Thinkific Labs Inc. — Audit Report / Information 2021

Feb 23, 2022

Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(expressed in U.S. dollars)

KPMG LLP PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1K3 Canada Telephone (604) 691-3000 Fax (604) 691-3031

INDEPENDENT AUDITORS' REPORT

The Shareholders of Thinkific Labs Inc.

Opinion

We have audited the consolidated financial statements of Thinkific Labs Inc. (the Entity), which comprise:

• the consolidated statements of financial position as at December 31, 2021 and December 31, 2020
• the consolidated statements of loss and comprehensive loss for the years then ended
• the consolidated statements of changes in equity for the years then ended
• the consolidated statements of cash flows for the years then ended
• and notes to the consolidated financial statements, including a summary of significant accounting policies

(Hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2021 and December 31, 2020 and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditors' Responsibilities for the Audit of the Financial Statements" section of our auditors' report.

We are independent of the Entity 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 audit opinion.

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 year ended December 31, 2021. 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 be communicated in our auditors' report.

Other Information

Management is responsible for the other information. Other information comprises the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions.

Our opinion on the financial statements does not cover the other information and we do not and will 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 and remain alert for indications that the other information appears to be materially misstated.

We obtained the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditors' 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 the auditors' 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 International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), 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 Entity's ability to continue as 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 Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity's financial reporting process.

Auditors' Responsibility 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 auditors' 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 generally accepted auditing standards 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 the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, 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 Entity'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 Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' 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 auditors' report. However, future events or conditions may cause the Entity 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.

• 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.
• Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this auditors' report is Tara V. Gill.

Vancouver, Canada February 23, 2022

Consolidated Statements of Financial Position

(expressed in U.S. dollars)

		December 31,2021	December 31,2020
	Notes	$	$
Assets
Current assets
Cash and cash equivalents		126,054,833	9,066,016
Trade and other receivables	8	1,392,391	806,687
Prepaid expenses and other assets		2,769,924	572,684
Investment tax credits	7	—	915,413
Contract acquisition assets	10	159,326	—
Total current assets		130,376,474	11,360,800
Property and equipment	9	766,568	407,268
Lease right-of-use assets	11	754,320	1,167,969
Contract acquisition assets	10	407,659	—
Intangible assets		98,985	—
Total assets		132,404,006	12,936,037
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities	12	3,286,321	1,498,163
Lease liabilities	11	515,348	492,611
Deferred revenue	4	6,628,749	4,767,614
Total current liabilities		10,430,418	6,758,388
Lease liabilities	11	359,917	868,473
Total liabilities		10,790,335	7,626,861
Shareholders' equity
Share capital	16	145,583,011	6,702,059
Contributed surplus		4,865,646	1,067,037
Accumulated other comprehensive loss		(38,113)	(38,113)
Accumulated deficit		(28,796,873)	(2,421,807)
Total shareholders' equity		121,613,671	5,309,176
Total liabilities and shareholders' equity		132,404,006	12,936,037
Commitments	13
Subsequent events	22

Consolidated Statements of Loss and Comprehensive Loss

(expressed in U.S. dollars)

		Years ended December 31,
		2021	2020
	Notes	$	$
Revenue	4, 21	38,116,836	21,069,587
Cost of revenue	5, 6	8,902,802	4,452,507
Gross profit		29,214,034	16,617,080
Operating expenses
Sales and marketing	6, 10	20,130,308	7,498,233
Research and development	6, 7	19,451,221	6,344,691
General and administrative	6, 9	13,939,903	4,246,164
Total operating expenses		53,521,432	18,089,088
Operating loss		(24,307,398)	(1,472,008)
Other income (expenses)
Foreign exchange gain (loss)		(2,312,563)	205,997
Finance income (expense), net		244,895	(27,076)
Total other income (expenses)		(2,067,668)	178,921
Net loss and comprehensive loss		(26,375,066)	(1,293,087)
Weighted average number of common sharesoutstanding - basic and diluted		65,107,020	41,377,888
Loss per share
Basic and diluted	18$	(0.41) $	(0.03)

Consolidated Statements of Cash Flows

(expressed in U.S. dollars)

			Years ended December 31,
		2021	2020
	Notes	$	$
Cash from (used in):
Operating activities
Net loss		(26,375,066)	(1,293,087)
Items not affecting cash and cash equivalents:
Depreciation and amortization	9,10,11	681,330	483,050
Stock-based compensation	6, 17	4,123,669	601,454
Unrealized foreign exchange loss		2,308,276	103,666
Finance expense		37,307	44,444
Changes in non-cash working capital:
Trade and other receivables	8	(585,704)	(567,060)
Prepaid expenses and other assets		(2,197,240)	(429,762)
Investment tax credits, net	7	936,057	(298,236)
Contract acquisition assets	10	(637,789)	—
Accounts payable and accrued liabilities	12	1,592,710	1,117,433
Deferred revenue	4	1,861,135	2,871,487
Cash from (used in) operating activities		(18,255,315)	2,633,389
Investing activities
Investment in property and equipment	9	(550,502)	(289,795)
Investment in intangible assets		(104,660)	—
Cash used in investing activities		(655,162)	(289,795)
Financing activities
Proceeds from issuance of shares upon IPO	16	148,616,696	—
Proceeds from issuance of shares		—	3,634,617
Share issuance costs	16	(9,891,051)	(66,168)
Operating lease payments	11	(538,826)	(447,630)
Exercise of stock options	16	68,503	27,081
Cash from financing activities		138,255,322	3,147,900
Effect of foreign exchange on cash and cash equivalents		(2,356,028)	(117,353)
Increase in cash and cash equivalents		116,988,817	5,374,141
Cash and cash equivalents, beginning of year		9,066,016	3,691,875
Cash and cash equivalents, end of year		126,054,833	9,066,016

