2020.

Balance Sheet. The table below sets forth the changes in our total assets and total liabilities as of March 27, 2021 and December 26, 2020.

(In thousands)	As of	As of	Change	Change
	March 27, 2021	December 26, 2020	$	%
Total Assets	140,088 $	99,880 $	40,208 $	40%
Total Liabilities	47,085 $	47,580 $	(495) $	-1%

Our total assets increased by $40.2 million, or 40%, as of March 27, 2021 compared to December 26, 2020. This increase was primarily due to the following;

a $17.1 million increase in current trade receivables due to the timing of tax season and when the majority of revenues are generated by our franchisees;
a $17.0 million increase in cash on hand which is mainly driven by cash from operations related to the start of the tax season during the three months ended March 27, 2021;
and a $6.9 million increase in other current assets due to increases in bank products receivable from the timing of tax season, which began during the three months ended March 27, 2021.

Our total liabilities decreased by $0.5 million, or 1%, as of March 27, 2021 compared to December 26, 2020. This decrease was due to an increase of $4.5 million of amounts Due to Area Developers (ADs) from December 26, 2020 to March 27, 2021 from accrued tax season payouts to ADs, which was offset by a decrease of $5.0 million of current deferred revenue due to the satisfaction of performance obligations and recognition of revenue during the three months ended March 27, 2021, which included the start of the current tax season.

D-8

Fiscal 2020 compared to Transition Period

Financial Results . The table below sets forth the components and changes in our operating income (loss) and net income (loss) for the year ended December 26, 2020 and the Transition Period.

(In thousands)	Twelve-months ended	Transition Period from May 1, 2019 to	Change
	December 26, 2020	December 28, 2019	$ %
Operating income (loss)	21,069 $	(63,048) $	84,117 $ -133%
Net income (loss)	14,671 $	(63,104) $	77,775 $ -123%

Revenues . The table below sets forth the components and changes in our revenue for the year ended December 26, 2020 and the Transition Period.

(In thousands)	Twelve-months ended	Transition Period from May 1, 2019 to	Change	Change
	December 26, 2020	December 28, 2019	$	%
Franchise Fees	1,055 $	922 $	133 $	14%
Area developer fees	3,206	2,447	759	31%
Royalities and advertising fees	56,753	3,212	53,541	1667%
Financial products	31,824	676	31,148	4608%
Interest income	3,624	3,950	(326)	-8%
Assisted tax preparation fees, net of discounts	15,893	1,144	14,749	1289%
Electronic filing fees	2,666	119	2,547	2140%
Other	7,754	2,515	5,239	208%
Total Revenue	122,775 $	14,985 $	107,790 $	719%

Our total revenue increased by $107.8 million, or 719%, in fiscal 2020 over the Transition Period. This increase was primarily due to the fact the Transition Period does not contain a tax season. We earned $96.1 million from January to April 2020 or 78.2% of total revenue during the 2020 tax season.

Operating Expenses . The table below sets forth the components and changes in our operating expenses for the year ended December 26, 2020 and the Transition Period.

(In thousands)	Twelve-months ended	Transition Period from May 1, 2019 to	Change	Change
	December 26, 2020	December 28, 2019	$	%
Employee compensation and benefits expense	34,817 $	19,428 $	15,389 $	79%
Area developer expense	9,627	456	9,171	2011%
Advertising expense	11,803	4,240	7,563	178%
Depreciation and amortization	15,555	11,878	3,677	31%
Selling, general and administrative expenses	29,904	42,031	(12,127)	-29%
Total operating expenses	101,706 $	78,033 $	23,673 $	30%

Our total operating expenses increased by $23.7 million, or 30% in fiscal 2020 compared to the Transition Period. The increase in expenses was driven by the Transition Period not having a tax season. The four additional months in fiscal 2020 resulted in increased expenses in employee compensation and benefits of $15.4 million, AD expense of $9.2 million, advertising expense of $7.6 million, and depreciation and amortization of $3.7 million. These increases were partially offset by a $12.1 million decrease in selling, general and administrative expense. The overall decrease in selling, general and administrative expenses were driven by a decrease of $19.8 million of impairment expense due

D-9

to a $20.1 million impairment and subsequent write-off of internally developed software (“Phoenix Software”) no longer in use during the Transition Period. This decrease was partially offset by a $2.5 million increase in rebate expense due to the Transition Period not containing a tax season which is when the majority of rebate expense is incurred. Additionally, there was a $4.6 million increase in software, computer and office supplies due to the additional four months included in fiscal 2020 that are not included in the Transition Period as the Company has contracted with third parties to license certain software that had previously been developed in house and was included in Phoenix Software.

Balance Sheet. The table below sets forth the changes in our total assets and total liabilities as of December 26, 2020 and December 28, 2019.

2020 and December 28, 2019.
(in thousands)	As of		Change
	December 26, 2020	December 28, 2019	$	%
Total Assets	99,880 $	135,851 $	(35,971) $	-26%
Total Liabilities	47,580 $	100,982 $	(53,402) $	-53%

Our total assets decreased by $36.0 million, or 26%, as of December 26, 2020 compared to December 28, 2019. This decrease was primarily due to a decrease in current and non-current receivables, net of $28.7 million due to MetaBank becoming the lender for working capital loans to our franchisees in fiscal 2020.

Our total liabilities decreased by $53.4 million, or 53%, as of December 26, 2020 compared to December 28, 2019. This decrease was primarily due to a $59.8 million decrease in current and non-current long-term obligations due to the termination of our revolving credit facility in fiscal 2020. We had a balance of $59.3 million on our revolving credit facility as of December 28, 2019 and no longer have an active credit facility as of December 26, 2020 as it was repaid and terminated due to MetaBank becoming the lender for working capital loans to our franchisees.

Transition Period compared to Fiscal 2019

Financial Results . The table below sets forth the components and changes in our operating loss and net loss for the Transition Period and year ended April 30, 2019.

(In thousands)	Transition Period from May 1, 2019 to	Twelve-months ended	Change
	December 28, 2019	April 30, 2019	$ %
Operating loss	(63,048) $	(616) $	(62,432) $ 10135%
Net loss	(63,104) $	(4,116) $	(58,988) $ 1433%

D-10

Revenues. The table below sets forth the components and changes in our revenue for the Transition Period and year ended April 30, 2019.

year ended April 30, 2019.
(In thousands)	Transition Period from May 1, 2019 to	Twelve-months ended	Change
	December 28, 2019	April 30, 2019	$	%
Franchise Fees	922 $	2,766 $	(1,844) $	-67%
Area developer fees	2,447	3,146	(699)	-22%
Royalities and advertising fees	3,212	63,716	(60,504)	-95%
Financial products	676	33,478	(32,802)	-98%
Interest income	3,950	8,189	(4,239)	-52%
Assisted tax preparation fees, net of discounts	1,144	14,611	(13,467)	-92%
Electronic filing fees	119	2,675	(2,556)	-96%
Other	2,515	3,965	(1,450)	-37%
Total Revenue	14,985 $	132,546 $	(117,561) $	-89%

Our total revenue decreased by $117.6 million, or 89%, in the Transition Period compared to fiscal 2019. This decrease was primarily due to the fact the Transition Period does not contain a tax season. We earned $115.9 million of our fiscal 2019 revenue from January through April.

Operating Expenses . The table below sets forth the components and changes in our operating expenses for the Transition Period and year ended April 30, 2019.

Transition Period and year ended April 30, 2019.
(In thousands)	Transition Period from May 1, 2019 to	Twelve-months ended	Change
	December 28, 2019	April 30, 2019	$	%
Employee compensation and benefits expense	19,428 $	40,413 $	(20,985) $	-52%
Area developer expense	456	15,584	(15,128)	-97%
Advertising expense	4,240	12,532	(8,292)	-66%
Depreciation and amortization	11,878	20,722	(8,844)	-43%
Selling, general and administrative expenses	42,031	43,911	(1,880)	-4%
Total operating expenses	78,033 $	133,162 $	(55,129) $	-41%

Our total operating expenses decreased by $55.1 million, or 41% in the Transition Period compared to fiscal year 2019. The decrease was primarily due to the Transition Period having only eight months of expenses instead of a full twelve months of expenses as well as the following:

a $21.0 million reduction in employee compensation and benefits due to the fact the Transition Period only reflects eight months of expenses while fiscal year 2019 reflects twelve months of expenses as well as a reduction in company-operated stores, a reduction in executive severance and compensation and the divestiture of our year-round accounting offices in January 2019;
a $15.1 million reduction in AD expense due to the Transition Period not including a tax season where fiscal 2019 does include a tax season as well as reduced AD count. The majority of the AD expense is generated during tax season due to the ADs share of the revenue generated in the territories;
a $8.3 million reduction in advertising expense due to the fact the Transition Period does not contain a tax season where fiscal year 2019 does contain a tax season, which is when the majority of advertising expense is incurred; and

D-11

a $8.8 million reduction in depreciation and amortization expenses mainly due to the difference in number of months included in the Transition Period compared to fiscal year 2019.
a $1.9 million reduction in selling general and administrative expenses mainly due to the difference in number of months included in the Transition Period compared to fiscal year 2019. The additional four months in fiscal 2019 compared to the Transition Period resulted in a decrease of $4.4 million for professional fees, a $1.9 million decrease in software, computer, and office supplies, a $1.3 million decrease in rebate expense, and a $3.7 million decrease to bad debt expense. Additionally, we incurred approximately $8.0 million of restructuring expenses in fiscal 2019 that we did not incur during the Transition Period. These decreases are partially offset by an increase in impairment expense of approximately $19.7 due to the impairment and subsequent write-off of the Phoenix Software that was no longer in use during the Transition Period.

Balance Sheet. The table below sets forth the changes in our total assets and total liabilities as of December 28, 2019 and April 30, 2019.

2019 and April 30, 2019.
(In thousands)	As of		Change
	December 28, 2019	April 30, 2019	$ %
Total Assets	135,851 $	170,023 $	(34,172) $ -20%
Total Liabilities	100,982 $	67,422 $	33,560 $ 50%

Our total assets decreased by $34.2 million, or 20%, as of December 28, 2019 compared to April 30, 2019. This decrease was primarily due to the following:

a $20.2 million reduction in intangible assets due to the write-off of the Phoenix Software in the Transition Period; and
a $6.5 million reduction in bank products receivable due to our change in fiscal year end from April 30 to the last Saturday in December. Our bank products are used during the tax season and we historically had a receivable related to the timing of receiving funding as April 30 coincided with the April 15[th] tax deadline.
a $14.3 million reduction in cash and cash equivalents due to the change in fiscal year end from April 30 to the last Saturday in December. Due to the seasonality of our business we have the highest levels of cash right after tax season and subsequently, in connection with preparing for the oncoming tax season have less cash right before the start of tax season.

Our total liabilities increased by $33.6 million, or 50%, as of December 28, 2019 compared to April 30, 2019. This increase was primarily due to the following:

a $47.7 million net increase in long-term obligations current and non-current due to the credit facility having an outstanding balance of $59.3 million as of December 28, 2019 and no balance as of April 30, 2019 offset by $11.9 million reduction in the term loan balance as of December 28, 2019 compared to April 30, 2019, partially offset by
a $14.1 million reduction in the amounts due to ADs due to our restructuring initiatives during fiscal 2019 which reduced the number of overall ADs.

Fiscal 2019 compared to Fiscal 2018

Financial Results . The table below sets forth the components and changes in our operating income (loss) and net income for the years ended April 30, 2019 and April 30, 2018.

D-12

(In thousands)	Twelve-months ended	Twelve-months ended	Change	Change
	April 30, 2019	April 30, 2018	$	%
Operating (loss) income	(616) $	18,914 $	(19,530) $	-103%
Net (loss) income	(4,116) $	9,286 $	(13,402) $	-144%

Revenues. The table below sets forth the components and changes in our revenue for the years ended April 30, 2019 and April 30, 2018.

2019 and April 30, 2018.
(In thousands)	Twelve-months ended	Twelve-months ended	Change
	April 30, 2019	April 30, 2018	$	%
Franchise Fees	2,766 $	3,917 $	(1,151) $	-29%
Area developer fees	3,146	11,155	(8,009)	-72%
Royalities and advertising fees	63,716	68,559	(4,843)	-7%
Financial products	33,478	47,225	(13,747)	-29%
Interest income	8,189	9,895	(1,706)	-17%
Assisted tax preparation fees, net of discounts	14,611	26,645	(12,034)	-45%
Electronic filing fees	2,675	2,154	521	24%
Other	3,965	5,929	(1,964)	-33%
Total Revenue	132,546 $	175,479 $	(42,933) $	-24%

Our total revenue decreased by $42.9 million, or 24%, in fiscal 2019 over fiscal 2018. This decrease was primarily due to the following:

a $13.7 million decrease in financial products related to bank fees reported as a reduction of income in fiscal 2019 and as operating expenses in fiscal 2018 due to contractual changes as we changed from principal accounting to agent accounting, requiring bank fees associated with this contract to be net against revenue instead of shown as an operating expense, as well as a reduction in the number of tax returns filed by our franchisees;
a $12.0 million decrease in assisted tax preparation fees driven by the reduction in the number of U.S. Company-owned offices and the divestiture of our year-round accounting offices;
a $8.0 million decrease in AD fees as a result of prior year sales that were fully recognized over the life of the original AD agreement as well as our restructuring efforts in 2019 and 2018 that terminated certain ADs.
a $4.8 million reduction in royalties and advertising fees due to a reduction in the number of tax returns filed by our franchisees;
a decrease of $2.0 million in other revenues primarily related to gains recorded in fiscal 2018 on AD and franchisee acquisitions where the consideration was less than the value of the acquired asset, the divestiture of our year-round accounting offices and a reduction in the number of tax returns processed in our online “DIY” business;
a $1.2 million decrease in franchise fees related to the reduction in the number of franchisees; and
a decrease of $1.7 million in interest income related to a reduction in working capital loans to franchisees as well as a decrease in the loans due from reacquired ADs and franchisees.

D-13

Operating Expenses . The table below sets forth the components and changes in our operating expenses for the years ended April 30, 2019 and April 30, 2018.

(In thousands)	Twelve-months ended	Twelve-months ended	Change	Change
	April 30, 2019	April 30, 2018	$	%
Employee compensation and benefits expense	40,413 $	47,930 $	(7,517) $	-16%
Area developer expense	15,584	16,564	(980)	-6%
Advertising expense	12,532	12,326	206	2%
Depreciation and amortization	20,722	18,701	2,021	11%
Selling, general and administrative expenses	43,911	61,044	(17,133)	-28%
Total operating expenses	133,162 $	156,565 $	(23,403) $	-15%

Our total operating expenses decreased by $23.4 million, or 15% in fiscal 2019 over fiscal 2018. The decrease was primarily due to the following:

a $17.1 million decrease in selling, general and administrative expenses due to the following;
a combined $17.6 million decrease in bank fees which was the result of a contractual change where we changed from principal accounting to agent accounting, requiring bank fees and other fees associated with this contract to be netted against revenue instead of shown as an operating expense;
a $2.9 million decrease in bad debt expense relating to fewer franchisees as well as our restructuring efforts where franchisees who had a history of non-payments or significant past due balances were either terminated or reacquired and run as Company-owned offices. Further, the franchisees who were not terminated or who did not have their locations purchased back by us were the historically strong franchisee locations that had a history of repayments and strong underlying location economics;
a $2.5 million decrease in impairment expense related to certain non-financial assets that were deemed impaired as part of the annual fiscal 2018 impairment analysis; partially offset by
a $3.4 million increase in restructuring expense due to the majority of the restructuring efforts becoming known and taking place in fiscal 2019;
a $2.9 million increase in professional fees primarily driven by increased legal costs and additional consulting expense related to accounting standard implementations.
a $7.5 million decrease in employee compensation and benefits due to lower severance costs and reduced employee head-count in 2019 compared to 2018 due to the reduction of company-owned offices;
a $1.0 million reduction in AD expense resulting from the acquisitions of ADs and a decrease in the number of tax returns filed; partially offset by
a $2.0 million increase in depreciation and amortization driven by assets that were placed in service right before the start of the 2018 tax season so fiscal 2018 reflects only 4 months of depreciation and amortization while fiscal 2019 reflects a full year of depreciation and amortization.

Balance Sheet. The table below sets forth the changes in our total assets and total liabilities as of April 30, 2019 and April 30, 2018.

D-14

(In thousands)	As of	As of	Change	Change
	April 30, 2019	April 30, 2018	$	%
Total Assets	170,023 $	196,374 $	(26,351) $	-13%
Total Liabilities	67,422 $	88,411 $	(20,989) $	-24%

Our total assets decreased by $26.4 million, or 13%, as of April 30, 2019 compared to April 30, 2018. This decrease was primarily due to the following:

a net decrease of $9.1 million of current and non-current receivables, net due to the restructuring initiatives taken during 2019 where franchisees who required significant operating loans and had a history of nonpayments or significant past due debt were either terminated or reacquired and run as a Company-owned office. Further, the franchisees that were not terminated or who did not have their locations purchased back by us were the historically strong franchisee locations that had a history of repayments on operating loans and accounts receivable balances;
a combined $11.2 million decrease in goodwill and intangible assets related to certain Company-owned offices that were closed and the related goodwill and intangibles written off as part of the restructuring initiatives during 2019; and
a $5.7 million decrease in right-of-use assets related to the closing of Company-owned offices during fiscal 2019 relating to the restructuring initiatives undertaken by us with the goal of operating only the strong performing offices and not offices with a history of low volume returns.

Our total liabilities decreased by $21.0 million, or 24%, as of April 30, 2019 compared to April 30, 2018. This decrease was primarily due to the following:

a $5.4 million decrease in long-term obligations current and non-current due to the paydown of our term loan as well as amounts due to former ADs, franchisees and third parties;
a $6.1 million decrease in financial liabilities current and non-current due to the closing of certain Companyowned offices and the termination of the related leases due to the restructuring efforts during 2019; and
a $4.3 million decrease in deferred revenue current and non-current primarily related to the restructuring initiatives in 2019 where certain franchisees and ADs were terminated or reacquired before the end of their respective franchisee and AD agreements as well as reduced sales of franchise locations in 2019 when compared to 2018.

LIQUIDITY AND CAPITAL RESOURCES

Overview of factors affecting our liquidity

Seasonality of cash flow. Our tax return preparation business is seasonal, and most of our revenues and cash flow are generated during the period from late January through April 30 each year. Following each tax season, from May 1 through late January of the following year, we rely significantly on excess operating cash flow from the previous season, from cash payments made by franchisees who purchase new territories prior to the next tax season, and, historically, on the use of our credit facility to fund our operating expenses and invest in the future growth of our business. Our business has historically generated a strong cash flow from operations on an annual basis. We devote a

D-15

significant portion of our cash resources during the off season to finance the working capital needs of our franchisees, corporate overhead costs and expenditures for property, equipment and software.

Liberty Tax Credit Agreement. On May 16, 2019, we entered into a new credit agreement (the "Liberty Tax Credit Agreement") which provided for a $135.0 million senior revolving credit facility, a $10.0 million sub-facility for the issuance of letters of credit, and a $20.0 million swingline loan sub-facility. On October 2, 2019, we amended the Liberty Tax Credit Agreement to extend the maturity date to October 2, 2022, from the original maturity date of May 31, 2020 and decreased the aggregate amount of commitments from $135.0 million to $125.0 million. The Liberty Tax Credit Agreement included customary affirmative, negative, and financial covenants, including delivery of financial statements and other reports and maintenance of existence. On February 14, 2020, we amended certain provisions of the Liberty Tax Credit Agreement to provide for the gradual reduction of the commitments under the Liberty Tax Credit Agreement and termination of the facility on April 30, 2020. We were in compliance with all debt covenants during the life of this credit agreement.

MetaBank Franchisee Loan Program. On August 18, 2020, we entered into an agreement with MetaBank to become the lender for working capital loans to our franchisees. Historically, we have drawn on our credit facility to provide and service franchisee working capital loans. Under this new agreement, MetaBank will be the sole lender to franchisee’s for working capital requirements and we will still serve as the loan servicer. During the term of this agreement, we will be entitled to earn a servicing fee of approximately 5% per annum on the average daily outstanding balance of the loan amount plus a 1% origination fee.

Republic Bank. On December 29, 2020, we amended our marketing and servicing agreement with Republic Bank & Trust Company, who is the lender on our Easy Advance program and servicing bank for our Refund Transfer Program, to include a $20.0 million initial service fee paid to us. This fee is for services and deliverables that we have provided to Republic Bank over the course of the 2021 tax season.

Revolution Financial Canada Loan Program Agreement . We entered into a Loan Program Agreement with Revolution (the “ Revolution Canada Loan Program Agreement ”) commencing on January 31, 2021 and continuing until April 30, 2021. Under the Revolution Canada Loan Program Agreement, we are (i) arranging for Revolution to provide up to $20.0 million U.S. dollars of loans to our Canadian franchisees to fund tax rebate discounting services, and (ii) agreeing to provide various services in connection with loans, including facilitating repayment of loans from the tax refund proceeds. In addition to providing loan servicing, we are paying Revolution $0.2 million as a facility arrangement fee. At the conclusion of the term of the Loan Program Agreement, Revolution shall pay us a servicing fee in an amount equal to the difference between $0.2 million minus the aggregate interest and origination fees received by Revolution from participating franchisees in connection with the loans; provided, however, that (i) if such difference is a negative number, Revolution shall pay us $0.2 million, and (ii) if there exists any principal loan losses at such time, Revolution may offset such principal loan losses against any servicing fee due to us.

Sources and uses of cash

Three months ended March 27, 2021 compared to three months ended March 28, 2020

D-16

(In thousands)	Three Months Ended
	March 27, 2021 March 28, 2020
Net cash generated from operating activies	20,524 $ 40,618 $
Net cash generated from investing activies	(1,755) 17,662
Net cash (used in) generated from financing activities	(1,867) $ (38,861) $

Operating activities

In the three months ended March 27, 2021 compared to the three months ended March 28, 2020, our cash generated from operating activities decreased $20.1 million. This decrease was primarily driven by a reduced net income of approximately $7.9 million, a $2.4 million decrease in Due to ADs driven by a decrease in revenue generated in each territory due to the delay in the start of the tax season, and a $12.6 million increase in accounts, notes, interest receivable and deferred revenue due to lower receivables as of December 26, 2020 compared to December 28, 2019, with Meta becoming the lender for working capital loans to our franchisees, as well as the timing on when federal returns are funded which is when the company is able to collect on amounts due from franchisees.

Investing activities

In the three months ended March 27, 2021, we used approximately $1.8 million cash in investing activities compared to the three months ended March 28, 2020. We generated approximately $17.7 million cash from investing activities primarily due to our no longer being the lender for working capital loans to our franchisees, but our investing activities were reduced by a net $18.8 million in cash generated from operating loans. Further, we spent $2.0 million more on purchases of property, equipment, and software. These decreases were partially offset by a $2.1 million decrease in cash used to acquire company-owned offices, AD rights, and acquired customer lists.

Financing activities

In the three months ended March 27, 2021 compared to the three months ended March 28, 2020, our cash used in financing activities decreased $37.0 million. This decrease was primarily driven by the fact that we no longer have a credit facility in 2021. Net borrowings and repayments under the credit facility were a net cash outflow of $37.3 million in the three months ended March 28, 2020, compared to no cash outflow in the three months ended March 27, 2021.

Sources and uses of cash for annual periods

(in thousands)	Twelve-months ended	Transition Period from May 1, 2019 to	Twelve-months ended Twelve-months ended
	December 26, 2020	December 28, 2019	April 30, 2019 April 30, 2018
Net cash generated from (used in) operating activies	54,919 $	(17,093) $	24,706 $ 35,195 $
Net cash generated from (used in) investing activies	6,360	(26,005)	(2,666) (9,012)
Net cash (used in) generated from financing activities	(67,194) $	28,664 $	(17,341) $ (24,384) $

Operating activities

In fiscal 2020, our cash generated from operating activities increased $72.0 million from the cash used in operations for the Transition Period. This increase was primarily driven by fiscal 2020 including a tax season and the Transition Period not including a tax season causing a $78.6 increase in net income between the year ended December 26, 2020 and the Transition Period.

D-17

In the Transition Period our cash used in operating activities decreased $41.8 million from the cash generated from operating activities in fiscal 2019. The main driver for this decrease is the fact that the Transition Period does not include a tax season and fiscal 2019 does include a tax season.

In fiscal 2019, our cash provided from operating activities decreased $10.5 million from the cash provided in fiscal 2018. This decrease was primarily driven by:

a decrease of $11.6 million in tax preparation fees received due to closures of Company-owned and yearround accounting stores; partially offset by
a $4.0 million reduction in executive severance and recruitment payments in fiscal 2019 compared to fiscal 2018.

Investing activities

In fiscal 2020, we used $32.4 million less cash in investing activities than in the Transition Period primarily due

to:

a $49.5 million increase in payments received on operating loans to franchisees and ADs;
a $1.1 million increase in proceeds from sale of Company-owned offices and AD rights;
a $0.3 million increase in proceeds from sale of property, equipment, and software; partially offset by
a $11.7 million increase in issuance of operating loans to franchisees and ADs;
a $3.1 million increase in net cash used to acquire Company-owned offices, AD rights and customer lists; and
a $3.7 million increase in purchases of property, equipment and software.

In the Transition Period we used $23.3 million more cash in investing activities than in fiscal 2019 due to:

a $66.7 million decrease in payments received on operating loans to franchisees and ADs;
a $3.3 million increase in purchases of Company-owned offices, AD rights and customer lists;
a $1.0 million decrease in proceeds from the sale of Company-owned offices and AD rights; partially offset by
a $45.8 million decrease in issuance of operating loans to franchisees and ADs; and
a $1.8 million decrease in purchases of property, equipment and software.

In fiscal 2019, we used $6.3 million less cash in investing activities than in fiscal 2018 due to:

a $2.7 million decrease in net cash used to acquire Company-owned offices, AD rights and customer lists;

D-18

a $5.5 million decrease in issuance of operating loans to franchisees and ADs;
a $2.5 million decrease in purchases of property, equipment and software;
a $0.8 million increase in proceeds from the sale of Company-owned offices and AD rights; partially offset by
a $5.1 million decrease in payments received on operating loans to franchisees and ADs.

Financing activities

In fiscal 2020, we used $95.9 million more cash for financing activities compared to the Transition Period due

to:

a $101.2 million increase in repayments on our credit facility;
a $17.2 million decrease in borrowings under our credit facility;
a $1.9 million increase in repayments of lease obligations; partially offset by
a $9.5 million decrease in repayments of other long-term obligations;
a $3.9 million decrease in payment of debt issuance costs; and
a $11.2 million increase in transfer from our parent company.

In the Transition Period, we used $46.0 million less cash for financing activities compared to fiscal 2019 primarily due to:

a $3.8 million decrease in repayments for lease obligations;
a $123.7 million decrease in repayments under our credit facility; partially offset by
a $64.4 million decrease in borrowings under our credit facility;
a $5.6 million increase in repayments of other long-term obligations;
a $4.6 million increase in payments of debt issuance costs; and
a $9.6 million increase in net cash transferred to our parent company.

In fiscal 2019, we used $7.0 million less cash for financing activities compared to fiscal 2018 primarily due to:

a $6.7 million decrease in dividends paid to Parent;

D-19

a $0.5 million decrease in cash paid for taxes on exercise/vesting of stock-based compensation; partially offset by
a combined $0.1 million increase in repayments of other long-term obligations and lease obligations.

OFF BALANCE SHEET ARRANGEMENTS

From time to time, we have been party to interest rate swap agreements. These swaps effectively changed the variablerate of our credit facility into a fixed rate credit facility. Under the swaps, we received a variable interest rate based on the one-month LIBOR and paid a fixed interest rate.

We also enter into forward contracts to eliminate exposure related to foreign currency fluctuations in connection with the short-term advances we make to our Canadian subsidiary in order to fund personal income tax refund discounting for our Canadian operations. At December 26, 2020, December 28, 2019, and April 30, 2019 and 2018, there were no forward contracts outstanding, but we expect to enter into forward contracts in the future during the Canadian tax season.

CONTRACTUAL OBLIGATIONS, CONTINGENCIES AND COMMITMENTS

The following table summarizes our contractual obligations as at March 27, 2021 and the effect such obligations are expected to have on our liquidity and cash flow in future periods:

(In thousands)	Within 1year	1 to 3years	3 to 5years	Over 5years	Total
Long-term obligations	401 $	407 $	317 $	903 $	2,028 $
Financial liabilities	4,640	3,850	581	52	9,123
Accounts payable and accrued expenses	12,876	-	-	-	12,876
Due to Area Developers (ADs)	6,556	-	-	-	6,556
Total	24,473 $	4,257 $	898 $	955 $	30,583 $

CONTINGINCIES

The Company is involved in various legal matters arising in the ordinary course of business. For further information surrounding these legal matters please refer to “Note 14- Commitments and Contingencies” in our audited combined and consolidated financial statements, and “Note 11 – Commitments and Contingencies” in our Interim Financial Statements.

RELATED PARTY TRANSACTIONS

M. Brent Turner’s Consulting and Services Agreement

Revolution Financial Services Agreement. The Company entered into a one-year Services Agreement (the “Revolution Agreement”) with Revolution Financial, Inc. (“Revolution”) effective as of August 23, 2019. Mr. Turner

D-20

serves as the Chief Executive Officer of Revolution. The Revolution Agreement provides for certain transition services, including leased office space and information technology personnel. Pursuant to the terms as provided in the Revolution Agreement, fees for each of the services provided by Revolution are calculated based on the actual costs for each applicable service to be paid by the Company. For the transition services provided by the Company in retail locations, which includes the provision of space and staffing, Revolution will pay the Company 50% of net revenue. The Revolution Agreement expired on August 23, 2020. During the life of the Revolution Agreement the Company did not earn any revenue or receive any payments under the agreement.

Revolution Financial Tax Program Agreement . The Company entered into a one-year Tax Program Agreement (the “Revolution Tax Program Agreement”) with Revolution effective as of November 20, 2020. The Revolution Tax Program Agreement allows Revolution to use Liberty’s tax preparation systems, certain identified intellectual property licensed from Liberty, and other expertise from Liberty to offer tax preparation services to consumers in Revolution locations. Pursuant to the terms provided in the Revolution Tax Program Agreement, (i) Revolution will pay to Liberty 60% of the Gross Receipts (as defined in the Revolution Tax Program Agreement) generated by the tax preparation services provided as part of the program, (ii) the Company will pay up to $5,000.00 per Revolution location towards the cost associated with replacing the exterior signage of Revolution locations with Liberty branded signage, and (iii) the Company will pay 60%, and Revolution will pay 40%, of the costs associated with local store marketing materials. As of March 27, 2021, the Company had earned less than $0.1 million in royalties related to the Revolution Tax Program Agreement.

Revolution Financial Loan Program Agreement . The Company entered into a one-year Loan Program Agreement (the “Revolution Loan Program Agreement”) with Revolution effective as of December 2, 2020. The Revolution Loan Program Agreement provides that Revolution will use its lending platform and expertise to offer consumer lending in Liberty locations. Pursuant to the terms provided in the Revolution Loan Program Agreement, the Company and/or its franchisees will pay to Revolution a one-time fee of ten thousand dollars ($10,000) software license fee for each location that participates in the program. Revolution shall pay a management fee to the Company and/or franchisee in an amount equal to fifty percent (50)% of the monthly Net Revenue (as defined in the Revolution Loan Program Agreement) during each calendar month (or portion thereof). As of March 27, 2021, the Company had not earned any revenue or incurred any expenses related to the Revolution Loan Program Agreement.

