Tiny Ltd. - Interim / Quarterly Report 2020

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WECOMMERCE HOLDINGS LTD.

(business formerly operated under Pixel Union Design Ltd.)

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three- and nine-month periods ended September 30, 2020 and September 30, 2019

GENERAL INFORMATION AND CAUTIONARY STATEMENTS

Introduction

The following management’s discussion and analysis (“MD&A”) dated December 17, 2020, provides information concerning the financial condition and results of operations of WeCommerce Holdings Ltd. (“WeCommerce” or the “Company”) for the three- and nine-month periods ended September 30, 2020 (“Q3 2020”) and September 30, 2019 (“Q3 2019”). The following MD&A should be read in conjunction with the Company’s unaudited Interim Condensed Consolidated Financial Statements and accompanying notes for Q3 2020 as well as our audited consolidated financial statements and notes thereto related to the year ended December 31, 2019 which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Additional information relating to the Company is available on Company’s website at www.wecommerce.co and www.sedar.com.

Basis of presentation

In this MD&A, unless otherwise indicated, all dollar amounts are expressed in Canadian dollars. The information in this report is current as of December 17, 2020, which is the date of filing. Disclosure contained in this document is current to December 17, 2020, unless otherwise noted.

Forward looking Information

This MD&A contains “forward-looking information” within the meaning of applicable securities laws in Canada. These statements are based on current expectations and estimates about our business and include information regarding our financial position, business strategy, growth strategies, operations, financial results and objectives. Particularly, information regarding our expectations of future results, growth of our operations and performance opportunities in the market in which we operate is forward-looking information.

In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “expects” or “does not expect”, “estimates”, “outlook”, “prospects”; “projection”, “intends”, “believes”, “should”, “will”, “would” or the negative of these terms, and similar expressions intended to identify forwardlooking statements. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. There can ne no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information.

The forward-looking information contained in this MD&A represents our expectations as of the date of the MD&A (or as of the date they are otherwise stated to be made) and are subject to changes after such date. We disclaim any intention or obligation or undertaking to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada.

Non-IFRS financial measures

This MD&A makes reference to certain non-IFRS measures. These measures are not recognised 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 our financial information reported under IFRS. We use non-IFRS measures including “EBITDA” and “Adjusted EBITDA”. Management uses these non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. As required by Canadian securities laws, we reconcile these non-IFRS measures to the most comparable IFRS measures in this MD&A. For definitions and reconciliation of these non-IFRS measures to the relevant reported measures, see “Non-IFRS measures”.

COMPANY STRATEGY AND OBJECTIVES

The business of WeCommerce is to acquire businesses within the Shopify ecosystem, including Software as a Service (“SaaS”) businesses. Generally, these businesses build digital goods such as Apps and Themes and run Agencies that support Shopify merchants. WeCommerce is focused on acquiring businesses with growth potential, a sustainable competitive advantage and that are, or have the potential to become, a leader within their particular market. WeCommerce targets businesses within the Shopify ecosystem because WeCommerce has confidence in the Shopify platform and because of the fragmented nature of the ecosystem, the attractive economics that the businesses generally provide and the belief that the WeCommerce management team understands those economics better than most of its competitors.

RECENT DEVELOPMENTS

Acquisition of Foursixty Inc

On June 1, 2020, the Company completed a share purchase agreement to acquire the 100% of the outstanding shares of Foursixty Inc. (“Foursixty”). Foursixty is in the business of developing, selling and supporting apps for clients utilizing ecommerce platforms

The base purchase price is $11 million, subject to working capital adjustments and potential amounts to be paid in relation to the earn-out provision. An earn-out of up to $3 million is to be paid if Foursixty ’s earnings before income taxes, depreciation and amortization (“EBITDA”) exceeds certain thresholds during the period from September 1, 2020 to May 31, 2022. Under the terms of the earn-out, achievement of EBITDA from $2.8 million to $3.8 million will result in an earn-out payment of $1.0 million to $3.0 million. Under no circumstances will the earn-out amount exceed $3.0 million.

The Company is currently in the process of finalizing the determination of the fair value of contingent consideration as well as the fair value of net assets acquired, specifically for the software applications, deferred revenue, customer relationships, brand and goodwill. The Company is also in the process of finalizing working capital adjustments.

Proposed Reverse take-over

On August 17, 2020, The Company announced that it had entered into a binding letter of intent with Brachium Capital Corp. (“Brachium”), whereby the Company proposes to complete a reverse take-over of Brachium. The transaction is expected to be structured as a three-cornered amalgamation pursuant to the provisions of the Business Corporations Act (British Columbia) (the “BCBA”), whereby Brachium will incorporate a wholly-owned subsidiary under the BCBCA, which will amalgamate with the Company (the “Amalgamation”) to form a newly amalgamated company. Holders of common shares in the capital of the Company, will receive Class A common shares in the capital of the Resulting Issuer for each WeCommerce share held immediately before the Amalgamation and receive stock options to acquire Class A common shares in the capital of the Resulting issuer for each WeCommerce stock option held immediately before the Amalgamation. The completion of the transaction is subject to a number of conditions including acceptance of the Canadian Securities Exchange.