Consolidated Statements of Changes in Equity

(expressed in U.S. dollars)

		Issued and outstanding
	Notes	Number ofShares	Share capital$	Contributedsurplus$	Accumulatedothercomprehensiveloss$	Accumulateddeficit$	Total$
Balance as at December 31, 2019		59,550,436	2,290,055	506,749	(38,113)	(1,128,720)	1,629,971
Net loss and comprehensive loss		—	—	—	—	(1,293,087)	(1,293,087)
Issuance of shares, net of share issuancecosts		2,160,260	4,343,757	—	—	—	4,343,757
Exercise of stock options	17	816,868	68,247	(41,166)	—	—	27,081
Stock-based compensation	6, 17	—	—	601,454	—	—	601,454
Balance as at December 31, 2020		62,527,564	6,702,059	1,067,037	(38,113)	(2,421,807)	5,309,176
Net loss and comprehensive loss		—	—	—	—	(26,375,066)	(26,375,066)
Issuance of shares upon IPO, net of shareissuance costs	16	14,156,500	138,725,645	—	—	—	138,725,645
Exercise of stock options	17	568,428	126,219	(84,129)	—	—	42,090
Vesting of restricted share units	17	2,483	29,088	(2,675)	—	—	26,413
Stock-based compensation	6, 17	—	—	3,885,413	—	—	3,885,413
Balance as at December 31, 2021		77,254,975	145,583,011	4,865,646	(38,113)	(28,796,873)	121,613,671

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

1. Organization and nature of operations

Thinkific Labs Inc. ("Thinkific" or the "Company") was incorporated on April 11, 2012 under the laws of British Columbia. Its head office is located at 400 - 369 Terminal Avenue, Vancouver, British Columbia, Canada.

The Company's primary business activity is to provide a platform that helps entrepreneurs and established businesses to start and grow their companies by creating and selling online learning products like courses and memberships. The Company's platform provides its customers with the critical functionalities they need to create customized online learning products such as courses and membership sites, market and sell those products to drive revenue, and deliver and engage with their students.

The Company's Subordinate Voting Shares are publicly traded on the Toronto Stock Exchange ("TSX") under the symbol "THNC".

2. Basis of preparation

Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the IFRS Interpretations Committee ("IFRIC").

Initial public offering

On April 27, 2021, the Company completed an Initial Public Offering ("IPO") on the TSX and issued 12,310,000 Subordinate Voting Shares for gross proceeds of $129,040,842 (CAD $160,030,000). On May 5, 2021, the underwriters fully exercised an over-allotment option to purchase an additional 1,846,500 Subordinate Voting Shares for gross proceeds of $19,575,854 (CAD $24,004,500). Total share issuance costs relating to the IPO and over-allotment option amounted to $9,891,051 (CAD $12,235,704). Net proceeds relating to the IPO and over-allotment option amounted to $138,725,645 (CAD $171,798,796).

On April 23, 2021, the Company effected a 4-for-1 split of each of its outstanding multiple voting shares of the Company (the "Multiple Voting Shares") and subordinate voting shares of the Company (the "Subordinate Voting Shares") (the "Share Split"). All share and per share data presented in the consolidated financial statements have been retroactively adjusted to reflect the Share Split. Refer to Note 16 for additional information.

These consolidated financial statements were approved for issue by the Company's Board of Directors on February 23, 2022.

Basis of measurement

These consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities which are measured at fair value.

The Company's functional currency is the U.S. dollar and all amounts are reported in U.S. dollars unless otherwise noted. References to "CAD" refers to the Canadian dollar. Transactions in foreign currencies are translated into the Company's functional currency on the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value is determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

Basis of consolidation

These consolidated financial statements consist of the financial statements of the Company and its wholly owned subsidiary, Thinkific.com Inc. The financial statements of the wholly owned subsidiary are prepared for the same period as the Company, using consistent accounting policies. All intercompany balances and transactions have been eliminated upon consolidation.

Use of judgements, estimates and assumptions

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Management reviews its estimates and underlying assumptions on an ongoing basis based on management's best knowledge of current events and actions that the Company may undertake in the future. Revisions to estimates are recognized prospectively.

The following are the key judgements, estimates and assumptions management considers to be material to the consolidated financial statements:

Revenue recognition

Our primary source of revenue is subscriptions to our cloud-based Platform. Subscriptions to the cloudbased Platform may include promises to transfer cloud services and professional services. A performance obligation is a commitment in a contract with a customer to transfer products or services that are distinct. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment.