Revolution Financial Canada Loan Program Agreement . The Company entered into a Loan Program Agreement with Revolution (the “Revolution Canada Loan Program Agreement”) commencing on January 31, 2021 and continuing until April 30, 2021. Under the Revolution Canada Loan Program Agreement, the Company, is (i) arranging for Revolution to provide up to $20.0 million of loans to its Canadian franchisees to fund the tax rebate discounting services, and (ii) agreeing to provide various services in connection with loans, including facilitating repayment of loans from the tax refund proceeds. In addition to providing loan servicing, the Company is paying Revolution $0.2 million as a facility arrangement fee. At the conclusion of the term of the Loan Program Agreement, Revolution shall pay to the Company a servicing fee in an amount equal to the difference between $0.2 million minus the aggregate interest and origination fees received by Revolution from participating franchisees in connection with the loans; provided, however, that (i) if such difference is a negative number, Revolution shall pay Liberty $0.2 million, and (ii) if there exists any principal loan losses at such time, Revolution may offset such principal loan losses against any servicing fee due to the Company.

Michael S. Piper

D-21

Nicole Ossenfort’s (Chief Executive Officer through June 9, 2019) franchise agreement

Shaun York’s (Chief Operating Officer through September 6, 2019) AD agreement

CRITICAL ACCOUNTING POLICIES

Significant Accounting Policies

Estimates

The preparation of our Financial Statements requires our management to exercise judgement and to make estimates and assumptions that affect the application of policies, reported amounts of revenues, expenses, assets and liabilities and disclosures. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing basis. Actual results may differ from these estimates.

Deferred Revenue

Deferred revenue represents the expected amount of cash to be received for AD and franchise fees in excess of the revenue recognized to date.

Financial Instruments

Financial assets – Classes and categories

measured at amortized cost;
measured at fair value through other comprehensive income (abbreviated as FVOCI); and
measured at fair value through the combined and consolidated income statement (abbreviated as FVTPL, fair value through profit or loss).

Financial assets – Recognition and derecognition

D-22

in the marketplace (regular-way purchase or sale). Financial assets are derecognized when substantially all the Company’s rights to cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

Financial assets – Measurement

Financial assets – Impairment

Financial liabilities – Classes and categories

All financial liabilities are measured subsequently at amortized cost using the effective interest method or at FVTPL.

D-23

Financial liabilities – Recognition and derecognition

When the Company exchanges with the existing lender one debt instrument into another one with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Company accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is recognized in profit or loss as the modification gain or loss within other gains and losses.

Financial liabilities – Measurement

Derivative Instruments and Hedging Activities

The Company only enters into a derivative contract when it intends to designate the contract as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its riskmanagement objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

D-24

exercised; the cash flow hedge is de-designated because a forecasted transaction is not probable of occurring; or management determines to remove the designation of the cash flow hedge.

Leases

Cash and Cash Equivalents

Property, Plant and Equipment

Goodwill

D-25

Goodwill is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired.

Intangible Assets and Asset Impairment

Employee benefits

AD expense

AD fees consist primarily of the AD’s share of royalties and franchise fees in their territories. The Company expenses AD fees in the period incurred.

Advertising expense

Current and Deferred Income Taxes

when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

D-26

in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available, against which the temporary differences can be utilized.

Significant Accounting Judgements and Estimates

Other disclosures relating to the Company’s exposure to risks and uncertainties includes:

Financial instruments risk and policies – “Note 4 – Financial Instruments” of the Combined and Consolidated Financial Statements.
Sensitivity analysis disclosures – “Note 1 – Basis of the Preparation and Accounting Policies” sub header Significant and Critical Accounting Policies , “Note 4 – Financial Instruments”, and “Note 7 – Goodwill and Intangible Assets”.

Judgements

Provision for expected credit losses

D-27

Impairment on nonfinancial assets

Indicators of impairment are based on management’s judgement. If an indication of impairment exists, or when annual testing for an asset is required, the Company estimates the asset’s recoverable amount. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the recoverable amount, management estimates the fair value less the costs of disposal, noting the costs of disposal is deemed immaterial. The fair value is determined based on an operating multiple discussed in further detail below. See “Note 1 – Basis of the Preparation and Accounting Policies” sub header Goodwill and Intangible Assets and Asset Impairment and “Note 7 - Goodwill and Intangible Assets” of the Combined and Consolidated Financial Statements for further information.

The areas where estimates and assumptions have the most significant effect on the amounts recognized in the Combined and Consolidated Financial Statements are as follows:

Share-based payments

Fair value of franchisees and company-owned stores

The Company also uses the operating multiple in estimating the fair value of the underlying company owned store to determine if the fair value of the non-financial assets less cost to dispose exceed the carrying amount of the nonfinancial assets. See “Note 7 - Goodwill and Intangible Assets” for further information.

Modifications to Existing Accounting Standards

Amendments to IFRS 3: Definition of a Business

Amendments to IFRS 16: COVID-19 Related Rent Concessions

D-28

way it would account for the change under IFRS 16, if the change were not a lease modification. The amendments apply to annual reporting periods beginning on or after June 1, 2020. Earlier application is permitted. The Company has elected to adopt this amendment, which has not had a material impact on the consolidated financial statements.

Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform – Phase II

Financial Risks, Capital Risks and Related Risk Management

Credit risk management

Nevertheless, commercial counterparties are constantly monitored following the similar methodology used for financial counterparties.

Liquidity risk management

Market risk management

D-29

identifying and monitoring changes in interest rates that may adversely impact expected future cash flows and by evaluating hedging opportunities. The Company maintains risk management control systems to monitor interest rate risk attributable to both the Company's outstanding or forecasted debt obligations and forecasted revenues as well as the Company's offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates and foreign currency rates on the Company's future cash flows.

D-30

APPENDIX E - LOANME FINANCIAL STATEMENTS

(See attached)

E-1

LoanMe, Inc. and Subsidiaries

Interim Condensed Consolidated Financial Statements (Unaudited)

March 31, 2021 and 2020

(Expressed in United States Dollars)

E-2

INDEX TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Interim Condensed Consolidated Statements of Financial Position ........................................................... 1 Interim Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) ....... 2 Interim Condensed Consolidated Statements of Shareholder’s Equity ...................................................... 3 Interim Condensed Consolidated Statements of Cash Flows .................................................................... 4 Notes to Interim Condensed Consolidated Financial Statements .............................................................. 5

E-3

LOANME, INC. AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) AS OF MARCH 31, 2021 AND DECEMBER 31, 2020 (Expressed in United States Dollars)

NOTES As of March 31, 2021 ASSETS Cash and cash equivalents 2 $ 7,029,183 Merchant cash advance receivable 2 270,767 Consumer and business loans receivable, at fair value 5 270,161,063 Accrued interest receivable 15,452,854 Bonds and subordinated certificates in securitized trusts 6 22,482,801 Prepaid expenses and other assets 1,379,701 Property and equipment, net 7 383,089 Intangible assets, net 8 5,799,904 Right-of-use assets, net 19 6,182,459 Total assets $ 329,141,821 LIABILITIES AND SHAREHOLDER’S EQUITY Notes payable 9 $ 249,988,380 Accounts payable and accrued liabilities 4,559,047 Accrued interest payable 9 680,324 Current tax payable 733,808 Advance deposits 10 7,582,624 Lease liabilities 19 7,027,004 Deferred income taxes, net 11 15,779,165 Total liabilities 286,350,352 SHAREHOLDER’S EQUITY Common stock, $0.001 par value, 55,555,556 shares authorized, 50,000,000 shares issued and outstanding, respectively 50,000 Contributed surplus 18 698,148 Accumulated other comprehensive income 110,829,298 Accumulated deficit (68,785,977) Total shareholder’s equity 42,791,469 Total liabilities and shareholder’s equity $ 329,141,821	As of December 31, 2020
	$ 9,845,375 – 283,236,282 14,337,907 24,576,770 1,858,661 364,915 6,032,614 6,510,212
	$ 346,762,736
	$ 270,767,072 6,152,861 209,152 219,639 8,887,500 6,942,358 14,732,120
	307,910,702
	50,000 698,148 106,612,081 (68,508,195)
	38,852,034
	$ 346,762,736

On behalf of the Board:

Jonathan Williams

Jonathan Williams Director

Page 1 The accompanying notes are an integral part of these interim condensed consolidated financial statements.

E-4

LOANME, INC. AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

REVENUES Interest income Interest expense Net interest income Gain on sale of consumer and business loans Total revenues EXPENSES Salaries, wages and benefits Provision for loan losses General and administrative Advertising and promotion Loan servicing Depreciation and amortization Impairment of bonds and subordinated certificates in securitized trusts Total operating expenses OPERATING (LOSS) INCOME FINANCE COSTS Interest expense on lease liabilities (LOSS) INCOME BEFORE INCOME TAXES INCOME TAX (BENEFIT) EXPENSE NET (LOSS) INCOME BASIC (LOSS) EARNINGS PER SHARE DILUTED (LOSS) EARNINGS PER SHARE Net (loss) income Other comprehensive income: Unrealized gains (losses) on consumer and business loans receivable at fair value through other comprehensive income, net of tax Allowance for credit losses recognized in net income, net of tax COMPREHENSIVE INCOME (LOSS)	NOTES 18 5 16 7,8,19 6 19 11 20 20 5 5	Three Months Ended	Three Months Ended
		March 31, 2021	March 31, 2020
		$ 39,585,933 8,191,332 31,394,601 1,427,015 32,821,616 3,068,428 21,793,123 2,158,167 1,207,548 1,933,483 586,103 2,355,535 33,102,387 (280,771) 87,121 (367,892) (90,110) $ (277,782) $ (0.01) $ (0.01) $ (277,782) 516,890 3,700,327 $ 3,939,435	$ 69,403,884 13,151,626
			56,252,258 5,510,206
			61,762,464
			4,015,627 42,332,203 2,300,081 3,802,972 4,575,687 273,070 –
			57,299,640
			4,462,824
			4,801
			4,458,023 1,137,673
			$ 3,320,350
			$ 0.07
			$ 0.07
			$ 3,320,350 (5,195,618) 635,545
			$ (1,239,723)

Page 2 The accompanying notes are an integral part of these interim condensed consolidated financial statements.

E-5

LOANME, INC. AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

Common Stock	Common Stock	Contributed Surplus	Accumulated Deficit	Accumulated Other Comprehensive Income	Total Shareholder’s Equity
Shares	Amount
50,000,000 – –	$ 50,000 – –	$ 698,148 – –	$ (68,508,195) – (277,782)	$ 106,612,081 4,217,217 –	$ 38,852,034 4,217,217 (277,782)
–	–	–	(277,782)	4,217,217	3,939,435
50,000,000	$ 50,000	$ 698,148	$ (68,785,977)	$110,829,298	$ 42,791,469
50,000,000	$ 50,000	$ 450,000	$ (87,642,154)	$119,867,036	$ 32,724,882
– – –	– – –	228,703 – –	– – 3,320,350	– (4,560,073) –	228,703 (4,560,073) 3,320,350
–	–	–	3,320,350	(4,560,073)	(1,239,723)
50,000,000	$ 50,000	$ 678,703	$ (84,321,804)	$115,306,963	$ 31,713,862

Page 3 The accompanying notes are an integral part of these interim condensed consolidated financial statements. E-6

LOANME, INC. AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization Amortization of right-of-use assets Amortization of loan fees and transaction costs Impairment of bonds and subordinated certificates in securitized trusts Provision for loan losses Consumer and business loans originated and participated Proceeds from sales of, and principal payments from, consumer and business loans Current tax payable Deferred income taxes Interest paid on lease liabilities Stock-based compensation Changes in operating assets and liabilities: Accrued interest receivable Prepaid expenses and other assets Accounts payable and accrued liabilities Accrued interest payable Advance deposits Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment Purchase of intangible assets Net change in bonds and subordinated certificates in securitized trusts Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on notes payable Principal repayments on notes payable Repayment of lease liabilities Net cash used in financing activities NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS– beginning of period CASH AND CASH EQUIVALENTS– end of period	Notes 7 7 6 18	Three Months Ended	Three Months Ended
		March 31, 2021 $ (277,782) 258,350 327,753 235,812 2,355,535 21,793,123 (14,025,833) 14,324,919 514,169 126,346 87,121 – (5,500,600) 478,960 (1,593,814) 471,172 (1,304,876) 18,270,355 (43,814) – (261,566) (305,380) 283,933 (21,062,625) (2,475) (20,781,167) (2,816,192) 9,845,375 $ 7,029,183	March 31, 2020
			$ 3,320,350 40,249 232,821 (1,468,102) – 42,332,203 (39,031,742) 36,751,039 (54,536) (5,479,563) 4,801 228,703 (9,466,842) 522,314 (4,586,610) (180,407) –
			23,164,678
			(7,793) (1,599,951) 245,794
			(1,361,950)
			21,745,787 (41,970,489) (245,056)
			(20,469,758)
			1,332,970 5,249,586
			$ 6,582,556

Page 4 The accompanying notes are an integral part of these interim condensed consolidated financial statements. E-7

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

1. NATURE OF BUSINESS

LoanMe, Inc. (“LoanMe”), a Nevada corporation, was formed on August 27, 2012 and operates as a specialty finance lender in the United States of America. The Company is wholly-owned by Bliksum LLC. LoanMe and its subsidiaries (collectively the “Company”) engage in the business of originating, acquiring, and marketing unsecured consumer installment loans (“consumer loans”) to individuals and businesses that respond to radio, television and internet advertisements. The principal office of the Company is in 1900 South State College Blvd, Suite 300, Anaheim, California. The Company is licensed to originate consumer and business loans in various states.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim condensed consolidated financial statements include the accounts of LoanMe and all entities that it controls. LoanMe controls an entity: i) when it has the power to direct the activities of the entity that have the most significant impact on the entity’s risks and/or returns; ii) where it is exposed to significant risks and/or returns arising from the entity; and iii) where it is able to use its power to affect the risks and/or returns to which it is exposed. This includes all wholly owned subsidiaries where LoanMe has control and ownership of all majority of voting rights. The Company’s subsidiaries are wholly owned and consist of the following: LoanMe Funding LLC, LM Retention Holdings LLC, LM BP Holdings LLC, Insights Logic LLC, LM 2014 BP III SPE LLC, and LM 2020 CM I SPE LLC.

All intra-group transactions and balances were eliminated upon consolidation.

The Company presents its condensed consolidated statement of financial position on a non-classified basis in order of liquidity.

On May 25, 2021, the Board of Directors reviewed the interim condensed consolidated financial statements and authorized them for issuance.

Statement of Compliance with International Financial Reporting Standards (“IFRS”)

The accompanying unaudited interim condensed consolidated financial statements for the three months ended March 31, 2021 and 2020 were prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting , using the same accounting policies as those used in the Company’s most recent audited annual consolidated financial statements. These unaudited interim condensed consolidated financial statements do not include all of the disclosures included in the Company’s audited annual consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read together with the audited annual consolidated financial statements for the years ended December 31, 2020 and 2019.

New Accounting Policies

The following new accounting policies were adopted during the three months ended March 31, 2021:

(A) MARKETING AND PROCESSING FEES

The Company began providing marketing and loan application processing services to financial institutions originators, such as banks. Fees from such services are recognized at the point in time when the loans are funded.

Page 5

E-8

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

(B) MERCHANT CASH ADVANCE (MCA)

The Company provides unsecured cash advances to consumers, net of prepaid interest rate. The advances have terms of six to twelve months. The collected upfront interest income is recorded as short term deferred revenue and recognized over the cash advance term, using the effective interest rate method.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with original maturities of three months or less to be cash equivalents.

The Company maintains bank accounts to collect and remit funds for its lenders under the terms of the various loan agreements. Cash balances related to such accounts are not available for general corporate purposes and were $1,127,287 and $839,089 at March 31, 2021 and December 31, 2020, respectively.

Gain on Sale of Loans and Advance Deposits

Gain on sale of loans is recognized when loan transfers to third parties qualify for derecognition and proceeds received exceed the carrying amounts and transaction costs. Advances received prior to the sale of loans are classified as advance deposits. Deposits are derecognized when the loans are delivered and are included in gain on sale of consumer and business loans in the interim condensed consolidated statements of income (loss) and comprehensive income. At March 31, 2021 and December 31, 2020, advance deposits totaled $7,582,624 and $8,887,500, respectively.

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the unaudited interim condensed consolidated financial statements in conformity with IFRS requires management to make accounting judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent assets and liabilities at the date of the interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

These accounting judgments, estimates and assumptions are continuously evaluated and are based on management’s historical experience, best knowledge of current events and conditions and other factors that are believed to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates, which could materially impact these consolidated financial statements. Changes in estimates will be reflected in the consolidated financial statements in future periods.

4. NEW ACCOUNTING STANDARDS

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2020, except for the adoption of new standards effective as of January 1, 2021. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Several amendments and interpretations apply for the first time in 2021, but do not have an impact on the interim condensed consolidated financial statements of the Company.

Page 6

E-9

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

4. NEW ACCOUNTING STANDARDS (continued)

(A) ADOPTION OF NEW ACCOUNTING STANDARDS

Amendments to IFRS 16 COVID-19 Related Rent Concessions

On May 28, 2020, the IASB issued COVID-19-Related Rent Concessions - amendment to IFRS 16 Leases. The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the COVID-19 related rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification. The amendments apply to annual reporting periods beginning on or after June 1, 2020. Earlier application is permitted. The Company has adopted the amendments as of January 1, 2021 and had no impact on the interim condensed consolidated financial statements of the Company as no such rental concessions were received.

Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform – Phase II

On August 27, 2020, The IASB published “Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) related to the modification of financial assets, financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure requirements applying IFRS 7 to accompany the amendments regarding modifications and hedge accounting. These amendments are effective for annual periods beginning on or after January 1, 2021, with earlier application permitted. The Company has adopted the amendments as of January 1, 2021 and had no impact on the interim condensed consolidated financial statements of the Company.

(B) STANDARDS ISSUED BUT NOT YET EFFECTIVE

IAS 1 – Presentation of Financial Statements

On February 12, 2021, IASB amended the disclosure of accounting policies related to IAS 1 and IFRS 2. These amendments are intended to help preparers deciding which accounting policies to disclose in their financial statements. The amendments are to be applied prospectively. The amendments to IAS 1 are effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. Once the entity applies the amendments to IAS 1, it is also permitted to apply the amendments to IFRS 2. The Company is in the process of evaluating the impact of adoption of this amendment.

. IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

On February 12, 2021, the IASB amended the definition of accounting estimates. These amendments introduce the definition of accounting estimates and include other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies. The amendments are effective for annual periods beginning on or after January 1, 2023 and changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Early adoption is permitted. The Company is in the process of evaluating the impact of adoption of this amendment.

Page 7

E-10

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

5. LOANS RECEIVABLE

Consumer and Business Loans

Consumer and business loans receivable represent amounts advanced to customers and includes unsecured consumer loans for prime and non-prime individual borrowers, as well as unsecured small business loans. Unsecured prime loans to individuals are originated in amounts ranging from $7,500 up to $100,000, bear annual interest at rates ranging from 9.9% to 22.9%, and have terms up to 180 months.

Unsecured non-prime loans to individuals and small businesses are originated in amounts ranging from $1,000 up to $250,000, bear annual interest at rates ranging from 0% to 199%, and have terms from 6 to 120 months.

Consumer loans include participation interests in unsecured consumer loans originated by third parties of up to 95% of the loan principal balance. Pursuant to the participation agreement, the Company may purchase the remaining 5% of the principal balance based on an agreed upon formula if the loan becomes 65 days or more delinquent. Transaction costs and fees associated with the participation purchases are capitalized and amortized into interest income using the effective interest method. These consumer loans have a 24-month term and bear annual interest at rates ranging from 165% or 210%

Consumer and business loans receivable measured at fair value at March 31, 2021 and December 31, 2020 are as follows:

Unsecured consumer and business loans Capitalized transaction costs less origination fees Loans receivable, at fair value	March 31, 2021 December 31, 2020
	$ 270,841,020 $ 285,158,455 (679,957) (1,922,173)
	$270,161,063 $283,236,282

Consumer and business loans receivable measured at fair value at March 31, 2021 and December 31, 2020, based on loan types are as follows:

Unsecured consumer non-prime loans Unsecured business loans Unsecured consumer prime loans Loans receivable, at fair value	March 31, 2021 $ 155,220,609 102,812,456 12,127,998 $270,161,063	December 31, 2020
		$ 162,055,489 109,504,924 11,675,869
		$283,236,282

The following table provides a breakdown of the consumer and business loans receivable at fair value. It also presents the allowance for expected credit losses by aging bucket, which represents the assessment of credit risk exposure and the IFRS 9 ECL measurement stage. The Company anticipates a significant number of loans in Stage 1 will experience significant credit deterioration based on historical patterns. The entire loan is presented based on its oldest individual past due balance to align with the stage groupings used in calculating the allowance for expected credit losses under IFRS 9:

Page 8

E-11

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

5. LOANS RECEIVABLE (continued)

Consumer and Business Loans (continued)

As of March 31, 2021

Credit Risk Category	Median FICO Days Past due	Stage 1	Stage 2	Stage 3	Total
Satisfactory Lower risk Lower risk Moderate risk Higher risk Credit-impaired	602 Not past due 664 Not past due 597 1-30 days 596 31-60 days 594 61-90 days 587 91+ days Loans receivable, at fair value Allowance for loan losses – OCI	$ 203,307,525 – – – – –	$ – 8,006,453 25,457,296 24,603,513 6,448,923 –	$ – – – – – 2,337,353	$ 203,307,525 8,006,453 25,457,296 24,603,513 6,448,923 2,337,353
		$203,307,525	$ 64,516,185	$2,337,353	$270,161,063
		$20,642,379	$37,077,518	$1,561,114	$ 59,281,011

As of December 31, 2020

As of December	31, 2020
Credit Risk Category	Median FICO Days Past due	Stage 1	Stage 2	Stage 3	Total
Satisfactory Lower risk Lower risk Moderate risk Higher risk Credit-impaired	608 Not past due 596 Not past due 595 1-30 days 594 31-60 days 595 61-90 days 590 91+ days Loans receivable, at fair value Allowance for loan losses – OCI	$ 226,559,156 – – – – –	$ – 10,568,476 24,843,487 11,386,774 7,345,325 –	$ – – – – – 2,533,064	$ 226,559,156 10,568,476 24,843,487 11,386,774 7,345,325 2,533,064
		$226,559,156	$ 54,144,062	$2,533,064	$283,236,282
		$23,227,320	$29,218,029	$1,697,745	$ 54,143,094

Page 9

E-12

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

5. LOANS RECEIVABLE (continued)

Consumer and Business Loans (continued)

The following tables present a reconciliation from the opening to the closing balance of the allowance for expected credit losses on consumer and business loans receivable:

Stage 1	Stage 2	Stage 3	Total
$ 23,227,320 1,249,611 (3,695,240) – (10,414,766) 11,914,391 (1,638,937) –	$ 29,218,029 (1,249,611) 3,695,240 (10,068,643) 15,715,375 – (232,872) –	$ 1,697,745 – – 10,068,643 11,616,388 – (28,539) (21,793,123)	$ 54,143,094 – – – 16,916,997 11,914,391 (1,900,348) (21,793,123)
$20,642,379	$37,077,518	$ 1,561,114	$59,281,011
Stage 1	Stage 2	Stage 3	Total
$ 42,724,427 923,665 (3,309,684) – (62,998,407) 59,037,272 (13,149,953) –	$ 39,480,014 (923,665) 3,309,684 (5,611,595) (3,639,853) – (3,396,556) –	$ 173,547 – – 5,611,595 131,754,159 – (20,038) (135,821,518)	$ 82,377,988 – – – 65,115,899 59,037,272 (16,566,547) (135,821,518)
$23,227,320	$29,218,029	$ 1,697,745	$54,143,094

Page 10

E-13

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

5. LOANS RECEIVABLE (continued)

Consumer and Business Loans (continued)

The overall changes in the allowance for credit losses of consumer and business loans receivable are summarized below:

Balance, beginning of period Net amounts written-off against allowance Provision for expected credit losses: Increase due to lending and collection activities Amounts recovered Changes in credit risk parameters Balance, end of period	Three Months Ended March 31, 2021 Year Ended December 31, 2020 $ 54,143,094 $ 82,377,988 (16,655,207) (135,821,517) 12,795,899 48,775,928 (7,919,773) (6,305,204) 16,916,998 65,115,899 $ 59,281,011$ 54,143,094

Sensitivity

Management has analyzed the impact on the fair value of the Company’s consumer and business loans associated with unobservable inputs. A 10% adverse change in expected defaults at March 31, 2021 would have an estimated negative effect of $1,700,764 on the fair value of consumer and business loans receivable and related unrealized gains (losses) reflected in OCI. A 20% adverse change in expected defaults at March 31, 2021 would have an estimated negative effect of $3,401,529 on the fair value of consumer and business loans receivable and related unrealized gains (losses) reflected in OCI. A 10% adverse change in the discount rate at March 31, 2021 would have an estimated negative effect of $7,688,402 on the fair value of consumer and business loans receivable and related unrealized gains (losses) reflected in OCI. A 20% adverse change in the discount rate at March 31, 2021 would have an estimated negative effect of $14,942,296 on the fair value of consumer and business loans receivable and related unrealized gains (losses) reflected in OCI.

The Company cannot guarantee that delinquency and loss levels will correspond with the historical levels experienced and there is a risk that delinquency and loss rates could increase significantly.

6. BONDS AND SUBORDINATED CERTIFICATES IN SECURITIZED TRUSTS

During 2018, the Company participated in a securitization transaction secured by $144,000,000 in consumer loans from its prime portfolio. All loans were originated by the Company, including $71,000,000 transferred from its portfolio and the remainder $73,000,000 transferred by an unrelated party who previously purchased similar loans from the Company. Pursuant to the transaction’s private placement memorandum (“PPM”), 4.75% Class A bonds, 5.00% Class B bonds, 5.00% Class C bonds and noninterest-bearing subordinated trust certificates were issued, whereby the Company retained a portion of the A, B and C Bonds and 27.65% of the subordinated trust certificates. The trust certificates represent beneficial equity interests in the Trust, which are subordinated to the A, B and C bonds and are not secured by any pledge of loans. Accordingly, to the extent the assets of the Trust are insufficient to pay all the bonds, the subordinated trust certificates bear the first and full risk of loss. Pursuant to the PPM, the Company is not required to cover any shortfalls and/or repurchase any loans subject to the securitization.

Page 11

E-14

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

6. BONDS AND SUBORDINATED CERTIFICATES IN SECURITIZED TRUSTS (continued)

During 2019, the Company participated in a securitization transaction secured by $70,000,000 in loans from its small business portfolio originated by the Company. Pursuant to the transaction’s PPM, 5.25% Class A bonds, 10.00% Class B bonds 11.25% Class C bonds and non-interest-bearing subordinated trust certificates were issued. As part of the securitization, the Company retained all of the subordinated trust certificates. The trust certificates represent beneficial equity interests in the Trust, which are subordinated to the A, B and C bonds and are not secured by any pledge of loans. Accordingly, to the extent the assets of the Trust are insufficient to pay the A, B and C bonds, the subordinated trust certificates bear the first and full risk of loss. Pursuant to the PPM, the Company is not required to cover any shortfalls and/or repurchase any loans subject to the securitization.

The aforementioned retained Class A, B and C bonds and subordinated trust certificates in the securitized trusts are held for investment and carried at amortized cost. Interest on these securities is recognized using the effective interest method.

The initial amortized cost of the bonds and subordinated trust certificates in each securitization was determined using fair value and based on the Company’s internal models used to compute the net present value of future expected cash flows, with observable market participant assumptions, where available. The Company’s assumptions include its expectations of inputs that other market participants would use in pricing these assets. These assumptions include judgments about the underlying collateral, prepayment speeds, estimated future credit losses, discount rates requirements and certain other factors which management expects market participants would require.

Carrying Amount	Discount Rate	Collateral	Estimated Fair Value
$ 3,734,960 $ 5,336,202 $ 13,411,639 Carrying Amount	4.75% – 5% 10% 15% Discount Rate	Prime Loans Business Loans Collateral	$ 3,803,421
			$ 6,224,795
			$ 13,411,639 Estimated Fair Value
$ 3,942,089 $ 5,329,641 $ 15,305,040	4.75% – 5% 10% 15%	Prime Loans Business Loans	$ 4,386,483
			$ 6,087,162
			$ 15,305,040

For the period ended March 31, 2021, the 2019 subordinated certificates have experienced significant credit deterioration, primarily as a result of loan modifications which decreased the contractual interest rates in the collateral loans thus reducing anticipated future cash flows to be collected. Consequently, an impairment of $2,355,535 was recorded for the period ended March 31, 2021. No such impairment incurred for the period ended March 31, 2020.

Page 12

E-15

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

6. BONDS AND SUBORDINATED CERTIFICATES IN SECURITIZED TRUSTS (continued)

Sensitivity

Management has analyzed the impact of unobservable inputs on the initial value of the Company’s bonds and subordinated certificates in securitized trusts.

For the 2018 Securitization, a 10% adverse change in expected defaults at March 31, 2021 would have an estimated negative effect of $937,155 in the fair value of the bonds and subordinated certificates in securitized trusts. A 20% adverse change in expected defaults at March 31, 2021 would have an estimated negative effect of $1,116,051 in the fair value of the bonds and subordinated certificates in securitized trusts. In addition, a 10% adverse change in the discount rate at March 31, 2021 would have an estimated negative effect of $392,262 on the fair value of the bonds and subordinated certificates in securitized trusts. A 20% adverse change in the discount rate at March 31, 2021 would have an estimated negative effect of $758,259 on the fair value of the bonds and subordinated certificates in securitized trusts.

For the 2019 Securitization, a 10% adverse change in expected defaults at March 31, 2021 would have an estimated negative effect of $1,144,531 in the fair value of the subordinated certificates in securitized trusts. A 20% adverse change in expected defaults at March 31, 2021 would have an estimated negative effect of $2,288,813 in the fair value of the subordinated certificates in securitized trusts. In addition, a 10% adverse change in the discount rate at March 31, 2021 would have an estimated negative effect of $508,791 on the fair value of the subordinated certificates in securitized trusts. A 20% adverse change in the discount rate at March 31, 2021 would have an estimated negative effect of $982,510 on the fair value of the subordinated certificates in securitized trusts.

7. PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS

Property and equipment, and right-of-use assets consisted of the following:

Property and Equipment	Right-of-use Assets (See Note 19)	Total
$ 252,003 183,915 – (71,003)	$ 517,871 7,158,637 – (1,166,296)	$ 769,874 7,342,552 – (1,237,299)
364,915 43,814 – (25,640)	6,510,212 – – (327,753)	6,875,127 43,814 – (353,393)
$ 383,089	$ 6,182,459	$ 6,565,548
$ 364,915	$ 6,510,212	$ 6,875,127
$ 383,089	$ 6,182,459	$ 6,565,548

Depreciation expense of property and equipment for the three months ended March 31, 2021 and the year ended December 31, 2020 totaled $25,640 and $71,003, respectively.

Page 13

E-16

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

8. INTANGIBLE ASSETS

Intangible Assets consisted of internally developed software and loan servicing asset, as follows:

Internally Developed Software	Servicing Asset	Total
$ 5,281,566 – (208,483)	$ 751,048 – (24,227)	$ 6,032,614 – (232,710)
$ 5,073,083	$ 726,821	$ 5,799,904
Internally Developed Software	Servicing Asset	Total
$ 3,957,863 1,879,657 (555,954)	$ 847,958 – (96,910)	$ 4,805,821 1,879,657 (652,864)
$ 5,281,566	$ 751,048	$ 6,032,614

Amortization expense for the three months ended March 31, 2021 and the year ended December 31, 2020, totaled $232,710 and $652,863, respectively.

