This prospectus has been filed under procedures in each of the provinces and territories of Canada that permit certain information about these securities to be determined after the prospectus has become final and that permit the omission of that information from this prospectus. The procedures require the delivery to purchasers of a supplemented PREP prospectus containing the omitted information within a specified period of time after agreeing to purchase any of these securities. All of the information contained in the supplemented PREP prospectus that is not contained in the base PREP prospectus will be incorporated by reference into the base PREP prospectus as of the date of the supplemented PREP prospectus.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.

These securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “ U.S. Securities Act ”), or the securities laws of any state of the United States and may not be offered or sold in the United States or to, or for the benefit or account of, U.S. Persons (as such term is defined in Regulation S under the U.S. Securities Act) except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities legislation or pursuant to an exemption therefrom. See “Plan of Distribution”.

BASE PREP PROSPECTUS

Initial Public Offering

June 14, 2021

==> picture [234 x 79] intentionally omitted <==

VERTICALSCOPE HOLDINGS INC. C$125,000,000  Subordinate Voting Shares

This prospectus qualifies the distribution (the “ Offering ”) of an aggregate of  subordinate voting shares (the “ Subordinate Voting Shares ”) of VerticalScope Holdings Inc. (“ VerticalScope ” or the “ Company ”) at a price of C$  per Subordinate Voting Share (the “ Offering Price ”). We will use the net proceeds from the Offering as described in this prospectus. See “ Use of Proceeds ”.

The Offering is being underwritten by a syndicate of underwriters led by RBC Dominion Securities Inc. (“ RBC ”), Canaccord Genuity Corp. and National Bank Financial Inc. (“ National Bank ”), as co-lead managers and joint bookrunners (the “ Lead Underwriters ”), and also including TD Securities Inc., Raymond James Ltd., Desjardins Securities Inc., Cormark Securities Inc. and HSBC Securities (Canada) Inc. (collectively, the “ Underwriters ”). See “ Plan of Distribution ”.

Price: C$  per Subordinate Voting Share

Per Subordinate Voting Share Total(4)	Offering Price (1) C$ C$	Underwriters’ Fee (2) C$ C$	Net Proceeds to the Company (3)
			C$ C$

(1) The Offering Price has been determined by negotiation between the Company and the Underwriters. See “ Plan of Distribution ”.

(2) The Company will pay the Underwriters a cash fee (the “ Underwriters’ Fee ”) equal to 6.0% of the gross proceeds from the sale of Subordinate Voting Shares pursuant to the Offering, subject to a reduced fee of 3.0% for Subordinate Voting Shares sold by the Underwriters to certain purchasers designated by the Company that may purchase up to an aggregate of  Subordinate Voting Shares (the “ President’s List Purchasers ”). No more than 10% of the aggregate number of Subordinate Voting Shares sold under the Offering will be sold to the President’s List Purchasers. See “ Plan of Distribution ”. Assumes there are no Subordinate Voting Shares sold to the President’s List Purchasers in the Offering.

(3) Assumes there are no Subordinate Voting Shares sold to the President’s List Purchasers in the Offering and before deducting the expenses of the Offering estimated to be C$  , which will be paid by the Company out of the gross proceeds of the Offering. See “ Use of Proceeds ”.

(4) The Company has granted the Underwriters an Over-Allotment Option (the “ Over-Allotment Option ”), exercisable in whole or in part, at the sole discretion of the Underwriters, to acquire up to  additional Subordinate Voting Shares at the Offering Price, representing 15% of the number of

[CAN_DMS: \139681133\12 ]

Subordinate Voting Shares offered under the Offering, to cover over-allotments, if any. The Over-Allotment Option may be exercised for a period of 30 days from the Closing Date. If the Underwriters exercise the Over-Allotment Option in full (assuming no Subordinate Voting Shares are sold to the President’s List Purchasers) and before deducting the expenses of the Offering estimated to be C$  , the total price to the public will be C$  , the Underwriters’ Fee will be C$  and the net proceeds to us will be C$  . This prospectus qualifies the distribution of the Over-Allotment Option. A purchaser that acquires Subordinate Voting Shares forming part of the Over-Allotment Option acquires those shares offered under this prospectus, regardless of whether the Over-Allotment Option is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. See “ Plan of Distribution ”.

Unless otherwise indicated, all information in this prospectus assumes that the Over-Allotment Option will not be exercised.

Upon completion of the Offering and the Pre-Closing Reorganization, we will have two classes of issued and outstanding shares: the Subordinate Voting Shares and the multiple voting shares of the Company (the “ Multiple Voting Shares ”). The Subordinate Voting Shares are “restricted securities” within the meaning of such term under applicable Canadian securities laws. The Company is entitled to file this prospectus on the basis that it complies with Section 12.3 of National Instrument 41-101 – General Prospectus Requirements . Except as described herein, the Subordinate Voting Shares and Multiple Voting Shares have the same rights, are equal in all respects and are treated by the Company as if they were one class of shares. Holders of Multiple Voting Shares and Subordinate Voting Shares have no pre-emptive rights or conversion or exchange rights or other subscription rights, except as described herein. Each Subordinate Voting Share will be entitled to one vote, and each Multiple Voting Share will be entitled to 10 votes and will be convertible into Subordinate Voting Shares on a onefor-one basis at any time at the option of the holder thereof and automatically in certain other circumstances, including at such time that Permitted Holders (as defined herein) that hold Multiple Voting Shares no longer as a group beneficially own, directly or indirectly and in the aggregate, at least 7.5% of the issued and outstanding Subordinate Voting Shares and Multiple Voting Shares (on a non-diluted basis). The holders of Subordinate Voting Shares benefit from contractual provisions that give them certain rights in the event of a take-over bid for the Multiple Voting Shares. See “ Description of Share Capital – Subordinate Voting Shares and Multiple Voting Shares ”. Upon completion of the Offering and the Pre-Closing Reorganization, and assuming no exercise of the Over-Allotment Option, the Company’s issued and outstanding share capital will consist of  Subordinate Voting Shares and 2,957,265 Multiple Voting Shares. See “ Description of Share Capital – PreClosing Reorganization – Authorized Share Capital at Closing ”.

Upon completion of the Offering, and assuming no exercise of the Over-Allotment Option, RDL Ventures Inc. (“ RDL Ventures ”), an entity controlled by our founder and Chief Executive Officer, Rob Laidlaw, will, directly or indirectly, own or control 100% of the Multiple Voting Shares of the Company. After giving effect to the Offering, and assuming no exercise of the Over-Allotment Option, RDL Ventures will hold approximately  % of the Company’s issued and outstanding shares and approximately  % of the voting power attached to all of the Company’s issued and outstanding shares (approximately  % and  %, respectively, if the Over-Allotment Option is exercised in full). As a result, subject to the limits set out in the Investor Rights Agreement (as defined herein), RDL Ventures will control a significant portion of the voting power attached to all of our outstanding shares and will have significant influence over us and our affairs. In addition, RDL Ventures, NordStar Capital LP through certain of its wholly-owned subsidiaries (collectively, “ NordStar Group ”) and Hedgewood Inc. (“ Hedgewood ”, and together with RDL Ventures and NordStar Group, the “ Principal Shareholders ”) will be party to an Investor Rights Agreement that, among other things, provides for certain governance rights and registration rights. See “ Principal Shareholders ”, “ Agreements with Principal Shareholders ” and “ Risk Factors ”. All of the Subordinate Voting Shares and Multiple Voting Shares, as applicable, held upon completion of the Offering by the Principal Shareholders, certain other shareholders as well as our directors and executive officers will be subject to contractual Lock-Up Agreements (as defined herein) with the Underwriters, representing approximately 99% of our issued and outstanding shares on a non-diluted basis (assuming completion of the Pre-Closing Reorganization) immediately prior to the completion of the Offering. See “ Plan of Distribution – Lock-Up Agreements ”.

There is currently no market through which the Subordinate Voting Shares may be sold and purchasers may not be able to resell the Subordinate Voting Shares purchased under this prospectus. This may affect the pricing of the Subordinate Voting Shares in the secondary market, the transparency and availability of trading prices, the liquidity of the Subordinate Voting Shares, and the extent of issuer regulation. See “ Risk Factors ”. The Subordinate Voting Shares have been conditionally approved for listing on the Toronto Stock Exchange (“ TSX ”) under the symbol “FORA”. Listing is subject to fulfilling all of the listing requirements of the TSX. See “ Plan of Distribution ”.

An investment in the Subordinate Voting Shares is subject to a number of risks that should be considered by a prospective purchaser. Prospective purchasers should carefully consider the risk factors described under “ Risk Factors ” before purchasing the Subordinate Voting Shares.

The Underwriters, as principals, conditionally offer the Subordinate Voting Shares, subject to prior sale, if, as and when

issued by the Company and accepted by the Underwriters in accordance with the conditions contained in the Underwriting Agreement referred to under “ Plan of Distribution ” and subject to the approval of certain legal matters on behalf of the Company by Norton Rose Fulbright Canada LLP with respect to Canadian legal matters and Norton Rose Fulbright US LLP with respect to U.S. legal matters, and on behalf of the Underwriters by Goodmans LLP with respect to Canadian legal matters.

The following table sets out the number of Subordinate Voting Shares that may be issued by the Company pursuant to the Over-Allotment Option:

Underwriters’ Position Over-Allotment Option	Maximum Size  Subordinate Voting Shares	Exercise Period Within 30 days from the Closing Date	Exercise Price
			C$ per Subordinate Voting Share

In connection with the Offering, the Underwriters may, subject to applicable law, over-allot or effect transactions that stabilize or maintain the market price of the Subordinate Voting Shares at levels other than those which otherwise might prevail on the open market. Such transactions, if commenced, may be discontinued at any time. The Underwriters may offer the Subordinate Voting Shares at a lower price than the Offering Price. See “ Plan of Distribution ”.

Subscriptions will be received subject to rejection or allotment in whole or in part and the Underwriters reserve the right to close the subscription books at any time without notice. It is expected that closing of the Offering (the “ Closing ”) will occur on or about  , 2021 or such later date as the Company and the Underwriters may agree (the “ Closing Date ”), but in any event not later than  , 2021. The Offering will be conducted under the book-based system. A purchaser of Subordinate Voting Shares will receive only a customer confirmation from the registered dealer from or through whom the Subordinate Voting Shares are purchased and who is a CDS depository service participant. No certificates will be issued to purchasers except in limited circumstances and registration will be made in the depository service of CDS. See “ Plan of Distribution – NonCertificated Inventory System ”.

RBC, National Bank and HSBC Securities (Canada) Inc. are affiliates of Canadian chartered banks that are currently lenders to the Company under its existing Credit Facilities (as defined herein). See “ Description of Material Indebtedness ”. Accordingly, the Company may be considered a “connected issuer”, as such term is defined in National Instrument 33-105 – Underwriting Conflicts , of RBC, National Bank and HSBC Securities (Canada) Inc. See “ Relationship Between Us and Certain Underwriters ”.

Neither the Company nor any of the Underwriters has authorized anyone to provide prospective purchasers with different or additional information from the information contained in this prospectus. The Company and the Underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Prospective purchasers should not assume that the information contained in this prospectus is accurate as of any date other than the date of this prospectus, or where information is stated to be as of a date other than the date of this prospectus, such other applicable date. The information contained in this prospectus is accurate only as of the date of this prospectus regardless of the time of delivery of this prospectus or of any sale of the Subordinate Voting Shares. The Company does not undertake to update the information contained or incorporated by reference in this prospectus, except as required by applicable Canadian securities laws.

==> picture [83 x 78] intentionally omitted <==

A Leading Digital Platform for Enthusiast Communities

Our Mission

The Fora Software Platform

==> picture [155 x 66] intentionally omitted <==

==> picture [41 x 41] intentionally omitted <==

Proprietary, Cloud-based Community Platform

We built our proprietary SaaS platform to accelerate innovation, enhance our user experience, reduce reliance on third party software and support thousands of individual communities on a single, unified code base.

Since launching in May 2019, we have made over 100 new software releases .

==> picture [433 x 286] intentionally omitted <==

==> picture [553 x 13] intentionally omitted <==

Benefits of our Unified, Cloud-Based Community Software Platform

Improved User Experience and Engagement

Integrated Monetization

Scalability, Speed & Reliability

Community Management & Moderation

Rapid Onboarding of Acquisitions

Our Investment in Fora Has Accelerated Our Growth

==> picture [540 x 283] intentionally omitted <==

----- Start of picture text -----

Investment
Reduced Ad Increased Software
Enhanced UX Density & Disruptive Team from 27 to Paused M&A
Formats over 100
+59% +28% 2x +9%
Improvement in
Photos Shared [(3)] Ad Viewability [(3)] MAU Growth [(1)]
Load Time [(3)]
Results
+44% +30% 100+ +11%
Software Releases LTM Organic
New Members ARPU [(2)]
Since May 2019 Revenue Growth
----- End of picture text -----

(1) Represents growth from Q1 2020 – Q1 2021. MAU is a non-IFRS measure. Please see “Non-IFRS Measures and Industry Metrics”. (2) Represents growth from Q1 2020 – Q1 2021. ARPU is a non-IFRS measure. Please see “Non-IFRS Measures and Industry Metrics”. (3) Represents growth from Q1 2020 – Q1 2021.

(All Dollar Figures in U.S.$ Millions)

Strong Financial Performance and Free Cash Flow Generation with a Large Acquisition TAM

Massive Acquisition TAM

Acquisition Pipeline

Revenue[(2)]

==> picture [542 x 171] intentionally omitted <==

----- Start of picture text -----

-14% -3% +11% Digital Advertising
E-commerce
$68.3
$61.6
$58.5 $58.5 YoY Growth
$21.8
$18.5 $27.3
$24.9
+41%
$46.5 $40.0 $15.9
$32.1 $34.2 $11.3
$7.0
$4.5
$6.7 $8.9
2018A 2019A 2020A LTM Q1-2020 Q1-2021
----- End of picture text -----

75,000+ 10,000+

Large Communities[(1)]

==> picture [102 x 9] intentionally omitted <==

----- Start of picture text -----

Online Communities
----- End of picture text -----

1.7% 4.3% VerticalScope Share of VerticalScope Share of Online Communities Large Communities

==> picture [273 x 260] intentionally omitted <==

----- Start of picture text -----

Annual
# of Deals Timeline
Adj. EBITDA
Contribution
Near-Term
Next 12
Pipeline 20 US $18M
(Advanced) Months
Medium-
Term 50+ US $50M+ 2022 - 2023
Pipeline
----- End of picture text -----

Deal count does not include micro acquisitions that VerticalScope regularly onboards

Adj. EBITDA & Margin[(2)(4)]

==> picture [508 x 172] intentionally omitted <==

----- Start of picture text -----

51% 51%
48%
47%
43%
Adj. EBITDA
28%
Margin
+35%
+5% YoY Growth
$34.7 -27%
$31.1
$26.6
$25.4 +144%
$7.7
$3.1
2018A 2019A 2020A LTM Q1-2020 Q1-2021
----- End of picture text -----

Free Cash Flow[[(3)(4)]]

==> picture [508 x 171] intentionally omitted <==

----- Start of picture text -----

Free Cash Flow [[(3)(4)]]
FCF
+67%
+14% YoY Growth
$31.7 -40%
$26.6
$21.7
$19.0 +302%
$6.5
$1.6
2018A 2019A 2020A LTM Q1-2020 Q1-2021
----- End of picture text -----

==> picture [1224 x 84] intentionally omitted <==

----- Start of picture text -----

Note: Acquisitions pipeline, Adjusted EBITDA contribution and timeline are based on management’s estimates and anticipated results only. (2) LTM YoY Growth represents Q1 2021 LTM as compared to Q1 2020 LTM.
See “Forward-Looking Information”. Adjusted EBITDA is a non-IFRS measure. See “IFRS and Non-IFRS Measures”. (3) Free Cash Flow is a non-IFRS measure. See “IFRS and Non-IFRS Measures”.
(1) Large communities are sites with an Alexa Internet rank of < 1,000,000. (4) Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS measures. See “IFRS and Non-IFRS Measures”.
----- End of picture text -----

Page	Page
..... 1	CORPORATE GOVERNANCE ...........................104
..... 1	EXECUTIVE COMPENSATION .........................110
..... 2	INDEBTEDNESS OF DIRECTORS, EXECUTIVE
..... 3	OFFICERS AND EMPLOYEES ........................131
..... 9	INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS .........................131
..... 9	PLAN OF DISTRIBUTION ..................................132
... 10	RELATIONSHIP BETWEEN US AND CERTAIN UNDERWRITERS .............................................135
... 11	RISK FACTORS ...................................................136
... 13	MATERIAL CONTRACTS ..................................167
... 32	LEGAL PROCEEDINGS AND REGULATORY
... 33	ACTIONS ...........................................................167
... 55	CERTAIN CANADIAN FEDERAL INCOME TAX
	CONSIDERATIONS ..........................................167
... 56	ELIGIBILITY FOR INVESTMENT .....................170
	EXPERTS ..............................................................171
ND ... 58	INDEPENDENT AUDITOR, TRANSFER AGENT AND REGISTRAR .............................................171
... 85	ENFORCEMENT OF JUDGMENTS AGAINST
... 85	FOREIGN PERSONS .........................................171
... 91	EXEMPTIONS ......................................................171
	PURCHASERS’ STATUTORY RIGHTS ............172
... 91	GLOSSARY OF TERMS ......................................173
SS ... 94	MANDATE OF THE BOARD OF DIRECTORS .180
... 95	AUDIT COMMITTEE CHARTER .......................188
... 96	INDEX TO FINANCIAL STATEMENTS ........... F-1
... 96	CERTIFICATE OF THE COMPANY ..................C-1
	CERTIFICATE OF THE UNDERWRITERS .......C-2

GENERAL MATTERS ............................................. 1 CURRENCY EXCHANGE RATE DATA ............... 1 IFRS AND NON-IFRS MEASURES ....................... 2 FORWARD-LOOKING INFORMATION ............... 3 MARKET AND INDUSTRY DATA ....................... 9 MARKETING MATERIALS ................................... 9 TRADEMARKS, TRADENAMES AND COPYRIGHTS ..................................................... 10 A LETTER FROM ROB LAIDLAW ..................... 11 PROSPECTUS SUMMARY ................................... 13 CORPORATE STRUCTURE ................................. 32 OUR BUSINESS ..................................................... 33 USE OF PROCEEDS .............................................. 55 SELECTED CONSOLIDATED FINANCIAL INFORMATION .................................................. 56 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ............................. 58 DIVIDEND POLICY .............................................. 85 DESCRIPTION OF SHARE CAPITAL ................. 85 PRINCIPAL SHAREHOLDERS ............................ 91 AGREEMENTS WITH PRINCIPAL SHAREHOLDERS ............................................... 91 DESCRIPTION OF MATERIAL INDEBTEDNESS .............................................................................. 94 CONSOLIDATED CAPITALIZATION ................ 95 OPTIONS TO PURCHASE SECURITIES ............. 96 PRIOR SALES ........................................................ 96 DIRECTORS AND EXECUTIVE OFFICERS ...... 97 AUDIT COMMITTEE .......................................... 102

GENERAL MATTERS

Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “VerticalScope”, the “Company,” “we”, “our,” “us” or similar terms refer to VerticalScope Holdings Inc., together with its subsidiaries and predecessors, including VerticalScope Inc. (“ VerticalScope OpCo ”) through which we conduct our activities, and references to “VerticalScope HoldCo” refer to VerticalScope Holdings Inc. alone.

All references in this prospectus to “management” are to the persons who are identified in this prospectus as the executive officers of the Company. See “ Directors and Executive Officers ”. All statements in this prospectus made by or on behalf of management are made in such persons’ capacities as executive officers of the Company and not in their personal capacities.

The information contained in this prospectus is accurate only as of the date of this prospectus or the date indicated, regardless of the time of delivery of this prospectus or of any sale of the Subordinate Voting Shares. The Company does not undertake to update the information contained or incorporated by reference in this prospectus, except as required by applicable Canadian securities laws. None of us or any of the Underwriters has authorized anyone to provide investors with additional or different information. The information contained on our website, https://www.verticalscope.com , is not intended to be included in or incorporated by reference into this prospectus, and investors should not rely on such information when deciding whether to invest in Subordinate Voting Shares. Any graphs, tables or other information demonstrating our historical performance or that of any other entity contained in this prospectus: (a) are intended only to illustrate past performance and are not necessarily indicative of our or such entities’ future performance, and (b) may include approximations that result from rounding.

None of the Company or any of the Underwriters is offering to sell the Subordinate Voting Shares in any jurisdiction where the offer or sale of such securities is not permitted. Investors are required to inform themselves about, and to observe any restrictions relating to, the Offering and the possession or distribution of this prospectus.

Unless otherwise indicated, the disclosure contained in this prospectus assumes: (a) that the Offering and the Pre-Closing Reorganization have been completed and that the Over-Allotment Option has not been exercised; (b) that none of the outstanding stock options are exercised for Subordinate Voting Shares pursuant to the Legacy ESOP (as defined herein); (c) that no Subordinate Voting Shares sold under the Offering are sold to the President’s List; and (d) that none of our directors, executive officers, or affiliates of the foregoing will participate in the directed share program.

Unless otherwise indicated, the disclosure contained in this prospectus assumes that upon completion of the Offering and the Pre-Closing Reorganization, there will be  Subordinate Voting Shares outstanding on a non-diluted basis (and  Subordinate Voting Shares outstanding on a non-diluted basis if the Over-Allotment Option is exercised in full). See “ Description of Share Capital – Pre-Closing Reorganization ”.

Certain capitalized terms used in this prospectus are defined in the “ Glossary of Terms ”. Unless otherwise specified, all references to “$”, “dollars”, “U.S.$” and “U.S. dollars” are to United States dollars, all references to “C$” are to Canadian dollars.

CURRENCY EXCHANGE RATE DATA

The following table sets out the high and low rates of exchange for one U.S. dollar expressed in Canadian dollars during each of the following periods, the average rate of exchange for those periods and the rate of exchange in effect at the end of each of those periods, each based on the rate of exchange published by the Bank of Canada for conversion of U.S. dollars into Canadian dollars.

Highest rate during the period…... Lowest rate during the period…...	Quarter Ended March 31, 2021 2020 (C$) (C$) 1.2828 1.4496 1.2455 1.2970	Year	Ended December 31,	Ended December 31,
	2021 (C$) 1.2828 1.2455	2020 (C$) 1.4496 1.2718	2019 (C$) 1.3600 1.2988	2018
				(C$) 1.3642 1.2288

Average rate for the period……... Rate at the end of the period…….	Quarter Ended March 31, 2021 2020 1.2660 1.3449 1.2575 1.4187	Year	Ended December 31,
	2021 1.2660 1.2575	2020 1.3415 1.2732	2019 2018 1.3269 1.2957 1.2988 1.3642

On June 11, 2021, the rate of exchange posted by the Bank of Canada for conversion of U.S. dollars into Canadian dollars was U.S.$1.00 equals C$1.2148 (the “ Exchange Rate ”).

The foregoing rates may differ from the actual rates used in the preparation of the financial statements and other financial data appearing in this prospectus. The inclusion of these exchange rates is not meant to suggest that the amounts in one currency actually represent such amounts in another currency, or that one currency could have been converted into another currency at any particular rate, if at all.

IFRS AND NON-IFRS MEASURES

Our financial statements included in this prospectus have been prepared in accordance with International Financial Reporting Standards (“ IFRS ”) as issued by the International Accounting Standards Board (“ IASB ”).

The information presented in this prospectus includes non-IFRS financial measures and industry metrics. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow Conversion Rate. This prospectus also makes reference to Average Revenue Per User (“ ARPU ”), Impressions and Monthly Active Users (“ MAU ”), which are operating metrics used in our industry. These non-IFRS measures and operating metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures and industry operating metrics in the evaluation of issuers. Our management also uses non-IFRS measures and industry metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, to confirm compliance with covenants under the Credit Agreement and to determine components of management compensation. We believe Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow Conversion Rate and operating metrics are important supplemental measures of our performance, primarily because they and similar measures are used widely among others in our industry as a means of evaluating a company’s underlying operating performance. However, the performance measures we use may be calculated in a different manner than similar performance measures used by other companies.

Non-IFRS Measures

“ Adjusted EBITDA ” is calculated as net income (loss) excluding interest, income tax expense (recovery), and depreciation and amortization, or EBITDA, adjusted for share-based compensation, unrealized gains or losses from changes in fair value of derivative financial instruments, severance, contingent consideration liabilities measured at fair value through profit and loss, gain on sale of assets, gain on sale of investments, foreign exchange loss (gain), and other charges that include direct and incremental business acquisition related costs and costs directly incurred in connection with the Offering that are not deducted from the equity proceeds.

“ Adjusted EBITDA Margin ” measures Adjusted EBITDA as a percentage of revenue.

“ Free Cash Flow ” means Adjusted EBITDA less capital expenditures and income taxes paid during the period.

“ Free Cash Flow Conversion Rate ” means Free Cash Flow divided by Adjusted EBITDA.

See “ Selected Consolidated Financial Information ” and “ Management’s Discussion and Analysis of Financial Condition and

Results of Operations – Cautionary Note Regarding Non-IFRS Measures ” for the reconciliation of such non-IFRS measures presented by the Company to the most directly comparable IFRS measure.

Industry Metrics

“ ARPU ” means our average revenue over a given period divided by the average MAU over the same period.

“ CPM ” means the cost paid for one thousand Impressions of an advertisement.

“ MAU ” means the number of individuals who have visited our communities within a calendar month, based on data as measured by Google Analytics. It is calculated as the sum of the monthly users of each of our communities. To calculate average MAU in a given period, we sum the total MAU for each month in that period, divided by the number of months in that period.

FORWARD-LOOKING INFORMATION

This prospectus contains “forward-looking information” within the meaning of applicable Canadian securities laws. Such forward-looking information includes, but is not limited to, information with respect to our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. This forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “might”, “will”, “achieve”, “occur”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “target”, “opportunity”, “strategy”, “scheduled”, “outlook”, “forecast”, “projection” or “prospect”, the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forwardlooking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances.

In particular, and without limiting the generality of the foregoing, forward-looking information in this prospectus includes statements relating to:

the Offering Price, and the completion, size, expenses and timing of the Closing;
obtaining all of the TSX and other approvals in connection with the Offering and Pre-Closing Reorganization;
changes in the capital market conditions and in economic, political and industry conditions and legislative, administrative and regulatory developments;
our business plans and strategies, including expectations regarding the growth of our user base, expansion of product offerings, brand, performance, and the ability to execute our growth strategies;
expectations regarding our revenue, revenue generation potential, expenses and other operating results;
our costs as a public company following Closing;
our ability to maintain good business relationships with our clients, agents, partners and licensors;
our ability to raise sufficient debt or equity financing on commercially reasonable terms to support our business growth;
use of our communities, services and platform, as well as the launch of new features on our Fora platform;
our ability to acquire new customers and successfully retain existing customers;
expectations regarding industry trends and technology and the size and growth rates of addressable markets;
our ability to protect our technology and intellectual property rights;
our ability to maintain consistent service, free from disruptions, outages, defects and other performance or quality issues;

the estimated addressable market opportunity for our communities, services and platform;
expectations regarding privacy and data management practices;
the adequacy of our insurance policies and our ability to maintain same;
the materiality and expected results of ongoing or future litigation;
our competitive position within the industry in which we operate;
our intention to expand our team, our reliance on key personnel and our ability to identify, recruit and retain skilled personnel, including expectations relating to our compensation process and program;
expectations regarding future dividend payments and future director and executive compensation levels and plans;
our estimated near-term and medium term acquisition pipeline and the anticipated Adjusted EBITDA contributions of such acquisitions;
our acquisition process, including our acquisition strategy and criteria, our ability to identify, complete, and integrate and improve acquisitions, and the payment, timing and size of acquisitions we expect to make;
completion of the Pre-Closing Reorganization and execution of ancillary agreements made in connection with the PreClosing Reorganization and the Offering;
price stabilization, short positions or passive market making efforts by the Underwriters;
the proposed use of proceeds from the Offering;
expectations regarding the long-term ownership equity position of our founder and Chief Executive Officer; and
the market price for the Subordinate Voting Shares.

Forward-looking information involves known and unknown risks and uncertainties, many of which are beyond our control, that could cause actual results, level of activity, performance or achievements to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, those described in greater detail under “ Risk Factors ” in this prospectus, including:

we generate a significant portion of our revenue from digital advertising, and reduced advertising spending by our customers, a loss of partners, or new and existing technologies that block advertisements online and/or affect our ability to customize advertisements could adversely affect our business;
we rely on third-party service providers, including third-party licenses, for many aspects of our platform and our business, and any failure to maintain these relationships could harm our business. If we are unable to obtain or fail to comply with the required licenses to operate our business or experience disputes with licensors or disruptions to our business relationships with our licensors, we could fail to obtain or lose license rights that are critical to our business;
we rely on search engines, advertising on the internet and social networking sites to attract a meaningful portion of our users; if we are not able to generate traffic to our websites through search engines, advertising on the internet and social networking sites, our ability to attract new users may be impaired;
we may be unable to identify and complete acquisitions or form partnerships or joint ventures under acceptable terms; any future acquisitions, partnerships or joint ventures that we make or enter into may not produce our anticipated benefits, including Adjusted EBITDA results, and could disrupt our business and harm our financial condition;
our digital advertising revenue is dependent on targeting and measurement tools that incorporate data signals from user activity on websites and services that we do not control, and changes to the regulatory environment and third-party systems and browsers may impact the availability of such signals, which could adversely affect our digital advertising

revenue;

problematic content on our communities, including unsafe content and other violations of our guidelines could affect the quality of our services, which could damage our reputation and deter our current and potential users from using our communities and services;
we intend to make significant investments in our business; if we are unable to generate adequate revenue growth and manage our expenses, we may incur significant losses and may not achieve or maintain profitability;
issues with the quality and reliability of our communities, services, platform and information technology systems could adversely impact our ability to attract and retain users and customers and, consequently, our business;
we could suffer disruptions, outages, defects, and other performance and quality problems with the cloud infrastructure on which we rely;
if we fail to recruit, train and retain qualified or key personnel, our business, financial condition and results of operations may be adversely affected;
our business relies on content providers, users and community moderators and administrators;
changes in laws or regulations relating to privacy and data protection, any actual or perceived failure by us to comply with such laws and regulations, or contractual or other obligation relating to, privacy and data protection could adversely affect our business;
accidental or unauthorized access to or disclosure, loss, destruction or modification of data, through cybersecurity incidents, computer viruses or otherwise, human error, natural or man-made disasters, or disruption of our technologies could expose us to liability, protracted and costly litigation and damage to our reputation;
claims by others that we have infringed their proprietary technology or other IP Rights could harm our business;
the costs and effects of pending and future litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, financial position and results of operations; our insurance may not be sufficient to cover all claims;
if we are unable to successfully obtain, maintain, protect, enforce or otherwise manage our intellectual property and proprietary rights, we may incur significant expenses and our business may be adversely affected;
our use of open source software could negatively affect our ability to commercialize our communities, services and platform and subject us to possible litigation;
we are subject to risks associated with information disseminated through our communities, services and platform;
our operational metrics and other estimates, including estimates about our growth, are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics could harm our business, revenue and financial results;
our brands, including the distinct brands of our communities, are integral to our success; if we fail to effectively maintain, promote and enhance our brands, our business and competitive advantage may be harmed;
we may not be able to successfully implement our growth strategy on a timely basis or at all;
if we fail to manage our growth effectively, our business could be adversely affected;
provisions of our present and future debt instruments may restrict our ability to pursue business strategies;
we may not be able to secure financing on favourable terms, or at all, to meet our future capital needs;
an increase in borrowing rates on our debt exposes us to interest expense risk, which could impact our debt service costs;

we have concentration in various aspects of our business and a loss of a major customer or e-commerce merchant, a decline in economic conditions or consumer interest, or other adverse conditions could have a material adverse effect on our business, financial condition and results of operations;
macroeconomic pressures in the markets in which we operate, including, but not limited to, the effects of the COVID19 pandemic, may adversely affect consumer spending, customer ad spending and our financial results;
we operate in a competitive business environment and, if we are unable to compete effectively, it could have a material adverse effect on our business, financial condition and results of operations;
we are subject to changes in the general economic conditions in Canada, the U.S. and globally and any negative economic events could adversely affect our business, financial condition, results of operations and ability to execute on our growth strategies;
our results of operations may be adversely affected by changes in foreign currency exchange rates;
a wide adoption of users that use ad-blockers may adversely affect our results of operations;
we are dependent upon users’ and customers’ continued and unimpeded access to the internet, and upon their willingness to use the internet;
our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks, which could expose us to losses and liability and otherwise harm our business;
if our judgments or estimates relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the Subordinate Voting Share price;
changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect our financial condition and results of operations;
it may be difficult or impossible for investors to enforce judgments against our foreign subsidiaries and non-resident directors or officers;
the COVID-19 pandemic had and could continue to have various impacts on our business, operations, and the markets and communities in which we and our customers operate, the extent of which are unknown;
an occurrence of a widespread health epidemic, pandemic or other outbreaks, as well as natural or other disasters, could have a material adverse effect on our business, financial condition and results of operations;
federal, state and local tax authorities may seek to assess federal, state and local business taxes and sales and use taxes; if we are required to collect sales and use taxes in additional jurisdictions, we might be subject to tax liability for past sales;
unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition;
our future effective tax rates could be subject to volatility or adversely affected by a number of factors;
our business is susceptible to risks associated with the use of our communities in various countries;
there is no existing market for the Subordinate Voting Shares, and listing on the TSX is subject to us fulfilling all of the listing requirements of the TSX; the Subordinate Voting Share price will fluctuate after the Offering, and you could lose a significant part of your investment;
our annual and quarterly results of operations may fluctuate; as a result, we may fail to meet or exceed the expectations of investors or securities analysts, which could cause the price of the Subordinate Voting Shares to decline;

sales of substantial amounts of the Subordinate Voting Shares in the public market, or the perception that these sales may occur, could cause the market price of the Subordinate Voting Shares to decline;
each of our Principal Shareholders beneficially owns a significant amount of our shares and may have interests that differ from, or may take actions that are not in the interests of, other shareholders;
the dual-class structure that will be contained in our Articles has the effect of concentrating voting control and the ability to influence corporate matters; significant control by the holder of Multiple Voting Shares and significant ownership by the Principal Shareholders may adversely affect the market price of the Subordinate Voting Shares;
shareholders will have limited control over our operations;
we do not anticipate paying any cash dividends in the foreseeable future;
new investors in the Subordinate Voting Shares will experience immediate and substantial book value dilution after the Offering;
we may issue additional Subordinate Voting Shares and such issuance will result in immediate dilution to existing shareholders; any issuance of Preferred Shares could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Subordinate Voting Shares, which could depress the price of our Subordinate Voting Shares;
we have broad discretion in the use of the net proceeds from the Offering;
the requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members;
as a public company, we will be required to develop and maintain proper and effective internal controls over financial reporting; we may not complete our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be effective, which could adversely affect investor confidence in our Company and, as a result, negatively impact the value of the Subordinate Voting Shares;
our management has limited experience managing a public company; and
if securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about us or our business, the price of the Subordinate Voting Shares and our trading volume could decline.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information.

Forward-looking information is based on management’s beliefs and assumptions and on information currently available to management. Although the forward-looking information contained in this prospectus is based upon what we believe are reasonable assumptions, investors are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information contained herein. Certain assumptions made in preparing the forward-looking information contained in this prospectus include:

our ability to capitalize on growth opportunities and implement our growth strategy;
our ability to attract and retain users of our communities;
our ability to maintain existing customer relationships and to continue to expand and renew our customers’ use of our digital communities;
our ability to acquire new customers, both domestically and internationally;

our ability to enhance our platform to remain at the forefront of the cloud-based digital media and enthusiast community space, including our ability to migrate newly acquired communities to our platform;
the consistency of the quality of the services we offer; the success of our efforts to expand our portfolio and market reach;
our significant reliance on our Fora platform; our and our customers’ and partners’ dependence on continuous, uninterrupted access to the internet to access our content;
our reliance on search engines and digital platforms to attract and generate traffic to our content;
our ability to maintain successful strategic relationships with third parties;
our ability to obtain and maintain financing on acceptable terms;
our ability to retain key personnel and to identify, recruit and retain skilled personnel;
the accuracy of our estimates of market opportunity and growth forecasts;
our ability to adapt to, and comply with, regulatory changes, including government relation of the internet, local and foreign privacy laws governing the collection, storage and use of personal information;
our success in identifying and evaluating, as well as financing and integrating, any future acquisitions, partnerships or joint ventures and our ability to execute on our expansion plans;
our ability to maintain, promote and enhance our brands;
the absence of material adverse changes in our business, our industry or the global economy;
a lack of disruptions, outages, defects, and other performance and quality problems with the cloud infrastructure of our third-party providers;
our ability to successfully obtain, maintain, protect, enforce or otherwise manage our intellectual property and proprietary rights;
a lack of claims by others that we have infringed their proprietary technology or other IP Rights;
our ability to obtain or comply with the required licenses to operate our business;
our ability to use open source software;
our ability to comply with privacy and data protection laws and regulations;
the negative impacts associated with the COVID-19 pandemic will not be long term;
the absence of accidental or unauthorized access to or disclosure, loss, destruction or modification of data, through cybersecurity incidents, computer viruses or otherwise, human error, natural or man-made disasters, or disruption of our services; and
that the risks and uncertainties described under “ Risk Factors ” will not materialize.

These factors should not be considered exhaustive and should be read together with the other cautionary statements in this prospectus.

Accordingly, all of the forward-looking information contained in this prospectus is expressly qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying

the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in greater detail in “ Risk Factors ” should be considered carefully by prospective investors. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained in this prospectus is provided as of the date of this prospectus, and we do not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law. Investors should read this entire prospectus and consult their own professional advisors to ascertain and assess the income tax, legal, risk factors and other aspects of their investment in the Subordinate Voting Shares.

MARKET AND INDUSTRY DATA

Market and industry data presented in this prospectus was obtained from third-party sources and industry reports, including eMarketer, and from publications, websites and other publicly available information, as well as industry and other data prepared by us or on our behalf on the basis of our knowledge of the markets in which we operate, including information provided by users, suppliers, partners, customers and other industry participants.

We believe that the market and industry data presented in this prospectus is accurate and, with respect to data prepared by us or on our behalf, that our estimates and assumptions are currently appropriate and reasonable, but there can be no assurance as to the accuracy or completeness thereof. The accuracy and completeness of the market and industry data presented in this prospectus are not guaranteed and none of us or any of the Underwriters makes any representation as to the accuracy of such data. Actual outcomes may vary materially from those forecasted in such reports or publications, and the prospect for material variation can be expected to increase as the length of the forecast period increases. Although we believe it to be reliable, none of us or any of the Underwriters has independently verified any of the data from third-party sources referred to in this prospectus, analyzed or verified the underlying studies or surveys relied upon or referred to by such sources, or ascertained the underlying market, industry and other assumptions relied upon by such sources. Market and industry data is subject to variations and cannot be verified due to limits on the availability and reliability of data inputs, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey.

MARKETING MATERIALS

Any “template version” of the following “marketing materials” (as such terms are defined in National Instrument 41-101 – General Prospectus Requirements ) filed with the securities commission or similar regulatory authority in each of the provinces and territories of Canada are specifically incorporated by reference into this prospectus:

the term sheet filed on SEDAR on May 31, 2021; and
the management presentation filed on SEDAR on May 31, 2021.

Any “marketing materials” referred to above are available under our profile on SEDAR at www.sedar.com.

In addition, any “template version” of any other “marketing materials” filed with the securities commission or similar regulatory authority in each of the provinces and territories of Canada in connection with this Offering, after the date hereof, but prior to the termination of the distribution of the Subordinate Voting Shares under this prospectus (including any amendments to, or an amended version of, any template version of any marketing materials), is deemed to be incorporated by reference herein.

Any “template version” of any “marketing materials” that are utilized in connection with the Offering are not part of this prospectus to the extent that the contents of the “template version” of the “marketing materials” have been modified or superseded by a statement contained in this prospectus.

TRADEMARKS, TRADENAMES AND COPYRIGHTS

This prospectus includes certain trademarks, trade names and material subject to copyright, such as “VerticalScope”, which are protected under applicable intellectual property laws and are the property of VerticalScope. Solely for convenience, our trademarks, trade names and copyrighted material referred to in this prospectus may appear without the[™] ,[® ] or[©] symbols, but such references are not intended to indicate, in any way, that we will not assert our rights to these trademarks, trade names and copyrights to the fullest extent under applicable law. See “ Our Business – Our Intellectual Property ”. All other trademarks, trade names and material subject to copyright used in this prospectus are the property of their respective owners.

A LETTER FROM ROB LAIDLAW

VERTICALSCOPE’S FOUNDER AND CEO

VerticalScope is a company built on personal passions. Our users visit our online communities because they are passionate about a topic and want to geek out with like-minded people. Our team is similarly passionate about the internet’s natural ability to foster unique communities and is fueled by the opportunity to create the world’s most powerful community platform. Indeed, it was the pursuit of my own passions that led me to build VerticalScope, starting from my family home in Regina, Saskatchewan in 1999.

As an early adopter of the internet, I spent my teenage years immersed in online car forums and Saskatchewan Roughrider fan communities. I founded my first website, TopHosts.com, in 1999 to help others find a web hosting company. While looking for advice online about scaling my first business, I discovered the depth and breadth of online forums and the richness of the communities that they supported. I went into the community business full time. At the age of 18, I paused my university studies, moved to Toronto, hired my first employees, and changed the Company name to VerticalScope. By 2010, we operated over 200 communities and were aggressively creating, buying, and growing online communities that were often aligned with my own personal interests.

In addition to being the connective tissue for passionate communities, we discovered that product-focused communities could be operated efficiently and were ideally suited for monetization. We found that communities like SnowboardingForum.com would attract higher advertising spend because users were specifically discussing snowboards, boots, jackets, travel, hotels, and lift passes. We also discovered that independent communities could often be purchased from hobbyist founders at attractive prices. We staffed up, built an M&A engine, and acquired as many of these productfocused online communities as we could. We started with cars, motorcycles, ATVs, and boats, and then we raised our first and only equity capital round from ABRY Partners. With this capital, we expanded our focus to home renovations, mountain biking, fishing, guitars, beekeeping, and many other topics. Today, we have over 1,200 online communities that service over 100 million passionate enthusiasts every month.

As a private company that was bootstrapped for its first 13 years, we have always valued our profitability. We have had a track record of strong cash flow generation, and each year we have found exciting ways to re-invest that capital to grow and strengthen our business.

The journey to becoming a public company has been an incredible one. Like every business, we’ve had our share of obstacles that we’ve overcome. In 2018, we reached a cross-roads. While our communities were flourishing, our bespoke technology stack had begun to impact our growth. Our sites were running on over 1,200 separate installations of third-party legacy software. Our sites were slow, and not responding well to changes in Google’s search algorithms that were increasingly prioritizing speed and modern user experiences. We made a decision to aggressively re-invest in our business and create our own proprietary community software platform, which would become known as Fora. We became a product and engineering driven company and grew our base of product and software engineers from 27 in 2017 to over 100 today. We prioritized user experience over revenue at every turn and removed ad formats that were detracting from our user experience. Our revenue declined from 2018 to 2019 as we began to migrate sites to Fora. But we knew that we were building for a reason. We are a data-driven team, and the data was looking good, and we knew that our communities would flourish with the right tools. As we moved a critical mass of communities onto the new platform, both revenue and monthly active users returned to growth.

Today, we are a software-enabled platform for online communities, with the right technology and infrastructure to drive our future goals. We manage our forum communities from one common platform, with one single code base. We launch new features across our Fora communities with one software release. We have a consistent, and high-performing selection of advertising placements for our customers. We’ve introduced machine-learning for search, content recommendations and community safety. The platform has changed the game for us -- monthly active users grew by 9%, and revenue grew organically by 11% in the 12 months ended March 31, 2021. We believe that this is just the beginning. In addition to improvements to our current communities, Fora also makes it easier to migrate new communities onto our platform and increases the rewards of doing so. We want to bring more communities onto the Fora platform by re-accelerating our M&A

engine. We believe there is a significant opportunity ahead to do disciplined, accretive acquisitions of topic-focused communities for long-term growth on our platform.

As the Founder and CEO of VerticalScope you can expect me to be a great steward of capital who is focused on providing investors with growth and profitability. I will ensure that we remain focused on maintaining the strength of our software platform, executing on accretive M&A and delivering profitable growth with high margins and free cash flow. I am not taking any money off the table in this IPO as I am all-in on VerticalScope’s future. I voluntarily took the longest lockup suggested because I have poured my heart and soul, and all of my passions, into VerticalScope over the last 20 years, and can’t wait to do so for the next 20. I hope you’ll join me.

PROSPECTUS SUMMARY

The following is a summary of the principal features of the Offering and certain information contained elsewhere in this prospectus. This summary should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in Subordinate Voting Shares. You should read this entire prospectus carefully, especially the “Risk Factors” section and our consolidated financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. Please refer to the “Glossary of Terms” for a list of defined terms used in this prospectus.