Stock-based compensation

The Company measures the cost of stock-based awards with employees by reference to the fair value of the related instruments at the date at which they are granted. Estimating fair value for stock-based compensation requires determining the most appropriate valuation model for a grant, which depends on the terms and conditions of the grant. This also requires making assumptions and determining the most appropriate inputs to the valuation model including: the fair value of the underlying shares, the expected life of the option, volatility, forfeiture rate, risk-free rate and dividend yield. Variation in actual results for any of these inputs will result in a different value of the stock option realized from the original estimate. The assumptions and estimates used are further outlined in Note 17.

Income tax

In assessing deferred income tax assets, management considers whether it is probable that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the years in which those temporary differences become deductible.

Management's judgment is required to determine the amount of deferred income tax assets that can be recognized, based upon the likely timing and the level of future taxable income together with future tax planning strategies.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

3. Significant accounting policies

Revenue recognition

The Company's primary source of revenue consists of software subscriptions to its cloud-based platform. The cloud-based platform provides customers the right to access its software through the internet. The Company's cloud-based platform presents a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. These services are made available to the customer continuously throughout the contractual period. However, the extent to which the customer uses the services may vary at the customer's discretion.

A performance obligation is a commitment in a contract with a customer to transfer products or services that are distinct. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment. The Company's cloud-based platform is considered to have a single performance obligation where the customer simultaneously receives and consumes the benefit, and as such revenue is recognized rateably over the term of the contractual agreement, except when customers are invoiced based on usage. Revenue provided on a usage basis is recognized as usage occurs.

The Company generally receives payment for the full subscription contract up front. In all other cases, payment terms and conditions vary by contract type, although terms include a requirement for payment within 30 days of the invoice date. In instances where the timing of revenue recognition differs from the timing of invoicing and subsequent payment, the Company has determined that such contracts generally do not include a significant financing component.

Money-back guarantee

We offer customers a 30-day money back guarantee whereby customers are permitted to receive a full refund within 30 days from initiation of the contract. Revenue is reduced for returns based on the estimate of future returns originating from subscription agreements with customers.

Deferred revenue

Payments received in advance of services being rendered are recorded as deferred revenue and recognized rateably over the requisite service period.

Contract acquisition assets

The Company capitalizes the incremental costs of obtaining sales contracts as contract acquisition assets. These costs consist of sales commissions paid to the Company's sales force, as well as employee incentive payouts under compensation plans that are tied to the value of long-term customer contracts acquired. Contract acquisition assets are generally amortized on a straight-line basis commensurate with the average term of the related contracts. Amortization of contract acquisition assets is included in sales and marketing expenses.

Research and development costs

Research and development costs are expensed as incurred.These costs primarily consist of personnel and related expenses, contractor and consultant fees, stock-based compensation, and corporate overhead allocations.

Prior to Company's IPO on April 27, 2021, the Company recognized the benefit of refundable research and development investment tax credits as a reduction of research and development costs. After the IPO the Company is no longer eligible to receive refundable tax credits, and research and development expenses are no longer reduced by these refundable amounts.

The Company is eligible for non-refundable investment tax credits that can only be claimed against income taxes otherwise payable are recognized as a reduction of income taxes when there is reasonable assurance that the claim will be recovered.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

Stock-based compensation

The Company accounts for stock-based awards based on the fair value of the award measured at the grant date. Accordingly, stock-based compensation cost is recognized in the statement of loss and comprehensive loss as an expense over the vesting period on a graded vesting basis.

The fair value of stock options is determined using the Black-Scholes option-pricing model. An estimate of forfeitures is applied when determining compensation expense. The Company determines the fair value of stock option awards on the date of grant using assumptions regarding expected term, share price volatility over the expected term of the awards, risk-free interest rate, and dividend rate.

The fair value of restricted share units ("RSUs") and deferred share units ("DSUs") is measured using the fair value of the Company's shares as if the units were vested and issued on the grant date. An estimate of forfeitures is applied when determining compensation expense.

Loss per share

Basic loss per share is calculated by dividing the net loss by the weighted average number of common shares (Subordinate Voting Shares and Multiple Voting Shares) outstanding during the period.

Diluted loss per share is calculated by dividing the net loss by the number of common shares used in the calculation of basic loss per share, adjusted for the number of common shares which could have had a dilutive effect on loss per share during the period, had outstanding in-the-money stock-based awards been exercised.

For periods where net losses are incurred, all potentially-dilutive securities have been excluded from the calculation of diluted loss per share, as including them would be anti-dilutive.

Cash and cash equivalents

The Company considers all highly liquid investments that are readily convertible into known amounts of cash, with original maturities at their acquisition date of three months or less to be cash equivalents.

Government assistance

Government assistance, which primarily consists of investment tax credits, is recognized when there is reasonable assurance that the asset will be received and all related conditions will be complied with.