9. NOTES PAYABLE

Notes payable as of March 31, 2021 and December 31, 2020 are summarized as follows:

Secured BP SSL Trust (BasePoint) IHA, LLC Chilmark Administrative, LLC Unsecured SBA EIDL Other notes payable	March 31, 2021	December 31, 2020
	$ 222,004,308 10,235,564 10,916,429 500,000 6,332,079	$ 242,274,592 10,555,123 10,987,008 500,000 6,450,349
	$249,988,380	$270,767,072

Accrued interest on notes payable as of March 31, 2021 and December 31, 2020 was $680,324 and $209,152, respectively. Total interest expense on notes payable for the three months ended March 31, 2021 and 2020 was $8,191,332 and $13,151,626, respectively. The covenants included portfolio covenants, affirmative covenants, and financial covenants. The performance trigger included loan collections, first payment default, delinquency, and charge-off. The Company was in compliance with all covenants and performance triggers.

Page 14

E-17

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

9. NOTES PAYABLE (continued)

BP SLL Trust (BasePoint)

In April 2019, the Company entered into a separate note payable agreement totaling $37,864,000 with BasePoint. The note is secured by equity interests in the Company’s parent, bears interest at 12.5% per annum and matures in April 2023. The unpaid principal balance due on the note totaled $37,864,000 at March 31, 2021 and December 31, 2020, respectively.

IHA, LLC (IHA)

In August 2019, the Company entered into a secured promissory note with IHA, LLC for $15,000,000 to fund consumer loans originated by the Company. Such note was secured by the related consumer loans with an unpaid principal balance of $14,053,542. The note bore interest of 10% per annum and matured in August 2020. Upon maturity, the Company transferred the collateral loans to IHA subject to a repurchase agreement which distributes collections to IHA until the collateral loans’ balance is reduced to zero. Because the Company has the right to repurchase the collateral loans at par, the collateral loans were not derecognized and the IHA transaction was accounted for as a borrowing. The unpaid principal balance due to IHA totaled $10,235,564 and $10,555,123 at March 31, 2021 and December 31, 2020, respectively.

Chilmark Administrative, LLC

In June 2020, the Company entered into a loan and security agreement for $11,000,000 with Chilmark Administrative, LLC to fund consumer loans originated by the Company. The loan security agreement is secured by the related consumer loans, bears interest at 11% per annum and matures in June 2021. The unpaid principal balance due to Chilmark totaled $10,916,429 and $10,987,008 at March 31, 2021 and December 31, 2020, respectively.

Other Notes Payable

The Company has other unsecured notes payable, bearing interest at rates ranging from 10% to 12.5%, and are generally due 12 months after issuance. The unpaid principal balance totaled $6,332,079 and $6,450,349 at March 31, 2021 and December 31, 2020, respectively.

$4,206,232 and $4,273,759 of the total unpaid principal balance at March 31, 2021 and December 31, 2020, respectively, is due to employees, borrowed at arm’s length terms. The notes bear interest rates ranging from 10% to 12.5% and are generally due 12 months after issuance and mature through March 2022.

Page 15

E-18

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

10. FINANCIAL INSTRUMENTS

Recognition and Measurement of Financial Instruments

The Company classified its financial instruments as follows for the periods ended March 31, 2021 and December 31, 2020:

December 31, 2020:
Financial Instruments Cash and cash equivalents Merchant cash advance receivable Consumer and business loans receivable Bonds and subordinated certificates in securitized trusts Accounts payable and accrued liabilities Advance deposits Notes payable	Measurement	March 31, 2021	December 31, 2020
	Amortized cost Amortized cost Fair value - OCI Amortized cost Amortized cost Amortized cost Amortized cost	$ 7,029,183 270,767 270,161,063 22,482,801 4,559,047 7,582,624 249,988,380	$ 9,845,375 – 283,236,282 24,576,770 6,152,861 8,887,500 270,767,072

Fair Value Measurement

All assets and liabilities for which fair value was measured or disclosed in the consolidated financial statements were categorized within the fair value hierarchy, described as follows, based on the lowest level input that was significant to the fair value measurement as a whole:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For consumer loans receivable, the Company applies assumptions which market participants would use based on the product type, age of the loan pools, and any other specific matters associated with the loan pools. Such assumptions include the principal collection rate, interest collection rate, and the discount rate. Inherent in the principal collection rate assumption are default rates and prepayment rates. Default rates are assumed to have a 100% severity. Default and prepayment rates impact each other and changes in single assumption are not significant. For example, an increase in prepayment speeds will generally result in lower defaults. A discount rate is then applied which management believes represents the rate that an investor in these cash flows would apply in the current circumstances. This rate assumes that the buyer and seller are independent and that the sale is not a forced or liquidation sale.

Bonds and subordinated certificates in securitized trusts discussed in Note 6 are initially recognized at fair value and subsequently accounted for at amortized cost and measured for impairment at each reporting period. At March 31, 2021 and December 31, 2020, the amortized cost carrying amount of bonds and subordinated certificates in securitized trusts totaled $22,482,801 and $24,576,770. Initial fair value measurements are based on the Company’s internal models used to compute the net present value of future expected cash flows, with observable market participant assumptions, where available. The Company’s assumptions include its expectations of inputs that other market participants would use in pricing these assets. These assumptions include judgments about the underlying collateral, estimated future credit losses, discount rates requirements and certain other factors which management expects market participants would require.

Page 16

E-19

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

10. FINANCIAL INSTRUMENTS (continued)

Fair Value Measurement (continued)

The hierarchy required the use of observable market data when available. The following table presents the Company’s financial instruments measured at FVTOCI and amortized cost by level at March 31, 2021 and December 31, 2020. There were no transfers between Level 1, Level 2, or Level 3 during the current or prior periods.

Total	Level 1	Level 2	Level 3
$270,161,063 7,029,183 270,767 22,482,801 4,559,047 7,582,624 249,988,380	$ – 7,029,183 – – – – –	$ – – 270,767 – 4,559,047 7,582,624 249,988,380	$270,161,063 – – 22,482,801 – – –
Total	Level 1	Level 2	Level 3
$283,236,282 9,845,375 24,576,770 6,152,861 8,887,500 270,767,072	$ – 9,845,375 – – – –	$ – – – 6,152,861 8,887,500 270,767,072	$283,236,282 – 24,576,770 – – –

(1) The fair value of cash and cash equivalents, accounts payable and accrued liabilities, and notes payable approximate their carrying value, due to the short terms to maturity, which is less than 12 months.

Fair Value Measurement of Consumer and Business Loans Receivable

The following table presents quantitative information about the valuation techniques and unobservable inputs applied to Level 3 fair value measurements reported at fair value as of March 31, 2021 and December 31, 2020:

Financial Instrument Measured at FVTOCI	Valuation Technique	Unobservable Input	Range of Inputs March 31, 2021 Range of Inputs December 31, 2020 5% – 32% 5% – 32% 5.5% – 20% 5.5% – 20%
Consumer and business loans receivable	Discounted Cash Flows (“DCF”)	Expected defaults Discount rate

Page 17

E-20

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

10. FINANCIAL INSTRUMENTS (continued)

Fair Value Measurement of Consumer and Business Loans Receivable (continued)

The discounted cash flow technique considers the contractual cash flows from the loans adjusted for expected defaults and using management’s best estimate of discount rates market participants would require. Interrelationships between significant unobservable inputs and fair value are as follows:

An increase in expected defaults would result in reduced fair value.
An increase in the discount rate would result in reduced fair value.

The quantitative impact of sensitivities of expected defaults and discount rates to the consumer and business loans receivable is included in Note 5.

The valuation techniques, unobservable inputs and impact of sensitivities of expected defaults and discount rates applied to Bonds and subordinated certificates in securitized trusts are disclosed in Note 5.

The following table presents the changes in fair value measurements of the Company’s Consumer and business loans receivable recognized at fair value and classified as Level 3:

Balance, beginning of period Loan origination Prepayment Write offs Transaction costs Unrealized gain Balance, end of period	March 31, 2021 $ 283,236,282 14,025,833 (14,324,919) (14,794,596) 1,242,216 776,247 $270,161,063	December 31, 2020 $ 395,374,335 62,059,348 (97,947,028) (92,476,810) 6,256,972 9,969,465 $283,236,282

11. INCOME TAXES

The Company’s income tax expense was determined as follows:

The Company’s income tax expense (benefit) for the three months ended March 31, 2021 and 2020 was determined as follows:

Combined basis federal and state income tax rates Expected income tax expense Nondeductible expenses Changes in tax rate Other	Three Months Ended	Three Months Ended
	March 31, 2021	March 31, 2020 25.26% $ 1,258,587 (40,605) (291,496) 211,187 $ 1,137,673
	26.48%
	$ (103,863) 6,439 – 7,314
	$ (90,110)

Page 18

E-21

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

11. INCOME TAXES (continued)

As of March 31, 2021 and December 31, 2020, the Company’s net deferred tax liabilities are as follows:

March 31, 2021 Property and equipment $ (1,627,599) Unrealized gains on consumer and business loans receivable at fair value through other comprehensive income (26,850,638) Deferred loan fees and transaction costs (3,158,192) Net operating losses 13,934,987 Other 1,922,277 $ (15,779,165)	March 31, 2021	December 31, 2020
		$ (1,672,239) (26,642,535) (3,213,884) 15,211,888 1,584,650
	$ (15,779,165)	$ (14,732,120)

Disclosure of income taxes for each component of other comprehensive income for the three months ended March 31, 2021 and 2020 is as follows:

Unrealized gain (losses) on loans receivable at fair value through other comprehensive income Allowance for credit losses recognized in net income Total current and deferred tax recognized in other comprehensive income	Three Months Ended	Three Months Ended
	March 31, 2021	March 31, 2020
	$ 208,103 1,450,533	$ (1,880,342) 249,134
	$ 1,658,636	$ (1,631,208)

12. COMMITMENTS AND CONTINGENCIES

Legal

As a lender, the Company is subject to various claims and actions, which arise, in the ordinary course of business. As of March 31, 2021, management, having consulted with its legal counsel, believes the ultimate resolution of any such claims and actions, both individually and in the aggregate, are not expected to have a material adverse effect upon the Company’s consolidated financial position or results of operations.

13. CAPITAL RISK MANAGEMENT

The Company manages its capital to maintain its ability to continue as a going concern and to provide adequate returns to shareholders. The capital structure of the Company consists of notes payable and shareholder’s equity, which includes contributed surplus, accumulated other comprehensive income and accumulated deficit.

The Company manages its capital structure and adjusts it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issues and increasing or decreasing notes payable or by undertaking other activities as deemed appropriate under specific circumstances. The Company’s strategy, objectives, measures, definitions and targets have not changed significantly in the past year.

Page 19

E-22

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

13. CAPITAL RISK MANAGEMENT (continued)

The Company has externally imposed capital requirements as governed through its financing facilities. Refer to Note 9. These requirements are to ensure the Company continues to operate in the normal course of business and to ensure the Company manages its debt relative to net worth. The capital requirements are congruent with the Company’s management of capital.

The Company monitors capital based on the financial covenants of its financing facilities.

As of March 31, 2021 and December 31, 2020 and during the corresponding financial periods then ended, the Company was in compliance with all its externally imposed financial covenants.

14. FINANCIAL RISK MANAGEMENT

Overview

The Company’s activities are exposed to a variety of financial risks: credit risk, liquidity risk and interest rate risk. The Company’s overall risk management program focuses on the unpredictability of financial and economic markets and seeks to minimize potential adverse effects on the Company’s financial performance.

Credit Risk

The maximum exposure to credit risk is represented by the carrying amount of other receivables, consumer and business loans receivable and investments in bonds and subordinated certificates in securitized trusts. The Company makes unsecured consumer and business loans to large number of customers pursuant to policies and procedures that are intended to ensure that there is no concentration of credit risk with any particular individual, company or other entity. However, the Company is subject to a higher level of credit risk due to the credit constrained nature of many of the Company’s customers. Borrowers who are in need of high interest rate loans generally have less than average credit scores and the Company does not require collateral to support these loans.

The Company performs on-going credit evaluations, monitors aging of the loan portfolio, monitors payment history of individual loans, and maintains a provision for expected credit losses to mitigate this risk.

The credit risk decisions on the Company’s loans receivable are made in accordance with the Company’s credit policies and lending practices, which are overseen by the Company’s senior management. Credit quality of the customer is assessed based on an internal credit scorecard and individual credit limits are defined in accordance with this assessment. The Company develops underwriting models based on the historical and expected performance of groups of customer loans which guide its lending decisions. To the extent that such data used to develop its underwriting models is not representative or predictive of current loan book performance, the Company could suffer increased loan losses.

The Company cannot guarantee that delinquency and loss levels will correspond with the historical levels experienced and there is a risk that delinquency and loss rates could increase significantly.

Liquidity Risk

The Company addresses liquidity risk management by maintaining sufficient availability of funding through its notes payable. The Company manages its cash resources based on financial forecasts and anticipated cash flows results, which have been periodically reviewed with the Company’s Board of Directors.

Page 20

E-23

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

14. FINANCIAL RISK MANAGEMENT (continued)

Liquidity Risk

The Company believes that cash and cash equivalents on hand and funds available from its lending arrangements will be sufficient in the near term to meet operational requirements and meet capital spending requirements. In addition, the incremental financing obtained from the Company’s inception through March 31, 2021 will allow the Company to continue normal operations. In order for the Company to achieve the full growth opportunities available, however, additional sources of financing over and above the currently available notes payable will be required in the future. There is no certainty that these long-term sources of capital will be available or at terms favorable to the Company.

Substantially all liabilities are due within 12 months with the exception of notes payable. Facilities that have matured in the three months ended 2021 were repaid as required.

Effective January 1, 2020, the Fair Access to Credit Act (“AB 539”) became effective for loans made under the California Financing Law (“CFL”), and imposed requirements related to interest rate caps, borrower education, credit reporting, and maximum loan repayment periods. More specifically, AB 539 amended the CFL to set a 36 percent rate cap on installment loans with a principal amount of $2,500 or more and less than $10,000, with a minimum 12-month loan term for such loans. AB 539 is expected to negatively impact the Company as a finance lender organization.

‐ In addition, since February 2020, the COVID 19 pandemic has caused substantial disruption to the U.S. and international economies and financial markets, including significant volatility, unprecedented unemployment, borrower defaults and declines in interest rates to record low levels. While the disruption is currently expected to be temporary, it presents material uncertainty due to the potential effects on personnel and business continuity or disruption, valuation of financial assets and liabilities and potential severe disruption to financial markets or deteriorations in credit and financing conditions.

Additionally, the second and third waves of the COVID-19 pandemic and the emergence of new variants have led to governments around the world to continue to enact measures to combat the spread of the COVID-19 virus, including, but not limited to, the implementation of travel bans, border closings, mandated closure of nonessential services, self-imposed quarantine periods and social and physical distancing policies, which have contributed to the material disruption to businesses globally, resulting in a sudden economic slowdown. The ever-changing and rapidly-evolving effects of COVID-19, the duration, extent and severity of which are currently unknown, on investors, businesses, the economy, society and the financial markets could, among other things, add volatility to the global stock markets, change interest rate environments, and increase delinquencies and defaults. Therefore, the COVID-19 virus and the measures to prevent its spread may contribute to a higher level of uncertainty with respect to management’s judgments and estimates.

In response to the foregoing events, the Company curtailed lending during the months of March and April 2020, extended forbearance to qualified borrowers, renegotiated its borrowing costs with certain lenders and refocused its lending operations to actively seek new channels and ventures. The Company also obtained proceeds from a government assistance program (see Note 20). Beginning in May 2020, the Company resumed lending operations and added steps during the loan origination process as follows:

Ensured employment, income, and asset verification documentation was dated no more than 15 days from the application date.
Required most recent income documentation and validated employment immediately prior to the funding date.
Reviewed income and employment documentation to identify furloughed borrowers or if there was a curtailment in income.
Confirmed that any small business loan borrower’s business was currently operating and in the approved industry.

Page 21

E-24

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

14. FINANCIAL RISK MANAGEMENT (continued)

Regulatory Risk

As discussed above, on September 13, 2019, the California legislature passed Assembly Bill 539. Other state legislatures have been active in the consumer financial services space as well.

In January 2021, the Illinois Legislature passed Senate Bill 1792 which contained The Predatory Loan Prevention Act. The new law was signed by the Governor and significantly impacts the extension of credit in the state of Illinois capping rates at 36% per annum and attempting to limit the servicing of bank originated consumer loan products. The law will negatively impact any potential revenue from either direct-lending, or the servicing of loans originated with Illinois residents.

In 2018, the Consumer Credit Privacy Act (“CCPA”) was passed into law, effective January 1, 2020. The CCPA broadens consumer rights with respect to personal information, imposing expanded obligations to disclose the categories and uses of personal information a business collects and providing consumers a right to access that information, a right to opt out of the sale of personal information and a right to request that a business delete personal information about the consumer subject to certain exemptions. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches, which may increase the costs of data breach litigation. The CCPA has been subject to a handful of amendments, of which AB 25, which is scheduled to sunset in January 2021, has the greatest impact on the Company. AB 25 excludes employees from most CCPA rights, other than the right to notice at or before the point of collection about the categories of personal information to be collected and the purposes for which the categories of personal information shall be used and a private right of action for data breach.

On March 2, 2021, Governor Ralph Northam signed into law the VCDPA. By enacting the VCDPA, Virginia becomes the second state nationwide to implement a comprehensive consumer data privacy law, after California with the CCPA. While the VCDPA is similar to the CCPA in many respects, the law has a different scope and different obligations than the CCPA. Accordingly, impacted businesses must conduct a separate scope analysis, and, if subject to the VCDPA, they will need to set up different business rules to comply with the law.

Other states and possibly the federal government may adopt laws similar to the CCPA. While it is too early to know the full impact, these developments could ultimately result in the imposition of requirements on the Company and other consumer financial service providers, as well as the business community at large, that could increase costs or otherwise adversely affect the Company’s business.

Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include cash and cash equivalents, consumer and business loans receivable, bonds and subordinated certificates in securitized trusts and notes payable.

Interest Rate Risk

Interest rate risk measures the Company’s risk of financial loss due to adverse movements in interest rates. As of March 31, 2021 and December 31, 2020, notes payable had a fixed rate of interest. The Company manages interest rate risk by making consumer and business loans that have fixed interest rates, matching the duration with corresponding note payable maturities. The Company expects to renew its note payable arrangements at fixed rates upon their maturity.

Page 22

E-25

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

14. FINANCIAL RISK MANAGEMENT (continued)

Currency Risk

Currency risk is the risk that changes in foreign exchange rates may have an effect on future cash flows associated with financial instruments. The Company is not exposed to foreign currency risk, as all its financial instruments are denominated in U.S. dollars.

Price Risk

Market price risk is the risk that the fair value of the financial instrument will fluctuate as a result of changes in market prices (other than those arising from interest rate risks or currency risk), whether caused by factors specific to an individual loan or factors affecting all instruments traded in the market. The loans portfolio comprises of non-listed closely held loans and bonds and subordinated certificates in securitized trusts which are not exposed to market prices. Fair valuation of the loan and debt portfolio is conducted at each reporting period. See the sensitivity analysis under Note 5.

15. EMPLOYEE BENEFIT PLAN

The Company offers a defined contribution 401(k) plan with discretionary Company contributions. To become eligible, employees must be at least 21 years of age, and have been employed for a minimum of 60 days. Employee elective contributions are fully vested. Employer matching contributions vest at a rate of 50% each year after one year of service and become fully vested after two years of service. The Company made a matching contribution totaling $37,074 and $49,072 equal to 50% of employees’ elective deferral contributions, up to 6%, for the three months ended March 31, 2021 and 2020.

16. GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the three months ended March 31, 2021 and 2020 are summarized as follows:

Credit verification costs Professional service Premises Utilities Software licenses Insurance and licenses Equipment and supplies Total	Three Months Ended	Three Months Ended
	March 31, 2021	March 31, 2020
	$ 682,402 1,000,512 – 19,406 394,293 42,639 18,915	$ 529,348 1,011,926 261,937 56,610 362,407 38,069 39,784
	$ 2,158,167	$ 2,300,081

Page 23

E-26

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

17. OTHER RELATED PARTY TRANSACTIONS

In addition to related party transactions and balances described elsewhere, these consolidated financial statements include the following:

Compensation

Key management personnel of the Company consist of individuals that have the authority and accountability for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the members of the Board of Directors.

The compensation of key management personnel is as follows:

Short term employee benefits (salaries and benefits) Stock-based compensation	Three Months Ended	Three Months Ended
	March 31, 2021	March 31, 2020
	$ 619,814 –	$ 1,021,622 228,703
	$ 619,814	$1,250,325

18. STOCK-BASED COMPENSATION

The Company has a stock option plan (the “Plan”) that provides for the granting of options to directors, officers and employees. The exercise price of an option is set at the time that such option is granted under the Plan. The maximum number of common shares reserved for issuance under the Plan is 5,555,556.

Each option converts into one common share of the Company upon exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither right to dividends nor voting rights. Options may be exercised at any time from the date they become fully vested to the date of expiration. Options issued under the Plan have a maximum contractual term of ten years. During the three months ended March 31, 2021, no options were granted by the Company and no options expired.

All options granted prior to 2021 became fully vested on March 31, 2020 or July 31, 2020. Volatility is estimated using historical data of comparable publicly traded companies operating in a similar segment. All granted options are exercisable at $0.28. The weighted average remaining contractual life is 8.75 years.

Total stock-based compensation expense recognized for the three months ended March 31, 2021 and 2020 was $0 and $228,703. Stock-based compensation expense is included in salaries, wages, and benefits in the accompanying interim condensed consolidated statements of income (loss) and comprehensive income.

19. LEASES

The Company has four lease agreements for its premises and equipment, such as copiers and postage machines. The Company had a month-to-month premises lease that expired in June 2020. Premises expense for the month-to-month premises lease totaled $261,937 for the three months ended March 31, 2020 and is included in general and administrative expense in the accompanying interim condensed consolidated statements of income (loss) and comprehensive income.

Page 24

E-27

LOANME, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in United States Dollars)

19. LEASES (continued)

Right-of-use assets and lease liabilities as of March 31, 2021 and December 31, 2020 are as follows:

As of December 31, 2019 Additions Amortization expense Interest expense Lease payments As of December 31, 2020 Additions Amortization expense Interest expense Lease payments As of March 31, 2021	Right of Use Assets Premises Equipment Total $ 404,998 $ 112,873 $ 517,871 7,158,637 – 7,158,637 (1,055,783) (110,513) (1,166,296) – – – – – – $ 6,507,852 $ 2,360 $ 6,510,212 – – – (325,393) (2,360) (327,753) – – – – – – $ 6,182,459 $ – $ 6,182,459	Lease Liabilities
		$ 537,680 7,158,637 – 180,000 (933,959)
		$ 6,942,358 – – 87,121 (2,475)
		$ 7,027,004

20. EARNINGS PER SHARE

Basic and Diluted Loss per Share

Basic (loss) earnings per share is computed by dividing net income or loss, after tax, applicable to common shareholders by the weighted average number of common shares outstanding during the period.

Net (loss) income Weighted average number of common shares outstanding Basic (Loss) Earnings per Share	Three Months Ended	Three Months Ended
	March 31, 2021	March 31, 2020
	$ (227,782) 50,000,000	$ 3,320,350 50,000,000
	$ (0.01)	$ 0.07

Common stock equivalents consisting of stock options were excluded from diluted (loss) earnings per share because their effect would be antidilutive.

21. SUBSEQUENT EVENTS

Management has evaluated the impact of subsequent events through the date the unaudited interim condensed financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited interim condensed financial statements.

Page 25

E-28

==> picture [182 x 73] intentionally omitted <==

LoanMe, Inc. and Subsidiaries Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(Expressed in United States Dollars)

E-29

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditor’s Report ..................................................................................................................... 1 Consolidated Statements of Financial Position ........................................................................................... 3 Consolidated Statements of Income (Loss) and Comprehensive Income .................................................. 4 Consolidated Statements of Shareholder’s Equity ..................................................................................... 5 Consolidated Statements of Cash Flows .................................................................................................... 6 Notes to Consolidated Financial Statements .............................................................................................. 7

E-30

==> picture [145 x 40] intentionally omitted <==

Baker Tilly US, LLP 18500 Von Karman Avenue, 10[th] Flr. Irvine, CA 92612 United States of America

T: +1 (949) 222-2999 F: +1 (949) 222-2289

INDEPENDENT AUDITOR’S REPORT

bakertilly.com

To the Board of Directors of LoanMe, Inc. and Subsidiaries

Opinion

We have audited the consolidated financial statements of LoanMe, Inc. and its subsidiaries (together the “Company), which comprise the consolidated statements of financial position as of December 31, 2020 and 2019, and the consolidated statements of income (loss) and comprehensive income, consolidated statements of changes in shareholder’s equity, and consolidated statements of cash flows for the years ended December 31, 2020, 2019 and 2018, and the notes to the consolidated financial statements including a summary of significant accounting policies (collectively the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2020, 2019 and 2018 in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”) and auditing standards generally accepted in the United States of America (“U.S. GAAS”). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises:

Management’s Discussion & Analysis
The information, other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

We obtained Management’s Discussion & Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly US, LLP

E-31

==> picture [146 x 39] intentionally omitted <==

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian GAAS and U.S. GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian GAAS and U.S. GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.

BAKER TILLY US, LLP

==> picture [140 x 29] intentionally omitted <==

Irvine, California April 14, 2021

E-32

LOANME, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31, 2020 and 2019 (Expressed in United States Dollars)

NOTES 2020 ASSETS Cash and cash equivalents 2 $ 9,845,375 Consumer and business loans receivable, at fair value 5 283,236,282 Accrued interest receivable 14,337,907 Bonds and subordinated certificates in securitized trusts 6 24,576,770 Prepaid expenses and other assets 1,858,661 Property and equipment, net 7 364,915 Intangible assets, net 8 6,032,614 Right-of-use assets, net 19 6,510,212 Total assets $ 346,762,736 LIABILITIES AND SHAREHOLDER’S EQUITY Notes payable 9 $ 270,767,072 Accounts payable and accrued liabilities 6,152,861 Accrued interest payable 9 209,152 Current tax payable 219,639 Advance deposits 2,10 8,887,500 Lease liabilities 19 6,942,358 Deferred income taxes, net 11 14,732,120 Total liabilities 307,910,702 SHAREHOLDER’S EQUITY Common stock, $0.001 par value, 55,555,556 shares authorized, 50,000,000 shares issued and outstanding, respectively 50,000 Contributed surplus 1,18 698,148 Accumulated other comprehensive income 106,612,081 Accumulated deficit (68,508,195) Total shareholder’s equity 38,852,034 Total liabilities and shareholder’s equity $ 346,762,736	2019
	$ 5,249,586 395,374,335 30,085,693 32,667,030 2,782,050 252,003 4,805,821 517,871
	$ 471,734,389
	$ 414,515,104 9,857,606 1,026,302 – – 537,680 13,072,815
	439,009,507
	50,000 450,000 119,867,036 (87,642,154)
	32,724,882
	$ 471,734,389

On behalf of the Board:

Jonathan Williams

Jonathan Williams Director

The accompanying notes are an integral part of these consolidated financial statements. E-33

Page 3

LOANME, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

NOTES REVENUES Interest income Interest expense Net interest income Gain on sale of consumer and business loans Total revenues EXPENSES Salaries, wages and benefits 18,20 Provision for loan losses 5 General and administrative 16,20 Advertising and promotion Loan servicing Depreciation and amortization 7,8,19 Impairment of bonds and subordinated certificates in securitized trusts 6 Other 12 Total operating expenses OPERATING INCOME (LOSS) FINANCE COSTS Interest expense on lease liabilities 19 INCOME (LOSS) BEFORE INCOME TAXES INCOME TAX EXPENSE (BENEFIT) 11 NET INCOME (LOSS) BASIC EARNINGS (LOSS) PER SHARE 2 DILUTED EARNINGS (LOSS) PER SHARE 2 Net income (loss) Other comprehensive income: Unrealized gains on consumer and business loans receivable at fair value through other comprehensive income, net of tax 5 Allowance for credit losses recognized in net income, net of tax 5 COMPREHENSIVE INCOME	2020 $ 212,447,633 43,024,999 169,422,634 13,229,038 182,651,672 9,746,167 107,586,623 8,808,216 5,697,687 14,600,993 1,890,163 8,108,466 – 156,438,315 26,213,357 180,000 26,033,357 6,899,398 $ 19,133,959 $ 0.38 $ 0.38 $ 19,133,959 7,079,815 (20,334,770) $ 5,879,004	2019 $ 299,715,108 52,411,217 247,303,891 27,560,090 274,863,981 19,728,433 163,494,444 13,160,219 30,830,668 18,695,963 1,008,196 3,279,620 – 250,197,543 24,666,438 48,164 24,618,274 6,911,898 $ 17,706,376 $ 0.35 $ 0.35 $ 17,706,376 4,875,655 (8,740,302) $ 13,841,729	2018
			$ 247,870,445 50,183,846
			197,686,599 6,821,093
			204,507,692
			11,663,611 147,165,453 19,124,329 22,995,535 20,491,759 8,318 – 6,150,000
			227,599,005
			(23,091,313)
			–
			(23,091,313) (6,394,517)
			$ (16,696,796)
			$ (0.33)
			$ (0.33)
			$ (16,696,796) 7,375,627 9,703,790
			$ 382,621

The accompanying notes are an integral part of these consolidated financial statements. E-34

Page 4

LOANME, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

Common Stock	Common Stock	Contributed Surplus	Accumulated Deficit	Accumulated Other Comprehensive Income
Shares	Amount
50,000,000 – –	$ 50,000 – –	$ 450,000 – –	$ (88,651,734) – (16,696,796)	$ 106,652,266 17,079,417 –
–	–	–	(16,696,796)	17,079,417
50,000,000 – –	50,000 – –	450,000 – –	(105,348,530) – 17,706,376	123,731,683 (3,864,647) –
–	–	–	17,706,376	(3,864,647)
50,000,000 – – –	50,000 – – –	450,000 248,148 – –	(87,642,154) – – 19,133,959	119,867,036 – (13,254,955) –
–	–	–	19,133,959	(13,254,955)
50,000,000	$ 50,000	$ 698,148	$ (68,508,195)	$ 106,612,081

The accompanying notes are an integral part of these consolidated financial statements. E-35

Page 5

LOANME, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

Notes	2020	2019	2018
7 7 6 18	$ 19,133,959 723,867 1,166,296 (2,917,172) 8,108,466 107,586,624 (62,059,348) 97,947,028 (4,816,607) 219,639 6,687,456 180,000 248,148 (31,929,052) 923,389 (3,704,745) (817,150) 8,887,500	$ 17,706,376 79,273 928,923 (8,408,186) 3,279,620 163,494,444 (348,403,586) 187,691,014 – – 6,885,780 48,164 – (56,074,819) (912,176) 3,137,514 (43,307) –	$ (16,696,796) 8,318 – (10,787,315) – 147,165,455 (286,286,955) 188,381,853 – – (6,448,803) – – (42,909,731) 3,302,870 1,705,694 (10,220,113) –
	145,568,298	(30,590,966)	(32,785,523)
	(183,915) (1,879,657) 956,447	(273,644) (3,957,863) 659,861	– – 886,151
	(1,107,125)	(3,571,646)	886,151
	39,151,876 (182,899,908) 4,816,607 (933,959)	226,389,020 (199,745,833) – (957,278)	112,907,060 (100,751,232) – –
	(139,865,384)	25,685,909	12,155,828
	4,595,789 5,249,586	(8,476,703) 13,726,289	(19,743,544) 33,469,833
	$ 9,845,375	$ 5,249,586	$13,726,289

The accompanying notes are an integral part of these consolidated financial statements. E-36

Page 6

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

1. NATURE OF BUSINESS

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The policies applied in these consolidated financial statements were based on IFRS issued and outstanding as of December 31, 2020.

