Tiny Ltd. — Interim / Quarterly Report 2022

Nov 10, 2022

Interim Condensed Consolidated Financial Statements (Expressed in Canadian dollars)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021 (Unaudited)

Interim Condensed Consolidated Statements of Financial Position (Expressed in Canadian dollars) (Unaudited)

	Notes	September 30,2022	December 31, 2021
Assets
Current assets
Cash and cash equivalents		$10,504,657	$26,122,247
Restricted cash		1,246,696	1,243,762
Trade and other receivables	4	2,199,308	3,049,341
Income taxes receivable		95,106	519,574
Prepaid expenses and deposits		980,166	284,356
		15,025,933	31,219,280
Deferred income tax asset		1,312,285	1,017,109
Property and equipment	5	199,200	210,457
Intangible assets	6	52,545,457	56,986,149
Goodwill	7	120,645,673	110,089,524
		$189,728,548	$199,522,519
Liabilities and Shareholder's Equity
Current liabilities
Trade and other payables	8	$3,302,625	$2,531,812
Contract liability	9	4,111,009	2,891,876
Income taxes payable		114,863	70,681
Foreign currency derivatives	10	15,604	30,132
Due to related parties		-	613
Contingent consideration payable	10	1,795,617	22,208,224
Indemnity holdback		1,350,911	-
Bank loan	11	5,614,995	3,186,032
		16,305,624	30,919,370
Deferred income tax liability		1,569,012	1,673,558
Indemnity holdback		249,920	1,196,037
Bank loan	11	44,966,146	57,017,386
		63,090,702	90,806,351
Shareholder's equity
Share capital	12	127,649,780	109,408,687
Contributed surplus		2,580,936	3,424,757
Retained deficit		(15,161,893)	(4,959,713)
Accumulated other comprehensive income		11,569,023	842,437
		126,637,846	108,716,168
		$189,728,548	$199,522,519

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

Approved on behalf of the Board:

Tim McElvaine Director

Chris Sparling Director

Interim Condensed Consolidated Statements of Net Loss and Comprehensive Income/(Loss) (Expressed in Canadian dollars)

(Unaudited)

		Three-month period ended		Nine-month period
			September 30,	ended September 30,
	Notes	2022	2021	2022	2021
Revenue
Recurring subscription revenue		7,915,065	6,825,881	22,788,844	15,037,414
Digital goods revenueAgency service revenue		2,810,725731,882	2,888,5891,228,814	9,788,9052,593,830	7,023,4204,271,487
		11,457,672	10,943,284	35,171,579	26,332,321
Expenses
Staff		5,682,164	3,792,831	17,833,014	10,013,790
Share-based compensation	13	1,027,754	449,729	2,857,306	972,764
Fees paid to ecommerce platforms		1,589,309	1,432,972	4,879,061	3,553,611
Depreciation and amortization	5,6	3,143,287	3,131,209	9,344,301	6,792,446
Professional fees		623,402	921,985	1,874,812	1,861,498
Occupancy		12,457	22,870	37,215	51,957
Advertising		462,430	622,965	1,703,117	1,277,938
General and office expenses		135,832	53,979	402,778	105,955
Hosting and subscriptions		976,905	387,703	2,522,488	965,962
Acquisition costs		6,901	321,154	151,141	1,431,228
Other		149,855	144,388	442,913	457,114
		13,810,296	11,281,785	42,048,146	27,484,263
Operating loss		(2,352,624)	(338,501)	(6,876,567)	(1,151,942)
Other expenses/(income)
Finance costs		810,092	589,305	2,308,512	2,416,005
Revaluation of contingent
consideration	10	68,535	200,000	(3,352,523)	79,376
(Gain)/loss on sale of intangibles and
property and equipment		-	155,497	11,799	(200,016)
Foreign exchange loss		3,173,110	1,593,524	4,535,891	1,406,692
		4,051,737	2,538,326	3,503,679	3,702,057
Loss before taxes		(6,404,361)	(2,876,827)	(10,380,246)	(4,853,999)
Income tax expense (recovery):Current		295,852	295,192	570,843	774,997
Deferred		(237,400)	(185,048)	(748,909)	(660,046)
Net loss		(6,462,813)	(2,986,971)	(10,202,180)	(4,968,950)
Other comprehensive (loss)/income
Items that will not be reclassified subsequently to net loss:
Foreign currency translation
adjustments		8,623,308	3,415,813	10,726,586	1,495,552
Comprehensive income/(loss)		2,160,495	428,842	524,406	(3,473,398)
Loss per share
Basic	14	(0.16)	(0.08)	(0.25)	(0.13)
Diluted	14	(0.16)	(0.08)	(0.25)	(0.13)

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

Interim Condensed Consolidated Statements of Changes in Shareholder's Equity (Expressed in Canadian dollars) (Unaudited)