RESULTS OF OPERATIONS

Three-month	period ended	September 30,	Nine-month period ended	September 30,
	2020	2019	2020	2019
Revenue
Recurring subscription revenue	2,082,268	1,100,976	4,655,216	3,079,072
Digital goods revenue	2,551,977	1,782,485	6,948,897	5,288,193
Agencyservice revenue	1,306,245	1,019,522	3,811,715	2,795,985
	5,940,490	3,902,983	15,415,828	11,163,250
Expenses
Staff	2,708,051	1,787,510	7,539,069	5,912,506
Fees paid to ecommerce platforms	657,068	473,325	1,772,690	1,362,051
Depreciation and amortization	961,606	528,427	2,230,672	1,585,395
Professional fees	173,223	68,972	401,828	183,502
Occupancy	36,817	19,768	97,937	58,211
Advertising	124,782	111,573	303,581	307,455
General and office expenses	24,542	19,672	74,424	148,772
Hosting and Subscriptions	154,219	95,086	416,300	353,127
Acquisition costs	14,691	-	100,293	-
Restructuring	-	170,257	-	321,212
Other	22,043	7,504	174,990	25,201
	4,877,042	3,282,094	13,111,784	10,257,432
Operating income	1,063,448	620,889	2,304,044	905,818
Other expenses:	302,963	247,016	647,957	504,993
Income tax expense/(recovery)	239,981	(24,375)	323,863	(37,591)
Net income	520,504	398,248	1,332,224	438,416
Basic earnings per share	0.38	0.38	1.11	0.36
Diluted earnings per share	0.38	0.37	1.10	0.36
Total Assets	28,062,516	14,016,376	28,062,516	14,016,376
Total Non-Current Liabilities	11,425,566	9,971,730	11,425,566	9,971,730

Revenue

Total revenues for the three-month period ended September 30, 2020 increased by $2,037,507 or 52.2% over the same period in 2019. Revenues for our Apps segment increased by $981,292 for the three-month period ended September 30, 2020 compared to the same period in 2019. Apps revenue includes $864,702 of additional revenue contributed by Foursixty Inc during the 2020 period. Revenues for our Themes segment increased by $769,492 for the three-month period ended September 30, 2020 compared to the same period in 2019. The increase in revenues in 2020 can be attributed to an increase in customer demand for these services as the economy saw a shift to online shopping as a result of the COVID-19 pandemic and social distancing measures. Revenues for our Agency segment increased by $286,723 for the three-month period ended September 30, 2020 compared to the same period in 2019. This increase can be attributed to the purchase of Rehash in October 2019 as well as organic departmental growth in core agency sales.

Total revenues for the nine-month period ended September 30, 2020 increased by $4,252,578 or 38.1% over the same period in 2019. Apps revenue increased by $1,576,144 for the nine-month period ended September 30, 2020 compared to the same period in 2019. The increase for the nine-month period can also be attributed to the acquisition of Foursixty Inc as well as increased customer demand for Agency and Theme products due to a shift by retail consumers to online shopping as a result of the COVID-19 pandemic.

Expenses:

Staff costs increased by $920,541 or 51.5% from $1,787,510 for the three months ended September 30, 2019 to $2,708,051 for the three-month period ended September 30, 2020. This increase can be attributed to an additional $101,320 of staff costs relating to WeCommerce corporate staff and $421,240 relating to Rehash and Foursixty (2019: $nil) as well as stockbased compensation costs of $48,890 compared to $1,048 for the same period in 2019. The remaining increase can be attributed to new hires in our Themes and Agency segments and as well as pay increases.

Staff costs were $7,539,069 for the nine-month period ended September 30, 2020 compared to $5,912,506 for the same period in 2019. An increase of $1,626,563 or 27.5% over the same period in 2019. The 2020 period includes $411,522 of staff costs (including severance costs) relating to WeCommerce corporate staff (2019: $nil) as well as stock-based compensation costs of $134,174 compared to $3,143 for the same period in 2019. Agency staff costs increased by $764,707 during the nine-month period ended September 30, 2020 compared to the same period in 2019. This increase is mainly attributable to the inclusion of Rehash staff costs in 2020 (2019: $nil). Apps staff costs increased by $310,656 during the nine-month period ended September 31, 2020 compared to the same period in 2019. This increase is mainly due to the inclusion of Foursixty staff costs in 2020 (2019: $nil). The 2019 staff costs presented include the cost of Pixel employees that were severed as part of a reorganisation and restructuring plan in the second quarter of 2019.