On April 14, 2021, the board of directors reviewed the consolidated financial statements and authorized them for issuance.

The Company presents its consolidated statement of financial position on a non-classified basis in order of liquidity.

Consolidation

The consolidated financial statements include the accounts of LoanMe and all entities that it controls. LoanMe controls an entity: i) when it has the power to direct the activities of the entity that have the most significant impact on the entity’s risks and/or returns; ii) where it is exposed to significant risks and/or returns arising from the entity; and iii) where it is able to use its power to affect the risks and/or returns to which it is exposed. This includes all wholly owned subsidiaries where LoanMe has control and ownership of all majority of voting rights. The Company’s subsidiaries are wholly owned and consist of the following: LoanMe Funding LLC, LM Retention Holdings LLC, LM BP Holdings LLC, InsightsLogic LLC, LM 2014 BP III SPE LLC, and LM 2020 CM I SPE LLC.

All intra-group transactions and balances were eliminated upon consolidation.

Operating Segment

All LoanMe revenue is earned through the United States operations. The consumer and small business loan production share similar products, services, and processes. Therefore, the Company aggregates the results and operates under one reportable segment.

Presentation Currency

The consolidated financial statements are presented in United States (“US”) dollars, which is the functional currency of LoanMe and its subsidiaries. The functional currency is the currency of the primary economic environment in which a reporting entity operates and is normally the currency in which the entity generates and expends cash.

Page 7

E-37

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments

The Company follows IFRS 9, Financial Instruments . Financial assets and financial liabilities are recognized in the Company’s consolidated statements of financial position when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs capitalized are then amortized over the expected life of the instrument using the effective interest rate method.

Classification and Measurement

A debt instrument that meets the following two conditions must be measured at amortized cost unless the asset is designated at Fair Value Through Profit or Loss (“FVTPL”) under the fair value option:

Business model test: The financial asset is held within a business model whose objective is to hold financial assets to collect their contractual cash flows (rather than to sell the assets prior to their contractual maturity to realize changes in fair value).
Cash flow characteristics test: The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument that meets the cash flow characteristics test and is not designated at FVTPL under the fair value option must be measured at Fair Value Through Other Comprehensive Income (“FVTOCI”) if it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and sell financial assets.

The Company’s consumer and business loans receivable met the cash flow characteristics test and are managed on a “hold to collect and for sale” basis. Therefore, they are initially measured at fair value plus transaction costs. These financial assets are carried at FVTOCI and unrealized gains or losses resulting from changes in fair value are recognized in Other Comprehensive Income (“OCI”). When these assets are derecognized, the gains or losses previously recognized in OCI are reclassified to profit or loss.

Bonds and subordinated certificates in securitized trusts met the cash flow characteristics test, are held to maturity for investment purposes and are managed on a “hold to collect” basis. Therefore, they are carried at amortized cost. Interest income on these securities is recognized using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to the carrying amount. When calculating the effective interest rate, the Company estimates future cash flows considering all contractual terms of the financial asset. Bonds and subordinated certificates in securitized trusts may be subject to impairment if future discounted cash flows expected for these securities are less than the carrying amounts.

Page 8

E-38

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments (continued)

Derecognition of Financial Assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers control of the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On derecognition of the Company’s loans receivable classified at FVTOCI, the cumulative gain or loss previously accumulated in OCI is reclassified to profit or loss.

Impairment of Financial Assets

The Company estimates expected credit losses on loans receivable and bonds and subordinated certificates in securitized trusts. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Company has adopted a three-stage approach to estimating a provision for expected credit losses (“ECL”) to all financial assets, which includes primarily loans receivable and bonds and subordinated certificates in securitized trusts. The amount of the ECL is updated at each reporting period to reflect changes in credit risk since initial recognition of each financial instrument. Under this model, credit losses are provided for, at each reporting date, based on when they are expected to transpire in future years irrespective of whether a loss has been incurred. Stage 1 consists of performing financial instruments that have not had a significant increase in credit risk since initial recognition. Under performing financial instruments that have experienced a significant increase in credit risk since initial recognition, including modifications, are classified as Stage 2, and financial instruments considered to be credit-impaired are classified as Stage 3. The provision for expected credit losses on both Stage 2 and Stage 3 is measured as lifetime ECLs. The provision for expected credit losses on Stage 1 financial instruments is measured at an amount equal to 12-month of ECLs, representing the portion of lifetime ECLs expected to result from default events possible within 12 months of the reporting date.

For other receivables including trade receivables and lease receivables or contract assets that do not have a significant financing component, the Company applies a simplified approach in calculating ECLs recognizing a loss allowance at an amount equal to lifetime ECLs at each reporting date.

Page 9

E-39

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments (continued)

Impairment of Financial Assets (continued)

a) Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. To the extent needed, forward looking information considered includes the future prospects of the industries in which the Company’s debtors operate, as well as consideration of various external sources of actual and forecast economic information that relate to the Company’s core operations such as interest rates and credit availability. In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

an actual or expected significant deterioration in the performance of the financial instruments such as delinquencies;
actual and expected significant deterioration in the debtor’s capacity to meet its contractual cash flow obligations to repay the instrument;
significant increases in credit risk on other financial instruments of the same debtor; and
existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

As the Company issues unsecured loans to high credit risk individuals and small business customers, the Company presumes that the credit risk on a financial asset has increased significantly since initial recognition when a borrower misses the first contractual payment due.

Despite the foregoing, the Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:

the financial instrument has a low risk of default;
the debtor has a strong capacity to meet its contractual cash flow obligations in the near term; and
adverse changes in economic and business conditions in the longer term do not reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Company considers a financial asset to have low credit risk when the asset is performing. Performing means that the counterparty is complying with the instrument contractual terms, and/or has a strong financial position and there are no past due amounts.

The Company regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

Page 10

E-40

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments (continued)

The Company cannot guarantee that delinquency and loss levels will correspond with the historical levels experienced and there is a risk that delinquency and loss rates could increase significantly.

b) Definition of default

The Company considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable:

when there is a breach of the contractual terms by the debtor; or
information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Company, in full.

Irrespective of the above analysis, the Company considers that default has occurred when a financial asset is more than 90 days past due unless the Company has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

c) Modified loans

In cases where a borrower experiences financial difficulty, the Company may grant certain concessionary modifications to the terms and conditions of a loan. Modifications may include payment deferrals, extension of amortization periods, rate reductions and other modifications intended to minimize the economic loss. The Company has policies in place to determine the appropriate remediation strategy based on the individual borrower. If the Company determines that a modification results in the expiry of cash flows, the original asset is derecognized while a new asset is recognized based on the new contractual terms. Significant increase in credit risk is assessed relative to the risk of default on the new financial instrument at the date of derecognition. A gain or loss is assessed at the date of modification or derecognition equal to the difference between the fair value of the cash flows under the original and modified terms. If the Company determines that a modification does not result in derecognition, significant increase in credit risk is assessed based on the risk of default at initial recognition of the original asset. Expected cash flows arising from the modified contractual terms are considered when calculating the ECL for the modified asset. For loans that were modified while having lifetime ECLs, the loans can revert to having 12-month ECLs after a period of performance and improvement in the borrower’s financial condition.

d) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is creditimpaired includes observable data about the following events:

significant financial difficulty of the borrower;
a breach of contract, such as a default or past due event (see (ii) above);
it is becoming probable that the borrower will enter bankruptcy or other financial reorganization; or
the disappearance of an active market for that financial asset because of financial difficulties.

e) Write-off policy

Loans receivable that are delinquent 120 days or more are written off against the allowance for expected credit losses. If a write-off is later recovered, the recovery is credited to bad debt expense.

Page 11

E-41

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments (continued)

f) Measurement and recognition of expected credit losses

ECLs are measured as the expected value of cash shortfalls (i.e., actual cash flows are less than contracted cash flows) expected to result from defaults over the relative time horizon, calculated on collective basis and using a probability-weighted approach that reflects reasonable and supportable information about historical loss rates, post-charge off recoveries, current conditions and forward indicators. Loans are grouped according to product type, customer tenure and aging for the purpose of assessing ECLs. Historical loss rates and probability weights are re-assessed on an on-going basis and subject to management review.

The key inputs in the measurement of ECL provision include:

The probability of default is an estimate of the likelihood of default over a given time horizon;
The exposure at default is an estimate of the exposure at a future default date;
The loss given default is an estimate of the loss arising at each Stage where a default occurs
Forward indicators related to credit and economic information.

The Company recognizes an impairment loss in profit or loss for all loans receivable measured at FVTOCI, by measuring the change in required allowance for loan losses between reporting periods. The Company records a provision equal to the change in the allowance at each reporting date with a corresponding increase or decrease to OCI. The Company does not reduce the gross carrying amount of loans receivable in the statement of financial position.

The Company evaluates expected credit losses on its investments in bonds and subordinated certificates and recognizes an impairment loss in profit or loss when the impact of expected credit losses reduces the investments’ fair value below their carrying amounts. The allowance for credit losses in bonds and subordinated certificates offsets the gross carrying amount of the investments in the statement of financial position.

Financial Liabilities

Financial liabilities are initially recognized at fair value. The fair value at initial recognition includes the value of proceeds received net of directly attributable transaction costs, which are amortized through the income statement over the life of the financial liability, using the effective interest rate method. The Company’s financial liabilities include notes payable, advance deposits, accrued interest payable, accounts payable and accrued liabilities.

After initial recognition, the Company’s interest-bearing debt is subsequently measured at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any fees or costs related to the interest-bearing debt. Interest expense and amortization of deferred financing charges are included in interest expense.

Non-interest-bearing financial liabilities, such as accounts payable, advance deposits and accrued liabilities, are carried at the amount owed.

A financial liability is derecognized when the obligation under the liability is settled, discharged, cancelled or expired. Any gains or losses are recognized in net income when liabilities are derecognized.

Page 12

E-42

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with original maturities of three months or less to be cash equivalents.

The Company maintains bank accounts to collect and remit funds for its lenders under the terms of the various loan agreements. Cash balances related to such accounts are not available for general corporate purposes and were $839,089 and $2,345,688 at December 31, 2020 and 2019, respectively.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. Major renewals and improvements are capitalized, while replacements, maintenance and repairs, which do not significantly improve or extend the useful life of the asset are expensed when incurred. Depreciation of property and equipment is computed using the straight–line method over the estimated useful lives of the assets, which range from three to five years.

Intangible Assets – Internally Developed Software

Intangible assets include costs for internally developed software. Development costs are capitalized until the software is placed into service and when the Company can demonstrate:

The technical feasibility of completing the intangible asset so that it will be available for use or sale;
Its intention to complete and its ability to use or sell the asset;
How the asset will generate future economic benefits;
The availability of resources to complete the asset; and
The ability to measure reliably the expenditure during development.

Intangible Assets – Servicing Assets

If the Company transfers a financial asset in a transfer that qualifies for derecognition and retains the right to service the financial asset for a fee, it will recognize either a servicing asset or a servicing liability for that servicing contract.

In 2019, the Company recognized a servicing asset related to the 2019 securitization. The servicing asset is recognized initially at an amount determined, on the basis of an allocation of the carrying amount of the transferred loans receivable (which includes the servicing asset), based on the relative fair values of the transferred loans receivables and the servicing asset on the date of the transfer. Subsequently, the servicing asset meets the definition of an intangible asset and is measured in accordance with IAS 38, “ Intangible Assets ”. The asset is amortized using straight line method over the expected term of the 2019 securitization (Note 8). The servicing asset may be subject to impairment if its fair value is estimated to be less than its carrying amount.

Impairment of Non-financial Assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating units (“CGU”) to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGU, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Page 13

E-43

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition

Interest Income Recognition

Interest on financial assets including loans, bonds and subordinated certificates in securitized trusts, is recognized in interest income using the effective interest method. Fees that relate to activities such as originating, restructuring or renegotiating loans are deferred and recognized as interest income over the expected term of such instruments using the effective interest method.

The effective interest rate is applied to the gross carrying amount of loans classified Stage 1 and 2. When a financial asset is credit-impaired (Stage 3), interest income is calculated by applying the effective interest rate to the net carrying amount of the asset, which is the gross carrying amount less the related ECL.

Accrual of interest income is suspended when a loan is contractually delinquent for 120 days or more.

Gain on Sale of Loans and Advance Deposits

Gain on sale of loans is recognized when loan transfers to third parties qualify for derecognition and proceeds received exceed the carrying amounts and transaction costs. Advances received prior to the sale of loans are classified as advance deposits. Deposits are derecognized when the loans are delivered and are included in gain on sale of consumer and business loans in the consolidated statements of income (loss) and comprehensive income. At December 31, 2020 and 2019, advance deposits totaled $8,887,500 and $0, respectively.

Leases

The Company adopted IFRS 16, Leases , effective January 1, 2019. The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

As a lessee, the Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

a) Right-of-use Assets

The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized at the inception of the lease, initial direct costs incurred, and lease payments made at or before the lease commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

Page 14

E-44

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (continued)

b) Lease Liabilities

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term, which may include extension options when they are reasonably certain to be exercised. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, plus variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs. The Company reviewed all leases with extension option and believes that it is reasonably certain that the options will not be exercised.

In determining a lease component, the Company separates the non-lease components from the lease component, using its standalone selling price, if applicable.

In calculating the present value of lease payments, the Company uses the incremental borrowing rate on leases at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

c) Short-Term Leases and Leases of Low Value Assets

The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognized as expense on a straight-line basis over the lease term.

During the years ended December 31, 2020 and 2019, the Company had no short-term leases or leases of low value assets.

Provisions

Provisions are recognized when the Company has a present obligation, legal or constructive, as a result of a past event, and the costs to settle the obligation are both probable and reliably measurable. Where there is expected to be a reimbursement of some or all of a provision, for example under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted. Where discounting is used, the increase in the provision as a result of the passage of time is recognized as a finance cost. As of December 31, 2020, and 2019, no provisions were recognized.

Page 15

E-45

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Taxes

a) Current Income Taxes

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those enacted or substantively enacted by the end of the reporting period.

Current income tax assets and liabilities are only offset if a legally enforceable right exists to offset the amounts and the Company intends to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current income tax relating to items recognized directly in equity is recognized in equity and not in net income.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

b) Deferred Income Taxes

Deferred income taxes are provided for using the liability method on temporary differences at the reporting date between the tax basis of assets and liabilities and their carrying amount for financial reporting purposes. Deductible income tax liabilities are recognized for all taxable temporary differences. Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable income will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that future taxable income will be available to allow the deferred income tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized, or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and liabilities are offset if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Page 16

E-46

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-based Compensation

The Company has stock options granted to directors, officers and employees, which are currently accounted for as equity-settled awards. The cost of such equity-settled transactions is measured by reference to the fair value determined using the Black-Scholes option pricing model. The inputs into this model are based on management’s judgments and estimates. Measurement inputs include the Company’s share price on the measurement date, the exercise price of the option, the expected volatility, the expected life and the risk-free rate of return. The cost of equity-settled transactions is charged to income, with a corresponding increase in contributed surplus over the vesting period. The cumulative expense recognized for equity-settled transactions at each reporting date reflects the extent to which the vesting period has elapsed and the Company’s best estimate of the number of equity instruments that will ultimately vest. The expense for a period is recognized as stock-based compensation expense and is included in salaries, wages and benefits in the consolidated statements of income (loss) and comprehensive income. No expense has been recognized for awards that do not ultimately vest.

Basic Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income or loss, after tax, applicable to common shareholders by the weighted average number of common shares outstanding during the period, which reflects the stock split that took place on December 12, 2019 in all periods presented.

Net income (loss) Weighted average number of common shares outstanding Basic Earnings (Loss) per Share	December 31, 2020	December 31, 2019	December 31, 2018
	$ 19,133,959 50,000,000	$ 17,706,376 50,000,000	$ (16,696,796) 50,000,000
	$ 0.38	$ 0.35	$ (0.33)

Diluted Earnings (Loss) per Share

Diluted earnings (loss) per share are computed in a similar way to basic earnings per share except that the weighted average shares outstanding are increased to include additional shares assuming the exercise of share options, if dilutive. Diluted earnings per share is calculated assuming that the cash that would be received on the exercise of options is applied to purchase shares at the average price during the period and that the difference between the shares issued upon exercise of the options and the number of shares obtainable under this computation, on a weighted average basis, is added to the number of shares outstanding. For the years ended December 31, 2020 and 2019, stock options were considered antidilutive and therefore excluded in the calculation of the diluted earnings (loss) per share.

Page 17

E-47

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the consolidated financial statements in conformity with IFRS requires management to make accounting judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

The following are the critical judgments, apart from those involving estimations that have been made in the process of applying the Company’s accounting policies, which have the most significant effect on the amounts recognized in the consolidated financial statements.

a) Provision for Expected Credit Losses

The ECL method is applied in determining the allowance for credit losses on consumer and business loans receivable, and bonds and subordinated certificates in securitized trusts. The key inputs in the measurement of ECL provision, all of which are subject to accounting judgments, estimates and assumptions are discussed in Notes 2, 5 and 6.

b) Impairment on Nonfinancial Assets

Indicators of impairment are based on management’s judgment. If an indication of impairment exists, or when annual testing for an asset is required, the Company estimates the asset’s recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the recoverable amount, management estimates the asset’s value in use. Value in use is based on the estimated future cash flows of the asset discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The impairment test calculations are based on estimated cash flow projections which are prepared annually for each individual asset.

c) Lease Liabilities

Some of the Company’s lease contracts for premises include extension options. Management exercises significant judgment in determining whether these extension options are reasonably certain to be exercised. At December 31, 2020, no extension option for lease contracts for premises is expected to be exercised.

The areas where estimates and assumptions have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:

a) Fair Value Measurement of Consumer and Business Loans Receivable

Consumer and business loans receivable are measured at fair value, which is re-measured at each reporting period. Changes in fair value are recorded in OCI based on the Company’s business model. With the assistance of a third-party valuation firm, the Company estimates the fair value of its consumer and business loans receivable by estimating the amount and time of cash flows to be received using assumptions about such cash flows that management believes market participants would use in evaluating the loans (See Notes 5 and 10).

Page 18

E-48

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (continued)

b) Interest Receivable and Interest Income

Consumer and business loans receivable include accrued interest earned from loans that is expected to be received in future periods. Interest receivable from consumer and business loans is determined based on the amounts the Company believes will be collected in future periods. The judgment used in respect of interest income is the methodology used to calculate the effective interest rate. In order to determine the effective interest rate applicable to loans an estimate must be made of the expected life of each loan and hence the cash flows relating thereto.

c) Taxation Amounts

Tax provisions, including current and deferred income tax assets and liabilities, may require estimates and interpretations of federal and state income tax rules and regulations and judgments as to their interpretation and application to the Company’s specific situation. Therefore, it is possible that the carrying amount of the tax assets and liabilities could change in the future and that changes to these amounts could have a material effect on the Company’s consolidated financial statements.

d) Fair Value of Share-based Payments

The Company uses the Black-Scholes option pricing model to determine the fair value of equity-settled stock options. Management exercises judgment in determining certain inputs to this model including the expected life of the options, expected volatility and forfeiture rates, and expected dividend yield. Variation in actual results for any of these inputs will result in a different fair value of the equity-settled stock options as compared to the original estimate.

4. NEW ACCOUNTING STANDARDS

(A) ADOPTION OF NEW ACCOUNTING STANDARDS

Amendments to IFRS 3: Definition of a Business

The amendments to IFRS 3 clarified that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarified that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the December 31, 2020 consolidated financial statements of the Company, as no business or asset acquisitions took place.

Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform – Phase II

On August 27, 2020, The IASB published “Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) related to the modification of financial assets, financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure requirements applying IFRS 7 to accompany the amendments regarding modifications and hedge accounting. These amendments are effective for annual periods beginning on or after 1 January 2021, with earlier application permitted. The Company has not early adopted this amendment.

Page 19

E-49

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

4. NEW ACCOUNTING STANDARDS (continued)

(A) ADOPTION OF NEW ACCOUNTING STANDARDS (continued)

Amendments to IAS 1 and IAS 8: Definition of Material

The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.”

The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the December 31, 2020 consolidated financial statements of, nor is there expected to be any future impact to the Company.

Conceptual Framework for Financial Reporting

The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the International Accounting Standards Board in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards.

The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These amendments had no impact on the December 31, 2020 consolidated financial statements of the Company.

(B) STANDARDS ISSUED BUT NOT YET EFFECTIVE

Amendments to IFRS 16 COVID-19 Related Rent Concessions

The amendments apply to annual reporting periods beginning on or after June 1, 2020. Earlier application is permitted. The Company has not early adopted this amendment.

Page 20

E-50

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

5. LOANS RECEIVABLE

Consumer and Business Loans

Loans receivable measured at fair value at December 31, 2020 and 2019 are as follows:

Unsecured consumer and business loans Capitalized transaction costs net of origination fees Loans receivable, at fair value	2020 $ 285,158,455 (1,922,173) $ 283,236,282	2019
		$ 403,553,480 (8,179,145)
		$ 395,374,335

Loans receivable measured at fair value at December 31, 2020 and 2019, based on loan types are as follows:

Unsecured consumer non-prime loans Unsecured business loans Unsecured consumer prime loans Loans receivable, at fair value	2020 $ 162,055,489 109,504,924 11,675,869 $ 283,236,282	2019
		$ 261,027,894 118,391,166 15,955,275
		$ 395,374,335

The components of loans receivable at December 31, 2020 and 2019 are as follows:

Unsecured consumer and business loans principal balance Fair value adjustment Capitalized transaction costs, net of origination fees Loans receivable, at fair value	2020 $ 203,992,441 81,166,014 (1,922,173) $283,236,282	2019
		$ 332,356,931 71,196,549 (8,179,145)
		$ 395,374,335

Expected Credit Losses (“ECL”)

Page 21

E-51

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

5. LOANS RECEIVABLE (continued)

Expected Credit Losses (“ECL”) (continued)

As of December 31, 2020

As of December	31, 2020
Credit Risk Category	Median FICO Days Past due	Stage 1	Stage 2	Stage 3	Total
Satisfactory Lower risk Lower risk Moderate risk Higher risk Credit-impaired	608 Not past due 596 Not past due 595 1-30 days 594 31-60 days 595 61-90 days 590 91+ days Loans receivable, at fair value Allowance for loan losses – OCI	$ 226,559,156 – – – – –	$ – 10,568,476 24,843,487 11,386,774 7,345,325 –	$ – – – – – 2,533,064	$ 226,559,156 10,568,476 24,843,487 11,386,774 7,345,325 2,533,064
		$226,559,156	$ 54,144,062	$ 2,533,064	$283,236,282
		$23,227,320	$29,218,029	$ 1,697,746	$54,143,094

As of December 31, 2019

As of December 31, 2019
Credit Risk Category Median FICO Days Past due Satisfactory 604 Not past due Lower risk 591 Not past due Lower risk 589 1-30 days Moderate risk 584 31-60 days Higher risk 589 61-90 days Credit-impaired 585 91+ days Loans receivable, at fair value Allowance for loan losses – OCI	Stage 1	Stage 2	Stage 3 $ – – – – – 219,328 $ 219,328 $ 173,547	Total
	$ 335,604,728 – – – – –	$ – 5,411,900 25,604,542 15,705,227 12,828,610 –		$ 335,604,728 5,411,900 25,604,542 15,705,227 12,828,610 219,328
	$ 335,604,728	$ 59,550,279		$ 395,374,335
	$42,724,427	$39,480,014		$82,377,988

The following tables present a reconciliation from the opening to the closing balance of the allowance for expected credit losses on consumer and business loans receivable:

As of December 31, 2020

As of December 31, 2020
Allowance for loan losses – OCI, beginning of year Transfer to stage 1 Transfer to stage 2 Transfer to stage 3 Net remeasurement of allowance Originations and acquisitions Principal payments and other adjustments Write-offs Allowance for loan losses – OCI, end of year	Stage 1	Stage 2	Stage 3	Total
	$ 42,724,427 923,665 (3,309,684) – (62,998,407) 59,037,272 (13,149,953) –	$ 39,480,014 (923,665) 3,309,684 (5,611,595) (3,639,853) – (3,396,556) –	$ 173,547 – – 5,611,595 131,754,159 – (20,038) (135,821,518)	$ 82,377,988 – – – 65,115,899 59,037,272 (16,566,547) (135,821,518)
	$ 23,227,320	$ 29,218,029	$ 1,697,745	$ 54,143,094

Page 22

E-52

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

5. LOANS RECEIVABLE (continued)

Expected Credit Losses (“ECL”) (continued)

As of December 31, 2019

Allowance for loan losses – OCI, beginning of year Transfer to stage 1 Transfer to stage 2 Transfer to stage 3 Net remeasurement of allowance Originations and acquisitions Principal payments and other adjustments Write-offs Allowance for loan losses – OCI, end of year	Stage 1	Stage 2	Stage 3	Total
	$ 60,725,342 706,619 (3,516,810) – (152,953,476) 155,502,103 (17,739,352) –	$ 33,685,076 (706,619) 3,516,810 (3,293,897) 8,859,630 – (2,580,985) –	$ 103,507 – – 3,293,897 172,432,127 – (25,601) (175,630,383)	$ 94,513,925 – – – 28,338,281 155,502,103 (20,345,938) (175,630,383)
	$ 42,724,426	$ 39,480,015	$ 173,547	$ 82,377,988

The overall changes in the allowance for credit losses of consumer and business loans receivable are summarized below:

Balance, beginning of year Net amounts written-off against allowance Provision for expected credit losses: Increase due to lending and collection activities Amounts recovered Changes in credit risk parameters Balance, end of year	2020 $ 82,377,988 (135,821,517) 48,775,928 (6,305,204) 65,115,899 107,586,623 $ 54,143,094	2019 $ 94,513,925 (175,630,383) 145,201,442 (10,045,277) 28,338,281 163,494,446 $ 82,377,988

Sensitivity

Management has analyzed the impact on the fair value of the Company’s consumer and business loans associated with unobservable inputs. A 10% adverse change in expected defaults at December 31, 2020 would have an estimated negative effect of $1,433,872 on the fair value of consumer and business loans receivable and related unrealized gains (losses) reflected in OCI. A 20% adverse change in expected defaults at December 31, 2020 would have an estimated negative effect of $2,867,743 on the fair value of consumer and business loans receivable and related unrealized gains (losses) reflected in OCI. A 10% adverse change in the discount rate at December 31, 2020 would have an estimated negative effect of $7,917,877 on the fair value of consumer and business loans receivable and related unrealized gains (losses) reflected in OCI. A 20% adverse change in the discount rate would have an estimated negative effect of $15,378,644 on the fair value of consumer and business loans receivable and related unrealized gains (losses) reflected in OCI.

The Company cannot guarantee that delinquency and loss levels will correspond with the historical levels experienced and there is a risk that delinquency and loss rates could increase significantly.

Page 23

E-53

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

6. BONDS AND SUBORDINATED CERTIFICATES IN SECURITIZED TRUSTS

At December 31, 2020 2018 Securitization Bonds Subordinated certificates 2019 Securitization Subordinated certificates At December 31, 2019 2018 Securitization Bonds Subordinated certificates 2019 Securitization Subordinated certificates	Carrying Amount	Discount Rate	Collateral Fair Value
	$ 3,942,089 $ 5,329,641 $ 15,305,040 Carrying Amount	4.75% – 5% 10% 15% Discount Rate	Prime Loans $4,386,483 $6,087,162 Business Loans $15,305,040 Collateral Fair Value
	$ 4,887,894 $ 4,834,493 $ 22,944,643	4.75% – 5% 10% 25%	Prime Loans $4,887,894 $5,201,473 Business Loans $24,290,758

Page 24

E-54

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

6. BONDS AND SUBORDINATED CERTIFICATES IN SECURITIZED TRUSTS (continued)

(a) Sensitivity

Management has analyzed the impact of unobservable inputs on the initial value of the Company’s bonds and subordinated certificates from securitized trusts.

For the 2018 Securitization, a 10% adverse change in expected defaults at December 31, 2020 would have an estimated negative effect of $241,118 in the fair value of the bonds and subordinated certificates in securitized trusts. A 20% adverse change in expected defaults at December 31, 2020 would have an estimated negative effect of $482,236 in the fair value of the bonds and subordinated certificates in securitized trusts. In addition, a 10% adverse change in the discount rate at December 31, 2020 would have an estimated negative effect of $332,434 on the fair value of the bonds and subordinated certificates in securitized trusts. A 20% adverse change in the discount rate at December 31, 2020 would have an estimated negative effect of $650,465 on the fair value of the bonds and subordinated certificates in securitized trusts.

For the 2019 Securitization, a 10% adverse change in expected defaults at December 31, 2020 would have an estimated negative effect of $1,396,072 in the fair value of the subordinated certificates in securitized trusts. A 20% adverse change in expected defaults at December 31, 2020 would have an estimated negative effect of $2,792,020 in the fair value of the subordinated certificates in securitized trusts. In addition, a 10% adverse change in the discount rate at December 31, 2020 would have an estimated negative effect of $589,658 on the fair value of the subordinated certificates in securitized trusts. A 20% adverse change in the discount rate at December 31, 2020 would have an estimated negative effect of $1,137,714 on the fair value of the subordinated certificates in securitized trusts.

(b) Expected Credit Losses

For the year ended December 31, 2020, the Company classified its subordinated certificates in the 2019 Securitization as Stage 2 since they have experienced significant credit deterioration, primarily as a result of loan modifications which decreased the contractual interest rates in the collateral loans thus reducing anticipated future cash flows to be collected. Consequently, an impairment of $8,108,466 was recorded for the year ended December 31, 2020. The same certificates were classified as Stage 1 for the year ended December 31, 2019, as they have not experienced significant credit deterioration since their issuance in October 2019.

For the years ended December 31, 2020 and 2019, respectively, the Company classified its subordinated certificates in the 2018 Securitization as Stage 2 since they have experienced significant credit deterioration from inception, primarily as a result of actual charge-offs exceeding anticipated amounts. This development led to the cancellation of the Class C bonds held by the Company. Consequently, an impairment of $3,279,620 was recorded for the year ended December 31, 2019.

Page 25

E-55

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

7. PROPERTY, EQUIPMENT, AND RIGHT-OF-USE ASSETS

Property, equipment, and right-of-use assets consisted of the following:

Property and Equipment	Right-of-use Assets (See Note 19)	Total
$ 17,252 273,644 – (38,893)	$ – 1,446,794 – (928,923)	$ 17,252 1,720,438 – (967,816)
$252,003 183,915 – (71,003)	$517,871 7,158,637 – (1,166,296)	$769,874 7,342,552 – (1,237,299)
$ 364,915	$ 6,510,212	$ 6,875,127
$ 252,003	$ 517,871	$ 769,874
$ 364,915	$ 6,510,212	$ 6,875,127

Depreciation expense of property and equipment for the years ended December 31, 2020, 2019 and 2018 totaled $71,003, $38,893, and $8,318, respectively.

8. INTANGIBLE ASSETS

Intangible assets consisted of internally developed software additions and loan servicing asset, as follows:

As of January 1, 2020 Cost Additions Amortization Net Book Value – December 31, 2020	Internally Developed Software	Servicing Asset	Total
	$ 3,957,863 1,879,657 (555,954) $ 5,281,566	$ 847,958 – (96,910) $ 751,048	$ 4,805,821 1,879,657 (652,864)
			$ 6,032,614

Page 26

E-56

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

8. INTANGIBLE ASSETS (continued)

As of January 1, 2019 Cost Additions Amortization Net Book Value – December 31, 2019	Internally Developed Software	Servicing Asset	Total
	$ – 3,957,863 –	$ – 888,338 (40,380)	$ – 4,846,201 (40,380)
	$ 3,957,863	$ 847,958	$ 4,805,821

Amortization expense for the year ended December 31, 2020 and 2019, totaled $652,863 and $40,380, respectively. There was no internally developed software nor servicing asset during 2018.