		Common	Share	Contributed	Accumulatedother	Earnings	Shareholder's
	Notes	shares (#)	capital	surplus	comprehensiveincome/(loss)	(deficit)	equity
Balance, December 31, 2020		35,999,207	65,726,277	4,375,315	(13,924)	(4,116,791)	65,970,877
Issuance of common shares on exercise ofshare options		496,192	2,674,957	(2,139,537)	-	-	535,420
Share-based compensation	13	-	-	972,764	-	-	972,764
Issuance of shares		2,810,000	31,233,426	-	-	-	31,233,426
Shares issued on purchase of subsidiary		496,697	9,100,000	-	-	-	9,100,000
Net loss and comprehensive loss for the period		-	-	-	-	(4,968,950)	(4,968,950)
Foreign currency translation adjustments		-	-	-	1,495,552	-	1,495,552
Balance, September 30, 2021		39,802,096	108,734,660	3,208,542	1,481,628	(9,085,741)	104,339,089
Balance, December 31, 2021		39,824,209	109,408,687	3,424,757	842,437	(4,959,713)	108,716,168
Issuance of common shares on exercise ofshare options		444,323	3,131,359	(2,945,930)	-	-	185,429
Share-based compensation	13	61,658	755,197	2,102,109	-	-	2,857,306
Payments of contingent consideration	10	1,241,742	14,354,537	-	-	-	14,354,537
Net loss and comprehensive loss for the period		-	-	-	-	(10,202,180)	(10,202,180)
Foreign currency translation adjustments		-	-	-	10,726,586	-	10,726,586
Balance, September 30,2022		41,571,932	127,649,780	2,580,936	11,569,023	(15,161,893)	126,637,846

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

Interim Condensed Consolidated Statements of Cash Flows (Expressed in Canadian dollars) (Unaudited)

	Nine-month	Nine-month
	period ended	period ended
	September 30, 2022	September 30,2021
Cash provided by (used in):
Operating activities
Net loss for the period	(10,202,180)	(4,968,950)
Adjustments for:
Finance costs	2,308,512	2,416,005
Depreciation and amortization	9,344,301	6,792,446
Accretion expense of indemnity holdback	48,161	-
Deferred income taxes	(748,909)	(660,046)
Fair value adjustment of contingent consideration	(3,352,523)	79,376
Fair value change in foreign currency derivatives	(14,528)	74,071
Loss/(gain) on sale of intangibles and property and equipment	11,799	168,186
Foreign exchange loss/(gain)	4,535,891	1,406,692
Share-based compensation	2,857,306	972,764
Changes in non-cash working capital balances:
Trade and other receivables	864,385	(1,155,702)
Prepaid expense and deposits	(690,795)	(382,586)
Due to related party	(613)	(1,387)
Trade and other payables	628,599	(585,593)
Contract liability	1,219,133	656,517
Income taxes receivable and payable	468,650	(461,900)
Cash provided by operating activities	7,277,189	4,349,893
Financing activities
Repayment of long-term debt	-	(10,700,000)
Repayment of term loan	(1,601,568)	(1,256,200)
Repayment of revolving facility	(12,693,963)	-
Drawdown of term loan	-	50,349,079
Drawdown of revolving credit facility	-	12,637,304
Interest paid	(1,751,075)	(2,086,913)
Cash financing fees paid related to credit facility	(71,559)	(1,314,808)
Proceeds from share issuance	-	31,233,426
Proceeds on share issuance of shares on exercise of options	185,429	535,420
Decrease in restricted cash	(167)	(1,074,544)
Repayment of lease liability	-	(103,707)
Cash (used in)/provided by financing activities	(15,932,903)	78,219,057
Investing activities
Purchase of property and equipment	(101,013)	(134,003)
Proceeds on disposal of intangibles and property and equipment	22,599	-
Acquisition of KnoCommerce	(2,428,493)	-
Acquisition of Stamped IO	-	(92,679,527)
Acquisition of Archetype	-	(24,269,211)
Payments of contingent consideration	(4,405,500)	(1,651,518)
Cash used in investing activities	(6,912,407)	(118,734,259)
Foreign exchange on cash	(49,469)	(458,236)
Decrease in cash (Note 10(c))	(15,617,590)	(36,623,545)
Cash, beginning of period	26,122,247	61,193,367
Cash, end of period	10,504,657	24,569,822

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

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

1. Nature of operations

WeCommerce Holdings Ltd. (the "Company") was incorporated on November 27, 2019 under the laws of the Province of British Columbia and maintains its head office at 2900-550 Burrard Street, Vancouver, BC V6C 0A3. Pursuant to a reverse takeover acquisition of Brachium Capital Corp. (a Canadian company listed on the TSX Venture Exchange) on December 9, 2020, the Company's shares became publicly traded under the symbol WE.V.

The Company invests in businesses who develop, sell, and support website themes and applications, as well as providing custom solutions, for clients on ecommerce platforms.

2. Basis of preparation and measurement

(a) Basis of preparation

These interim condensed consolidated financial statements ("interim financial statements") of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to the preparation of interim financial statements, including International Accounting Standards ("IAS") 34, Interim Financial Reporting. These interim financial statements do not include all the information required for full annual financial statements and were approved by the Board of Directors for issue on November 10, 2022.

These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2021.

(b) Basis of measurement

These interim financial statements have been prepared on the going concern basis, under the historical cost basis except for certain financial instruments that are measured at fair value, as detailed in the Company's significant accounting policies disclosed in Note 3 of the audited consolidated financial statements for the year ended December 31, 2021.

(c) Basis of consolidation

A subsidiary is an entity controlled by the Company. Control exists when the Company has the power to manage, either directly or indirectly, the entity's financial and operational policies in order to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The financial statements of all subsidiaries are prepared to the same reporting date as the Company using consistent accounting policies.