OUR BUSINESS

Business Overview

VerticalScope is a technology company that has built and operates a cloud-based digital community platform serving more than 100 million MAU and 55 million registered community members across over 1,200 online communities. Our digital community platform consists of and enables hyper-focused apps, forums, marketplaces, editorial, and e-commerce rating and brand review websites. Our platform operates at the intersection of community, content and commerce. We believe in the power of enthusiasts to inform and inspire. Our members are passionate about sharing their interests with like-minded individuals and those whose identities are similarly shaped by the things they love. We focus on hyper-specific subjects that engender strong affinity from online communities of enthusiasts, super fans, experts, pros, hobbyists and armchair analysts.

Our mission is to enable people with common interests to connect, explore their passions and share knowledge about the things they love. We maintain separate brands for each of our communities. We believe that setting aside dedicated spaces for the exploration of unique interests creates a culture of ownership and belonging. Our strategic focus has been to invest in highly engaging topics, brands and activities that generate significant intensity of interest and commercial activity. While in aggregate our communities cover a wide range of interests, individually, they focus on narrow interests and foster both depth and breadth, as illustrated below.

==> picture [499 x 301] intentionally omitted <==

Note: Excludes communities that were minimally active, meaning communities with less than 1,000 MAU. Communities operated as of the end of March 2021 was 1,221.

We generate revenue through digital advertising and e-commerce transactions. The content on our communities provides rich context on specific products and is often used to inform purchase decisions. Advertisers benefit from reaching our scaled audience of in-market consumers in close proximity to purchase decisions. We also earn revenue from e-commerce transactions that our communities influence. We have established direct relationships with e-commerce merchants, brands and marketplaces that share revenue with us each time our users purchase goods that they learn about on our communities. In FY 2020, 56% of our revenue was from digital advertising and 44% was from e-commerce transactions.

Throughout our history, we have consistently focused on the prudent financial management of our business. We are in a growth phase, having achieved $61.6 million of revenue in the last twelve months ended March 31, 2021, with $34.2 million of advertising revenue and $27.3 million of e-commerce revenue. In the last twelve months ended March 31, 2021, Adjusted EBITDA was $31.1 million, Free Cash Flow was $26.6 million, and our Free Cash Flow Conversion Rate was 85%. In Q1 2021, our revenue increased to $15.9 million, a 41% increase compared to $11.3 million in the same period in the prior year. Further, in the same period, we generated Adjusted EBITDA of $7.7 million as compared to $3.1 million in the quarter ended March 31, 2020, which represents an Adjusted EBITDA Margin of 48% versus 28%, respectively. We have a track record of strong cash flow generation driven by our unique business model and our disciplined approach to managing operating expenses.

==> picture [498 x 186] intentionally omitted <==

(1) LTM YoY Growth represents Q1 2021 LTM as compared to Q1 2020 LTM.

” (2) Free Cash Flow is a non-IFRS measure . See “ IFRS and Non-IFRS Measures .

” (3) Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS measures. See “ IFRS and Non-IFRS Measures .

We have built our business through a combination of acquisitions and organic initiatives. We believe that adding communities to our platform through asset-focused acquisitions is an efficient use of capital as it allows us to grow the number of MAU we reach while providing acquired communities with improved technology and monetization capabilities. We have made over 200 acquisitions in our history and we believe that acquisitions will be an important driver of our future growth.

Our Communities and Users

==> picture [499 x 389] intentionally omitted <==

Our community members are subject matter experts who create rich content, including product reviews, explainers, comparisons, how to guides, fan fiction, essays, topic focused memes and buying guides. The examples below are indicative of the range and depth of the conversations on our communities:

On MTBR, mountain biking diehards answer a question about the impact of upgrading to 2.8 inch tires with over 640 responses spanning over 30 pages. The responses include setup guides, commercial links to recommended products to improve the ride, links to other MTBR posts, videos, graphs and official recommendations from the manufacturer.
On WatchUSeek, our community for watch aficionados, a recent thread discussing new and upcoming Seiko watches has generated over 1,030 pages of discussion. Members within the “Dress Watch Desperados” thread have posted about 300 times, with new hobbyists and passionate collectors trading photos of their Omegas, Breitlings, Breguets, JaegerLeCoultres and Glashuttes.
On ToyotaNation, a question about the importance of using the original equipment manufacturer (“ OEM ”) - recommended grade of oil generates posts about the specific engine tolerance of the Toyota Highlander 2[nd] Generation from 2008-2013, references from OEM manuals and regional differences in octane rating systems are discussed.
On ArcheryTalk, threads like “Does your form matter if you are accurate?” often generate discussions about the best bows, grips and arrows with links to websites where users can buy recommended gear.

Our most engaged members are often motivated by being recognized as thought leaders within their communities. They often assume leadership roles in our communities as moderators and administrators, organizing topic threads, ensuring that conversations remain on-topic and contributing to building positive cultures within our communities. We have more than 10,000 volunteer moderators and administrators in addition to 20 full-time employees focused on community management.

We have a successful history of acquiring and integrating communities to expand our footprint. We believe there is a massive opportunity to continue consolidating independent communities and creating value by improving user experience, engagement and monetization.

Our Acquisition Strategy

We have acquired and effectively integrated over 200 online communities. We make targeted acquisitions to accelerate user growth and expand into categories (or interests) that we believe are of strategic importance. Typically, the acquired communities come with a loyal user base and history of rich user-generated content. They are often leading enthusiast communities in their respective categories. For these acquisitions, we apply a proven and repeatable process to expedite the transactional timeline, minimize cost and generate significant incremental value. Post-acquisition, we transition acquired forum communities to our Fora platform, which offers an improved user experience, driving added and improved engagement, leading to higher monetization.

Current Acquisition Pipeline

We operate in a large and fragmented market. We monitor more than 75,000 target community acquisition opportunities, including over 10,000 large community acquisition opportunities, in our internal acquisition database. We define a large community acquisition as one that ranks in the top 1,000,000 of websites according to Alexa Internet, a provider of website traffic rankings. We source acquisition opportunities internally and through inbound leads. If an opportunity is still of interest after an initial discussion with the current owner(s), the opportunity is added to our acquisition pipeline. Our market share of online communities and large communities in March 2021 was 1.7% and 4.8%, respectively, providing significant opportunities for growth through acquisitions.

==> picture [499 x 229] intentionally omitted <==

Note: Acquisitions pipeline, Adjusted EBITDA contribution and timeline are based on management’s estimates and anticipated results only. See “ Forward-

” Looking Information ”. Adjusted EBITDA is a non-IFRS measure. See “ IFRS and Non-IFRS Measures . (1) Large communities are sites with an Alexa Internet rank of < 1,000,000.

As of March 31, 2021 our current pipeline includes 20 acquisition opportunities that we estimate could represent over $18 million of Adjusted EBITDA (on a trailing 12-month basis) in aggregate, which we intend to pursue in the next 12 months (including potential acquisitions that we may seek to complete prior to the Closing). We are in different stages of discussions with these targets; however, no definitive agreements have been executed and there can be no assurance that we will complete any or all of these potential acquisitions. In addition, we have a medium-term pipeline (anticipated to pursue in 2022-2023) of over 50 opportunities that we estimate could represent over $50 million of Adjusted EBITDA (on a trailing 12-month basis). These larger funnel opportunities do not include the many smaller acquisition opportunities (typically with a purchase price less than $100,000) that become available to us each year, some of which attract our interest and would be acquired by us.

Our Acquisition Process

Communities we acquire are typically owned and operated by an individual enthusiast or hobbyist founder seeking a liquidity event. Acquisitions range in size depending on the financial profile of the target, total MAU and its trends. Smaller acquisitions can take 2-4 weeks to complete, while larger transactions take approximately 8-12 weeks from the time a valuation is agreed upon. We prefer asset acquisitions, which usually involve the purchase of the target community’s domain, content, user database, moderator and administrator database, intellectual property, direct advertising contracts and social media accounts. Once closed, we quickly transition the assets to the Fora platform, where we are able to improve user experience, stability and security.

Acquisition Criteria

We primarily seek the following characteristics in target communities:

==> picture [468 x 193] intentionally omitted <==

----- Start of picture text -----

|||||
|---|---|---|---|
||
|Highly active and loyal|We look to augment our user base by increasing penetration in existing categories,|
|user base|entering new categories or otherwise adding scale. We conduct an extensive review|
|of community activity and engagement trends with the goal of acquiring an|
|organically generated and active user base.|
||
|High quality content|Acquiring a high quality content-rich community increases the community’s ability|
|to retain existing and attract new users.|
||
|Digital|advertising|Communities with existing digital advertising but with suboptimal layouts, formats|
|revenue improvement|and monetization sources provide an opportunity for us to improve programmatic|
|opportunities|advertising performance. The community also becomes part of our combined offering|
|to nationally-focused advertising clients, opening up new sources of monetization that|
|the community would not have been able to access prior to acquisition.|
|Commerce|revenue||We are attracted to opportunities where we can immediately expand commerce|
|improvement|revenue by leveraging our improved technology and existing commerce relationships|
|opportunities|(for example, using our preferred rates to improve revenue sharing economics).|

----- End of picture text -----

Integration and Improvement

Once we acquire a forum community, its users and content databases are migrated to the Fora platform, resulting in nearterm benefits to the community. With the Fora platform, users enjoy an improved user experience, particularly on mobile devices, resulting in higher engagement with content and advertisement and improved ARPU. As a result of the transition to Fora’s unified code base, subsequent site maintenance and updates become much easier to manage and implement. Once the community has been integrated, the acquired MAU become part of our scaled digital advertising offering and first-party

data pool. We utilize a robust set of key performance indicators to track, monitor and manage the financial and operational performance of each of our acquired communities to optimize post-acquisition performance.

Select Acquisition Case Studies

==> picture [499 x 236] intentionally omitted <==

Note: “PP” refers to purchase price.

(1) Adjusted EBITDA is a non-IFRS measure. See “ IFRS and Non-IFRS Measures ”.

RedFlagDeals

Canadian focused bargain shopping community, which currently has over 1,200,000 members.
We identified an opportunity for improving monetization of a highly engaged user base, that had been undervalued.
Post-acquisition, by leveraging our programmatic advertising technology and e-commerce capabilities, we increased ARPU and Adjusted EBITDA by approximately 70% from closing (August 2018) to the end of FY 2020.

MTBR

Leading mountain-biking community, which currently has over 450,000 members.
We identified an opportunity to augment the site’s e-commerce capabilities.
We integrated the community into our Fora platform, significantly improving user experience and traffic, and in-turn nearly doubling run-rate Adjusted EBITDA from closing (June 2018) to the end of FY 2020.

Piloteers.org

Honda Pilot focused community, which currently has approximately 125,000 members and represents a typical smaller acquisition referenced above (purchase price of less than $100,000).
We acquired the community in March 2010 for its high-quality content.
As at the end of FY 2020, the community generated annual Adjusted EBITDA of more than twice the original purchase price.

SpeakEV

Electric vehicle focused community, which currently has over 25,000 members.
We acquired the community in December 2016 due to the increasing relevance and popularity of electric vehicles.
We have experienced an over 500% increase in community Adjusted EBITDA over the past four years.

The Fora Software Platform

Our Fora platform is an innovative, cloud-based system that combines proprietary software with leading open-source, thirdparty software that enables us to operate, develop and scale our extensive network of communities as if they were a single entity.

Benefits of the Fora platform include: a consistent user experience; centralized community management; integrated monetization including relevant digital advertising and e-commerce capabilities; and scalability, speed and reliability.

We built the Fora platform over three years and started migrating our forum communities to the platform in May 2019. We funded the development of the platform with cash flow from operations and increased our product and software engineering team headcount from 27 at the end of 2017 to 97 at March 31, 2021. As part of our enhanced user experience, we intentionally removed ads that slowed down our page load speeds. We also temporarily paused our acquisition activity in order to focus our resources on building a software platform that would make future acquisitions even more accretive.

Fora has had a positive impact on our business and accelerated our growth. Since the platform was launched in May 2019, we have seen an increase in users, members, engagement and monetization. In Q1 2021, new members increased approximately 44% and new posting members increased approximately 42% over Q1 2020. In terms of engagement, the number of total posts increased approximately 11% and the number of images posted increased approximately 59% in Q1 2021 over Q1 2020. With regard to monetization, ARPU increased approximately 30% and ad viewability increased approximately 28% in Q1 2021 over Q1 2020.

The Fora platform allows us to quickly innovate and launch new features. Since launching the Fora platform, we have made more than 100 new software releases incorporating new features and functionality. Going forward, we plan to continue to improve our user experience, launch new mobile experiences, and enhance our marketplace and community commerce capabilities.

Our Transition to Fora

While the Fora platform has significantly improved our business, the path that led us to build our own software platform was challenging. Prior to Fora, we managed more than 1,000 separate installations of legacy software built by third-party software vendors. In order to roll out new features or make changes to the user experience, we had to develop solutions for numerous software platforms and deploy them individually on each of our communities, which was a lengthy and cumbersome process. The majority of our product and software engineering team was focused on maintaining, patching and fixing our software stack. Our inability to innovate and respond quickly to industry changes meant that our communities became increasingly slow and our user experience failed to keep up with our users’ expectations.

A significant number of our new users initially find our communities through specific queries on search engines, such as “how do I change the headlights on a 2004 Camry?”. Because of the depth of our hyper-specific content, our communities have historically ranked highly in search results for such long-tail queries.

In 2018, search engines began increasing their focus on page load speed and modern user experiences in determining the order in which search results were shown. Our multiple legacy software platforms made it extremely challenging to quickly respond to those changes. As a result, our search ranking declined meaningfully, resulting in fewer new users, lower MAU and lower revenue. To enable better infrastructure management and enhance performance and user experience, we began building the Fora platform. Our initial deployment of Fora was completed in early 2019 and we started migrating our forum communities in May 2019. We intentionally reduced our digital advertising revenue by removing ads that detracted from our user experience and slowed down our page load speeds. We also temporarily paused our acquisition activity in order to

focus our resources on building a software platform that would make future acquisitions even more accretive.

Our decision to invest in building a proprietary software platform rather than continuing to operate our patchwork software solutions has transformed our business. See “ Our Business – The Fora Software Platform ” below for a description of the improvements on users, engagement and monetization since the launch of the Fora platform.

The following chart illustrates the monthly, year-over-year MAU growth for our Fora forum communities compared to our communities on legacy platforms, as well as overall migration of our forum community MAU to Fora:

==> picture [499 x 181] intentionally omitted <==

----- Start of picture text -----

100%
80%
60%
40%
20%
0%
(20%)
(40%)
Mar‐19 Jun‐19 Sep‐19 Dec‐19 Mar‐20 Jun‐20 Sep‐20 Dec‐20 Mar‐21
% of Platform (Forum Community MAU) Fora User Growth Legacy User Growh
----- End of picture text -----

Note: Fora and legacy MAU indexed to April 2019 MAU count for comparative purposes.

Because we have migrated our forum communities to the Fora platform in batches over the past 18 months, the full benefit of the Fora platform has not yet been realized. We had migrated 88%, 82% and 36% of forum community MAU to Fora as of March 31, 2021, December 31, 2020, and December 31, 2019, respectively. The above chart shows our migration of forums since May 2019.

In the ordinary course of our business, our communities experience fluctuations in MAU. For example, MAU may decline due to a number of different factors including the subject matter of the communities no longer being popular or relevant, seasonal changes, changes to search engine algorithms, changing preference in user experience and the performance of the underlying software platform. Occasionally, our poorly performing communities no longer contribute to our MAU and become dormant over time, which has little or no impact to our overall operations.

Industry Overview & Trends

Topic-Focused Communities are Thriving

Advertising Budgets are Following Consumers Online

Digital advertising has robust momentum as consumers continue to migrate online. eMarketer estimates that digital advertising accounted for 58% of the $650 billion global advertising market in 2020. Digital advertising is expected to grow at a 14% compound annual growth rate (“ CAGR ”) through 2024, compared to 3% for non-digital channels. A focus on efficient audience targeting and the return on advertisement spend (“ ROAS ”) continue to drive increases in mobile and social media advertising. As the industry continues to evolve, data transparency, advertising personalization and consumer

privacy are being monitored by advertisers, platforms, consumers and regulators. In an uncertain privacy regime, first party and contextual audience data is increasingly more valuable to improve advertising efficiency.

As E-Commerce Spending Grows, Social Networks and Communities are Closing the Loop from Influence to Purchase

Our Market Opportunity

We define our total addressable market as the aggregate North American digital advertising and e-commerce opportunity, estimated by eMarketer to be in excess of $1 trillion in 2021. eMarketer estimates the total market opportunity for digital advertising in Canada and the U.S. is anticipated to grow at a CAGR of 13% from $199 billion in 2021 to $288 billion in 2024. The North American e-commerce market is estimated to grow at a CAGR of 13% from $887 billion in 2021 to $1.3 trillion in 2024. We are well positioned to capitalize on the momentum in both digital advertising and e-commerce as we continue to roll out additional advertising and e-commerce capabilities.

Our Strengths

Dedicated Spaces for Hyper-Specific Enthusiast Communities

Our topic-focused communities enable passionate enthusiasts to connect with like-minded people about their interests. We have consistently made strategic product decisions that promote focus, depth and intensity within our individual communities. Because our communities are topic-focused, they are less cluttered with the political posturing, social pressure, noise and distractions that pervade other social media platforms. As of March 31, 2021, approximately 1.7 billion posts have been generated by our members and in 2021, over 99% of our traffic was generated organically from our avid members and highly specific search queries.

Powerful Network Effects & Passion at Scale

While our focus on niche topics somewhat limits the size of any individual community, our unified technology platform and acquisition strategy enable us to scale rapidly by executing our playbook across thousands of communities. We can efficiently acquire communities, improve their user experience and monetization, and incorporate their unique audience with the over 100 million MAU across our existing communities. We believe our approach uniquely provides the focused, passionate engagement of small communities with the scalability and operating leverage of a technology platform. Fora allows us to bring the scale of our aggregate platform to advertisers, while also providing hyper-specific targeting based on the content of individual communities.

Proven, Accretive Acquisition Playbook

We have executed and integrated more than 200 community acquisitions since 2010. We have developed a systematic approach to acquisitions that enables us to monitor, assess and execute a high volume of transactions in the normal course of business. We are uniquely positioned to acquire communities at attractive prices and create significant value by onboarding forum communities onto our Fora platform. We have identified 20 opportunities in our near-term pipeline that we estimate could represent up to $18 million in trailing 12-month Adjusted EBITDA. In addition, we have identified more than 50 opportunities in our medium-term pipeline that we estimate could represent greater than $50 million of trailing 12month Adjusted EBITDA. These larger funnel opportunities do not include the many smaller acquisition opportunities (typically with a purchase price less than $100,000) that become available to us each year.

The Fora Platform

We built the Fora platform in order to accelerate our innovation, enhance our user experience and support thousands of individual communities on a single, unified code base. The Fora platform has significantly improved the user experience of our communities which has resulted in accelerated user growth, increased engagement and improved monetization. Fora also provides significant advantages for forum community acquisitions. We believe that migrating newly acquired sites to the Fora platform will improve community civility, safety and moderation, and the growth and monetization of communities.

Robust Value Proposition for Advertisers and E-Commerce Merchants

Our communities are inherently commercial by design. We have purposely built and acquired communities focused on topics, categories and brands that generate substantial commercial activity. Consumers trust the expert opinions of our community members and use their rich, product-focused content to research purchases. For advertisers, we provide access to a scaled audience of in-market buyers where they can precisely target niche audiences and can leverage our first-party data to reach registered members elsewhere on our platform. Our advertisers track the performance of their advertising dollars and increase their spending with us due to our users’ propensity to buy their products.

In recent years, we have introduced e-commerce experiences that enable us to share in revenue generated from purchases that our communities inspire and influence. For e-commerce partners, we provide brand exposure, validation from trusted experts and incremental revenue. We are continuing to develop and launch new e-commerce experiences that will enable us to capture more of the value generated by our communities.

Attractive Business Model Providing High Margin Cash Flows

We believe our highly efficient business model has enabled us to consistently generate attractive margins and strong cash flow generation. Our communities produce high-quality user-generated content, which reduces our need to spend on professional content creators. Over 10,000 moderators and administrators volunteer their time and contribute to high engagement on our communities. Our high-quality content results in organic discovery of our communities, which reduces our need for paid marketing. Finally, our Fora platform delivers significant operational efficiencies and operating leverage.

As a result of our unique business model and focus on accretive growth, we have maintained annual Adjusted EBITDA Margins in excess of 40% for the past three years and in Q1 2021, even while making substantial investments in our technology platform. This focus has enabled us to deliver continued, strong Free Cash Flow. In FY 2020, we generated $26.6 million of Adjusted EBITDA and $21.7 million of Free Cash Flow. See “ IFRS and Non-IFRS Measures ”.

Our Business Model

We have two main sources of revenue: digital advertising and e-commerce. The digital advertising stream includes revenue generated from (i) direct advertising campaigns, (ii) custom content solutions and (iii) programmatic advertising. The e- commerce stream includes revenue generated from (i) commissions, (ii) referral payments and (iii) subscriptions.

Digital Advertising

In 2020, we served over 400 direct advertisers in the U.S. and Canada. Our current customers include Cabela’s, Canadian Tire, Chevrolet, Sony, Yamaha, together with other OEMs, retailers and insurance providers. Our direct advertising efforts focus mainly on larger brands seeking to reach a national base of consumers.

Geared Content Studios, our in-house production studio, provides custom content and video solutions specializing in reaching enthusiasts and in-market shoppers.

Programmatic advertising includes monetization of Impressions that are not sold by the higher-priced direct sales channel through real-time bidding (“ RTB ”). Programmatic advertising is driven by connections with the largest ad exchanges and supply-side platforms in North America. Programmatic advertising also includes revenue generated through our private marketplace and “ Programmatic Guaranteed ” advertising – an invitation-only auction for premium Impression sales with agreed upon price floors. Private marketplace and Programmatic Guaranteed advertising combine the relationship of direct advertising with the technology of RTB.

E-Commerce

Commission-based e-commerce revenue is generated from over 70 partners and networks on our communities, including Amazon, Best Buy, eBay and Sole Fitness. We receive a commission from sales attributable to traffic we send to partners, with rates of up to 15% of transaction value. Sales are influenced by product reviews from our network of staff and freelance writers and by broader community discussion, which includes user-generated product links posted in our communities. For certain e-commerce partners, we also generate referral payments for traffic directed from our communities, even if no transaction is completed.

Subscription-related e-commerce revenue is generated from three sources: (i) a native commerce product that enables merchants to maintain a presence on our communities and engage in commercial conversations with our users, (ii) a business directory product that connects consumers with service providers and (iii) paid user memberships which accounts for an immaterial portion of our current e-commerce revenue.

Select Customer Case Study

A leading North American retailer with over 100 locations across the U.S. and Canada and a growing e-commerce business has been an active customer of ours since 2014. The customer’s advertising program is entirely performance driven with the main key performance indicator being ROAS, a marketing metric that measures the revenue generated per every dollar spent in an advertising campaign, that is calculated as the total sales generated by the customer attributable to its digital advertising programs with us.

Our customer’s advertisements are distributed throughout our communities and are featured in highly-contextually relevant communities, including Contractor Talk, GM Full Size, My Tractor Forum, etc. We leverage the customer’s first-party sales data that it shares with us to optimize campaign performance and to achieve its KPI goal.

Based on our results from the last quarter of 2020 and the first quarter of 2021, our ROAS performance exceeded our customer’s goal by over 37%. In addition, the customer’s advertising spending over the 12-month period ending March 31, 2021 increased by 46% compared to the same period in the prior year.

Our Four-Pronged Approach to Profitability

We have maintained a track record of strong cash flow generation for most of our corporate history. We have carefully calibrated each aspect of our business to optimize profitability, emphasizing the following four key factors:

Long-Tail, User-Generated Content

We focus on generating free user content, which is accessible to our over 100 million users. Across all of our communities, we host over 1.7 billion pieces of content, and over 95% of our content is freely contributed by our passionate community members. Our unique content is tailored to each community and ranges in complexity, from basic thread responses to queries, to in-depth, long tailed discussions that may be viewed thousands of times, remaining relevant long after they have been posted.

Engaged Moderators and Administrators

The quality of our community content plays a significant role in our ability to attract and retain users. Our communities face the same challenges as other social media where maintaining content quality becomes an increasingly time-consuming and complex task as the community scales. To assist with content moderation, we have amassed a team of over 10,000 volunteer moderators and administrators. These moderators and administrators are power users, who are passionate and routine content contributors motivated by being recognized as community thought leaders. These moderators help us organize community content, promote a positive culture and keep our communities safe. To support our moderators and administrators, we have a dedicated community management team that works closely with moderators and administrators to identify new issues, respond to user feedback and deploy new features to improve community experience.

Organic Audience

In 2020, over 99% of our community users come from organic, unpaid sources. We believe our communities come highly

recommended from avid enthusiasts and rank highly in search results due to the depth and specificity of our content libraries. Once users have engaged with our communities, they continue to come back because of the strength of the content and the overall user experience. As a result, we seldom pay to promote our communities, which allows us to minimize a typically significant component of the cost structure.

The Fora Platform

Our investment into building and utilizing the Fora platform has brought significant efficiencies to different parts of our business and is a critical success factor underlying our profitable future growth. We believe the adoption of the Fora platform and our previous experience integrating communities have greatly accelerated our community integration timeline. Postmigration, the transition to a singular, modern code base makes site maintenance and updates a much faster and cheaper process.

Growth Strategy

Grow our User Base and Increase Engagement on our Communities

We have made significant investments over the last two years to create a leading communities software platform in Fora. Fora introduced a step-change improvement for our user experience. It improved our page load speed, created a modern user interface, reduced ad density, and optimized our format for mobile engagement. This has led to more users and increased engagement on the communities that have migrated to the new platform. As of the end of Q1 2021, approximately 88% of forum community MAU has migrated and over 70% of such migrated community MAU have been on Fora for more than three months as of March 31, 2021. Our Fora platform delivered the following improvements in Q1 2021 as compared to the same quarter in 2020:

9% increase in MAU;
44% increase in new members;
59% increase in photos shared;
28% increase in ad viewability; and
30% in increase in overall ARPU.

We will continue to grow our user base and increase engagement by improving and enhancing the user experience, launching new communities, and investing in community civility, safety and moderation.

Expand our Commerce Capabilities

E-commerce is a significant growth opportunity for us. Consumers trust the expert opinions of our community members and use their rich, product-focused content to research purchases. By launching new products and capabilities, including direct commerce in Fora communities, sponsored marketplaces and new e-commerce partnerships, we can capture more of the value generated by our communities and increase our overall user monetization.

Acquire and Enhance Enthusiast Communities

We believe we are uniquely positioned to consolidate a highly fragmented market of online communities. We have a tested execution playbook that allows us to quickly identify, evaluate and close on opportunities. We have built a strong reputation in the market and are an acquirer of choice for independent, enthusiast-owned communities. Fora enables us to seamlessly improve user experience, increase monetization and onboard acquired forum communities with limited business disruption.

Develop and Launch New Features and Products

Fora provides the critical platform to efficiently manage and update our network of over 1,200 communities. With our communities aligned on a single, unified code base, we can efficiently and continuously update our communities based on internal initiatives and user feedback. Fora enables the agility needed to be responsive to changes in the market and create

new experiences to delight and engage our user base. We believe we have a strong product roadmap for Fora’s future.

Competition

In general, we compete for consumer attention with larger, more established companies such as Reddit, Facebook (including Instagram), YouTube, Snap and Twitter.

While we do not believe that any specific competitor offers the distinct value proposition and capabilities that we offer at scale, we primarily compete with other community aggregators and independent communities in the market for digital advertising and e-commerce.

We also compete with a number of companies for acquisition opportunities such as IAC, Red Ventures, Future plc and Enthusiast Gaming. These companies tend to be focused on specific categories and do not offer a unified community platform such as Fora.

THE OFFERING

==> picture [489 x 603] intentionally omitted <==

----- Start of picture text -----

||||||
|---|---|---|---|---|
|Issuer:|VerticalScope Holdings Inc.|
|Offering:||Subordinate Voting Shares (or||Subordinate Voting Shares if the Over-Allotment Option is|
|exercised in full).|
|Offering Price:|C$||per Subordinate Voting Share.|
|Gross Proceeds:|C$125,000,000 (or C$143,750,000 if the Over-Allotment Option is exercised in full).|
|Closing Date:|On or about||, 2021 or such later date as the Company and the Underwriters may agree, but in|
|any event not later than||, 2021. See “|Plan of Distribution|”.|
|Over-Allotment|We have granted the Underwriters the Over-Allotment Option, exercisable in whole or in part, at|
|Option:|the sole discretion of the Underwriters, to acquire up to||additional Subordinate Voting Shares,|
|representing 15% of the number of Subordinate Voting Shares offered hereby, to cover over-|
|allotments, if any. The Over-Allotment Option may be exercised at the Offering Price for a period|
|of 30 days from the Closing Date. See “|Plan of Distribution|”.|
|Shares|Upon completion of the Offering and the Pre-Closing Reorganization, and assuming no exercise|
|Outstanding:|of the Over-Allotment Option, there will be||Subordinate Voting Shares and 2,957,265 Multiple|
|Voting Shares on a non-diluted basis (||Subordinate Voting Shares and 2,957,265 Multiple|
|Voting Shares on a fully-diluted basis) issued and outstanding immediately after completion of|
|the Offering.|
|If the Over-Allotment Option is exercised in full there will be||Subordinate Voting Shares and|
|2,957,265|Multiple Voting Shares on a non-diluted basis (||Subordinate Voting Shares and|
|2,957,265 Multiple Voting Shares on a fully-diluted basis) issued and outstanding immediately|
|after completion of the Offering.|
|Upon completion of the Offering and the Pre-Closing Reorganization, no Class A Common|
|Shares or Class B Common Shares will be issued and outstanding. See “|Description of Share|
|Capital|”.|
|Directed Share|At our request, the Underwriters have reserved up to 10% of the Subordinate Voting Shares (as|
|Program:|part of, and not incremental to, the President’s List) to be sold by us and offered by this prospectus|
|for sale, at the Offering Price, through a directed share program. The number of Subordinate|
|Voting Shares available for sale to the general public will be reduced by the number of reserved|
|Subordinate Voting Shares sold to these individuals. Any reserved Subordinate Voting Shares|
|not purchased by these individuals will be offered by the Underwriters to the general public on|
|the same basis as the other Subordinate Voting Shares offered under this prospectus. See “|Plan|
|of Distribution – Directed Share Program|”.|
|Voting Rights:|The Subordinate Voting Shares will have one vote per share and the Multiple Voting Shares will|
|have 10|votes per share.|
|The Multiple Voting Shares carry a greater number of votes per share relative to the Subordinate|
|Voting Shares. The Subordinate Voting Shares are therefore “restricted securities” within the|

----- End of picture text -----

meaning of such term under applicable Canadian securities laws. After giving effect to the Offering the Subordinate Voting Shares will collectively represent approximately  % of our issued and outstanding shares and approximately  % of the voting rights attached to all of our issued and outstanding shares (approximately  % and  %, respectively, if the Over-Allotment Option is exercised in full) and the Multiple Voting Shares will collectively represent approximately  % of our issued and outstanding shares and approximately  % of the voting rights attached to all of our issued and outstanding shares (approximately  % and  %, respectively, if the Over- Allotment Option is exercised in full).

==> picture [489 x 282] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Conversion Rights:|The Subordinate Voting Shares are not convertible into any other class of shares. The Multiple|
|Voting Shares are convertible into Subordinate Voting Shares on a one-for-one basis at the option|
|of the holder. In addition, our Articles provide that Multiple Voting Shares will automatically|
|convert into Subordinate Voting Shares in certain other circumstances. See “|Description of Share|
|Capital – Subordinate Voting Shares and Multiple Voting Shares – Conversion|”.|
|Take-Over Bid|In accordance with applicable regulatory requirements designed to ensure that, in the event of a|
|Protection:|take-over bid, the holders of Subordinate Voting Shares will be entitled to participate on an equal|
|footing with holders of Multiple Voting Shares, we will enter into a Coattail Agreement with|
|holders of Multiple Voting Shares. The Coattail Agreement will contain provisions customary for|
|dual-class TSX-listed issuers designed to prevent transactions that otherwise would deprive the|
|holders of Subordinate Voting Shares of rights under applicable take-over bid legislation in|
|Canada to which they would have been entitled if the Multiple Voting Shares had been|
|Subordinate Voting Shares. See “|Description of Share Capital – Take-Over Bid Protection|”.|
|Dividend Policy:|We do not currently anticipate paying any cash dividends on our securities, including the|
|Subordinate Voting Shares, in the foreseeable future. We currently intend to reinvest our earnings|
|to finance the growth of our business, including funding acquisitions, and/or to pay down debt.|
|Any determination to pay dividends in the future will be at the discretion of the board of directors|
|of the Company (the “|Board|”) and will depend on many factors, including, among others, our|
|financial condition, current and anticipated cash requirements, contractual restrictions and|
|financing agreement covenants, solvency tests imposed by applicable corporate law and other|
|factors that the Board may deem relevant. See “|Dividend Policy|”.|

----- End of picture text -----

Use of Proceeds: We expect to receive C$  in net proceeds from the Offering (C$  if the Over-Allotment Option is exercised in full), after deducting the Underwriters’ Fee of C$  (C$  if the Over-Allotment Option is exercised in full) and the expenses relating to the Offering, which are estimated to be C$  . We intend to primarily use the net proceeds of the Offering to pursue our current pipeline of acquisitions. See “ Use of Proceeds ”. Description of Upon completion of the Offering and the Pre-Closing Reorganization, our authorized share capital Share Capital: will consist of: (i) an unlimited number of Multiple Voting Shares; (ii) an unlimited number of Subordinate Voting Shares; and (iii) an unlimited number of preferred shares (the “ Preferred Shares ”), issuable in series, of which 2,957,265 Multiple Voting Shares,  Subordinate Voting Shares and nil Preferred Shares will be issued and outstanding immediately following the Closing (assuming no exercise of the Over-Allotment Option). See “ Description of Share Capital ”. Principal Upon completion of the Offering and the Pre-Closing Reorganization, and assuming no exercise of the Over-Allotment Option,  Subordinate Voting Shares will be owned or controlled by

Shareholders:

Lock-Up Agreements:

NordStar Group (representing approximately  % of the total voting rights attached to all of the Company’s issued and outstanding shares), 2,957,265 Multiple Voting Shares will be owned or controlled by RDL Ventures (representing approximately  % of the total voting rights attached to all of the Company’s issued and outstanding shares) and  Subordinate Voting Shares will be owned or controlled by Hedgewood (representing approximately  % of the total voting rights attached to all of the Company’s issued and outstanding shares). See “ Principal Shareholders ”.

In connection with the completion of the Offering, each of the Company, the Principal Shareholders, certain other securityholders, as well as our directors and executive officers will enter into Lock-Up Agreements pursuant to which he, she or it will agree not to, directly or indirectly, without the prior written consent of the Lead Underwriters, on behalf of the Underwriters, as applicable: (a) offer, sell, contract to sell, issue, grant or sell any option, right or warrant to purchase, or otherwise lend, transfer or dispose of shares of the Company, financial instruments or securities convertible into or exercisable or exchangeable for shares of the Company, (b) make any short sale, engage in any hedging transaction, or enter into any swap or other arrangement that transfers to another person, in whole or in part, any of the economic consequences of ownership of shares of the Company, whether any such transaction is to be settled by delivery of shares, other securities, cash or otherwise, or (c) announce any intention to do any of the foregoing for a period commencing on the Closing Date and ending (i) in the case of the Company, the Company’s directors and executive officers and certain other shareholders, 180 days after the Closing Date and (ii) in the case of the Principal Shareholders, 12 months after the Closing Date for NordStar Group and Hedgewood and 24 months after the Closing Date for RDL Ventures (subject to the release mechanism described in the following paragraph), in all cases, subject to customary exceptions.

Pursuant to the terms and conditions of their Lock-Up Agreements, each of the Principal Shareholders will have the right to sell, grant, secure, pledge or otherwise transfer, dispose of or monetize (a) as it relates to NordStar Group and Hedgewood, (i) up to half of their Subordinate Voting Shares or other equity securities of the Company 180 days after the Closing; (ii) up to three quarters of their Subordinate Voting Shares or other equity securities of the Company nine months after the Closing; and (iii) any and all of their Subordinate Voting Shares or other equity securities of the Company 12 months after the Closing; and (b) as it relates to RDL Ventures, (i) up to one third of its Multiple Voting Shares, Subordinate Voting Shares or other equity securities of the Company 12 months after the Closing; (ii) up to two thirds of its Multiple Voting Shares, Subordinate Voting Shares or other equity securities of the Company 18 months after the Closing; and (iii) any and all of its Multiple Voting Shares, Subordinate Voting Shares and other equity securities of the Company 24 months after the Closing.

All of the Subordinate Voting Shares and Multiple Voting Shares, as applicable, held upon completion of the Offering by the Principal Shareholders, certain other shareholders as well as directors and executive officers will be subject to Lock-Up Agreements, representing approximately 99% of issued and outstanding shares on a non-diluted basis immediately prior to the completion of the Offering. See “ Plan of Distribution – Lock-Up Agreements ”.

Market for the Subordinate Voting Shares:

TSX Trading Symbol:

The Subordinate Voting Shares have been conditionally approved for listing on the TSX under the symbol “FORA”. Listing is subject to fulfilling all of the listing requirements of the TSX. See “ Plan of Distribution ”.

Eligibility for In the opinion of Norton Rose Fulbright Canada LLP, our Canadian counsel, and Goodmans LLP, Investment: Canadian counsel to the Underwriters, based on the current provisions of the Tax Act, on the date of the Offering, provided that the Subordinate Voting Shares acquired by investors pursuant to the Offering are then listed on a “designated stock exchange” for the purposes of the Tax Act, which currently includes the TSX, the Subordinate Voting Shares will, on that date, be “qualified investments” under the Tax Act for trusts governed by RRSPs, RRIFs, RDSPs, DPSPs, RESPs and TFSAs, each as defined in the Tax Act. See “ Eligibility for Investment ”.

Risk Factors: An investment in the Subordinate Voting Shares is speculative and subject to a number of risks that should be considered by a prospective purchaser. Prospective purchasers should carefully consider the risk factors described under “ Risk Factors ” before purchasing the Subordinate Voting Shares.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following tables set forth our selected consolidated financial information for the periods and as at the dates indicated therein. The selected consolidated financial information set out below has been derived from our audited annual consolidated financial statements as at and for the years ended December 31, 2020, 2019 and 2018, and has been derived from our unaudited interim consolidated financial statements as at and for the three months ended March 31, 2021, as included elsewhere in this prospectus.

Our historical results are not necessarily indicative of the results that should be expected in any future period. All amounts are in thousands of U.S. dollars except where otherwise indicated. Prospective investors should review this information in conjunction with the audited and unaudited consolidated financial statements, including the notes thereto, the Management’s Discussion and Analysis (“ MD&A ”), as well as “ General ”, “ IFRS and Non-IFRS Measures ”, “ Consolidated Capitalization ”, “ Description of Material Indebtedness ” and “ Description of Share Capital ” included elsewhere in this prospectus.

Selected Information from Consolidated Statement of Income (Loss) and Comprehensive Income (Loss)

==> picture [496 x 214] intentionally omitted <==

----- Start of picture text -----

|||||||
|---|---|---|---|---|---|
|Three months ended|
|Year ended December 31|
|March 31|
|(in thousands of U.S. dollars except per share|
|2021|2020|2020|2019|2018|
|data)|
|Revenue|15,918|11,265|56,923|58,455|68,348|
|Operating expenses|13,455|13,784|53,340|54,739|78,136|
|Operating income (loss)|2,463|(2,519)|3,583|3,715|(9,788)|
|Other expenses (income)|1,143|1,793|4,973|8,354|8,476|
|Income tax expense (recovery)|465|(1,310)|117|(2,905)|(4,165)|
|Net income (loss) and comprehensive income|854|(3,002)|(1,506)|(1,733)|(14,099)|
|(loss)|
|Net income (loss) per share - basic ($)|0.06|(0.22)|(0.11)|(0.12)|(1.01)|
|Net income (loss) per share - diluted ($)|0.06|(0.22)|(0.11)|(0.12)|(1.01)|

----- End of picture text -----

Selected Information from Consolidated Balance Sheet

d Information from Consolidated Balance Sheet
As at March	As at December 31
(in thousands of U.S. dollars) 31, 2021	2020 2019 2018

Cash 5,466	4,604 5,113 16,070
Other current assets 11,249	15,552 13,203 13,537
Non-current assets 64,372	67,528 83,680 97,124
Total assets 81,087	87,684 101,996 126,732

Current liabilities(1) 14,058	14,291 18,222 15,977
Long-term debt 85,037	93,142 103,024 128,364
Other non-current liabilities 3,217	2,795 3,751 4,823
Total liabilities 102,312	110,228 124,996 149,164

Shareholders’ deficiency (21,225)	(22,545) (23,000) (22,432)

(1) Includes current portion of long-term debt ($7,833, $8,323, $8,459 and $3,651 as at Q1 2021, FY 2020, FY 2019 and FY 2018).

Reconciliation of Adjusted EBITDA and Free Cash Flow to Net Income (Loss)

Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures” , “General Matters” and “IFRS and Non-IFRS Measures” .

==> picture [496 x 396] intentionally omitted <==

----- Start of picture text -----

||||||||
|---|---|---|---|---|---|---|
|Three months ended|
|March 31|Year ended December 31|
|(in thousands of U.S. dollars except|
|percentages)|2021|2020|2020|2019|2018|
|Net income (loss)|854|(3,002)|(1,506)|(1,733)|(14,099)|
|Interest expense|1,094|2,217|5,634|8,194|8,638|
|Income tax expense (recovery)|465|(1,310)|117|(2,905)|(4,165)|
|Depreciation and amortization|4,583|5,228|20,190|21,810|37,611|
|EBITDA|6,996|3,133|24,435|25,366|27,985|
|Share-based compensation|466|222|1,962|1,165|2,011|
|Unrealized loss (gain) from changes in|
|derivative instruments|54|202|(81)|(252)|534|
|Severance|[(1)]|105|1|777|329|1,262|
|Adjustment to contingent consideration|-|-|-|(1,564)|1,146|
|Loss (gain) on sale of assets|-|(192)|(359)|(13)|-|
|Loss (gain) on sale of investments|-|-|(530)|-|-|
|Foreign exchange loss (gain)|50|(231)|227|172|(163)|
|Other charges|[(2)]|4|11|164|208|1,971|
|Adjusted EBITDA|[(3)]|7,673|3,145|26,595|25,412|34,747|
|Adjusted EBITDA Margin|[(4)]|48.2%|27.9%|46.7%|43.5%|50.8%|
|Less capital expenditures|(1,236)|(1,429)|(4,496)|(5,344)|(860)|
|Income taxes (paid) recovered|49|(102)|(392)|(1,042)|(2,180)|
|Free Cash Flow|[(5)]|6,486|1,614|21,707|19,027|31,707|

----- End of picture text -----

(1) Severance is included in wages and consulting on the consolidated statements of income (loss) and comprehensive (loss).

(2) Other charges are included in wages and consulting and general and administrative on the consolidated statements of income (loss) and comprehensive (loss).

(3) Adjusted EBITDA is a non-IFRS measure. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ”, “ General Matters ” and “ IFRS and Non-IFRS Measures ”.

(4) Adjusted EBITDA Margin is a non-IFRS measure and measures Adjusted EBITDA as a percentage of revenue. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ”, “ General Matters ” and “ IFRS and Non-IFRS Measures ”.

(5) Free Cash Flow is a non-IFRS measure. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ”, “ General Matters ” and “ IFRS and Non-IFRS Measures”.

CORPORATE STRUCTURE

Name, Address and Incorporation

VerticalScope Holdings Inc. was incorporated on November 19, 2012 under the OBCA. VerticalScope HoldCo is authorized to issue an unlimited number of Class A Common Shares, an unlimited number of Class B Common Shares, an unlimited number of Class A Preferred Shares, an unlimited number of Multiple Voting Shares, an unlimited number of Subordinate Voting Shares and an unlimited number of Preferred Shares, issuable in series. On November 26, 2012 articles of amendment were filed to amend the rights, privileges and restrictions attached to the Class A Common Shares, Class B Common Shares and Class A Preferred Shares. On October 5, 2017, articles of amendment were filed to amend a defined term forming part of the share terms. On June 11, 2021, as part of the Pre-Closing Reorganization, we filed articles of amendment to, among other things, provide for the creation of the Subordinate Voting Shares and the Multiple Voting Shares.

VerticalScope Inc., a subsidiary of VerticalScope HoldCo, was most recently formed by the amalgamation of VerticalScope Inc. (incorporated on July 5, 1999) and TrustedPros Inc. on January 1, 2019 under the OBCA. VerticalScope OpCo is authorized to issue an unlimited number of common shares, all of which are owned by VerticalScope HoldCo.