9. NOTES PAYABLE

Notes payable as of December 31, 2020 and 2019 are summarized as follows:

Secured BP SSL Trust (BasePoint) IHA, LLC Hudson Cove Newport II, LLC Melody Business Finance, LLC Chilmark Administrative, LLC Unsecured SBA EIDL Other notes payable	2020	2019
	$ 242,274,592 10,555,123 – – 10,987,008 500,000 6,450,349	$ 337,683,559 13,140,000 41,629,725 12,000,000 – – 10,061,820
	$ 270,767,072	$ 414,515,104

Accrued interest on notes payable as of December 31, 2020 and 2019 was $209,152 and $1,026,302, respectively. Total interest expense on notes payable for the years ended December 31, 2020, 2019 and 2018 was $43,024,999 and $52,411,217, and $50,183,846, respectively. The covenants included portfolio covenants, affirmative covenants, and financial covenants. The performance trigger included loan collections, first payment default, delinquency, and charge-off. The Company was in compliance with all covenants and performance triggers.

BP SLL Trust (BasePoint)

During 2014 and 2015, the Company entered into four credit facility agreements with borrowing capacity totaling $315,000,000 with BasePoint to fund consumer loans originated by the Company. Such credit facilities are secured by the related consumer loans, bear interest ranging from 13% to 14% per annum and require weekly payments of principal and interest as defined in the agreements. The unpaid principal balance due on such credit facilities totaled $204,410,592 and $299,819,559, on December 31, 2020 and 2019, respectively. The borrowing capacity matures at various dates through December 2022. In March 2020, the interest rates on these facilities were temporarily reduced to rates ranging from 10.55% to 10.88% through June 2020, which resulted in the reduction of $1,275,530 in interest expense. In July 2020, the interest rates reverted back to the contractual levels of 13% to 14%.

Page 27

E-57

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

9. NOTES PAYABLE (continued)

BP SLL Trust (BasePoint) (continued)

In April 2019, the Company entered into a separate note payable agreement totaling $37,864,000 with BasePoint. The note is secured by equity interests in the Company’s parent, bears interest 12.5% per annum and matures in April 2023. The unpaid principal balance due on the note totaled $37,864,000 and $37,864,000 on December 31, 2020 and 2019, respectively.

IHA, LLC (IHA)

In August 2019, the Company entered into a secured promissory note with IHA, LLC for $15,000,000 to fund consumer loans originated by the Company. Such note was secured by the related consumer loans with unpaid principal balance of $14,053,542. The note bore interest of 10% per annum and matured in August 2020. Upon maturity, the Company transferred the collateral loans to IHA subject to a repurchase agreement which distributes collections to IHA until the collateral loans’ balance is reduced to zero. Because the Company has the right to repurchase the collateral loans at par, the collateral loans were not derecognized and the IHA transaction was accounted for as a borrowing. The unpaid principal balance due to IHA totaled $10,155,123 and $13,140,000 at December 31, 2020 and 2019, respectively.

Hudson Cove Newport II, LLC (Hudson Cove)

The Company has various credit facility agreements with Hudson Cove to fund consumer loans originated by the Company with a maximum commitment not to exceed $160,000,000. Such credit facility agreements are secured by the related consumer loans, bear interest ranging from 10% to 16% per annum, require weekly payments of principal and interest as defined in the agreements, and mature at various dates through December 2022. The unpaid principal balance due to Hudson Cove totaled $0 and $41,629,725 at December 31, 2020 and 2019, respectively.

Melody Business Finance, LLC (Melody)

In June 2017, the Company entered into a credit facility agreement for $40,000,000 with Melody to fund consumer prime loans originated by the Company. Such credit facility is secured by the related consumer loans, bears interest at 9.67% per annum and requires weekly payments of principal and interest as defined in the agreement. The unpaid principal balance due to Melody totaled $12,000,000 at December 31, 2019. The credit facility matured in December 2020 and was paid off accordingly.

Chilmark Administrative, LLC

Other Notes Payable

The Company has other unsecured notes payable, bearing interest at rates ranging from 10% to 12.5%, and are generally due 12 months after issuance. The unpaid principal balance totaled $6,450,349 and $10,061,820 at December 31, 2020 and 2019, respectively.

$4,273,759 of the total unpaid principal balance is due to employees, borrowed at arm’s length terms. The notes bear interest at rates ranging from 10% to 12.5% and are generally due 12 months after issuance.

Page 28

E-58

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

9. NOTES PAYABLE (continued)

Maturities

Future estimated principal payments for notes payable approximate the following for the years ending December 31 (rounded):

2021 2022 2023 2024 2025	$ 37,388,000 33,213,000 129,504,000 70,184,000 478,000
	$ 270,767,000

10. FINANCIAL INSTRUMENTS

Recognition and Measurement of Financial Instruments

The Company classified its financial instruments as follows for the years ended December 31, 2020 and 2019:

Financial Instruments Cash and cash equivalents Consumer and business loans receivable Bonds and subordinated certificates in securitized trusts Accounts payable and accrued liabilities Advance deposits Notes payable	Measurement	2020	2019
	Amortized cost Fair value - OCI Amortized cost Amortized cost Amortized cost Amortized cost	$ 9,845,375 283,236,282 24,576,770 6,152,861 8,887,500 270,767,072	$ 5,249,586 395,374,335 32,667,030 9,857,606 – 414,515,104

Fair Value Measurement

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Page 29

E-59

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

10. FINANCIAL INSTRUMENTS (continued)

Recognition and Measurement of Financial Instruments (continued)

Bonds and subordinated certificates in securitized trusts discussed in Note 6 are initially recognized at fair value and subsequently accounted for at amortized cost and measured for impairment at each reporting period. At December 31, 2020 and 2019, the amortized cost carrying amount of bonds and subordinated certificates in securitized trusts totaled $24,576,770 and $32,667,030. Initial fair value measurements are based on the Company’s internal models used to compute the net present value of future expected cash flows, with observable market participant assumptions, where available. The Company’s assumptions include its expectations of inputs that other market participants would use in pricing these assets. These assumptions include judgments about the underlying collateral, estimated future credit losses, discount rates requirements and certain other factors which management expects market participants would require.

The hierarchy required the use of observable market data when available. The following table presents the Company’s financial instruments measured at FVTOCI and amortized cost by level at December 31, 2020 and 2019. There were no transfers between Level 1, Level 2, or Level 3 during the current or prior periods.

Total	Level 1	Level 2	Level 3
$ 283,236,282 9,845,375 24,576,770 6,152,861 8,887,500 270,767,072	$ – 9,845,375 – – – –	$ – – – 6,152,861 8,887,500 270,767,072	$ 283,236,282 – 24,576,770 – – –
Total	Level 1	Level 2	Level 3
$ 395,374,335 5,249,586 32,667,030 9,857,606 414,515,104	$ – 5,249,586 – – –	$ – – – 9,857,606 414,515,104	$395,374,335 – 32,667,030 – –

Page 30

E-60

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

10. FINANCIAL INSTRUMENTS (continued)

Recognition and Measurement of Financial Instruments (continued)

Financial Instrument Measured at FVTOCI	Valuation Technique	Unobservable Input	Range of Inputs 2020 Range of Inputs 2019 5% – 32% 5% – 32% 5.5% – 20% 5.5% – 20%
Consumer and business loans receivable	Discounted Cash Flows (“DCF”)	Expected defaults Discount rate

An increase in expected defaults would result in reduced fair value.
An increase in the discount rate would result in reduced fair value.

The quantitative impact of sensitivities of expected defaults and discount rates to the consumer and business loans receivable is included in Note 5.

Fair Value Measurement

The following table presents quantitative information about the valuation techniques and unobservable inputs applied to Level 3 fair value measurements reported at amortized cost as of December 31, 2020 and 2019:

Financial Instruments Measured at Amortized Cost	Valuation Technique	Unobservable Input	Range of Inputs 2020 Range of Inputs 2019 4.75% – 5% 4.75% – 5% 6% – 15% 10% – 25% 4% – 13% 4% – 13%
Bonds in securitized trusts Subordinated certificates in securitized trusts	DCF DCF	Discount rate Discount rate Expected defaults

An increase in expected defaults would result in reduced fair value.
An increase in the discount rate would result in reduced fair value.

The quantitative impact of sensitivities of expected defaults and discount rates to the consumer and business loans receivable is included in Note 5.

Page 31

E-61

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

11. INCOME TAXES

The Company’s income tax expense (benefit) was determined as follows for the years ended December 31, 2020, 2019 and 2018:

2020	2019	2018
28.23%	27.98%	27.98%
$ 7,588,593 73,169 (1,108,557) (291,496) 637,689	$ 6,889,079 8,498 – – 14,321	$ (6,461,781) 13,428 – – 53,836
$ 6,899,398	$ 6,911,898	$ (6,394,517)

The provision for (benefit from) income taxes is as follows for the years ended December 31, 2020, 2019, and 2018:

2020	2019	2018
$ – 274,677	$ – 8,000	$ – 8,000
274,677 6,624,721	8,000 6,903,898	8,000 (6,402,517)
$ 6,899,398	$ 6,911,898	$ (6,394,517)

$ (1,672,239) (26,642,535) (3,213,884) 15,211,888 1,584,650	$ (79,823) (23,530,889) (3,653,967) 14,893,449 (701,585)
$ (14,732,120)	$ (13,072,815)

Page 32

E-62

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

11. INCOME TAXES (continued)

Disclosure of income taxes for each component of other comprehensive income is as follows:

2020 Unrealized gain (losses) on loans receivable at fair value through other comprehensive income $ 2,902,823 Allowance for credit losses recognized in net income (7,971,258) Total current and deferred tax recognized in other comprehensive income $ (5,068,435)	2020	2019	2018
		$ 1,894,884 (3,396,072)	$ 2,865,823 3,770,439
	$ (5,068,435)	$ (1,501,188)	$ 6,636,262

The Company’s income tax returns may be subject to examination by federal and state taxing authorities. Because application of tax laws and regulations for many types of transactions is susceptible to varying interpretations, amounts reported in the accompanying consolidated financial statements could be changed later upon final determination by taxing authorities. Management believes that the Company has no uncertain income tax positions that could materially affect its consolidated financial statements at both the federal and state jurisdiction levels. The Company’s income tax returns remain open for examination generally for three years for federal income taxes, and four years for state income taxes.

As of December 31, 2020, the Company has federal and state tax net operating loss carryforwards approximating $99,616,388, which begin to expire in 2036. The related tax effected deferred tax asset approximates $15,211,880 and is included in the net deferred tax liabilities.

12. COMMITMENTS AND CONTINGENCIES

Legal

As a lender, the Company is subject to various claims and actions, which arise, in the ordinary course of business. At December 31, 2020, management, having consulted with its legal counsel, believes the ultimate resolution of any such claims and actions, both individually and in the aggregate, are not expected to have a material adverse effect upon the Company’s consolidated financial position or results of operations.

Agreements

The Company had an agreement with another entity pursuant to which it utilized a loan origination and servicing platform to manage its loan portfolio. The agreement obligated the Company to pay $250,000 per month. In February 2019, the parties terminated the agreement. The Company incurred and paid a total of $500,000 and $3,000,000 for use of the loan origination and servicing platform during the years ended December 31, 2019 and 2018. During 2018, the Company forgave and derecognized a $6,150,000 note receivable with the same entity, which is included in other expenses in the accompanying consolidated statements of income (loss) and comprehensive income.

13. CAPITAL RISK MANAGEMENT

Page 33

E-63

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

13. CAPITAL RISK MANAGEMENT (continued)

The Company monitors capital based on the financial covenants of its financing facilities.

For the years ended December 31, 2020, 2019 and 2018, the Company was in compliance with all its externally imposed financial covenants.

14. FINANCIAL RISK MANAGEMENT

Overview

Credit Risk

The Company cannot guarantee that delinquency and loss levels will correspond with the historical levels experienced and there is a risk that delinquency and loss rates could increase significantly.

Page 34

E-64

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

14. FINANCIAL RISK MANAGEMENT (continued)

Credit Risk (continued)

As of December 31, 2020, 2019 and 2018 the Company’s consumer loans receivable unpaid principal balances were approximately $204,670,416, $332,356,931 and $316,041,672, respectively. Net chargeoffs expressed as a percentage of the average loan portfolio were 33.34%, 38.28% and 31.83% for the years ended December 31, 2020, 2019 and 2018, respectively.

Liquidity Risk

The Company believes that cash and cash equivalents on hand and funds available from its lending arrangements will be sufficient in the near term to meet operational requirements and meet capital spending requirements. In addition, the incremental financing obtained in 2020, 2019 and 2018 will allow the Company to continue normal operations. In order for the Company to achieve the full growth opportunities available, however, additional sources of financing over and above the currently available notes payable will be required in the future. There is no certainty that these long-term sources of capital will be available or at terms favorable to the Company.

Substantially all liabilities are due within 12 months with the exception of notes payable. Facilities that have matured in 2021 were repaid as required.

In addition, since February 2020, the COVID 19 pandemic has caused substantial disruption to the U.S. and international economies and financial markets, including significant volatility, unprecedented unemployment, borrower defaults and declines in interest rates to record low levels. While the disruption is currently expected to be temporary, it presents material uncertainty due to the potential effects on personnel and business continuity or disruption, valuation of financial assets and liabilities and potential severe disruption to financial markets or deteriorations in credit and financing conditions.

Additionally, the second wave of the COVID-19 pandemic and the emergence of new variants have led to governments around the world to continue to enact measures to combat the spread of the COVID-19 virus, including, but not limited to, the implementation of travel bans, border closings, mandated closure of nonessential services, self-imposed quarantine periods and social and physical distancing policies, which have contributed to the material disruption to businesses globally, resulting in a sudden economic slowdown. The ever-changing and rapidly-evolving effects of COVID-19, the duration, extent and severity of which are currently unknown, on investors, businesses, the economy, society and the financial markets could, among other things, add volatility to the global stock markets, change interest rate environments, and increase delinquencies and defaults. Therefore, the COVID-19 virus and the measures to prevent its spread may contribute to a higher level of uncertainty with respect to management’s judgments and estimates.

Page 35

E-65

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

14. FINANCIAL RISK MANAGEMENT (continued)

Liquidity Risk (continued)

Ensured employment, income, and asset verification documentation was dated no more than 15 days from the application date.
Required most recent income documentation and validated employment immediately prior to the funding date.
Reviewed income and employment documentation to identify furloughed borrowers or if there was a curtailment in income.
Confirmed that any small business loan borrower’s business was currently operating and in the approved industry.

Anticipated cash flows from assets and liabilities at December 31, 2020, that are expected to impact the Company’s liquidity are as follows:

Sources of Liquidity Cash and cash equivalents Consumer and business loans receivable Accrued interest receivable Bond and subordinated certificates in securitized trusts Uses of Liquidity Notes payable Accounts payable Accrued interest payable Net liquidity surplus	Within 1 Year	1 to 2 Years	Over 2 Years	Total
	$ 9,845,375 35,862,974 14,337,907 5,889,947 37,387,550 6,152,861 209,152	$ – 41,987,979 – 7,313,092 33,213,551 – –	$ – 205,385,329 – 11,373,731 200,165,971 – –	$ 9,845,375 283,236,282 14,337,907 24,576,770 270,767,072 6,152,861 209,152
	$22,186,640	$16,087,520	$16,593,089	$ 54,867,249

Regulatory Risk

As discussed above, on September 13, 2019, the California legislature passed Assembly Bill 539. Other state legislatures have been active in the consumer financial services space as well.

Page 36

E-66

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

14. FINANCIAL RISK MANAGEMENT (continued)

Regulatory Risk (continued)

Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include cash and cash equivalents, consumer and business loans receivables, bonds and subordinated certificates in securitized trusts, other receivables and notes payable.

Interest Rate Risk

Interest rate risk measures the Company’s risk of financial loss due to adverse movements in interest rates. As of December 31, 2020, 2019 and 2018 notes payable had a fixed rate of interest. The Company manages interest rate risk by making consumer and business loans that have fixed interest rates, matching the duration with corresponding note payable maturities. The Company expects to renew its note payable arrangements at fixed rates upon their maturity.

Currency Risk

Page 37

E-67

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

14. FINANCIAL RISK MANAGEMENT (continued)

Price Risk

Market price risk is the risk that the fair value of the financial instrument will fluctuate as a result of changes in market prices (other than those arising from interest rate risks or currency risk), whether caused by factors specific to an individual loan or factors affecting all instruments traded in the market. The loans portfolio comprises of non-listed closely held loans and Bonds and subordinated certificates in securitized trusts which are not exposed to market prices. Fair valuation of the loan and debt portfolio is conducted at each reporting period. See the sensitivity analysis under Note 5.

15. EMPLOYEE BENEFIT PLAN

The Company offers a defined contribution 401(k) plan with discretionary Company contributions. To become eligible, employees must be at least 21 years of age, and have been employed for a minimum of 60 days. Employee elective contributions are fully vested. Employer matching contributions vest at a rate of 50% each year after one year of service and become fully vested after two years of service. The Company made a matching contribution totaling $176,082 equal to 50% of employees’ elective deferral contributions, up to 6%, for the year ended December 31, 2020. The Company did not contribute to the 401(k) plan for the years ended December 31, 2019 and 2018.

16. GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses as of December 31, 2020, 2019 and 2018 are summarized as follows:

Credit verification costs Professional service Premises Utilities Software licenses Insurance and licenses Equipment and supplies Others Total	2020	2019	2018
	$ 1,774,376 4,234,858 732,512 118,286 1,288,496 206,646 192,942 260,100	$ 2,482,306 6,705,987 1,417,669 416,591 686,390 278,741 207,199 965,336	$ 2,003,695 13,074,078 1,691,126 245,336 193,683 221,557 231,339 1,463,515
	$ 8,808,216	$ 13,160,219	$ 19,124,329

17. OTHER RELATED PARTY TRANSACTIONS

In addition to related party transactions and balances described elsewhere, these consolidated financial statements include the following:

Compensation

Page 38

E-68

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

17. OTHER RELATED PARTY TRANSACTIONS (continued)

Compensation (continued)

The compensation of key management personnel is as follows:

Years Ended December 31 Short term employee benefits (salaries and benefits) Stock-based compensation	2020	2019	2018
	$ 2,502,535 158,333	$ 2,117,490 –	$ 915,281 –
	$ 2,660,868	$ 2,117,490	$ 915,281

18. STOCK-BASED COMPENSATION

The following table summarizes information about stock options outstanding and exercisable under the Company’s Stock Option Plan at December 31, 2020:

	Outstanding
Options Outstanding – 185,185 – – 185,185 1,111,109 – – 1,296,294 1,296,294	Weighted Average Grant Date Fair Value $ $ – 0.19 – – 0.19 0.19 – – $ 0.19 $ 0.19	Weighted Average Exercise Price $
		$ – 0.28 – –
		0.28 0.28 – –
		$ 0.28
		$ 0.28

As of December 31, 2020 and 2019, options outstanding were 1,296,294 and 185,185, respectively. As of December 31, 2020 and 2019, options exercisable were 1,296,294 and 0, respectively. The weighted average exercise price was $0.28 and $0 at December 31, 2020 and 2019, respectively.

Page 39

E-69

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

18. STOCK-BASED COMPENSATION (continued)

The Company used the fair value method of accounting for stock options granted to directors, officers and employees. The fair value of each option granted was estimated using the Black-Scholes option pricing model with the following assumptions:

Risk-free interest rate Expected life Expected volatility Expected dividend yield Expected forfeiture rate	Year Ended December 31, 2020 Year Ended December 31, 2019
	0.28% -1.71% 1.67% 5 years 5 years 85% - 100% 85% 0% 0% 0% 0%

All options granted during the years ended December 31, 2020 and 2019 became fully vested on March 31, 2020 or July 31, 2020. Volatility is estimated using historical data of comparable publicly traded companies operating in a similar segment. All granted options are exercisable at $0.28. The weighted average remaining contractual life is 9 years.

Total stock-based compensation expense recognized for the year ended December 31, 2020 was $248,148. Stock-based compensation expense is included in salaries, wages, and benefits in the accompanying consolidated statements of income (loss) and comprehensive income.

19. LEASES

The Company has four lease agreements for its premises and equipment, such as copiers and postage machines.

Right-of-use assets and lease liabilities as of December 31, 2020 and 2019 are as follows:

Premises	Right of Use Assets Equipment Total $ 231,799 $ 1,446,794 (118,926) (928,923) – – – – 112,873 517,871 – 7,158,637 (110,513) (1,166,296) – – – – $ 2,360 $ 6,510,212	Right of Use Assets Equipment Total $ 231,799 $ 1,446,794 (118,926) (928,923) – – – – 112,873 517,871 – 7,158,637 (110,513) (1,166,296) – – – – $ 2,360 $ 6,510,212	Lease Liabilities
$ 1,214,995 (809,997) – –	$ 231,799 (118,926) – –	$ 1,446,794 (928,923) – –	$ 1,446,794 – 48,164 (957,278)
404,998 7,158,637 (1,055,783) – –	112,873 – (110,513) – –	517,871 7,158,637 (1,166,296) – –	537,680 7,158,637 – 180,000 (933,959)
$ 6,507,852	$ 2,360	$ 6,510,212	$ 6,942,358

Page 40

E-70

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

19. LEASES (continued)

For the years ended December 31, 2020 and 2019, the variable lease payments comprised of the premises property tax and excluded from lease liabilities are $20,722 and $33,638, respectively.

Future minimum lease payments as of December 31, 2020 are as follows:

2021 2022 2023 2024 2025 Total minimum lease payments Less: amounts representing interest Present value of future minimum lease payments	$ 1,202,502 1,641,080 1,689,097 1,740,938 1,642,779
	7,916,396 (974,038)
	$ 6,942,358

20. PROCEEDS FROM PAYCHECK PROTECTION PROGRAM

On May 18, 2020, the Company received proceeds in the amount of $4,816,607 under the Paycheck Protection Program (“PPP”) which was established as part of the United States Coronavirus Aid, Relief and Economic Security (“CARES”) Act and is administered through the Small Business Administration (“SBA”). The PPP provides loans to qualifying businesses in amounts up to 2.5 times their average monthly payroll expenses and was designed to provide a direct financial incentive for qualifying businesses to keep their workforce employed during the Coronavirus crisis. PPP loans are uncollateralized and guaranteed by the SBA and are forgivable after a “covered period” (eight or twenty-four weeks) as long as the borrower maintains its payroll levels and uses the loan proceeds for eligible expenses, including payroll, benefits, mortgage interest, rent, and utilities. The forgiveness amount will be reduced if the borrower terminates employees or reduces salaries and wages more than 25% during the covered period. Any unforgiven portion is payable over 2 years if issued before, or 5 years if issued after, June 5, 2020 at an interest rate of 1% with payments deferred until the SBA remits the borrower’s loan forgiveness amount to the lender, or, if the borrower does not apply for forgiveness, ten months after the end of the covered period. PPP loan terms provide for customary events of default, including payment defaults, breaches of representations and warranties, and insolvency events and may be accelerated upon the occurrence of one or more of these events of default. Additionally, PPP terms do not include prepayment penalties.

The Company evaluated the PPP’s eligibility criteria in accordance with International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”) and believes that the PPP proceeds represent, in substance, a grant that is expected to be forgiven; accordingly, the Company accounted for the proceeds as a grant. Pursuant to IAS 20, the Company cannot recognize any income from the grant until there is reasonable assurance that any conditions attached to the grant will be met and that the grant will be received. Once it is reasonably assured that the grant conditions will be met and that the grant will be received, grant income is recorded on a systematic basis over the period in which the Company recognizes, as expenses, the related costs for which the grant is intended to compensate. Income from the grant can be presented as either other income or as a reduction in the expenses for which the grant was intended to compensate.

Page 41

E-71

LOANME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019 and 2018 (Expressed in United States Dollars)

20. PROCEEDS FROM PAYCHECK PROTECTION PROGRAM (continued)

Therefore, because the Company has met the reasonably assurance threshold required under IAS 20, met the PPP eligibility requirements, and incurred qualified expenditures in excess of the amount of the PPP liability, the Company has recognized a reduction of expenses totaling $4,816,107 during 2020 to offset qualified expenditures and reduced its PPP liability accordingly. The reduction of the expense was reflected in the accompanying consolidated statements of income (loss) and comprehensive income in the amount of $4,360,644 under salaries, wages, and benefits, and $455,962 under general and administrative expenses.

If the Company’s PPP liability, or a portion of it, is ultimately not forgiven, the loan will be subject to the PPP terms and conditions discussed above. The SBA reserves the right to audit any PPP loan, regardless of size. These audits may occur after forgiveness has been granted. In accordance with the CARES Act, all borrowers are required to maintain their PPP loan documentation for six years after the PPP loan was forgiven or repaid in full and to provide that documentation to the SBA upon request.

The Company applied for forgiveness of the loan in February 2021.

21. SUBSEQUENT EVENTS

Certain notes matured subsequent to December 31, 2020. The Company paid off or renewed the notes accordingly. Refer to Note 9.

The Company obtained its California and Delaware mortgage originators licenses during the first quarter in 2021, and continue to pursue licensing in Tennessee and Virginia, among other states. The Company anticipates originating mortgage loans during 2021.

On February 22, 2021, the Company announced that it had entered into definitive purchase agreements with NextPoint Acquisition Corp. (“NAC”) pursuant to which NAC will acquire, directly or indirectly, all of the equity interests of the Company. Pursuant to the agreement, prior to the completion of and in connection with the acquisition, the Company will convert to a Delaware limited liability company.

Page 42

E-72

APPENDIX F - MANAGEMENT’S DISCUSSION & ANALYSIS OF LOANME

(See attached)

==> picture [48 x 33] intentionally omitted <==

F-1

LoanMe, Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS

December 31, 2020, 2019 and 2018 And for the three months ended March 31, 2021 and 2020

(Expressed in United States Dollars)

F-2

F-3

MANAGEMENT’S DISCUSSION & ANALYSIS

The following discussion of performance, financial condition and future prospects should be read in conjunction with the unaudited financial statements of the three months ended March 31, 2021 and 2020 (the “Unaudited Interim Financial Statements ”) and audited financial statements for the fiscal years ended December 31, 2020, 2019, and 2018 (the “ Annual Financial Statements ”) of LoanMe Inc. (“LoanMe” or the “Company”).

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document may contain “ forward-looking statements ” (as defined under applicable securities laws). These forward-looking statements relate to future events or future performance including with respect to the Company’s objectives and priorities for fiscal year 2021 and beyond, and strategies or further actions with respect to the Company, the Company’s business operations, financial performance and condition.

Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “target”, “intend”, “could” or the negative of these terms or other comparable terminology. By their very nature, forwardlooking statements involve inherent risks and uncertainties, both general and specific, and many factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating forward-looking statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, market and general economic conditions and the risks and uncertainties discussed in the section entitled “Risk Factors” in NextPoint Acquisition Corp’s final non-offering prospectus dated June 3, 2021 (the “ Prospectus ”).

The forward-looking statements contained in this MD&A are presented for the purpose of assisting investors in understanding business and strategic priorities and objectives of the Company as at the periods indicated and may not be appropriate for other purposes. Forward-looking statements contained in this MD&A are not guarantees of future performance and, while forward-looking statements are based on certain assumptions that the Company considers reasonable, actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Company. Prospective investors are cautioned to consider these and other factors carefully when making decisions with respect to the Company and not place undue reliance on forward looking statements. Circumstances affecting the Company may change rapidly. Except as may be expressly required by applicable law, the Company does not undertake any obligation to update publicly or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

NON-IFRS FINANCIAL MEASURES

This MD&A makes reference to certain non-IFRS financial measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as additional information to complement the IFRS financial measures contained herein by providing further metrics to understand the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial results reported under IFRS. We use non-IFRS financial measures, including Adjusted EBITDA, to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also use non-IFRS financial measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements. See “Non-IFRS Financial Measures”.

F-4

FINANCIAL INFORMATION ABOUT SEGMENTS

All our revenue is earned through the United States operations. The consumer and small business loan production share similar economic characteristics and projected trends. The nature of the products/services, production processes, the type of customer, and the methods used to distribute products are also similar. Therefore, we operate under one reportable segment.

COMPANY OVERVIEW

The key corporate changes, transactions and material contracts which will assist in understanding this MD&A, are as follows:

Non-Prime Consumer and Business Loan Products

We offer consumer loan products in eight states and small business loan product in thirty states. Our consumer loans are with fixed rates between 77% to 98%, fixed term generally between two to seven years, and unsecured. The loan amounts are ranging from $1,000 to $20,000 with no pre-payment penalties. The small business loan product interest rates are between 39% to 159%. The loan size is ranging from $3,500 to $250,000, and the terms are from 24 to 120 months. The origination fees ranging from 5% to 10% are retained by LoanMe and included in the principal balance of the loan. Non-Prime consumer loans have a weighted average FICO of 618, and business loans have a weighted average of 703.

Prime/Near Prime Loan Products

Prior to 2020, we offered unsecured Prime loan products with loan amounts ranging from $7,500 to $100,000, interest rate between 9.9% to 22.9%, and loan terms up to 180 months. In 2020, we launched Near Prime loan products, designed to capture the market of consumers that may not yet be able to qualify for a prime loan but are over-qualified for a higher interest non-prime loan. Near Prime loans are unsecured with loan amounts ranging from $3,100 to $10,000 with interest rates between 18% and 36% over a 60-month term. They may be repaid early at any time with no prepayment charges. Near Prime loans have a weighted average FICO of 661. They are currently offered in 9 states.

Robust Technology Platform

In April 2020, we transitioned to a highly customized loan origination system (“LOS”). We built multiple third-party integrations to facilitate the exchange of data between our LOS and third-party providers enabling us to automate many tasks and streamline multiple processes within the loan origination workflow. We manage our entire loan origination lifecycle within our LOS, from lead management through application, underwriting and funding of loans.

Bank Products

In March 2020, we entered into an agreement with a third-party agent of a state-chartered bank. We provide marketing and customer data analysis services to this third-party agent and participation interests in the bank loans are acquired. The credit criteria, fees, and interest rates are set by the bank and are proprietary to the bank. We plan to continue to grow these bank product offerings in the future by adding other nationally chartered banks and expanding into additional states.

F-5

Cost Saving

In December 2019, we entered into an agreement with a new loan servicer. Under this agreement, the servicing cost was significantly reduced from $18 per loan to $4.25 - $9 per loan. In fiscal year 2020, we used the new servicer for the newly originated loans. We plan to transition all existing loans to the new loan servicer during 2021. The expected cost saving will be approximately $5 million per year.

Securitization

In May 2018, we participated in a $144 million securitization transaction secured by $144 million in consumer prime loans, including $71 million transferred from our portfolio and the remainder $73 million transferred by an unrelated party who previously purchased similar loans from us. As part of the securitization, we retained a portion of the Class A, B and C securitized bonds and the residual interest consisting of subordinated certificates. In August 2019, we participated in a $70 million securitization transaction secured by $70 million in small business loans. As part of the securitization, we retained 100% of the residual interest consisting of subordinated certificates.

California AB 539

On January 1, 2020, the Fair Access to Credit Act (AB 539) was signed into law by the Governor of California and became effective for loans made under the California Financing Law (“CFL”), which imposed requirements related to interest rate caps, borrower education, credit reporting, and maximum loan repayment periods. More specifically, AB 539 amends the CFL to set a 36% rate cap on installment loans with a principal amount of $2,500 or more and less than $10,000, with a minimum 12-month loan term for such loans. The negative impact on our business was remediated by entering the additional 10 states.