As at December 31, 2021, the Company had the following wholly-owned operating subsidiaries:

WeCommerce Operations Ltd. (formerly "Rehash Ltd.") Pixel Union Design Ltd. ("Pixel Union") Foursixty Inc. ("Foursixty") Stamped Technologies Pte. Ltd. ("Stamped") Archetype Themes Limited Partnership ("Archetype")

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

2. Basis of preparation and measurement (continued)

(c) Basis of preparation (continued)

As at September 30, 2022, the Company had the following wholly-owned operating subsidiaries:

WeCommerce Operations Ltd. Pixel Union Design Ltd. Foursixty Inc. Stamped Technologies Pte. Ltd. Archetype Themes Limited Partnership KnoCommerce Inc. ("KnoCommerce")

All Intra-Group balances and transactions are eliminated on consolidation.

(d) Functional and presentation currency

These interim financial statements are presented in Canadian dollars. The functional currency of WeCommerce, Foursixty, Pixel Union and Archetype is the Canadian dollar. The functional currency of WeCommerce Operations Ltd., Stamped and KnoCommerce is the U.S. dollar. The assets and liabilities of subsidiary entities that have a different functional currency from the Company are translated at the exchange rate prevailing at the financial position reporting date. The income statements of such entities are translated at average rates of exchange during the period. All resulting exchange differences are recognized directly in accumulated other comprehensive (loss)/income.

Transactions denominated in currencies other than the functional currency are translated by applying the exchange rate prevailing on the date of the transaction. At each reporting date, all monetary assets and liabilities denominated in foreign currencies are translated at the rates prevailing at the financial position reporting date. Any resulting translation adjustments are recognized in the Consolidated Statement of Net Loss and Comprehensive Income/(Loss).

(e) Estimates and judgments

The preparation of financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting methods and the amounts recognized in the financial statements. These estimates and the underlying assumptions are established and reviewed continuously on the basis of past experience and other factors considered reasonable in the circumstances. They therefore serve as the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from the estimates.

Significant judgments and estimates relate to:

(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 these fair values involves a variety of assumptions, including estimates surrounding the costs to acquire or reproduce a similar asset, expected future net cash flows and appropriate discount rates. Contingent consideration resulting

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

2. Basis of preparation and measurement (continued)

(e) Estimates and judgments (continued)

from business combinations which is classified as a financial liability, is recorded at fair value at the acquisition date as part of the business combination based on expected discounted cash flows and is remeasured to fair value at each reporting date with any subsequent change in fair value recognized in the Consolidated Statement of Net Loss and Comprehensive Income/(Loss).

(ii) Impairment of intangible assets and goodwill

Management assesses indicators of impairment for intangible assets and goodwill at each reporting date and and performs a quantitative impairment test for goodwill at least annually. When performing quantitative assessments, forecasts 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 are offered to employees and directors in the form of stock options, deferred share units, restricted share units or performance share units. Options are settled in equity; deferred share units, restricted share units and performance share units are settled in cash or equity, or a combination of each, at the option of the Company. 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 expected term, volatility, and forfeiture rate. The expected term is determined based on management's estimate of the period of time between grant date and exercise date. Volatility is determined using a comparable peer group until such time as sufficient trading history is available for the Company's own shares.

(iv) Determination of functional currency

Determination of functional currency requires management to make judgments in evaluating primary and secondary indicators under IAS 21, The Effect of Changes in Foreign Exchange Rates. Key judgments include the primary economic environment in which the Company operates, the currency that mainly influences sales prices for its services and the costs of labour, and the country whose competitive forces and regulations mainly determine sales prices.

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

3. Significant accounting policies

The significant accounting policies applied in the preparation of these interim financial statements are consistent with the accounting policies disclosed in Note 3 of the audited consolidated financial statements for the year ended December 31, 2021.

4. Trade and other receivables

	September 30, 2022	December 31, 2021
Trade receivables	2,124,865	1,733,818
Sales tax receivable	61,090	217,155
Working capital adjustments receivable –Stamped	-	696,645
Other receivables	14,480	408,901
	2,200,435	3,056,519
Allowance for expected credit loss	(1,127)	(7,178)
Trade and other receivables, net	2,199,308	3,049,341

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

5. Property and equipment

	ComputerEquipment	OfficeEquipment	Furniture	LeaseholdImprovements	Right-ofuse assets	Total
Cost:
Balance on January 1, 2021	370,122	9,221	109,591	731	361,367	851,032
Additions	200,858	3,431	-	-	-	204,289
Disposals	(276,819)	(12,129)	(108,751)	(731)	(361,367)	(759,797)
Acquisition through business combination (Note 16)	16,278	2,849	-	-	-	19,127
Foreign exchange	531	-	-	-	-	531
Balance on December 31, 2021	310,970	3,372	840	-	-	315,182
Additions	94,621	6,392	-	-	-	101,013
Disposals	(69,001)	(106)	-	-	-	(69,107)
Foreign exchange	8,676	-	-	-	-	8,676
Balance on September30, 2022	345,266	9,658	840	-		355,764
Accumulated depreciation:Balance on January 1, 2021Additions	260,24998,279	6,8611,844	95,5576,615	550181	257,760103,607	620,977210,526
Disposals	(254,721)	(8,450)	(101,538)	(731)	(361,367)	(726,807)
Foreign exchange	29	-	-	-	-	29
Balance on December 31, 2021	103,836	255	634	-	-	104,725
Additions	76,268	1,098	101	-	-	77,467
Disposals	(29,036)	-	-	-	-	(29,036)
Foreign exchange	3,408	-	-	-	-	3,408
Balance on September30, 2022	154,476	1,353	735	-	-	156,564
Net book value:
At December 31, 2021	207,134	3,117	206	-	-	210,457
AtSeptember30, 2022	190,790	8,305	105	-	-	199,200