Prior to Closing, as part of the Pre-Closing Reorganization, we will further amend our articles to, among other things, provide for the change of the Class A Common Shares into Multiple Voting Shares and the Class B Common Shares into Subordinate Voting Shares and the repeal of the Class A Common Shares, Class B Common Shares and Class A Preferred Shares. See “ Description of Share Capital – Pre-Closing Reorganization ”.

Our headquarters and registered office is located at 111 Peter Street, Suite 901, Toronto, Ontario M5V 2H1, Canada.

Intercorporate Relationships

The following organization chart indicates the intercorporate relationships of VerticalScope HoldCo and its material subsidiaries, VerticalScope OpCo and Outdoor Hub, LLC. The chart also includes certain other subsidiaries that support the Company’s operations such as VerticalScope Estonia OÜ, which employs a team that provides off-peak hour technical support in respect of our Fora platform.

==> picture [498 x 170] intentionally omitted <==

==> picture [498 x 85] intentionally omitted <==

OUR BUSINESS

Business Overview

Founded in 1999 by Rob Laidlaw and headquartered in Toronto, we are a technology company that has built and operates a cloud-based digital community platform serving more than 100 million MAU and 55 million registered community members across over 1,200 online communities (comprising hyper-focused apps, forums, marketplaces, editorial, and e-commerce rating and brand review websites) as of March 31, 2021. Our platform operates at the intersection of community, content and commerce and is the foundation of our growth. We believe in the power of enthusiasts to inform and inspire. Our members are passionate about sharing their interests with like-minded individuals and those whose identities are similarly shaped by the things they love. We focus on hyper-specific subjects that engender strong affinity from online communities of enthusiasts, super fans, experts, pros, hobbyists and armchair analysts.

Our mission is to enable people with common interests to connect, explore their passions and share knowledge about the things they love. Our brands include dedicated communities for watch geeks, audio nerds, motorheads, fitness obsessed, DIYers, deal junkies, mountain bikers and enthusiasts of hundreds of additional topics. We maintain separate brands for each of our communities. We believe that setting aside dedicated spaces for the exploration of unique interests creates a culture of ownership and belonging. We provide a common user experience across our communities, but empower our users to develop each community’s individual, authentic personality. Our strategic focus has been to invest in highly engaging topics, brands and activities that generate significant intensity of interest and commercial activity. While in aggregate our communities cover a wide range of interests, individually, they focus on narrow interests and foster both depth and breadth, as illustrated below.

==> picture [499 x 301] intentionally omitted <==

Note: Excludes communities that were minimally active, meaning communities with less than 1,000 MAU. Communities operated as of the end of March 2021 was 1,221.

We generate revenue through digital advertising and e-commerce transactions. Our communities are inherently commercial by design. The content on our communities provides rich context on specific products and is often used to inform purchase decisions. Advertisers benefit from reaching our scaled audience of in-market consumers in close proximity to purchase decisions. We also earn revenue from e-commerce transactions that our communities influence. We have established direct

relationships with e-commerce merchants, brands and marketplaces that share revenue with us each time our users purchase goods that they learn about on our communities. In FY 2020, 56% of our revenue was from digital advertising and 44% was from e-commerce transactions. We expect our investments in the Fora platform and in our e-commerce capabilities to allow us to capitalize on the continued market growth in both digital advertising and e-commerce.

==> picture [499 x 186] intentionally omitted <==

(1) LTM YoY Growth represents Q1 2021 LTM as compared to Q1 2020 LTM.

” (2) Free Cash Flow is a non-IFRS measure . See “ IFRS and Non-IFRS Measures

(3) Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS measures. See “ IFRS and Non-IFRS Measures ”

Our Communities and Users

==> picture [499 x 390] intentionally omitted <==

On MTBR, mountain biking diehards answer a question about the impact of upgrading to 2.8 inch tires with over 640 responses spanning over 30 pages. The responses include setup guides, commercial links to recommended products to improve the ride, links to other MTBR posts, videos, graphs and official recommendations from the manufacturer.
On Polestar Forum, which we launched in 2019 to engage the rapidly expanding community around Polestar electrical vehicles, the community has generated over 45,000 posts. There are actively engaged threads, including a running list of requested Polestar features, that are updated consistently as the community expands and owners get more familiar with their vehicles.
On WatchUSeek, our community for watch aficionados, a recent thread discussing new and upcoming Seiko watches has generated over 1,030 pages of discussion. Members within the “Dress Watch Desperados” thread have posted about 300 times, with new hobbyists and passionate collectors trading photos of their Omegas, Breitlings, Breguets, Jaeger-LeCoultres and Glashuttes.
On DIY Chatroom, members post explainers like “Identifying Home Leak” and provide detailed answers to

questions like “When a store mixes paint for you, how long does it stay mixed?”. A seven-year thread “Shuswap Life” follows the homebuilding adventure of member “cocobolo”, who purchased a piece of property in North Shuswap, British Columbia as the ultimate DIY project. What started with scoping out the picturesque raw land through a bevy of shared images travels across time through over 3,050 separate posts to a current day built-up homestead. The community takes immense pride in the successful progress and fierce independence shared in this self-narrated story.

On ToyotaNation, a question about the importance of using the OEM-recommended grade of oil generates posts about the specific engine tolerance of the Toyota Highlander 2[nd] Generation from 2008-2013, references from OEM manuals and regional differences in octane rating systems are discussed.
On ArcheryTalk, threads like “Does your form matter if you are accurate?” often generate discussions about the best bows, grips and arrows with links to websites where users can buy recommended gear.

Our most engaged members are often motivated by being recognized as thought leaders within their communities. Our “power users” create unique, compelling content and often assume leadership roles in our communities as moderators and administrators. Our “mods and admins” organize topic threads, ensure that conversations remain on-topic and contribute to building positive cultures within our communities. We have more than 10,000 volunteer moderators and administrators in addition to 20 full-time employees focused on community management. We have built specialized software tools that leverage machine learning to enable our team to manage communities more efficiently, identify spam and address problematic posts.

On average, forum communities running on the Fora platform (which represented 88% of forum community MAU as at March 31, 2021) shared the following characteristics and experienced the following results in Q1 2021:

Average MAU in Q1 2021	Average number of members in Q1 2021	Average number of posts in Q1 2021
65,251	43,423	1,582,989

Over the same period, the geographic breakdown of users of our Fora forum communities was as follows:

Geographic traffic distribution acros	Geographic traffic distribution acros	Geographic traffic distribution acros	s Fora communities	s Fora communities
U.S.	U.K.	EEA	Canada	Other
64.5%	8.6%	7.8%	7.2%	11.9%

Our individual communities vary widely in size, ranging from communities with greater than 1 million MAU to communities with less than 1,000 MAU. The distribution of our communities by MAU in Q1 2021 (with a comparison to Q1 2020) was as follows:[(1) ]

		MAU Q1 2020	MAU Q1 2021
# sites	MAU per Community
		(aggregate of sites within category)	(aggregate of sites within category)
11	>1,000,000 MAU	21,851,432	21,875,700
58	>250,000 to 1,000,000 MAU	26,413,206.33	27,953,685.67
127	>100,000 to 250,000 MAU	20,092,196.67	23,554,811.67

		MAU Q1 2020	MAU Q1 2021
# sites	MAU per Community
		(aggregate of sites within category)	(aggregate of sites within category)
609	>10,000 to 100,000 MAU	22,179,730	25,176,243.67
419	>1,000 MAU to 10,000 MAU	1,997,050.67	2,085,872.67

(1) Communities remained in their respective categories for each time period and are organized based on total MAU in Q1 2021. This table excludes 292 communities that were minimally active, meaning communities with less than 1,000 MAU, in Q1 2021. Such minimally active communities contributed approximately 85,000 MAU in Q1 2021 compared with approximately 218,000 MAU in Q1 2020 in aggregate.

Our Acquisition Strategy

We executed 16, 9, 1 and 0 acquisitions during 2018, 2019, 2020 and Q1 2021 respectively. In 2018, we spent approximately $49.7 million on acquisitions. We spent approximately $0.4 million and $0.2 million on acquisitions in 2019 and 2020, respectively, as we temporarily paused our acquisition activity in order to focus our resources on building the Fora software platform that would make future acquisitions even more accretive. Such acquisitions contributed approximately $7.0 million, $11.6 million, $7.4 million and $1.9 million in Adjusted EBITDA during 2018, 2019, 2020 and Q1 2021 respectively. The 2018 acquisitions included our acquisition of the Outdoor Hub, LLC, MTBR and RedFlagDeals.com communities. The 2019 acquisitions were primarily domain name purchases and a single community purchase that was merged with an existing community we already owned. The single 2020 acquisition was a small forum community purchase completed in December 2020.

Current Acquisition Pipeline

==> picture [499 x 229] intentionally omitted <==

Note: Acquisitions pipeline, Adjusted EBITDA contribution and timeline are based on management’s estimates and anticipated results only. See “ Forward- ” Looking Information ”. Adjusted EBITDA is a non-IFRS measure. See “ IFRS and Non-IFRS Measures . (1) Large communities are sites with an Alexa Internet rank of < 1,000,000.

As of March 31, 2021 our current pipeline includes 20 acquisition opportunities that we estimate could represent over $18 million of Adjusted EBITDA (on a trailing 12-month basis) in aggregate, which we intend to pursue in the next 12 months (including potential acquisitions that we may seek to complete prior to the Closing). We expect to spend approximately $100 million to complete the 20 acquisition opportunities identified in our current pipeline, and to fund such acquisitions with net proceeds from the Offering, borrowings under the Credit Facilities, and cash flow from operations. We are in different stages of discussions with these targets; however, no definitive agreements have been executed and there can be no assurance that we will complete any or all of these potential acquisitions. In the event we do not complete some or all of these potential acquisitions, we will seek other near-term acquisition opportunities as part of our acquisition process and strategy.

In addition, we have a medium-term pipeline (anticipated to pursue in 2022-2023) of over 50 opportunities that we estimate could represent over $50 million of Adjusted EBITDA (on a trailing 12-month basis). We expect to pay multiples consistent with prior transactions in order to complete such acquisitions and to fund such acquisitions with borrowings under the Credit Facilities and/or new credit facilities that we may enter into, cash flow from operations, and/or new financings, which may include the issuance of additional Subordinate Voting Shares. These larger funnel opportunities do not include the many smaller acquisition opportunities (typically with a purchase price less than $100,000) that become available to us each year, some of which attract our interest and would be acquired by us.

We believe that we are well positioned to execute on our near-term and medium-term pipelines despite our relatively low level of acquisition activity over the previous two years. Our senior management team has a significant amount of acquisition experience with the Company having completed over 200 acquisitions in its history, including 16 acquisitions in 2018 alone. As a result, we have established a reputation in the industry as a leading acquirer of online communities and have established a streamlined acquisition process (see “ Our Business – Our Acquisition Strategy – Current Acquisition Pipeline – Our Acquisition Process ”). The acquisition opportunities in our current pipeline and in our medium-term pipeline have been identified by our assessment of current market opportunities, our capacity to manage the volume of acquisition activity over a given timeframe, and financing considerations.

We expect to begin executing on our current pipeline immediately following the closing of the Offering. In anticipation, our team has been building the acquisition pipeline with outreach to prospective acquisition targets. In many cases, we have established relationships with these targets which span several years. With our investment in building and transitioning our forum communities onto the Fora platform over the past two years, we believe we are well positioned to manage the onboarding and integration of acquired communities with existing resources. With our renewed focus on our acquisition

strategy, and the anticipated increased activity associated with deal sourcing, negotiation and due diligence, we intend to hire additional supporting roles in corporate development, legal and finance in 2021 and 2022.

Our estimate of the anticipated Adjusted EBITDA contributions of the acquisition opportunities in our current and mediumterm pipelines is based on a number of factors, including: (i) financial and community performance data provided by certain of the potential acquisition targets; (ii) third party data sources we use to identify and size potential targets (e.g. Alexa Internet); (iii) revenue sources of the target community; (iv) subject matter of the target community and our assessment of the target community’s attractiveness to advertisers and e-commerce partners; and (v) our assessment of whether the contribution margins of the target community are consistent with similar communities and related assets in our portfolio of communities or other similar completed acquisitions. We believe that the mix of acquisition opportunities in the current pipeline could contribute aggregate estimated Adjusted EBITDA of $18 million annually. The current pipeline comprises targets that: (a) involve multiple communities or a portfolio of communities; and (b) range in size from smaller single community deals with estimated Adjusted EBITDA of approximately $100,000 to larger portfolio deals with estimated Adjusted EBITDA amounts of greater than $5 million.

Our Acquisition Process

We believe we are a high-probability counterparty to sellers, given we offer an attractive transaction execution process with upfront cash, certainty of closing, simplified transaction documentation, an expedited transaction timeline and our strong reputation as a community consolidator in a market where there is a limited universe of potential acquirers. The limited acquirer universe provides us with negotiating leverage, which allows us to acquire communities at attractive valuations, often resulting in highly accretive transactions.

Following the Offering, we expect to expand our dedicated corporate development team to focus on accelerating our acquisition conversion and growing our communities.

Acquisition Criteria

We primarily seek the following characteristics in target communities:

Highly active and loyal	Highly active and loyal		We look to augment our user base by increasing penetration in existing
user base			categories, entering new categories or otherwise adding scale. We conduct an
			extensive review of community activity and engagement trends with the goal of
			acquiring an organically generated and active user base.
High quality content			Acquiring a high quality content-rich community increases the community’s
			ability to retain existing and attract new users.
Digital	advertising		Communities with existing digital advertising but with suboptimal layouts,
revenue improvement			formats and monetization sources provide an opportunity for us to improve
opportunities			programmatic advertising performance. The community also becomes part of
			our combined offering to nationally-focused advertising clients, opening up new
			sources of monetization that the community would not have been able to access
			prior to acquisition.
Commerce	revenue		We are attracted to opportunities where we can immediately expand commerce
improvement			revenue by leveraging our improved technology and existing commerce
			relationships (for example, using our preferred rates to improve revenue sharing

opportunities

economics).

Integration and Improvement

Once we acquire a forum community, its users and content databases are migrated to the Fora platform, resulting in nearterm benefits to the community. With the Fora platform, users enjoy an improved user experience, particularly on mobile devices, via our cloud-based platform, which results in higher engagement with content and advertisement and improved ARPU. As a result of the transition to Fora’s unified code base, subsequent site maintenance and updates become much easier to manage and implement. Once the community has been integrated, the acquired MAU becomes part of our scaled digital advertising offering and first-party data pool. We utilize a robust set of key performance indicators to track, monitor and manage the financial and operational performance of each of our acquired communities to optimize post-acquisition performance.

Select Acquisition Case Studies

==> picture [498 x 236] intentionally omitted <==

Note: “PP” refers to purchase price.

(1) Adjusted EBITDA is a non-IFRS measure. See “ IFRS and Non-IFRS Measures

RedFlagDeals

Canadian focused bargain shopping community, which currently has over 1,200,000 members.
We identified an opportunity for improving monetization of a highly engaged user base, that had been undervalued.
Post-acquisition, by leveraging our programmatic advertising technology and e-commerce capabilities, we increased ARPU and Adjusted EBITDA by approximately 70% from closing (August 2018) to the end of FY 2020.

MTBR

Leading mountain-biking community, which currently has over 450,000 members.
We identified an opportunity to augment the site’s e-commerce capabilities.
We integrated the community into our Fora platform, significantly improving user experience and traffic, and inturn nearly doubling run-rate Adjusted EBITDA from closing (June 2018) to the end of FY 2020.

Piloteers.org

Honda Pilot focused community, which currently has approximately 125,000 members and represents a typical smaller acquisition referenced above (purchase price of less than $100,000).
We acquired the community in March 2010 for its high-quality content.
As at the end of FY 2020, the community generated annual Adjusted EBITDA of more than twice the original purchase price.

SpeakEV

Electric vehicle focused community, which currently has over 25,000 members.
We acquired the community in December 2016 due to the increasing relevance and popularity of electric vehicles.
We have experienced an over 500% increase in community Adjusted EBITDA over the past four years.

The Fora Software Platform

The Fora platform is an innovative, cloud-based system that combines our proprietary software with leading open-source, third-party software to enable us to operate, develop and scale our extensive network of communities as if they were a single entity. We built Fora in order to accelerate our innovation, enhance our user experience, and support thousands of individual communities on a single, unified code base.

On our communities, users are able to interact, discover products and transact. The core components of our Fora platform include cloud hosting, community management, and a content management system customized for social interaction.

The Fora platform provides benefits including: a consistent user experience, which we are continuously improving; centralized community management; integrated monetization including relevant digital advertising and e-commerce capabilities; and scalability, speed and reliability.

We built the Fora platform over the course of three years and started migrating our forum communities to the Fora platform in May 2019. We funded the development of the Fora platform with cash flow from operations and we increased our product and software engineering team headcount from 27 at the end of 2017 to 97 at March 31, 2021. As part of our enhanced user experience, we intentionally removed ads that slowed down our page load speeds. We also temporarily paused our acquisition activity in order to focus our resources on building a software platform that would make future acquisitions even more accretive.

The Fora platform has had a positive impact on our business and accelerated our growth. Since the Fora platform was launched in May 2019, we have seen an increase in users, members, engagement and monetization. In Q1 2021, new members increased approximately 44% and new posting members increased approximately 42% over Q1 2020. In terms of engagement, the number of total posts increased approximately 11% and the number of images posted increased approximately 59% in Q1 2021 over Q1 2020. With regard to monetization, ARPU increased approximately 30% and ad viewability increased approximately 28% in Q1 2021 over Q1 2020.

The Fora Software Platform Technology Stack

==> picture [499 x 184] intentionally omitted <==

==> picture [499 x 93] intentionally omitted <==

Scalability

Our platform can see many traffic changes from regular seasonal patterns, to content going viral across the internet. Using Google Cloud’s best-in-class implementation of Kubernetes containers allows us to scale our computing resources in realtime, while also optimizing infrastructure costs. At its current peak, our platform handles well over 5,000 requests per second and can scale up seamlessly to serve far more. Our proprietary software allows us to run our content management system as if it were a single entity, removing the complexities of independently scaling thousands of individual software instances.

Performance

Our engineers take a performance-first philosophy when building new product features or making changes to backend services. We continuously monitor performance metrics from our internal sources and live traffic to ensure our users have the best experience possible when browsing and contributing to our communities. Because of this focus, our page load time went from an average of 9.5 seconds in Q1 2019 to 4.1 seconds in Q1 2021 in respect of communities that were migrated to Fora before January 1, 2021. This performance-first approach also ensures that search engines can see our pages as top performers in terms of delivering modern user experiences, generating high quality content, and delivering modern infrastructure and pages that load quickly, allowing us to improve our overall web search presence.

Machine Learning and Research

We have a wealth of experience researching challenging problems in the space of natural language processing both in-house and in partnerships with universities across Canada. As a result of this research, we use natural language processing techniques (including topic modelling, entity extractions, aspect-based sentiment analysis and page load) to understand what our members discuss across our communities. This insight allows us to surface meaningful content to our users with on-site content recommendations or power-enhanced search capabilities. In addition, we employ several toxicity detection methods to help guide our moderators’ attention to content and areas of our communities that may need additional scrutiny.

Security and Safety

We take a multilayered approach to security. Users accessing our communities have their traffic encrypted from end-to-end.

We employ a leading global content delivery network with web application firewalls at the edges of our network to help protect against malicious actors and denial of service attacks. For administrative services and all system-level access, we take a zero-trust approach and require our privileged members within our company and our communities to use two-factor authentication when accessing their accounts. In parallel to our security practices, we aim to create a safe environment for our users and advertisers. We have developed technology that moderates and limits unsafe content and seeks to ensure content contributed by our members is safe for public consumption.

Continuous Improvement

We are continuously making improvements to various aspects of the platform. An essential feature of our development practices is our ability to quickly and reliably deploy changes to production across our entire network of communities. We have implemented a robust automated testing suite that is designed to give us the confidence that each deployment to production will be successful. In a circumstance where our automation suite does not detect an issue in production, our architecture provides us with the option to roll back to a previously known working configuration instantaneously or to quickly fail-forward.

Our Transition to Fora

In 2018, search engines began increasing their focus on page load speed and modern user experiences in determining the order in which search results were shown. Our multiple legacy software platforms made it extremely challenging to quickly respond to those changes. As a result, our search ranking declined meaningfully, resulting in fewer new users, lower MAU and lower revenue. To enable better infrastructure management and enhance performance and user experience, we began building the Fora platform. Our initial deployment of Fora was completed in early 2019 and we started migrating our forum communities in batches to the Fora platform in May 2019. We intentionally reduced our digital advertising revenue by removing ads that detracted from our user experience and slowed down our page load speeds. We also temporarily paused our acquisition activity in order to focus our resources on building a software platform that would make future acquisitions even more accretive.

Our decision to invest in building a proprietary software platform rather than continuing to operate our patchwork software solutions has transformed our business. See “ Our Business – The Fora Software Platform ” above for a description of the improvements on users, engagement and monetization since the launch of the Fora platform.

When comparing user growth for forum communities on our Fora platform against those on legacy solutions, our Fora communities have consistently out-performed. Starting in January of 2020, as migrated sites were re-indexed higher in search results due to their better user experience and performance, user growth began to accelerate and differentiate compared to communities on legacy platforms. The following chart illustrates the monthly, year-over-year MAU growth for our Fora forum communities compared to our communities on legacy platforms, as well as overall migration of our forum community MAU to Fora:

==> picture [499 x 181] intentionally omitted <==

Note: Fora and legacy MAU indexed to April 2019 MAU count for comparative purposes.

Industry Overview & Trends

Topic-Focused Communities are Thriving

Topic-focused communities provide a valuable alternative to traditional social media platforms. They provide a venue where your status can be earned by the knowledge and energy you bring to the conversation. They are an outlet where individuals can share their passions with the needed privacy to separate those interests from their daily lives and local social networks. Reddit’s /r/wallstreetbets page demonstrated that topic-focused communities can be highly influential. We are seeing strong momentum across our communities, with a 44% increase in newly registered members for the quarter ended March 31, 2021 compared to the same period in the prior year. We provide a unique and separate experience compared to Reddit. We bring our individual communities to the forefront, instead of emphasizing the VerticalScope brand. We believe this approach allows our members to engage more actively in the topics they love, separating their interests from a broader online persona and promoting safety and security from online backlash. When our members are sharing information about their watches, cars, sailboats and other high-value categories, it is within a like-minded community instead of one’s broader social network. As a result, we have seen strong membership and engagement versus similar communities that are part of broader social networks. For illustrative purposes, see below the metrics comparing some of our topic-focused communities against comparable subreddits.

==> picture [469 x 222] intentionally omitted <==

Note: Metrics as of April 22, 2021. Metrics shown for Reddit are for r/RangeRover, r/MTB, r/mercedes_benz and r/sailing. Average Posts Per Member calculated as total posts / current members as of April 22, 2021.

Advertising Budgets are Following Consumers Online

Digital advertising has robust momentum as consumers continue to migrate online. eMarketer estimates that digital advertising accounted for 58% of the $650 billion global advertising market in 2020. Digital advertising is expected to grow at a 14% CAGR through 2024, compared to 3% for non-digital channels. A focus on efficient audience targeting and ROAS continue to drive increases in mobile and social media advertising. These channels are expected to grow at a CAGR of 16% and 8% through 2024, respectively. As the industry continues to evolve, data transparency, advertising personalization and consumer privacy are being monitored by advertisers, platforms, consumers and regulators. In an uncertain privacy regime, first party and contextual audience data is increasingly more valuable to improve advertising efficiency.

As E-Commerce Spending Grows, Social Networks and Communities are Closing the Loop from Influence to Purchase

As e-commerce continues to scale, social networks are uniquely positioned to shorten the distance between discovery and purchase. Shoppers conduct significant product research online and are increasingly turning to social networks and communities for independent product validation. Through platform-specific solutions, software integrations and commerce partnerships, social networks are bringing transactions onto their platforms, helping to minimize typical e-commerce barriers including vendor trust, cart abandonment and payments. Facebook, Instagram and Snap have all launched shoppable advertising and Pinterest continues to expand its shoppable pins partnership with Shopify, further enabling direct e- commerce.

Our Market Opportunity

We define our total addressable market as the aggregate North American digital advertising and e-commerce opportunity, estimated by eMarketer to be in excess of $1 trillion in 2021. eMarketer estimates the total market opportunity for digital advertising in Canada and the U.S. is anticipated to grow at a CAGR of 13% from $199 billion in 2021 to $288 billion in 2024. The North American e-commerce market is estimated to grow at a CAGR of 13% from $887 billion in 2021 to $1.3 trillion in 2024 according to eMarketer. We are well positioned to capitalize on the momentum in both digital advertising and e-commerce as we continue to roll out additional advertising and e-commerce capabilities.

Our Strengths

Dedicated Spaces for Hyper-Specific Enthusiast Communities

Our topic-focused communities enable passionate enthusiasts to connect with like-minded people about their interests. We create dedicated spaces and maintain separate brands for each of our enthusiast communities. We have consistently made

strategic product decisions that promote focus, depth and intensity within our individual communities. Because our communities are topic-focused, they are less cluttered with the political posturing, social pressure, noise and distractions that pervade other social media platforms. Further, we allow our members to communicate using pseudonyms so they can share their passions freely without publicly committing their real world identities to scrutiny. As of March 31, 2021, approximately 1.7 billion posts have been generated by our members and in 2021, over 99% of our traffic was generated organically from our avid members and highly specific search queries. Maintaining separate brands enables us to benefit from the natural affinity that our users feel towards the things they love. For example, people who are passionate about woodworking seek out our Woodworking Talk community, not our brand.

Powerful Network Effects & Passion at Scale

We benefit from powerful network effects at the level of our individual communities. Our topic-focused communities encourage our enthusiasts to create unique, highly engaging multimedia content. The content on our communities drives discovery and engagement. For example, when a beekeeper seeks out advice on colony collapse and discovers a thread with multiple in-depth posts on the topic, they are drawn into the community and begin to contribute. When more members engage, more hyper-specific content is created, which enables more discovery and engagement.

Proven, Accretive Acquisition Playbook

We have executed and integrated more than 200 community acquisitions since 2010. We have developed a systematic approach to acquisitions that enables us to monitor, assess and execute a high volume of transactions in the normal course of business. We are uniquely positioned to acquire communities at attractive prices and create significant value by onboarding forum communities onto our Fora platform. We monitor more than 75,000 communities, many of which are attractive acquisition targets. We have identified 20 opportunities in our near-term pipeline that we estimate could represent up to $18 million in trailing 12-month Adjusted EBITDA. In addition, we have identified more than 50 opportunities in our medium-term pipeline that we estimate could represent greater than $50 million of trailing 12-month Adjusted EBITDA. These larger funnel opportunities do not include the many smaller acquisition opportunities (typically with a purchase price less than $100,000) that become available to us each year.

The Fora Platform

We built the Fora platform in order to accelerate our innovation, enhance our user experience and support thousands of individual communities on a single, unified code base. The Fora platform has significantly improved the user experience of our communities which has resulted in accelerated user growth, increased engagement and improved monetization. Fora also provides significant advantages for forum community acquisitions. Fora has accelerated the speed with which we can onboard new communities. We believe that migrating newly acquired sites to the Fora platform will improve community civility, safety and moderation, and the growth and monetization of communities.

Robust Value Proposition for Advertisers and E-Commerce Merchants

Our communities are inherently commercial by design. We have purposely built and acquired communities focused on topics, categories and brands that generate substantial commercial activity. Consumers trust the expert opinions of our community members and use their rich, product-focused content to research purchases. For advertisers, we provide access to a scaled audience of in-market buyers in a trusted environment. Advertisers are able to precisely target niche audiences in the context of our focused communities and can leverage our first-party data to reach registered members elsewhere on our platform. Our advertisers track the performance of their advertising dollars and increase their spending with us due to our users’ propensity to buy their products.

In recent years, we have introduced commerce experiences that enable us to share in revenue generated from purchases that

our communities inspire and influence. For e-commerce partners, we provide brand exposure, validation from trusted experts and incremental revenue. We are continuing to develop and launch new commerce experiences that will enable us to capture more of the value generated by our communities.

Attractive Business Model Providing High Margin Cash Flows

Our Business Model

We own enthusiast communities across a broad range of topics – including woodworking, watches, audio gear, cars, treadmills, sailing, deals and hundreds of other topics. The common thread in most of our communities is the focus on commercial topics. The targeted nature of our communities means our users tend to be potential consumers coming to research purchases.

Members engage with other members of the community. They read reviews, learn about product categories, ask questions and compare products. This community input gives users buying confidence, as expert community members share their personal experience with products, accelerating the purchase funnel. Our topic-focused communities mean the advertisements our users see are highly relevant and targeted. Our proximity to purchases and advertisement context drive attractive CPMs.

Digital Advertising

Geared Content Studios, our in-house production studio, provides custom content and video solutions specializing in reaching enthusiasts and in-market shoppers.

Programmatic advertising includes monetization of Impressions that are not sold by the higher-priced direct sales channel through RTB. Programmatic advertising is driven by connections with the largest ad exchanges and supply-side platforms in North America. Programmatic advertising also includes revenue generated through our private marketplace and Programmatic Guaranteed advertising – an invitation-only auction for premium Impression sales with agreed upon price floors. Private marketplace and Programmatic Guaranteed advertising combine the relationship of direct advertising with the technology of RTB.

E-Commerce

Select Customer Case Study

A leading North American retailer with over 100 locations across the U.S. and Canada and a growing e-commerce business has been an active customer of ours since 2014. The customer’s advertising program is entirely performance driven with the main key performance indicator being the return on advertisement spend, a marketing metric that measures the revenue generated per every dollar spent in an advertising campaign, that is calculated as the total sales generated by the customer attributable to its digital advertising programs with us.

Our customer’s advertisements are distributed throughout our communities and are featured in highly-contextually relevant communities, including Contractor Talk, GM Full Size, My Tractor Forum, RAM Forumz, The Combine Forum, World Sea Fishing, Ohio Game Fishing, Mountain Buzz and Michigan-Sportsman. We leverage the customer’s first-party sales data that it shares with us to optimize campaign performance and to achieve its KPI goal.

Our Four-Pronged Approach to Profitability

Long-Tail, User-Generated Content

Engaged Moderators and Administrators

Organic Audience

In 2020, over 99% of our community users come from organic, unpaid sources. We believe our communities come highly recommended from avid enthusiasts and rank highly in search results due to the depth and specificity of our content libraries. Once users have engaged with our communities, they continue to come back because of the strength of the content and the overall user experience. As a result, we seldom pay to promote our communities, which allows us to minimize a typically significant component of the cost structure.

The Fora Platform

and our previous experience integrating communities have greatly accelerated our community integration timeline. Postmigration, the transition to a singular, modern code base makes site maintenance and updates a much faster and cheaper process. Fora greatly enhances our user experience, drives additional user engagement, increases community performance and organic traffic.

Growth Strategy

Grow our User Base and Increase Engagement on our Communities

We have made significant investments over the last two years to create a leading communities software platform in Fora to support our forum communities. Fora introduced a step-change improvement for our user experience. It improved our page load speed, created a modern user interface, reduced ad density, and optimized our format for mobile engagement. This has led to more users and increased engagement on the communities that have migrated to the new platform. As of the end of Q1 2021, approximately 88% of forum community MAU has migrated to the Fora platform and over 70% of such migrated community MAU have been on Fora for more than three months as of March 31, 2021. Our Fora platform delivered the following improvements in Q1 2021 as compared to the same quarter in 2020:

9% increase in MAU;
44% increase in new members;
59% increase in photos shared;
28% increase in ad viewability; and
30% in increase in overall ARPU.

We will continue to grow our user base and increase engagement by improving and enhancing the user experience, launching new communities, and investing in community civility, safety and moderation.

Expand our Commerce Capabilities

Acquire and Enhance Enthusiast Communities

Develop and Launch New Features and Products

Competition

In general, we compete for consumer attention with larger, more established companies such as Reddit, Facebook (including Instagram), YouTube, Snap and Twitter.

advertising and e-commerce.

Social Media

Our two principal social media competitors are Reddit and Facebook Groups. These competitors have broad reach and presence, but our communities offer dedicated spaces for hyper-specific content. In addition, our members use pseudonyms, whereas certain social media platforms like Facebook require IRL or “in real life” identities. Pseudonyms allow members to share freely without public scrutiny of their IRL identity and reduce political posturing, social pressure, noise and distraction.

Independent Communities

We also face competition from a number of smaller, independent communities. Most of these communities are maintained as a part-time effort by an enthusiast founder with limited resources. These communities typically started as part of their founder’s personal interests and may not have the technical and operational capabilities found in our communities. The founders of these communities often lack the operational savviness and relationships with advertisers to efficiently monetize their audiences. Our communities provide a better user experience and regular software updates, in addition to better moderation and quality control. As such, we do not view independent communities as a significant competitive threat.

Our Employees and Culture

We have an experienced and passionate management team led by our founder and Chief Executive Officer, Rob Laidlaw, with broad expertise in software development, digital media, e-commerce, online community management and acquisitions. Over the past four years, we have grown our software engineering and product development team from 27 individuals to 97 individuals as at March 31, 2021.

As of March 31, 2021, we employed 238 employees, of which 175 were based in Canada, 44 were based in the U.S., 16 were based in Estonia and 3 were based in the Cayman Islands. We also engage consultants and/or subcontractors as needed to support our operations. None of our employees are unionized or represented by a labor organization or are party to a collective bargaining agreement. We believe that the scale of our business and platform provide our team members with a unique opportunity to showcase their skills, and our culture of promoting work-life balance helps us attract a diversity of talent and provides a meaningful experience to all of our team members, all of which positively impacts our business performance.

==> picture [410 x 204] intentionally omitted <==

Our company culture is informed by a set of core values that influence how we operate the business but also guide our recruiting efforts by defining the characteristics that we believe make someone successful at VerticalScope. These core

values are:

CUSTOMER FOCUSED

Always make our customers (users, moderators and advertisers) our #1 priority Take responsibility to drive customer satisfaction Make decisions that serve our customers’ interests

PASSIONATE

Bring enthusiasm & excitement to your job every day Seek opportunities to improve skills & knowledge Use both heart & mind to drive results

ACTION ORIENTED

Get work done without over analyzing Demonstrate commitment to develop action items and execute them

TAKES OWNERSHIP

Take responsibility for success of projects, from beginning to end Be accountable for quality and completeness of work

Take action in support of company goals

TEAM PLAYER

Collaborate and communicate effectively with internal & external teams Encourage constructive debate/discussion Support the overall success of the group

INNOVATIVE

Solve problems & overcome challenges with creativity Bring new ideas to your role, department and VerticalScope that drive better business performance

RESOURCEFUL AND EFFICIENT

Manage VerticalScope resources as though they were your own Negotiate competitively and create efficient, self-sustaining, healthy relationships with suppliers & partners

As with the rest of the world, we have been impacted by the COVID-19 pandemic. Even before the COVID-19 pandemic, we embraced a “work from anywhere” model, striking a balance between in-office and remote work. This approach extends our reach beyond our physical office locations and provides a greater pool of talent from which to recruit. With the onset of COVID-19 in the first quarter of 2020, most of our workforce shifted to working entirely remotely without a significant impact on productivity. We recognize the social impacts of the COVID-19 pandemic on our team, and we are working to maintain our distinctive work environment and promote the well-being of our employees. In addition, we have implemented measures to prioritize the health and safety of our workforce, and believe we comply with applicable laws and regulations in respect of COVID-19.

Our Facilities and Locations

All of our premises are leased. We are headquartered in Toronto, Ontario and have offices in the U.S., Estonia and the Cayman Islands. We believe that our current facilities are adequate to meet our ongoing needs for the near and mid-term and that, if we require additional space, we will be able to obtain additional facilities on commercially reasonable terms. The following table outlines the facilities we currently lease.

Location Toronto, Canada Troy, U.S. Tallinn, Estonia Camana Bay, Cayman Islands	Area (in square feet) 27,961(1) 7,345 2,081 926	Lease Expiration Date July 31, 2025 October 31, 2021 December 15, 2022 February 8, 2023	Use
			Office Space Office Space Office Space Office Space

(1) This figure does not include a lease in respect of 5,510 square feet in the same building (expiring September 30, 2027) which we have subleased to a third party until September 29, 2027.

Our Intellectual Property

We rely on a combination of intellectual property laws, confidentiality procedures and contractual provisions to protect our communities, services and platform in Canada, the U.S., the Cayman Islands and other jurisdictions in which we conduct our business. We have registered, and have applied for the registration of, Canadian and U.S. trademarks, service marks, and domain names. Over time, we have assembled a portfolio of trademarks, service marks, domain names and trade secrets covering our communities, services and platform. We have been issued trademark registrations in Canada, including “AUTOFORUMS”, “AUTOFORUMS.COM”, “DOCTORS YOU CAN TRUST”, “GEARED CONTENT”, “RateMDs”, “Redflagdeals.com”, “Redflagdeals Where Canadians Save”, “TOPHOSTS”, “TrustScore” and “VERTICALSCOPE”, and we have a pending trademark registration in Canada for the trademark “FORA”. We have been issued service marks and trademark registrations in the U.S., including “ARCHERYTALK”, “AVS FORUM”, “BIMMERFEST”, “DOCTORS YOU CAN TRUST”, “HOBBYTALK”, “HYSTERSISTERS”, “KNITTING PARADISE”, “MOTHERING”, “PIRATE4X4.COM”, “RATEMDS”, “RATEMDS DOCTORS YOU CAN TRUST”, “THE TRUTH ABOUT CARS”, “TRUSTEDPROS”, “TTAC”, “VARAGESALE” and “VERTICALSCOPE”, and we have a pending trademark application in the U.S. for the trademark “FORA”.

Our intellectual property enables us to provide a leading platform for digital enthusiast communities and services. Any significant impairment of, or third-party claims against, our intellectual property rights could harm our business or our ability to compete. We are subject to risks related to our intellectual property. For more information, see “ Risk Factors ”.

Research and Development

Research and development expenses consist primarily of employee-related expenses, contractor and consultant fees and corporate overhead allocations for the design, development and management of our communities and platform. We continue to focus our research and development efforts on adding new features and solutions, and increasing the functionality and enhancing the ease of use of our communities and platform. In the past, these expenses have been reduced by Canadian federal Scientific Research and Experimental Development Program (“ SR&ED ”) tax credits. Once we are a public company, we will no longer be able to reduce our research and development expenses through refundable SR&ED credits, which will cause our research and development expenses to increase. While we expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our Fora platform, we expect our research and development expenses to decline as a percentage of total revenue.

Regulatory Environment and Industry Standards

We operate in a complex legal and regulatory environment and are subject to a number of federal, state, provincial and foreign laws and regulations that affect companies conducting business on the internet. Our business, and the communities, services and platform that we offer are subject to a variety of laws and regulations in Canada, the U.S., Europe, the Cayman Islands and other jurisdictions in which we operate. Failure to comply with the laws and regulations in the jurisdictions in which we operate may result in regulatory or other sanctions being imposed on us or our subsidiaries, and may result in constraints on our ability to continue to operate or to continue to grow our business. We are subject to risks relating to the regulatory environment in which we operate. For more information, see “ Risk Factors ”.

Privacy and Data Protection Laws and Regulations

We receive from, store and process for, our users and customers, certain data, including personal data. We also collect, use, store and disclose personal data belonging to our employees. As we expand our network of communities, users and customers, including in new jurisdictions, we may be subject to additional laws, directives and regulations, as well as contractual obligations, relating to the collection, use, retention, security, disclosure, transfer, destruction, de-identification and other processing of such personal data in the jurisdictions in which we operate or our users and customers reside. Additionally, some jurisdictions require us to use industry-standard or reasonable measures to safeguard personal or confidential information. Many of these laws also impose obligations to provide notification of security breaches to affected individuals, consumer reporting agencies, businesses or governmental agencies.

We are subject to Canada’s Personal Information Protection and Electronic Documents Act (“ PIPEDA ”), and the analogous provincial laws, which similarly impose data privacy and security obligations on our processing of personal data. In

December 2019, the federal government began drafting a new bill to reform PIPEDA providing expressly for the establishment of new rights related to privacy, such as personal data portability, the ability to remove, delete and erase personal data and the ability to withdraw consent to the exchange or sale of personal data. Bill C-11, also known as the Digital Charter Implementation Act, 2020 , would repeal parts of PIPEDA and replace them with a new legislative regime governing the collection, use, and disclosure of personal data for commercial activity in Canada. As the core of this regime, the Consumer Privacy Protection Act would be enacted to maintain, modernize, and extend existing rules and to impose new rules on private sector organizations for the protection of personal data. The Consumer Privacy Protection Act would also continue and enhance the role of the Privacy Commissioner of Canada in overseeing compliance with these measures by businesses. The Personal Information and Data Protection Tribunal Act would be enacted to create a tribunal to hear appeals of orders issued by the Privacy Commissioner of Canada and apply a new administrative monetary penalty regime created under the Consumer Privacy Protection Act . Provisions of PIPEDA governing electronic alternatives to paper records would be retained under the new title of the Electronic Documents Act . While Bill C-11 has been tabled, it is unclear when it is coming into force and is subject to further review and amendments.

We are also subject to Québec’s Act respecting the protection of personal information in the private sector (the “ Private Sector Act ”). On June 12, 2020, the Government of Québec tabled Bill 64, an Act to modernize legislative provisions as regards the protection of personal data (“ Bill 64 ”), which proposes major amendments to the Private Sector Act, notably, to impose new obligations on Québec businesses while significantly increasing the powers of its supervisory authority. Should Bill 64 pass, the Québec privacy regime for private companies would become more onerous, as new proposed penal provisions would introduce fines of either up to C$25,000,000 or 4% of worldwide turnover for the preceding fiscal year, whichever sum is greater.

Canada’s anti-spam legislation (“ CASL ”) is the federal law dealing with spam and other electronic threats. It is meant to protect Canadians while ensuring that businesses can continue to compete in the global marketplace. The Office of the Privacy Commissioner of Canada (“ OPC ”) shares responsibility for enforcing CASL with the Canadian Radio-television and Telecommunications Commission and the federal Competition Bureau. CASL applies to a commercial electronic message that is sent to an electronic address. There are three general requirements for sending a commercial electronic message to an electronic address: (i) obtain consent, (ii) provide identification information; and (iii) provide an unsubscribe mechanism. CASL also requires organizations to consider whether express or implied consent is applicable.

In the U.S., federal and various state government bodies and agencies have adopted or are considering adopting laws and regulations limiting or otherwise regarding the collection, processing, storing and security of personal data. For example, in June 2018, California passed the California Consumer Privacy Act (“ CCPA ”), which became effective on January 1, 2020 and imposes stringent data privacy and data protection requirements for the data of California residents. Enforcement of the CCPA by the California Attorney General began on July 1, 2020. Among other requirements, CCPA requires companies subject to such laws to provide new disclosures to California consumers and afford such consumers new data protection rights, including the ability to opt-out of certain sales of personal data. The CCPA also provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal data that may increase the likelihood of, and risks associated with, data breach litigation. The effects of the CCPA are potentially far-reaching and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

Furthermore, in the U.S., the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“ CANSPAM ”) applies to companies that send unsolicited commercial email. CAN-SPAM bans false or misleading header information and prohibits deceptive subject lines. It also requires that unsolicited commercial email be identified as advertising and provide recipients with a method for opting out of receiving any such email in the future. In addition, CANSPAM directs the Federal Trade Commission (“ FTC ”) to issue rules establishing the criteria for determining the primary purpose of a commercial email. Privacy laws inspired by the CCPA have also been introduced in a number of other U.S. states. For example, the California Privacy Rights Act is a state-wide data privacy bill passed into law in the General Election 2020, which takes effect on January 1, 2023 and becomes fully enforceable on July 1, 2023 – with a lookback period from January 1, 2022. Other states, including Nevada, Virginia, Florida, New Hampshire, Washington State, and Illinois also released their respective takes on what residents’ bolstered privacy rights and businesses’ corresponding obligations should look like.

The European Parliament and the Council of the European Union in 2016 adopted the European Union’s General Data Protection Regulations (“ GDPR ”), which came into effect in May 2018, superseding the European Union Data Protection Directive, and imposing more stringent data privacy and data protection requirements. The GDPR authorizes fines for certain

violations of up to 4% of global annual revenue or €20 million, whichever is greater. Further, while the U.K. enacted the Data Protection Act 2018 (“ DPA ”) in May 2018 which supplements the GDPR and has publicly announced that it will continue to regulate the protection of personal data in the same way post-Brexit. For example, the European Union and the U.K. notably reached a Trade and Cooperation Agreement (“ TCA ”) on December 24, 2020. In respect of personal data protection, this TCA provides for a temporary period during which transfers made to the U.K. will not be considered as transfers within the meaning of the laws of the European Union, insofar as the DPA as amended in 2019 applies. During that temporary period, certain designated powers referred to in the DPA and GDPR can only be exercised by the U.K. with the consent of the European Union. The temporary period will begin on the date of entry into force of the TCA. It should end in either (i) four months, extendable by two additional months (unless one of the parties object); or (ii) the date on which the U.K. is granted an adequacy decision by the European Commission, whichever is the earlier. We also note the potential coming into force of the Regulation on Privacy and Electronic Communications (“ ePR ”) which will replace the current ePrivacy Directive 2002/58/EC and which will regulate the use of electronic marketing and tracking technologies and may have an impact on our operations.