COVID-19

‐ Since February 2020, the COVID 19 pandemic has caused substantial disruption to the U.S. and international economies and financial markets, including significant volatility, unprecedented unemployment, borrower defaults and declines in interest rates to record low levels. While the disruption is currently expected to be temporary, it presents material uncertainty due to the potential effects on personnel and business continuity or disruption, valuation of financial assets and liabilities and potential severe disruption to financial markets or deteriorations in credit and financing conditions.

In response to the foregoing events, we curtailed lending during the months of March and April 2020, extended forbearance to qualified borrowers, renegotiated our borrowing costs with current lenders and refocused its lending operations to actively seek new channels and ventures. Beginning in May 2020, we resumed lending operations and enhanced the underwriting of the borrowers’ ability to pay.

We also quickly monitored, adapted and implemented several procedures for the employees, customers and vendors. We transitioned employees to a temporarily remote work environment for several months. Our productivity was largely unaffected. We provided flexibility to the currently impacted customers by allowing them to waive late fees, defer payments or additional repayment options. We actively renegotiated with the vendors and received discounts and payment deferrals to maintain liquidity. We pursued all available Federal Aid packages successfully. The Company received Economic Injury Disaster Loan and Paycheck Protection Program (“PPP”) loan from the Small Business Administration in May 2020.

We reviewed the average age of our loan portfolio. For non-prime loans, the average age for the year ended December 31, 2020 was 19.6 months, while it was 9.3 months as for the year ended December 31, 2019. For small business loans, the average age for the year ended December 31, 2020 was 21.5 months, compared to 11.2 months for the year ended December 31, 2019. For prime loans, the average age for the year ended December 31, 2020 was 49.3 months, compared to 37.2 months for the year ended December 31, 2019. The average age of the portfolio has improved across loan types. With a higher average age of the loan portfolio, our charged-off loan rate has decreased in 2020 compared to 2019.

We continue to closely monitor this pandemic and expect to make future changes to respond to the situation as it continues to evolve.

F-6

Our revenue primarily consists of interest on financial assets including loans, bonds and subordinated certificates in securitized trusts, and is recognized in interest income using the effective interest method. Fees that relate to activities such as originating, restructuring, or renegotiating loans are deferred and recognized as interest income over the expected term of such instruments using the effective interest method.

Accrual of interest income is suspended when a loan is delinquent for 120 days or more.

We sell loans in the normal course of business to manage our liquidity and duration of our assets and liabilities. We recognize gains from the sale of loans when loan transfers qualify as sale transactions and proceeds from such sale transactions exceed our carrying amounts.

RESULTS OF OPERATIONS

REVENUES Interest income Interest expense Net interest income Gain on sale of consumer and business loans Total revenues EXPENSES Salaries, wages and benefits Provision for loan losses General and administrative Advertising and promotion Loan servicing Depreciation and amortization Impairment of bonds and subordinated certificates in securitized trusts Total operating expenses OPERATING (LOSS) INCOME FINANCE COSTS Interest expense on lease liabilities (LOSS) INCOME BEFORE INCOME TAXES INCOME TAX (BENEFIT)EXPENSE NET (LOSS) INCOME BASIC (LOSS) EARNINGS PER SHARE DILUTED (LOSS) EARNINGS PER SHARE Net (loss) income Other comprehensive income: Unrealized gains (losses) on consumer and business loans receivable at fair value through other comprehensive income, net of tax Allowance for credit losses recognized in net income, net of tax COMPREHENSIVE INCOME (LOSS)	Three Months Ended	Three Months Ended
	March 31, 2021	March 31, 2020
	$ 39,585,933 8,191,332 31,394,601 1,427,015 32,821,616 3,068,428 21,793,123 2,158,167 1,207,548 1,933,483 586,103 2,355,535 33,102,387 (280,771) 87,121 (367,892) (90,110) $ (277,782) $ (0.01) $ (0.01) $ (277,782) 516,890 3,700,327 $ 3,939,435	$ 69,403,884 13,151,626
		56,252,258 5,510,206
		61,762,464
		4,015,627 42,332,203 2,300,081 3,802,972 4,575,687 273,070 –
		57,299,640
		4,462,824
		4,801
		4,458,023 1,137,673
		$ 3,320,350
		$ 0.07
		$ 0.07
		$ 3,320,350 (5,195,618) 635,545
		$ (1,239,723)

F-7

Three months ended March 31, 2021 compared to three months ended March 31, 2020

Revenue. The table below sets forth the components and changes in our revenue for the three months ended March 31, 2021 and 2020.

Interest income	March 31, 2021 March 31, 2020 Change
	$ % (In thousands) $ 39,586 $ 69,404 $ (29,818) -43%
Interest expense	8,191 13,152 (4,961) -38%
Net Interest income	31,395 56,252 (24,857) -44%
Gain on sale of consumer loans	1,427 5,510 (4,083) -74%
Total Revenue	$ 32,822 $ 61,762 $ (28,940) -47%

Our revenue for the three months ended March 31, 2021 decreased by $28.9 million or 47%, from $61.8 million for the three months ended March 31, 2020. This decrease was primarily due to the following:

a decrease in interest income by $29.8 million or 43%, from $69.4 million for the three months ended March 31, 2020, primarily due to the shrinking portfolio driven by the loan origination activities slow-down, resulting from COVID-19;
a decrease in gain on sale of consumer loans by $4.1 million or 74%, from $5.5 million for the three months ended March 31, 2020, resulting primarily from fewer sales of charged off loans; and
an interest expense reduction $5 million or 38% from $13.2 million for the three months ended March 31, 2020, primarily due to the decrease in the aggregate balance of the Notes Payable (as defined below).

Operating expenses. The table below sets forth the components and changes in our operating expenses for three months ended March 31, 2021 and 2020.

three months ended March 31, 2021 and 2020.
Salaries, wages and benefits	March 31, 2021 March 31, 2020 Change
	$ % (In thousands) $ 3,068 $ 4,016 $ (948) -24%
Provision for loan losses, net of recoveries	21,793 42,332 (20,539) -49%
General and administrative	2,158 2,300 (142) -6%
Advertising	1,208 3,803 (2,595) -68%
Loan servicing	1,933 4,576 (2,643) -58%
Depreciation and amortization	586 273 313 115%
Impairment of subordinated certificates in securitized trusts	2,356 - 2,356 100%
Total operating expenses	$ 33,102 $ 57,300 $ (24,198) -42%

Total operating expenses decreased by $24 million, or 42%, in the three months ended March 31, 2021 compared to three months ended March 31, 2020. The decrease was primarily attributable to the following:

a $1 million decrease in salaries, wages and benefits, primarily due to the reduction of the loan origination activities, including stock-based compensation expense of $228,703 granted to officers, directors and employees and substantially fully vested as of March 31, 2020. No additional stock-based compensation was granted, and no compensation expense was recorded during the three months ended March 31, 2021;

F-8

a $20.5 million decrease in the provision for loan losses, mainly driven by the shrinking loan portfolio, and the continuing effort of collection during the three months ended March 31, 2021;
a decrease of $2.6 million in advertising and promotion expense due to the conservative approaches taken during the COVID-19 pandemic, including switching from cost per lead to cost per fund from all lead providers, and cutting high-cost channels such as pay per click, TV, and radio; and
a $2.6 million decrease in loan servicing expense due to the transitioning the majority of the portfolio to the second and cost-effective servicer, and the decrease of the portfolio size.

These decreases were slightly offset by a $0.3 million increase in depreciation and amortization of right-of-use assets, property and equipment, and intangible assets. In addition, due to a significant credit deterioration in our 2019 securitization, primarily because of the COVID-19 pandemic, an impairment of $2.4 million was recorded for the three months ended March 31, 2021.

Income taxes. The table below sets forth certain information regarding our income taxes for the three months ended March 31, 2021 and 2020.

(Loss) income before income taxes	March 31, 2021 March 31, 2020 Change
	$ % (In thousands) $(368) $4,458 $ (4,826) -108%
Income tax (benefit) expense	(90) 1,138 (1,228) -108%
Effective tax rate	24.5% 25.5%
Net (loss) income	$(278) $3,320 $ (3,598) -108%

The decrease in our effective tax rate for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 relates primarily to the write-off of unused net operating loss during the three months ended March 31, 2020. During the three months ended March 31, 2020, $1.2 million net operating loss was written off as it was unlikely to be utilized due to the limitation. After the write-off, the remaining balance of net operating loss was $32 million.

Net (loss) income and (loss) earnings per share . The table below sets forth certain information regarding our Net income and EPS for the three months ended March 31, 2021 and 2020.

	March 31, 2021 March 31, 2020 Change
	$ % (Inthousands)
Net (loss) income	$(278) $3,320 $ (3,598) -108%
Basic (loss) earnings per share	(0.01) 0.07 (0.08) -120%
Diluted (loss) earnings per share	$(0.01) $0.07 $ (0.08) -120%

For the three months ended March 31, 2021, we had a net loss of $0.3 million, basic and diluted loss per share of $0.01 compared to net income of $3.3 million and basic and diluted earnings per share (EPS) of $0.07 for the three months ended March 31, 2020. EPS decreased due to decrease in revenues by $30.8 million resulting from shrinking portfolio and reduced loan origination activities during Covid 19, offset by $25 million reduction in operating expenses, resulting from expenses control and savings. Average weighted number of shares used in calculating

F-9

basic and dilutive EPS in the three months ended March 31, 2021 and basic and diluted EPS in the three months ended March 31, 2020 was 50 million common shares. For the three months ended March 31, 2021 and 2020, stock options were considered antidilutive and therefore excluded in the calculation of the dilution earnings per share.

Other comprehensive income (OCI). The table below sets forth certain information regarding our OCI for the three months ended March 31, 2021 and 2020.

Net (loss) income	March 31, 2021 March 31, 2020 Change
	$ % (In thousands) $(278) $3,320 $(3,598) -108%
Unrealized gains (losses) on loans receivable at fair value through other comprehensive income, net of tax	517 (5,196) 5,713 -110%
Allowance for credit losses recognized in income, net of tax	3,700 636 3,064 482%
Other Comprehensive income (loss)	$3,939 $(1,240) $5,179 -418%

For the three months ended March 31, 2021, other comprehensive income increased by $5.2 million, from a loss of ($1.2) million for the three months ended March 31, 2020, primarily due to the improvement in fair values in the three months ended March 31, 2021 resulting from the reduction of unrealized losses on loans receivable by $5.7 million (net of tax), increase of allowance of credit losses by $3.1 million (net of tax), from $0.6 million (net of tax) for the three months ended March 31, 2020, offset by a reduction in net income by $3.6 million, from $3.3 million for the three months ended March 31, 2020.

The increase in the allowance for credit losses resulted from an increased balance of loans in underperforming stages as of March 31, 2021, comparing to March 31, 2020.

F-10

Fiscal year 2020 compared to fiscal year 2019

REVENUES Interest income Interest expense Net interest income Gain on sale of consumer and business loans Total revenue EXPENSES Salaries, wages and benefits Provision for loan losses General and administrative Advertising and promotion Loan servicing Depreciation and amortization Impairment of bonds and subordinated certificates in securitized trusts Other Total operating expenses OPERATING INCOME (LOSS) FINANCE COSTS Interest expense on lease liabilities INCOME (LOSS) BEFORE INCOME TAXES INCOME TAX EXPENSE (BENEFIT) NET INCOME (LOSS) BASIC EARNINGS (LOSS) PER SHARE DILUTED EARNINGS (LOSS) PER SHARE	December 31, 2020 $ 212,447,633 43,024,999 169,422,634 13,229,038 182,651,672 9,746,167 107,586,623 8,808,216 5,697,687 14,600,993 1,890,163 8,108,466 – 156,438,315 26,213,357 180,000 26,033,357 6,899,398 $ 19,133,959 $ 0.38 $ 0.38	December 31, 2019 $ 299,715,108 52,411,217 247,303,891 27,560,090 274,863,981 19,728,433 163,494,444 13,160,219 30,830,668 18,695,963 1,008,196 3,279,620 – 250,197,543 24,666,438 48,164 24,618,274 6,911,898 $ 17,706,376 $ 0.35 $ 0.35	December 31, 2018
			$ 247,870,445 50,183,846
			197,686,599 6,821,093
			204,507,692
			11,663,611 147,165,453 19,124,329 22,995,535 20,491,759 8,318 – 6,150,000
			227,599,005
			(23,091,313)
			–
			(23,091,313) (6,394,517)
			$ (16,696,796)
			$ (0.33)
			$ (0.33)

F-11

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Net income (loss) Unrealized gains on consumer and business loans receivable at fair value through other comprehensive income, net of tax Allowance for credit losses recognized in net income, net of tax COMPREHENSIVE INCOME	$ 19,133,959 7,079,815 (20,334,770) $ 5,879,004	$ 17,706,376 4,875,655 (8,740,302) $ 13,841,729	$ (16,696,796) 7,375,627 9,703,790
			$ 382,621

Revenue. The table below sets forth the components and changes in our revenue for the years ended December 31, 2020 and 2019.

Interest income	December 31, 2020 December 31, 2019 Change
	$ % (In thousands) $ 212,448 $ 299,715 $ (87,267) -29%
Interest expense	43,025 52,411 (9,386) -18%
Net interest income	169,423 247,304 (77,881) -31%
Gain on sale of consumer and business loans	13,229 27,560 (14,331) -52%
Total Revenue	$ 182,652 $ 274,864 $ (92,212) -34%

Our revenue for year ended December 31, 2020 decreased by $92.2 million or 34%, from $274.9 million for the year ended December 31, 2019. This decrease was primarily due to the following:

a decrease in interest income by $87.3 million or 29%, from $299.7 million for the year ended December 31, 2019, primarily due to the shrinking portfolio driven by the loan origination activities slow-down from COVID-19 and California AB 539;
a decrease in gain on sale of consumer loans by $14.3 million or 52%, from $27.6 million for the year ended December 31, 2019, resulting primarily from fewer loan sales due to COVID-19; and
an interest expense reduction $9.4 million or 18% from $52.4 million for the year ended December 31, 2019, primarily due to the decrease in the aggregate balance of the Notes Payable (as defined below).

F-12

Operating expenses. The table below sets forth the components and changes in our operating expenses for the years ended December 31, 2020 and 2019.

Salaries, wages and benefits	December 31, 2020 December 31, 2019 Change
	$ % (In thousands) $ 9,746 $ 19,728 $ (9,982) -51%
Provision for loan losses, net of recoveries	107,587 163,495 (55,908) -34%
General and administrative	8,808 13,160 (4,352) -33%
Advertising	5,698 30,831 (25,133) -82%
Loan servicing	14,601 18,696 (4,095) -22%
Depreciation and amortization	1,890 1,008 882 87%
Impairment of subordinated certificates in securitized trusts	8,108 3,280 4,828 147%

Total operating expenses	$ 156,438 $ 250,198 $ (93,760) -37%

Total operating expenses decreased $93.8 million, or 37%, in the year ended December 31, 2020 compared to the year ended December 31, 2019. The decrease was primarily attributable to the following:

a $10 million decrease in salaries, wages and benefits, primarily due to the reduction of the loan origination activities, and the effort to preserve cash during the COVID-19 pandemic by temporarily reducing salaries, managing workforce, and obtaining PPP loans of $4.8 million which reduced the salaries, wages and benefits during fiscal year 2020. Offset by an increase in compensation expense of $248,000 for stockbased compensation granted to officers, directors and employees and fully vested during fiscal year 2020;
a $55.9 million decrease in the provision for loan losses, , mainly driven by the shrinking loan portfolio, the additional effort of collection and tightened underwriting policies implemented during fiscal year 2020;
a reduction of $4.4 million in general and administrative expenses resulting from transitioning outsourced general administrative functions in house saving totaling $4.0 million and obtaining the government PPP loans which reduced general and administrative expenses during fiscal year 2020 by $0.5 million;
a decrease of $25.1 million in advertising and promotion expense due to the conservative approaches taken during the COVID-19 pandemic, including switching from cost per lead to cost per fund from all lead providers, and cutting high-cost channels such as pay per click, TV, and radio; and
a $4.1 million decrease in loan servicing expense due to the continuing negotiation effort with the current servicer, engaging with the second and cost-effective servicer, and the decrease of the portfolio size.

These decreases were slightly offset by a $0.9 million increase in depreciation and amortization of right-of-use assets, property and equipment, and intangible assets. In addition, due to a significant credit deterioration in our 2019 securitization, primarily because of the COVID-19 pandemic, an impairment of $8.1 million was recorded for the year ended December 31, 2020, compared to a $3.2 million impairment recorded in fiscal year 2019 in our 2018 securitization resulting from increased defaults and culminating in the cancellation of the 2018 Class C bonds.

F-13

Income taxes. The table below sets forth certain information regarding our income taxes for the years ended December 31, 2020 and 2019.

Income before income taxes	December 31, 2020 December 31, 2019 Change
	$ % (In thousands) $ 26,033 $ 24,618 $ 1,415 6%
Income tax expense	6,899 6,912 (13) 0%
Effective tax rate	26.5% 28.1%
Net income	$ 19,134 $ 17,706 $ 1,428 8%

The decrease in our effective tax rate in the year ended December 31, 2020 compared to the year ended December 31, 2019 relates primarily to the permanent difference resulted from nontaxable PPP expense reduction.

Net income and Earnings per share (EPS) . The table below sets forth certain information regarding our net income and EPS for the years ended December 31, 2020 and 2019.

	December 31, 2020 December 31, 2019 Change
	$ % (In thousands)
Net income	$ 19,134 $ 17,706 $ 1,428 8%
Basic earnings per share	0.38 0.35 0.03 8%
Diluted earnings per share	$ 0.38 $ 0.35 $ 0.03 8%

In fiscal year 2020, we had a net income of $19.1 million, basic EPS and diluted EPS of $0.38 compared to net income of $17.7 million and basic and diluted EPS of $0.35 in fiscal 2019. EPS improved in 2020 due to our efforts to control expenses and PPP resulting in savings which exceeded our decreases in revenues resulting from our shrinking portfolio, reduced loan origination activities, and increased credit impairment on bonds and subordinated certificates in securitized trusts. The average weighted number of shares used in calculating basic and dilutive EPS in 2020 and basic and diluted EPS in 2019 was 50 million common shares. For the years ended December 31, 2020 and 2019, stock options were considered antidilutive and therefore excluded in the calculation of the dilution earnings per share.

Other comprehensive income (OCI). The table below sets forth certain information regarding our OCI for the years ended December 31, 2020 and 2019.

Net income	December 31, 2020 December 31, 2019 Change
	$ % (In thousands) $ 19,134 $ 17,706 $ 1,428 8%
Unrealized gains on loans receivable at fair value through other comprehensive income, net of tax	7,080 4,876 2,204 45%
Allowance for credit losses recognized in income, net of tax	(20,335) (8,740) (11,595) 133%
Comprehensive income	$ 5,879 $ 13,842 $ (7,963) -58%

F-14

In fiscal year 2020, OCI decreased by $8 million, from $13.8 in fiscal year 2019, primarily due to the reduction in our allowance for credit losses of $11.6 million (net of tax), from $8.7 million (net of tax) in fiscal year 2019, offset by increase in net income of $1.4 million, from $17.7 million in fiscal year 2019 and increase in unrealized gains on loans receivable by $2.2 million (net of tax), from $4.9 million in fiscal year 2019. The decrease in the allowance for credit losses resulted from annual changes in 2020 loan write offs which exceeded the ECL provisions. ECL provisions in fiscal year 2020 were lower than fiscal year 2019, due to our shrinking loan portfolio and our additional collection efforts in 2020. Our unrealized gains on loans receivables increased year over year, due to the improvements in the age of our loans, which led to improved fair value premium.

Fiscal year 2019 compared to fiscal year 2018

Revenue. The table below sets forth the components and changes in our revenue for the years ended December 31, 2019 and 2018.

31, 2019 and 2018.
Interest income	December 31, 2019 December 31, 2018 Change
	$ % (In thousands) $ 299,715 $ 247,870 $ 51,845 21%
Interest expense	52,411 50,183 2,228 4%
Net interest income	247,304 197,687 49,617 25%
Gain on sale of consumer and business loans	27,560 6,821 20,739 304%
Total Revenue	$ 274,864 $ 204,508 $ 70,356 34%

Our revenue for year ended December 31, 2019 increased by $70.4 million or 34%, from $204.5 million for year ended December 31, 2018. This increase was primarily due to the following:

an increase in interest income by $52 million or 21%, from $247.9 million for the year ended December 31, 2018 due to the growing portfolio; and
an increase in gains on sale of consumer and business loans by $20.7 million, or 304%, which included $14.2 million gain on sales from the small business loan securitization in August 2019.

These increases were offset by a $2.2 million increase in interest expense, due to the increase of the note payable from $388 million in 2018 to $415 million in 2019.

F-15

Operating expenses. The table below sets forth the components and changes in our operating expenses for the years ended December 31, 2019 and 2018.

Salaries, wages and benefits	December 31, 2019 December 31, 2018 Change
	$ % (In thousands) $ 19,728 $ 11,664 $ 8,064 69%
Provision for loan losses	163,495 147,165 16,330 11%
General and administrative	13,160 19,124 (5,964) -31%
Advertising	30,831 22,996 7,835 34%
Loan servicing	18,696 20,492 (1,796) -9%
Depreciation and amortization	1,008 8 1,000 100%
Impairment of subordinated certificates in securitized trusts	3,280 – 3,280 100%
Other	– 6,150 (6,150) -100%
Total operating expenses	$ 250,198 $ 227,599 $ 22,599 10%

Total operating expenses increased $22.6 million, or 10%, in the fiscal year 2019 compared to fiscal year 2018. The increase was primarily attributable to the following:

a $8.1 million increase in salaries, wages and benefits, primarily due to the hiring of additional personnel to support operations compared to outsourcing the same employment services in prior year;
a $16.3 million increase in the provision for loan losses due to the growing portfolio;
a $7.8 million increase in advertising expenses which led to the loan origination increase by 24%;
a $1 million increase in depreciation and amortization due to the adoption of IFRS 16, which resulted in recording a right of use asset and amortizing it accordingly;
a $3.3 million increase in impairment related to increased defaults culminating in the cancellation of the class C bond in our 2018 securitization; and
a $1.8 million decrease in servicing expense related to the negotiation effort with the then current loan servicer.

Income taxes. The table below sets forth certain information regarding our income taxes for the years ended December 31, 2019 and 2018.

Income (loss) before income taxes	December 31, 2019 December 31, 2018 Change
	$ % (In thousands) $ 24,618 $ (23,091) $ 47,709 -207%
Income tax expense(benefit)	6,912 (6,394) 13,306 -208%
Effective tax rate	28.1% 27.7%
Net income (loss)	$ 17,706 $ (16,697) $ 34,403 -206%

The increase in our income tax expense in fiscal year 2019 compared to fiscal year 2018 relates primarily to the increase in our income before income taxes, compared to a loss in the prior fiscal year.

F-16

Net income (loss) and Earnings (loss) Per Share (EPS) . The table below sets forth certain information regarding our net income and EPS for the years ended December 31, 2019 and 2018.

	December 31, 2019 December 31, 2018 Change	December 31, 2019 December 31, 2018 Change
	$ % (In thousands)
Net income (loss)	$ 17,706 $ (16,697)	$ 34,403 -206%
Basic earnings per share	$ 0.35 $ (0.33)	$ 0.69 -206%
Diluted earnings per share	$ 0.35 $ (0.33)	$ 0.69 -206%

In fiscal 2019, we had a net income of $17.7 million and basic and diluted EPS of $0.35 compared to net loss of $16.7 million and basic and diluted EPS of ($0.33) in fiscal 2018, primarily because of the growth of our net interest income, and the gain on the small business loan securitization, slightly offset by the increase in operating expenses. During fiscal years 2019 and 2018, our outstanding common shares were 50,000,000 and 50,000,000, respectively.

Adopting IFRS 16: IFRS 16 was adopted effective January 1, 2019. Accounting information for 2018 was not restated but was reported under the previous accounting standard. The net effect of adopting IFRS 16 on the statements of income in 2019 is to decrease operating expenses before depreciation and amortization while increasing depreciation and amortization and financing costs with an insignificant impact on net income. By extension this will result in EBITDA increasing as the depreciation of the right-of-use assets and interest on the lease liability is excluded from this measure. Similarly, operating income will also increase (albeit to a lesser extent) as the interest on the lease liability is excluded from this measure. During fiscal year 2019, the adoption of IFRS 16 decreased net income by $14,000.

Other comprehensive income (OCI). The table below sets forth certain information regarding our OCI for the years ended December 31, 2019 and 2018.

Net income (loss)	December 31, 2019 December 31, 2018 Change
	$ % (In thousands) $ 17,706 $ (16,697) $ 34,403 -206%
Unrealized gains on consumer and business loans receivable at fair value through other comprehensive income, net of tax	4,876 7,376 (2,500) -34%
Allowance for credit losses recognized in netincome,net oftax	(8,740) 9,704 (18,444) -190%
Other Comprehensive income	$ 13,842 $ 383 $ 13,459

In fiscal year 2019, OCI increased by $13.5 million due to increase in net income by $34.4 million, from ($16.7) million in fiscal year 2018, offset by a decrease in unrealized gains on consumer and business loans receivable of $2.5 million, from $7.4 million in fiscal year 2018 and a decrease in the allowance for credit losses of $18.4 million, from $9.7 million in fiscal year 2018, resulting from annual write offs exceeding the ECL provision in 2019 compared to the prior year.

F-17

KEY BALANCE SHEET COMPONENTS

March 31, 2021 compared to December 31, 2020

	March 31, 2021 December 31, 2020
	(In thousands)
Consumer & Business loans receivable	$ 270,161 $ 283,236
Merchant cash advance (MCA) receivable	271 -
Bonds and subordinated certificates in securitized trusts	22,483 24,577
Notes payable	$ 249,988 $ 270,767

Consumer and Business Loans Receivable, at Fair Value, Bonds and Subordinated Certificates in Securitized Trusts and Merchant cash advance (MCA) receivable

The consumer and business loans receivable as of March 31, 2021 decreased by $13.1 million or 5% from $283.2 million as of December 31, 2020. As of March 31, 2021, non-prime consumer, non-prime small business, and prime consumer loans represented 57%, 38%, and 5% of total loans receivable, respectively. As of December 31, 2020, non-prime consumer, non-prime small business, and prime consumer loans represented 57%, 39%, and 4% of total loans receivable, respectively. As of March 31, 2021, non-prime consumer loans decreased by $6.8 million or 4% from $162.1 million as of December 31, 2020. Non-prime small business loans decreased by $6.7 million or 6%, from $109.5 million as of December 31, 2020. The decreases in non-prime loans were because of the reduction in loan demand and origination activities due to COVID-19 impact. These decreases were offset by $0.5 million or 4% increase in prime loans from $11.7 million as of December 31, 2020. In Q4 2020, we launched near-prime products and gradually expanded the target markets.

The bonds and subordinated certificates in securitized trusts decreased by $2.1 million, from $24.6 million in fiscal year 2020, mainly due to the $2.4 million impairment that took place during the three months ended March 31, 2021 in our 2019 securitization, due to significant credit deterioration resulting from COVID-19, in addition to the annual payments received.

In 2021, the Company commenced providing unsecured merchant cash advances to small business owners, net of prepaid interest rate. The advances have terms of six to twelve months.

Notes Payable

Changes to Notes Payable are listed under Liquidity and Cash flows-Notes Payable section below.

December 31, 2020 compared to December 31, 2019

The following selected consolidated balance sheet data should be read in conjunction with “Results of Operations” above.

F-18

Consumer and business loans receivable, at fair value	December 31, 2020 December 31, 2019 December 31, 2018
	(In thousands) $ 283,236 $ 395,374 $ 367,672
Bonds and subordinated certificates in securitized trusts	24,577 32,667 13,662
Notes payable	$ 270,767 $ 414,515 $ 387,872

Consumer and Business Loans Receivable, at Fair Value and Bonds and Subordinated Certificates in Securitized Trusts

The consumer and business loans receivable as of December 31, 2020 decreased by $112.1 million or 28% from $395.4 million as of December 31, 2019. As of December 31, 2020, non-prime consumer, non-prime small business and prime consumer loans represented 57% (66% in 2019), 39% (30% in 2019) and 4% (4% in 2019) of total loans receivable, respectively. As of December 31, 2020, non-prime consumer loans and non-prime small business decreased by $99 million or 38% and $8.9 million or 8%, from $261 million as of December 31, 2019 and $118.4 million, respectively, due to California Fair Access to Credit Act (AB 539) establishing interest rate caps on consumer loans and the COVID-19 restrictions which reduced loan demand and origination activities. In response to substantial disruption to the U.S. and international economics and financial markets, caused by COVID-19, the Company curtailed lending during the months of March and April 2020, extended forbearance to qualified borrowers, renegotiated its borrowing costs with current lenders and refocused its lending operations to actively seek new channels and ventures. Beginning in May 2020, the Company resumed lending operations and tightened its underwriting standards. Also, prime loans decreased by $4.3 million, or 27% from $16 million, due to the slowdown of issuing new lending prime loans since beginning of fiscal year 2018.

The bonds and subordinated certificates in securitized trusts decreased by $8.1 million, from $32.7 million in fiscal year 2019, mainly due to the $8.1 million impairment that took place during fiscal year 2020 in our 2019 securitization, due to significant credit deterioration resulting from COVID-19.

Notes Payable

Changes to Notes Payable are listed under Liquidity and Cash flows-Notes Payable section below.

LIQUIDITY AND CASHFLOWS

Overview of Factors Affecting our Liquidity

Our primary need for liquidity is to fund working capital requirements of our business, mostly for consumer and small business loans lending, capital expenditures, debt service and for general corporate purposes. Our primary source of liquidity is cash on hand & cash equivalents, receipts from consumer and small business loans, receipts from investments in bonds and subordinated certificates in securitized trusts, and financing from Notes Payable. Our ability to grow our loan portfolio, invest in bonds and subordinated certificates in securitized trusts and to repay or refinance indebtedness depends on our future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business and other factors, some of which are beyond our control.

Subsequent to year end, the Company expanded the funding efforts to eighteen additional states through a bank partnership. The Company also started originating Merchant Credit Advance (MCA), and brokering Mortgage Loans in the first half of 2021.

We expect that our cash on hand and cash equivalents, receipts from consumer and small business loans, receipts from investments in bonds and subordinated certificates in securitized trusts, provided by our operations and our established credit facilities will allow us to meet our capital requirements and operational needs for the next twelve months.

F-19

Notes Payable

BP SLL Trust (BasePoint)

During 2014 and 2015, the Company entered into four credit facility agreements with borrowing capacity totaling $315,000,000 with BasePoint to fund consumer loans originated by the Company. Such credit facilities are secured by the related consumer loans, bear interest ranging from 13% to 14% per annum and require weekly payments of principal and interest as defined in the agreements. The unpaid principal balance due on such credit facilities totaled $184,140,308 $204,410,592 and $299,819,559, as of March 31, 2021, December 31, 2020 and December 31, 2019, respectively. The borrowing capacity matures at various dates through December 2022. In March 2020, the interest rates on these facilities were temporarily reduced to rates ranging from 10.55% to 10.88% through June 2020, which resulted in the reduction of $1,275,530 in interest expense. In July 2020, the interest rates reverted back to the contractual levels of 13% to 14%.

In April 2019, the Company entered into a separate note payable agreement totaling $37,864,000 with BasePoint. The note is secured by equity interests in the Company’s parent, bears interest 12.5% per annum and matures in April 2023. The unpaid principal balance due on the note totaled $37,864,000, $37,864,000 and $37,864,000 as of March 31, 2021, December 31, 2020 and December 31, 2019, respectively.