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

6. Intangible assets

	Customerrelationships	Non-competeagreement	Brand	Softwareapplications	Intellectualproperty	Total
Cost:
Balance at January 1, 2021	1,816,000	-	1,349,092	12,657,032	-	15,822,124
Acquisition through business combination (Note 16)	9,900,000	8,660,000	8,220,000	29,791,928	1,300,000	57,871,928
Disposition	-	-	-	(302,005)	-	(302,005)
Foreign exchange	80,540	51,735	62,726	225,479	-	420,480
Balance at December 31, 2021	11,796,540	8,711,735	9,631,818	42,372,434	1,300,000	73,812,527
Acquired through business combination (Note 16)	-	385,110	-	1,540,440	-	1,925,550
Foreign exchange	696,433	473,456	542,398	2,071,721	-	3,784,008
Balance on September30, 2022	12,492,973	9,570,301	10,174,216	45,984,595	1,300,000	79,522,085
Accumulated depreciation:
Balance at January 1, 2021	105,933	-	422,439	6,481,044	-	7,009,416
Additions	1,117,074	1,554,749	809,508	6,165,069	230,645	9,877,045
Disposition	-	-	-	(142,485)	-	(142,485)
Foreign exchange	13,117	19,660	7,151	42,474	-	82,402
Balance at December 31, 2021	1,236,124	1,574,409	1,239,098	12,546,102	230,645	16,826,378
Additions	1,171,542	1,927,465	829,564	4,850,763	487,500	9,266,834
Foreign exchange	136,579	208,589	74,460	463,788	-	883,416
Balance on September30, 2022	2,544,245	3,710,463	2,143,122	17,860,653	718,145	26,976,628
Net book value:
At December 31, 2021	10,560,416	7,137,326	8,392,720	29,826,332	1,069,355	56,986,149
At September30, 2022	9,948,728	5,859,838	8,031,094	28,123,942	581,855	52,545,457

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

7. Goodwill

	Themes	Apps	Total
Balance on January 1, 2021	3,943,549	7,998,662	11,942,211
Acquisition through business combination(Note 16)	15,463,561	81,965,646	97,429,207
Foreign exchange	-	718,106	718,106
Balance on December 31, 2021	19,407,110	90,682,414	110,089,524
Acquisition through business combination(Note 16)	-	2,796,163	2,796,163
Foreign exchange	-	7,759,986	7,759,986
Balance on September 30, 2022	19,407,110	101,238,563	120,645,673

Goodwill was recognized as part of the acquisitions of the shares of KnoCommerce on March 10, 2022. 100% of KnoCommerce's goodwill has been allocated to our Apps reportable segment (see Note 16).

The Company performs an impairment test annually on December 31 each year or at each reporting date, if there is an indication of impairment. On June 30, 2022, the Company performed an impairment test related to the Pixel Union Themes CGU. As a result of the test performed, the Company did not identify any impairment. On September 30, 2022, an additional impairment test was performed related to Archetype Themes CGU. The Company did not identify any impairment.

8. Trade and other payables

	September 30, 2022	December 31, 2021
Trade payables	697,999	1,102,885
Sales tax payable	112,632	105,660
Accrued payroll and related expenses	1,578,668	723,895
Accrued other	913,326	599,372
	3,302,625	2,531,812

As at June 30, 2022, the Company accrued $623,060 related to severance to be paid to employees within the themes portfolio at Pixel Union. The full accrual has been paid out as at September 30, 2022.

9. Contract liability

	September 30,2022	December 31, 2021
Opening balance	2,891,876	841,505
Prior year liability recognized as revenue during the period	(2,462,269)	(841,505)
Acquired at fair value	-	1,489,314
Acquired liability recognized as revenue during the period	-	(1,395,081)
Net additions	3,560,046	2,776,984
Foreign exchange	121,356	20,659
Closing balance	4,111,009	2,891,876

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

10. Financial instruments

(a) Classification and measurement

The following table summarizes information regarding the classification and carrying values of the Company's financial instruments:

	Financialassets atamortizedcost	Financialliabilities atamortizedcost	Fair valuethroughprofit orloss	September 30,2022
Financial Assets
Cash and cash equivalents	10,504,657	-	-	10,504,657
Restricted cash	1,246,696	-	-	1,246,696
Trade and other receivables	2,199,308	-	-	2,199,308
Financial Liabilities
Trade and other payables	-	3,302,625	-	3,302,625
Bank loan	-	50,581,141	-	50,581,141
Foreign currency derivatives	-	-	15,604	15,604
Contingent consideration payable	-	-	1,795,617	1,795,617
Indemnity holdback	-	1,600,831	-	1,600,831

	Financialassets atamortizedcost	Financialliabilities atamortizedcost	Fair valuethroughprofit orloss	December 31,2021
Financial Assets
Cash and cash equivalents	26,122,247	-	-	26,122,247
Restricted cash	1,243,762	-	-	1,243,762
Trade and other receivables	3,049,341	-	-	3,049,341
Financial Liabilities
Trade and other payables	-	2,531,812	-	2,531,812
Bank loan	-	60,203,418	-	60,203,418
Foreign currency derivatives	-	-	30,132	30,132
Due to related parties	-	613	-	613
Contingent consideration payable	-	-	22,208,224	22,208,224
Indemnity holdback	-	1,196,037	-	1,196,037

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

10. Financial instruments (continued)

(b) Fair value

The following fair value measurement hierarchy is used for financial instruments that are measured in the Interim Consolidated Statement of Financial Position at fair value:

Level 1 – quoted prices in active markets for identical assets or liabilities;

Level 2 – techniques (other than quoted prices included in Level 1) that are observable for the asset or liability, either directly (as prices), or indirectly (as derived from prices); and

Level 3 – techniques which use inputs that are both significant to the overall fair value measurement of the asset or liability and are not based on observable market data (unobservable inputs).