The regulatory framework in Canada, the U.S. and Europe, and in many other jurisdictions, in respect of cybersecurity and the protection of data and privacy is constantly evolving and is likely to remain uncertain for the foreseeable future. Certain aspects of the interpretation and application of such laws and regulations are also ambiguous. We are subject to risks relating to protection of personal data and privacy. For more information, see “ Risk Factors ”.

Unfair or Deceptive Acts or Practices

We and our partners are subject to U.S. and Canadian federal, state and provincial laws prohibiting unfair or deceptive trade practices enforced by various regulatory agencies, including, in the U.S., the FTC and U.S. state attorneys general, in Canada, the Competition Bureau, and in Europe, the European Commission. These agencies and regulators may take actions that affect the activities of certain of our customers, and in some cases may subject us to investigations or enforcement actions if we are deemed to have aided and abetted or otherwise facilitated illegal or improper activities.

USE OF PROCEEDS

Proceeds from the Offering

The net proceeds of the Offering, after deducting the Underwriters’ Fee of C$  payable by the Company and the estimated expenses of the Offering of approximately C$  , are estimated to be approximately C$  . If the Over-Allotment Option is exercised in full, the total aggregate net proceeds of the Offering are estimated to be approximately C$  , after deducting the Underwriters’ Fee and the estimated expenses of the Offering.

We intend to use all of the net proceeds of the Offering to pursue our current pipeline of acquisition opportunities. See “ Our Business – Our Acquisition Strategy – Current Acquisition Pipeline ”. If the Over-Allotment is exercised in full, we intend to use the net proceeds of the Over-Allotment Option as additional cash to invest in our other growth strategies, including continued investment in our Fora platform, products and services, and growing our audience and user and customer base, as well as for general working capital purposes.

We will have broad discretion in allocating the net proceeds from the Offering. While we currently anticipate that we will use the net proceeds from the Offering as outlined above, the actual use of the net proceeds may vary depending on the circumstances, including market conditions. For example, depending on market conditions for interest rates following Closing and depending upon the amount of proceeds received in the Offering, we may decide to temporarily reduce in whole or in part the amount of debt outstanding under the Credit Facilities, hold the proceeds in cash or cash equivalents for use in relation to working capital requirements or strategic growth opportunities as they present themselves, or we may decide to reduce our interest payments under the Credit Facilities by using net proceeds from the Offering to accelerate our debt repayments under the Credit Facilities and re-draw on the Credit Facilities, to fund in whole or in part acquisition opportunities as they present themselves. Pending use of the net proceeds from the Offering, we may also invest the net proceeds from the Offering in short-term, investment grade, interest bearing instruments or hold them as cash. See “ Risk Factors ”.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Our historical results are not necessarily indicative of the results that should be expected in any future period. All amounts are in thousands of U.S. dollars except where otherwise indicated. Prospective investors should review this information in conjunction with the audited and unaudited consolidated financial statements, including the notes thereto, the MD&A, as well as “ General ”, “ IFRS and Non-IFRS Measures ”, “ Consolidated Capitalization ”, “ Description of Material Indebtedness ” and “ Description of Share Capital ” included elsewhere in this prospectus.

Selected Information from Consolidated Statement of Income (Loss) and Comprehensive Income (Loss)

	Three months ended March 31	Three months ended March 31	Year	ended December 31	ended December 31
(in thousands of U.S. dollars except per share data)	2021	2020	2020	2019	2018
Revenue	15,918	11,265	56,923	58,455	68,348
Operating expenses	13,455	13,784	53,340	54,739	78,136
Operating income (loss)	2,463	(2,519)	3,583	3,715	(9,788)
Other expenses (income)	1,143	1,793	4,973	8,354	8,476
Income tax expense (recovery)	465	(1,310)	117	(2,905)	(4,165)
Net income (loss) and comprehensive income	854	(3,002)	(1,506)	(1,733)	(14,099)
(loss)
Net income (loss) per share - basic ($)	0.06	(0.22)	(0.11)	(0.12)	(1.01)
Net income (loss) per share - diluted ($)	0.06	(0.22)	(0.11)	(0.12)	(1.01)

Selected Information from Consolidated Balance Sheet

	As at March	As	at December	31
(in thousands of U.S. dollars)	31, 2021	2020	2019	2018
Cash	5,466	4,604	5,113	16,070
Other current assets	11,249	15,552	13,203	13,537
Non-current assets	64,372	67,528	83,680	97,124
Total assets	81,087	87,684	101,996	126,732
Current liabilities(1)	14,058	14,291	18,222	15,977
Long-term debt	85,037	93,142	103,024	128,364
Other non-current liabilities	3,217	2,795	3,751	4,823
Total liabilities	102,312	110,228	124,996	149,164
Shareholders’ deficiency	(21,225)	(22,545)	(23,000)	(22,432)

(1) Includes current portion of long-term debt ($7,833, $8,323, $8,459 and $3,651 as at Q1 2021, FY 2020, FY 2019 and FY 2018).

Reconciliation of Adjusted EBITDA and Free Cash Flow to Net Income (Loss)

Measures”.
	Three months ended March 31		Year	ended December 31
(in thousands of U.S. dollars except percentages)	2021	2020	2020	2019	2018
Net income (loss)	854	(3,002)	(1,506)	(1,733)	(14,099)
Interest expense	1,094	2,217	5,634	8,194	8,638
Income tax expense (recovery)	465	(1,310)	117	(2,905)	(4,165)
Depreciation and amortization	4,583	5,228	20,190	21,810	37,611
EBITDA	6,996	3,133	24,435	25,366	27,985
Share-based compensation	466	222	1,962	1,165	2,011
Unrealized loss (gain) from changes in	54	202	(81)	(252)	534
derivative instruments
Severance(1)	105	1	777	329	1,262
Adjustment to contingent consideration	-	-	-	(1,564)	1,146
Loss (gain) on sale of assets	-	(192)	(359)	(13)	-
Loss (gain) on sale of investments	-	-	(530)	-	-
Foreign exchange loss (gain)	50	(231)	227	172	(163)
Other charges(2)	4	11	164	208	1,971
Adjusted EBITDA(3)	7,673	3,145	26,595	25,412	34,747
Adjusted EBITDA Margin(4)	48.2%	27.9%	46.7%	43.5%	50.8%
Less capital expenditures	(1,236)	(1,429)	(4,496)	(5,344)	(860)
Income taxes (paid) recovered	49	(102)	(392)	(1,042)	(2,180)
Free Cash Flow(5)	6,486	1,614	21,707	19,027	31,707

(1) Severance is included in wages and consulting on the consolidated statements of income (loss) and comprehensive (loss).

(2) Other charges are included in wages and consulting and general and administrative on the consolidated statements of income (loss) and comprehensive (loss).

(3) Adjusted EBITDA is a non-IFRS measure. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ”, “ General Matters ” and “ IFRS and Non-IFRS Measures ”.

(4) Adjusted EBITDA Margin is a non-IFRS measure and measures Adjusted EBITDA as a percentage of revenue. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ”, “ General Matters ” and “ IFRS and Non-IFRS Measures ”.

(5) Free Cash Flow is a non-IFRS measure. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – ” Cautionary Note Regarding Non-IFRS Measures ”, “ General Matters ” and “ IFRS and Non-IFRS Measures .

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This MD&A for FY 2020, FY 2019 and FY 2018, and Q1 2021 and Q1 2020 should be read in conjunction with our audited annual consolidated financial statements and unaudited condensed interim consolidated financial statements, along with the related notes thereto, for those periods included elsewhere in this prospectus. This MD&A is presented as of the date of this prospectus and is current to that date unless otherwise stated. The financial information presented in this MD&A is derived from our audited annual consolidated financial statements for FY 2020, FY 2019 and FY 2018, and the unaudited condensed interim consolidated financial statements for Q1 2021 and Q1 2020, all of which have been prepared in accordance with IFRS, as issued by the IASB. All dollar amounts are expressed in thousands of U.S. dollars except per share figures, per user figures and where otherwise indicated. Numbers may not add due to rounding.

Caution Regarding Forward-Looking Information

This MD&A contains forward-looking statements. The forward-looking statements and other forward-looking information are provided as of the date of this MD&A and are based on management’s opinions, estimates and assumptions in light of its experience and perception of historical trends, current trends, current conditions and expected future developments, as well as other factors that management believes are appropriate and reasonable in the circumstances. We do not undertake to update any such forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Actual results may differ materially from those indicated or underlying forward looking statements as a result of various factors, including those described below under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Instruments and Other Instruments ” and contained elsewhere in this prospectus. Accordingly, prospective investors should not place undue reliance on forwardlooking information. See “ Forward-Looking Information ”.

We caution that the list of risk factors and uncertainties is not exhaustive, and other factors could also adversely affect our results. Many factors, including factors that are beyond our control, may have a detrimental impact on our operating performance. See “ Risk Factors ” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Cautionary Note Regarding Non-IFRS Measures

This MD&A makes reference to certain non-IFRS measures, operating metrics and KPIs. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. 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. Such non-IFRS measures are operating metrics used in our industry. We also include these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance and that such measures highlight trends in our financial performance that may not otherwise be apparent when one relies solely on IFRS measures. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, to confirm compliance with covenants under the Credit Agreement and to determine components of management compensation. Non-IFRS measures should not be considered in isolation, nor as a substitute for analysis of the financial information reported under IFRS including revenue, net income, cash flows generated by operating, investing or financing activities, or other financial statement data presented in accordance with IFRS, and may not be comparable to similarly titled measures used by other companies.

In addition to the KPIs, the non-IFRS measures presented in the MD&A are as follows with reconciliations to their nearest IFRS measures provided below:

charges that include direct and incremental business acquisition related costs and costs directly incurred in connection with the Offering that are not deducted from the equity proceeds.

“ Adjusted EBITDA Margin ” measures Adjusted EBITDA as a percentage of revenue.

“ Free Cash Flow ” means Adjusted EBITDA less capital expenditures and income taxes paid during the period.

The following table sets forth a reconciliation of Adjusted EBITDA and Free Cash Flow to net income (loss):

(in thousands of US dollars)	Q1 2021	Q1 2020	2020	2019	2018
Net income (loss)	854	(3,002)	(1,506)	(1,733)	(14,099)
Interest expense	1,094	2,217	5,634	8,194	8,638
Income tax expense (recovery)	465	(1,310)	117	(2,905)	(4,165)
Depreciation and amortization	4,583	5,228	20,190	21,810	37,611
EBITDA	6,996	3,133	24,435	25,366	27,985
Share-based compensation	466	222	1,962	1,165	2,011
Unrealized loss (gain) from changes in	54	202	(81)	(252)	534
derivative instruments
Severance(1)	105	1	777	329	1,262
Adjustment to contingent consideration	-	-	-	(1,564)	1,146
Loss (gain) on sale of assets	-	(192)	(359)	(13)	-
Loss (gain) on sale of investments	-	-	(530)	-	-
Foreign exchange loss (gain)	50	(231)	227	172	(163)
Other charges(2)	4	11	164	208	1,971
Adjusted EBITDA	7,673	3,145	26,595	25,412	34,747
Less capital expenditures	(1,236)	(1,429)	(4,496)	(5,344)	(860)
Cash Taxes	49	(102)	(392)	(1,042)	(2,180)
Free Cash Flow	6,486	1,614	21,707	19,027	31,707

(1) Severance is included in wages and consulting on the consolidated statements of income (loss) and comprehensive (loss).

(2) Other charges are included in wages and consulting and general and administrative on the consolidated statements of income (loss) and comprehensive (loss).

OVERVIEW

Business Overview

VerticalScope Holdings Inc. was incorporated on November 19, 2012 under the OBCA. VerticalScope Inc., a subsidiary of VerticalScope HoldCo., was most recently formed by the amalgamation of VerticalScope Inc. (incorporated on July 5, 1999) and TrustedPros Inc. on January 1, 2019 under the OBCA.

We are a technology company that has built and operates a cloud-based digital enthusiast community platform serving over 100 million MAU and 55 million registered community members across over one thousand and two hundred online communities as at March 31, 2021. We focus on hyper-specific subjects that engender strong affinity from online communities of enthusiasts, super fans, experts, pros, hobbyists and armchair analysts. Our brands include dedicated communities for watch geeks, audio nerds, motorheads, fitness-obsessed, mountain bikers, DIYers, deal junkies and enthusiasts of hundreds of additional topics. We maintain separate brands for each of our communities.

We have built our business through a combination of acquisitions and organic initiatives. We believe that adding communities to our platform through asset-focused acquisitions is an efficient use of capital as it allows us to grow the number of MAU we reach while providing acquired communities with improved technology, user experience and monetization capabilities. We have made over two hundred acquisitions in our history and we believe that acquisitions will

be an important driver of our future growth.

See “ Our Business – Our Journey ”.

Our Business Model

We have one reporting segment and two main sources of revenue: digital advertising and e-commerce. The digital advertising stream includes revenue generated from (i) direct advertising campaigns, (ii) custom content solutions, and (iii) programmatic advertising. The e-commerce revenue stream includes revenue generated from (i) commissions, (ii) referral payments, and (iii) subscriptions.

Digital Advertising

In 2020, we served over 400 direct advertisers in the U.S. and Canada. Our current customers include Cabela’s, Canadian Tire, Chevrolet, Sony, and Yamaha, together with other OEMs, retailers and insurance providers. Our direct advertising efforts focus mainly on larger brands seeking to reach a national base of consumers.
Geared Content Studios, our in-house production studio, provides custom content and video solutions specializing in reaching enthusiasts and in-market shoppers.
Programmatic advertising includes the monetization of Impressions that are not sold by the higher-priced direct sales channel through RTB. Programmatic advertising is driven by connections with the largest ad exchanges and supply-side platforms in North America. Programmatic advertising also includes revenue generated through our private marketplace and Programmatic Guaranteed advertising – an invitation-only auction for premium Impression sales with agreed upon price floors. Private marketplace and Programmatic Guaranteed advertising combine the relationship of direct advertising with the technology of RTB.

E-commerce

We receive a commission from sales attributable to traffic we send to partners, with rates of up to 15% of transaction value. Sales are influenced by product reviews from our network of staff and freelance writers and by broader community discussion, which includes user-generated product links posted in our communities. Commissions are generated from over 70 partners and networks on our communities including Amazon, Best Buy, eBay and Sole Fitness.
For certain e-commerce partners, we also generate referral payments for traffic directed from our communities, even if no transaction is completed.
Subscription-related e-commerce revenue is generated from three sources: (i) a native commerce product that enables merchants to maintain a presence on our communities and engage in commercial conversations with our users, (ii) a business directory product that connects consumers with service providers, and (iii) paid user memberships which accounts for an immaterial portion of our current e-commerce revenue.

See “ Our Business ”.

KPIs

We monitor the following KPIs to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our KPIs may be calculated in a manner that differs from similar KPIs used by other companies.

Monthly Active Users (MAU)

Monthly active users is defined as the number of individuals who have visited our communities within a calendar month, based on data as measured by Google Analytics. It is calculated as the sum of the monthly users of each of our communities.

To calculate average MAU in a given period, we sum the total MAU for each month in that period, divided by the number of months in that period. We view our MAU as a key indicator of the attractiveness of our platforms and their content, and the quality of our user experience. Measuring MAU is important to us and we believe it provides useful information to our investors because our digital advertising and e-commerce revenue streams depend, in part, on our ability to provide customers and partners with connections to our users.

Average Revenue Per Monthly Active User (ARPU)

ARPU is defined as our average revenue over a given period divided by the average MAU over the same period. Similarly, each of our revenue streams can be used as the numerator in this measure to determine the ARPU for each revenue stream. We believe that measuring ARPU is reflective of how we are monetizing the users across our communities.

The following table sets forth a summary of the monthly average of our MAU and ARPU for the periods presented:

YTD 2021 Q42021	Q32021 Q22021 Q1 2021
MAU (000) 100,732 -	- - 100,732
ARPU ($) 0.053 -	- - 0.053

FY 2020 Q4 2020	Q3 2020 Q2 2020 Q1 2020
MAU (000) 89,953 89,655	86,468 90,919 92,769
ARPU ($) 0.053 0.075	0.051 0.044 0.040

FY 2019 Q42019	Q32019 Q22019 Q12019
MAU (000) 95,747 91,432	96,430 93,584 101,543
ARPU ($) 0.051 0.060	0.047 0.051 0.046

FY 2018 Q42018	Q32018 Q22018 Q12018
MAU (000) 105,889 101,088	106,190 110,473 105,804
ARPU ($) 0.054 0.062	0.052 0.052 0.049

MAU in FY 2020 was impacted by a number of factors throughout the year, including the onset of the COVID-19 pandemic and the events surrounding the U.S. election, each of which resulted in lower MAU on certain of our communities as people temporarily spent more time on general news sites. Similarly, digital advertising ARPU in FY 2020 was negatively impacted primarily as a result of adverse impacts to advertiser budgets resulting from COVID-19 and the short-term impact of the migration of our forum communities to the Fora platform, which included intentionally reducing our digital advertising revenue by removing ads that detracted from our user experience and slowed down our page load speeds. As 2020 progressed and the number of forum communities transitioned to the Fora platform increased, we began to see the long-term benefits of the new platform on MAU and ARPU growth, and that momentum continued into Q1 2021.

MAU in FY 2019 was adversely impacted primarily as a result of a decline in search ranking results for communities on our multiple legacy software platforms. In addition, digital advertising ARPU was negatively impacted primarily as a result of the short-term impact of the migration of our forum communities to the Fora platform, which included intentionally reducing our digital advertising revenue by removing ads that detracted from our user experience and slowed down our page load speeds.

See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ”.

Impact of COVID-19 on our Operations

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. In response, many

governments implemented preventive or protective measures such as temporary closures of businesses, quarantines or shelter-in-place orders. The resulting commercial disruption had a negative impact on our direct and programmatic advertising revenue throughout 2020, and this impact has continued in respect of certain of our digital advertising customers in 2021. Due to the economic hardships presented by the COVID-19 pandemic, we received benefits from the CEWS and the CARES Act for a Paycheck Protection Program loan (the “ PPP Loan ”), and right-sized our workforce in Canada. In contrast, our revenue from e-commerce activities realized significant growth in 2020 and in the first quarter of 2021, which growth was accelerated by the lockdown measures imposed by governments in the U.S. and Canada as consumer behaviour accelerated towards making online purchases.

As we had embraced a “work from anywhere” model prior to the onset of the COVID-19 pandemic, striking a balance between in-office and remote work, most of our workforce was able to shift to working entirely remotely without a significant impact on productivity. This approach extends our reach beyond our physical office locations and provides a greater pool of talent from which to recruit. We recognize the social impacts of the COVID-19 pandemic on our team, and we are working to maintain our distinctive work environment and promote the well-being of our employees. In addition, we have implemented measures to prioritize the health and safety of our workforce, and we believe we comply with applicable laws and regulations in respect of COVID-19.

We are continuing to monitor the impact of COVID-19 on our business, financial condition and operations. Any future impact of COVID-19 on our operational and financial performance will depend on certain developments, including, but not limited to, the duration and spread of the outbreak, duration of local, state and federal issued public health orders, impact on our customers and our sales cycles, impact on our employees, and impact on regional and worldwide economies and financial markets in general, all of which are uncertain and cannot be predicted.

See “ Our Business – Our Employees and Culture ” and “ Risk Factors ”.

Consolidated Highlights

Financial Highlights for Q1 2021

Revenue was $15,918, an increase of $4,654, or 41%, compared to Q1 2020.
Adjusted EBITDA was $7,673, an increase of $4,528, or 144%, compared to Q1 2020.
Adjusted EBITDA Margin was 48%, an increase of 20% compared to Q1 2020.
Net income (loss) was $854, an increase of $3,856, compared to Q1 2020.
Free Cash Flow was $6,486, an increase of $4,872, or 302% compared to Q1 2020.

Notable Events for Q1 2021

We had strong momentum across our communities, with a 44% increase in newly registered members during Q1 2021 as compared to Q1 2020.
We continued the migration of our forum communities to the Fora platform. As at March 31, 2021, 88% of forum community MAU were migrated to the Fora platform.

Financial Highlights for FY 2020

Revenue for FY 2020 was $56,923, a decrease of $1,531, or 3%, compared to FY 2019.
Adjusted EBITDA for FY 2020 was $26,595, an increase of $1,183, or 5%, compared to FY 2019.
Adjusted EBITDA Margin was 47%, an increase of 3% compared to FY 2019.
Net loss for FY 2020 was $1,506, a decrease of $227 compared to FY 2019.

Free Cash Flow was $21,707, an increase of $2,681, or 14%, compared to FY 2019.

Notable Events for FY 2020

We continued the migration of our forum communities to the Fora platform. As at December 31, 2020, 82% of forum communities were migrated to the Fora platform.

The Fora Software Platform

In 2018, search engines began increasing their focus on page load speed and modern user experiences in determining the order in which search results were shown. Our multiple legacy software platforms made it extremely challenging to quickly respond to those changes. As a result, our search ranking declined meaningfully, resulting in fewer new users, lower MAU and lower revenue. To enable better infrastructure management and enhance performance and user experience, we began building the Fora platform. Our initial deployment of Fora was completed in early 2019 and we started migrating our forum of communities in batches to the Fora platform in May 2019. We intentionally reduced our digital advertising revenue by removing ads that detracted from our user experience and slowed down our page load speeds. We also temporarily paused our acquisition activity in order to focus our resources on building a software platform that would make future acquisitions more accretive.

The Fora platform has had a positive impact on our business and accelerated our growth. Since the Fora platform was launched in May 2019, we have seen an increase in users, members, engagement and monetization. In Q1 2021, new members increased approximately 44% and new posting members increased approximately 42% over Q1 2020. In terms of engagement, the number of total posts increased approximately 11% and the number of images posted increased approximately 59% in Q1 2021 compared to Q1 2020. With regard to monetization, ARPU increased approximately 30% and ad viewability increased approximately 26% in Q1 2021 compared to Q1 2020.

See “ Our Business – The Fora Software Platform ”.

Factors Affecting our Performance

We believe that the growth and future success of our business depends on many factors, some of which are discussed below. See also “ Risk Factors ”.

Attractiveness of our Communities to Users and Search Engines

Our success in generating digital advertising and e-commerce revenue is dependent on the volume and quality of the users engaging with our communities. Our business model is focused on the growth of our user base, and our financial performance will be significantly affected by our success in adding, retaining, and engaging active users of our communities, services and platform.

Our ability to maintain and grow the number of users, along with improvements to user engagement (e.g., more posts, higher quality content, increased time on site), will increase the appeal of our communities to advertisers and e-commerce partners, and help to drive greater digital advertising and e-commerce revenue. The majority of our MAU are sourced, organically, from online search engines such as Google and Bing. Our ability to deliver modern user experiences, generate high quality content, and deliver modern infrastructure and pages that load quickly are keys to maintaining our visibility in search results. This has a direct impact on our ability to grow MAU, and therefore our ability to monetize and grow revenue.

Additionally, access to multiple, third-party advertising networks ensures access to advertisers at competitive rates.

Ability to Integrate Acquisitions

We have acquired and effectively integrated over two hundred online communities. These acquisitions are typically immaterial when considered individually having regard to the overall size and value of our current business and operations. We apply a proven and repeatable process to expedite the transactional timeline, minimize cost and generate significant incremental value. Post-acquisition, we transition acquired forum communities to our Fora platform, which offers an

improved user experience, driving added and improved engagement, leading to higher monetization. Our ability to identify and complete acquisitions under acceptable terms, to successfully integrate the acquired communities with our existing communities, services and platform, and to realize the anticipated benefits therefrom, may impact our future growth and success.

Investment in our Fora Platform

We plan to continue to invest in research and development as we continue to add new features and solutions, and enhance the ease of use and functionality of our communities and platform. Research and development expenses consist primarily of employee-related expenses, contractor and consultant fees and corporate overhead allocations for the design, development and management of our communities and platform. Such investments could reduce our short-term operating results and may not produce the long-term benefits that we expect.

Growth in Monetization

Monetization trends, which are reflected in ARPU, are a key factor that affect our revenue and financial results. We believe we have significant monetization opportunities ahead. We are focused on serving more advertisers, continuing to improve the advertising products we offer and providing additional e-commerce experiences in our communities.

There are many variables that impact digital advertising ARPU, including Impressions on our platform and the price we are able to charge per Impression. Our pricing per Impression depends on a number of factors including the engagement of our audience, the number of advertisers, the amount of advertising spend, an advertiser’s objectives, the performance and effectiveness of our advertising products, as well as the effect of geographic and community subject matter on each of these factors.

There are many variables that impact e-commerce ARPU, including the volume and relevance of our content, broader market demand for products discussed, availability of commerce relationships with vendors and retailers, the gross merchandise value of the goods purchased and our percentage share of that revenue.

Macroeconomic Factors and General Trends

Macroeconomic and industry conditions have an impact on the demand for advertising and consumer purchasing behaviour, which can impact digital advertising revenue. These conditions also impact the willingness of our users to make purchases, which can impact e-commerce revenue and ad performance. In uncertain times or during an economic downturn, such as during the COVID-19 pandemic, there is generally an adverse impact on consumer spending and advertising budgets. Conversely, in periods of economic growth, there is generally increased consumer and advertising spending.

Aside from macroeconomic conditions, the broad shift from in-person to e-commerce retail and sales is a trend we believe will continue to benefit our growth and success as brands and advertisers look to generate both awareness and sales via our communities, and we continue to benefit from e-commerce.

Foreign Currency

The majority of our revenue is in U.S. dollars, whereas our wages and consulting expenses are primarily in Canadian dollars. From time to time, we enter into forward contracts to reduce our exposure to foreign currency risk and provide more certainty with cash flows. Otherwise, our results of operations may be adversely impacted by a decrease in the value of the U.S. dollar relative to the Canadian dollar.

Seasonality

Our platform can see changes in traffic, specifically over quarterly periods, as a result of expected changes, such as regular seasonal patterns.

Digital advertising expenditures by customers and e-commerce spending tends to be impacted by seasonality and as a result, our quarterly digital advertising revenue and e-commerce revenue are also impacted by seasonality. Typically, advertising

budgets are set annually and digital advertising revenue is lowest in the first quarter, and peaks in the fourth quarter as advertisers and agencies look to utilize their budgets in full and consumer spending increases during the holiday season. E- commerce revenue faces similar seasonality.

As a result, we believe the best indicator for performance is year-over-year comparisons.

Key Components of Results of Operations

Revenue

We generate revenue through digital advertising and e-commerce transactions with the majority of our revenue being generated from digital advertising.

Digital Advertising

Our digital advertising revenue comprises direct advertising, custom content solutions and programmatic advertising. Our success in generating digital advertising revenue is dependent on the volume and quality of the users engaging with our communities and the volume of Impressions generated in those communities. We engage a direct sales force to secure advertising contracts from major brands and agencies (including OEMs, retailers and insurance providers). Our ability to generate revenue from our direct sales channel is dependent upon the success of our sales team in managing the relationships with our customers and demonstrating the value of our communities. We rely on customers to purchase Impressions from our communities for future revenue. Our contracts with customers generally do not include long-term obligations.

Geared Content Studios, our in-house production studio, provides custom content and video solutions specializing in reaching enthusiasts and in-market shoppers.

Programmatic advertising includes monetization of Impressions that are not sold by the higher-priced direct sales channel through RTB. Programmatic advertising revenue is determined by Impression volumes generated in our communities and the price we are able to charge per Impression. Programmatic advertising revenue is driven by our relationship with the largest ad exchanges and supply-side platforms, which ensures access to advertisers at competitive rates. Programmatic advertising also includes revenue generated through our private marketplace and Programmatic Guaranteed advertising.

Data regarding our users generally improves how ads on our communities can be monetized. If data regarding these users decrease, revenue may therefore be adversely impacted. In addition, revenue is also dependent on the successful placement of ads on our communities to achieve optimal viewability in order to engage our users effectively.

E-Commerce

E-commerce revenue is primarily driven by the monetization of our content through arrangements in respect of commissions and referral payments with e-commerce merchants, brands and marketplaces. We earn revenue from e-commerce transactions that our communities influence, for example through product reviews on our communities. We rely on our internal business development team to secure partnerships with brands and retailers and negotiate competitive rates for commissions and referral payments. Sales are influenced by product reviews from our network of staff and freelance writers and by broader community discussion, which includes user-generated product links posted in our communities. Accordingly, it is important that such content is relevant and trustworthy in order to drive user consumption and engagement. For certain e-commerce partners, we also generate referral payments for traffic directed from our communities, even if no transaction is completed.

If users decrease along with content they produce, revenue may be adversely impacted. Similarly, if we fail to produce or drive relevant content that can be monetized, e-commerce revenue may be adversely impacted. Also, changes to agreements in respect of commissions and referral payments may also impact e-commerce revenue.

Operating Expenses

Our operating expenses include wages and consulting expenses, share-based compensation, platform and technology

expenses, general and administrative expenses, depreciation and amortization and adjustment to contingent consideration.

Our largest operating expense is wages and consulting expenses. Our ability to attract and retain the type of talent we feel is necessary to achieve our growth strategy is significant to the future success of our business. Furthermore, our continued focus as a technology company requires that we attract this talent specifically within software, engineering and development capacities and, therefore, wages and consulting expenses may increase in the coming years. Platform and technology costs primarily consist of costs related to our cloud hosting infrastructure, cyber security, programmatic and e-commerce platform fees and other licensed software used in our operations. Adjustment to contingent consideration primarily consists of changes in the fair value of earn-out obligations in connection with previously completed acquisitions.

SELECTED ANNUAL FINANCIAL INFORMATION

The following table summarizes our consolidated results of operations for the periods presented. The information should be read together with the financial statements included in this prospectus. The selected consolidated information set out below for FY 2020, FY 2019 and FY 2018 has been derived from our audited financial statements included in this prospectus, which were prepared in accordance with IFRS. Historical financials and operating information may not be indicative of future performance.

	Year ended December	Year ended December
(in thousands of U.S. dollars except per share data and percentages)	2020	2019	2018
Revenue	56,923	58,455	68,348
Operating expenses	53,340	54,739	78,136
Net income (loss)	(1,506)	(1,733)	(14,099)
Adjusted EBITDA	26,595	25,412	34,747
Adjusted EBITDA Margin (%)	46.7	43.5	50.8
Net income (loss) per share - basic ($)	(0.11)	(0.12)	(1.01)
Net income(loss) per share - diluted($)	(0.11)	(0.12)	(1.01)
Total assets	87,684	101,996	126,732
Total liabilities	110,228	124,996	149,164

See “ Discussion of Operations ” for a more detailed discussion of revenue, operating expenses and net income.

Total Assets

Total assets for FY 2020, FY 2019 and FY 2018 were $87,684, $101,996 and $126,732, respectively.

The decrease in total assets for FY 2020 was primarily attributable to a decline in intangible assets. We largely paused acquisition activity since 2018 and existing intangible assets have been amortizing. This decrease has been partially offset by an increase in our investment in internally-generated intangible assets related to the development of the Fora platform, and an increase in trade and other receivables in Q4 2020 in comparison to the prior year.

The decrease in total assets for FY 2019 was primarily attributable to a decrease in intangible assets. As indicated above, we largely paused acquisition activity since 2018 and existing intangible assets acquired in these acquisitions have been amortizing. Total assets also decreased due to a reduction in cash as we made voluntary payments against our Credit Facilities in 2019. The decrease was partially offset by an increase in our investment in intangibles tied to the development of the Fora platform.

Total Liabilities

Total liabilities for FY 2020, FY 2019 and FY 2018 were $110,228, $124,996 and $149,164, respectively.

The decrease in total liabilities for FY 2020 was primarily attributable to scheduled and voluntary payments we made

against our Credit Facilities and a reduction in our accounts payables and interest payments payable under the Credit Facilities.

The decrease in total liabilities for FY 2019 was primarily attributable to scheduled and voluntary payments we made against our Credit Facilities and a reduction in accounts payable and accrued liabilities to the expiration of an acquisitionrelated earn-out target that was not achieved.

DISCUSSION OF OPERATIONS

Results of Operations

The following table outlines our summary consolidated results of operations and certain other items for the periods presented:

	Three months ended 31	March	Year	ended December	31
(in thousands of U.S. dollars except per share data)	2021	2020	2020	2019	2018
Revenue	15,918	11,265	56,923	58,455	68,348
Operating expenses:
Wages and consulting	6,020	5,818	21,465	22,923	25,356
Share-based compensation	466	222	1,962	1,165	2,011
Platform and technology	1,643	1,519	6,366	5,613	5,268
General and administrative	744	996	3,356	4,792	6,744
Depreciation and amortization	4,583	5,228	20,190	21,810	37,611
Adjustment to contingent consideration	-	-	-	(1,564)	1,146
	13,455	13,784	53,340	54,739	78,136
Operating income	2,463	(2,519)	3,583	3,715	(9,788)
Other expenses:
Gain on sale of assets	-	(192)	(359)	(13)	-
Interest expense	1,094	2,217	5,634	8,194	8,638
Gain on sale of investments	-	-	(530)	-	-
Foreign exchange loss (gain)	50	(231)	227	172	(163)
	1,143	1,793	4,973	8,354	8,476
Income tax expense (recovery)	465	(1,310)	117	(2,905)	(4,165)
Net income (loss)	854	(3,002)	(1,506)	(1,733)	(14,099)
Net income (loss) per share - basic ($)	0.06	(0.22)	(0.11)	(0.12)	(1.01)
Net income (loss) per share - diluted ($)	0.06	(0.22)	(0.11)	(0.12)	(1.01)

The following table outlines our summary of the monthly average of our MAU and ARPU, as well as a summary of our

revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow for the periods presented:

revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow for the periods presented:	revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow for the periods presented:
Three months ended March 31 Year ended December 31
(in thousands of U.S. dollars except MAU and ARPU) 2021	2020 2020 2019 2018
Digital advertising revenue 8,906	6,731 32,055 39,964 46,506
E-commerce revenue 7,013	4,533 24,868 18,490 21,842
Total Revenue 15,918	11,265 56,923 58,455 68,348
MAU (000) 100,732	92,769 89,953 95,747 105,88 9
ARPU - digital advertising $0.029	$0.024 $0.030 $0.035 $0.037
ARPU - e-commerce $0.023	$0.016 $0.023 $0.016 $0.017
ARPU - total revenue $0.053	$0.040 $0.053 $0.051 $0.054
Adjusted EBITDA 7,673	3,145 26,595 25,412 34,747
Adjusted EBITDA Margin (%) 48	28 47 44 51
Free Cash Flow 6,486	1,614 21,707 19,027 31,707

Q1 2021 and Q1 2020

Revenue

Revenue for Q1 2021 was $15,918, an increase of $4,654, or 41%, compared to $11,265 for Q1 2020. This increase was primarily attributable to an increase in total ARPU of 30% and in MAU of 9%. The increase in MAU was primarily attributable to improved search ranking resulting from a higher proportion of our forum communities running on the Fora platform in Q1 2021.

Digital advertising revenue for Q1 2021 was $8,906, an increase of $2,175, or 32%, compared to $6,731 for Q1 2020. This increase was primarily attributable to an increase in digital advertising ARPU of 22%. The increase in digital advertising ARPU was primarily attributable to improved performance of our advertising products on forum communities that had migrated to the Fora platform which resulted in positive impacts to advertiser budgets and increased rates in programmatic advertising. Digital advertising ARPU growth in Q1 2021 was also amplified due to weaker relative performance in Q1 2020 related to the onset of COVID-19.

E-commerce revenue for Q1 2021 was $7,013, an increase of $2,479, or 55%, compared to $4,533 for Q1 2020. This increase was primarily attributable to an increase in e-commerce ARPU of 42%. The increase in e-commerce ARPU was attributable to several factors, including: (i) our strategic focus on expanding our e-commerce capabilities, growing our e-commerce team and increasing our e-commerce partnerships; (ii) the continued expansion of e-commerce spending, partially accelerated by the COVID-19 pandemic; and (iii) recovering economic conditions. E-commerce ARPU growth in Q1 2021 was also amplified due by weaker relative performance in Q1 2020 related to the onset of COVID-19.

Expenses

Operating expenses for Q1 2021 and Q1 2020 were $13,455 and $13,784, respectively.

The change in operating expenses for Q1 2021 was primarily attributable to the following:

Wages and Consulting

s and Consulting
		Three months ended March		31
(in thousands of U.S. dollars exceptpercentages)	2021	2020	$ Change	% Change
Wages and consulting	6,020	5,818	202	3
Percentage of total revenue (%)	38	52	-	-

Wages and consulting expenses increased from $5,818 to $6,020, or 3%, for Q1 2021 compared to the equivalent period in the prior year. This increase can be attributed to higher wages as a result of merit increases, higher bonus accruals, and hiring new employees partially offset by lower consulting costs.

Share-based Compensation

based Compensation
	Three months		ended March 31
(in thousands of U.S. dollars exceptpercentages)	2021	2020	$ Change	% Change
Share-based compensation	466	222	244	110
Percentage of total revenue (%)	3	2	-	-

Share-based compensation increased from $222 to $466 or 110%, for Q1 2021 compared to the equivalent period in the prior year. This increase can be attributed to an increase in the fair value of options vested during Q1 2020.

Platform and Technology

	Three months	Three months	ended March 31	ended March 31
(in thousands of U.S. dollars exceptpercentages)	2021	2020	$ Change	% Change
Platform and technology	1,643	1,519	124	8
Percentage of total revenue (%)	10	13	-	-

Platform and technology expenses increased from $1,519 to $1,643, or 8%, for Q1 2021 compared to the equivalent period in the prior year. This increase can be attributed to an increase in cloud hosting infrastructure costs related to higher usage due to an increase in MAU.

General and Administrative

al and Administrative
	Three months		ended March 31
(in thousands of U.S. dollars exceptpercentages)	2021	2020	$ Change	% Change
General and administrative	744	996	(252)	(25)
Percentage of total revenue (%)	5	9	-	-

General and administrative expenses decreased from $996 to $744, or 25%, for Q1 2021 compared to the equivalent period in the prior year. This decrease can be attributed to reduced travel activity during COVID-19 and reduced spending on advertising.

Depreciation and Amortization

ciation and Amortization
		Three months ended March		31
(in thousands of U.S. dollars exceptpercentages)	2021	2020	$ Change		% Change
Depreciation and amortization	4,583	5,228	(645)		(12)

Percentage of total revenue (%) 29 46 - -

Depreciation and amortization decreased from $5,228 to $4,583, or 12%, for Q1 2021 compared to the equivalent period in the prior year. This decrease can be attributed to reductions in amortization of acquired intangibles from past acquisitions due to reduced acquisition activity.

Adjustment to Contingent Consideration

There were no adjustments to contingent consideration in either Q1 2021 or Q1 2020.

Net Income

Net income for Q1 2021 was $854, an increase of $3,856 compared to a net loss of $3,002 for Q1 2020. This increase was primarily attributable to an increase in operating income and a reduction in interest expense under our Credit Facilities as a result of the payments during Q1 2021 compared to the equivalent period in the prior year.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA for Q1 2021 was $7,673, an increase of $4,528, or 144%, compared to $3,145 for Q1 2020. This increase was primarily attributable to an increase in operating income as a result of an increase in revenue.

Adjusted EBITDA Margin for Q1 2021 was 48% compared to 28% for Q1 2020. Adjusted EBITDA and Adjusted EBITDA Margin are not recognized measures under IFRS. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ” for a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin.

Free Cash Flow

Free Cash Flow for Q1 2021 was $6,486, an increase of $4,872, or 302%, compared to $1,614 for Q1 2020. This increase was primarily attributable to an increase in Adjusted EBITDA. Free Cash Flow is not a recognized measure under IFRS. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ” for a reconciliation of net income (loss) to Free Cash Flow.

FY 2020 and FY 2019

Revenue

Revenue for FY 2020 was $56,923, a decrease of $1,531, or 3%, compared to $58,455 for FY 2019. This decrease was primarily attributable to a decrease in MAU of 6%. The decrease in MAU was primarily attributable to a number of factors throughout the year including the onset of the COVID-19 pandemic and the events surrounding the U.S. election. This was partially offset by an increase in total ARPU of 4%.

Digital advertising revenue for FY 2020 was $32,055, a decrease of $7,909, or 20%, compared to $39,964 for FY 2019. This decrease was primarily attributable to the decrease in MAU and a decrease in digital advertising ARPU of 15%. The decrease in digital advertising ARPU was primarily attributable to adverse impacts to advertiser budgets resulting from COVID-19 and the temporary impact of transitioning our forum communities to the Fora platform, which included intentionally reducing our digital advertising revenue by removing ads that detracted from our user experience and slowed down our page load speeds.

E-commerce revenue for FY 2020 was $24,868, an increase of $6,378, or 34%, compared to $18,490 for FY 2019. This increase was primarily attributable to an increase in e-commerce ARPU of 43%. The increase in e-commerce ARPU was attributable to several factors, including: (i) our strategic focus on expanding our e-commerce capabilities, growing our e- commerce team and increasing our e-commerce partnerships; and (ii) the continued expansion of e-commerce spending, partially accelerated by the COVID-19 pandemic.

Notably, total revenue increased for Q3 2020 and Q4 2020 compared to Q1 2020 and Q2 2020 due to, in addition to seasonal trends, improved performance of our advertising products on forum communities that had migrated to the Fora platform which resulted in positive impacts to advertiser budgets and increased rates in programmatic advertising as well as the recovery of economic conditions. Additionally, starting in the second half of 2020, programmatic and direct advertising spending increased as the impact of COVID-19 moderated relative to the first half of 2020. We expect to see continued strength in digital advertising revenue driven by both improving economic conditions and the performance improvements from the Fora platform.

Expenses

Operating expenses for FY 2020 and FY 2019 were $53,340 and $54,739, respectively.

The change in operating expenses for FY 2020 was primarily attributable to the following:

Wages and Consulting

es and Consulting
		Year ended December 31
(in thousands of U.S. dollars exceptpercentages)	2020	2019	$ Change	% Change
Wages and consulting	21,465	22,923	(1,457)	(6)
Percentage of total revenue (%)	38	39	-	-

Wages and consulting expenses decreased from $22,923 to $21,465, or 6%, for FY 2020 compared to the prior year. This decrease can be attributed to amounts received in connection with the CEWS, partially offset by severance costs due to staff layoffs.

Share-based Compensation

-based Compensation
	Year ended December 31
(in thousands of U.S. dollars exceptpercentages) 2020	2019 $ Change % Change
Share-based compensation 1,962	1,165 796 68
Percentage of total revenue (%) 3	2 - -

Share-based compensation increased from $1,165 to $1,962, or 68%, for FY 2020 compared to the prior year. This increase can be attributed to the extension of the expiry date of certain fully vested options in April 2020, with the incremental benefit of $1,007 fully recognized as additional share-based compensation in 2020.

Platform and Technology

rm and Technology
		Year ended December 31
(in thousands of U.S. dollars exceptpercentages)	2020	2019	$ Change	% Change
Platform and technology	6,366	5,613	753	13
Percentage of total revenue (%)	11	10	-	-

Platform and technology expenses increased from $5,613 to $6,366, or 13%, for FY 2020 compared to the prior year. This increase can be attributed to an increase in cloud hosting infrastructure costs for our forum communities that have transitioned to the Fora platform.

General and Administrative

al and Administrative
		Year ended December 31
(in thousands of U.S. dollars exceptpercentages)	2020	2019	$ Change	% Change

General and administrative 3,356	4,792 (1,435) (30)
Percentage of total revenue (%) 6	8 - -

General and administrative expenses decreased from $4,792 to $3,356, or 30%, for FY 2020 compared to the prior year. This decrease can be attributed to reduced travel activity during COVID-19 and reduced spending on advertising as well as a reduction in bad debt expense.

Depreciation and Amortization

ciation and Amortization
	Year ended December 31
(in thousands of U.S. dollars exceptpercentages) 2020	2019 $ Change % Change
Depreciation and amortization 20,190	21,810 (1,620) (7)
Percentage of total revenue (%) 35	37 - -

Depreciation and amortization decreased from $21,810 to $20,190, or 7%, for FY 2020 compared to the prior year. This decrease can be attributed to reductions in amortization of acquired intangibles from past acquisitions due to reduced acquisition activity, which was partially offset by increases in amortization primarily due to additions to computer software intangibles for the development of the Fora platform.

Adjustments to Contingent Consideration

There was no contingent consideration adjustment recorded in FY 2020 compared to a ($1,564) reversal in the prior year attributed to the expiration of an acquisition related earn-out target which was not achieved.

Net Income

Net loss for FY 2020 was $1,506, a decrease of $227, compared to a net loss of $1,733 for FY 2019. This decrease was primarily attributable to a reduction in interest expense on our Credit Facilities as a result of payments during the year compared to the prior year and a gain on investments in 2020 in the amount of $530, partially offset by an increase in income tax expense.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA for FY 2020 was $26,595, an increase of $1,183, or 5%, compared to $25,412 for FY 2019. This increase was primarily attributable to an increase in operating income as a result of a decrease in operating expenses which were partially offset by lower revenue.