IHA, LLC (IHA)

In August 2019, the Company entered into a secured promissory note with IHA, LLC for $15,000,000 to fund consumer loans originated by the Company. Such note is secured by the related consumer loans with unpaid principal balance of $14,053,542. The note bears interest of 10% per annum and matured August 2020. Upon maturity, the Company transferred the collateral loans to IHA subject to a repurchase agreement which distributed collections to IHA until the collateral loans’ balance has been reduced to zero. Because the Company has the right to repurchase the collateral loans at par, the collateral loans were not derecognized and the IHA transaction was accounted for as a borrowing. The unpaid principal balance due to IHA totaled $10,235,564, $10,555,123 and $13,140,000 as of March 31, 2021, December 31, 2020 and December 31, 2019, respectively.

Hudson Cove Newport II, LLC (Hudson Cove)

Melody Business Finance, LLC (Melody)

In June 2017, the Company entered into a credit facility agreement for $40,000,000 with Melody to fund consumer prime loans originated by the Company. Such credit facility is secured by the related consumer loans, bears interest at 9.67% per annum and require weekly payments of principal and interest as defined in the agreement. The unpaid principal balance due to Melody totaled $12,000,000 as of December 31, 2019. The credit facility matured in December 2020 and has been paid off accordingly.

Chilmark Administrative, LLC

In June 2020, the Company entered into a loan and security agreement for $11,000,000 with Chilmark Administrative LLC to fund consumer loans originated by the Company. The loan security agreement is secured by the related consumer loans, bears interest at 11% per annum and matures in June 2021. The unpaid principal balance due to Chilmark totaled $10,916,429 and $10,987,008 as of March 31, 2021 and December 31, 2020, respectively.

F-20

For the three months ended March 31, 2021 and year ended December 31, 2020, the Company was in compliance with all its externally imposed financial covenants.

Consumer and Business Loans and potential exposure to changes in credit loss

Our cash flow during the year is substantially utilized to issue loans to prime and non-prime individual borrowers, in addition to unsecured small business loans. Unsecured prime loans to individuals originated in amounts ranging from $7,500 up to $100,000, bear annual interest at rates ranging from 9.9% to 22.9%, and have 180-month terms. Unsecured non-prime loans to individuals and small business originated in amounts ranging from $1,000 up to $250,000, bear annual interest at rates ranging from 0% to 199%, and have terms from 6 to 120 months.

The Company makes unsecured consumer loans to large number of customers pursuant to policies and procedures that are intended to ensure that there is no concentration of credit risk with any particular individual, company or other entity. However, the Company is subject to a higher level of credit risk due to the credit constrained nature of many of the Company’s customers. Borrowers who are in need of high interest rate loans generally have less than average credit scores and the Company does not require collateral to support the loans it makes.

The Company performs on-going credit evaluations, monitors aging of the loan portfolio, monitors payment history of individual loans, and maintains an allowance for loan loss to mitigate this risk.

The Company cannot guarantee that delinquency and loss levels will correspond with the historical levels experienced and there is a risk that delinquency and loss rates could increase significantly.

As of December 31, 2020, and December 31, 2019, the Company’s average gross consumer loans, and interest receivables were $287.5 million and $352.4 million, respectively. Net charge-offs expressed as a percentage of the average loan and interest receivables were 47% and 50%, for the years ended December 31, 2020 and December 31, 2019, respectively.

F-21

SOURCES AND USES OF CASH

Cash Flows of the three months ended March 31, 2021 compared to the three months ended March 31, 2020:

Net cash provided by operating activities	March 31, 2021 March 31, 2020 Change
	(In thousands) $ 18,270 $ 23,165 $ (4,895)
Net cash provided by (used in) investing activities	(305) (1,362) 1,057
Net cash provided by (used in) financing activities	(20,781) (20,470) (311)

Cash Flows from Operating Activities

Net cash provided by operating activities decreased by $4.9 million in the three months ended March 31, 2021, from $23.2 million in the three months ended March 31, 2020. The decrease was mainly driven by the reduction in loan portfolio, resulting from COVID-19 economic disruption.

Cash Flows from Investing Activities

Net cash used in investing activities decreased by $1.1 million in the three months ended March 31, 2021, from (1.4) million in the three months ended March 31, 2020, due to reduction in purchases of intangible assets.

Cash Flows from Financing Activities

Net cash used in financing activities increased by $0.3 million in the three months ended March 31, 2021, from ($20.5) million in the three months ended March 31, 2020, due to reduction in borrowed Notes Payable and repayments.

Cash Flows of Fiscal year 2020 compared to Fiscal year 2019

Net cash provided by (used) in operating activities	December 31, 2020 December 31, 2019 Change
	(In thousands) $ 145,568 $ (30,591) $ 176,159
Net cash (used in) provided by investing activities	(1,107) (3,572) 2,465
Net cash (used in) provided by financing activities	(139,865) 25,686 (165,551)

Cash Flows from Operating Activities

Net cash provided by (used in) operating activities increased by $176 million in 2020, from ($30.6) million in 2019. The increase was mainly driven by the reduction in new loan originations to consumers or loan sales to third parties, resulting from COVID-19 economic disruption.

Cash Flows from Investing Activities

Net cash used in investing activities decreased by $2.5 million in 2020, from ($3.6) million in 2019, due to reduction in purchases of property, equipment and intangible assets.

F-22

Cash Flows from Financing Activities

Net cash used in financing activities increased by $166 million in 2020, from $25.7 million in 2019, due to repayments of borrowed Notes Payable, including prescheduled principal and interest payments.

Cash Flows of Fiscal year 2019 compared to Fiscal year 2018

Net cash provided by (used) in operating activities	December 31, 2019 December 31, 2018 Change
	(In thousands) $ (30,591) $ (32,786) $ 2,195
Net cash (used in) provided by investing activities	(3,572) 886 (4,458)
Net cash (used in) provided by financing activities	25,686 12,156 13,530

Cash Flows from Operating Activities

Net cash used in operating activities decreased by $2.2 million in 2019, from ($32.8) million in 2018. The decrease was driven primarily by increase in revenues from a larger loan portfolio in 2019.

Cash Flows from Investing Activities

Net cash used in investing activities increased by $4.5 million in 2019, from $0.9 million in 2018, due to an increase in purchases of property, equipment and intangible assets.

Cash Flows from Financing Activities

Net cash provided by financing activities increased by $13.5 million in 2019, from $12.2 million in 2018, due primarily to the net increase in Notes Payable borrowings in excess of principal and interest payments, partially offset by the payment of interest and principal of lease liabilities.

OFF BALANCE SHEET ARRANGEMENTS

We had no off -balance sheet arrangements for the three months ended March 31, 2021 and fiscal years ending December 31, 2020 and 2019.

F-23

CONTRACTUAL OBLIGATIONS, CONTINGENCIES AND COMMITMENTS

The following table summarizes our contractual obligations as of December 31, 2020 and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):

Notes Payable	Within 1 Year 1 to 2 Years Over 2 Years Total as of December 31, 2020
	$ 37,388 $ 33,214 $ 200,166 $ 270,767
Accounts payable and accrued liabilities	6,153 – – 6,153
Accrued interest payable	209 – – 209
Total	$ 43,750 $ 33,214 $ 200,166 $ 277,129

CONTINGENCIES

The Company is involved in various legal matters arising in the ordinary course of business. The resolution of these matters is not expected to have a material adverse effect on the Company’s financial position, financial performance or cash flows. Accordingly, no provisions have been made in our financial statements.

NON–IFRS FINANCIAL MEASURES

Adjusted EBITDA

The table below shows Adjusted EBITDA, which is a non–IFRS measure that the Company defines as earnings excluding depreciation, amortization, interest and taxes. The Company believes Adjusted EBITDA is used by investors to analyze operating performance and evaluate our ability to incur and service debt and our capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. In addition, the Company believes that the adjustments for provision for loan losses, net of recoveries shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of the income or expense items. The computation of Adjusted EBITDA as presented below may differ from the computation of similarly titled measures provided by other companies (dollars in thousands):

	March 31, 2021 March 31, 2020
	(In thousands)
Net (loss) Income from continuing operations	$ (278) $ 3,320
Depreciation and amortization expenses	586 273
Provision (benefit) for income taxes	(90) 1,138
Interest expense	8,278 13,156
EBITDA	8,496 17,887
Nonrecurring adjustments	- -
Adjusted EBITDA	$ 8,496 $ 17,887

F-24

	December 31, 2020 December 31, 2019 December 31, 2018
	(In thousands)
Net income (loss) from continuing operations	$ 19,134 $ 17,706 $ (16,697)
Depreciation and amortization expenses	1,890 1,008 8
Provision (benefit) for income taxes	6,899 6,912 (6,395)
Interest expense	43,205 52,459 50,184
EBITDA	71,128 78,085 27,100
Nonrecurring adjustments
Note Receivable Charge off	– – 6,150
Adjusted EBITDA	$ 71,128 $ 78,085 $ 33,250

CAPITAL MANAGEMENT

The Company manages its capital to maintain its ability to continue as a going concern and to provide adequate returns to shareholders by way of share appreciation and dividends. The capital structure of the Company consists of Notes Payable and shareholder’s equity, which includes share capital, accumulated other comprehensive income (loss) and retained earnings. Notes Payable includes various financing facilities, short–term notes, and Economy Disaster Injury Loan provided by Small Business Administration.

The Company manages its capital structure and adjusts it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuance and increasing or decreasing Notes Payable or by undertaking other activities as deemed appropriate under specific circumstances. The Company’s strategy, objectives, measures, definitions and targets have not changed significantly in the past year.

The Company has externally imposed capital requirements as governed through its financing facilities. These requirements are to ensure the Company continues to operate in the normal course of business and to ensure the Company manages its debt relative to net worth. The capital requirements are congruent with the Company’s management of capital.

The Company monitors capital based on the financial covenants of its financing facilities.

For the three months ended March 31, 2021 and years ended December 31, 2020 and 2019, the Company was in compliance with all its externally imposed financial covenants and does not have any off–balance sheet financing arrangements. Refer to Note 9 of the Annual Financial Statements for Notes Payable details.

SHARE CAPITAL

As of the date of this MD&A, the Company had 50,000,000 common shares ($0.001) issued and outstanding and 5,555,556 authorized common shares reserved for the issuance of stock–based payments, of which 1.3 million stock options were granted to officers, directors and employees and fully vested in 2020.

RELATED PARTY TRANSACTIONS

The Company has approximately $4.2 million, $4.3 million and $4.9 million as of March 31, 2021, December 31, 2020 and 2019, respectively, of unpaid principal balance for employees’ unsecured notes payable, bearing interest at rates ranging from 10% to 12.5%, and which are generally due twelve months after issuance. Several senior

F-25

management members and employees provide the Company one-year unsecured note for working capital. The notes are recorded at par. There are no ongoing contractual or other commitments.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

For further information about the accounting policies used by the Company, please refer to the Unaudited Interim and Annual Financial Statements and notes thereto for the three months ended March 31, 2021 and fiscal years ended December 31, 2020 and 2019, which have been prepared in accordance with IFRS and with interpretation of the IFRIC.

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Critical accounting estimates represent estimates made by management that are, by their very nature, uncertain. Management evaluates its estimates on an ongoing basis. Such estimates are based on assumptions that management believes are reasonable under the circumstances, and these estimates form the basis for making judgments about the carrying value of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. A summary of the significant judgements and estimates are included in Note 4 to the Annual Financial Statements. See also Note 2 to the Unaudited Interim and Annual Financial Statements for the Company’s significant accounting policies used by management in the preparation of its financial information.

MANAGING RISK

Except as otherwise disclosed in this MD&A and in the Unaudited Interim and Annual Financial Statements, there have been no significant changes to the nature and scope of the risks faced by the Company. Such business risks should be considered by interested parties when evaluating the Company’s performance and its outlook.

F-26

APPENDIX G – NEXTPOINT FINANCIAL UNAUDITED PRO FORMA FINANCIAL STATEMENTS

(See attached)

==> picture [50 x 37] intentionally omitted <==

G-1

NextPoint Financial Inc.

Unaudited pro forma combined financial statements

As at March 31, 2021, for the three months ended March 31, 2021 and for the year ended December 31, 2020

G-2

Unaudited Pro Forma Combined Statement of Financial Position

As at March 31, 2021

(in thousands of US dollars)

	NextPoint (Note 7) Liberty Tax (Note 5) LoanMe (Note 6)	Pro forma adjustments Note 3	Pro forma Combined (no redemption scenario)	Pro forma adjustments Note 3	Pro forma Combined (25% redemption scenario)
	163 19,680 7,029 200,064 - - - 40,716 15,453 - 9,930 - - - 32,414 - - 22,483 37 16,101 1,651 200,263 86,427 79,030 - 2,703 383 - 3,097 - - - 237,747 - 9,063 - - 29,511 5,800 - 7,244 6,182 - 2,043 - 200,263 140,088 329,142 - 401 41,200 - 4,640 1,281 3,356 12,876 4,559 7,583 672 20,798 1,414 10,300 - - 197,385 - - 211,713 38,715 56,037 - 1,627 208,789 - 4,483 5,746 - 2,260 15,779 211,713 47,085 286,351 - 94,113 - 5,860 - 50 698 - (1,110) 110,829 (17,310) - (68,786) (11,451) 93,003 42,791 200,263 140,088 329,142	200,064 (a) 25,000 (b) (5,000) (c) (197,055) (d) (8,325) (e) - (f) (200,064) (a) (185,380) 96,701 (d) 123,589 (d) 34,910 - (f) (2,000) (c) (197,385) (a) (199,385) 43,129 (d) (156,256) (94,113) (d) 197,385 (a) 25,000 (b) 115,900 (d) (50) (d) (698) (d) (109,719) (d) (3,000) (c) 68,786 (d) (8,325) (e) 191,166 34,910	41,555 - 56,169 9,930 32,414 22,483 - - 17,789 180,340 3,086 3,097 237,747 105,764 158,900 13,426 2,043 704,403 41,601 5,921 18,791 7,583 22,884 10,300 - 107,080 210,416 10,229 61,168 388,893 - 344,145 - - (28,635) 315,510 704,403	38,000 (f) (50,012) (a) (12,012) (12,012) 38,000 (f) 38,000 38,000 (50,012) (a) (50,012) (12,012)	29,543 - 56,169 9,930 32,414 22,483 - - 17,789
Current Assets: Cash and Cash Equivalents Restriced cash and securities held in escrow account Current Receivables, Net Unsecured Loans Receivable at Cost Unsecured Loans Receivable at Fair Market Value Investments in Bonds and residual interest in securitized trusts [Extra line 1] [Extra line 2] Other Current Assets Total Current Assets Property and Equipment, Net Unsecured Loans Receivable at Cost, Non-Current Unsecured Loans Receivable at Fair Market Value, Non-Current Goodwill, Net Intangible Assets, Net Operating Lease Right-of-Use-Assets Other Non-Current Assets Total Assets Current Liabilities: Current Installments of Long-Term Obligations Current Lease Liabilities Accounts Payable and Accrued Expenses Forward Loan Sale Deposits Other Current Liabilities Class A and B warrants liability Class A Restricted Voting Units Total Current Liabilities Long-Term Obligations, Excluding Current Installments Non-Current Lease Liabilities Other Non-Current Liabilities Total Liabilities Member's Capital Share Capital Contributed Surplus Accumulated Other Comprehensive Income/(Loss) Retained Earnings Total Equity Total Liabilities and Equity
					168,328 3,086 3,097 237,747 105,764 158,900 13,426 2,043
					692,391
					79,601 5,921 18,791 7,583 22,884 10,300 -
					145,080 210,416 10,229 61,168
					426,893 - 294,133 - - (28,635)
					265,498
					692,391

The accompanying notes are an integral part of these unaudited pro forma combined financial statements.

G-3

Unaudited Pro Forma Combined Statement of Income (Loss) and Comprehensive Income (Loss)

For the three months ended March 31, 2021

(in thousands of US dollars, except per share amounts)

	NextPoint (Note 7) Liberty (Note 5) LoanMe (Note 6)	Pro forma adjustments Note 3	Pro forma combined (no redemption scenario)	Pro forma adjustments Note 3	Pro forma combined (25% redemption scenario)
Revenues: Interest Income Interest Expense Net Interest Income Income From Unsecured Loans at Fair Value Gain on Sale of Loans Service Revenue Total Revenues Operating Expenses: Employee Compensation Advertising Expense Servicing Expense Provision for Finance Receivable Losses Selling, General and Administrative Impairment on securitized asset Net unrealized loss on change warrants liabilities Amortization of Issuance Cost on Class A Shares Total Operating Expenses Income From Operations Other (Income) Expense: Interest Expense, Net Other (income) expense, Net Income Before Income Taxes Income Tax Expense Net Income Net Income (Loss) per Share - basic Weighted average shares outstanding - basic Net Income (Loss) per Share - diluted Weighted average shares outstanding - diluted Items that may be subsequently reclassified to profit or loss Net gain/(loss) on interest rate swap agreement Net loss on foreign currency forward contracts Exchange gain/(loss) on translation of foreign operations Change in fair value of consumer loans and boands and residual interest in securitized trusts, net of tax Allowance for loan losses Total other comprehensive income Total comprehensive income (loss)	- 956 39,586 - - 8,191 - 956 31,395 - - - - - 1,427 - 75,524 - - 76,480 32,822 - 10,936 3,068 - 4,244 1,208 - - 1,933 - - 21,793 4,698 19,251 2,744 - - 2,356 4,532 - - 1,901 - - 11,132 34,431 33,102 (11,132) 42,049 (280) 2 93 87 - (153) - (11,134) 42,109 (367) - 2,312 (90) (11,134) 39,797 (277) (1.94) - - 5,750,000 - - (1.94) 5,750,000 - (48) - - (17) - - (222) - - - 517 - - 3,700 - (287) 4,217 (11,134) 39,510 3,940			- - - - 1,325 (k) (1,325) (358) (l) (967) - (967)	40,542 8,191
			40,542
			8,191
		- - 1,686 (g) (2,000) (h) (1,901) (i) (2,215) 2,215 2 (j) 2,213 598 (l) 1,615	32,351 - 1,427 75,524 109,302 14,004 5,452 1,933 21,793 26,379 2,356 4,532 - 76,449 32,853 184 (153) 32,821 2,820 30,001 0.76 39,677,800 0.75 39,804,995 (48) (17) (222) 517 3,700 3,930 33,931		32,351 - 1,427 75,524
					109,302 14,004 5,452 1,933 21,793 26,379 2,356 4,532 -
					76,449
					32,853 1,509 (153)
					31,496 2,462
					29,034
					0.84 34,677,800 0.83 34,804,995 (48) (17) (222) 517 3,700
		-			3,930
		1,615			32,964

The accompanying notes are an integral part of these unaudited pro forma combined financial statements.

G-4

Unaudited Pro Forma Combined Statement of Income (Loss) and Comprehensive Income (Loss)

For the year ended December 31, 2020

(in thousands of US dollars, except per share amounts)

	NextPoint (July 16 - Dec 31, 2020) (Note 7) Liberty (Note 5) LoanMe (Note 6)	Pro forma adjustments Note 3	Pro forma combined (no redemption scenario)	Pro forma adjustments Note 3	Pro forma combined (25% redemption scenario)
Revenues: Interest Income Interest Expense Net Interest Income Income From Unsecured Loans at Fair Value Gain on Sale of Loans Service Revenue Total Revenues Operating Expenses: Employee Compensation Advertising Expense Servicing Expense Provision for Finance Receivable Losses Selling, General and Administrative Impairment on securitized asset Net unrealized loss on change warrants liabilities Amortization of Issuance Cost on Class A Shares Total Operating Expenses Income From Operations Other (Income) Expense: Interest Expense, Net Other (income) expense, Net Income Before Income Taxes Income Tax Expense Net Income Net Income (Loss) per Share - basic Weighted average shares outstanding - basic Net Income (Loss) per Share - diluted Weighted average shares outstanding - diluted Items that may be subsequently reclassified to profit or loss Net gain/(loss) on interest rate swap agreement Exchange gain/(loss) on translation of foreign operations Change in fair value of consumer loans and boands and residual interest in securitized trusts, net of tax Allowance for loan losses Total other comprehensive income Total comprehensive income (loss)	- 3,624 212,448 - 94 43,025 - 3,530 169,423 - - - - - 13,229 - 119,151 - - 122,681 182,652 - 34,817 9,746 - 11,803 5,698 - - 14,601 - - 107,587 2,469 55,086 10,698 - - 8,108 685 - - 3,022 - - 6,176 101,706 156,438 (6,176) 20,975 26,214 - 5,225 180 - (107) - (6,176) 15,857 26,034 - 1,186 6,899 (6,176) 14,671 19,135 (1.07) - - 5,750,000 - - (1.07) 5,750,000 - (103) - - 244 - - - 7,080 - - (20,335) - 141 (13,255) (6,176) 14,812 5,880			- - - - 5,300 (k) (5,300) (1,431) (l) (3,869) - (3,869)	216,072 43,119
			216,072
			43,119
		- - 6,687 (g) 5,000 (h) (3,022) (i) 8,665 (8,665) - (j) (8,665) (2,339) (l) (6,326)	172,953 - 13,229 119,151 305,333 44,563 17,501 14,601 107,587 79,940 8,108 685 - 272,985 32,348 5,405 (107) 27,050 5,746 21,304 0.54 39,677,800 0.54 39,804,995 (103) 244 7,080 (20,335) (13,114) 8,190		172,953 - 13,229 119,151
					305,333 44,563 17,501 14,601 107,587 79,940 8,108 685 -
					272,985
					32,348 10,705 (107)
					21,750 4,315
					17,435
					0.50 34,677,800 0.50 34,804,995 (103) 244 7,080 (20,335)
		-			(13,114)
		(6,326)			4,321

The accompanying notes are an integral part of these unaudited pro forma combined financial statements.

G-5

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

1. Description of the Proposed Transaction

On February 22, 2021, NextPoint Acquisition Corp (“NAC”) announced that it had entered into definitive purchase agreements with respect to each of Franchise Group Intermediate L 1, LLC (“Liberty”) and LM Holdco (“LoanMe”) pursuant to which NAC shall acquire, directly or indirectly, all of the equity interests of each of Liberty and LoanMe. The acquisition of Liberty and LoanMe (collectively, the “Target Businesses”) by NAC is referred to in the pro forma financial information as the “Transaction” and is intended to constitute NAC’s qualifying acquisition pursuant to the Toronto Stock Exchange Company Manual.

Liberty is the tax preparation business of Franchise Group, Inc. Through its system of income tax preparation offices, Liberty also facilitates refund-based tax settlement financial products, such as Refund Transfer products in the U.S. and personal income tax refund discounting in Canada. Liberty also offers online tax preparation services.

LoanMe, a Nevada corporation, operates as a specialty finance lender in the United States of America. LoanMe engages in the business of marketing and originating unsecured consumer installment loans (“consumer loans”) to individuals and businesses that respond to radio, television and internet advertisements. Headquartered in Anaheim, California, LoanMe is licensed in various states, with lending concentration in California.

NAC is a special purpose acquisition corporation incorporated under the laws of the Province of British Columbia for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization, or any other similar business combination involving NAC (a “qualifying acquisition”). NAC was incorporated on July 16, 2020 under the Business Corporations Act (British Columbia), and is domiciled in Canada. The registered office of NAC is located at 595 Burrard Street, Suite 2600, Three Bentall Centre, Vancouver, BC, V7X 1L3, Canada. NAC completed its initial public offering on August 11, 2020 for gross proceeds of US$200 million. The gross proceeds of the initial public offering were placed in an escrow account and will be released upon consummation of the Transaction in accordance with the terms and conditions of the Escrow Agreement.

Upon completion of the Transaction, NAC will be renamed NextPoint Financial Inc. (“NextPoint Financial”).

Under the Transaction Agreements, at the closing of the Transaction, the following principal steps, among other things, shall occur:

Pursuant to the terms of the LoanMe Agreement, LoanMe will engage in a series of transactions resulting in LM Holdco becoming the sole stockholder of LoanMe prior to the Effective Time. These transactions are under common control and do not result in any step-ups in values or other changes which would impact the historical financial statements of LoanMe or these pro forma financial statements.
NAC will complete a Private Placement of 2,500,000 non-voting shares of a wholly owned subsidiary of NAC at a price of US$10.00.
NAC and the wholly owned subsidiary undertaking the Private Placement will amalgamate and each nonvoting share of the private placement subsidiary will be exchanged for one Class A Restricted Voting Share
Class A Restricted Voting Shares and Class B Shares will convert into Common Shares and Proportionate Voting Shares, as applicable
NAC will acquire each of Liberty and LoanMe for a combination of cash and shares

G-6

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

2. Basis of Presentation

The unaudited pro forma combined statement of financial position as at March 31, 2021, the unaudited pro forma combined statement of comprehensive income for the three months ended March 31, 2021 and for the twelve months ended December 31, 2020 (collectively, the “unaudited pro forma combined financial statements”), have been prepared by management for illustrative purposes only and give effect to the Transaction. The unaudited pro forma combined financial statements have been prepared on the basis of the assumptions and adjustments described below and in subsequent notes.

The unaudited pro forma combined financial statements have been derived from and should be read in conjunction with the following financial statements:

The unaudited consolidated financial statements of NAC as at March 31, 2021 and for the three months ended March 31, 2021 and the restated audited consolidated financial statements of NAC for the period from July 16, 2020 (date of incorporation) to December 31, 2020
The unaudited consolidated financial statements of Liberty as at March 27, 2021 and for the three months ended March 27, 2021 and the audited combined consolidated financial statements of Liberty for the twelve months ended December 26, 2020
The unaudited consolidated financial statements of LoanMe as at March 31, 2021 and for the three months ended March 31, 2021 and the audited consolidated financial statements of LoanMe for the 12 months ended December 31, 2020

The unaudited pro forma combined statement of financial position has been prepared to give effect to the Transaction and related transactions summarized below as if they had been consummated on March 31, 2021. The unaudited pro forma combined statement of comprehensive income for the three months ended March 31, 2021 and for the twelve months ended December 31, 2020 gives effect to the Transaction and related transactions summarized below as if they had been consummated on January 1, 2020, although NAC was formed on July 16, 2020 the Target Businesses operated for the complete fiscal year.

The unaudited pro forma combined financial statements, including the notes thereto, should be read in conjunction with Liberty, LoanMe and NAC’s historical financial statements, and their respective Management’s Discussion and Analysis of financial condition and results of operations.

NAC is considered the legal and accounting acquirer of Liberty and LoanMe as a result of NAC acquiring control of Target Businesses following the transaction. NAC has been identified as the accounting acquirer as NAC controls Liberty and LoanMe through its controlling voting rights in the post combination entity. The unaudited pro forma combined financial statements were prepared using the acquisition method of accounting in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) - IFRS 3, Business Combinations (“IFRS 3”). Under acquisition accounting, the measurement of the fair value of the consideration issued and of the assets acquired and liabilities assumed is dependent upon valuations which involve judgement. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma combined financial statements. Differences between these preliminary estimates and the final acquisition accounting will occur and these differences could have a material impact on the accompanying unaudited pro forma combined financial statements and NextPoint Financial’s future results of operations and financial position. In preparation of the unaudited pro forma combined financial statements, certain reclassifications were made to the historical financial statements of each of the Target Businesses and NAC in order to align with the expected financial statement presentation to be adopted following the close of the Transaction, as described in the notes below.

G-7

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

The accounting policies used in the unaudited pro forma combined financial statements include all adjustments necessary for the fair presentation of the transaction in accordance with the recognition and measurement principles of IFRS and incorporate the significant accounting policies expected to be used to prepare NextPoint Financial’s combined financial statements.

The unaudited pro forma combined financial statements may not be indicative of the financial position that would have prevailed and operating results that would have been obtained if the transactions had taken place on the dates indicated or of the financial position or operating results which may be obtained in the future. The unaudited pro forma combined financial statements are not a forecast or projection of future results. The actual financial position and results of operations of NextPoint Financial for any period following the closing of the Transaction will vary from the amounts set forth in the unaudited pro forma combined financial statements and such variation may be material.

There are no material transactions among NAC, Liberty and LoanMe during the periods presented in the unaudited pro forma combined financial statements that would need to be eliminated.

The unaudited pro forma combined financial statements do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the Transaction, the costs to integrate the operations of Liberty and LoanMe, or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.

3. Adjustments to the Unaudited Pro Forma Combined Financial Statements

The unaudited pro forma combined statement of financial position and combined statements of comprehensive income have been prepared to reflect the Transaction together with the related transactions summarized above and the following assumptions and adjustments. The historical financial statements have been adjusted to give pro forma effect to events that are (i) directly attributable to the Transaction and (ii) objectively determinable.

Pro forma combined balance sheet

(a) Cash released from escrow & share conversion: Adjustment to release restricted cash balance in NAC from escrow and to reflect the conversion of the Class A Restricted Voting shares into common shares upon close of the Transaction. In a scenario where 25% of the Class A Restricted Voting shareholders redeem their shares, the amount of cash available and Class A Restricted Voting Shares converted to common shares is reduced by $50 million (5,000,000 Class A Restricted Voting Shares).
(b) Private Placement: Adjustment related to the subscription for non-voting shares in a Private Placement of 2,500,000 non-voting shares of a wholly owned subsidiary of NAC at a price of US$10.00. NAC and the wholly owned subsidiary will amalgamate, and each non-voting share of the private placement subsidiary will be exchanged for one Class A Restricted Voting Share, which will then convert to common shares of NextPoint Financial.
(c) Transaction costs: Adjustment to decrease NextPoint Financial’s cash by $5 million for estimated transaction costs in connection with the Transaction, $0.5 million of which were incurred by NAC prior to December 31, 2020, $1.5 million of which were incurred by NAC in the three months ended March 31, 2021, and $3 million subsequently. These costs are comprised of investment banking, legal, audit, and accounting fees.

G-8

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

(d) Acquisitions of Liberty and Loan Me: If the Transaction had occurred on March 31, 2021, the estimated preliminary fair values of the identifiable assets and liabilities (and related tax impacts) of Liberty and LoanMe and the purchase consideration would be as follows:

(thousands of USD dollars)	Liberty	LoanMe	Total
Assets
Cash and Cash Equivalents	19,680	7,029	26,709
Current Receivables, Net	40,716	15,453	56,169
Unsecured Loans Receivable at Cost	9,930	-	9,930
Unsecured Loans Receivable at Fair Market Value	-	32,414	32,414
Investments in Bonds and residual interest in securitized trusts	-	22,483	22,483
Other Current Assets	16,101	1,651	17,752
Property and Equipment, Net	2,703	383	3,086
Unsecured Loans Receivable at Cost, Non-Current	3,097	-	3,097
Unsecured Loans Receivable at Fair Market Value, Non-Current	-	237,747	237,747
Intangible Assets, Net	140,500	18,400	158,900
Operating Lease Right-of-Use-Assets	7,244	6,182	13,426
Other Non-Current Assets	2,043	-	2,043
	242,014	341,742	583,756
Liabilities
Current Installments of Long-Term Obligations	401	41,200	41,601
Current Lease Liabilities	4,640	1,281	5,921
Accounts Payable and Accrued Expenses	12,876	4,559	17,435
Forward Loan Sale Deposits		7,583	7,583
Other Current Liabilities	20,798	1,414	22,212
Long-Term Obligations, Excluding Current Installments	1,627	208,789	210,416
Non-Current Lease Liabilities	4,483	5,746	10,229
Other Non-Current Liabilities	40,195	20,973	61,168
	85,020	291,545	376,565
Net assets	156,994	50,197	207,191
Cash	179,055	18,000	197,055
Proportionate Voting Shares	67,400	48,500	115,900
Estimated total Purchase consideration	246,455	66,500	312,955
Goodwill arising on acquisition	89,461	16,303	105,764

As a result of the acquisition, historical equity balances of Liberty and LoanMe are eliminated through the purchase accounting entries.

The preliminary purchase price allocation is based on management’s best estimate of fair value. The actual amount allocated to certain identifiable net assets could vary as the purchase price allocation is finalized.