The carrying values of cash and cash equivalents, restricted cash, trade and other receivables, and trade and other payables approximates their fair value to the relatively short-term maturity of these financial instruments. The carrying value of bank loans is initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method.

There were no transfers between levels of the fair value hierarchy in the nine-month periods ended September 30, 2022 and September 30, 2021.

(c) Contingent consideration payable

Total contingent consideration payable is comprised of:

• $1,795,617 relating to the acquisition of KnoCommerce

Amounts are included within contingent consideration until they are settled.

Liabilities for contingent consideration related to business acquisitions are recorded at fair value on acquisition and are adjusted quarterly for changes in fair value. Changes in the fair value of contingent consideration liabilities can result from changes in anticipated milestone payments and changes in assumed discount periods and rates. These inputs are unobservable in the market and therefore, categorized as Level 3 inputs.

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

10. Basis of preparation and measurement (continued)

(c) Contingent consideration payable (continued)

The following table presents the changes in fair value of the Company's liability for contingent consideration:

Balance on January 1, 2021	$2,975,594
Acquired through business combination (Note 16)	27,110,840
Adjustment to fair value	(5,223,240)
Payments of contingent consideration	(2,651,518)
Foreign exchange	(3,452)
Balance on December 31, 2021	22,208,224
Acquired through business combination (Note 16)	1,566,113
Adjustment to fair value	(3,352,523)
Payment of contingent consideration	(4,405,500)
Payment of contingent consideration through issuance of shares	(14,354,537)
Foreign exchange	133,840
Balance on September 30, 2022	1,795,617

(d) Derivative financial instruments

The Company uses certain derivative financial instruments, primarily forward foreign exchange contracts, to manage foreign currency exposures on export sales. The Company does not designate its foreign exchange contracts as hedging instruments under a fair value hedge accounting model. Therefore, a change in foreign exchange rates at the reporting date will affect profit or loss. The derivative financial instruments are categorized under Level 2 in the fair value hierarchy.

At September 30, 2022, outstanding forward exchange contracts enabled the Company to convert USD $160,300 to CAD $200,000 up to November 1, 2022 (December 31, 2021 outstanding forward exchange contracts enabled the Company to convert USD $2,002,052 to CAD $2,500,000 up to November 1, 2022). The Company recognized a fair value derivative liability of $15,604 at September 30, 2022 (December 31, 2021: derivative liability of $30,132).

For the three- and nine-months ended September 30, 2022, the company recognized a loss and gain of $1,618 and $14,528, respectively (three- and nine-month periods ended September 30, 2021: loss of $67,412 and $74,071, respectively) on its derivative financial instruments recognized within the Interim Consolidated Statement of Net Loss and Comprehensive Income/(Loss).

(i) Foreign exchange risk

The Company's reporting currency is CAD and functional currency varies by subsidiary in either CAD or USD. The Company's term loan is denominated in USD and a significant portion of the Company's wholly owned subsidiaries' (Pixel Union, Rehash, Stamped, Foursixty, Archetype and KnoCommerce) sales occur outside of Canada and are received in U.S. Dollars. As such, the Company is exposed to foreign currency risks on cash, debt and trade and other receivables denominated in U.S. Dollars.

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

10. Basis of preparation and measurement (continued)

(d) Derivative financial instruments (continued)

At period-end, the Company reported the following U.S. Dollar monetary assets and liabilities, as stated in Canadian Dollars:

	September 30,2022	December 31,2021
Cash	$10,226,547	$8,513,128
Trade and other receivables	1,315,774	2,374,852
Trade and other payables	(928,051)	(1,267,091)
Debt	(51,526,784)	(61,285,171)
Total exposure	$(40,912,514)	$(51,664,282)

11. Bank loans

	September 30,2022	December 31,2021
Term loan	$51,526,784	$48,651,571
Revolving facility	-	12,633,600
Deferred financing costs	(945,643)	(1,081,753)
	50,581,141	60,203,418
Less:
Current portion	(5,878,895)	(3,486,450)
Deferred financing costs – current portion	263,900	300,418
	44,966,146	57,017,386

The Company has access to a credit facility with an aggregate amount of USD $60 million comprising of:

• A senior revolving credit facility in an aggregate principal amount of USD $20 million ($24.8 million);
• A senior term loan facility in an aggregate principal amount of USD $40 million ($49.6 million)

As at September 30, 2022, the Company's ability to draw on the senior delayed draw term loan in an aggregate principal amount of USD $20 million ($24.8 million) expired.

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as 'IBOR reform'). During the first quarter, an amendment was made to the credit facility to replace the base rate, LIBOR, with an alternative rate as part of IBOR reform. The credit facility has transitioned its base rate to a secured overnight financing rate ("SOFR").

As at September 30, 2022, the Company was in compliance with all debt covenants. The fair value of the debt approximates the carrying value.

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

12. Share capital

The authorized share capital of the Company consists of an unlimited number of common shares without par value.