Adjusted EBITDA Margin for FY 2020 was 47% compared to 44% for FY 2019. Adjusted EBITDA and Adjusted EBITDA Margin are not recognized measures under IFRS. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ” for a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin.

Free Cash Flow

Free Cash Flow for FY 2020 was $21,707, an increase of $2,681, or 14%, compared to $19,027 for FY 2019. This increase was primarily attributable to an increase in Adjusted EBITDA. Free Cash Flow is not a recognized measure under IFRS. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ” for a reconciliation of net income (loss) to Free Cash Flow.

FY 2019 and FY 2018

Revenue

Revenue for FY 2019 was $58,455, a decrease of $9,893, or 14%, compared to $68,348 for FY 2018. This decrease was

primarily attributable to a decrease in MAU of 10% and a decrease in ARPU of 5%. The decrease in MAU was primarily attributable to a decline in search ranking results for communities on our multiple legacy software platforms.

Digital advertising revenue for FY 2019 was $39,964, a decrease of $6,542, or 14%, compared to $46,506 for FY 2018. This decrease was primarily attributable to a decrease in MAU of 10% and a decrease in digital advertising ARPU of 5%. The decrease in digital advertising ARPU was primarily attributable to the short-term impact of the migration of our forum communities to the Fora platform, which included intentionally reducing our digital advertising revenue by removing ads that detracted from our user experience and slowed down our page load speeds.

E - commerce revenue for FY 2019 was $18,490, a decrease of $3,351, or 15%, compared to $21,842 for FY 2018. This decrease was primarily attributable to a decrease in MAU of 10% and a decrease in e-commerce ARPU of 6%. The decrease in e-commerce ARPU was primarily attributable to our decision to remove certain e-commerce product links from our communities which were negatively impacting page load times and user experience.

Expenses

Operating expenses for FY 2019 and FY 2018 were $54,739 and $78,136, respectively.

The change in operating expenses for FY 2019 was primarily attributable to the following:

Wages and Consulting

and Consulting
		Year ended December 31
(in thousands of U.S. dollars exceptpercentages)	2019	2018	$ Change	% Change
Wages and consulting	22,923	25,356	(2,434)	(10)
Percentage of total revenue (%)	39	37	-	-

Wage and consulting expenses decreased from $25,356 to $22,923, or 10%, for FY 2019 compared to the prior year. This decrease was primarily due to increased investment in capitalized development costs for the development of our new Fora platform and certain employee reductions.

Share-based Compensation

based Compensation
		Year ended December 31
(in thousands of U.S. dollars exceptpercentages)	2019	2018	$ Change	% Change
Share-based compensation	1,165	2,011	(846)	(42)
Percentage of total revenue (%)	2	3	-	-

Share-based compensation decreased from $2,011 to $1,165, or 42%, for FY 2019 compared to the prior year. This decrease can be attributed to stock option forfeitures and a decrease in share-based compensation from fully vested options.

Platform and Technology

rm and Technology
		Year ended December 31
(in thousands of U.S. dollars exceptpercentages)	2019	2018	$ Change	% Change
Platform and technology	5,613	5,268	346	7
Percentage of total revenue (%)	10	8	-	-

Platform and technology expenses increased marginally from $5,268 to $5,613, or 7%, for FY 2019 compared to the prior year. This increase can be attributed to a greater need for cloud computing resources under the Fora platform.

General and Administrative

	Year ended December 31
(in thousands of U.S. dollars exceptpercentages) 2019	2018 $ Change % Change
General and administrative 4,792	6,744 (1,952) (29)
Percentage of total revenue (%) 8	10 - -

General and administrative expenses decreased from $6,744 to $4,792, or 29%, for FY 2019 compared to the prior year. This decrease can be attributed to a decrease in rent expenses and a reduction in travel activity and professional fees tied to the pause in acquisition activity.

Depreciation and Amortization

ciation and Amortization
	Year ended December 31
(in thousands of U.S. dollars exceptpercentages) 2019	2018 $ Change % Change
Depreciation and amortization 21,810	37,611 (15,800) (42)
Percentage of total revenue (%) 37	55 - -

Depreciation and amortization decreased from $37,611 to $21,810, or 42%, for FY 2019 compared to the prior year. This decrease can be attributed to reductions in amortization of acquired intangibles from past acquisitions due to reduced acquisition activity in 2019.

Adjustments to Contingent Consideration

Adjustments to contingent consideration decreased from $1,146 to a recovery of $1,564 for FY 2019 compared to the prior year. This decrease can be attributed to the expiration of an acquisition related earn-out target which was not achieved.

Net Income

Net loss for FY 2019 was $1,733, an improvement of $12,366 compared to a net loss of $14,099 for FY 2018. The decrease was primarily attributable to the reductions in amortization of acquired intangibles from past acquisitions due to reduced acquisition activity in 2019, which was partially offset by reduced revenue and operating income in 2019.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA for FY 2019 was $25,412, a decrease of $9,335 compared to $34,747 for FY 2018. This decrease was primarily attributable to a decrease in operating income as a result of a decrease in revenue, which was partially offset by a decrease in operating expenses.

Adjusted EBITDA Margin for FY 2019 was 44% compared to 51% for FY 2018 compared to the prior year. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures ” for a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin.

Free Cash Flow

Free Cash Flow for FY 2019 was $19,027, a decrease of $12,680, or 40%, compared to $31,707 for FY 2018. This decrease was primarily attributable to a reduction in Adjusted EBITDA and an increase in capital expenditures. Free Cash Flow is not a recognized measure under IFRS. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Non-IFRS Measures” for a reconciliation of net income (loss) to Free Cash Flow.

SUMMARY OF QUARTERLY RESULTS

Prior to becoming a reporting issuer, we did not prepare quarterly financial statements and, other than our interim financial

statement for the Q1 2021 and Q1 2020 periods presented within, no quarterly financial information is available.

LIQUIDITY AND CAPITAL RESOURCES

Our capital structure consists of shareholders’ equity and long-term debt. We manage our capital structure based on the funds available to us in order to support the continuation and expansion of our operations and to fund future acquisitions. We intend to rely on positive cash flows from operations, availability under our Credit Facilities and proceeds from the Offering to achieve our growth strategies.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given our relative size, is reasonable. There were no changes in our approach to capital management during Q1 2021 or FY 2020. Neither we nor our subsidiaries are subject to externally imposed capital requirements aside from the covenants described in Note 11 of our consolidated financial statements and described under “ Credit Facilities ” and “Forgivable Loan ” below.

Working Capital

Our primary source of cash flow is revenue from operations. Our principal cash requirements are for working capital, to service our Credit Facilities and to achieve our growth strategies. Our approach to managing liquidity is to ensure that we have sufficient liquidity to meet our liabilities as they become due. We do so by monitoring cash flow, performing budgetto-actual analysis, and forecasting future performance and our effect on cash flow on a regular basis.

In Q1 2021, FY 2020, FY 2019 and FY 2018, we generated cash flow from operations totalling $11,011, $14,103, $16,570, and $21,860, respectively, which was sufficient to meet our short-term obligations. In addition to cash balances, we are able to, if necessary, draw on the Revolving Loans to, among other things, meet ongoing working capital requirements. Given our existing cash and Revolving Loans, along with anticipated cash flow generated from operations in the future and expected proceeds from the Offering, we believe that we will have sufficient liquidity to meet our current, short-term financial obligations. With respect to our Credit Facilities, given our anticipated cash flow generated from operations in the future, we believe that we will have sufficient liquidity to continue to service that debt.

Cash Flows

The following table presents cash and cash flows from operating, investing and financing activities for the periods presented:

Cash Flows	Three months ended March 31	Three months ended March 31	Year ended	December	31
(in thousands of U.S. dollars)	2021	2020	2020	2019	2018
	$	$	$	$	$
Net cash provided by operating activities	11,011	4,121	14,103	16,570	21,860
Net cash used in investing activities	(1,234)	(1,234)	(3,455)	(5,648)	(51,763)
Net cash used provided (used) by financing activities	(8,923)	(2,917)	(11,195)	(21,913)	23,208
Changes in cash during the period	854	(29)	(547)	(10,992)	(6,696)
Cash, beginning of period	4,604	5,113	5,113	16,070	22,863
Foreign exchange impact on cash held	8	(51)	37	34	(97)
Cash, end of period	5,466	5,033	4,604	5,113	16,070

Cash Flows from Operating Activities

Cash flows from operating activities for Q1 2021 were $11,011, an increase of $6,889, or 167%, compared to Q1 2020. This increase was primarily attributable to an increase in net income less items not involving cash of $4,151 and a decrease in

interest paid compared to the equivalent period in the prior year in the amount of $2,960.

Cash flows from operating activities for FY 2020 were $14,103, a decrease of $2,467, or 15%, compared to FY 2019. This decrease was primarily attributable to a reduction in the non-cash operating assets and liabilities of $3,160, and a decrease in net income, less items not involving cash of $891, partially offset by a decrease in interest and taxes paid compared to the prior year of $934 and $650, respectively.

Cash flows from operating activities for FY 2019 were $16,570, a decrease of $5,291, or 24%, compared to FY 2018. This decrease was primarily the result of a decrease in net loss after non-cash items of $3,186 and an increase in interest paid compared to the prior year of $2,553.

Cash Flows Used in Investing Activities

There were no changes to cash flows used in investing activities for Q1 2021 compared to Q1 2020. This was primarily attributable to a reduction in capitalized expenditures, including reduced investments in capitalized development costs incurred for the Fora platform, offset by an increase in cash flows used in investing activities compared to the prior year due to the sale of investments in Q1 2020.

Cash flows used in investing activities for FY 2020 were $3,455, a decrease of $2,193, or 39%, compared to FY 2019. This decrease was primarily attributable to a reduction in capitalized expenditures related to software development in connection with the shift from third party development resources to internal resources. In addition, cash flows used in investing activities decreased by $1,243 compared to the prior year due to the sale of assets and investments in 2020.

Cash flows used in investing activities for FY 2019 were $5,648, a decrease of $46,115, or 89%, compared to FY 2018. This decrease was primarily attributable to reduced acquisition activity in 2019 in connection with the migration of our forum communities to the Fora platform, partially offset by increased investments in capitalized development costs incurred for the Fora platform.

Cash Flows Used in/from Financing Activities

Cash flows used in financing activities for Q1 2021 were $8,923, an increase of $6,006, or 206%, compared to Q1 2020. This increase in cash flows used in financing activities was primarily attributable to an increase in total principal payments against our Credit Facilities in Q1 2021 ($8,705) compared to the equivalent period in the prior year.

Cash flows used in financing activities for FY 2020 were $11,195, a decrease of $10,718, or 49%, compared to FY 2019. This decrease was primarily attributable to a reduction in total principal payments made against our Credit Facilities in FY 2020 ($11,163) compared to the prior year. We also received proceeds from the Paycheck Protection Program ($899) for two of our U.S. subsidiaries, in FY 2020 which offset cash flows used in financing activities. The Paycheck Protection Program provides that the PPP Loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent and utilities. However, no assurance is provided that forgiveness for any portion of the PPP Loan will be obtained. Accordingly, the PPP Loan has been accounted for as long-term debt as at March 31, 2021.

Cash flows used in financing activities for FY 2019 were $21,913, an increase of $45,121 compared to FY 2018. This increase was primarily attributable to drawing on the Credit Facilities for $27,700 to fund acquisition activity in FY 2018. In addition, cash flows used in financing activities increased as a result of higher total principal payments made against our Credit Facilities in FY 2019.

Capital Expenditures

enditures
	Three months ended March 31	Year ended December	31
(in thousands of U.S.	2021 2020	2020 2019	2018

dollars)
Capitalized software	1,093	1,343	4,007	4,780	114
Propertyand equipment	143	87	489	564	746
Total capital expenditures	1,236	1,429	4,496	5,344	860

Capital expenditures for Q1 2021 were $1,236, a decrease of $193, or 14%, compared to $1,429 for Q1 2020. This decrease was primarily attributable to a reduction in capitalized development costs incurred for the Fora platform, partially offset by an increase in property and equipment. We capitalize eligible software costs when certain criteria are met. Capitalized software costs are primarily comprised of wages and consulting expenses for third-party contractors.

Capital expenditures for FY 2020 were $4,496, a decrease of $848, or 16%, compared to $5,344 for FY 2019. This decrease was primarily attributable a reduction in capitalized development costs incurred for the Fora platform, and decreases in expenditures tied to property and equipment. We capitalize eligible software costs during the development phase when certain criteria are met. Capitalized software costs are primarily comprised of wages for our software developers and product development team, net of any government grants or investment tax credits received as a recovery of these costs.

Capital expenditures for FY 2019 were $5,344, an increase of $4,484, or 521%, compared to $860 for FY 2018. This increase was attributable to the commencement of building the Fora platform, partially offset by reduced expenditures in property and equipment.

Credit Facilities

Existing Credit Agreement

On October 5, 2017, we entered into a credit agreement (the “ Original Credit Agreement ”) between VerticalScope OpCo as borrower (the “ Borrower ”), the Company, as guarantor and Capital One, National Association, as lender, providing for credit facilities (as may be amended or restated from time to time, including pursuant to the A&R Credit Agreement (as defined below), the “ Credit Facilities ”) that originally consisted of a revolving credit facility (the “ Revolving Loans ”) in the amount of $20 million, initial term loans (the “ Initial Term Loans ”) in the amount of $110 million, and delayed draw term loans (the “ Delayed Draw Term Loans ” and together with the Initial Term Loans the “ Term Loans ”) in the amount of up to $70 million. Delayed Draw Term Loans were drawn in an aggregate amount of $27.7 million in March 2018 and August 2018. Unused commitments for the Delayed Draw Term Loans terminated on October 5, 2019 in accordance with the terms of the Credit Agreement and commitment fees in respect of the Delayed Draw Term Loans ceased to be payable from that date. As of December 31, 2020, we had borrowings of $101 million and $20 million undrawn and available to borrow as Revolving Loans. As of December 31, 2020, all of the outstanding loans bear a floating interest of U.S. dollar LIBOR plus a margin, which is determined by the total net leverage ratio. The Credit Facilities have a maturity date of October 4, 2022. We incurred transaction costs of $3.1 million, directly attributable to the establishment of the Credit Facilities, which amount was capitalized against the Credit Facilities and is being amortized using the effective interest method.

On December 20, 2019, we entered into the first amendment to the Original Credit Agreement (the “ First Amendment ”). The First Amendment increased the amortization to 7.5% per annum (from 5%), the maximum total net leverage ratio (as calculated in accordance with the Credit Agreement) to 4.50x (from 3.50x), with such ratio reducing by 0.25 percentage points each fiscal quarter beginning with fiscal quarter ended June 30, 2021, to 3.0x for the fiscal quarter ended September 30, 2022 and decreased the minimum fixed charge coverage ratio (as calculated in accordance with the Credit Agreement) to 1.05x (from 1.25x), with such ratio increasing to 1.10x for the fiscal quarter ending March 31, 2022 and thereafter. We incurred transaction costs of $476, directly attributable to the issuance of the First Amendment, which were capitalized against the Credit Facilities and are being amortized using the effective interest method. On May 25, 2021, we entered into the second amendment to the Original Credit Agreement (the “ Second Amendment ” and the Original Credit Agreement, as amended by the First Amendment and the Second Amendment, the “ Credit Agreement ”) which provides for certain amendments to the event of default related to a “Change of Control” (as defined in the Credit Agreement). See “ Description of Material Indebtedness – Credit Agreement with Capital One ”.

Amended and Restated Credit Agreement

Following Closing, we expect to enter into an amended and restated credit agreement (the “ A&R Credit Agreement ”), amending and restating the Credit Agreement and the Credit Facilities. We expect that as of the effective date of the A&R Credit Agreement, the Term Loans would be restated to be a single term loan of $50 million (the “ Restated Term Loan ”), repayable in quarterly installments, and the commitment for Revolving Loans would be restated to be $75 million, with each maturing five years after the effective date. Under the A&R Credit Agreement, we expect that there would no longer be any Delayed Draw Term Loans. We have not received a commitment in respect of the A&R Credit Agreement and there can be no assurance that we will enter into an A&R Credit Agreement or, if we do, that the terms will not differ from those set out above.

Forgivable Loan

The U.S. Paycheck Protection Program, offered by the U.S. Small Business Administration (“ SBA ”), was a COVID-19 relief loan designed to provide a direct incentive for small businesses to keep their workers on payroll. We applied for the loan, through our US subsidiaries, and were approved for the amount of $899 in June 2020. The loan is eligible for forgiveness based on specified criteria from the SBA. We have submitted an application for the loan forgiveness in early 2021 and are awaiting confirmation from our lenders. The loan balance is included in the long-term debt on the consolidated balance sheets as at December 31, 2020.

Contractual Obligations

As at December 31, 2020, we had the following payment commitments with respect to lease payments and other contractual obligations:

(in thousands of U.S. dollars)		Payments Due by Period	Payments Due by Period	Payments Due by Period
	Total	< 1 year	1 – 3 years	4 – 5 years	> 5 years
Debt	102,812	9,159	$93,653	-	-
Operating Leases	6,888	1,411	2,769	2,311	397
Purchase Obligations1	12,013	1,229	4,641	5,460	683
Total Contractual Obligations	121,713	11,799	101,063	7,771	1,080

Notes:

(1) “Purchase Obligation” means an agreement to purchase goods or services that is enforceable and legally binding on us that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.

There were no material changes to the contractual obligations presented above in Q1 2021.

Contingencies

We are, from time to time, involved in various claims, legal proceedings and complaints arising in the ordinary course of business. As of the date hereof, we do not believe that adverse decisions in any pending or threatened proceedings, or any amount we may be required to pay by reason thereof, will have a material adverse effect on our financial condition or future results of operations.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have, or are reasonable likely to have, a current or future effect on our results of operations or financial condition as at the date hereof. All of our liabilities and commitments are reflected in our statement of financial position. From time to time, we may be contingently liable with respect to litigation and claims that arise in the normal course of our operations.

TRANSACTIONS WITH RELATED PARTIES

We have no related party transactions, other than those noted in our financial statements included in this prospectus.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the financial statements in conformity with IFRS requires management’s judgements and also requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We review these estimates and underlying assumptions on an ongoing basis based on management’s best knowledge of current events and actions that we may undertake in the future. Actual results could differ from these estimates. Areas requiring the most significant estimates and judgments are outlined below.

Revenue Recognition

We have two primary streams of revenue: digital advertising and e-commerce. The digital advertising stream includes revenue generated from (i) direct advertising campaigns, (ii) custom content solutions, and (iii) programmatic advertising. The e-commerce revenue stream includes revenue generated from (i) commissions, (ii) referral payments, and (iii) subscriptions.

Digital Advertising

Direct advertising campaigns includes placement of advertising for end-advertiser customers. Revenue is recognized based on fees for the delivery of Impressions. Substantially all Impressions are delivered on communities owned by us. Impressions are tracked using both first-and-third party advertising management platforms and follow the guidelines established by the Interactive Advertising Bureau.

Custom content solutions include contracts for the production of custom content for customers using our in-house production studio. The projects are short-term in nature. Revenue is recognized over time on a proportionate performance basis as control is transferred to the customer and considering production milestones.

Programmatic advertising includes sales of display ad inventory on a per-Impression basis through an auction run by our ad exchange and supply-side platform partners, or premium Impression auctions in our private marketplace. Revenue is recognized for the fees we retain from these sales in the period the Impressions are delivered.

E-commerce

We receive commissions from third party sales attributable to traffic sent to partners, with rates of up to 15% of transaction value purchased. Commissioned sales are driven by product reviews from our network of freelance writers and by usergenerated product links posted in communities. Commission revenue is recognized in the same period the commissioned transactions occur based on the contract terms.

For certain e-commerce customers, referral fees are earned for traffic directed from our communities, even if no transaction is completed. Referral fees are recognized in the period the transaction occurs which triggers the referral fee, as this is when our performance is completed.

Subscription-related e-commerce revenue is generated from term-based subscriptions with customers that: (i) enables merchants to maintain a presence on our communities; (ii) provide presence in an online business directory that connects consumers with service providers; and (iii) memberships that provide access to our communities with fewer advertisements. Revenue from subscription contracts is recognized evenly over the term of the subscription as the customer receives and consumes the benefits of the subscription services.

Intangible Assets

Intangible assets with finite lives that are acquired separately are measured on initial recognition at cost, which comprises our purchase price plus any directly attributable costs of preparing the asset for our intended use. Intangible assets acquired as part of a business combination that are recognized separately from goodwill are initially measured at fair value.

We incur internal and external costs for our revenue-generating website communities. Costs incurred during the planning stage (pre-development) are expensed as incurred. Costs incurred during the application and infrastructure development stage, the graphical design stage and the content development stage are capitalized as internally generated intangible assets if the criteria for capitalizing development costs are met. This applies to costs that can be directly attributed and necessary to creating, producing or preparing the community for it to be capable of operating in the manner intended by management. Costs incurred to operate the communities once complete are expensed as incurred except for costs associated with additions to the communities that separately meet the capitalization criteria.

For costs associated with other internally developed intangibles controlled by us, such as our community software platform and other computer software, costs incurred during the development phase of the software are capitalized once it can be demonstrated that software is technically feasible, future economic benefits are probable, and we intend to and have sufficient resources to complete development and to use or sell the asset. Capitalization ceases once the asset is capable of operating in the manner intended by management. Other costs are expensed as incurred.

Following initial recognition, intangible assets are carried at cost less accumulated amortization and impairment losses. Intangible assets are amortized over the periods in the tables below. The estimated useful life and amortization method are reviewed annually, with the effect of any change in estimate being accounted for on a prospective basis. Effective February 1, 2020, we changed our method for amortizing computer software from the declining-balance method with 30% as the rate to the straight-line method of depreciation, as this method better approximates the useful life of the asset. The change was applied prospectively as a change in estimate and resulted in additional amortization of $526 being charged in 2020 based on the application of the updated estimate method. Amortization is recognized using the following methods and rates:

Asset	Basis	Rate
Communities	Straight line	5 years
Acquired content	Straight line	1 year
Customer relationships	Straight line	5 years
Computer software	Straight line	3 to 5years

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

There were no changes to our accounting policies in the periods presented and we do not expect to early adopt any changes in our accounting policies at this time.

New and Revised IFRS

New and revised IFRS in issue but not yet effective are as follows.

Amendments to IAS 37, Onerous Contracts - Cost of Fulfilling a Contract

The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labour or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property and equipment in fulfilling the contract).

The amendments apply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity first applies the amendments. Comparatives are not restated. Instead, the entity shall recognize the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the date of initial application.

The amendments are effective for annual periods beginning on or after January 1, 2022, with early application permitted. We are currently evaluating the impact of these amendments and do not expect the amendments to have a material impact on the consolidated financial statements.

Reference to the Conceptual Framework – Amendments to IFRS 3

In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework. The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements.

The IASB also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential “day 2” gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21, Levies, if incurred separately. At the same time, the IASB decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements.

The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and apply prospectively. We are currently evaluating the impact of these amendments and do not expect the amendments to have a material impact on the consolidated financial statements.

Annual Improvements to IFRS Standards 2018-2020 Cycle

In May 2020, the IASB issued minor amendments to certain standards including IFRS 1, IFRS 9, Financial Instruments and IFRS 16, Leases (“ IFRS 16 ”). The annual improvements process is used to make necessary but non-urgent changes to IFRS that are not included in other projects. The amendments issued are effective for annual periods beginning on or after January 1, 2022. We are currently evaluating the impact of these amendments and do not expect the amendments to have a material impact on the consolidated financial statements.

Interest Rate Benchmark Reform (Phase 1)

On September 26, 2019, the IASB issued amendments for some of its requirements for hedge accounting in IFRS 9, Financial Instruments and IAS 39, Financial Instruments: Recognition and Measurement, as well as the related standard on disclosures, IFRS 7 Financial Instruments: Disclosures in relation to Phase 1 of IBOR Reform and its Effects on Financial Reporting project. The amendments modify specific hedge accounting requirements to allow entities to assume that the interest rate benchmark on which the hedged cash flows and the cash flows of which the hedging instrument are based on, are not altered as a result of IBOR reform. The amendments are effective for annual periods beginning on or after January 1, 2020. The adoption of the amendments did not have a material impact on the consolidated financial statements in the current or comparative periods.

Interest Rate Benchmark Reform (Phase 2)

We initially adopted Interest Rate Benchmark Reform Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 from January 1, 2021.

We applied these amendments retrospectively. However, in accordance with the exceptions permitted in these amendments, we elected not to restate the prior period to reflect the application of these amendments, including not providing additional disclosures for 2020. There is no impact on opening equity balances as a result of retrospective application.

These provide practical relief from certain requirements in IFRS standards. These reliefs relate to modifications of financial instruments and lease contracts or hedging relationships triggered by a replacement of a benchmark interest rate in a contract with a new alternative benchmark rate.

If the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changes as a result of interest rate benchmark reform, we update the effective interest rate of the financial asset or financial liability to reflect the change is required by the reform.

If changes are made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, then we first update the effective interest rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform.

Subsequently, we apply the policies on accounting for modifications set out above to the additional changes.

These amendments also provide an exception to use a revised discount rate that reflects the change in interest rate when remeasuring a lease liability because of a lease modification that is required by interest rate benchmark reform.

Finally, these amendments provide a series of temporary exceptions from certain hedge accounting requirements when a change required by interest rate benchmark reform occurs to a hedged item and / or hedging instrument that permit the hedge relationship to be continued without interruption. The adoption of these amendments did not have a material impact on the consolidated financial statements in the current or comparative periods.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

As at December 31, 2020, our financial instruments consist of financial assets comprised of $4,604 cash, $14,664 trade and other receivables and $81 derivative instruments, as well as financial liabilities comprised of $4,449 accounts payable and accrued liabilities, $3,234 lease liability, and $101,465 long-term debt.

The fair values of these financial instruments, excluding long-term debt, approximate their carrying value due to their shortterm maturity. The carrying value of our long-term debt approximates fair value due to the variable interest rate in the relevant agreements.

Credit Risk

Credit risk is the risk of financial loss to us if a customer or counterparty to a financial instrument fails to meet its contractual obligations. We are exposed to credit risk on accounts receivable from our customers. To the extent necessary, we take steps to monitor the credit risk of clients. Balances for trade accounts receivable are managed on an ongoing basis to ensure allowances for doubtful accounts that corresponds to the specific credit risk of our customers, which are established and maintained at an appropriate amount.

As at December 31, 2020, there was a concentration of credit risk with 29% of our trade receivables balance with two customers for 20% and 9%, respectively, compared to a 15% trade receivables balance with two customers for 8% and 7%, respectively as at December 31, 2019. These customers are in the digital advertising and e-commerce sector. As at March 31, 2021, those receivables were paid in full.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. We are exposed to interest rate risk on our Credit Facilities, which bear interest at a LIBOR plus a margin determined by our net leverage ratio. We are also exposed to interest rate risk on the utilized portion of the Credit Facilities. Based on the amount owing at December 31, 2020, a 1% change in LIBOR would result in an increase (decrease) of $1,082 in interest expense. Based on the amount owing at March 31, 2021, a 1% change in LIBOR would result in an increase (decrease) of $246 in interest expense.

Foreign Currency Risk

Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Our exposure to the risk of changes in foreign exchange rates relates to the services it obtains from vendors and employees located in Canada which are subject to foreign exchange fluctuations. We manage this risk by monitoring our Canadian dollar (“ CAD ”) cash flow. We have the following CAD-denominated balances as at March 31, 2021 and December 31, 2020, 2019 and 2018:

(in thousands ofU.S. dollars)	2021	2020	2019	2018
Cash	671	715	217	1,210
Trade and other receivables	1,057	1,751	2,088	1,754
Investment taxes receivable	0	131	92	92
Accountspayable and accrued liabilities	1,510	2,684	4,161	3,810

During FY 2020, we had various CAD-denominated operating expenses from continuing operations in the amount of $13,285 (2019 - $15,085). We expect to receive a total of $131 (2019 - $92) in CAD-denominated tax credits which offset these expenses. As at December 31, 2020, a 1% depreciation or appreciation of the Canadian dollar against the U.S. dollar would have resulted in an approximate $100 and $99 increase or decrease, respectively, in income before income taxes. During Q1 2021, we had various CAD-denominated operating expenses from continuing operations in the amount of $3,998 (Q1 2020 - $3,569). We received a total of $115 (Q1 2020 - $97) in CAD-denominated tax credits which offset these expenses. As at March 31, 2021, a 1% depreciation or appreciation of the Canadian dollar against the U.S. dollar would have resulted in an approximate $40 and $40 decrease or increase, respectively, in income before income taxes.

From time to time, we enter into foreign exchange contracts with financial institutions to hedge the value of foreign currencydenominated liabilities or future commitments. Gains and losses from these contracts offset the losses and gains from the underlying hedged transactions. As at December 31, 2020 and March 31, 2021, we entered into foreign exchange forward contracts to sell U.S. dollars in exchange for CAD. These contracts outstanding as at December 31, 2020 have a notional value of $1,450 (2019 - $253), a carrying value of $1,531 (2019 - $252) and an unrealized gain of $81 (2019 - unrealized gain of $252). These contracts outstanding as at March 31, 2021 have a notional value of $450 (Q1 2020 - $3,967), a carrying value of $477 (Q1 2020 - $3,764) and an unrealized loss of $54 (Q1 2020 - unrealized loss of $202). These contracts will settle throughout 2021. A s at December 31, 2020 and March 31, 2021, we did not have a significant unhedged exposure to this type of foreign currency risk that would have an impact to net income.

Liquidity Risk

Liquidity risk is the risk that we will be unable to fulfill our obligations on a timely basis or at a reasonable cost. We manage our liquidity risk by monitoring our operating requirements. We maintain sufficient cash on hand and access to additional shareholder funding to ensure we have sufficient funds to fulfill our obligations. As at December 31, 2020, we had working capital of $5,865 to cover short term obligations. As at March 31, 2021, we had working capital of $2,657 to cover short term obligations.

Concentration Risk – Industry

We operate in the social networking industry with a significant focus on the automotive sector and are affected by general economic trends. A decline in economic conditions, consumer interest or other adverse conditions in the social networking industry or automotive sector, could lead to reduced revenue and gross margin. We will face more risks than if it were diversified broadly over numerous industries or sectors.

DISCLOSURE OF OUTSTANDING SECURITY DATA

Prior to completion of the Pre-Closing Reorganization, we were authorized to issue an unlimited number of Class A Common Shares, an unlimited number of Class B Common Shares, and an unlimited number of Class A Preferred Shares. Additionally, we had 962,500 options outstanding exercisable to acquire 962,500 Class B Common Shares.

On June 11, 2021, as part of the Pre-Closing Reorganization, we filed articles of amendment to, among other things, provide for the creation of the Subordinate Voting Shares and the Multiple Voting Shares. Currently, we are authorized to issue an unlimited number of Class A Common Shares, an unlimited number of Class B Common Shares, an unlimited number of Class A Preferred Shares, an unlimited number of Multiple Voting Shares, an unlimited number of Subordinate Voting Shares and an unlimited number of Preferred Shares, issuable in series. As of the date hereof, 13,929,327 Class A Common Shares, 28,125 Class B Common Shares, no Class A Preferred Shares, no Multiple Voting Shares, 75,000 Subordinate Voting Shares and no Preferred Shares are issued and outstanding.

Upon completion of the Pre-Closing Reorganization, our authorized share capital will consist of: (i) an unlimited number of Multiple Voting Shares; (ii) an unlimited number of Subordinate Voting Shares; and (iii) an unlimited number of Preferred Shares, issuable in series.

we will have 962,500 options outstanding to acquire 962,500 Subordinate Voting Shares.

See “Description of Share Capital” and “Options to Purchase Securities ”.

DIVIDEND POLICY

We have not declared or paid any dividends on our securities in FY 2020, FY 2019 or FY 2018 or the current fiscal year. We currently intend to reinvest our earnings to finance the growth of our business, including funding acquisitions, and/or to pay down debt, and we do not currently anticipate paying any cash dividends on our securities, including the Subordinate Voting Shares, in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of the Board and will depend on many factors, including, among others, our financial condition, results of operations, current and anticipated cash requirements, contractual restrictions, general business conditions and compliance with covenants in our financing agreements, solvency tests imposed by application corporate law and other factors that the Board may deem relevant. See “ Risk Factors ”.

DESCRIPTION OF SHARE CAPITAL

The following description of our share capital summarizes certain provisions which are and will be contained in amended articles (“ Articles ”), which amendments have been and will be filed as part of the Pre-Closing Reorganization, and the totality of which will be effective prior to the completion of the Offering. These summaries do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of our Articles and by-laws.

Share Capital Before the Pre-Closing Reorganization and Completion of the Offering

Prior to the Pre-Closing Reorganization, the Company was authorized to issue an unlimited number of Class A Common Shares, an unlimited number of Class B Common Shares, and an unlimited number of Class A Preferred Shares. Additionally, we had 962,500 options outstanding exercisable to acquire 962,500 Class B Common Shares.

As part of the Pre-Closing Reorganization, we amended our articles on June 11, 2021 to, among other things, provide for the creation of the Subordinate Voting Shares and the Multiple Voting Shares.

Immediately prior to completion of the Offering, 2,957,265 Class A Common Shares, 11,000,187 Class B Common Shares, no Class A Preferred Shares, no Multiple Voting Shares, 75,000 Subordinate Voting Shares and no Preferred Shares will be issued and outstanding.

Pre-Closing Reorganization

In connection with, and prior to the Closing, the following Pre-Closing Reorganization is being implemented through a series of transactions approved by the Company’s shareholders and the Board:

our articles of incorporation were amended on June 11, 2021 to, among other things:
(i) create a new class of an unlimited number of Subordinate Voting Shares;
(ii) create a new class of an unlimited number of Multiple Voting Shares;
(iii) create a new class of an unlimited number of Preferred Shares, issuable in series;
75,000 Subordinate Voting Shares have been issued, at a deemed issue price equal to the Offering Price, to Norton Rose Fulbright Canada LLP, legal counsel to the Company, as partial consideration for their services in connection with the Offering, which shares are not being qualified under this prospectus;
prior to our articles being further amended as provided for below, holders of Class A Common Shares, other than RDL Ventures (an entity controlled by our founder and Chief Executive Officer, Rob Laidlaw), will exchange all of their Class A Common Shares for Class B Common Shares on a one-for-one basis in accordance with share exchange agreements to be entered into by the Company and such holders of Class A Common Shares;
our articles will be further amended after the filing of the supplemented PREP prospectus to, among other things:
(i) change the then existing 2,957,265 Class A Common Shares into 2,957,265 Multiple Voting Shares;
(ii) change the then existing 11,000,187 Class B Common Shares into 11,000,187 Subordinate Voting Shares; and

(iii) delete the Class A Preferred Shares, Class A Common Shares and the Class B Common Shares; and

the Legacy ESOP will be amended such that each outstanding option to acquire Class B Common Shares of the Company under the Legacy ESOP will become exercisable for Subordinate Voting Shares. Option holders under the Legacy ESOP will also be entitled to exchange their existing options for new replacement options under the Legacy ESOP for the sole purpose of changing the exercise price from U.S. dollars to Canadian dollars (for clarity, all other terms of the options will remain unchanged). The exercise price for a new option will be determined by converting the U.S. dollar exercise price of the existing option it is being exchanged for to Canadian dollars based on the exchange rate posted by the Bank of Canada for conversion of U.S. dollars into Canadian dollars on the date on which our articles are further amended as referred to above. To be effective, an option holder will need to give notice of such an exchange no later than one day prior to our articles being further amended.

These amendments and agreements are collectively referred to as the “Pre-Closing Reorganization”. See “ Principal Shareholders ” for the number of Subordinate Voting Shares and Multiple Voting Shares that will be owned by each of the Principal Shareholders upon Closing.

Authorized Share Capital at Closing

Upon completion of the Pre-Closing Reorganization and the Offering, our authorized share capital will consist of: (i) an unlimited number of Multiple Voting Shares; (ii) an unlimited number of Subordinate Voting Shares and (iii) an unlimited number of Preferred Shares, issuable in series.

Upon completion of the Offering,  Subordinate Voting Shares (  Subordinate Voting Shares if the Over-Allotment Option is exercised in full), 2,957,265 Multiple Voting Shares and no Preferred Shares will be issued and outstanding. All of the issued and outstanding Multiple Voting Shares will, directly or indirectly, be held by RDL Ventures, an entity controlled by our founder and Chief Executive Officer, Rob Laidlaw and his Permitted Holders.

The Subordinate Voting Shares are “restricted securities” within the meaning of such term under applicable Canadian securities laws. We are exempt from the requirements of Section 12.3 of National Instrument 41-101 – General Prospectus Requirements on the basis that we were a private issuer within the meaning of such term under applicable Canadian securities laws immediately before filing this prospectus.

All of the shares issued prior to or pursuant to the completion of the Offering will be fully paid and non-assessable.

Subordinate Voting Shares and Multiple Voting Shares

Except as described herein, the Subordinate Voting Shares and Multiple Voting Shares have the same rights, are equal in all respects and are treated by the Company as if they were one class of shares. Holders of Multiple Voting Shares and Subordinate Voting Shares have no pre-emptive rights or conversion or exchange rights or other subscription rights, except that each outstanding Multiple Voting Share may at any time, at the option of the holder, be converted into one Subordinate Voting Share and the Multiple Voting Shares will automatically convert into Subordinate Voting Shares upon certain transfers and other events, as described below under “ Description of Share Capital – Subordinate Voting Shares and Multiple Voting Shares – Conversion ”.

Rank

The Subordinate Voting Shares and Multiple Voting Shares rank pari passu with respect to the payment of dividends, or other distributions, return of capital and distribution of assets in the event of the liquidation, dissolution or winding up of the Company. In the event of the liquidation, dissolution or winding-up of the Company or any other distribution of its assets among its shareholders for the purpose of winding-up its affairs, whether voluntarily or involuntarily, the holders of Subordinate Voting Shares and the holder of Multiple Voting Shares are entitled to participate equally, share-for-share, in the remaining property and assets of the Company available for distribution to the holders of shares, without preference or distinction among or between the Subordinate Voting Shares and the Multiple Voting Shares, subject to the rights of the holders of any Preferred Shares.

Dividends

The holders of outstanding Subordinate Voting Shares and Multiple Voting Shares are entitled to receive dividends or other distributions on a share-for-share basis at such times and in such amounts and form as our Board may from time to time determine, but subject to the rights of the holders of any Preferred Shares, without preference or distinction among or between the Subordinate Voting Shares and the Multiple Voting Shares. We are permitted to pay dividends unless there are reasonable grounds for believing that: (i) we are, or would after such payment be, unable to pay our liabilities as they become due; or (ii) the realizable value of our assets would, as a result of such payment, be less than the aggregate of our liabilities and stated capital of all classes of shares. In the event of a payment of a dividend in the form of shares, Subordinate Voting Shares shall be distributed with respect to outstanding Subordinate Voting Shares and Multiple Voting Shares shall be distributed with respect to outstanding Multiple Voting Shares.

Voting Rights

The holders of outstanding Subordinate Voting Shares are entitled to one vote per share and the holder of Multiple Voting Shares is entitled to 10 votes per share. After giving effect to the Offering, and assuming no exercise of the Over-Allotment Option, the Subordinate Voting Shares will collectively represent approximately  % of our issued and outstanding shares and approximately  % of the voting power attached to all of our issued and outstanding shares (approximately  % and  %, respectively, if the Over-Allotment Option is exercised in full) and the Multiple Voting Shares will collectively represent approximately  % of our issued and outstanding shares and approximately  % of the voting power attached to all of our issued and outstanding shares (approximately  % and  %, respectively, if the Over-Allotment Option is exercised in full).

Conversion

The Subordinate Voting Shares are not convertible into any other class of shares. Each outstanding Multiple Voting Share may at any time, at the option of the holder, be converted into one Subordinate Voting Share. Upon the first date that a Multiple Voting Share shall be held by a Person other than a Permitted Holder, the Permitted Holder which held such Multiple Voting Share until such date, without any further action, shall automatically be deemed to have exercised his, her or its rights to convert such Multiple Voting Share into one fully paid and non-assessable Subordinate Voting Share, on a share-for-share basis. Notwithstanding the foregoing, any Multiple Voting Share held by a Lender (as defined below) shall be deemed to continue to be held by the Permitted Holder so long as the Lender has not exercised a right of foreclosure on such Multiple Voting Share or other similar action pursuant to the terms of such pledge or other security interest.

In addition, all Multiple Voting Shares held by Permitted Holders will convert automatically into Subordinate Voting Shares in a manner described above at such time that the Permitted Holders no longer as a group beneficially own, directly or indirectly and in the aggregate, at least 7.5% of the issued and outstanding Subordinate Voting Shares and Multiple Voting Shares (on a non-diluted basis).

For the purposes of the foregoing and elsewhere in this prospectus:

“ Lender ” means a Person who holds any Multiple Voting Shares pursuant to a pledge or other grant of security interest by a Permitted Holder in such Multiple Voting Share, pursuant to a bona fide loan or other indebtedness transaction.

“ Members of the Immediate Family ” means with respect to any individual, each parent (whether by birth or adoption), spouse, child (including any step-child) or other descendants (whether by birth or adoption) of such individual, each spouse of any of the aforementioned Persons, each trust created solely for the benefit of such individual and/or one or more of the aforementioned Persons, and each legal representative of such individual or of any aforementioned Persons (including without limitation a tutor, curator, mandatary due to incapacity, custodian, guardian or testamentary executor), acting in such capacity under the authority of the law, an order from a competent tribunal, a will or a mandate in case of incapacity or similar instrument. For the purposes of this definition, a Person shall be considered the spouse of an individual if such Person is legally married to such individual, lives in a civil union with such individual or is the common law partner (as defined in the Tax Act as amended from time to time) of such individual. A Person who was the spouse of an individual within the meaning of this paragraph immediately before the death of such individual shall continue to be considered a spouse of such individual after the death of such individual;

“ Permitted Holders ” means (i) Rob Laidlaw and any Members of the Immediate Family of Rob Laidlaw, and (ii) any

Person controlled, directly or indirectly, by one or more Persons referred to in clause (i) above.

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

A Person is “ controlled ” by another Person or other Persons if: (i) in the case of a company or other body corporate wherever or however incorporated: (A) securities entitled to vote in the election of directors carrying in the aggregate at least a majority of the votes for the election of directors and representing in the aggregate at least a majority of the participating (equity) securities are held, other than by way of security only, directly or indirectly, by or solely for the benefit of the other Person or Persons; and (B) the votes carried in the aggregate by such securities are entitled, if exercised, to elect a majority of the board of directors of such company or other body corporate; or (ii) in the case of a Person that is an unincorporated entity other than a limited partnership, at least a majority of the participating (equity) and voting interests of such Person are held, directly or indirectly, by or solely for the benefit of the other Person or Persons; or (iii) in the case of a limited partnership, the other Person is the general partner of such limited partnership; and “controls”, “controlling” and “under common control with” shall be interpreted accordingly.

Subdivision or Consolidation

No subdivision or consolidation of the Subordinate Voting Shares or the Multiple Voting Shares may be carried out unless, at the same time, the Multiple Voting Shares or the Subordinate Voting Shares, as the case may be, are subdivided or consolidated in the same manner and on the same basis.

Certain Class Votes

Except as required by the OBCA, applicable Canadian securities laws or our Articles, holders of Subordinate Voting Shares and Multiple Voting Shares will vote together on all matters subject to a vote of holders of both those classes of shares as if they were one class of shares. Under the OBCA, certain types of amendments to our Articles are subject to approval by special resolution of the holders of our classes of shares voting separately as a class, including amendments to:

add to, remove or change the rights, privileges, restrictions or conditions attached to the shares of that class;
add to the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class; and
make any class of shares having rights or privileges inferior to the shares of such class equal or superior to the shares of that class.

Without limiting other rights at law of any holders of Subordinate Voting Shares or Multiple Voting Shares to vote separately as a class, neither the holders of the Subordinate Voting Shares nor the holder of the Multiple Voting Shares shall be entitled to vote separately as a class or to dissent upon a proposal to amend our Articles in the case of an amendment to (1) increase or decrease any maximum number of authorized shares of such class or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of such class; or (2) create a new class of shares equal or superior to the shares of such class, which rights are otherwise provided for in paragraphs (a) and (e) of subsection 170(1) of the OBCA. Pursuant to our Articles, neither the holders of the Subordinate Voting Shares nor the holder of Multiple Voting Shares will be entitled to vote separately as a class or to dissent on a proposal to amend our Articles to effect an exchange, reclassification or cancellation of all or part of the shares of such class pursuant to subsection 170(1)(b) of the OBCA unless such exchange, reclassification or cancellation: (a) affects only the holders of that class; or (b) affects the holders of Subordinate Voting Shares and Multiple Voting Shares differently, on a per share basis, and such holders are not already otherwise entitled to vote separately as a class under applicable law or our Articles in respect of such exchange, reclassification or cancellation.

Pursuant to our Articles, holders of Subordinate Voting Shares and Multiple Voting Shares will be treated equally and identically, on a per share basis, in certain change of control transactions that require approval of our shareholders under the OBCA, unless different treatment of the shares of each such class is approved by a majority of the votes cast by the holders of the Subordinate Voting Shares and Multiple Voting Shares, each voting separately as a class.