Fees paid to ecommerce platforms increased by $183,743 or 38.8% from $473,325 for the three months ended September 30, 2019 to $657,068 for the three-month period ended September 30, 2020 and increased by $410,639 or 30.1%, from $1,362,051 for the nine-month period ended September 30, 2019 to $1,772,690 for the nine-month period ended September 30, 2020. These fees are primarily fees paid to Shopify for partner sales as a percentage of gross sales. The increase was driven by higher Theme and App revenues in the 2020 period.

Depreciation and amortization increased by $433,179 or 82.0% from $528,427 for the three months ended September 30, 2019 to $961,606 for the three-month period ended September 30, 2020 and increased by $645,277 or 40.7% from $1,585,395 for the nine-month period ended September 30, 2019 to $2,230,672 for the nine-month period ended September 30, 2020. Amortization for the three-month period of 2020 includes $395,929 (nine-month period of 2020 $536,967) of amortization on intangible assets recognized as part of the acquisition of Foursixty with no such expense in 2019.

Professional fees increased by $104,251 or 151.1% from $68,972 for the three months ended September 30, 2019 to $173,223 for the three-month period ended September 30, 2020. Professional fees increased by $218,326 or 119% from $183,502 for the nine-month period ended September 30, 2019 to $401,828 for the nine-month period ended September 30, 2020. The increase in professional fees in 2020 is due to legal and accounting fees incurred by WeCommerce ($nil in 2019). These fees were incurred in connection with the implementation of a cloud based financial reporting system, the accrual of 2020 audit fees as well as legal fees relating to the previously disclosed legal contingency and corporate matters.

NON-IFRS MEASURES

We define EBITDA as net income or loss before interest, income taxes and amortization. Adjusted EBITDA removes unusual or non-operating items from EBITDA, such a merger and acquisition costs, restructuring charges, asset impairments, noncash stock-based compensation and foreign exchange gains and losses. We are presenting these measures because we believe that our current and potential investors, and many analysts, use them to assess our current and future operating results and to make investments decisions. Management uses these measures in managing the business and making decisions. EBITDA and adjusted EBITDA are not intended as a substitute for IFRS measures.

	Three-month period ended	Three-month period ended	Nine-month period ended	Nine-month period ended
		September 30,		September 30,
*Adjusted EBITDA*	2020	2019	2020	2019
Net income	520,504	398,248	1,332,224	438,416
Income tax expense/(recovery)	239,981	(24,375)	323,863	(37,591)
Depreciation and amortization	961,606	528,427	2,230,672	1,585,395
Finance costs	190,327	258,940	610,937	560,501
EBITDA	1,912,418	1,161,240	4,497,696	2,546,721
EBITDA %	32%	30%	29%	22%
*EBITDA adjustments*
Stock-based compensation	48,890	1,048	134,174	3,143
Foreign exchange (gain)/loss	112,636	(11,924)	37,020	(55,508)
Restructuring	-	170,257	-	321,212
Acquisition costs	14,691	-	100,293	-
Severance costs	-	-	90,809	-
Other	39,974	-	102,782	-
Adjusted EBITDA	2,128,609	1,320,621	4,962,774	2,815,568
Adjusted EBITDA %	36%	34%	32%	25%

LIQUIDITY AND CAPITAL RESOURCES

Overview

Cash on hand, including short term investments, amounted to $3,974,613 compared to $4,080,908 at December 31, 2019.

The Company’s two main sources of funding are revenue from the sale of Apps, Themes and Agency fees and debt financing.

Long term debt is as follows:

	September 30, 2020	December 31, 2019
BDC facility	11,000,000	11,500,000
Less: Deferred financing fees	(135,000)	(157,500)
	10,865,000	11,342,500
Current maturities	(1,495,000)	(1,495,000)
	9,370,000	9,847,500

In March 2019, Pixel Union entered into a debt facility agreement with BDC Capital for principal of $12,000,000 secured by a guarantee from Out of the Sandbox, Inc., and WeCommerce Holdings Ltd. The loan is subject to various debt covenants. As at September 30, 2020, the Company was in compliance with these covenants. The loan has a maturity date of April 15, 2025, with monthly payments of $100,000 principal plus interest. The interest rate is floating based on BDC Capital’s

Floating Base rate as at September 30, 2020, was 6.55% (December 31, 2019 was 8.05%) per year. The loan agreement also includes a provision for an annual “Excess Cash Flow Sweep” (ECFS) calculated based on net income adjusted for certain factors. In response to the COVID-19 crisis and effective April 06, 2020, the terms of Pixel Union’s bank loan with the Business Development Bank of Canada have been amended to deferred monthly principal payments of $100,000 for a period of four months. The amended terms also defer the annual cash flow sweep payment from May 2020 to the fourth quarter of 2020.