13. Share-based compensation

On May 14, 2021, WeCommerce's Board of Directors approved a new equity incentive plan (the "Omnibus Plan") to amend and restate the Company's Stock Option Plan. The Omnibus Plan permits the Board to grant options, restricted share units, performance share units and deferred share units to eligible directors, employees and consultants. Under the terms of the Omnibus Plan, the Company may issue equity awards up to 10% of the issued and outstanding common shares of the Company.

(a) Stock options

A summary of Company's outstanding stock options and changes during the periods then ended are as follows:

	Number ofoptions	Weightedaverageexercise price($)
Outstanding, January 1, 2021	1,899,871	1.90
Exercised	(496,192)	1.08
Forfeited	(11,625)	7.00
Outstanding, September 30, 2021	1,392,054	2.15
Exercised	(16,974)	1.07
Forfeited	(4,443)	7.00
Outstanding, December 31, 2021	1,370,637	2.15
Exercised	(444,323)	0.42
Forfeited	(9,842)	7.00
Outstanding, September 30, 2022	916,472	2.48

The following table provides the stock option information as at September 30, 2022:

			Options outstanding		Options exercisable
Exerciseprice ($)	Number	Weightedaverageremainingcontractualterm	Weightedaverageexerciseprice ($)	Number	Weightedaverageremainingcontractualterm	Weightedaverageexerciseprice ($)
0.35-0.47	233,963	0.71	0.35	233,963	0.71	0.35
0.75-1.14	368,985	7.90	1.14	346,302	7.90	1.14
3.70-7.00	313,524	3.19	7.00	103,127	3.19	7.00
	916,472	1.27	2.48	683,392	0.72	1.18

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

13. Share-based compensation (continued)

(a) Stock options (continued)

The following table provides the stock option information as at December 31, 2021:
Options outstandingOptions exercisable
Exerciseprice ($)	Number	Weightedaverageremainingcontractualterm	Weightedaverageexerciseprice ($)	Number	Weightedaverageremainingcontractualterm	Weightedaverageexerciseprice ($)
0.35-0.47	643,096	3.76	0.35	643,096	3.76	0.35
0.75-1.14	404,730	8.64	1.14	356,044	8.64	1.14
3.70-7.00	322,811	3.97	7.00	67,608	3.94	7.00
	1,370,637	5.25	2.15	1,066,748	5.40	1.04

(b) Restricted share units ("RSUs"), Deferred share units ("DSUs") and Performance share units ("PSUs")

RSUs, DSUs and PSUs can be settled in either common shares, cash, or a combination of both, at the option of the Company. It is the Company's intent to settle the outstanding RSUs, DSUs and PSUs in common shares. RSUs and DSUs are classified as equity-settled and valued at the closing share price on the grant date. PSUS are classified as equity-settled. PSUs are valued depending on certain market conditions including the share price, the 120-day volume weighted average trading price ("VWAP") preceding each vesting date and relative increase from the previous vesting date.

The following table provides the RSUs, DSUs and PSUs information as at September 30, 2021 and September 30, 2022:

	RSUs	DSUs	PSUs
Outstanding, January 1, 2021	-	-	-
Granted	153,303	14,000	-
Settled	-	-	-
Forfeited	-	-	-
Outstanding, September 30, 2021	153,303	14,000	-
	RSUs	DSUs	PSUs
Outstanding, January 1, 2022	252,105	14,000	190,000
Granted	274,537	27,798	120,000
Settled	(62,589)	-	-
Forfeited	(31,481)	(3,500)	-

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

13. Share-based compensation (continued)

(c) Share-based compensation expense

Total expenses from share-based payment transactions recognized during the period are as follows:

	Three-month period endedSeptember 30,		Nine-month period ended	September 30,
	2022	2021	2022	2021
Stock options	124,561	238,853	392,654	761,888
Restricted share units	643,517	191,309	1,850,745	191,309
Deferred share units	80,614	19,567	80,614	19,567
Performance share units	179,062	-	533,293	-
	1,027,754	449,729	2,857,306	972,764

14. Loss per share

Net loss per share has been calculated as follows:

		Three-month period ended			Nine-month period ended
			September 30,	September 30,
		2022	2021		2022	2021
Net loss	$	(6,462,813)	(2,986,971)	$	(10,202,180)	(4,968,950)
Weighted average number of sharesoutstandingWeighted average number of sharesoutstanding including potentially		41,403,777	39,610,068		41,035,307	37,437,910
dilutive shares		41,403,777	39,610,068		41,035,307	37,437,910
Basic loss per shareDiluted loss per share	$$	(0.16)(0.16)	(0.08)(0.08)	$$	(0.25)(0.25)	(0.13)(0.13)

The outstanding number and type of securities that are anti-dilutive during the period are as follows:

	September 30, 2022	September 30, 2021
Stock options	280,191	1,014,995
RSUs	468,484	-
	748,675	1,014,995

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

15. Segment information

(a) Reportable segments

For the three-months ended September30, 2022	Themes	Apps	Agency	Total
Revenue	2,810,725	7,915,065	731,882	11,457,672
Fees paid to ecommerce platforms	450,782	1,138,527	-	1,589,309
Staff	692,158	2,921,092	951,632	4,564,882
Share-based compensation	69,746	169,288	31,528	270,562
Hosting and subscriptions	81,804	825,368	69,733	976,905
Other expenses	91,665	198,679	78,737	369,081
Advertising	41,926	420,504	-	462,430
Segment profit/(loss)	1,382,644	2,241,607	(399,748)	3,224,503
Depreciation and amortization	-	-	-	3,143,287
Acquisition costs	-	-	-	6,901
Staff	-	-	-	1,117,282
Share-based compensation	-	-	-	757,192
Corporate office expenses	-	-	-	552,465
Operating income/(loss)	1,382,644	2,241,607	(399,748)	(2,352,624)