Take-Over Bid Protection

Under applicable Canadian securities laws, an offer to purchase Multiple Voting Shares would not necessarily require that an offer be made to purchase Subordinate Voting Shares. In accordance with the rules of the TSX designed to ensure that, in the event of a take-over bid, the holders of Subordinate Voting Shares will be entitled to participate on an equal footing with the holder of Multiple Voting Shares, the holder of Multiple Voting Shares upon completion of the Offering will enter into a customary coattail agreement with us and a trustee (the “ Coattail Agreement ”). The Coattail Agreement will contain provisions customary for dual-class, TSX-listed corporations designed to prevent transactions that otherwise would deprive the holders of Subordinate Voting Shares of rights under applicable Canadian securities laws to which they would have been entitled if the Multiple Voting Shares had been Subordinate Voting Shares.

The undertakings in the Coattail Agreement will not apply to prevent a sale by Permitted Holders of Multiple Voting Shares if concurrently an offer is made to purchase Subordinate Voting Shares that:

a) offers a price per Subordinate Voting Share at least as high as the highest price per share to be paid pursuant to the take-over bid for the Multiple Voting Shares;
b) provides that the percentage of outstanding Subordinate Voting Shares to be taken up (exclusive of shares owned immediately prior to the offer by the offeror or persons acting jointly or in concert with the offeror) is at least as high as the percentage of outstanding Multiple Voting Shares to be sold (exclusive of Multiple Voting Shares owned immediately prior to the offer by the offeror and persons acting jointly or in concert with the offeror);
c) has no condition attached other than the right not to take up and pay for Subordinate Voting Shares tendered if no shares are purchased pursuant to the offer for Multiple Voting Shares; and
d) is in all other material respects identical to the offer for Multiple Voting Shares.

In addition, the Coattail Agreement will not prevent the transfer of Multiple Voting Shares to Permitted Holders, provided such transfer is not or would not have been subject to the requirements to make a take-over bid (if the vendor or transferee were in Canada) or constitutes or would be exempt from certain requirements applicable to take-over bids under applicable Canadian securities laws. The conversion of Multiple Voting Shares into Subordinate Voting Shares, whether or not such Subordinate Voting Shares are subsequently sold, would not constitute a disposition of Multiple Voting Shares for the purposes of the Coattail Agreement.

Under the Coattail Agreement, any sale of Multiple Voting Shares by a holder of Multiple Voting Shares who is a party to the Coattail Agreement will be conditional upon the transferee becoming a party to the Coattail Agreement, to the extent such transferred Multiple Voting Shares are not automatically converted into Subordinate Voting Shares in accordance with our Articles.

The Coattail Agreement will contain provisions for authorizing action by the trustee to enforce the rights under the Coattail Agreement on behalf of the holders of the Subordinate Voting Shares. The obligation of the trustee to take such action will be conditional on us or holders of the Subordinate Voting Shares providing such funds and indemnity as the trustee may reasonably require. No holder of Subordinate Voting Shares will have the right, other than through the trustee, to institute any action or proceeding or to exercise any other remedy to enforce any rights arising under the Coattail Agreement unless the trustee fails to act on a request authorized by holders of not less than 10% of the outstanding Subordinate Voting Shares and reasonable funds and indemnity have been provided to the trustee.

Other than in respect of non-material amendments and waivers that do not adversely affect the interests of holders of Subordinate Voting Shares, the Coattail Agreement will provide that, among other things, it may not be amended, and no provision thereof may be waived, unless, prior to giving effect to such amendment or waiver, the following have been obtained: (a) the consent of the TSX and any other applicable securities regulatory authority in Canada; and (b) the approval of at least two-thirds of the votes cast by holders of Subordinate Voting Shares represented at a meeting duly called for the purpose of considering such amendment or waiver, excluding votes attached to Subordinate Voting Shares held by the holder of Multiple Voting Shares or its affiliates and related parties and any persons who have an agreement to purchase Multiple Voting Shares on terms which would constitute a sale or disposition for purposes of the Coattail Agreement, other than as permitted thereby.

No provision of the Coattail Agreement will limit the rights of any holders of Subordinate Voting Shares under applicable

law.

Preferred Shares

Upon completion of the Pre-Closing Reorganization, we will be authorized to issue an unlimited number of Preferred Shares issuable in series. Each series of Preferred Shares shall consist of such number of shares and having such rights, privileges, restrictions and conditions as may be determined by our Board prior to the issuance thereof. Holders of Preferred Shares, except as otherwise provided in the terms specific to a series of Preferred Shares or as required by law, will not be entitled to vote at meetings of holders of shares, and will not be entitled to vote separately as a class or dissent upon a proposal to amend our Articles in the case of an amendment of the kind referred to in paragraph (a), (b) or (e) of subsection 170(1) of the OBCA. With respect to the payment of dividends and distribution of assets in the event of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the Preferred Shares will be entitled to preference over the Subordinate Voting Shares, the Multiple Voting Shares and any other shares ranking junior to the Preferred Shares from time to time and may also be given such other preferences, not inconsistent with our Articles, over the Subordinate Voting Shares, the Multiple Voting Shares and any other shares ranking junior to the Preferred Shares as may be determined at the time of creation of such series.

We will file an undertaking with the OSC pursuant to which we will agree to provide reasonable prior notice to the OSC in the event we intend to issue a series of Preferred Shares that: (a) carry a greater number of votes on a per share basis, irrespective of the number or percentage of Preferred Shares owned, than the Subordinate Voting Shares; or (b) would cause any of the factors set out in section 4.1 of OSC Rule 56-501 – Restricted Shares to be present in relation to the Subordinate Voting Shares, regardless of any existing restrictions on the Subordinate Voting Shares due to the existence of the Multiple Voting Shares.

Advance Notice Provisions

In line with recommended governance practices, we will adopt at Closing an advance notice by-law to provide clarity with respect to the election of our directors (the “ Advance Notice Provisions ”). The Advance Notice Provisions are intended to: (i) facilitate orderly and efficient annual general meetings or, where the need arises, special meetings; (ii) ensure that all shareholders receive adequate notice of Board nominations and sufficient information with respect to all nominees; and (iii) allow shareholders to register an informed vote. Only persons who are nominated by shareholders in accordance with the Advance Notice Provisions will be eligible for election as directors at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called was the election of directors.

Under the Advance Notice Provisions, a shareholder wishing to nominate a director would be required to provide us notice, in the prescribed form, within the prescribed time periods. These time periods require that we receive notice of a director’s nomination: (i) in the case of an annual meeting of shareholders (including annual and special meetings), not less than 30 days prior to the date of the annual meeting of shareholders; provided, that if the first public announcement of the date (the “ Notice Date ”) of the annual meeting of shareholders is less than 50 days before the meeting date, not later than the close of business on the 10th day following the Notice Date; and (ii) in the case of a special meeting (which is not also an annual meeting) of shareholders called for any purpose which includes electing directors, not later than the close of business on the 15th day following the Notice Date, provided that, in either instance, if notice-and-access (as defined in National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer ) is used for delivery of proxy related materials in respect of a meeting described above, and the Notice Date in respect of the meeting is not less than 50 days prior to the date of the applicable meeting, the notice must be received not later than the close of business on the 40th day before the applicable meeting.

Forum Selection

In addition, we will adopt at Closing a forum selection by-law that provides that, unless we consent in writing to the selection of an alternative forum, the courts of the Province of Ontario, Canada and appellate courts therefrom (or, failing such court, any other “court” as defined in the OBCA having jurisdiction, and the appellate courts therefrom), will be the sole and exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action or proceeding asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us; (iii) any action or proceeding asserting a claim arising pursuant to any provision of the OBCA or our Articles or by-laws; or (iv) any action or proceeding asserting a claim otherwise related to our “affairs” (as defined in the OBCA). Our forum selection by-law also provides that our

securityholders are deemed to have consented to personal jurisdiction in the Province of Ontario and to service of process on their counsel in any foreign action initiated in violation of our by-law.

PRINCIPAL SHAREHOLDERS

The following table sets out certain information with respect to shareholders who, immediately following the closing of the Offering, will, to our knowledge, beneficially own, control or direct, directly or indirectly, voting securities carrying 10% or more of the voting rights attached to any class of our voting securities:

Shares Owned Following

	Shares Owned Following
Name of Shareholder NordStar Group RDL Ventures(3) Hedgewood	the Pre-Closing Reorganization and Prior to Closing Number of Subordinate Voting Shares Number of Multiple Voting Shares 7,860,505 nil nil 2,957,265 3,111,557 nil	Shares Owned Immediately Following			Closing (1)
	Number of Subordinate Voting Shares 7,860,505 nil 3,111,557	Number of Subordinate Voting Shares 7,860,505 nil 3,111,557	Number of Multiple Voting Shares nil 2,957,265 nil	Percentage of Outstanding Shares %(4) %(4) %(4)	Percentage of Total Voting Power(2)
					%(4) %(4) %(4)

(1) Assumes that the Over-Allotment Option is not exercised.

(2) Percentage of voting power represents voting power with respect to all of the Subordinate Voting Shares and Multiple Voting Shares, as a single class. The holder of the Multiple Voting Shares is entitled to 10 votes per share, and holders of the Subordinate Voting Shares are entitled to one vote per share. For more information on the voting rights attached to the Subordinate Voting Shares and Multiple Voting Shares, see “ Description of Share Capital – Subordinate Voting Shares and Multiple Voting Shares ”.

(3) Beneficially owned and controlled by our founder and Chief Executive Officer, Rob Laidlaw.

(4) Figures represent ownership of the issued and outstanding shares on a non-diluted basis. Upon completion of the Offering and the Pre-Closing Reorganization, and assuming no exercise of the Over-Allotment Option, (i) 7,860,505 Subordinate Voting Shares will be owned or controlled by NordStar Group (representing approximately  % of the total voting rights attached to all of the Company’s issued and outstanding shares), and our Chair of the Board and director, Paul Rivett, may be deemed to exercise control or direction over 50% of the equity interest in the sole shareholder of NordStar Group; (ii) 2,957,265 Multiple Voting Shares will be owned or controlled by RDL Ventures (representing approximately  % of the total voting rights attached to all of the Company’s issued and outstanding shares); and (iii) 3,111,557 Subordinate Voting Shares will be owned or controlled by Hedgewood (representing approximately  % of the total voting rights attached to all of the Company’s issued and outstanding shares), an entity which is beneficially owned and controlled by our director, Jesse Rasch. On a fully-diluted basis (assuming the exercise of all options outstanding immediately following Closing and assuming no exercise of the Over-Allotment Option), NordStar Group, RDL Ventures and Hedgewood will, immediately following Closing, own 7,860,505, 2,957,265 and 3,111,557 of the issued and outstanding shares and hold approximately  %,  % and  % of the total voting power attached to all of the issued and outstanding shares, respectively. If the Over-Allotment Option is exercised in full, NordStar Group, RDL Ventures and Hedgewood will, immediately following Closing, own 7,860,505, 2,957,265 and 3,111,557 of the issued and outstanding shares (7,860,505, 2,957,265 and 3,111,557, respectively, on a fully diluted basis) and hold approximately  %,  % and  % of the total voting power attached to all of the issued and outstanding shares, respectively (approximately  %,  % and  %, respectively, on a fully diluted basis).

AGREEMENTS WITH PRINCIPAL SHAREHOLDERS

Investor Rights Agreement

Upon Closing, we will enter into an investor rights agreement (the “ Investor Rights Agreement ”) with the Principal Shareholders with respect to certain shareholder rights. The following is a summary of the material attributes and characteristics of the Investor Rights Agreement. This summary is qualified in its entirety by reference to the provisions of that agreement, which contains a complete statement of those attributes and characteristics. The Investor Rights Agreement will be filed with the Canadian securities regulatory authorities and available under our SEDAR profile at www.sedar.com.

Nomination Rights

The Company, pursuant to the Investor Rights Agreement, will have a Board consisting initially of seven (7) directors and any proposed increase or decrease to the Board size will require the consent of all of the Principal Shareholders for so long that a Principal Shareholder has a nomination right as further described below.

The Investor Rights Agreement will provide director nomination rights to each of the Principal Shareholders as follows:

as long as NordStar Group (collectively) owns (i) Subordinate Voting Shares representing at least 15% of the issued and outstanding Multiple Voting Shares and Subordinate Voting Shares (on a non-diluted basis), NordStar Group

will have the right to designate two director nominees to the Board, one of whom must be independent within the meaning of NI 52-110; and (ii) Subordinate Voting Shares representing at least 7.5% (but less than 15%) of the issued and outstanding Multiple Voting Shares and Subordinate Voting Shares (on a non-diluted basis), NordStar Group will have the right to designate one director nominee to the Board. One of the NordStar Group’s nominees must be Paul Rivett, other than in certain specified circumstances, in which case the NordStar Group is entitled to designate another nominee;

as long as RDL Ventures owns Multiple Voting Shares and/or Subordinate Voting Shares representing at least 7.5% of the issued and outstanding Multiple Voting Shares and Subordinate Voting Shares (on a non-diluted basis) or while Rob Laidlaw is Chief Executive Officer or an executive officer of the Company, RDL Ventures will have the right to designate one director nominee to the Board, which nominee must be Mr. Laidlaw for so long as he is Chief Executive Officer or an executive officer of the Company; and
as long as Hedgewood owns Subordinate Voting Shares representing at least 7.5% of the issued and outstanding Multiple Voting Shares and Subordinate Voting Shares (on a non-diluted basis), Hedgewood will have the right to designate one director nominee to the Board. In addition, Hedgewood will be entitled to appoint one Board observer, subject to the terms and conditions set out in the Investor Rights Agreement, which entitlement will terminate in the event Hedgewood no longer has the right to appoint a director nominee.

Each of the Principal Shareholders’ nominees will be included as part of the slate of director candidates proposed by the Company in any management information circular relating to the election of directors and the Company will solicit proxies from its shareholders and recommend that shareholders vote in favour of the Principal Shareholders’ nominees. Subject to compliance by the Company with the foregoing, the Principal Shareholders agree to vote all of the Subordinate Voting Shares and Multiple Voting Shares they own in favour of the election of the nominees of the Principal Shareholders.

During the period commencing at Closing and ending on the first to occur of the following events: (i) NordStar Group beneficially owns less than 19.99% of the issued and outstanding Multiple Voting and Subordinate Voting Shares (on a nondiluted basis); (ii) the fifth anniversary of the Closing Date: and (iii) termination of Mr. Laidlaw as Chief Executive Officer of the Company, other than if such termination is for gross misconduct (as such term is defined in the Chief Executive Officer’s employment agreement to be entered into in connection with the Offering): (a) NordStar Group is entitled to have Mr. Rivett serve as Chair of the Board, other than in the event of the resignation, death or incapacity of Mr. Rivett, in which case, NordStar Group no longer has the right to designate the Chair; and (b) if Mr. Laidlaw is no longer acting as the Chief Executive Officer of the Company as a result of his resignation, death or incapacity, then the Multiple Voting Shares then held by RDL Ventures or other Permitted Holders under the Articles will be automatically converted into Subordinate Voting Shares.

Principal Shareholder Nominees

Holders of the Subordinate Voting Shares will have the right to vote on the election of all of the director nominees, whereas RDL Ventures, as holder of the Multiple Voting Shares, has agreed not to vote or permit to be voted the Multiple Voting Shares with respect to the election of directors who are not the nominees of the Principal Shareholders under the Investor Rights Agreement until the earliest of the following events: (i) NordStar Group beneficially owns less than 19.99% of the issued and outstanding Multiple Voting and Subordinate Voting Shares (on a non-diluted basis), (ii) the fifth anniversary of the Closing Date, and (iii) termination of Mr. Laidlaw as the Chief Executive Officer of the Company, other than if such termination is for gross misconduct (as such term is defined in the Chief Executive Officer’s employment agreement to be entered into in connection with the Offering). Following the earliest to occur of any such events, holders of the Multiple Voting Shares and Subordinate Voting Shares will be entitled to vote with respect to the election of all of the directors of the Company.

Registration Rights

The Investor Rights Agreement will provide for demand registration rights in favour of the Principal Shareholders that will enable them, under certain circumstances, to require the Company to use reasonable commercial efforts to qualify by prospectus in Canada all or any portion of the Subordinate Voting Shares held by them (or converted from Multiple Voting Shares) for a distribution to the public, provided that the Company will not be obliged to effect (i) more than two demand registrations in any 12-month period or within ninety (90) days following the date on which a receipt was issued to the

Company with respect to any final prospectus filed by the Company (other than a base shelf prospectus) or (ii) any demand registration where the value of the Subordinate Voting Shares offered under such demand registration is less than C$10 million. In addition, the Company is entitled to postpone a demand registration for up to ninety (90) days, twice in a 12-month period, if the Board determines that a demand registration would materially interfere with any material financing, acquisition, corporate reorganization or merger or other transaction or which would require disclosure of information at a time when the Company has a bona fide business purpose not to immediately disclose such information.

In order to be entitled to such rights, each Principal Shareholder must hold at least 7.5% of our issued and outstanding Multiple Voting Shares and Subordinate Voting Shares (on a non-diluted basis) at the relevant time.

The Investor Rights Agreement will also provide for incidental (or piggyback) registration rights allowing the Principal Shareholders to include their Subordinate Voting Shares in certain public offerings of Subordinate Voting Shares, subject to certain underwriters’ cutback rights. In order to be entitled to such rights, each Principal Shareholder must hold at least 5% of our issued and outstanding Multiple Voting Shares and Subordinate Voting Shares (on a non-diluted basis) at the relevant time.

Furthermore, if the Company proposes to file a registration statement for the distribution of Subordinate Voting Shares to the public in the U.S., the parties will, prior to such distribution taking place, supplement the Investor Rights Agreement so as to provide the Principal Shareholders with registration rights enabling the distribution of registrable securities that are substantially equivalent to the registration rights provided under the Investor Rights Agreement.

As a result of the Lock-Up Agreements described under “ Plan of Distribution – Lock-Up Agreements ”, the demand and incidental registration rights granted pursuant to the Investor Rights Agreement will not be exercisable by the Principal Shareholders during a period of at least 180 days after the date of Closing without the prior written consent of the Lead Underwriters, on behalf of the Underwriters. See “ Plan of Distribution – Lock-Up Agreements ”.

DESCRIPTION OF MATERIAL INDEBTEDNESS

Credit Agreement with Capital One

Existing Credit Agreement

On October 5, 2017, we entered into the Original Credit Agreement with Capital One, National Association, providing for Credit Facilities that consisted of a revolving credit facility in the amount of $20 million, Initial Term Loans in the amount of $110 million, and the Delayed Draw Term Loans in the amount of up to $70 million. The Delayed Draw Term Loans were drawn in an aggregate amount of $27.7 million in March 2018 and August 2018. Unused commitments for the Delayed Draw Term Loans terminated on October 5, 2019 in accordance with the terms of the Credit Agreement and commitment fees in respect of the Delayed Draw Term Loans ceased to be payable from that date. As of December 31, 2020, we had borrowings of $101 million and $20 million undrawn and available to borrow as Revolving Loans. The Credit Facilities have a maturity date of October 4, 2022. We incurred transaction costs of $3.1 million, directly attributable to the establishment of the Credit Facilities, which amount was capitalized against the Credit Facilities and is being amortized using the effective interest method.

On December 20, 2019, we entered into the First Amendment. The First Amendment increased the amortization to 7.5% per annum (from 5%), the maximum total net leverage ratio (as calculated in accordance with the Credit Agreement) to 4.50x (from 3.50x), with such ratio reducing by 0.25 percentage points each fiscal quarter beginning with fiscal quarter ended June 30, 2021, to 3.0x for the fiscal quarter ended September 30, 2022 and decreased the minimum fixed charge coverage ratio (as calculated in accordance with the Credit Agreement) to 1.05x (from 1.25x), with such ratio increasing to 1.10x for the fiscal quarter ending March 31, 2022 and thereafter. We incurred transaction costs of $476 thousand, directly attributable to the issuance of the First Amendment, which were capitalized against the Credit Facilities and are being amortized using the effective interest method.

On May 25, 2021, we entered into the Second Amendment, which provides for, among other things, amendments to the event of default under the Credit Agreement related to a “Change of Control” (as defined in the Credit Agreement).

Amended and Restated Credit Agreement

Following Closing, we expect to enter into the A&R Credit Agreement, amending and restating the Credit Agreement and the Credit Facilities. We expect that, as of the effective date of the A&R Credit Agreement, the Term Loans would be restated to be a single term loan of $50 million, repayable in quarterly installments, and the commitment for Revolving Loans would be restated to be $75 million, with each maturing five years after the effective date. Under the A&R Credit Agreement, we expect that there would no longer be any Delayed Draw Term Loans. We have not received a commitment in respect of the A&R Credit Agreement and there can be no assurance that we will enter into the A&R Credit Agreement or, if we do, that the terms will not differ from those set out above.

The occurrence of a “Change of Control” as defined in the Credit Agreement is an event of default. Following completion of the Offering, a Change of Control will occur if (a) any person or persons constituting a group, other than RDL Ventures, Hedgewood and NordStar Group and their respective affiliates (each an “ Authorized Holder ”) become the beneficial owner, directly or indirectly, of our stock or stock equivalents representing more than 35% of the aggregate ordinary voting power represented by our issued and outstanding stock or stock equivalents and the percentage of aggregate ordinary voting power so held is greater than the percentage represented by the stock or stock equivalents beneficially owned, directly or indirectly, in the aggregate by the Authorized Holders (for purposes of measuring beneficial ownership held by any person that is not a Authorized Holder, stock or stock equivalents held by any Authorized Holder will be excluded) or (b) we cease to own one hundred percent (100%) of the issued and outstanding stock and stock equivalents of VerticalScope OpCo.

Revolving Loans and Term Loans are subject to interest rates based on U.S. dollar LIBOR for interest periods selected by the Borrower or the U.S. dollar base rate, plus the applicable margin in each case, which is determined by the total net leverage ratio. Amounts of unused commitments in respect of Revolving Loans are subject to commitment fees. The applicable margin and commitment fees depend on the Borrower’s total net leverage ratio. As of December 31, 2020, all of the outstanding loans bear a floating interest based on U.S. dollar LIBOR.

Revolving Loans and Term Loans are also subject to mandatory prepayments in respect of: (i) 100.0% or 50.0% of the net proceeds of asset dispositions and events of loss by the Borrower or its subsidiaries in excess of $4.0 million in a fiscal year (such percentage depending on the total net leverage ratio), subject to reinvestment rights; (ii) the net proceeds of certain issuances of indebtedness; and (iii) 50.0%, 25.0% or 0.0% of excess cash flow greater than $1.0 million in a fiscal year (such percentage depending on the total net leverage ratio) of the Borrower.

The Credit Agreement contains customary representations and warranties, affirmative and negative covenants (including those described under “ Risk Factors – Risks Relating to Our Business and Industry – Provisions of our present and future debt instruments may restrict our ability to pursue business strategies ”) and events of default, in addition to other customary provisions for credit agreements negotiated in the context of comparable transactions.

The Credit Facilities are secured by U.S. and Canadian security agreements of the Company, the Borrower and their subsidiaries (other than immaterial subsidiaries), which provides the agent, on behalf of the lenders, with a first charge over all assets, including intellectual property, unlimited guarantees and indemnities by all such subsidiaries of the Borrower and first-ranking pledges of equity interests in the capital of the Company’s subsidiaries (other than immaterial subsidiaries).

CONSOLIDATED CAPITALIZATION

The following table sets forth our consolidated capitalization as at March 31, 2021: (i) on an actual basis; and (ii) as adjusted to give effect to the Pre-Closing Reorganization and the Offering (assuming no exercise of the Over-Allotment Option). This table is presented and should be read in conjunction with our financial statements and the related notes included elsewhere in this prospectus and with the information set forth under “ Selected Consolidated Financial Information ”, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations” , “Use of Proceeds ” and “ Description of Share Capital – Pre-Closing Reorganization” .

Cash Debt Equity Share capital(2)(3) Contributed surplus Deficit Total equity (deficit) Total Capitalization	As at March 31, 2021	As at March 31, 2021
	Actual After giving effect to the Pre-Closing Reorganization and the Offering (in thousands of U.S.$) 5,466 (1) 92,870(4) 92,870 34,184  10,838 10,838 (66,246) (66,246) (21,225)  71,645 	After giving effect to the Pre-Closing Reorganization and the Offering

(1) The amount included in the table includes the estimated net proceeds of the Offering of C$  million after deducting the Underwriters’ Fee of C$  and the expenses of the Offering estimated at C$  and assumes no exercise of the Over-Allotment Option.

(2) As of March 31, 2021, the Company’s authorized share capital comprised an unlimited number of Class A Common Shares, an unlimited number of Class B Common Shares, and an unlimited number of Class A Preferred Shares. As a result of the Pre-Closing Reorganization, the Company’s authorized share capital immediately prior to the Closing will consist of (i) an unlimited number of Subordinate Voting Shares, (ii) an unlimited number of Multiple Voting Shares and (iii) an unlimited number of Preferred Shares, issuable in series. Immediately prior to the Closing, all of the issued and outstanding Class A Common Shares and Class B Common Shares will be changed into Multiple Voting Shares and Subordinate Voting Shares, respectively, on a one-for-one basis, as described under “ Description of Share Capital ”. Immediately following Closing and assuming no exercise of the Over-Allotment Option, 2,957,265 Multiple Voting Shares,  Subordinate Voting Shares and no Preferred Shares will be issued and outstanding.

(3) The amount included in the table includes additional share capital raised by the Company through the Offering estimated to amount to C$  million, excluding any proceeds from the Over-Allotment Option and the estimated expenses of the Offering. The amounts included in the table also do not include any Subordinate Voting Shares issuable upon the exercise or settlement of options or other awards under the Omnibus Incentive Plan or the Legacy ESOP.

(4) The amount included in the table includes the balance outstanding as at March 31, 2021 for the Initial Term Loans ($90,404) and the Delayed Draw Term Loans ($1,566) under the Credit Facilities and for a forgivable COVID-19 relief loan ($899) in connection with the PPP Loan offered by the U.S. Small Business Administration. The Company has submitted an application for forgiveness of the PPP Loan and is awaiting confirmation. See “ Risk Factors ”. The amount included in the table also includes the current portion of long-term debt of $7,833 as at March 31, 2021.

OPTIONS TO PURCHASE SECURITIES

The Company has granted options to acquire Class B Common Shares under the Legacy ESOP. As part of the Pre-Closing Reorganization and conditional upon the Closing, such options will become exercisable for Subordinate Voting Shares. Following the Closing, no further awards will be made under the Legacy ESOP.

Our Board has approved a new omnibus incentive plan (the “ Omnibus Incentive Plan ”). The Omnibus Incentive Plan provides for the grant of options which will be exercisable for Subordinate Voting Shares. The Omnibus Incentive Plan also provides for the grant of share units consisting of restricted share units (“ RSUs ”), performance share units (“ PSUs ”) and deferred share units (“ DSUs ”). The terms of the Legacy ESOP and the Omnibus Incentive Plan are described under “ Executive Compensation – Equity Incentive Plan s”.

The following table sets forth the aggregate number of options held by holders of each category identified therein as of the date of this prospectus, as adjusted to give effect to the Pre-Closing Reorganization whereby each option will be exercisable for a Subordinate Voting Share:

Category of Holder All of our executive officers and past executive officers, as a group (9in total) All of our directors and past directors who are not also executive officers, as a group (0in total) All of our other employees and past employees, as a group (4in total) All of our consultants, as a group (0in total)	Number of options 837,500 - 125,000 -	Exercise Price (in U.S.$)(1) 19.48(2) - 24.83 -	Expiration Date Range
			April 11, 2026 – April 18, 2031(3) - July 1, 2026 – January 31, 2030 -

(1) Represents the weighted average exercise price of all outstanding options to purchase Subordinate Voting Shares, whether vested or unvested. In connection with the Pre-Closing Reorganization, option holders under the Legacy ESOP will be entitled to exchange their existing options for new replacement options under the Legacy ESOP for the sole purpose of changing the exercise price from U.S. dollars to Canadian dollars. See “ PreClosing Reorganization ”.

(2) Excludes 25,000 options of which the exercise price will be the Offering Price.

(3) The expiration date for 212,500 options granted to certain former executive officers is connected to a “liquidity event” as provided for in agreements between the Company and these former executive officers.

For a description of our equity-based incentive compensation plans, “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Long-Term Incentive Compensation ”.

PRIOR SALES

The following table summarizes issuances of Subordinate Voting Shares, or securities convertible into Subordinate Voting Shares, during the 12-month period preceding the date of this prospectus. As part of the Pre-Closing Reorganization, our outstanding Class A Common Shares and Class B Common Shares will become Subordinate Voting Shares and Multiple Voting Shares, as applicable, and all of the outstanding options to acquire Class B Common Shares under the Legacy ESOP will become options to acquire Subordinate Voting Shares. See “ Description of Share Capital – Pre-Closing Reorganization ”.

Date of Issuance Type of Security Number of Securities Issued Issuance/ Exercise Price per Security (in U.S.$)(1)	As adjusted for Pre-Closing Reorganization
	Number of Securities Issued Issuance/ Exercise Price per Security (in U.S.$) (1)

July 6, 2020	Options	30,000	16.2194	30,000	16.2194
October 1, 2020	Options	25,000	15.6267	25,000	15.6267
November 30, 2020	Options	150,000	15.6267	150,000	15.6267
April 18, 2021	Options	25,000	(2)	25,000	(2)
June 13, 2021	Subordinate Voting	75,000	(3)	75,000	(3)
	Shares

(1) In connection with the Pre-Closing Reorganization, option holders under the Legacy ESOP will be entitled to exchange their existing options for new replacement options under the Legacy ESOP for the sole purpose of changing the exercise price from U.S. dollars to Canadian dollars. See “ PreClosing Reorganization ”.

(2) Exercise price equal to the Offering Price.

(3) Issue price equal to the Offering Price. See “ Description of Share Capital – Pre Closing Reorganization ”.

DIRECTORS AND EXECUTIVE OFFICERS

The following tables set out, for each of our directors and executive officers (including those who will serve upon Closing), the person’s name, province or state and country of residence, age, position with us, principal occupation and, if a director, the date on which the person became a director. Our directors are elected annually and, unless re-elected, retire from office at the end of the next annual meeting of shareholders. As a group, the directors of the reconstituted Board and executive officers will beneficially own, or control or direct, directly or indirectly, a total of 2,957,265 Multiple Voting Shares and a total of 7,860,505 Subordinate Voting Shares, representing respectively 100% and  % of each such class of shares outstanding immediately following the Closing (assuming no exercise of the Over-Allotment Option).

Directors

Directors
Name and Province or State and Country of Residence ROBLAIDLAW(8) Grand Cayman, Cayman Islands WAYNEBIGBY(3), (7), (9), (12) Ontario, Canada PAULRIVETT(2), (4), (7), (10) Ontario, Canada CORYJANSSEN(6), (7), (12) Alberta, Canada MALGOSIAGREEN(2), (5), (7), (12) British Columbia, Canada MICHAELWASHINUSHI (1), (6), (7), (10), (12) Ontario, Canada MARINAGLOGOVAC(4), (7), (12) Ontario, Canada JESSERASCH(7), (11) Ontario, Canada LORENZODEMARCHI(7), (11) Ontario, Canada	Age 39 60 53 40 42 52 59 45 59	Position(s) / Title Director and Chief Executive Officer Director Director, Chair of the Board Director Director Director Director Director Director	Director Since November 19, 2012 Upon Closing September 25, 2020 as a Director Upon Closing as Chair Upon Closing Upon Closing Upon Closing Upon Closing November 19, 2012 June 13, 2017	Principal Occupation
				Chief Executive Officer of VerticalScope Retired Co-Owner of NordStar Capital LP and Chairman and Co-Proprietor of Torstar Corporation Co-Founder and Co-CEO of AltaML Inc. Chief Executive Officer of Plenty of Fish Chief Financial Officer of FreshBooks President & Chief Executive Officer of CanadaHelps Chief Executive Officer, Hedgewood Inc. Chief Investment Officer of Torstar Corporation (previously its Executive Vice President and Chief Financial Officer)

(1) Chair of the Audit Committee.

(2) Member of the Nominating and Governance Committee.
(3) Chair of the Nominating and Governance Committee.
(4) Member of the Audit Committee.

(5) Chair of the Compensation Committee.

(6) Member of the Compensation Committee.

(7) Independent director for the purposes of NI 58-101. See “ Corporate Governance – Board of Directors – Director Independence ”.

(8) RDL Ventures nominee. See “ Agreements with Principal Shareholders – Investor Rights Agreement – Nomination Rights”.

(9) Hedgewood nominee. See “ Agreements with Principal Shareholders – Investor Rights Agreement – Nomination Rights ”.

(10) NordStar Group nominee. See “ Agreements with Principal Shareholders – Investor Rights Agreement – Nomination Rights ”.

(11) Mr. Rasch and Mr. DeMarchi will both resign as directors immediately prior to Closing.

(12) Each of Mr. Bigby, Mr. Janssen, Ms. Green, Mr. Washinushi and Ms. Glogovac will not be serving in the capacity of director of the Company as at the date of this prospectus and as a result will not be statutorily liable for the contents of this prospectus.

Executive Officers

Name and Province or State and Country of Residence ROBLAIDLAW Grand Cayman, Cayman Islands VINCENZOBELLISSIMO Ontario, Canada KENDALCLARKE Ontario, Canada CHRISGOODRIDGE Ontario, Canada SAMEERLALJI Ontario, Canada JOEPISHGAR New Hampshire, U.S. BRANDONSEIBEL Ontario, Canada DIANEYU Ontario, Canada	Age 39 45 35 46 42 40 38 44	Position(s) / Title Founder and Chief Executive Officer SVP, Finance Chief Commerce Officer President, Chief Operating Officer Chief Product Officer Chief Community Officer Chief Technology Officer Chief Legal Officer and Corporate Secretary	Years with VerticalScope (approximate)
			20 8 5 6 1 1 12 8

Biographies

The following are brief profiles of the executive officers and directors of the Company, including a description of each individual’s principal occupation within the past five years.

Non-Executive Directors

Wayne Bigby, Director (upon Closing)

Wayne is a retired senior executive and lawyer with over 35 years of business experience. Prior to his retirement, Wayne served as the President of Hedgewood, where he filled a multi-dimensional role, including acting as general counsel for the related group of companies. He also had investment management responsibilities and provided strategic consulting to the Hedgewood portfolio companies, including sitting on several private company boards. Prior to joining Hedgewood, Wayne held a number of executive/legal roles, including as Executive Vice President of Kingsdale Shareholder Services, Editor-inChief of Lexpert (a division of Thomson Reuters), Executive Vice President of InQuent Technologies Inc. and Corporate Law Associate at Blake, Cassels & Graydon LLP. Wayne holds a Juris Doctor degree from the University of Toronto along with MBA and Bachelor of Science degrees from Queen’s University.

Marina Glogovac, Director (upon Closing)

Marina is the President and Chief Executive Officer of CanadaHelps, a leader in providing fundraising and donation technology to charities and donors. Prior to joining CanadaHelps, Marina had a 25-year career in leading e-commerce, technology and media companies, including as Chief Executive Officer and the Chief Revenue Officer at Lavalife Corp., Chief Marketing Officer at Kobo Inc. and Group Publisher for St. Joseph’s Media. Marina has served on boards or advisory committees for The Walrus Magazine Foundation, Magazines Canada, Interactive Advertising Bureau Canada and Ontario Media Development Corporation. A graduate of the University of Belgrade, Marina also holds a Master’s degree in Education from the University of Toronto’s Ontario Institute for Studies in Education (OISE).

Malgosia Green, Director (upon Closing)

Malgosia Green is the Chief Executive Officer of Plenty of Fish, which is part of the Match group. During her over threeyear tenure, she has led the transformation of the technology platform, brand strategy and product vision of one of the largest dating apps in the U.S. Prior to her current role, she served as the Chief Product Officer at Top Hat. During her tenure, the brand grew into a leading educational technology company, and the team’s headcount increased from 20 employees to over 300. Malgosia was also the founder and Chief Executive Officer of Savvica, an online marketing company focused on international education and financed by Educomp (EDSO.BO), India’s largest education company. Malgosia also served as the Director of Product Management at Affinity Labs, an online communities company funded by Mayfield Fund and Trinity Ventures. Malgosia holds a B.Sc. (Honours) in System Design Engineering from the University of Waterloo.

Cory Janssen, Director (upon Closing)

Cory Janssen has over 20 years’ experience in technology and software development. He is the Co-Founder and Co-CEO of AltaML Inc., a Canadian artificial intelligence company that designs and implements applied artificial intelligence solutions. In his current role, Cory is responsible for overseeing AltaML’s growth strategy and is actively involved in helping business leaders understand how artificial intelligence can be used as a horizontal enabler to create competitive advantage. In addition to his role at AltaML, Cory is also an Associate at the Creative Destruction Lab. Before AltaML, Cory was the President of Galt Capital Inc. and the Co-Founder of Janalta Interactive. He was also involved in several successful ventures and is best known for co-founding Investopedia.com, which was sold to Forbes Media in 2007. Cory serves on the board of directors of McCoy Global Inc. (TSX: MCB) and Edmonton Global, as well as a number of other private company boards. He holds a Bachelor of Commerce from the University of Alberta.

Paul Rivett, Director (current) and Chair of the Board (upon Closing)

Paul is the Co-Owner of NordStar Capital LP and the Chairman and Co-Proprietor of Torstar Corporation. He was previously the President of Fairfax Financial Holdings Ltd. and Vice President and Chief Operating Officer of Hamblin Watsa Investment Counsel Ltd. Paul currently serves on the boards of directors of GreenFirst Forest Products Inc. (TSXV: GFP) and Recipe Unlimited Corporation (TSX: RECP). He previously served as a director of Zenith National Insurance Corp., Odyssey Group Holdings Inc., Northbridge Financial Corporation, MEGA Brands Inc., Resolute Forest Products Inc., The Brick Ltd., Resolute FP US Inc. (formerly Bowater Inc.) and as Vice Chairman of the Board of Fairfax Africa Holdings Corporation (now Helios Fairfax Partners Corporation). Paul holds a Bachelor of Science degree from the University of Toronto, a Masters in International Relations from Queen’s University and a Bachelor of Laws degree from Queen’s University. He is also a Canadian Securities Registered Portfolio Manager.

Michael Washinushi, Director (upon Closing)

Michael Washinushi has over 15 years of experience in corporate finance and planning, spanning multiple industries, including food service, real estate and telecommunications. He is the Chief Financial Officer of FreshBooks, a cloud-based accounting software that allows owners to invoice clients, track time, and run their small businesses in the cloud. Prior to FreshBooks, he served as the Chief Financial Officer, Secretary and Treasurer of SiriusXM Canada. Michael holds a Bachelor of Arts degree in economics from York University.

Executive Officers Who Also Serve as Directors

Rob Laidlaw, Founder and Chief Executive Officer

Rob Laidlaw is the founder and visionary behind VerticalScope. Rob founded TopHosts.com, the predecessor company to VerticalScope in 1999 from the basement of his family home in Saskatchewan, Canada. As CEO of VerticalScope, he has aggressively grown the business focusing his energies on business development, market strategy and platform growth. In 2001, Rob launched the Modified Automotive Group which was later acquired in 2007 by the largest US enthusiast-magazine publisher Primedia. Today, Rob is a passionate enthusiast and avid community user and is focused on continuing to grow our Fora software platform. When he’s not working, Rob enjoys angel investing, traveling and playing tennis.

Executive Officers Who Do Not Serve as Directors

Vincenzo Bellissimo SVP, Finance

Vincenzo has been our SVP Finance since 2017 and joined VerticalScope in 2012 as the VP Finance after spending 12 years in the film distribution industry with a focus on independent start-ups and systems implementation. Prior to joining us, Vincenzo held a Controller position at Alliance Films where he assisted in launching a self-directed solution for Home Entertainment which included the implementation of a new enterprise resource planning system, by title reporting and electronic data interchange connectivity for order and inventory management. He also previously worked for Maple Pictures as its Controller. Vincenzo holds a Bachelor of Commerce degree with a specialty in Accounting from the University of Toronto. When he’s not working, Vincenzo enjoys spending time with his family and perfecting their southern Italian artisan traditions.

Kendal Clarke, Chief Commerce Officer

Kendal brings over 10 years of digital media strategy, corporate development, and operations experience to our team. Since joining the team in 2015, Kendal has played a key role in identifying and growing new sources of revenue. As Chief Commerce Officer, Kendal is responsible for the commerce strategy and operations across all of VerticalScope. At VerticalScope, Kendal was also the Vice President of Commerce and the Director of Strategic Partnerships and Affiliate Revenue. Prior to joining us, Kendal was the Manager of Corporate Strategy and Development at Torstar Corporation and a Product Manager at thestar.com. Kendal has two bachelor’s degrees (BA and BPHE) from Queen’s University and her MBA from Schulich School of Business at York University. When she is not working, Kendal enjoys long distance running, canoeing and spending time with friends and family.

Chris Goodridge, President and COO

Chris is our President and Chief Operating Officer and formerly VeticalScope’s Chief Investment Officer. Chris brings over nineteen years of M&A and technology and digital media leadership to VerticalScope. Prior to joining us, Chris was Chief Operating Officer, Digital and SVP Digital Ventures at Torstar Corporation and prior to that was the President of Torstar Digital. Chris has successfully completed over 50 acquisitions of online communities and digital properties both while with us and prior to joining our team. Chris led Torstar’s investment in VerticalScope in 2015, and was a member of our Board of Directors from 2015-2017. Prior to Torstar, Chris practiced corporate and M&A law with Blake, Cassels & Graydon LLP. He has a B.Sc. from Queen’s University, a law degree from Osgoode Hall Law School and an MBA from the Rotman School of Management. When he is not working, Chris loves to cook (especially southern style BBQ), read (favourite author Erik Larson), go for long weekend runs and spend time with his family at the cottage. Chris loves every sport and also is a volunteer minor hockey coach in the GTHL.

Sameer Lalji, Chief Product Officer

Sameer Lalji joined our team in March of 2020 as Chief Product Officer. Sameer brings over 15 years of product knowledge and experience to the team, supported by his in-depth technical understanding and degree in computer science. Sameer’s bottom-up approach, interpersonal skills and a dedication to fostering company culture have resulted in highly-engaged teams and products with intuitive user experiences. Prior to joining our team, Sameer provided consulting services through Lalji Consulting Services Inc. where he served as the Managing Director of Band of Coders and oversaw the launch of a complex rewards application for one of the Middle East’s largest retailer developers of software and mobile applications. Prior to that, Sameer was the Chief Technology Officer at DealTap where he delivered

100

applications to production and facilitated the acquisition of DealTap. Prior to his role with DealTap, Sameer was a Managing Director at Devbridge Group, and previously, a Technical Program Director at K2 Digital. Prior to his role at K2 Digital, Sameer was a Program Manager at eyeReturn Marketing. When he is not working, Sameer enjoys volleyball, wall climbing, reading and a multitude of other hobbies.

Joe Pishgar, Chief Community Officer

Joe Pishgar joined VerticalScope as its Chief Community Officer in 2020. Joe is an 18+ year veteran of online community management and is a subject matter expert on forums, digital conduct, moderation, user-generated content, engagement, and monetization with a background in high-tech media and entertainment. Prior to joining VerticalScope, he served as Vice President, Global Communities at Future plc where he launched communities for PC Gamer, Space.com, Live Science, What Hi-Fi, and more. Previously, he served as Director of Community for Purch Inc. where he built communities for Tom’s Hardware, Tom’s Guide, and AnandTech. Joe enjoys gaming, cooking, and hiking in his spare time.

Brandon Seibel, Chief Technology Officer

Brandon Seibel has been our Chief Technology Officer since 2019. Brandon brings over a decade of experience building and managing scalable technology platforms and teams. Prior to becoming our Chief Technology Officer, he served as our Chief Architect and our Operations and Systems Architecture Manager. He has led the technology vision and engineering teams working on our Fora platform, led an R&D team focusing on natural language processing and architected and implemented the companies technology platform that hosts and serves our millions of users per month. Before VerticalScope, Brandon was a key contributor to the web hosting and email platform at Network Solutions LLC, which built a pre-cloud horizontally scalable computer platform that powered hosting and email services. When he is not working, Brandon enjoys dabbling in his passion for aviation and spending time with his wife and two kids.

Diane Yu, Chief Legal Officer and Corporate Secretary

Diane Yu has been our Chief Legal Officer since 2013 and our Corporate Secretary since 2015. Diane brings over 19 years of legal experience in domestic and cross-border M&A, strategic partnership and joint venture transactions, corporate finance, corporate governance, and corporate, commercial, securities and regulatory matters. Prior to joining our team, Diane was Senior Legal Counsel in the Transactions and Corporate Operations groups at TD Bank. Before that, Diane was in private practice at Proskauer Rose LLP and Gowling WLG specializing in M&A and Corporate Finance. Diane received her Bachelor of Laws from the University of Ottawa, and her Honours Bachelor of Commerce from the University of Toronto (Trinity College). Diane is admitted to the bar in both New York and Ontario. Diane is a past member of the Board of Directors of Women in Capital Markets and the Heather L. Main Scholarship Committee. Diane was awarded the M&A Advisor’s 40 Under 40 Emerging Leaders Award in 2015 and the Lexpert Zenith Award for Mid-Career Excellence in 2018. When Diane is not working, she enjoys trying out new restaurants, travelling, engaging in outdoor activities and adventures and spending time with family and friends.