The Company’s major capital expenditures for 2021 are expected to consist of increasing the number of portfolio companies currently owned by the group by investing in leading Shopify businesses.

Cash flows

Analysis of cash flows:

	Nine-month periods ended	September 30,
	2020	2019
Cash provided by operating activities	4,793,824	1,949,407
Cash provided by financing activities	5,938,091	1,704,029
Cash used in investingactivities	(9,626,883)	(1,947,015)
Increase in cash	1,105,032	1,706,421

Operating activities

For the nine-month period ended September 30, 2020, cash provided by our operating activities was $4,793,824, compared to $1,949,407 for the nine-month period ended September 30, 2019. The increase of $2,844,417 is due to higher revenues in 2020 offset by increased staff costs, increased fees paid to ecommerce platforms and an increase in professional fees and other expenses.

Financing activities

For the nine-month period ended September 30, 2020, cash flows provided by financing activities was $5,938,091 compared to $1,704,029 for the nine-month period ended September 30, 2019. The increase of $4,234,062 is due to the issuance of common shares in 2020 while in 2019, the Company received a cash inflow of debt which was then primarily used to repurchase common shares as part of a restructuring plan.

Investing activities

Cash used in investing activities for the nine-month period ended September 30, 2020, was $9,626,883 compared to $1,947,015 for the nine-month period ended September 30, 2019. The increase of $7,679,868 is the result of the purchase of Foursixty Inc in June 2020 offset by the purchase of a short-term investment in the 2019 period.

OFF-BALANCE SHEET ARRANGEMENTS

As at the date of this MD&A, the Company has not entered into any off-balance sheet arrangements

TRANSACTIONS WITH RELATED PARTIES

The Company participated in the following transactions with related parties during the three- and nine-month periods ended September 30, 2020:

	September 30, 2020	December 31, 2019
Payable to Tiny Management Ltd.	6,674	1,927
Payable to former shareholders of Rehash	-	76,283
	6,674	78,210

In 2019, Tiny Management Ltd provided interest free shareholder loans, with no fixed repayment terms. The former shareholders of Rehash are now employed by the Company as the CEO and CTO of Rehash. Amounts owing to these individuals were non-interest bearing and had no fixed repayment terms.

During the three- and nine-month periods ended September 30, 2020, WeCommerce paid $8,120 and $13,160 respectively to Tiny Management for professional fees with no such charge in 2019. During the three-month period ended September 30, 2020, Tiny Management Ltd incurred $24,342 on behalf of WeCommerce for subscriptions and licenses which were reimbursed by WeCommerce in Q3 2020 (Q3 2019: $nil).

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Company’s consolidated financial statements in conformity with IFRS requires management to make judgements, estimates, and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

Significant judgements, estimates and assumptions that have the most significant effect on the amounts recognized in the financial statements are described below:

( i ) Valuation of assets and liabilities acquired in business combinations

In a business combination, the company may acquire the assets and assume certain liabilities of an acquired entity. The estimate of fair values for these transactions involves judgment in determining the fair values assigned to the tangible and intangibles assets acquired and the liabilities assumed on the acquisition. The determination of theses fair values involves a variety of assumptions, including estimates surrounding the costs to acquire or reproduce as similar asset, expected future net cash flows and appropriate discount rates. Contingent consideration resulting from business combinations is recorded at fair value at the acquisition date as part of the business combination based on expected discounted cash flows, and is subsequently remeasured to fair value at each reporting date with any subsequent change in fair value recognized in the Consolidated Statements of Income and Total Comprehensive Income.

( ii ) Impairment of intangible assets and goodwill:

Management assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to an impairment of intangible assets and goodwill. Value in use calculations performed in assessing recoverable amounts incorporate a number of key estimates and assumptions about future events, which are subject to uncertainty and might materially differ from the actual results. In making these key estimates and judgements, management takes into consideration assumptions that are mainly based on market conditions existing at the reporting dates and appropriate market and discount rates. These estimates are regularly compared to actual market data and actual transactions entered into by the Company.

( iii ) Share based compensation:

The Company measures the cost of share-based compensation transactions with employees and directors by reference to the fair value of the equity instruments at the date at which they are granted. These options are only offered to employees and are equity settled. Estimating fair value for share based compensation requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining and making assumptions about the most appropriate inputs to the valuation model including the implied market price, expected term, volatility, dividend yield of the share option and forfeiture rate. Expected term is set at a midpoint of the weighted average vesting term and the contractual term. Volatility is determined using a comparable peer group.