The primary adjustments to reflect the fair value of acquired intangible assets as follows:

	$ (000's) Useful Life
Technology Customer & Franchise Relationships Brand	11,200 8 years 124,400 5 - 10 years 19,000 Indefinite 154,600

As a result of the recognition of significantly more intangible assets, a deferred tax liability of 43,129 was recognized.

G-9

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

(e) Deferred underwriting costs: Adjustment relates to the payment of the deferred underwriting commission related to the July 16, 2020 initial public offering of NAC that will be incurred on closing of the Transaction.
(f) Credit facility: NAC has entered into a commitment letter providing for $200 million in revolving credit facilities which may be used to fund the cash portion of the purchase prices payable in the Transaction. The acquisition of Liberty is, among other things, subject to the amount of cash held by the Escrow Agent after giving effect to any and all redemptions of Class A Restricted Voting Shares plus any amount of cash drawn from the credit facility but not to be less than $215 million. To the extent redemptions of Class A Restricted Voting Shares cause NAC to not meet the minimum cash requirement, a drawdown of the credit facility will be required. A $2 million commitment fee is payable on the first use of the facility. In a scenario where there are no redemptions of Class A Restricted Voting Shares, the credit facility is not required to meet the Liberty minimum cash requirement. In a scenario of 25% redemptions, a drawdown on the credit facility of $40 million and payment of the $2 million commitment fee will be required as part of closing of the Transaction.

Pro forma combined income statement

(g) Amortization of acquired intangibles: Reflects the incremental amortization of definite-lived intangibles arising on the acquisitions of Liberty and LoanMe. The definite-lived intangible assets relate to Technology, Franchise Relationships and Customer Relationships with estimated useful lives ranging from 5 - 10 years and expected amortization is as follows:

	12 months ended December 26, 2020 3 months ended March 27, 2021 $ (000's) $ (000's)
Annual amoritzation of intangible assets Less: Amount already reflected in Liberty historical financial statements Less: Amount already reflected in LoanMe historical financial statements Pro forma adjustment for incremental amortization	16,880 4,220 (9,540) (2,300) (653) (233)
	6,687 1,687

(h) Transaction costs: Reflects estimated transaction costs associated with the Transaction of $5.0 million to be incurred subsequent to December 31, 2020 and the removal of the $2.0m incurred in the three-month period ended March 31, 2021.
(i) Reversal of amortization of issuance cost on Class A Shares: Reflects the reversal of amortization expense related to issuance costs on Class A shares as the Class A Restricted Voting Shares would have been converted into common shares of NextPoint Financial as a result of the Transaction.
(j) Reversal of NAC interest expense & interest income: Reflects a decrease in interest expense of $18 and $48 for interest related to the NAC Class A Restricted Voting Units, as the Class A Restricted Voting Shares

G-10

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

would have been converted into common shares of NextPoint Financial as a result of the Transaction for the three months ended March 31, 2021 and for the 12 months ended December 31, 2020. Also reflects a decrease in interest income $16 and $48 related to cash held in escrow for the three months ended March 31, 2021 and for the 12 months ended December 31, 2020 as the cash would have been used in the Transaction.

(k) Interest on credit facility: Reflects interest expense related to the drawdown of the credit facility at 12.0% per annum in addition to the amortization of $2 million commitment fee due on initial drawdown of the facility over four years.
(l) Tax: Reflects the tax impact of pro forma income statement adjustments at NextPoint Financial’s statutory rate of 27%

4. Share Capital and income (Loss) Per Share

The pro forma net income (loss) per share is calculated using the pro forma weighted average number of shares which would have been outstanding for the three months ended March 31, 2021 and for the twelve months ended December 31, 2020 assuming completion of the Transaction on January 1, 2020.

Basic and diluted net income (loss) per share is calculated by dividing the net loss for the period by the pro forma weighted average number of common shares and dilutive shares that would have been outstanding during the period using the treasury stock method. Warrants are excluded from the diluted EPS calculation as they were out of the money as compared to the average share price in the pro forma period.

The weighted average number of common shares was determined by taking the historical weighted average number of common shares outstanding of NextPoint Financial and adjusting for the shares issued under the Transaction:

	NAC	Private Placement Sub	NextPoint Financial
	Class A Shares Class A Warrants Class B Shares Class B Warrants	Non-Voting Shares	Warrants Common Shares Proportionate Voting Shares
NAC Shares oustanding as at December 31, 2020 Share impacts of the Transaction: Private Placement of non-voting shares Issuance of proportionate voting shares for Liberty Tax acquisition Issuance of proportionate voting shares for LoanMe acquisition Exchange of Private Placement non-voting shares for Common Conversion of Class A shares to Common Shares Conversion of Class B shares to Proportionate Voting Shares Conversion of Class A & B Warrants for Common Share Warrants	20,000,000 10,000,000 5,750,000 300,000 (20,000,000) (5,750,000) (10,000,000) (300,000)	2,500,000 (2,500,000)	67,400 46,878 2,500,000 20,000,000 57,500 10,300,000
	- - - -	-	10,300,000 22,500,000 171,778

G-11

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

Weighted Average Number of Common Shares	No Redemption Scenario 25% Redemption Scenario 22,500,000 22,500,000 17,177,800 17,177,800 - (5,000,000) 39,677,800 34,677,800 127,195 127,195 39,804,995 34,804,995	No Redemption Scenario 25% Redemption Scenario 22,500,000 22,500,000 17,177,800 17,177,800 - (5,000,000) 39,677,800 34,677,800 127,195 127,195 39,804,995 34,804,995
Common Shares Add: Converted Proportionate Voting Shares Less: Redemption scenario shares Total weighted average number of common shares outstanding - basic Add: LoanMe Share Options Total weighted average number of common shares outstanding - diluted		22,500,000 17,177,800 -
		39,677,800 127,195 39,804,995

5. Reclassifications to map Liberty’s historical financial statement line items to the NextPoint Financial presentation

The tables below present reclassification adjustments to reconcile between the historical financial statement line item presentation of Liberty and the go forward NextPoint Financial classification:

G-12

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

Balance Sheet

Historical classification

Amount
NextPoint Financial classification

Current receivables, net
Of which:
Accounts receivable
Allowance for doubtful accounts - current
Notes receivable - current
Allowance for doubtful accounts - current
Interest receivable, net of uncollectible amounts
Allowance for doubutful accounts (AFDA)
Assets held for sale
Deferred income tax asset
Other current assets
Income tax receivable
Net investment in sublease
Deferred tax assets
Other non-current assets
Current financial liabilities
Due to Area Developers (ADs)
Income taxes payable
Deferred Revenue - current
Related party payable
Non-current financial liabilities
Deferred revenue - non-current
Deferred income tax liability
Long-term income taxes payable

50,646
45,925
(5,209)
40,716
Current Receivables, Net
9,702
(1,270)
1,498
9,930
Unsecured Loans Receivable at Cost
(5,209) AFDA - Current Receivables, Net
(1,270) AFDA - Unsecured Loans Receivable at Cost
(6,479)
3,755
-
10,123
2,223
16,101
Other Current Assets
859
182
1,002
2,043
Other Non-Current Assets
4,640
Current Lease Liabilities
6,556
3,136
4,625
6,481
20,798
Other Current Liabilities
4,483
Non-Current Lease Liabilities
2,260
-
-
2,260
Other Non-Current Liabilities

G-13

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

Income Statement, for	the twelve months ended December 26, 2020	the twelve months ended December 26, 2020
Historical classification	Amount	NextPoint Financial classification
Franchise fees	1,055
Area Developer fees	3,206
Royalties and advertising fees	56,753
Financial products	31,824
Assisted tax preparation fees, net of discounts	15,893
Electronic filing fees	2,666
Other revenues	7,754
	119,151	Service Revenue
Area Developer expense	9,627
Depreciation and amoritization	15,555
Selling, general and administrative expenses	29,904
	55,086	Selling, General and Administrative
	94	Interest Expense
	5,225	Interest Expense, Net
Finance costs	5,319

Income Statement, for the three months ended March 27, 2021	Income Statement, for the three months ended March 27, 2021	Income Statement, for the three months ended March 27, 2021
Historical classification	Amount	NextPoint Financial classification
Franchise fees	374
Area Developer fees	117
Royalties and advertising fees	37,594
Financial products	23,009
Assisted tax preparation fees, net of discounts	9,434
Electronic filing fees	1,814
Other revenues	3,182
	75,524	Service Revenue
Area Developer expense	5,001
Depreciation and amoritization	4,118
Selling, general and administrative expenses	10,132
	19,251	Selling, General and Administrative
Finance costs	93	Interest Expense, Net

6. Reclassifications to map LoanMe’s historical financial statement line items to the NextPoint Financial presentation

The tables below present reclassification adjustments to reconcile between the historical financial statement line item presentation of LoanMe and the go-forward NextPoint Financial classification:

G-14

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

	Balance Sheet
Historical classification	Amount NextPoint Financial classification
Accrued interest receivable Prepaid expenses and other assets Merchant cash advance receivable Consumer and business loans receivable, at fair value Notes payable Lease liabilities Income tax payable Accrued interest payable Deferred income taxes, net	15,453 Current Receivables, Net 1,380 271 1,651 Other Current Assets 32,414 Unsecured Loans Receivable at Fair Market Value 237,747 Unsecured Loans Receivable at Fair Market Value, Non-Current 270,161 41,200 Current Installments of Long-Term Obligations 208,789 Long-Term Obligations, Excluding Current Installments 249,989 7,027 1,281 Current Lease Liabilities 5,746 Non-Current Lease Liabilities 7,027 734 680 1,414 Other Current Liabilities 15,779 Other Non-Current Liabilities for the twelve months ended December 31, 2020
Income Statement,
Historical classification	Amount NextPoint Financial classification
General and administrative Depreciation and amortization

7. Reclassifications to map NAC’s historical financial statement line items to the NextPoint Financial presentation

The tables below present reclassification adjustments to reconcile between the historical financial statement line item presentation of NAC and the go-forward NextPoint Financial classification:

G-15

Notes to the Unaudited Pro Forma Combined Financial Statements

(in thousands of US dollars)

	Balance Sheet	Balance Sheet
Historical classification	Amount	NextPoint Financial classification
Prepaid expenses	31
Receivable	5
	37	Other Current Assets
Accrued expenses	3,356	Accounts Payable and Accrued Expenses
Loan from Sponsor	670
Interest payable	2
	672	Other Current Liabilities

Loan from Sponsor Interest payable	670 2 672 Other Current Liabilities	670 2 672 Other Current Liabilities
Income Statement, for	the twelve months ended December 31, 2020
Historical classification	Amount	NextPoint Financial classification
Interest	48
Interest expense	48
	-	Interest Expense, Net
General and administrative	226
Professional fees	2,244
	2,469	Selling, General and Administrative

General and administrative Professional fees	226 2,244 2,469 Selling, General and Administrative	226 2,244 2,469 Selling, General and Administrative	226 2,244 2,469 Selling, General and Administrative
	Income Statement, for the three months ended March 31, 2021
Historical classification		Amount	NextPoint Financial classification
Interest		16
Interest expense		18
		2	Interest Expense, Net
General and administrative		68
Professional fees		4,631
		4,698	Selling, General and Administrative

G-16

APPENDIX H – MANDATE OF THE BOARD OF DIRECTORS

Section 1 Introduction

The members of the board of directors (respectively, the “ Directors ” and the “ Board ”) of NextPoint Financial Inc. (the “ Company ”) are elected by the shareholders of Company and are responsible for the stewardship of Company. The purpose of this mandate (the “ Board Mandate ”) is to describe the principal duties and responsibilities of the Board, as well as some of the policies and procedures that apply to the Board in discharging its duties and responsibilities.

Certain aspects of the composition and organization of the Board are prescribed and/or governed by the Business Corporations Act (British Columbia) and the constating documents of the Company.

Section 2 Chair of the Board

The chair of the Board (the “ Chair ”) shall be appointed by the board of directors. The role of the Chair is to act as the leader of the Board, to manage and coordinate the activities of the Board and to oversee execution by the Board of this written mandate.

Section 3 Board Size

The constating documents of the Company provide that the Board shall be comprised of a minimum of three (3) Directors and a maximum of twenty (20) Directors. The Board shall initially be comprised of ten (10) Directors. The Board shall periodically review its size in light of its duties and responsibilities from time to time.

Section 4 Independence

The Board shall be comprised of a minimum of three independent Directors. A Director shall be considered independent if he or she would be considered independent for the purposes of National Instrument 58-101 — Disclosure of Corporate Governance Practices .

Section 5 Role and Responsibilities of the Board

The Board is responsible for supervising the management of the business and affairs of the Company and is expected to focus on guidance and strategic oversight with a view to increasing shareholder value.

In accordance with the Business Corporations Act (British Columbia), in discharging his or her duties, each Director must act honestly and in good faith, with a view to the best interests of the Company. Each Director must also exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Section 6 Board Meetings

(1) In accordance with the constating documents of the Company, meetings of the Board may be held at such times and places as the Chair may determine and as many times per year as necessary to effectively carry out the Board’s responsibilities. The independent Directors may meet in-camera without senior executives of the Company or any non-independent directors, as required.
(2) The Chair shall be responsible for establishing or causing to be established the agenda for each Board meeting, and for ensuring information is circulated to board on a timely basis and that regular minutes of Board proceedings are kept and circulated on a timely basis for review and approval.
(3) The Board may invite, at its discretion, any other individuals to attend its meetings. Senior executives of the Company shall attend a meeting if invited by the Board.

H-1

Section 7 Delegations and Approval Authorities

(1) The Board shall appoint the chief executive officer of the Company (the “CEO”) and delegate to the CEO and other senior executives the authority over the day-to-day management of the business and affairs of Company.
(2) The Board may delegate certain matters it is responsible for to the committees of the Board, currently consisting of the Audit Committee and the C&CG Committee. The Board may appoint other committees, as it deems appropriate to the extent permissible under applicable law. The Board will, however, retain its oversight function and ultimate responsibility for such matters and associated delegated responsibilities.

Section 8 Strategic Planning Process and Risk Management

(1) The Board shall adopt a strategic planning process to establish objectives and goals for the Company’s business and shall review, approve and modify as appropriate the strategies proposed by senior executives to achieve such objectives and goals. The Board shall review and approve, at least on an annual basis, a strategic plan which takes into account, among other things, the opportunities and risks of the Company’s business and affairs.
(2) The Board, in conjunction with management, shall be responsible to identify the principal risks of the Company’s business and oversee management’s implementation of appropriate systems to seek to effectively monitor, manage and mitigate the impact of such risks. Pursuant to its duty to oversee the implementation of effective risk management policies and procedures, the Board may delegate to applicable Board committees the responsibility for assessing and implementing appropriate policies and procedures to address specified risks, including delegation of financial and related risk management to the Audit Committee and delegation of risks associated with compensation policies and practices to the C&CG Committee.

Section 9 Succession Planning, Appointment and Supervision of Senior Executives

(1) The Board shall approve the corporate goals and objectives of the CEO and, with the assistance of the C&CG Committee, review the performance of the CEO against such corporate goals and objectives. The Board shall take steps to satisfy itself as to the quality of the CEO and other senior executives of the Company and that the CEO and other senior executives create a culture of integrity throughout the organization.
(2) The Board shall approve the succession plan for the Company, including the selection, appointment, supervision and evaluation of the senior executives of Company, and shall also approve the compensation of the senior executives of Company upon recommendation of the C&CG Committee.

Section 10 Financial Reporting and Internal Controls

The Board shall review and monitor, with the assistance of the Audit Committee, the adequacy and effectiveness of the Company’s system of internal control over financial reporting, including any significant deficiencies or changes in internal control and the quality and integrity of the Company’s external financial reporting processes.

Section 11 Regulatory Filings

The Board shall approve applicable regulatory filings that require or are advisable for the Board to approve, which the Board may delegate in accordance with Section 7(2) of this mandate. These include, but are not limited to, the annual audited financial statements, interim financial statements and related management discussion and analysis accompanying such financial statements, management proxy circulars, annual information forms, offering documents and other applicable disclosure.

H-2

Section 12 Corporate Disclosure and Communications

The Board will seek to ensure that corporate disclosure of the Company complies with all applicable laws, rules and regulations and the rules and regulations of the stock exchanges upon which Company’s securities are listed. In addition, the Board shall adopt appropriate procedures designed to permit the Board to receive feedback from shareholders on material issues.

Section 13 Corporate Policies

The Board shall adopt and periodically review policies and procedures designed to ensure that the Company and its Directors, officers and employees comply with all applicable laws, rules and regulations and conduct the Company’s business ethically and with honesty and integrity.

Section 14 Review of Mandate

The Board may, from time to time, permit departures from the terms of this Board Mandate, either prospectively or retrospectively. This Board Mandate is not intended to give rise to civil liability on the part of the Company or its directors or officers to shareholders, security holders, customers, suppliers, partners, competitors, employees or other persons, or to any other liability whatsoever on their part.

The Board may review and recommend changes to the Board Mandate from time to time and the C&CG Committee may periodically review and assess the adequacy of this mandate and recommend any proposed changes to the Board for consideration.

Dated: 

Approved by:

Board of Directors of the Company

H-3

APPENDIX I - AUDIT COMMITTEE CHARTER

SECTION 1 PURPOSE

The audit committee (the “ Audit Committee ”) is a committee of the board of directors (the “ Board ”) of NextPoint Financial Inc. (the “ Corporation ”). The primary function of the Audit Committee is to assist the directors of the Corporation in fulfilling their applicable roles by:

(a) recommending to the Board the appointment and compensation of the Corporation’s external auditor;
(b) overseeing the work of the external auditor, including the resolution of disagreements between the external auditor and management;
(c) pre-approving all non-audit services (or delegating such pre-approval if and to the extent permitted by law) to be provided to the Corporation by the Corporation’s external auditor;
(d) satisfying themselves that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information, extracted or derived from its financial statements, including periodically assessing the adequacy of such procedures;
(e) establishing procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal controls or auditing matters, and for the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing and other matters;
(f) reviewing and approving any proposed hiring of current or former partner or employee of the current and former auditor of the Corporation; and
(g) reviewing and approving the annual and interim financial statements, related Management Discussion and Analysis (“ MD&A ”) and other financial information provided by the Corporation to any governmental body or the public.

The Audit Committee should primarily fulfill these roles by carrying out the activities enumerated in this Charter. However, it is not the duty of the Audit Committee to prepare financial statements, to plan or conduct internal or external audits, to determine that the financial statements are complete and accurate and are in accordance with International Financial Reporting Standards, to conduct investigations, or to assure compliance with laws and regulations or the Corporation’s internal policies, procedures and controls, as these are the responsibility of management, and in certain cases, the external auditor.

SECTION 2 LIMITATIONS ON AUDIT COMMITTEE’S DUTIES

In contributing to the Audit Committee’s discharge of its duties under this Charter, each member of the Audit Committee shall be obliged only to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Nothing in this Charter is intended to be, or may be construed as, imposing on any members of the Audit Committee a standard of care or diligence that is in any way more onerous or extensive than the standard to which the directors are subject.

Members of the Audit Committee are entitled to rely, absent actual knowledge to the contrary, on (i) the integrity of the persons and organizations from whom they receive information, (ii) the accuracy and completeness of the information provided, (iii) representations made by management as to the non-audit services provided to the Corporation by the external auditor, (iv) financial statements of the Corporation represented to them by a member of management or in a written report of the external auditors to present fairly the financial position of the Corporation in accordance with generally accepted accounting principles, and (v) any report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by any such person.

I-1

SECTION 3 COMPOSITION AND MEETINGS

The Audit Committee should be comprised of not less than three directors as determined by the Board, all of whom shall be independent within the meaning of National Instrument 52-110 – Audit Committees (“ 52-110 ”) of the Canadian Securities Administrators (or exempt therefrom), and free of any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Audit Committee. All members of the Audit Committee should have a working familiarity with basic finance and accounting practices. At least one member of the Audit Committee should have accounting or related financial management expertise and be considered a financial expert. Each member should be “financially literate” within the meaning of 52-110. The Audit Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the Corporation or an outside consultant or accredited organization.

The members of the Audit Committee shall be elected by the Board on an annual basis or until their successors shall be duly appointed. Unless a Chair of the Audit Committee (the “ Chair ”) is elected by the full Board, the members of the Audit Committee may designate a Chair by majority vote of the full Audit Committee membership.

In addition, the Audit Committee members should meet all of the requirements for members of audit committees as defined from time to time under applicable legislation and the rules of any stock exchange on which the Corporation’s securities are listed or traded.

The Audit Committee should meet at least four times annually, or more frequently as circumstances require. The Audit Committee should meet within 45 days following the end of the first three financial quarters to review and discuss the unaudited financial results for the preceding quarter and the related MD&A, and should meet within 90 days following the end of the fiscal year end to review and discuss the audited financial results for the preceding quarter and year and the related MD&A.

The Audit Committee may ask members of management or others to attend meetings and provide pertinent information as necessary. For purposes of performing their duties, members of the Audit Committee shall have full access to all corporate information and any other information deemed appropriate by them, and shall be permitted to discuss such information and any other matters relating to the financial position of the Corporation with senior employees, officers and the external auditor of the Corporation, and others as they consider appropriate.

For greater certainty, management is indirectly accountable to the Audit Committee and is responsible for the timeliness and integrity of the financial reporting and information presented to the Board.

In order to foster open communication, the Audit Committee or its Chair should meet at least annually with management and the external auditor in separate sessions to discuss any matters that the Audit Committee or each of these groups believes should be discussed privately. In addition, the Audit Committee or its Chair should meet with management quarterly in connection with the Corporation’s interim financial statements.

A quorum for the transaction of business at any meeting of the Audit Committee shall be a majority of the number of members of the Audit Committee or such greater number as the Audit Committee shall by resolution determine.

Meetings of the Audit Committee shall be held from time to time and at such place as any member of the Audit Committee shall determine upon 48 hours’ notice to each of its members. The notice period may be waived by all members of the Audit Committee. Each of the Chair of the Board, the external auditor, the Chief Executive Officer, the Chief Financial Officer or the Secretary shall be entitled to request that any member of the Audit Committee call a meeting.

This Charter is subject in all respects to the Corporation’s notice of articles and articles from time to time.

SECTION 4 ROLE

As part of its function in assisting the Board in fulfilling its oversight role (and without limiting the generality of the Audit Committee’s role), the Audit Committee should:

I-2

(1) Determine any desired agenda items;
(2) Review and recommend to the Board changes to this Charter, as considered appropriate from time to time;
(3) Review the public disclosure regarding the Audit Committee required by 52-110;
(4) Review and seek to ensure that disclosure controls and procedures and internal control over financial reporting frameworks are operational and functional;
(5) Summarize in the Corporation’s annual information form the Audit Committee’s composition and activities, as required; and
(6) Submit the minutes of all meetings of the Audit Committee to the Board.

Documents / Reports Review

(7) Review and recommend to the Board for approval the Corporation’s annual and interim financial statements, including any certification, report, opinion, undertaking or review rendered by the external auditor and the related MD&A, as well as such other financial information of the Corporation provided to the public or any governmental body as the Audit Committee or the Board require.
(8) Review other financial information provided to any governmental body or the public as they see fit.
(9) Review, recommend and approve any of the Corporation’s press releases that contain financial information.
(10) Seek to satisfy itself and ensure that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements and related MD&A and periodically assess the adequacy of those procedures.

External Auditor

(11) Recommend to the Board the selection of the external auditor, considering independence and effectiveness, and review the fees and other compensation to be paid to the external auditor.
(12) Review and seek to ensure that all financial information provided to the public or any governmental body, as required, provides for the fair presentation of the Corporation’s financial condition, financial performance and cash flow.
(13) Instruct the external auditor that its ultimate client is not management and that it is required to report directly to the Audit Committee, and not management.
(14) Monitor the relationship between management and the external auditor including reviewing any management letters or other reports of the external auditor and discussing any material differences of opinion between management and the external auditor.
(15) Review and discuss, on an annual basis, with the external auditor all significant relationships it has with the Corporation to determine the external auditor’s independence.
(16) Pre-approve all non-audit services (or delegate such pre-approval as the Audit Committee may determine and as permitted by applicable Canadian securities laws) to be provided by the external auditor.
(17) Review the performance of the external auditor and any proposed discharge of the external auditor when circumstances warrant.

I-3

(18) Periodically consult with the external auditor out of the presence of management about significant risks or exposures, internal controls and other steps that management has taken to control such risks, and the fullness and accuracy of the financial statements, including the adequacy of internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper.
(19) Communicate directly with the external auditor and arrange for the external auditor to be available to the Audit Committee and the full Board as needed.
(20) Review and approve any proposed hiring by the Corporation of current or former partners or employees of the current (and any former) external auditor of the Corporation.

Audit Process

(21) Review the scope, plan and results of the external auditor’s audit and reviews, including the auditor’s engagement letter, the post-audit management letter, if any, and the form of the audit report. The Audit Committee may authorize the external auditor to perform supplemental reviews, audits or other work as deemed desirable.
(22) Following completion of the annual audit and quarterly reviews, review separately with each of management and the external auditor any significant changes to planned procedures, any difficulties encountered during the course of the audit and, if applicable, reviews, including any restrictions on the scope of work or access to required information and the cooperation that the external auditor received during the course of the audit and, if applicable, reviews.
(23) Review any significant disagreements among management and the external auditor in connection with the preparation of the financial statements.
(24) Where there are significant unsettled issues between management and the external auditor that do not affect the audited financial statements, the Audit Committee shall seek to ensure that there is an agreed course of action leading to the resolution of such matters.

Financial Reporting Processes

(25) Review the integrity of the financial reporting processes, both internal and external, in consultation with the external auditor as they see fit.
(26) Consider the external auditor’s judgments about the quality, transparency and appropriateness, not just the acceptability, of the Corporation’s accounting principles and financial disclosure practices, as applied in its financial reporting, including the degree of aggressiveness or conservatism and trend of its accounting principles and underlying estimates, and whether those principles are common practices or are minority practices.
(27) Review all material balance sheet and off balance sheet issues, material contingent obligations (including those associated with material acquisitions or dispositions) and material related party transactions.
(28) Review with management and the external auditor the Corporation’s accounting policies and any changes that are proposed to be made thereto, including all critical accounting policies and practices used, any alternative treatments of financial information that have been discussed with management, the ramification of their use and the external auditor’s preferred treatment and any other material communications with management with respect thereto.
(29) Review the disclosure and impact of contingencies and the reasonableness of the provisions, reserves and estimates that may have a material impact on financial reporting.

I-4

(30) If considered appropriate, establish separate systems of reporting to the Audit Committee by each of management and the external auditor.
(31) Review with internal audit and accounting management the activities of the internal audit function.
(32) Have final authority to review and approve the annual audit plan and all major changes to the plan.
(33) Review the effectiveness of the internal audit function and ensure there are no unjustified restrictions or limitations.
(34) Meet with internal audit management and the CFO together or separately, as necessary

Risk Management

(35) Review program of risk assessment and steps taken to address significant risks or exposures of all types, including insurance coverage and tax compliance.

General

(36) With prior Board approval, the Audit Committee may at its discretion retain independent counsel, accountants and other professionals to assist it in the conduct of its activities and to set and pay (as an expense of the Corporation) the compensation for any such advisors.
(37) Respond to requests by the Board with respect to the functions and activities that the Board requests the Audit Committee to perform.
(38) Periodically review this Charter and, if the Audit Committee deems appropriate, recommend to the Board changes to this Charter.
(39) Review the public disclosure regarding the Audit Committee required from time to time by applicable Canadian securities laws, including:
(a) the Charter of the Audit Committee;
(b) the composition of the Audit Committee;
(c) the relevant education and experience of each member of the Audit Committee;
(d) the external auditor services and fees; and
(e) such other matters as the Corporation is required to disclose concerning the Audit Committee.
(40) Review in advance, and approve, the hiring and appointment of the Corporation’s senior financial executives by the Corporation, if any.
(41) Perform any other activities as the Audit Committee deems necessary or appropriate including ensuring all regulatory documents are compiled to meet Committee reporting obligations under 52-110.

SECTION 5 AUDIT COMMITTEE COMPLAINT PROCEDURES

Submitting a Complaint

(1) Anyone may submit a complaint regarding conduct by the Corporation or its employees or agents (including its independent auditors) reasonably believed to involve questionable accounting, internal accounting controls or auditing matters. The Chair should oversee treatment of all material complaints.

I-5

Procedures

(2) The Chair will be responsible for the receipt and administration of employee complaints and oversee management of other material complaints.
(3) In order to preserve anonymity when submitting a complaint regarding questionable accounting or auditing matters, the employee may submit a complaint confidentially.

Investigation

(4) The Chair should review and investigate the complaint. Corrective action will be taken when and as warranted in the Chair’s discretion.

Confidentiality

(5) The identity of the complainant and the details of the investigation should be kept confidential throughout the investigatory process.

Records and Report

(6) The Chair should maintain a log of complaints, tracking their receipt, investigation, findings and resolution, and should prepare a summary report for the Audit Committee.

The Audit Committee is a committee of the Board and is not and shall not be deemed to be an agent of the Corporation’s securityholders for any purpose whatsoever. The Board may, from time to time, permit departures from the terms hereof, either prospectively or retrospectively, and no provision contained herein is intended to give rise to civil liability to securityholders of the Corporation or other liability whatsoever.

I-6

AI assistant

NextPoint Financial Inc. — M&A Activity 2021

47928_rns_2021-06-04_1e790475-4d15-4038-b76b-184a3d3da76b.pdf

PROSPECTUS

NEXTPOINT ACQUISITION CORP.

This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities.

No underwriters have been involved in the preparation of this prospectus or performed any review or independent due diligence of the contents of this prospectus.

TABLE OF CONTENTS

GLOSSARY OF TERMS

PROSPECTUS SUMMARY

Overview

Transaction Agreements

LoanMe Agreement

Investor Rights Agreement

Private Placement

Debt Financing

Principal Steps of the Transaction

Description of the Business

Board of Directors

Risk Factors

Summary of Financial Information

Pro Forma Consolidated Capitalization

Summary Pro Forma Consolidated Financial Information

Unaudited Pro Forma Consolidated Income Statements

Unaudited Pro Forma Consolidated Balance Sheet

NOTICE TO READERS

Non-IFRS Measures

Reconciliation of Non-IFRS Measures

Liberty Adjusted EBITDA Reconciliation

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

MARKET AND INDUSTRY DATA

TRADEMARKS AND TRADENAMES

CORPORATE STRUCTURE

NextPoint Acquisition Corp.

Transaction

Summary of Transaction Agreements

Liberty Agreement

Aggregate Consideration

Purchase Price Adjustment

Representations and Warranties

Conditions to Closing

Termination

LoanMe Agreement

Aggregate Consideration

See “ Transaction Agreements – LoanMe Agreement – Effect of the LoanMe Transaction

Pre-closing LoanMe Restructuring

Effect of the LoanMe Transaction

Pre-Closing Covenants

Conditions to Closing

Termination

Investor Rights Agreement

Private Placement

Debt Financing

Certain Covenants and Events of Default

Principal Steps of the Transaction

Related Party Interests

LoanMe

Private Placement

Credit Facility

Prior Valuations

Redemption Rights

Process for Redemption by Non-Registered Holders of Restricted Voting Shares

Use of Proceeds

NextPoint Financial

Inter-corporate Relationships

MARKET OVERVIEW

Tax Preparation Market

U.S. Tax Filing Composition

Paid Tax Preparation Market

Paid Preparer Market Share

Do-It-Yourself Preparation

Tax Return Market Growth

Annual U.S. Tax Returns Filed (Millions)

U.S. Federal Tax Return Filers by Income

Tax Preparation Regulatory Environment

Financial Privacy Regulation

Franchise Regulations

Consumer & Small and Medium-Sized Enterprises Finance Market

Consumer Finance Market

Total Household Debt

NextPoint Financial Inc. M&A Activity 2021