Property and equipment

Property and equipment is stated at cost, less accumulated depreciation and impairment. Depreciation is calculated using the following methods and annual rates:

Asset	Basis	Rate
Computer and other equipment	Straight-line	3 years
Office furniture and equipment	Declining balance	20 %
Leasehold improvements	Straight-line	Term of lease

Intangible assets

The Company's intangible assets relate to acquired domain names that are stated at cost, less accumulated amortization. Amortization is calculated using the straight-line method over 15 years, the estimated useful lives of the related assets, and is recorded in general and administrative expenses.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

Leases

The Company accounts for leases by first determining if an arrangement is a lease at inception. Right-ofuse assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The right-ofuse assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company's leases do not provide an implicit rate, therefore, the incremental borrowing rate based on the information available at commencement date was used to determine the present value of lease payments. The right-of-use assets exclude lease incentives, which are accounted as a reduction of lease liabilities if they have not yet been received. The Company's lease terms may include options to extend or terminate the lease. These options are included in the lease terms when it is reasonably certain they will be exercised. Lease expense related to lease components is recognized on a straight-line basis over the lease term.

The carrying values of right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. The determination of whether any impairment exists includes a comparison of estimated undiscounted future cash flows anticipated to be generated over the remaining life of an asset or asset group to their net carrying value. If the estimated undiscounted future cash flows associated with the asset or asset group are less than the carrying value, an impairment loss will be recorded based on the estimated fair value. For right-of-use assets that are impaired, the remaining carrying value of the right-of-use assets are amortized on a straight line basis over the remaining term of the lease.

Impairment of non-financial assets

At each reporting date, the Company evaluates the carrying amount of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets or cash-generating units ("CGU"). The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of disposal. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized in the consolidated statements of income and comprehensive income for the amount by which the carrying amount of the asset or CGU exceeds its recoverable amount.

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Income taxes

Current tax

Current tax consists of current tax payable based on the Company's taxable income for the year. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not to be realized.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

The Company considers many factors when assessing the likelihood of future realization of our deferred tax assets, including our recent cumulative loss experience and expectations of future earnings, capital gains and investment in the applicable jurisdiction, the carry-forward periods available to us for tax reporting purposes, and other relevant factors.

Financial instruments

Initial recognition and measurement

Trade receivables and debt securities are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus or minus, for items not at fair value through profit or loss ("FVTPL"), transaction costs that are directly attributable to their acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at amortized cost, fair value through other comprehensive income ("FVOCI") or FVTPL. Subsequent to initial measurement, these assets are measured as follows:

• FVTPL these assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
• Amortized cost these assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized through profit or loss.
• Debt investments at FVOCI these assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income ("OCI"). On derecognition, gains and losses accumulated in OCI are reclassified to income.
• Equity investments at FVOCI these assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

Future accounting standards

The Company does not expect that any new or amended standards or interpretations that are effective for annual periods beginning on or after January 1, 2022 will have a significant impact on the Company's consolidated financial statements.

4. Revenue from contracts with customers

The Company's revenue from contracts with customers is primarily comprised of software subscriptions from its cloud-based platform.

Contract liabilities

As at December 31, 2021, the Company has deferred revenue of $6,628,749 (2020 - $4,767,614).

For the year ended December 31, 2021, $22,361,667 of deferred revenue was recognized in the consolidated statements of loss and comprehensive loss (2020 - $11,930,726).

5. Cost of revenue

	Years endedDecember 31,
	2021	2020
	$	$
Support	4,271,229	1,790,525
Hosting	2,672,917	1,900,992
Payment processing	1,550,783	685,791
Software	407,873	75,199
	8,902,802	4,452,507

6. Employee compensation

Employee compensation is primarily comprised of salaries and benefits and stock-based compensation expense. Excluding tax credits, total employee compensation for the year ended December 31, 2021 was $35,948,637 (2020 - $13,175,640).

Stock-based compensation expense (Note 17) was included in the following expense categories:

	Years endedDecember 31,
	2021	2020
	$	$
Cost of revenue	661,006	65,827
Sales and marketing	685,507	149,510
Research and development	1,630,202	179,847
General and administrative	1,146,954	206,270
	4,123,669	601,454

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

7. Government assistance

As at December 31, 2021, the Company's investment tax credit balance is nil. As at December 31, 2020 the investment tax credits balance of $915,413 represented refundable investment tax credits receivable, and did not include any amounts for non-refundable investment tax credits.

8. Trade and other receivables

	December 31,2021	December 31,2020
	$	$
Trade receivables	1,281,219	782,653
Other receivables	111,172	24,034
	1,392,391	806,687

As at December 31, 2021, the Company's trade and other receivables balance included an allowance for credit loss of nil (2020 - nil).

9. Property and equipment

Property and equipment consists of computer and other equipment, office furniture, and leasehold improvements. Depreciation of property and equipment is included in general and administrative expenses.