( iv ) Determination of functional currency:

Determination of functional currency requires management to make judgment in evaluating primary and secondary indicators under IAS 21 (“IAS 21”), The Effect of Changes in Foreign Exchange Rates . Key judgments include primary

economic environment in which the Company primarily operates, currency that mainly influences the sales prices for its services and the costs of labor, and the country whose competitive forces and regulations mainly determine sales prices.

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

Amendments to IFRS 3:

In October 2018, the IASB issued Definition of a Business (Amendments to IFRS 3) which: (a) clarifies that to be considered a business, an acquired 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 outputs; (b) narrows the definition of a business and of outputs by focusing on goods and services provided to customers; and (c) removes certain assessments and adds guidance and illustrative examples. The amendment is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period. The Company adopted the standard commencing January 1, 2020. The adoption of this standard does not have an impact on the Company's Interim Condensed Consolidated Financial Statements.

FINANCIAL RISK FACTORS

The Company is exposed to a number of risks as a result of holding financial instruments including credit risk, liquidity risk and currency risk.

(i) Credit risk

Credit risk is the risk of financial loss to the company if a counterparty to a financial instrument fails to meet its contractual obligations. We manage our credit risk on cash by using major Canadian chartered banks for all cash deposits. The cash balance at September 30, 2020 was $3,974,613 (December 31, 2019: $2,869,581). We manage our credit risk on trade receivables by assessing the credit quality of the counterparty. At September 30, 2020, the Company had recorded an allowance for doubtful accounts of $30,551 (December 31, 2019: $nil).

(ii) Liquidity risk

Liquidity risk is the risk that we will not be able to meet our respective obligations as they come due. We manage liquidity requirements through frequent monitoring of cash inflows and outflows, preparation of cash flow forecasting and our available credit facilities. We expect to finance our operations and cash flows from our current available resources without further support from our shareholders and lenders. However, to the extent that additional cash resources are required due to unforeseen circumstances, we anticipate support from our shareholders and lenders, although there can be no guarantees.

(iii) Currency risk

Currency risk is the risk of financial loss due to unfavorable changes in foreign exchange rates. The Company is exposed to currency risk as a result of its financial instruments denominated in U.S dollars, including Cash, Trade and other receivables and Trade and other payables. At September 30, 2020, the Company’s total exposure to currency risk (stated in Canadian dollars) was $1,423,768 (December 31, 2019: $2,835,033).

The Company uses certain derivative financial instruments, primarily forward foreign exchange contracts, to manage foreign currency exposures. The Company does not use derivative financial instruments for speculative purposes, and they are not designated as hedges. At September 30, 2020 outstanding forward exchange contracts enabled the Company to convert $607,115 US dollars to $800,000 Canadian dollars up to August 23, 2021 (December 31, 2019, outstanding forward contracts enabled the Company to convert $600,000 US dollars to $794,050 Canadian dollars up to March 31, 2020).

SUBSEQUENT EVENTS

(a) On November 20, 2020, the Company settled the abovementioned claim regarding a margin call on its outstanding forward contracts (see Note 17) for an amount of $81,000.

(b) On November 25, 2020, Pixel Union implemented a new policy to manage foreign exchange fluctuations and economically hedge the associated risk through forward foreign currency contracts. Pixel Union signed a general Security Agreement with the Royal Bank of Canada as security for these trades.

(c) On December 09, 2020, the Company completed its previously announced private placement offering of subscription receipts for gross proceeds of $60,000,871. Each subscription receipt entitles the holder to one common share of the Company. The Company issued 431,692 shares at a price of $138.99 per share.

The Company paid agents a cash fee of $3,000,052 in connection with the private placement.

(d) On December 09, 2020, the Company completed a reverse take-over (“the Transaction”) of Brachium Capital Corp (“Brachium”). The transaction was structured as a three-cornered amalgamation pursuant to the provisions of the Business Corporations Act (British Columbia) (the “BCBA”), whereby Brachium incorporated a wholly-owned subsidiary under the BCBCA, which amalgamated with the Company (the “Amalgamation”) to form a newly amalgamated company. Immediately prior to the closing of the Transaction, Brachium consolidated its issued and outstanding Class A common shares on a 36.9763 to 1 basis (each post-consolidation Class A common share, a “Common Share”) and changed its name from “Brachium Capital Corp.” to “WeCommerce Holdings Ltd.”

Holders of common shares in the capital of the Company, including each aforementioned subscription receipt, received 19.8554 Class A common shares in the capital of the Resulting Issuer for each WeCommerce share held immediately before the Amalgamation. Existing stock option holders in the Company received 19.8554 options to acquire shares in the capital of the Resulting issuer for each WeCommerce stock option held immediately before the Amalgamation.