Corporate Cease Trade Orders and Bankruptcies

None of our directors or executive officers or shareholders holding a sufficient number of securities in VerticalScope to materially affect the control of VerticalScope is, as at the date of this prospectus, or has been, within the 10 years prior to the date of this prospectus: (a) a director, chief executive officer or chief financial officer of any company that was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; (b) was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; or (c) a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. For the purposes of this paragraph, “order” means a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case, that was in effect for a period of more than 30 consecutive days.

Individual Bankruptcies

None of our directors or executive officers or shareholders holding a sufficient number of securities in VerticalScope to

101

materially affect the control of VerticalScope has, within the 10 years prior to the date of this prospectus, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver manager or trustee appointed to hold assets of that individual.

Penalties or Sanctions

None of our directors, executive officers or shareholders holding a sufficient number of securities of VerticalScope to materially affect the control of VerticalScope has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

Conflicts of Interest

The OBCA requires, among other things, that our directors and executive officers act honestly and in good faith with a view to the best interest of the Company, to disclose any personal interest that they may have in any material contract or transaction that is proposed to be entered into with us and, in the case of directors, to abstain from voting as a director for the approval of any such contract or transaction.

Other than as disclosed herein, to our knowledge, there are no known existing or potential material conflicts of interest between us and our directors and executive officers, except that certain of our directors and officers also serve as directors or officers of other companies, and therefore it is possible that a conflict may arise between their duties to us and their duties as a director or officer of such other companies. See “ Directors and Executive Officers – Biographies ”. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the OBCA.

In the ordinary course of our business, we have entered into commercial agreements with arm’s length parties in which certain of our directors and officers have indirect minority beneficial ownership interests, and may do so again in the future. For example, we have a commercial agreement with Snapsort Inc. and a commercial agreement with certain subsidiaries of NordStar Capital LP. Our director Jesse Rasch is also a director of Snapsort Inc. and each of Mr. Rasch and Mr. Laidlaw has indirect minority beneficial ownership interests in Snapsort Inc. The Chair of our Board Mr. Rivett is also Co-Owner of NordStar Capital LP, and he exercises control or direction over 50% of the Class A units of NordStar Capital LP. We view the foregoing conflicts of interest to be immaterial, and when such conflicts arise, they are resolved in accordance with the provisions of the OBCA.

Directors’ and Officers’ Liability Insurance

Our directors and officers are covered under our existing directors’ and officers’ liability insurance. Under this insurance coverage, we will be reimbursed for insured claims where payments have been made under indemnity provisions on behalf of our directors and officers, subject to a deductible for each loss, which will be paid by us. Our individual directors and officers will also be reimbursed for insured claims arising during the performance of their duties for which they are not indemnified by us. Excluded from insurance coverage are illegal acts, acts which result in personal profit and certain other acts.

AUDIT COMMITTEE

Audit Committee Charter

The Board has adopted a written charter describing the mandate of the Audit Committee that establishes, inter alia , the committee’s purpose and responsibilities, consistent with NI 52-110. The text of the charter of the Audit Committee is reproduced in its entirety under “ Audit Committee Charter ” in this prospectus.

The Audit Committee assists the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, internal control and legal compliance functions, including the Board’s oversight of:

the quality, integrity, fairness and completeness of the Company’s financial statements and financial information;
the accounting and financial reporting policies, practices and procedures;

102

the qualifications, appointment, performance and independence of the external auditor;
the performance of the internal audit function;
the Company’s disclosure controls and procedures, internal controls over financial reporting and management’s responsibility for assessing and reporting on the effectiveness of such controls;
the Company’s risk management practices and financial reporting compliance;
the preparation of disclosures and reports required to be prepared by the Audit Committee by any applicable laws, regulations, rules and listing standards; and
the Company’s compliance with applicable laws, regulations, rules and listing standards.

The Audit Committee also provides an avenue for communication between the external auditor, management and other employees of the Company, as well as the Board, concerning accounting, financial reporting and auditing matters. To fulfill its roles, duties and responsibilities, the Audit Committee may contact and have discussions with the Company’s external auditors and officers and employees, and obtain Company information and documentation from such persons. The Audit Committee may obtain full access to all Company books, records, facilities and personnel in investigating matters within the scope of its responsibility. The Audit Committee may, in its sole discretion, retain and obtain the advice and assistance of independent outside counsel and such other advisors as it deems necessary to fulfill its duties and responsibilities and may set the compensation and oversee the work of any outside counsel and other advisors to be paid by the Company.

Composition of the Audit Committee

Currently, the Audit Committee consists of Paul Rivett, Jesse Rasch, and Lorenzo DeMarchi. Effective immediately upon Closing, the Audit Committee will be reconstituted to consist of Paul Rivett, Marina Glogovac and Michael Washinushi, each of whom is considered both “financially literate” and “independent” within the meaning of NI 52-110. Mr. Washinushi will serve as the Chair of the Audit Committee. For the education and experience relevant to the performance by each such person of the responsibilities as a member of the Audit Committee following completion of the Offering, see “ Directors and Executive Officers – Biographies ”.

It is the Board’s determination that each of the members of the Audit Committee is financially literate within the meaning of NI 52-110. A director is “financially literate” within the meaning of NI 52-110 if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by our financial statements.

Additionally, it is the Board’s determination that each of the members of the Audit Committee is independent within the meaning of NI 52-110. Subject to certain exceptions, a director is “independent” within the meaning of NI 52-110 if he or she has no direct or indirect material relationship with the issuer. A “material relationship” is a relationship that could, in the view of the Board, be reasonably expected to interfere with the exercise of a director’s independent judgment.

The Board will appoint the members of the Audit Committee annually, and each member of the Audit Committee shall serve at the pleasure of the Board until the member resigns, is removed or ceases to be a member of the Board.

Pre-Approval Procedures

The Audit Committee is responsible for the pre-approval of all audit and non-audit services to be provided to us by our independent auditor where such pre-approval is required by applicable laws, regulations, rules and listing standards.

Review of the External Auditor

At least annually, the Audit Committee shall consider, assess and report to the Board on (i) the independence of our external auditor; (ii) the external auditor’s written statement delineating all relationships between the external auditor and us, assuring that the lead audit partner rotation is carried out, as required by law, and delineating any other relationships that may adversely affect the independence of the external auditor; and (iii) the evaluation of the lead audit partner, taking into account the opinions of management.

103

Independent Auditor’s Fees

The following sets forth the fees billed or accrued for various services provided by KPMG LLP and its affiliates to the Company for FY 2020 and FY 2019:

Services Retained Audit Fees(1) Audit-Related Fees Tax Fees(2) All Other Fees Total	Fees billed in FY 2020 (in C$) 93,000 - 186,896 - 279,896	Fees billed in FY 2019 (in C$)
		120,450 - 156,766 - 277,216

(1) Audit Fees relate to professional services rendered for audits of the Company’s annual consolidated financial statements.

(2) Tax Fees relate principally to fees associated with assistance in respect of tax compliance requirements in various jurisdictions and investment tax credit filings.

CORPORATE GOVERNANCE

The Canadian Securities Administrators have issued corporate governance guidelines pursuant to National Policy 58-201 – Corporate Governance Guidelines which are recommended as “best practices” for issuers to follow. We recognize that good corporate governance plays an important role in our overall success and in enhancing shareholder value and, accordingly, we will be adopting, upon Closing, certain governance policies and practices. The disclosure set out below includes disclosure required by NI 58-101 and NI 52-110 describing our approach to corporate governance.

Board of Directors

Composition of the Board

Under our Articles, our Board is to consist of a minimum of three and a maximum of 13 directors as determined from time to time by our Board. Pursuant to the Investor Rights Agreement, the size of the Board will be set at seven directors. The directors are appointed at an annual general meeting of shareholders and the term of office for each of the directors will expire at the time of our next annual shareholders meeting or until such director’s resignation, replacement or removal. Under the OBCA, a director may be removed with or without cause by a resolution passed by a majority of the votes cast by shareholders present in person or by proxy at a meeting and who are entitled to vote. Under the OBCA, at least one quarter of our directors must be resident Canadians as defined in the OBCA. Our Articles provide that, between annual general meetings of shareholders, the directors may appoint one or more additional directors so appointed, but the number of additional directors so appointed may not at any time exceed one-third of the number of current directors who were elected or appointed other than as additional directors.

Nomination of Directors and Majority Voting Policy

Subject to the nomination rights set out in the Investor Rights Agreement, our Nominating and Governance Committee is responsible for identifying individuals qualified to become Board members and recommending nominees for election or appointment as directors, as the case may be, as well as to recommend individual directors to serve on the various Board committees, in each case in accordance with the provisions of applicable corporate law, rules and regulations and listing requirements and the written mandate of our Nominating and Governance Committee. Under the Investor Rights Agreement, each of NordStar Group, Hedgewood and RDL Ventures will be entitled to certain director nomination rights. See “ Agreements with Principal Shareholders – Investor Rights Agreement – Nomination Rights ”.

To the extent all or a portion of the rights to designate directors under the Investor Rights Agreement are lost or there is an increase in the size of the Board, the Nominating and Governance Committee will be unconstrained with respect to its recommendations for any available director positions not subject to the nomination rights of shareholders. It is expected that the Nominating and Governance Committee will consider the competencies and skills that the Board determines are necessary for the Board as a whole to possess, the competencies and skills that the Board determines each existing director to possess, and the competencies and skills each new nominee will bring to the boardroom. The Nominating and Governance Committee is expected to also consider the amount of time and resources that nominees have available to fulfill their duties as a member of the Board.

104

The Nominating and Governance Committee is entirely composed of independent directors within the meaning of NI 58-101. The chair of the Nominating and Governance Committee is an independent director and will lead any nominating process in accordance with and pursuant to the criteria for Board membership determined by the Nominating and Governance Committee in accordance with its written mandate.

In accordance with the requirements of the TSX, our Board will adopt a majority voting policy. Under the majority voting policy, if any nominee for director receives a greater number of votes “withheld” from his or her election than votes “for” such election, such nominee is required to immediately tender his or her resignation as a director, to be effective on acceptance by the Board. The Nominating and Governance Committee will consider such offer of resignation and make a recommendation to the Board whether to accept the resignation or delay or reject it on the basis of exceptional circumstances. In considering whether exceptional circumstances exist, the Nominating and Governance Committee will consider all factors deemed relevant by members of the committee.

The Board will consider the recommendation of the Nominating and Governance Committee and disclose by news release its decision whether or not to accept that resignation and the reasons for its decision no later than 90 days after the date of the relevant shareholders’ meeting. The Board will accept the tendered resignation, absent exceptional circumstances.

Insider Trading Policy

All of our directors, officers, employees and consultants and other designated persons are subject to our insider trading policy, which contains practices and expectations relating to, among other things, insider trading, tipping, filings, regular and discretionary blackout periods, and consequences of non-compliance. The insider trading policy is intended to supplement relevant Canadian securities legislation and the standards, rules, policies and guidance of the TSX. See also “ Executive Compensation – Hedging Prohibition ”.

Advance Notice By-Law

We will have adopted at Closing an advance notice by-law that includes provisions with respect to the election of our directors in our Articles. See “ Description of Share Capital – Other Important Provisions of our Constating Documents – Advance Notice Provisions ”.

Director Independence

Our Board is composed of seven directors, six of whom are independent within the meaning of NI 58-101. See “ Agreements with Principal Shareholders ”. It is the Board’s determination that, pursuant to applicable standards, Rob Laidlaw is not independent by reason of the fact that he is the Chief Executive Officer of the Company. For additional information regarding the directors of VerticalScope, see “ Directors and Executive Officers ”.

Pursuant to NI 58-101, an independent director is one who is free from any direct or indirect relationship which could, in the view of the Board, be reasonably expected to interfere with a director’s independent judgment. The Board shall determine annually whether each member of the Board is independent in accordance with applicable securities legislation by ascertaining, among other things, whether they were engaged as an executive officer or employee of VerticalScope, they have any immediate family member engaged as an executive officer or employee of VerticalScope, they received remuneration from VerticalScope other than remuneration for acting as a director or a member of any committee of the Board, or they or an immediate family member benefitted from a business relationship with VerticalScope that could reasonably be perceived to interfere with their independent judgement.

We have taken steps to ensure that adequate structures and processes will be in place following the completion of the Offering to permit the Board to function independently of management of the Company. It is contemplated that independent directors within the meaning of NI 52-110 will hold in-camera sessions without management or non-independent directors present at meetings of the Board. See “ Corporate Governance – Board of Directors – Meetings of Independent Directors ”.

Outside Directorships

The following members of the Board are currently directors of other companies that are reporting issuers (or the equivalent) in a jurisdiction of Canada or a foreign jurisdiction:

105

Director Paul Rivett Cory Janssen	Reporting Issuer Recipe Unlimited Corporation GreenFirst Forest Products Inc. McCoy Global Inc.	Stock Exchange
		TSX TSXV TSX

The Board has not adopted a director interlock policy, but is keeping informed of other public directorships held by its members.

Meetings of Independent Directors

The Board will hold regularly-scheduled quarterly meetings as well as ad hoc meetings from time to time. In the course of meetings of the Board or of committees of the Board, and the independent directors will hold meetings, or portions of such meetings, at which neither non-independent directors nor officers of VerticalScope are in attendance.

If a director or officer holds an interest in a transaction or agreement under consideration at a Board meeting or a meeting of a committee of the Board, that director or officer shall not be present at the time the Board or committee deliberates such transaction or agreement and shall abstain from voting on the matter, subject to certain limited exceptions provided for in the OBCA.

Chair of the Board

The Chair of the Board is principally responsible for overseeing the operations and affairs of the Board.

Mandate of the Board

The Board has adopted a written mandate describing, inter alia , the Board’s role and overall responsibility to supervise the management of, and provide stewardship over, our business and affairs. The Board, directly and through its committees and the Chair of the Board, shall provide direction to our executive officers, generally through the Chief Executive Officer. The Board has overall responsibility for the Company’s strategic planning and budgets, risk management, ethics and compliance, corporate governance and stakeholder engagement, including communications with our shareholders and the market. The text of the mandate of the Board is reproduced in its entirety under “ Mandate of the Board of Directors ” in this prospectus.

Position Descriptions

The Board has adopted a written position description for the Chair of the Board, which sets out the Chair of the Board’s key responsibilities, including, among others, ensuring the Board has structures and procedures in place to enable it to function independently of management, carries out its responsibilities effectively and clearly understands and respects the boundaries between Board and management responsibilities. The Chair of the Board also has duties relating to ensuring sufficiently frequent Board meetings, setting the agenda for, and ensuring matters set out therein are discussed and brought to resolution at, Board meetings and recommending chairs for the committees of the Board.

In addition, the Board has adopted a written position description for each of its committee chairs within the respective committee mandates which sets out each of the committee chair’s key responsibilities, including, among others, reporting to the Board with respect to the deliberations, decisions and recommendations of the applicable committee, as well as duties relating to setting out committee meeting agendas, calling and chairing committee meetings and working with the respective committee and management to ensure, to the greatest extent possible, the effective functioning of the committee.

Finally, the Board has developed and implemented a written position description for the role of the Chief Executive Officer who is primarily responsible for the day-to-day management of the business and affairs of the Company, including establishing the strategic and operational priorities of the Company, providing leadership for the effective overall management of the Company, including in the areas of finance, administration and governance, and acting as the principal spokesperson for the Company and overseeing interactions between the Company and the public.

Orientation and Continuing Education

The Nominating and Governance Committee shall review, monitor and make recommendations with respect to director orientation. Following Closing, we will implement an orientation program under which each new director will meet with the

106

Chair of our Board, individual directors and members of the senior management team to discuss the Company’s business and activities. It is anticipated that all newly elected directors will receive orientation and education as to the nature and operation of the business and affairs of the Company, including the Company’s internal controls, financial reporting and accounting practices, the Company’s regulatory and legal requirements as it transitions into a reporting issuer, and as to the role of the Board and its committees. Orientation will be designed to assist the directors in fully understanding the nature and operation of the Company’s business, the role of the Board and its committees, and the contributions that individual directors are expected to make, including the time and effort the Company expects them to devote to the execution of their functions.

In addition, the Nominating and Governance Committee will review, monitor and make recommendations with respect to director continuing education programs designed to maintain or enhance the skills and abilities of the Company’s directors in relation to their duties and responsibilities on the Board and to ensure that their knowledge and understanding of the Company’s business, including its operations, internal controls, financial reporting and accounting practices, remains current.

The Chair of the Board, in consultation with the Nominating and Governance Committee, will review and monitor, as appropriate, the Company’s orientation and continuing education programs for directors.

Code of Ethics and Business Conduct

The Board has adopted a written Code of Ethics and Business Conduct applicable to all of our directors, officers, employees, contractors and agents acting on behalf of the Company. The Code of Ethics and Business Conduct sets out our core values and standards of behavior that are expected from our personnel with respect to all aspects of our business. The objective of the Code of Ethics and Business Conduct is to provide guidelines for maintaining our integrity, reputation and honesty with a goal of honouring others’ trust in us at all times. The Code of Ethics and Business Conduct addresses conduct in dealing with conflicts of interest, protection of our assets, confidentiality, fair dealing with shareholders, competitors and employees, insider trading, compliance with laws and reporting any illegal or unethical behaviour. Our Board will have ultimate responsibility for the stewardship of and monitoring compliance with the Code of Ethics and Business Conduct and it will monitor compliance through our Nominating and Governance Committee.

The foregoing summary is subject to, and qualified in its entirety by reference to the Code of Ethics and Business Conduct, which upon the completion of the Offering, will be available on our website at www.verticalscope.com and under our SEDAR profile at www.sedar.com .

Interests of Directors

A director who has a material interest in a matter before our Board or any committee on which he or she serves is required to disclose such interest as soon as the director becomes aware of it. In situations where a director has a material interest in a matter to be considered by our Board or any committee on which he or she serves, such director may be required to excuse himself or herself from the meeting while discussions and voting with respect to the matter are taking place. Directors will also be required to comply with the relevant provisions of the OBCA regarding conflicts of interest.

Assessments

It is the responsibility of the Nominating and Governance Committee to, at least annually, evaluate the overall efficiency of the Board and its various committees, as well as each director regarding his, her or its performance, effectiveness and contribution, and to report its evaluation results to the Board on a regular basis. The Board receives and reviews the Nominating and Governance Committee’s annual review and assessment of the performance, effectiveness and contributions of the Board, its committee and the directors themselves. The evaluation by the Board takes into account (i) in the case of the Board, the mandate of the Board and (ii) in the case of an individual director, the applicable position description(s), as well as the competencies and skills each individual director is expected to contribute to the Board.

Director Term Limits and Other Mechanisms of Board Renewal

Our Board has not adopted director term limits, a retirement policy for its directors or other automatic mechanisms of board renewal. Rather than adopting formal term limits, mandatory age-related retirement policies and other mechanisms of board renewal, the Nominating and Governance Committee, subject to the nomination rights set out in the Investor Rights Agreement, will seek to maintain the composition of the Board in a way that provides, in the judgment of the Board, the best mix of skills and experience to provide for our overall stewardship.

107

The Board shall, on an annual basis, evaluate and review its performance as a whole, as well as the performance of each individual director while taking into account, among other things, any applicable position description(s), as well as the competencies and skills each individual director is expected to contribute to the Board. See “ Corporate Governance – Assessments ”.

Diversity and Inclusion

We believe that having a diverse Board and executive team offers a depth of perspective that enhances Board and management operations and performance. We similarly believe that having a diverse and inclusive organization overall is beneficial to our success, and we are committed to diversity and inclusion at all levels of our organization to ensure that we attract, retain and promote the brightest and most talented individuals.

The Board does not intend to specifically define diversity, but the Nominating and Governance Committee will value diversity of experience, perspective, education, background, race, gender and national origin as part of its overall evaluation of director nominees for election or re-election (to the extent permitted by the Investor Rights Agreement), and the Board and the Nominating and Governance Committee will value same as part of their respective evaluation of candidates for executive positions. This will be achieved through ensuring that diversity considerations are taken into account to fill vacancies, continuously monitoring the level of women, visible minorities, aboriginal persons and persons with disabilities represented on our Board and in our executive team, continuing to broaden recruiting efforts to attract and interview qualified female and other diverse candidates, and committing to retention and training to ensure that our most talented employees are promoted from within our organization. The Company does not currently have, but will be considering post-Closing the establishment of, a written diversity policy.

Recommendations concerning director nominees (in accordance with the terms of the Investor Rights Agreement) and appointment of executive officers are expected to be based on competence, merit and performance, as well as expected contribution to the Board and management’s performance, such that diversity will be taken into consideration, as it is beneficial that a diversity of backgrounds, views and experiences be present at the Board and management levels. The Company does not intend to adopt a formal policy for the representation and nomination of women on the Board or senior management. The Board, the Nominating and Governance Committee and our senior management team already take gender and other diversity representation into consideration as part of their overall recruitment and selection process. The Company also does not intend to adopt targets for gender or other diversity representation in part due to the need to consider a balance of criteria for each individual appointment and because it is ultimately the competence, skills, experience, character and behavioral qualities that are most important to determining the value which an individual could bring to our Board or management.

Two out of eight of the Company’s executive officers are women (representing 25% of the Company’s executive officers) and, following completion of the Offering, two out of seven of the Company’s directors will be women (representing 29% of the Board).

Committees of the Board

In addition to the Audit Committee, which is required by Canadian securities law for all reporting issuers (see “ Audit Committee ”), the Board has established the following standing committees: the Compensation Committee, and the Nominating and Governance Committee.

Nominating and Governance Committee

The Nominating and Governance Committee consists of a minimum of three directors, all of whom are independent directors, and is charged with overseeing director criteria and selection, Board and committee evaluations, appointment, succession and performance of executive officers, corporate governance, shareholder proposals and environmental, social and corporate governance matters. Upon Closing, the Nominating and Governance Committee will be composed of Wayne Bigby, Malgosia Green and Paul Rivett, all of whom are independent within the meaning of NI 58-101. Wayne Bigby is the chair of the Nominating and Governance Committee. For additional details regarding the relevant education and experience of each member of the Nominating and Governance Committee, see “ Directors and Executive Officers – Biographies ”.

The Board has adopted a written mandate setting forth the purpose, composition, authority and responsibility of the Nominating and Governance Committee. The Nominating and Governance Committee is responsible for, among other things:

108

Subject to the nomination rights set out in the Investor Rights Agreement or similar agreements which may exist from time to time between the Company and certain shareholders, developing and recommending to the Board criteria for selecting potential director candidates and identifying and selecting or recommending to the Board for selection qualified nominees for the Board and committees thereof;
Subject to the nomination rights set out in the Investor Rights Agreement or similar agreements which may exist from time to time between the Company and certain shareholders, reviewing and recommending to the Board criteria relating to directors’ tenure and retention of directors unrelated to age or tenure;
At least annually, reviewing and making recommendations to the Board regarding the composition and organization of the Board and committees thereof in light of legal and regulatory requirements;
Considering and recommending to the Board succession plans with respect to executive officers;
Reviewing and evaluating, and recommending any necessary or appropriate changes to, the Code of Ethics and Business Conduct at least annually, and monitoring adherence thereto;
Reviewing and making recommendations to the Board corporate governance trends and practices, including the Company’s principal corporate policies, including without limitation with regards to matters relating to disclosure, insider trading, governance, diversity, ethics, the environment and health and safety;
Reviewing shareholder proposals received by the Company and recommending to the Board appropriate action in connection therewith;
At least annually, reviewing the adequacy, amount and form of compensation to be paid to each director, considering whether that compensation realistically reflects the time commitment, responsibilities and risks of being effective directors and making recommendations to the Board as appropriate;
Reviewing and monitoring executive and director share ownership requirements and any public disclosure relating to executive and director share ownership, and making recommendations to the Board in connection therewith; and
Overseeing the Company’s strategy and initiatives relating to environmental, social and corporate governance matters that are significant to the Company, including monitoring and reporting to the Board on emerging trends, risks or issues relating to relevant environmental, social and corporate governance matters and reviewing the Company’s public disclosure with respect to environmental, social and corporate governance matters.

See also “ Corporate Governance – Orientation and Continuing Education ” and “ Corporate Governance – Assessments ”. Further particulars of the process by which compensation for our executive officers is determined is provided under “ Executive Compensation ”.

Compensation Committee

The Compensation Committee consists of a minimum of three directors, all of whom are independent directors, and is charged with overseeing executive compensation, the Company’s incentive and equity-based compensation plans and executive compensation disclosure after Closing. Upon Closing, the Compensation Committee will be composed of Malgosia Green, Cory Janssen and Michael Washinushi, all of whom are independent within the meaning of NI 58-101. Malgosia Green is the chair of the Compensation Committee. For additional details regarding the relevant education and experience of each member of the Compensation Committee, including the direct experience that is relevant to each committee member’s responsibilities in executive compensation, see “ Directors and Executive Officers – Biographies ”.

The Board has adopted a written mandate setting forth the purpose, composition, authority and responsibility of the Compensation Committee. The Compensation Committee is responsible for, among other things:

Reviewing, at least annually, the goals and objectives of the Company’s executive compensation plans and amending, or making recommendations to the Board to amend, such goals and objectives as required;
Evaluating, at least annually, the performance of the Chief Executive Officer of the Company and, based on such

109

evaluation and with appropriate input from other independent members of the Board, determining and recommending the Chief Executive Officer’s annual compensation (including, as appropriate, salary, bonus, incentive and equity compensation);

Reviewing, at least annually, the evaluation process and compensation structure for the Company’s executive officers and making recommendations to the Board with respect to the compensation of such executive compensation (including, as appropriate, salary, bonus, incentive and equity compensation);
Assessing annually the competitiveness and appropriateness of the Company’s policies relating to executive officer compensation;
Reviewing and recommending to the Board adoption, amendment or termination of the Company’s incentive and equitybased compensation plans and overseeing their administration (and the aggregate number of shares to be reserved for issuance thereunder);
Reviewing, at least annually, the adequacy, amount and form of compensation to be paid to members of the Board and committees thereof;
Reviewing the Company’s executive compensation disclosure information in accordance with applicable laws, rules and regulations and listing requirements and making recommendations to the Board regarding the approval and disclosure of such information;
Identifying, considering and evaluating the risks, if any, arising from and associated with the Company’s compensation policies and practices and making recommendations to the Board regarding the adoption of practices that will assist in the identification and mitigation of any risks associated with the compensation policies and practices of the Company;
Considering and recommending for approval by the Board the appointment of the Chief Executive Officer, the President, the Chief Financial Officer and other executive officers;
Reviewing and assessing the performance of the executive officers against pre-set specific corporate and individual goals and objectives and reviewing the annual performance assessments of the executive officers and reporting to the Board on such assessments;
Reviewing and recommending for approval by the Board and the Nominating and Governance Committee the Company’s succession plan for the Chief Executive Officer, the President, the Chief Financial Officer and other senior executives; and
Overseeing the selection of any peer group used in benchmarking or determining compensation or any element of compensation.

Further particulars of the process by which compensation for our executive officers is determined is provided under the heading “ Executive Compensation ” in this prospectus.

EXECUTIVE COMPENSATION

Introduction

The following section describes the significant elements of our executive compensation program, with particular emphasis on the process for determining compensation payable to our “Named Executive Officers” or “ NEOs ”. The discussion below also reflects certain contemplated changes to our compensation program that would be implemented in connection with, and contingent upon, the completion of the Offering. The anticipated NEOs for the current financial year ending December 31, 2021 (“ FY 2021 ”) are:

Rob Laidlaw, Founder and Chief Executive Officer;
Vincenzo Bellissimo, SVP, Finance;
Chris Goodridge, President and Chief Operating Officer;

110

Diane Yu, Chief Legal Officer and Corporate Secretary; and
Brandon Seibel, Chief Technology Officer.

Overview

We operate in a dynamic and rapidly evolving market. To succeed in this environment and to achieve our business and financial objectives, we need to attract, retain and motivate a highly talented team of executive officers. We expect our team to possess and demonstrate strong leadership and management capabilities, as well as foster our culture, which is at the foundation of our success and remains a pivotal part of our everyday operations.

We intend to design our executive officer compensation program to achieve the following objectives:

provide compensation opportunities in order to attract and retain talented, high-performing and experienced executive officers, whose knowledge, skills and performance are critical to our success;
motivate our executive officers to achieve our business and financial objectives;
align the interests of our executive officers with those of our shareholders by tying a meaningful portion of compensation directly to the long-term value and growth of our business; and
provide incentives that encourage appropriate levels of risk-taking by our executive officers and provide a strong payfor-performance relationship.

As we transition from being a privately-held company to a publicly-traded company, we will continue to evaluate our philosophy and compensation program as circumstances require and plan to continue to review compensation on an annual basis. As part of this review process, we expect to be guided by the philosophy and objectives outlined above, as well as other factors which may become relevant, such as the cost to us if we were required to find a replacement for a key employee.

The Board has established the Compensation Committee which, upon Closing, will be composed of Malgosia Green, Cory Janssen and Michael Washinushi, all of whom are independent within the meaning of NI 58-101. Malgosia Green is the chair of the Compensation Committee.

The Board has adopted a written mandate for the Compensation Committee that establishes, inter alia , the Compensation Committee’s purpose and responsibilities with respect to executive compensation. See “ Corporate Governance – Committees of the Board – Compensation Committee ” for a description of the Compensation Committee’s mandate.

Compensation Discussion and Analysis

Compensation Objectives and Philosophy

Our compensation practices are designed to retain, motivate and reward our executive officers for their performance and contribution to our short- and long-term success. The Board seeks to compensate executive officers by combining shortterm and long-term cash and equity incentives. It also seeks to reward the achievement of corporate and individual performance objectives, and to align executive officers’ incentives with the Company’s performance. Our philosophy is to pay fair, reasonable and competitive compensation with a significant equity-based component in order to align the interest of the Company’s executive officers with those of its shareholders.

Compensation Governance

Compensation-Setting Process

We discuss below the compensation expected to be paid to our executive officers as approved by the Board in accordance with the objectives set forth above, including for our current fiscal year, which will be our first year as a public company.

After Closing, the Compensation Committee will be responsible for overseeing our human resources, succession planning, and compensation policies, processes and practices. The Compensation Committee will also ensure that compensation policies and practices provide an appropriate balance of risk and reward consistent with our risk profile. The Board has

111

established a written charter for the Compensation Committee setting out its responsibilities for administering our compensation programs and reviewing and making recommendations to the Board concerning the level and nature of the compensation payable to our directors and executive officers after Closing. The Compensation Committee’s oversight will include setting objectives, evaluating performance, and ensuring that total compensation paid to our NEOs and various other key executive officers and key managers is fair, reasonable and consistent with the objectives of our philosophy and compensation program. See also “ Executive Compensation – Overview ”.

The Compensation Committee, in accordance with our compensation philosophy, will periodically assess the competitiveness of our compensation in order to make compensation-related decisions. As part of the executive compensation review and design process, the Compensation Committee may establish a peer group to benchmark compensation. The Compensation Committee may engage an independent compensation consultant to evaluate our executive compensation program against market practice.

Risk and Executive Compensation

In reviewing the Company’s compensation policies and practices each year, the Compensation Committee will seek to ensure the executive compensation program provides an appropriate balance of risk and reward consistent with the risk profile of the Company. The Compensation Committee will also seek to ensure the Company’s compensation practices do not encourage excessive risk-taking behaviour by the executive team.

Principal Elements of Compensation

Upon completion of the Offering, the compensation of our executive officers is expected to include three major elements: (i) base salary in the form of cash and, in the case of our Chief Executive Officer, partially paid in RSUs; (ii) short-term incentives, consisting of annual bonuses and equity-based incentives or, for certain employment categories, commissionbased payments; and (iii) long-term incentives consisting of equity-based awards and contingent cash bonuses. Equity-based incentives will consist of awards under our Omnibus Incentive Plan. The Board has approved equity awards grants to our executive officers in connection with the Offering as disclosed below, and the Board may award further grants as we transition into a publicly-listed issuer.

The Compensation Committee and the Board will determine the go-forward structure of short- and long-term incentive compensation both in terms of quantum and instrument mix, taking into account outstanding equity awards granted to our executive officers.

Base Salaries

Base salary is generally provided as a fixed source of compensation for our executive officers, other than as described below in respect of our Chief Executive Officer. Base salaries for executive officers are established based on the scope of their responsibilities, competencies and their prior relevant experience, taking into account compensation paid in the market for similar positions and the market demand for such executive officers. An executive officer’s base salary is determined by taking into consideration the executive officer’s total compensation package and the Company’s overall compensation philosophy.

On Closing, and on an annual basis thereafter, a portion of Mr. Laidlaw’s base salary will be satisfied by a grant of 26,300 RSUs pursuant to the Omnibus Incentive Plan. Each grant of RSUs will vest at the end of the fiscal year in respect of which they were granted (including for the current fiscal year) and will be settled in Subordinate Voting Shares issued from treasury for services rendered during such fiscal year. These RSU grants maximize available cash resources of the Company and align our Chief Executive Officer’s interest with that of our shareholders through equity ownership.

Assessments of base salaries will be conducted annually, and base salaries may be adjusted based on factors such as the executive officer’s success in meeting or exceeding individual objectives and an assessment of the competitiveness of the then current compensation. Additionally, base salaries can be adjusted as warranted throughout the year to reflect promotions or other changes in the scope or breadth of an executive officer’s role or responsibilities, as well as to maintain market competitiveness.

Short-Term Incentive Compensation

Our NEOs and other executive officers are entitled to annual bonuses, short-term equity-based incentives or commission-

112

based compensation, depending on employee function. Annual bonuses, short-term equity-based incentives and commission plans are designed to motivate our executive officers to meet our business and financial objectives generally and our annual financial performance targets in particular.

For Fiscal 2021, the NEOs, other than our Chief Executive Officer, are eligible to earn an annual bonus based on a target percentage of base salary. Each of these NEO’s bonus is either based (i) on the Company’s success in achieving its Adjusted EBITDA targets, or (ii) 50% on the NEO’s success in achieving personalized goals and objectives and 50% on the Company’s success in achieving its Adjusted EBITDA targets.

The Board maintains the discretion at all times to grant discretionary bonuses, short-term equity-based incentives or commissions, including in the context of acquisitions, and to consider, among other things, the NEO’s individual accomplishments and total compensation opportunity.

The Company will also use Adjusted EBITDA CAGR targets as performance metrics for our Chief Executive Officer. On Closing, and on an annual basis thereafter, Mr. Laidlaw will be granted 40,000 options to purchase an equivalent number of Subordinate Voting Shares pursuant to the Omnibus Incentive Plan. Each grant of options will vest following the end of each fiscal year in respect of which they were granted, subject to achieving the applicable Adjusted EBITDA CAGR targets, as provided for below, and will be exercisable for Subordinate Voting Shares issued from treasury. The exercise price for any options granted will be equal to the market price of the Subordinate Voting Shares at the time of grant, provided that in respect of the options granted on Closing the exercise price will be equal to the Offering Price.

The options will only vest following the end of each fiscal year in respect of which they were granted in the event the Company meets or exceeds the Adjusted EBITDA CAGR targets for the fiscal year, as set forth below:

Adjusted	EBITDA CAGR Targets	Options Vested
		*(Cumulative)*
	15%	12,500
	20%	12,500
	25%	15,000

If any of the above Adjusted EBITDA CAGR targets are not met during the fiscal year, the options subject to those targets will expire. The vested options will have a term of 10 years from the date of grant.

Long-Term Incentive Compensation

Long-term incentive awards, consisting of equity-based awards and contingent cash bonuses, are a variable element of compensation that allow us to incentivize and retain our executive officers for their sustained contributions to the Company. These incentive awards reward performance and continued employment by an executive officer, with associated benefits to us of attracting and retaining employees. We believe that long-term incentive awards provide executive officers with a strong link to long-term corporate performance and the creation of shareholder value. After Closing, the Compensation Committee will determine the grant size and terms of any additional long-term incentive awards to be recommended to the Board and may consider, among other things, the NEO’s total compensation opportunity, the need to create a meaningful opportunity for reward predicated on the creation of long-term shareholder value, individual accomplishments, adjustments to duties, the NEO’s existing incentive award holdings (including the unvested portion of such awards), and the retention implications of existing grants and our incentive goals. We also believe that the use of cash bonuses with performance targets that apply to a longer horizon allows us to incentivize and retain our executive officers for their sustained contributions to the Company.

To incentivize and retain our executive officers, including our Chief Executive Officer, the Company has determined to use market capitalization as a performance metric for its management compensation to be assessed for the 30-month, and 54month periods following completion of the Offering. The Board believes this metric aligns with the Company’s medium to long-term growth strategy. The Company will approve a contingent cash bonus and grant RSUs to Mr. Laidlaw at Closing as described below and may make RSU grants and/or contingent cash bonuses to the other members of management of the

113

Company after Closing such that, in the event the Company reaches the market capitalization targets, (a) the RSUs held by Mr. Laidlaw and other recipients of such grants (provided that they remain employed with the Company), shall vest into Subordinate Voting Shares to be issued by the Company from treasury and (b) the contingent cash bonus shall be payable, as further outlined below. Any grants or allocation of RSUs to members of management, other than the Chief Executive Officer, have not been determined and may be determined by the Chief Executive Officer, for submission to and approval by the Board, after Closing. Subject to TSX and any other required regulatory approval, the Compensation Committee may in its discretion, acting reasonably and in good faith, consider vesting a portion of the RSUs described below or paying a portion of the cash bonus, in the event the market capitalization targets are substantially achieved.

First 30 months following completion of the Offering

Market Capitalization Target(1) Value of RSUs to Chief Executive Officer C$1,000,000,000 C$40,000,000	% of outstanding equity of Company on vesting of RSUs 4.0%	Cash Bonus to Chief Executive
		Officer C$10,000,000

(1) Market capitalization is the product obtained by multiplying the 90 day VWAP of the Subordinate Voting Shares at the relevant time by the total number of equity securities of the Company outstanding at such time (including, for greater certainty, the Multiple Voting Shares). Upon the consummation of one transaction or a series of transactions involving the issuance or repurchase of equity securities of the Company (other than any issuance of Subordinate Voting Shares upon exercise of outstanding options and other equity-based awards) or the payment of an extraordinary dividend or other distribution in cash or securities, the market capitalization target will be adjusted up or down to offset the impact of such transaction(s) to the extent it could be considered material to the achievement of the target. For greater clarity, for one transaction or a series of transactions to be considered to have a material impact, there must be more than a 10% cumulative change in the case of (i) below, to the 10-day VWAP of the Subordinate Voting Shares immediately following the payment, and in the cases of (ii) and (iii) below, to the total number of outstanding equity securities of the Company immediately following the closing of the Offering, in which case, as determined by the Board: (i) in the case of the payment of an extraordinary dividend or other distribution by the Company, the market capitalization target will be adjusted down by the percentage change in the trading price of the Subordinate Voting Shares measured by comparing the 10 day VWAP of the Subordinate Voting Shares for the 10 days preceding the payment and the 10 days following the payment, less 10%; (ii) in the case of a share issuance by the Company, the market capitalization target will be adjusted up by an amount equal to the percentage of the increase in the total number of equity securities of the Company outstanding following such share issuance, less 10%; or (iii) in the case of a share repurchase by the Company, the market capitalization target will be adjusted down by an amount equal to the percentage of the decrease in the total number of equity securities of the Company outstanding following such share repurchase, less 10%.

In the event that the Company’s market capitalization reaches C$1 billion within the first 30 months following the Closing Date, (a) the number of RSUs granted to Mr. Laidlaw referred to above shall immediately vest, provided he remains employed with the Company, resulting in him receiving 4% of the then outstanding equity of the Company in the form of Subordinate Voting Shares and (b) the cash bonus shall be payable to Mr. Laidlaw. The number of RSUs will be determined by dividing C$40 million by the 90 day VWAP of the Subordinate Voting Shares at the time of vesting. In the event the RSUs granted to Mr. Laidlaw referred to above vest, the Subordinate Voting Shares underlying such RSUs will be subject to a six-month contractual lock-up agreement, in a form approved by the Board.

If the above market capitalization target is not met within the first 30 months following completion of the Offering, the RSUs subject to that target will expire, and the cash bonus will not be payable and will be cancelled.

First 54 months following completion of the Offering

Market Capitalization Target(1) C$1,000,000,000	Value of RSUs to Chief Executive Officer C$10,000,000	% of outstanding equity of Company
		on vesting of RSUs
		1%

(1) Market capitalization shall be calculated in accordance with footnote (1) under the table in “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Long-Term Incentive Compensation – First 30 months following completion of the Offering ”.

In the event that the Company’s market capitalization fails to reach C$1 billion within the first 30 months following the Closing Date, but reaches it within the first 54 months following the Closing Date, the number of RSUs granted to Mr. Laidlaw referred to above shall immediately vest, provided he remains employed with the Company, resulting in him receiving 1% of the then outstanding equity of the Company in the form of Subordinate Voting Shares. This number of

114

RSUs will be determined by dividing C$10 million by the 90 day VWAP of the Subordinate Voting Shares at the time of vesting.

For greater certainty, the foregoing grant would not be in addition to achieving the target within the first 30 months. If the above market capitalization target is not met within the first 54 months following completion of the Offering, the RSUs subject to that target will expire.

See “ Executive Compensation – Employment Agreements, Termination and Change of Control Benefits ” for details concerning RSU entitlements on termination.

Benefits and Perquisites

The Company offers certain benefits to its employees, including its NEOs. The benefits can include coverage for, among other things, health, life and disability insurance by means of group insurance plans. Some benefits increase in proportion with salary and scope of responsibilities.

We do not have any defined benefit or defined contribution pension plans in place which provide for payments or benefits at, following, or in connection with retirement.

Equity Incentive Plans

We established our option plan on November 21, 2012 (which has been amended from time to time to, among other things, increase the size of the option pool) (the “ Legacy ESOP ”). The Company has historically granted to certain directors, officers and senior employees options to purchase Class B Common Shares under the Legacy ESOP. In connection with the Pre-Closing Reorganization and prior to Closing, we will amend the Legacy ESOP to, among other things, provide that outstanding options granted thereunder will be exercisable for Subordinate Voting Shares and no further awards will be made under the Legacy ESOP.

In connection with the Offering, we have adopted the Omnibus Incentive Plan which allows our Board to grant equity-based awards to eligible participants.

Omnibus Incentive Plan

The Omnibus Incentive Plan allows for a variety of equity-based awards that provide different types of incentives to be granted to our directors, executive officers, employees and consultants, including options, RSUs, PSUs and DSUs, collectively referred to as “ awards ”. Our Board is initially responsible for administering the Omnibus Incentive Plan, and may delegate its responsibilities thereunder. The following discussion is qualified in its entirety by the full text of the Omnibus Incentive Plan.

Our Board, in its sole discretion, designates, from time to time, the directors, executive officers, employees and consultants to whom awards shall be granted and determines, if applicable, the number of Subordinate Voting Shares to be covered by such awards and the terms and conditions of such awards.

Subordinate Voting Shares Reserved for Issuance

The aggregate number of Subordinate Voting Shares reserved for issuance under the Omnibus Incentive Plan and the Legacy ESOP shall not exceed 12% of the Subordinate Voting Shares and Multiple Voting Shares issued and outstanding from time to time, on a non-diluted basis. Upon Closing, there will be such number of Subordinate Voting Shares that is equal to  % of the issued and outstanding Subordinate Voting Shares and Multiple Voting Shares issuable pursuant to the exercise of options or settlement of awards that are outstanding under the Omnibus Incentive Plan and the Legacy ESOP. If an outstanding award under the Legacy ESOP or the Omnibus Incentive Plan expires or is forfeited, surrendered, cancelled or is otherwise terminated for any reason without having been exercised or settled in full, or if Subordinate Voting Shares acquired pursuant to an award subject to forfeiture are forfeited, the Subordinate Voting Shares covered by such award, if any, will again be available for issuance under the Omnibus Incentive Plan. Subordinate Voting Shares will not be deemed to have been issued pursuant to the Omnibus Incentive Plan with respect to any portion of an award that is settled in cash. Any Subordinate Voting Shares subject to an Award which has been exercised or settled in Subordinate Voting Shares will again be available for issuance under the Omnibus Incentive Plan.

115

The Omnibus Incentive Plan is considered to be an “evergreen” plan, since the Subordinate Voting Shares covered by Awards which have been exercised or terminated will be available for subsequent grants under the Omnibus Incentive Plan and the total number of Awards available to grant increases as the number of issued and outstanding Subordinate Voting Shares increases.

Options

All options granted under the Omnibus Incentive Plan will have an exercise price determined and approved by our Board at the time of grant, which shall not be less than the market price of the Subordinate Voting Shares on the date of the grant; provided that in the case of the 40,000 options granted to our Chief Executive Officer on Closing, the exercise price shall be equal to the Offering Price. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Short-Term Incentive Compensation ”.