	Computer andotherequipment	Office furniture	Leaseholdimprovements	Total
		$	$	$
Cost
As at December 31, 2019	69,860	92,880	52,983	215,723
Additions	2,156	80,200	255,335	337,691
As at December 31, 2020	72,016	173,080	308,318	553,414
Additions	131,345	255,445	163,712	550,502
As at December 31, 2021	203,361	428,525	472,030	1,103,916
Accumulated depreciation
As at December 31, 2019	35,768	13,615	4,423	53,806
Depreciation expense	11,637	18,764	61,939	92,340
As at December 31, 2020	47,405	32,379	66,362	146,146
Depreciation expense	17,098	29,044	145,060	191,202
As at December 31, 2021	64,503	61,423	211,422	337,348
Net book value
As at December 31, 2020	24,611	140,701	241,956	407,268
As at December 31, 2021	138,858	367,102	260,608	766,568

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

10. Contract acquisition assets

Contract acquisition costs consist of sales commissions paid to the Company's sales force, as well as employee incentive payouts under compensation plans that are tied to the value of long-term customer contracts acquired. Amortization of contract acquisition assets is included in sales and marketing expenses.

The following table provides a reconciliation of contract acquisition assets.

		Years endedDecember 31:
	2021	2020
	$	$
Balance, beginning of the year	—	—
Additions	637,789	—
Amortization	(70,804)	—
Balance, end of year	566,985	—

11. Leases

The Company leases office space under non-cancellable operating lease agreements. As at December 31, 2021, the expected remaining lease terms are between one and three years. The Company does not currently act in the capacity of a lessor. Depreciation of lease right-of-use assets is included in general and administrative expenses.

Lease right-of-use assets

During the year ended December 31, 2021, the Company recognized depreciation expense of $413,649 on lease right-of-use assets (2020 - $390,334).

Lease liabilities

		Years endedDecember 31,
	2021	2020
	$	$
Balance, beginning of the year	1,361,084	995,370
Additions	—	699,531
Leasehold inducements	—	47,895
Lease payments	(538,826)	(447,630)
Interest expense	37,307	44,450
Foreign exchange loss	15,700	21,468
Balance, end of year	875,265	1,361,084

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

12. Accounts payable and accrued liabilities

	December 31,2021	December 31,2020
	$	$
Trade payables	1,337,753	369,446
Accrued liabilities	1,145,717	327,260
Accrued compensation and benefits and associated taxes	482,883	330,519
Accrued sales tax payable	319,968	470,938
	3,286,321	1,498,163

13. Commitments

A summary of the Company's contractual obligations and commitments as at December 31, 2021 is presented below:

	Liabilities due by period
	< 1 year	2 - 3 years	4 - 5 years	Total
Operating lease obligations	545,469	351,484	27,947	924,900
Software commitments	1,387,015	2,996,772	229,732	4,613,519
	1,932,484	3,348,256	257,679	5,538,419

14. Related party transactions

Parties related to the Company include shareholders Greg Smith, Matthew Smith, the Rhino Group Permitted Holders (which consists of Vancouver Founder Fund Limited Partnership, VFF II Limited Partnership, Rhino Co-Invest 1 Limited Partnership, Vancouver Founder Fund (VCC) Inc, and any other affiliated fund (the "Principal Shareholders"), Alpha Score Seminars Inc., an entity co-owned by Greg Smith and Matthew Smith, and key management personnel of the Company. Key management personnel includes members of the Company's senior management and the Board of Directors.

Key management personnel compensation for the years ended December 31, 2021 and 2020 was as follows:

		Years endedDecember 31,
	2021	2020
	$	$
Salaries and benefits	1,613,675	783,177
Stock-based compensation	647,576	216,608
	2,261,251	999,785

Amounts due to related parties included in accounts payable at December 31, 2021 was $168,100 (2020 - nil) and is related to an equity incentive arrangement for our Board of Directors. Refer to Note 17 for more details.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

15. Credit facility

The Company has a revolving credit facility with a Canadian chartered bank for CAD $2,300,000. The credit facility bears interest at the Canadian prime rate plus an applicable margin. As at December 31, 2021, no amounts were drawn under this credit facility (2020 - nil).

16. Share capital

A summary of the Company's number of issued and outstanding common shares and preferred shares is presented below**:**

	Number ofcommon	Number ofpreferred
	shares	shares	Total
Outstanding as at December 31, 2019	42,778,568	16,771,868	59,550,436
Equity Financing	—	1,256,936	1,256,936
Conversion of SAFE Agreement	—	666,840	666,840
Exchange of common shares	(4,124,360)	4,124,360	—
Issuance of preferred shares	—	236,484	236,484
Exercise of stock options	816,868	—	816,868
Outstanding as at December 31, 2020	39,471,076	23,056,488	62,527,564
Pre-closing capital changes	23,056,488	(23,056,488)	—
Shares issued upon IPO	14,156,500	—	14,156,500
Exercise of stock options	568,428	—	568,428
Vesting of restricted share units	2,483	—	2,483
Outstanding as at December 31, 2021	77,254,975	—	77,254,975

The issuance of shares in 2021 relate to the following:

Pre-closing capital changes

On April 23, 2021, the Company (i) converted all of the issued and outstanding existing preferred shares into common shares (the "common shares") on a 1-for-1 basis, (ii) amended the Company's Articles to (a) amend and redesignate the Company's common shares as Subordinate Voting Shares, (b) create a new class of unlimited number of Multiple Voting Shares, (c) repeal the classes of shares relating to the existing preferred shares and (d) create a new class of unlimited preferred shares, issuable in series, (iii) effected a 4-for-1 split of each of the Company's Multiple Voting Share and Subordinate Voting Shares, (iv) made each option to acquire shares of the Company under the Legacy Option Plan exercisable for Subordinate Voting Shares, and (v) converted all Subordinate Voting Shares beneficially owned by the Principal Shareholders into an equal number of Multiple Voting Shares pursuant to certain share exchange agreements entered into between the Company and each of the Principal Shareholders, and canceled the exchanged Subordinate Voting Shares.