Upon completion of the Transaction and the Amalgamation, the issued and outstanding share capital of the Company consists of 35,961,591 Common Shares with outstanding options to acquire an additional 1,588,339 Common Shares and outstanding warrants to acquire 10,818 Common Shares. The Common Shares commenced trading on the Exchange under the symbol “WE” at the opening of the markets on December 14, 2020.

The board of directors has been reconstituted and is now comprised of the following individuals: Andrew Wilkinson, Sara Elford, Chris Sparling, Shane Parrish and Tim McElvaine. Sara Elford will serve as Chair of the Company’s audit committee.

(e) On December 10, 2020, the Company granted 340,000 options in the resulting issuer to employees of the Company. The options are exercisable at $7.00 and vest over a period of 4 – 5 years.

RISK FACTORS:

(a) Reliance on Shopify Platform

The Company principally generates revenues through the sale of solutions to merchants on the Shopify platform. Moreover, WeCommerce’s acquisition strategy targets businesses within the Shopify ecosystem. As a result, WeCommerce’s business and prospects are very dependent on the ongoing success of the Shopify ecommerce platform. If there is a decline in the use of Shopify’s ecommerce platform, this could adversely affect the Company’s business, results of operations and financial condition.

(b) Reliance on Management and Key Employees

The Company’s success is highly dependent on the retention of key personnel both within the parent company level and within its subsidiary companies. The availability of persons with the necessary skills to execute the business strategy of the Company or a particular subsidiary Company is very limited and competition for such persons is intense. As the Company’s business activity grows, additional key financial and administrative personnel, as well as additional staff, may be required. Although the Company believes that it will be successful in attracting, training and retaining qualified personnel, there can be no assurance of such success. If the Company is not successful in attracting, training and retaining qualified personnel, the efficiency of operations may be

affected. In addition, if any of its executive officers or key employees join a competitor or form a competing company, the Company may lose know-how, key professionals and staff members as well as partners.

(c) Conflicts of Interest

The Company may be subject to various potential conflicts of interest because of the fact that some of its officers, directors and consultants may be engaged in a range of business activities, including certain officers, directors and consultants that provide services to other companies involved in ecommerce. The Company’s executive officers, directors and consultants may devote time to their outside business interests, so long as such activities do not materially or adversely interfere with their duties to the Company. In some cases, the Company’s executive officers, directors and consultants may have fiduciary obligations associated with these business interests that interfere with their ability to devote time to the Company’s business and affairs and that could adversely affect the Company’s operations. These business interests could require significant time and attention of the Company’s executive officers, directors and consultants. In addition, the Company may also become involved in other transactions which conflict with the interests of its directors, officers and consultants who may from time to time deal with persons, firms, institutions or corporations with which the Company may be dealing, or which may be seeking investments similar to those desired by it. The interests of these persons could conflict with those of the Company. In addition, from time to time, these persons may be competing with the Company or a Portfolio Company for available investment opportunities. Conflicts of interest, if any, will be subject to the procedures and remedies provided under applicable laws. In particular, in the event that such a conflict of interest arises at a meeting of the Company’s directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In accordance with applicable laws, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company.

(d) Additional financing

In order to execute Company’s anticipated growth strategy, it will require additional equity and/or debt financing in order to undertake acquisitions or other business combination transactions. There can be no assurance that additional financing will be available to the Company when needed or on terms which are commercially acceptable to the Company. The Company’s inability to raise financing to support on-going operations or to fund acquisitions, could limit its growth and may have a material adverse effect upon future profitability. The Company may require additional financing to fund its operations to the point where it is generating positive cash flows. If additional funds are raised through further issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those of holders of Company Common Shares.

Even if its financial resources upon completion of the Business Combination are sufficient to fund its current operations, there is no guarantee that the Company will be able to achieve its business objectives. The continued development of the Company following the Amalgamation will require substantial additional financing in order to meet its growth objectives. The failure to raise such capital could result in the delay or indefinite postponement of current business objectives. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company. In addition, from time to time, the Company may enter into transactions to acquire assets or the shares of other corporations. These transactions may be financed wholly or partially with debt, which may temporarily increase the Company’s debt levels above industry standards. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions.

(e) Global Financial Conditions

Current global financial conditions have been subject to increased volatility and access to financial markets has been severely restricted. These factors may impact the ability of the Company to obtain equity or debt financing in the future and, if obtained, on terms favourable to the Company. If these increased levels of volatility and market turmoil continue, the Company’s operations could be adversely impacted and the value and the price of the Company’s Common Shares could continue to be adversely affected.

(f) Management of Growth

The growth of WeCommerce’s operations has placed significant demands on managerial, financial and human resources. WeCommerce’s ability to continue its rate of growth will depend on a number of factors, including the availability of capital, existing and emerging competition and the ability to recruit and train additional qualified personnel. Moreover, as the Company’s business grows, the Company will need to devote additional resources to improving its operational infrastructure and continuing to enhance its scalability in order to maintain the performance of its business.