For the three-months ended September30, 2021	Themes	Apps	Agency	Total
Revenue	2,888,589	6,825,881	1,228,814	10,943,284
Fees paid to ecommerce platforms	417,653	1,015,319	-	1,432,972
Staff	940,244	1,437,357	1,191,571	3,569,172
Share-based compensation	16,618	118,273	12,352	147,243
Hosting and subscriptions	33,367	330,225	24,111	387,703
Other expenses	132,615	188,924	135,160	456,699
Advertising	66,625	550,976	5,364	622,965
Segment profit/(loss)	1,281,467	3,184,807	(139,744)	4,326,530
Depreciation and amortization	-	-	-	3,131,209
Acquisition costs	-	-	-	321,154
Staff	-	-	-	223,659
Share-based compensation	-	-	-	302,486
Corporate office expenses	-	-	-	686,523
Operating income/(loss)	1,281,467	3,184,807	(139,744)	(338,501)

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

15. Segment information (continued)

For the nine-months ended September30, 2022	Themes	Apps	Agency	Total
Revenue	9,788,905	22,788,844	2,593,830	35,171,579
Fees paid to ecommerce platforms	1,380,832	3,498,229	-	4,879,061
Staff	3,683,307	7,846,948	2,711,215	14,241,470
Share-based compensation	143,719	444,134	51,761	639,614
Hosting and subscriptions	243,290	2,100,114	179,084	2,522,488
Other expenses	211,075	520,688	180,743	912,506
Advertising	164,166	1,530,649	8,302	1,703,117
Segment profit/(loss)	3,962,516	6,848,082	(537,275)	10,273,323
Depreciation and amortization	-	-	-	9,344,301
Acquisition costs	-	-	-	151,141
Staff	-	-	-	3,591,544
Share-based compensation	-	-	-	2,217,692
Corporate office expenses	-	-	-	1,845,212
Operating income/(loss)	3,962,516	6,848,082	(537,275)	(6,876,567)

For the nine-months ended September30, 2021	Themes	Apps	Agency	Total
Revenue	7,023,420	15,037,414	4,271,487	26,332,321
Fees paid to ecommerce platforms	999,777	2,553,834	-	3,553,611
Staff	2,775,805	3,400,757	3,309,560	9,486,122
Share-based compensation	36,539	143,467	34,942	214,948
Hosting and subscriptions	100,682	782,440	82,840	965,962
Other expenses	162,296	278,663	218,168	659,127
Advertising	207,802	1,049,175	20,961	1,277,938
Segment profit	2,740,519	6,829,078	605,016	10,174,613
Depreciation and amortization	-	-	-	6,792,446
Acquisition costs	-	-	-	1,431,228
Staff	-	-	-	527,668
Share-based compensation	-	-	-	757,816
Corporate office expenses	-	-	-	1,817,397
Operating income/(loss)	2,740,519	6,829,078	605,016	(1,151,942)

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

16. Acquisitions

All acquisitions have been accounted for using the acquisition method. The results of operations of the acquired entities are included in the Company's consolidated financial statements from the date of acquisition.

(a) Foursixty acquisition

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

As part of the acquisition, the expected contingent consideration of up to $3.0 million was to be paid if Foursixty's EBITDA exceeded certain thresholds during the period from June 1, 2020 to May 31, 2022. Under the terms, achievement of EBITDA ranging from $2.8 million to $3.8 million would result in a payment of $1.0 million to $3.0 million.

Prior to December 31, 2021, the Company had paid $2.4 million to the former owners of Foursixty. During the three-months ended March 31, 2022, the Company paid $200,000 and the remaining $400,000 was paid during the three-months ended June 30, 2022. No further amounts are owing in relation to the purchase of Foursixty.

(b) Stamped acquisition

On April 6, 2021, the Company completed an asset purchase agreement to acquire certain assets of T.O.Enterprise Pte. Ltd. (Formerly, "Stamped.io.Pte.Ltd."), and incorporated Stamped Technologies Pte. Ltd. Stamped is a SaaS platform enabling online merchants to implement and manage customer reviews and loyalty programs through Shopify and other ecommerce platforms.

As part of the acquisition, the expected contingent consideration was payable on December 31, 2021, as Stamped achieved a minimum revenue target of USD $10 million for the 12-month period ended December 31, 2021. On February 4, 2022, the contingent consideration was satisfied by the issuance of 1,241,742 Class A common shares of WeCommerce. The shares issued as contingent consideration are subject to a statutory hold period expiring on the date that is four months and one day after the date of issuance. No further amounts are owing in relation to the purchase of Stamped.

The purchase price allocation was finalized as at December 31, 2021, and there have been no subsequent changes to the purchase price allocation as disclosed in Note 20 of the audited consolidated financial statements for the year ended December 31, 2021.

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

16. Acquisitions (continued)

(c) Archetype acquisition

On August 24, 2021, the Company completed an asset purchase agreement to acquire certain assets of Archetype Themes Inc. ("Archetype"). Archetype is in the business of developing and selling themes used by merchants on Shopify.