Following these capital changes, the Company is authorized to issue an unlimited number of Subordinate Voting Shares, with no par value and Multiple Voting Shares, with no par value (together, "common shares") and an unlimited number of preferred shares with no par value, issuable in series.

Initial public offering

On April 27, 2021, the Company completed an IPO on the TSX and issued 12,310,000 Subordinate Voting Shares for gross proceeds of $129,040,842 (CAD $160,030,000). On May 5, 2021, the underwriters fully exercised an over-allotment option to purchase an additional 1,846,500 Subordinate

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

Voting Shares for gross proceeds of $19,575,854 (CAD $24,004,500). Total share issuance costs relating to the IPO and over-allotment option amounted to $9,891,051 (CAD $12,235,704). Net proceeds relating to the IPO and over-allotment option amounted to $138,725,645 (CAD $171,798,796).

The issuance of shares in 2020 relate to the following:

Equity financing

On July 16, 2020 the Company completed a treasury offering of 1,256,936 preferred shares for gross proceeds of $3,035,985 (CAD $4,180,204).

Conversion of SAFE Agreement

In 2019, the Company entered into a Simple Agreement for Future Equity ("SAFE Agreement") in the amount of $810,091 (CAD $1,050,000) with one of the Company's shareholders, who is considered a related party. The SAFE Agreement had no maturity date and bore no interest. The SAFE Agreement provided the shareholder with rights to future equity in the Company. On July 16, 2020, the shareholder converted the SAFE Agreement into 666,840 preferred shares for gross proceeds of $775,308 (CAD $1,050,000).

17. Stock-based compensation

In 2016, the Company established a stock option plan (the "Legacy Option Plan") for directors, officers, employees, and consultants of the Company. In connection with the IPO on April 27, 2021, the Legacy Option Plan was amended such that no further awards can be made under the Legacy Option Plan. In connection with the IPO, the Company adopted an omnibus incentive plan (the "Omnibus Incentive Plan") which allows the Board of Directors to grant long-term stock-based awards, including stock options, and Restricted Share Units ("RSUs") to eligible participants, as well as the Directors' Deferred Share Units Plan (the "DSU Plan"), which allows the Board of Directors to grant DSUs to its members.

The aggregate number of common shares that may be issued pursuant to the grants made under the Legacy Option Plan and Omnibus Incentive Plan, shall be equal to 10% of the aggregate number of issued and outstanding common shares (Subordinate Voting Shares and Multiple Voting Shares), from time to time.

Stock options

All stock options have an exercise price determined and approved by the Board of Directors at the time of grant, which cannot be less than the market price of a Subordinate Voting Share on the date of grant. Each option entitles the holder to purchase one Subordinate Voting Share. Stock options typically have a maximum term of up to ten years and generally vest over four years.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

A summary of the Company's stock option activity is presented below:

	Years ended December 31,
	2021		2020
	Number ofoptions	Weightedaverageexerciseprice(CAD)	Number ofoptions	Weightedaverageexerciseprice(CAD)
Outstanding, beginning of year	5,433,628 $	0.64	5,623,252 $	0.21
Granted	1,631,600 $	12.55	768,000 $	3.12
Exercised	(568,428) $	0.15	(816,868) $	0.07
Forfeited	(106,276) $	8.29	(140,756) $	0.62
Outstanding, end of year	6,390,524 $	3.59	5,433,628 $	0.64
Exercisable, end of year	4,032,357 $	0.42	3,906,600 $	0.15

A summary of the Company's stock options outstanding is presented below:

		December 31, 2021		December 31, 2020
Exercise price range (CAD)	Number ofoptions	Weightedaverageremainingcontractuallife (years)	Number ofoptions	Weightedaverageremainingcontractuallife (years)
$0.04 - $0.07	2,138,628	2.9	2,515,628	3.8
$0.08 - $0.83	1,756,784	6.2	1,944,000	7.2
$0.84 - $11.70	1,140,576	8.5	974,000	9.3
$11.71 - $15.76	1,354,536	9.3	—	—
	6,390,524	6.2	5,433,628	6.0

The fair value of stock options granted was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

		Years endedDecember 31,
	2021	2020
Expected volatility	64 %	70 %
Risk-free interest rate	1.1 %	0.6 %
Expected option life (years)	6.1	10.0
Expected dividend yield	— %	— %

Restricted share units ("RSUs")

RSUs are an equity incentive arrangement which entitle the holder to receive, upon vesting, Subordinate Voting Shares, cash, or a combination thereof, at the discretion of the Board of Directors. RSUs are accounted for at fair value, using the prevailing Thinkific Subordinate Voting Share price as if the units were vested and issued on the grant date. Stock-based compensation expense is determined based on the estimated fair value on the date of grant, and recognized over the service period. Forfeitures are estimated at the grant date. RSUs typically have an maximum term of up to ten years and generally vest over three years.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

During the year ended December 31, 2021, the Company's Board of Directors approved the grant of 8,512 RSUs with a fair value of CAD $14.21 per unit (2020 - nil). During the year ended December 31, 2021, 2,483 RSUs were vested (2020 - nil).