(g) Risks Associated with Acquisitions

The Company will be pursuing a strategy of growth through acquisitions. Acquisitions involve a number of known and unknown risks, including diversion of management’s attention, failure to retain key acquired personnel, unanticipated events or circumstances, and legal liabilities, some or all of which could have a material adverse effect on the business, results of operations and financial condition of the Company. In addition, there can be no assurance that the Company can complete any acquisition it pursues on favourable terms, that any acquired businesses, products or technologies will achieve anticipated revenues and income, or that any acquisitions completed will ultimately benefit the business. An acquisition could also result in a potentially dilutive issuance of equity securities. The failure of the Company to successfully manage its strategy of growth through acquisitions could have a material adverse effect on the Company’s business, results of operations and financial condition.

(h) Tax Risk

The Company will be considered to have been carrying on business in Canada for purposes of the Income Tax Act (Canada) (the “ Tax Act ”). However, the Company will be operating in a new and developing industry that has had historically low regulations and tax compliance. There is risk that foreign governments may look to increase their tax revenues or levy additional taxes. While WeCommerce does not foresee any adverse tax affects, there is no guarantee that governments will not impose such additional adverse taxes in the future.

(i) Currency Fluctuations

Due to WeCommerce’s present operations, and the intention to have future operations in jurisdictions outside Canada, the Company is expected to be exposed to significant currency fluctuations. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the CAD dollar, US dollar and other currencies, may have a material adverse effect on the Company’s business, financial condition and operating results. The Company may, expand operations globally so it may be subject to additional gains and losses against additional currencies. WeCommerce does not currently have a foreign exchange hedging program in place. In the future, the Company may establish a program to hedge a portion of its foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if the Company develops a hedging program, it may not hedge its entire exposure to any one foreign currency and it may not hedge its exposure at all with respect to certain foreign currencies.

(j) Competitive Markets

The Company will face competition and new competitors will continue to emerge throughout the world. Services to be offered by competitors of the Company may take a larger market share than anticipated, which could cause the Company’s performance to fall below expectations. It is expected that competition in the ecommerce environment will intensify. If competitors of the Company develop and market more successful products or services, offer competitive products or services at lower price points, or if the Company does not produce consistently high-quality and well-received products and services, revenues, margins, and profitability of the Company will decline.

(k) Uncertainty and Adverse Changes in the Economy

Adverse changes in the economy could negatively impact the Company’s business. Future economic distress may result in a decrease in demand for products, which could have a material adverse impact on the Company’s operating results and financial condition. Uncertainty and adverse changes in the economy could also increase costs associated with developing and publishing products, increase the cost and decrease the availability of sources of financing, and increase the Company’s exposure to material losses from bad debts, any of which could have a material adverse impact on the financial condition and operating results of the Company.

(l) WeCommerce’s rapid growth may not be sustainable and depends on the Portfolio Companies ability to attract new customers, retain revenue from existing merchants and increase sales to both new and existing customers

The Portfolio Companies principally generate revenues through the sale of solutions to merchants on the Shopify platform. The Portfolio Companies’ customers have no obligation to renew their subscriptions after their subscription term expires. As a result, even though the number of merchants using a Portfolio Company’s solutions may have grown, there can be no assurance that such Portfolio Company will be able to retain these customers. Many customers of our Portfolio Companies are in the entrepreneurial stage of their development and there is no guarantee that their businesses will succeed. New customers utilizing our Portfolio Companies services may also decide not to continue or renew their subscription for reasons outside of our control.

(m) Risk of inability to attract new customers or sell additional products to existing customers

To increase revenue and achieve and maintain profitability, the Company must regularly add new customers or sell additional solutions to existing customers. Numerous factors, however, may impede the ability to add new customers and sell additional solutions to existing customers, including inability to convert companies that have been referred to them by our existing network into paying customers, failure to attract and effectively train new sales and marketing personnel, failure to retain and motivate current sales and marketing personnel, failure to develop relationships with partners or resellers and/or failure to ensure the effectiveness of our marketing programs. In addition, if prospective customers do not perceive that our solutions are of sufficiently high value and quality, we may not be able to attract the number and types of new customers that the Company is seeking. The Company’s revenue growth and profitability will be adversely affected

(n) WeCommerce relies significantly on recurring revenue, and if recurring revenue declines or contracts are not renewed, the Company’s future results of operations could be harmed

In order for the Company to improve operating results, it is important that customers renew their agreements when their subscription terms expire. These customers have no obligation to renew their subscriptions after a subscription term. The Company cannot guarantee customers will renew their subscriptions at the same or higher levels of service, or at all.

