NextPoint Financial Inc. — Management Reports 2020

Nov 11, 2020

NEXTPOINT ACQUISITION CORP.

MANAGEMENT'S DISCUSSION AND ANALYSIS

As at September 30, 2020

and for the period from inception on July 16, 2020 to September 30, 2020

(Expressed in U.S. Dollars)

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 ("Interim Financial Statements") of NextPoint Acquisition Corp. (the "Corporation") for the period from inception on July 16, 2020 through September 30, 2020 and the accompanying notes thereto.

This Management's Discussion and Analysis ("MD&A") has been prepared with an effective date of November 9, 2020. The Interim 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

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 2020 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 initial public offering prospectus dated August 5, 2020 (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 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 44 South Broadway, 11th Floor, White Plains, New York, 10601, United States.

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 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.

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).

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.

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 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 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.

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.

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.

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.

SELECTED QUARTERLY INFORMATION

Below is selected information from the statement of income for the period from inception on July 16, 2020 through September 30, 2020. There is no comparative interim period available as the Corporation was incorporated on July 16, 2020.

Revenue
Interest	$13,238
Total Revenue	13,238
Expenses
Interest expense	13,238
Amortization of Issuance CostonClass A Shares	409,905
General and administrative	125,200
Professional fees	101,038
Total Expenses	$649,381
Net Loss	$(636,143)

Weighted average shares outstanding of Class B Shares, basic and diluted	6,513,125
Net Loss per Share - basic and diluted	$(0.10)

RESULTS OF OPERATIONS

The Corporation has not conducted commercial operations and it is 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 September 30, 2020, the Corporation realized a net loss of $636,143. This represents a loss of approximately $0.10 per share.

The funds raised relating to Class A Restricted Voting Units totaling $200,000,000 have been held as cash in the escrow account. During the period from inception on July 16, 2020 through September 30, 2020, the Corporation earned interest income of $13,238 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 September 30, 2020 were allocated between shareholders' equity and shares subject to redemption on the following basis:

	Class ARestrictedVoting Shares	Warrants	Class BShares	Total
Professional fees (Legal, accounting, etc.)	$638,379	$128	$15,202	$653,709
Underwriters' commission	1,849,630	370	—	1,850,000
Exchange listing	175,037	35	—	175,072
Other	4,999	1	—	5,000
Total	$2,668,045	$534	$15,202	$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 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 September 30, 2020:

Retainer and Administrative fees	$62,500
Travel	34,930

Fees to escrow agent	12,278
Amortization of prepaid expenses	13,799
Other	1,693
Total	$125,200

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 $13,238. 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).

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.

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. Although the Corporation has commenced the process of identifying potential acquisitions with a view to completing a qualifying acquisition, the Corporation has not yet entered into a definitive agreement.

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 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 September 30, 2020, the Corporation paid $62,500 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 Interim Financial Statements and notes thereto for the period ended September 30, 2020, which have been prepared in accordance with IFRS and with interpretation of the IFRIC. These financial statements meet the requirements of International Accounting Standard 34, "Interim Financial Reporting," except for certain financial instruments which are carried at fair value.

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 at inception.

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 of September 30, 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 of and during the period from inception on July 16, 2020 through September 30, 2020.

The Chief Executive Officer and the Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting as defined in NI 52-109. As the Corporation became a reporting issuer on August 5, 2020, the Corporation has elected to file the alternative form of Chief Executive Officer and Chief Financial Officer interim certificates under Form 52-109F2 IPO/RTO. This filing option is available to the Corporation under NI 52-109 as this period is the Corporation's first interim period ended since it became a reporting issuer.

MANAGING RISK

Except as otherwise disclosed in this MD&A and in 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 Prospectus, 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.

November 9, 2020