Deferred share units ("DSUs")

DSUs are an equity incentive arrangement for our Board of Directors which entitle the holder to receive, upon redemption, a cash payment equal to the prevailing Thinkific Subordinate Voting Share price on the date of settlement. Each DSU vests on the date of the grant, however, the redemption of DSUs occurs when the holder ceases to be a director of the Company. DSUs are accounted for at fair value. Stockbased compensation expense is determined based on the estimated fair value of the DSUs on the date of grant, and subsequently adjusted to reflect the fair value at each period-end. Fair value of the accrued liability is based on the prevailing Thinkific Subordinate Voting Share price at each period-end.

During the year ended December 31, 2021, the Company's Board of Directors approved the grant of 23,836 DSUs with a weighted average fair value of CAD $12.74 per unit (2020 - nil).

18. Loss per share

The Company has two categories of potentially dilutive securities: stock-options and RSUs. The Company was in a net loss position for the years presented and these securities have been excluded from the diluted loss per share calculation as their effect would be anti-dilutive. As a result the basic and diluted weighted average number of shares outstanding and the basic and diluted loss per share are the same.

19. Income taxes

The income tax amounts recognized in the consolidated statements of loss and comprehensive loss are as follows:

	Years endedDecember 31,
	2021$	2020$
Current tax expense
Current income tax	—	—
Deferred tax (recovery) expense
Origination and reversal of temporary differences	(9,119,301)	(205,055)
Changes in unrecognized losses and deductible temporarydifferences	9,119,301	205,055
	—	—

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

A reconciliation of the income tax expense to the expected amount using the Company's Canadian tax rate is as follows:

		Years endedDecember 31,
	2021$	2020$
Income before income taxes	(26,375,066)	(1,293,087)
Canadian tax rate	27 %	27 %
Expected Canadian income tax expense (recovery)	(7,121,268)	(349,133)
Increase (reduction) in income taxes resulting from:
Recognition of previously unrecognized losses	—	205,055
Change in unbenefitted deductible temporary differences	6,454,976
Permanent differences of stock-based compensation	1,120,075	162,393
Benefit of ITCs generated	(741,906)	—
Impact of SR&ED	228,469	(20,835)
Other permanent differences	100,266	32,750
True-up	(36,378)	(19,690)
Foreign exchange differences	(4,234)	(10,540)
	—	—

The following tables present tax effects of temporary differences and carry-forwards, as well as movements in the deferred tax balances:

	December 31,2020$	Recognized inprofit or loss$	December 31,2021$
Deferred tax assets (liabilities)
Tax effect of investment tax credits	(178,827)	65,329	(113,498)
Right-of-use assets	(311,376)	111,687	(199,689)
Lease liabilities	367,493	(131,172)	236,321
Contract assets	—	(153,086)	(153,086)
Share issuance costs	2,525	(2,525)	—
Property and equipment	(13,415)	(44,428)	(57,843)
Non operating loss carryforward	—	232,219	232,219
Donations	25,237	30,339	55,576
Other	108,363	(108,363)	—
	—	—	—

Notes to the Consolidated Financial Statements

As at and for the years ended December 31, 2021 and 2020

	December 31,2019$	Recognized inprofit or loss$	December 31,2020$
Deferred tax assets (liabilities)
Tax effect of investment tax credits	(126,205)	(52,622)	(178,827)
Right-of-use assets	(216,953)	(94,423)	(311,376)
Lease liabilities	236,710	130,783	367,493
Share issuance costs	4,291	(1,766)	2,525
Property and equipment	16,447	(29,862)	(13,415)
Donations	—	25,237	25,237
Other	85,710	22,653	108,363
	—	—	—

The amount of deductible temporary differences and unused tax losses and Scientific Research and Experimental Development ("SR&ED") expenditures for which no deferred income tax assets have been recognized are as follows:

			Years endedDecember 31,
		2021$	2020$
Net operating loss carryforward		21,181,395	—
Share issuance costs		8,569,335	—
Undeducted SR&ED expenditures		2,536,296	1,262,274
Non-refundable ITCs		741,906	—
Other		88,502	85,202
		33,117,434	1,347,476

The Company's non-capital loss carry forwards and non-refundable SR&ED investment tax credits will expire in twenty years from origination and the Company's undeducted SR&ED pool, financing fees, and other temporary deductible differences have an unlimited carry forward period.

In assessing deferred income tax assets, management considers whether it is probable that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the years in which those temporary differences become deductible.

Management considers the scheduled reversals of deferred income tax liabilities, the character of the deferred income tax assets and available tax planning strategies in making this assessment.