Sales of new or recurring subscriptions and software-related support service contracts and renewals after expiration of the contractual term may decline or fluctuate as a result of a number of factors, including end customers’ level of satisfaction with our software solutions; the price, performance and functionality of their software solutions; the availability, price, performance and functionality of products and services offered by their

competitors; or changes in customers’ operations including reductions in their overall spending levels. If sales of new or recurring subscriptions and software related support service contracts decline, the Company’s overall revenue and revenue growth may decline.

(o) Security and privacy breaches

Security and privacy breaches could delay or interrupt service to our customers, harm our reputation or subject the Company to significant liability and adversely affect business and financial results. The Company’s ability to retain customers and attract new customers could be adversely affected by an actual or perceived breach of security or privacy relating to customer information. Certain of our operations involve the storage and transmission of confidential information of customers and security breaches could expose the Company to a risk of loss of this information, litigation, indemnity obligations and other liability. If security measures are breached as a result of third party action, employee error, malfeasance or otherwise, and, as a result, someone obtains unauthorized access to our customers’ data, including personally identifiable information regarding users, damage to our reputation is likely, our business may suffer and significant liability could be incurred. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to prevent these techniques or to implement adequate preventative measures.

We have implemented technical, organizational and physical security measures, including employee training, backup systems, monitoring and testing and maintenance of protective systems and contingency plans, to protect and to prevent unauthorized access to confidential information of our customers and to reduce the likelihood of disruptions to our systems.

Despite these measures, our information systems, including back-up systems and any third party service provider systems that we employ, are vulnerable to damage, interruption, disability or failure due to a variety of reasons, including physical theft, electronic theft, fire, power loss, computer and telecommunication failures or other catastrophic events, as well as from internal and external security breaches, denial of service attacks, viruses, worms and other known or unknown disruptive events. The Company or our third party service providers may be unable to anticipate, timely identify or appropriately respond to one or more of the rapidly evolving and increasingly sophisticated means by which computer hackers, cyber terrorists and others may attempt to breach our security measures or those of our third party service providers’ information systems.

If a breach of a Portfolio Company’s security measures occurs, the market perception of their effectiveness could be harmed, and the Company could lose potential sales and existing customers. Furthermore, a security breach affecting a competitor or any other company that provides hosting services or delivers applications under a SaaS model, even if no confidential information is compromised, may adversely affect the market perception of security measures and potential sales and existing customers could be lost.

(p) Client Demand

The Company plans to significantly expand the number and diversity of clients served thereby increasing revenues. We are always working toward identifying and provide additional services and products that appeal to existing clients in an effort to increase their revenues. The Company’s ability to attract new clients, as well as increase revenues from existing clients, is dependent on a number of factors including but not limited to offering high quality products and services at competitive prices, the strength of competitors and the ability of our sales and marketing teams. The failure to attract new clients or to obtain new business from existing clients may mean that the Company will not increase its revenues as quickly as anticipated, if at all.

(q) Protection of Intellectual Property

The Company’s ability to secure intellectual property rights is essential to the success of its ongoing operations and future opportunities. There is no assurance, however, that the Company’s rights will not be challenged, invalidated or circumvented. In addition, the laws of certain countries do not protect proprietary rights to the

same extent as do the laws of the United States and Canada, and therefore there can be no assurance that we will be able to adequately protect our proprietary technology against unauthorized third party copying or use. Such unauthorized copying or use may adversely affect our competitive position. Further, there can be no assurance that the Company will successfully obtain licenses to any technology that may be required to conduct business or that, if obtainable, such technology can be licensed at a reasonable cost.

(r) Infringement of Intellectual Property

From time to time, the Company may receive notices from third parties alleging that it has infringed their intellectual property rights. Responding to any such claim, regardless of its merit, may be time-consuming, result in costly litigation, divert management’s attention and resources and cause the Company to incur significant expenses. Any meritorious claim of intellectual property infringement against the Company may potentially result in a temporary or permanent injunction, prohibiting it from marketing or selling certain products or requiring it to pay royalties to a third party. In the event of a meritorious claim or the inability of the Company to develop or license substitute technology, its business and results of operations may be materially adversely affected.

(s) Mobile device transactions

Commerce transacted over mobile devices continues to grow more rapidly than desktop transactions. The Company is dependent on the interoperability of their solutions with third-party mobile devices and mobile operating systems as well as web browsers that they do not control. Any changes in such devices, systems or web browsers that degrade the functionality of our platform or give preferential treatment to competitive services could adversely affect usage of our platform. Mobile commerce is a key element in WeCommerce’s strategy and effective mobile functionality is integral to our long-term development and growth strategy. In the event that merchants and their buyers have difficulty accessing and using our platform on mobile devices, our business and operating results could be adversely affected.