The base purchase price is USD $20 million (CAD $24.3 million) paid in cash and contingent consideration of up to USD $12 million (CAD $14.6 million). The following summarizes the consideration paid and recognized amounts of assets acquired and liabilities assumed at the acquisition date based on the purchase price allocation:

	Purchase Price Allocation
Consideration:
Cash	24,269,211
Contingent consideration, at fair value	3,804,540
Indemnity holdback	1,196,037
Working capital adjustments	(165,905)
Total consideration	29,103,883
Identifiable assets acquired:
Accounts receivable	146,874
Prepaid expenses and deposits	7,046
Office equipment	2,849
Brand	1,600,000
Software applications	6,000,000
Intellectual property	1,300,000
Non-compete agreement	3,200,000
Customer relationships	1,400,000
Goodwill	15,463,561
	29,120,330
Identifiable liabilities assumed:
Trade and other payables	16,447
Fair value of net assets acquired	29,103,883

The estimated fair value of the applicable contingent consideration is calculated based on discounted probability weighted expected cashflows. The contingent consideration is to be paid, if Archetype's earnings before income tax, depreciation and amortization ("EBITDA"), exceeds certain threshold during the first six months ending December 31, 2021 and 12-month period ending December 31, 2022. The achievement of EBITDA targets in the first period has resulted in consideration payable of USD $3 million (CAD $3.8 million), payable by June 30, 2022. If achievement of EBITDA targets in the second period is reached, it will result in a payment of up to USD $8 million, payable by June 30, 2023. Under no circumstances will the total payment exceed USD $12.0 million.

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

16. Acquisitions (continued)

(c) Archetype acquisition (continued)

On April 19, 2022, the Company paid out USD $3.0 million (CAD $3.8 million) as a result of Archetype exceeding a certain threshold during the first six months ending December 31, 2021.

During the nine-months ended September 30, 2022, the Company reassessed the fair value of the expected contingent consideration and decreased the amount by $1.1 million (CAD $1.4 million) within the Interim Consolidated Statement of Net Loss and Comprehensive Income/(Loss). As at September 30, 2022, there are no amounts accrued related to the contingent consideration.

(d) KnoCommerce acquisition

On March 10, 2022, the Company completed a share purchase agreement to acquire 100% of the outstanding shares of Kno Technologies Inc ("KnoCommerce"). KnoCommerce is a leading ecommerce survey and insights platform provider that enables merchants to capture and act on zero-party data collected directly from customers.

The base purchase price is USD $1.9 million (CAD $2.4 million) paid in cash and contingent consideration with an estimated value of USD $1.2 million (CAD $1.6 million). The Company is currently in the process of finalizing the determination of the fair value of the contingent consideration, fair value of the net assets acquired and is in the process of finalizing working capital adjustments. In Q2 2022, additional information about the fair value of assets and liabilities became available, the Company made changes to the preliminary purchase price allocations. The significant changes include a decrease in the fair value of the contingent consideration for USD $0.4 million (CAD $0.5 million), resulting in a decrease in the total consideration paid. In addition, there was a decrease in software for USD $0.5 million (CAD $0.6 million), an increase of goodwill for USD $0.01 million (CAD $0.01 million) and a decrease in deferred tax for USD $0.1 million (CAD $0.2 million).

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

16. Acquisitions (continued)

(d) KnoCommerce acquisition (continued)

The following summarizes the consideration paid and recognized amounts of assets acquired and liabilities assumed at the acquisition date based on the preliminary purchase price allocation:

	Preliminary Purchase Price Allocation
Consideration:
Cash	2,436,223
Contingent consideration, at fair value	1,566,113
Indemnity holdback	256,740
Total consideration	4,259,076
Identifiable assets acquired:
Cash	10,195
Accounts receivable	2,396
Prepaid expenses and deposits	5,015
Software applications	1,540,440
Non-compete agreement	385,110
Goodwill	2,796,163
	4,739,319
Identifiable liabilities assumed:
Trade and other payables	131,053
Deferred taxes	349,190
Fair value of net assets acquired	4,259,076

The estimated fair value of the applicable contingent consideration is based on discounted probability weighted discounted cashflows. The contingent consideration is to be paid, if KnoCommerce achieves minimum revenue targets during the 18 months following the closing date. The contingent consideration is expected to be settled through the combination of 30% cash and 70% through the issuance of shares, or through a combination of cash and shares, at the discretion of the Company. The shares are based on the greater of i) the 10-day volume weighted average share price at a future issuance date or ii) the discounted market price of the Company's shares on the last completed trading day prior to March 10, 2022. To the extent the market price of the Company's shares on March 10, 2022 exceeds the 10-day volume weighted average share price at the future issuance date, the difference will be settled through a cash payment.

During the three-month and nine- month period ended September 30, 2022, the Company reassessed the fair value of the expected contingent consideration and increased the expected amount by USD $50,000 (CAD $68,535) and USD $90,000 (CAD $123,363)

Notes to Interim Condensed Consolidated Financial Statements (Tabular amounts expressed in Canadian dollars, unless otherwise noted)

For the three- and nine-month periods ended September 30, 2022 and September 30, 2021

16. Acquisitions (continued)

(e) Estimated consolidated revenue and net income

For the three- and nine-month period ended September 30, 2022, KnoCommerce contributed revenue of $73,809 and $140,393, respectively, to the Company's results. For the three- and nine-month period ended September 30, 2022, KnoCommerce contributed a net loss of $185,021 and $399,661 respectively, to the Company's results. Had the acquisition occurred on January 1, 2022, management estimates that consolidated revenue and consolidated net loss would have been $35,263,409 and $10,341,669