20. Financial risk management and financial instruments

Capital management

The general objectives of the Company's capital management strategy reside with the preservation of its capacity to continue operating, in providing benefits to its stakeholders, and in providing a return on investment to its shareholders by selling its services at a price commensurate with the operating risk it assumes.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

We determine the total amount of capital required consistent with risk levels. This capital structure is adjusted on a timely basis depending on changes in the economic environment and in the risks of the underlying assets. We are not subject to any externally imposed capital requirements.

Credit and concentration risk

The Company's credit risk is primarily attributable to its cash and cash equivalents and trade and other receivables. Credit risk with respect to cash and cash equivalents is managed by holding cash and cash equivalents with high quality financial institutions.

Due to our diverse customer base, there is no particular concentration of credit risk related to our trade and other receivables, and no customer accounts comprise more than 5% of the trade and other receivables balance. The Company's trade and other receivables balance is managed and analyzed on an ongoing basis to ensure that an appropriate expected credit loss is established and maintained.

Liquidity risk

The Company's approach to managing liquidity is to ensure, to the extent possible, that it always has sufficient liquidity to meet its liabilities as they become due. The Company manages this risk by monitoring cash flow and performing budget-to-actual analysis on an ongoing basis.

Foreign exchange risk

The Company's foreign exchange risk is primarily attributable to Canadian dollar denominated cash and cash equivalents, investment tax credits, accounts payable, and lease liabilities. The majority of trade and other receivables are denominated in U.S. dollars.

Foreign exchange risk is managed by holding Canadian dollar denominated cash sufficient to cover our Canadian dollar expenditures, thereby creating a natural hedge against realized foreign exchange risk. The Company has not entered into any foreign exchange hedging arrangements to mitigate risk against unrealized amounts.

Based on working capital held at December 31, 2021, a 10% strengthening in the Canadian dollar against the U.S. dollar, with all other variables held constant, would result in an increase in foreign exchange loss of approximately $10,681,494 recorded against net (loss) income (2020 - $161,162). The sensitivity associated with a 10% weakening of the Canadian dollar against the U.S. dollar would be equal and opposite

Interest rate risk

The Company is not exposed to material interest rate risk as the Company's trade and other receivables, accounts payable and accrued liabilities, and lease liabilities do not bear interest, and the Company has not drawn on the credit facility.

Fair value

The Company measures the fair value of its financial assets and financial liabilities using a fair value hierarchy. A financial instrument's classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value. The different levels of the fair value hierarchy are defined below:

• Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
• Level 3 Unobservable inputs for the asset or liability.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

The following table summarizes the classification and carrying value of the Company's financial instruments:

	Financialassets atamortizedcost	Financialliabilities atamortizedcost	Fair valuethroughprofit or loss	December 31,2021
	$	$	$	$
Financial assets
Cash and cash equivalents	126,054,833	—	—	126,054,833
Trade and other receivables	1,392,391	—	—	1,392,391
Financial liabilities
Accounts payable and accrued liabilities	—	3,286,321	—	3,286,321
Lease liabilities	—	875,265	—	875,265
	Financialassets atamortizedcost	Financialliabilities atamortizedcost	Fair valuethroughprofit or loss	December 31,2020
	$	$	$	$
Financial assets
Cash and cash equivalents	9,066,016	—	—	9,066,016
Trade and other receivables	806,687	—	—	806,687
Investment tax credits	915,413	—	—	915,413
Financial liabilities
Accounts payable and accrued liabilities	—	1,498,163	—	1,498,163
Lease liabilities	—	1,361,084	—	1,361,084

The fair value of cash and cash equivalents, trade and other receivables, investment tax credits, and accounts payable and accrued liabilities is considered to be equal to their respective carrying values due to their short-term maturities.

Notes to the Consolidated Financial Statements As at and for the years ended December 31, 2021 and 2020

21. Segmented information

Operating segments

The Company operates primarily in one principal business, that being the development, marketing and support management of the Company's cloud-based platform.

Entity-wide disclosures

Geographic revenue information is based on the location of the customer invoiced.

		2021		Years endedDecember 31,2020
	$	%	$	%
United States	19,298,406	51 %	10,973,041	52 %
Rest of world	15,012,239	39 %	8,168,679	39 %
Canada	3,806,191	10 %	1,927,867	9 %
	38,116,836	100 %	21,069,587	100 %

Long-lived assets, which include lease right-of-use assets, property and equipment, intangible assets, and contract acquisition assets, are all located in Canada.

22. Subsequent events

Credit facilities

On January 13, 2022, the Company terminated its loan agreement dated March 19, 2019 with a Canadian chartered bank for a CAD $2,300,000 revolving demand facility. Prior to termination, no amounts were outstanding.

On January 13, 2022, the Company entered into a loan agreement with a Canadian chartered bank for a revolving demand facility (the "Facility') that allows the Company to borrow up to CAD $38,000,000.

The Company can draw on the Facility by way of either a U.S. dollar base rate or Canadian dollar prime loan advance. The Facility bears interest at either the U.S. base rate or Canadian prime rate plus applicable margins. The Facility will mature on January 13, 2025.