Subject to any vesting conditions set forth in a participant’s grant agreement, an option shall be exercisable during a period established by our Board which shall not be more than ten years from the grant of the option. The Omnibus Incentive Plan provides that the exercise period shall automatically be extended if the date on which it is scheduled to terminate shall fall during a blackout period. In such cases, the extended exercise period shall terminate ten business days after the last day of the blackout period. The Board may, in its discretion, provide for procedures to allow a participant to elect to undertake a “cashless exercise” or a “net exercise” in respect of options.

Share Units

Our Board is authorized to grant RSUs, PSUs and DSUs evidencing the right to receive Subordinate Voting Shares (issued from treasury or purchased on the open market), cash based on the value of a Subordinate Voting Share or a combination thereof at some future time to eligible persons under the Omnibus Incentive Plan.

RSUs generally become vested, if at all, following a period of continuous employment. PSUs are similar to RSUs, but their vesting is, in whole or in part, conditioned on the attainment of specified performance metrics as may be determined by the Board. The terms and conditions of grants of RSUs and PSUs, including the quantity, type of award, grant date, vesting conditions, vesting periods, settlement date and other terms and conditions with respect to these awards will be set out in the participant’s grant agreement.

Subject to the achievement of the applicable vesting conditions, the payout of an RSU or PSU will generally occur on the applicable settlement date following the vesting date. The payout of a DSU will generally occur upon or following the participant ceasing to be a director, executive officer, employee or consultant of the Company, subject to satisfaction of any applicable conditions.

Dividend Share Units

If, as the case may be, dividends (other than share dividends) are paid on the Subordinate Voting Shares (“ Dividend Share Units ”), a number of Dividend Share Units equal to the dividends declared divided by the market price of the Subordinate Voting Shares on the date such dividends are declared will be automatically granted to each participant who holds RSUs, PSUs or DSUs on the record date for such dividends, and will be subject to the same vesting or other conditions applicable to the related RSUs, PSUs or DSUs, as applicable.

Adjustments

In the event of any subdivision, consolidation, reclassification, reorganization or any other change affecting the Subordinate Voting Shares, or any merger or amalgamation with or into another corporation, or any distribution to all security holders of cash, evidences of indebtedness or other assets not in the ordinary course, or any transaction or change having a similar effect, the Board shall in its sole discretion, subject to the required approval of any stock exchange, determine the appropriate adjustments or substitutions to be made in such circumstances in order to maintain the economic rights of the participants in respect of awards under the Omnibus Incentive Plan, including, without limitation, adjustments to the exercise price or number of Subordinate Voting Shares to which the participant is entitled upon exercise or settlement of an award, the number and kind of securities reserved for issuance pursuant to the plan and/or permitting the immediate exercise of any outstanding awards that are not otherwise exercisable.

116

Trigger Events

The Omnibus Incentive Plan will provide that, unless otherwise determined by the Board and except as otherwise provided by the terms and conditions of a participant’s employment agreement, upon the termination for cause of a participant (i) any awards granted to such participant, that are unvested on the termination date, shall automatically terminate and (ii) any awards granted to such participant that have already vested at the time of such termination for cause will be settled in accordance with the terms of the Omnibus Incentive Plan.

The Omnibus Incentive Plan will further provide that, unless otherwise determined by the Board and except as otherwise provided by the terms and conditions of a participant’s employment agreement, upon the resignation or retirement of a participant, (i) the Board may, in its sole discretion, determine that a portion of the PSUs, RSUs and/or DSUs granted to such participant that have not yet vested shall immediately vest and be settled, (ii) the portion of the PSUs, RSUs and/or DSUs granted to such participant that have not yet vested and that are determined by the Board, in its sole discretion, not to immediately vest upon such participant’s resignation or retirement, shall automatically terminate, (iii) all unvested options shall be forfeited on the termination date, (iv) vested options as of the termination date shall remain exercisable until the earlier of 30 days after the termination date or the expiry date of the options; and (v) any outstanding PSUs, RSUs and/or DSUs that have already vested of the date of such participant’s resignation or retirement will be settled in accordance with the terms of the Omnibus Incentive Plan.

The Omnibus Incentive Plan will further provide that, unless otherwise determined by the Board and except as otherwise provided by the terms and conditions of a participant’s employment agreement, upon a participant’s termination of employment as a result of death or disability, (i) all rights, title and interest in the options granted to such participant which are unvested on the termination date will continue to vest in accordance with the terms of the Omnibus Incentive Plan and the participant’s grant agreement, for a period of up to two years, (ii) vested options (including such options that vest during the two year period following the termination date) will remain exercisable until the earlier of (A) two years after the termination date, and (B) the expiry date of the options, (iii) the Board may, in its sole discretion, determine that a portion of PSUs, RSUs and/or DSUs granted to the participant that have not yet vested will immediately vest on the termination date and be settled, (iv) the portion of the PSUs, RSUs, and/or DSUs granted to the participant that have not yet vested and that are determined by the Board, in its sole discretion, not to vest upon death or disability, shall terminate automatically; and (v) any outstanding PSUs, RSUs and/or DSUs that have already vested as of the date of such participant’s death or disability will be settled in accordance with the terms of the Omnibus Incentive Plan.

The Omnibus Incentive Plan will further provide that, unless otherwise determined by the Board and except as otherwise provided by the terms and conditions of a participant’s employment agreement, upon the termination without cause of a participant (i) the Board may, in its sole discretion, determine that a portion of the PSUs, RSUs and/or DSUs granted to such participant that will not vest by the termination date shall immediately vest and be settled, (ii) the portion of the PSUs, RSUs and/or DSUs granted to such participant that will not vest by the termination date and that are determined by the Board, in its sole discretion, not to immediately vest upon such participant’s termination without cause, shall terminate automatically, (iii) all unvested options shall be forfeited on the termination date, (iv) vested options shall remain exercisable until the earlier of 90 days after the termination date or the expiry date of the options and (v) any outstanding PSUs, RSUs and/or DSUs that have already vested as of the date of such participant’s termination without cause will be settled in accordance with the terms of the Omnibus Incentive Plan.

Change of Control

Except as otherwise provided by the terms and conditions of a participant’s employment agreement, in the event of a change of control, the Board will have the power, in its sole discretion, to modify the terms of the Omnibus Incentive Plan and/or the awards granted thereunder (including to cause the vesting of all unvested awards) to assist the participants to tender into a take-over bid or any other transaction leading to a change of control. In such circumstances, the Board shall be entitled to, in its sole discretion, provide that any or all awards shall terminate, provided that any such outstanding awards that have vested shall remain exercisable until consummation of such change of control, and/or permit participants to conditionally exercise awards.

117

The Board may at its discretion accelerate the vesting, where applicable, of any outstanding awards notwithstanding the previously established vesting schedule, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration or, subject to applicable regulatory provisions and shareholder approval, extend the expiration date of any award, provided that (i) the period during which an option is exercisable does not exceed ten years from the date such option is granted, and (ii) the period during which a vested RSU and PSU may be settled does not exceed three years in accordance with the terms of the Omnibus Incentive Plan.

Amendments and Termination

Our Board will be entitled to suspend or terminate the Omnibus Incentive Plan at any time, or from time to time amend or revise the terms of the Omnibus Incentive Plan or of any granted award, provided that no such suspension, termination, amendment or revision will be made, (i) except in compliance with applicable law and with the prior approval, if required, of the shareholders, the TSX or any other regulatory body having authority over the Company, and (ii) if it would adversely alter or impair the rights of any participant, without the consent of the participant except as permitted by the terms of the Omnibus Incentive Plan, provided however, subject to any applicable rules of the TSX, the Board may from time to time, in its absolute discretion and without the approval of shareholders, make, amongst others, the following amendments to the Omnibus Incentive Plan or any outstanding award:

any amendment to the vesting provisions, if applicable, or assignability provisions of awards;
any amendment to the expiration date of an award that does not extend the terms of the award past the original date of expiration for such award;
any amendment regarding the effect of termination of a participant’s employment or engagement;
any amendment to the terms and conditions of grants of PSUs, RSUs or DSUs, including the performance criteria, as applicable, the type of award, grant date, vesting periods, settlement date and other terms and conditions with respect to the awards;
any amendment which accelerates the date on which any award may be exercised or payable, as applicable, under the Omnibus Incentive Plan;
any amendment to the definition of an eligible participant under the Omnibus Incentive Plan (other than with respect to eligible participants who are eligible to receive an award of options issued under the Omnibus Incentive Plan as incentive stock options intended to meet the requirements of Section 422 of the U.S. Internal Revenue Code of 1986);
any amendment necessary to comply with applicable law or the requirements of the TSX or any other regulatory body;
any amendment of a “housekeeping” nature, including, without limitation, to clarify the meaning of an existing provision of the Omnibus Incentive Plan, correct or supplement any provision of the Omnibus Incentive Plan that is inconsistent with any other provision of the Omnibus Incentive Plan, correct any grammatical or typographical errors or amend the definitions in the Omnibus Incentive Plan;
any amendment regarding the administration of the Omnibus Incentive Plan;
any amendment to add a provision permitting the grant of awards settled otherwise than with shares issued from treasury;
any amendment to add a cashless exercise feature or net exercise procedure;
any amendment to add a form of financial assistance; and
any other amendment that does not require the approval of the holders of Subordinate Voting Shares pursuant to the amendment provisions of the Omnibus Incentive Plan.

For greater certainty, our Board shall be required to obtain shareholder approval to make the following amendments:

118

any increase in the maximum number of Subordinate Voting Shares issuable pursuant to the Omnibus Incentive Plan;
except for adjustments permitted by the Omnibus Incentive Plan, any reduction in the exercise price or purchase price of an award or any cancellation of an award and replacement of such award with an award with a lower exercise price or purchase price, to the extent such reduction or replacement benefits an insider;
any extension of the term of an award beyond its original expiry date, to the extent such amendment benefits an insider;
any amendment which (i) increases the maximum number of shares that may be issuable upon exercises of options issued under the Omnibus Incentive Plan as incentive stock options intended to meet the requirements of Section 422 of the U.S. Internal Revenue Code of 1986 or (ii) which modifies the definition of eligible participant used for purposes of determining eligibility for the grant of an incentive stock option; and
any amendment to the amendment provisions of the Omnibus Incentive Plan.

Legacy ESOP

Eligible participants under the Legacy ESOP are certain directors, officers, employees and consultants of the Company and its subsidiaries. Our Board is responsible for administering the Legacy ESOP (which responsibilities may be delegated to a person or committee as authorized by the Board) and has the authority to interpret the Legacy ESOP and establish rules and regulations applying to it and to make all other determinations it deems necessary or useful for the proper administration of the Legacy ESOP. The following discussion is qualified in its entirety by the full text of the Legacy ESOP. No additional options will be granted under the Legacy ESOP.

The Legacy ESOP allows for the grant of options to our directors, officers, employees and consultants.

Based on the number of options outstanding under the Legacy ESOP, as of the date hereof, an aggregate number of 962,500 Subordinate Voting Shares will be issuable on completion of the Offering pursuant to the exercise of options under the Legacy ESOP, which will represent approximately  % of the aggregate number of Subordinate Voting Shares and Multiple Voting Shares issued and outstanding as of Closing, assuming no exercise of the Over-Allotment Option.

Pursuant to the Legacy ESOP, the aggregate number of shares that may be issued pursuant to the exercise of options cannot represent more than 962,500 Subordinate Voting Shares, which is equal to the number of Subordinate Voting Shares underlying outstanding options under the Legacy ESOP.

The Legacy ESOP provides that certain events, including termination for cause, termination without cause, disability or death or violation of certain covenants may trigger forfeiture of the option, subject to the terms of the participant’s agreement. All options granted under the Legacy ESOP will continue to vest in accordance with their existing vesting schedules, which our Board shall have the right to accelerate.

In connection with the Offering, the Legacy ESOP will be amended to, among other things, include terms and conditions required by the TSX for a “legacy” stock option plan and to allow the Board to provide for procedures to allow a participant to elect to undertake a “cashless exercise” in respect of options.

Summary Compensation Table

The following table provides a summary of the annualized compensation expected to be earned by the NEOs for FY 2021, our first fiscal year as a public company, assuming a closing date of June 30, 2021:

119

Name and Principal Position Salary (U.S.$)(1)(2) Share- based awards (U.S.$) Option- based awards (U.S.$)	Non-equity incentive plan compensation Annual incentive plan (U.S.$)(3) Long- term incentive plans Pension value (U.S.$) All other compensation (U.S.$) Total compensation (U.S.$)
Rob Laidlaw Chief Executive Officer 395,000 (5) (6) Vincenzo Bellissimo SVP, Finance 189,336 - - Chris Goodridge President and Chief Operating Officer 325,164 - Diane Yu Chief Legal Officer and Corporate Secretary 221,235 - - Brandon Seibel Chief Technology Officer 207,858 -	- -(7) - -  51,450 - - - 240,786 243,873 - - 569,037 90,552 - - - 311,787 83,966 - - 291,824

(1) Represents annual base salary expected to be paid for the year ending December 31, 2021.

(2) Base salaries are paid to our NEOs in both Canadian and American dollars. Salaries paid in Canadian dollars have been converted for the above table at the Exchange Rate. For the year ending December 31, 2021 and assuming a closing date of June 30, 2021, we expect to pay a base salary of U.S.$395,000 to Mr. Laidlaw, C$230,000 to Mr. Bellissimo, C$395,000 to Mr. Goodridge, C$268,750 to Ms. Yu, and C$252,500 to Mr. Seibel.

(3) Represents amounts expected to be earned pursuant to each NEO’s bonus entitlement opportunity, based on 100% of target payout. Actual payments will depend upon the achievement of performance goals and Company performance and will be paid in cash in 2022. Converted into U.S. dollars using the Exchange Rate.

(4) None of the NEOs are entitled to perquisites or other personal benefits which, in the aggregate, are worth over $50,000 or over 10% of their base salary.

(5) Upon Closing, Mr. Laidlaw will be granted 26,300 RSUs, which forms part of his annual base salary. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Base Salaries ” for further details. Amount shown represents the grant date fair value of RSUs based on the Offering Price. This assumes that the market capitalization target is not achieved in FY 2021. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Long-Term Incentive Compensation ”. Converted into U.S. dollars using the Exchange Rate.

(6) Represents the grant of 40,000 options for FY 2021 and assumes the maximum Adjusted EBITDA CAGR target is met for the year ending December 31, 2021. Amount shown represents the grant date fair value of options, which has been calculated using the Black-Scholes method. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Short-Term Incentive Compensation ” for further details. Converted into U.S. dollars using the Exchange Rate.

(7) This assumes that the market capitalization target is not achieved in FY 2021. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Long-Term Incentive Compensation ”.

Incentive Plan Awards

The following table provides details regarding the outstanding option-based and share-based awards held by the NEOs expected to be outstanding immediately following the completion of the Offering:

120

Option-based Awards
Name and Principal
Position
Number of
Subordinate
Voting
Shares
underlying
unexercised
options(1)
Option
exercise
price
(U.S.$)
Option
expiration
date
Value of
unexercised
in-the-
money
options
(U.S.$)(2)
Rob Laidlaw
Founder and Chief
Executive Officer
40,000(3)
(4)
(5)
-
Vincenzo Bellissimo
SVP, Finance
50,000
25,000
27.0824
15.6267
Nov 30,
2027
Nov 30,
2030

Chris Goodridge
President and Chief
Operating Officer
200,000
75,000
23.1776
15.6267
Jan 31,
2029
Nov 30,
2030

Diane Yu
Chief Legal Officer
and Corporate
Secretary
50,000
25,000
25,000
20.2053
27.0824
15.6267
Apr 11,
2026
Jan 1,
2028
Nov 30,
2030

Brandon Seibel,
Chief Technology
Officer
10,000
25,000
23.1776
15.6267
Jul 1,
2027
Nov 30,
2030


Share-based Awards
Number of
shares that
have not
vested
Market or
payout value of
share-based
awards that
have not vested
(U.S.$)
Market
of
payout
value of
vested
share-
based
awards
not paid
out or
distribut
ed
(U.S.$)

Up to a
maximum of
4.0% of equity
securities
outstanding at
time of
vesting(6)
26,300
Subordinate
Voting
Shares(7)
Up to
40,000,000(6)
Up to(7) (8)
-
-
-
-
-
-
-
-
-
-
-
-
-

(1) Options granted under the Legacy ESOP. At Closing, as part of the Pre-Closing Reorganization, each option will become exercisable for one Subordinate Voting Share. For a description of the terms of the options granted under the Legacy ESOP, see “ Executive Compensation – Equity Incentive Plans – Legacy ESOP ”.

(2) Based on the Offering Price and converted into U.S. dollars using the Exchange Rate.

(3) Represents the grant of 40,000 options for FY 2021. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Short-Term Incentive Compensation ” for further details.

(4) Exercise price equal to the Offering Price.

(5) The term of the options will be 10 years. If the Adjusted EBITDA CAGR goals are not met during the fiscal year, the options subject to those targets will expire. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Short-Term Incentive Compensation ” for further details.

(6) Upon Closing, Mr. Laidlaw will be granted RSUs that will vest upon achievement of a market capitalization goal. See “ Executive Compensation –

121

Risk and Executive Compensation – Principal Elements of Compensation – Long-Term Incentive Compensation ” for additional details. Converted into U.S. dollars using the Exchange Rate.

(7) Upon Closing, Mr. Laidlaw will be granted 26,300 RSUs, which forms part of his annual base salary. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Base Salaries ” for further details.

(8) Based on the Offering Price and converted into U.S. dollars using the Exchange Rate.

Incentive Plan Awards – Value Vested or Earned During the Year

The following table sets out, for each of the Company’s NEOs, the value of non-equity incentive plan awards for FY 2021 and the option-based and share-based awards expected to vest in accordance with their terms for FY 2021 (assuming the continued employment of each NEO):

		Share-based	Non-equity incentive
	Option-based awards	awards – Value	plan compensation –
	Value vested during	vested during the	Value earned during the
Name and Principal Position	the year (U.S.$)(1)	year (U.S.$)(1)	year (U.S.$)(2)
Rob Laidlaw	(3)	(4)	-(5)
Founder and Chief Executive Officer
Vincenzo Bellissimo		-	51,450
SVP, Finance
Chris Goodridge		-	243,873
President and Chief Operating Officer
Diane Yu		-	90,552
Chief Legal Officer and Corporate Secretary
Brandon Seibel		-	83,966
Chief Technology Officer

(1) Based on the Offering Price and converted into U.S. dollars using the Exchange Rate.

(2) Represents amounts expected to be earned pursuant to each NEO’s bonus entitlement opportunity, based on 100% of target payout. Actual payments will depend upon the achievement of performance goals and Company performance, and will be paid in cash in 2022. Converted into U.S. dollars using the Exchange Rate.

(3) Represents the grant of 40,000 options for FY 2021 and assumes the maximum Adjusted EBITDA CAGR target is met for the year ending December 31, 2021. Amount shown represents the grant date fair value of options, which has been calculated using the Black-Scholes method. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Short-Term Incentive Compensation ” for further details. (4) Upon Closing, Mr. Laidlaw will be granted 26,300 RSUs, which forms part of his annual base salary. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Base Salaries ” for further details. Based on the Offering Price and converted into U.S. dollars using the Exchange Rate. This assumes that the market capitalization target is not achieved in FY 2021. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Long-Term Incentive Compensation ”.

(5) This assumes that the market capitalization target is not achieved in FY 2021. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation – Long-Term Incentive Compensation ”.

Employment Agreements, Termination and Change of Control Benefits

We have written employment agreements with each of our NEOs, and each executive is entitled to receive compensation established by us, as well as other benefits in accordance with plans available to most employees. In connection with the Offering, we will be entering into new written employment agreements with each of our NEOs which, among other things, will provide for (i) entitlements to a severance package in connection with termination of their employment without cause or as a result of disability, as outlined below, and (ii) entitlements to certain benefits in connection with termination of their employment without cause or as a result of disability under certain circumstances.

Additionally, upon Closing, our Chief Executive Officer and our President and Chief Operating Officer will become entitled to certain benefits in connection with the termination of their employment in the event of death.

Further, if following a change of control of the Company, an NEO either (i) is terminated within 12 months, or (ii) resigns for good reason within 12 months, such NEO will be entitled to an enhanced severance package as described below.

Payment of termination benefits beyond statutory minimums shall be subject to, among other things, the NEO executing a

122

full and satisfactory release in favour of the Company (or any successor entity following a change of control of the Company).

The table below shows the entitlements that would be awarded to our NEOs upon the occurrence of certain events, assuming the completion of the Offering. See “ Executive Compensation – Risk and Executive Compensation – Principal Elements of Compensation ”.

NEO

Payments, Payables and Benefits

Rob Laidlaw, Founder and Chief Executive Officer

Termination
without Change in
Control

Mr. Laidlaw’s employment agreement will prohibit the Company from terminating Mr. Laidlaw’s
employment without cause in the five (5) years following the Closing Date (the “Protected
Employment Period”).
If, following the Protected Employment Period, Mr. Laidlaw’s employment is terminated without
cause, he is entitled to: payment of $500,000, pro-rated to the termination date, in lieu of the
unvested equity portion of his annual base salary; a payment representing 24 months of the cash
portion of his base salary in lieu of notice; a payment of $1,000,000 in lieu of the equity portion of
his annual base salary over his 24 month notice period; the continuation of certain benefits for his
24 month notice period; a cash payment in lieu of unvested options (conditional on compliance
with employment terms that survive termination of employment) equal to the product of (i) the
aggregate value of the vested “in-the-money” portion of the option awards granted to Mr. Laidlaw
in each of the last two completed fiscal years immediately prior to Mr. Laidlaw’s termination of
employment, divided by two (the “Average Annual Bonus Value”), and (ii) the number of months
of Mr. Laidlaw’s active employment before the termination date divided by 12; and payment of an
additional 24 months’ bonus (conditional on compliance with employment terms that survive
termination of employment) based on the Average Annual Bonus Value.
If Mr. Laidlaw’s employment is terminated without cause following the Protected Employment
Period, he would be entitled to an estimated severance payment of $1,790,000 plus the cash value
of the unvested equity portion of his annual base salary up to the termination date plus the value of
his option-based entitlements calculated using the Average Annual Bonus Value.(1)
Mr. Laidlaw is also entitled to accrued but unpaid cash-based salary payments and vacation or other
compensation earned up to the termination date.
If Mr. Laidlaw’s employment is terminated by reason of death or disability, he is entitled to receive
a cash payment in lieu of unvested options equal to the product of (i) the Average Annual Bonus
Value, and (ii) the number of months of Mr. Laidlaw’s active employment before the termination
date divided by 12. Additionally, Mr. Laidlaw is entitled to accrued but unpaid cash-based salary
payments and vacation or other compensation earned up to the termination date. Mr. Laidlaw is
also entitled to a payment of $500,000, pro-rated to the termination date, in lieu of the unvested
equity portion of his annual base salary.
If Mr. Laidlaw’s employment is terminated due to disability, he is also entitled to receive 12 months
of the cash portion of his annual base salary as well as $500,000 in lieu of the unvested equity
portion of his annual base salary. If Mr. Laidlaw’s employment is terminated by reason of
disability, he would be entitled to an estimated severance payment of $895,000 plus the cash value
of the unvested equity portion of his annual base salary up to the termination date plus the value of
his option-based entitlements calculated using the Average Annual Bonus Value.(1)
If Mr. Laidlaw’s employment is terminated with cause, he will not be entitled to any severance
pay, notice or compensation in lieu of notice, nor to any payments or benefits following the
termination date. He will however be entitled topayment of his accrued but unpaid cash-based

123

salary payments and vacation or other compensation earned up to the termination date.
Additionally, Mr. Laidlaw will be entitled to a payment of $500,000, pro-rated to the termination
date, in lieu of the unvested equity portion of his annual base salary. Mr. Laidlaw’s employment
agreement will generally be governed by Cayman Islands law, however the meaning of “cause”
will be governed by Ontario law.
Any of the aforementioned payments to Mr. Laidlaw that exceed his minimum entitlements, if any,
under applicable employment standards legislation, are conditional upon his execution of a release
of claims in favour of the Company (or any successor entity).
Mr. Laidlaw’s employment agreement also contains non-competition and non-solicitation
covenants which are in effect during the period of his employment and for 12 months thereafter.
Notwithstanding the termination of his employment, Mr. Laidlaw is entitled to retain his Board
and/or committee memberships so long as he remains RDL Ventures’ nominee to the Board.

Termination upon
a
Change
in
Control

If Mr. Laidlaw is terminated without cause or he resigns for good reason within 12 months following
a change of control, he is entitled to:a severance payment representing 30 months of the cash portion
of his base salary; a payment of $1,250,000 in lieu of the equity portion of his annual base salary
over his 30 month notice period; a cash payment in lieu of unvested options (conditional on
compliance with employment terms that survive termination of employment) equal to the product
of (i) the Average Annual Bonus Value, and (ii) the number of months of Mr. Laidlaw’s active
employment before the termination date divided by 12; payment of an additional 30 months’ bonus
(conditional on compliance with employment terms that survive termination of employment) based
on the Average Annual Bonus Value; and the continuation of certain benefits for the duration of his
30 month notice period.
Mr. Laidlaw is also entitled to accrued but unpaid cash-based salary payments and vacation or
other compensation earned up to the termination date. Additionally, Mr. Laidlaw is entitled to a
payment of $500,000, pro-rated to the termination date, in lieu of the unvested equity portion of
his annual base salary.
If Mr. Laidlaw isterminated without cause or he resigns for good reason following Closing and
within 12 months following a change of control, he would be entitled to an estimated severance
payment of $2,237,500 plusthe cash value of the unvested equity portion of his annual base salary
up to the termination date plus the value of his option-based entitlements calculated using the
Average Annual Bonus Value.(1)
Any of the aforementioned payments to Mr. Laidlaw that exceed his minimum entitlements, if any,
under applicable employment standards legislation, are conditional upon his execution of a release
of claims in favour of the Company (or any successor entity).
If Mr. Laidlaw’s employment is terminated for reasons and/or in circumstances other than those
described above, he will have no additional entitlements upon termination beyond the baseline
entitlements described in the_“Executive Compensation – Employment Agreements, Termination_
and Change of Control Benefits – Termination without Change in Control” section above.
Notwithstanding the termination of his employment, Mr. Laidlaw is entitled to retain his Board
and/or committee memberships so long as he remains RDL Ventures’ nominee to the Board.

124

Vincenzo Bellissimo, SVP, Finance

Vincenzo Bellissimo, SVP, Finance

Termination
without Change in
Control

If Mr. Bellissimo’s employment is terminated without cause, he is entitled to: 18 months of notice
or base salary in lieu of notice; the continuation of certain benefits for his 18 month notice period;
payment of the portion of his bonus award earned up to the termination date (conditional on
compliance with employment terms that survive termination of employment); and payment of an
additional 18 months’ bonus (conditional on compliance with employment terms that survive
termination of employment), to be based on Mr. Bellissimo’s average annual bonus payment over
the preceding two (2) years (or, if Mr. Bellissimo has not participated in his current bonus plan for
two (2) full bonus/calendar years as of the termination date, 80% of Mr. Bellissimo’s target annual
bonus in the applicable year).
If Mr. Bellissimo’s employment is terminated without cause following Closing, he would be
entitled to an estimated severance payment equal to $412,972.(3)
Mr. Bellissimo is also entitled to accrued but unpaid base salary and vacation or other compensation
earned up to the termination date.
If Mr. Bellissimo’s employment is terminated due to disability, he is entitled to receive 12 months
of base salary in lieu of notice. Mr. Bellissimo is also entitled to accrued but unpaid base salary
and vacation or other compensation earned up to the termination date.
If Mr. Bellissimo’s employment is terminated due to disability, he would be entitled to an estimated
severance payment of $205,800.
Any of the aforementioned payments to Mr. Bellissimo that exceed his minimum entitlements, if
any, under the_ESA_, are conditional upon his execution of a release of claims in favour of the
Company (or any successor entity).
If Mr. Bellissimo’s employment is terminated with cause, he will not be entitled to any severance
pay, notice or compensation in lieu of notice, nor to any payments or benefits following the
termination date. He will however be entitled to payment of his accrued but unpaid base salary and
vacation or other compensation earned up to the termination date.
Mr. Bellissimo’s employment agreement also contains non-competition and non-solicitation
covenants which are in effect during the period of his employment and for 12 months thereafter.

Termination upon
a
Change
in
Control

If Mr. Bellissimo is terminated without cause or he resigns for good reason within 12 months
following a change of control, he is entitled to: a severance payment representing 24 months of his
base salary; payment of the portion of his bonus award earned up to the termination date (conditional
on compliance with employment terms that survive termination of employment); payment of an
additional 24 months’ bonus (conditional on compliance with employment terms that survive
termination of employment), to be based on Mr. Bellissimo’s average annual bonus payment over
the preceding two (2) years (or, if Mr. Bellissimo has not participated in his current bonus plan for
two (2) full bonus/calendar years as of the termination date, 80% of Mr. Bellissimo’s target annual
bonus in the applicable year); early acceleration and payment of all vested and unvested awards and
options granted to Mr. Bellissimo in accordance with the Mr. Bellissimo in accordance with the
Legacy ESOP; and the continuation of certain benefits for the duration of his 24 month notice period.
If Mr. Bellissimo isterminated without cause or he resigns for good reason within 12 months
following a change of control, he would be entitled to an estimated severance payment of
$533,479.(4)
Mr. Bellissimo is also entitled to accrued but unpaid base salary and vacation or other compensation
earned up to the termination date.
Any of the aforementioned payments to Mr. Bellissimo that exceed his minimum entitlements, if
any, underthe ESA, are conditionalupon his executionofarelease ofclaimsin favourofthe

125

Company (or any successor entity).

If Mr. Bellissimo’s employment is terminated for reasons and/or in circumstances other than those described above, he will have no additional entitlements upon termination beyond the baseline entitlements described in the “Executive Compensation – Employment Agreements, Termination and Change of Control Benefits – Termination without Change in Control” section above.

Chris Goodridge, President and Chief Operating Officer

	Company (or any successor entity). If Mr. Bellissimo’s employment is terminated for reasons and/or in circumstances other than those described above, he will have no additional entitlements upon termination beyond the baseline entitlements described in the_“Executive Compensation – Employment Agreements, Termination_ and Change of Control Benefits – Termination without Change in Control” section above.
Chris Goodridge, President and Chief Operating Officer
Termination without Change in Control	If Mr. Goodridge’s employment is terminated without cause, he is entitled to: 18 months of notice or base salary in lieu of notice; the continuation of certain benefits for his 18 month notice period; payment of the portion of his bonus award earned up to the termination date (conditional on compliance with employment terms that survive termination of employment); and payment of an additional 18 months’ bonus (conditional on compliance with employment terms that survive termination of employment), to be based on Mr. Goodridge’s average annual bonus payment over the preceding two (2) years (or, if Mr. Goodridge has not participated in his current bonus plan for two (2) full bonus/calendar years as of the termination date, 80% of Mr. Goodridge’s target annual bonus in the applicable year). If Mr. Goodridge’s employment is terminated without cause following Closing, he would be entitled to an estimated severance payment of $1,244,250.(5) Mr. Goodridge is also entitled to accrued but unpaid base salary and vacation or other compensation earned up to the termination date. If Mr. Goodridge’s employment is terminated due to his death or disability, he is entitled to receive a pro-rated bonus for that year. Mr. Goodridge is also entitled to accrued but unpaid base salary and vacation or other compensation earned up to the termination date. If Mr. Goodridge’s employment is terminated due to disability, he is also entitled to receive 12 months of base salary in lieu of notice. If Mr. Goodridge’s employment is terminated by reason of death, he would be entitled to an estimated severance payment of $201,780.(6) If Mr. Goodridge’s employment is terminated by reason of disability, he would be entitled to an estimated severance payment of $470,821.(7) Any of the aforementioned payments to Mr. Goodridge that exceed his minimum entitlements, if any, under the_ESA_, are conditional upon his execution of a release of claims in favour of the Company (or any successor entity). If Mr. Goodridge’s employment is terminated with cause, he will not be entitled to any severance pay, notice or compensation in lieu of notice, nor to any payments or benefits following the termination date. He will however be entitled to payment of his accrued but unpaid base salary and vacation or other compensation earned up to the termination date. Mr. Goodridge’s employment agreement also contains non-competition and non-solicitation covenants which are in effect during the period of his employment and for 12 months thereafter.
Termination upon a Change in Control	If Mr. Goodridge is terminated without cause or he resigns for good reason within 12 months following a change of control, he is entitled to: a severance payment representing 24 months of his base salary; payment of the portion of his bonus award earned up to the termination date (conditional on compliance with employment terms that survive termination of employment); payment of an additional 24 months’ bonus (conditional on compliance with employment terms that survive termination of employment), to be based on Mr. Goodridge’s average annual bonus payment over the preceding two (2) years (or, if Mr. Goodridge has not participated in his current bonus plan for two (2)fullbonus/calendaryears as ofthe terminationdate, 80% of Mr. Goodridge’s target annual

126

bonus in the applicable year); early acceleration and payment of all vested and unvested awards and options granted to Mr. Goodridge in accordance with the Legacy ESOP; and the continuation of certain benefits for the duration of his 24 month notice period. If Mr. Goodridge is terminated without cause or he resigns for good reason within 12 months following a change of control, he would be entitled to an estimated severance payment of $1,284,398. [(][8)] Mr. Goodridge is also entitled to accrued but unpaid base salary and vacation or other compensation earned up to the termination date. Any of the aforementioned payments to Mr. Goodridge that exceed his minimum entitlements, if any, under the ESA , are conditional upon his execution of a release of claims in favour of the Company (or any successor entity). If Mr. Goodridge’s employment is terminated for reasons and/or in circumstances other than those described above, he will have no additional entitlements upon termination beyond the baseline entitlements described in the “Executive Compensation – Employment Agreements, Termination and Change of Control Benefits – Termination without Change in Control” section above.

	bonus in the applicable year); early acceleration and payment of all vested and unvested awards and options granted to Mr. Goodridge in accordance with the Legacy ESOP; and the continuation of certain benefits for the duration of his 24 month notice period. If Mr. Goodridge isterminated without cause or he resigns for good reason within 12 months following a change of control, he would be entitled to an estimated severance payment of $1,284,398.(8) Mr. Goodridge is also entitled to accrued but unpaid base salary and vacation or other compensation earned up to the termination date. Any of the aforementioned payments to Mr. Goodridge that exceed his minimum entitlements, if any, under the_ESA_, are conditional upon his execution of a release of claims in favour of the Company (or any successor entity). If Mr. Goodridge’s employment is terminated for reasons and/or in circumstances other than those described above, he will have no additional entitlements upon termination beyond the baseline entitlements described in the_“Executive Compensation – Employment Agreements, Termination_ and Change of Control Benefits – Termination without Change in Control” section above.
Diane Yu, Chief Legal Officer and Corporate Secretary
Termination without Change in Control	If Ms. Yu’s employment is terminated without cause, she is entitled to: 18 months of notice or base salary in lieu of notice; the continuation of certain benefits for her 18 month notice period; payment of the portion of her bonus award earned up to the termination date (conditional on compliance with employment terms that survive termination of employment); and payment of an additional 18 months’ bonus (conditional on compliance with employment terms that survive termination of employment), to be based on Ms. Yu’s average annual bonus payment over the preceding two (2) years (or, if Ms. Yu has not participated in her current bonus plan for two (2) full bonus/calendar years as of the termination date, 80% of Ms. Yu’s target annual bonus in the applicable year). If Ms. Yu’s employment is terminated without cause following Closing, she would be entitled to an estimated severance payment of $522,732.(3) Ms. Yu is also entitled to accrued but unpaid base salary and vacation or other compensation earned up to the termination date. If Ms. Yu’s employment is terminated due to disability, she is entitled to receive 12 months of base salary in lieu of notice. Ms. Yu is also entitled to accrued but unpaid base salary and vacation or other compensation earned up to the termination date. If Ms. Yu’s employment is terminated due to disability, she would be entitled to an estimated severance payment of $226,380. Any of the aforementioned payments to Ms. Yu that exceed her minimum entitlements, if any, under the_ESA_, are conditional upon her execution of a release of claims in favour of the Company (or any successor entity). If Ms. Yu’s employment is terminated with cause, she will not be entitled to any severance pay, notice or compensation in lieu of notice, nor to any payments or benefits following the termination date. She will however be entitled to payment of her accrued but unpaid base salary and vacation or other compensation earned up to the termination date. Ms. Yu’s employment agreement also contains non-competition and non-solicitation covenants which are in effect during the period of her employment and for 12 months thereafter.
Termination upon a Change in	If Ms. Yu is terminated without cause or she resigns for good reason within 12 months following a change ofcontrol, sheis entitled to: a severance paymentrepresenting24 months of herbase salary;

127

Control

payment of the portion of her bonus award earned up to the termination date (conditional on
compliance with employment terms that survive termination of employment); payment of an
additional 24 months’ bonus (conditional on compliance with employment terms that survive
termination of employment), to be based on Ms. Yu’s average annual bonus payment over the
preceding two (2) years (or, if Ms. Yu has not participated in her current bonus plan for two (2) full
bonus/calendar years as of the termination date, 80% of Ms. Yu’s target annual bonus in the
applicable year); early acceleration and payment of all vested and unvested awards and options
granted Ms. Yu in accordance with the Legacy ESOP; and the continuation of certain benefits for
the duration of her 24 month notice period.
If Ms. Yu’s employment is terminatedwithout cause or she resigns for good reason within 12
months following a change of control, she would be entitled to an estimated severance payment of
$666,792.(4)
Ms. Yu is also entitled to accrued but unpaid base salary and vacation or other compensation earned
up to the termination date.
Any of the aforementioned payments to Ms. Yu that exceed her minimum entitlements, if any, under
the_ESA_, are conditional upon her execution of a release of claims in favour of the Company (or any
successor entity).
If Ms. Yu’s employment is terminated for reasons and/or in circumstances other than those
described above, she will have no additional entitlements upon termination beyond the baseline
entitlements described in the_“Executive Compensation – Employment Agreements, Termination_
and Change of Control Benefits – Termination without Change in Control” section above.

128

Brandon Seibel, Chief Technology Officer

Termination
without Change in
Control

If Mr. Seibel’s employment is terminated without cause, he is entitled to: 18 months of notice or
base salary in lieu of notice; the continuation of certain benefits for his 18 month notice period;
payment of the portion of his bonus award earned up to the termination date (conditional on
compliance with employment terms that survive termination of employment); and payment of an
additional 18 months’ bonus (conditional on compliance with employment terms that survive
termination of employment), to be based on Mr. Seibel’s average annual bonus payment over the
preceding two (2) years (or, if Mr. Seibel has not participated in his current bonus plan for two (2)
full bonus/calendar years as of the termination date, 80% of Mr. Seibel’s target annual bonus in the
applicable year).
If Mr. Seibel’s employment is terminated without cause following Closing, he would be entitled to
an estimated severance payment of $499,600.(5)
Mr. Seibel is also entitled to accrued but unpaid base salary and vacation or other compensation
earned up to the termination date.
If Mr. Seibel’s employment is terminated due to disability, he is entitled to receive 12 months of
base salary in lieu of notice. Mr. Seibel is also entitled to accrued but unpaid base salary and
vacation or other compensation earned up to the termination date.
If Mr. Seibel’s employment is terminated due to disability, he would be entitled to an estimated
severance payment of $209,916.
Any of the aforementioned payments to Mr. Seibel that exceed his minimum entitlements, if any,
under the_ESA_, are conditional upon his execution of a release of claims in favour of the Company
(or any successor entity).
If Mr. Seibel’s employment is terminated with cause, he will not be entitled to any severance pay,
notice or compensation in lieu of notice, nor to any payments or benefits following the termination
date. He will however be entitled to payment of his accrued but unpaid base salary and vacation or
other compensation earned up to the termination date.
Mr. Seibel’s employment agreement also contains non-competition and non-solicitation covenants
which are in effect during the period of his employment and for 12 months thereafter.

Termination upon
a
Change
in
Control

If Mr. Seibel is terminated without cause or he resigns for good reason within 12 months following
a change of control, he is entitled to: a severance payment representing 24 months of his base
salary; payment of the portion of his bonus award earned up to the termination date (conditional
on compliance with employment terms that survive termination of employment); payment of an
additional 24 months’ bonus (conditional on compliance with employment terms that survive
termination of employment), to be based on Mr. Seibel’s average annual bonus payment over the
preceding two (2) years (or, if Mr. Seibel has not participated in his current bonus plan for two (2)
full bonus/calendar years as of the termination date, 80% of Mr. Seibel’s target annual bonus in the
applicable year); early acceleration and payment of all vested and unvested awards and options
granted to Mr. Seibel in accordance with the Legacy ESOP; and the continuation of certain benefits
for the duration of his 24 month notice period.
If Mr. Seibel’s employment is terminatedwithout cause or he resigns for good reason within 12
months following a change of control, he would be entitled to an estimated severance payment of
$638,145.(8)
Mr. Seibel is also entitled to accrued but unpaid base salary and vacation or other compensation
earned up to the termination date.

129

Any of the aforementioned payments to Mr. Seibel that exceed his minimum entitlements, if any, under the ESA , are conditional upon his execution of a release of claims in favour of the Company (or any successor entity).

If Mr. Seibel’s employment is terminated for reasons and/or in circumstances other than those described above, he will have no additional entitlements upon termination beyond the baseline entitlements described in the “Executive Compensation – Employment Agreements, Termination and Change of Control Benefits – Termination without Change in Control” section above.

(1) Severance payment estimated based on the base salary we expect to pay to Mr. Laidlaw. The value of option-based entitlements calculated using the Average Annual Bonus Value cannot be estimated in advance, as the Average Annual Bonus Value will depend entirely on the strike price of future options granted to Mr. Laidlaw. Severance payments are reported above in U.S. dollars.
(2) The value of option-based entitlements calculated using the Average Annual Bonus Value cannot be estimated in advance, as the Average Annual Bonus Value will depend entirely on the strike price of future options granted to Mr. Laidlaw. Severance payment is reported above in U.S. dollars.
(3) Severance payment estimated based on the base salary and annual incentive compensation we expect to pay to the NEO and assumes (i) that the NEO will be provided with payment in lieu of notice, (ii) achievement of 100% of target annual short term incentive bonus for the year in which termination occurs, and (iii) that the NEO’s additional bonus would be based on an annual bonus amount equivalent to the average of the NEO’s annual short term incentive bonuses for 2019 and 2020. Severance payments are reported above in U.S. dollars using the Exchange Rate.
(4) Severance payment estimated based on the base salary and annual incentive compensation we expect to pay to the NEO and assumes (i) achievement of 100% of target annual short term incentive bonus for the year in which termination occurs, and (ii) that the NEO’s additional bonus would be based on an annual bonus amount equivalent to the average of the NEO’s annual short term incentive bonuses for 2019 and 2020. Estimates do not include entitlements to early acceleration and payment of all vested and unvested awards potentially granted to the NEO in accordance with the Omnibus Incentive Plan, as no awards have been issued to the NEO under the Omnibus Incentive Plan. Severance payments are reported above in U.S. dollars using the Exchange Rate.
(5) Severance payment estimated based on the base salary and annual incentive compensation we expect to pay to the NEO and assumes (i) that the NEO will be provided with payment in lieu of notice, (ii) achievement of 100% of target annual short term incentive bonus for the year in which termination occurs, and (iii) that the NEO’s additional bonus would be based on an annual bonus amount equivalent to 80% of the NEO’s 2021 target annual short term incentive bonus. Severance payments are reported above in U.S. dollars using the Exchange Rate.
(6) Severance payment estimate assumes achievement of 100% of target annual short term incentive bonus for the year in which termination occurs. Severance payment is reported above in U.S. dollars using the Exchange Rate.
(7) Severance payment estimated based on the base salary and annual incentive compensation we expect to pay to the NEO and assumes achievement of 100% of target annual short term incentive bonus for the year in which termination occurs. Severance payment is reported above in U.S. dollars using the Exchange Rate.
(8) Severance payment estimated based on the base salary and annual incentive compensation we expect to pay to the NEO and assumes (i) achievement of 100% of target annual short term incentive bonus for the year in which termination occurs, and (ii) that the NEO’s additional bonus would be based an annual bonus amount equivalent to 80% of the NEO’s 2021 target annual short term incentive bonus. Estimates do not include entitlements to early acceleration and payment of all vested and unvested awards potentially granted to the NEO in accordance with the Omnibus Incentive Plan, as no awards have been issued to the NEO under the Omnibus Incentive Plan. Severance payments are reported above in U.S. dollars using the Exchange Rate.

Director Compensation

Our directors’ compensation program is designed to attract and retain the most qualified individuals to serve on the Board. The Board, through the Compensation Committee, will be responsible for reviewing and approving any changes to the directors’ compensation arrangements. In consideration for serving on the Board, each director who is not an employee will be paid an annual retainer, in accordance with the table below, and will be reimbursed for their reasonable out-of-pocket expenses incurred while serving as directors. Our directors’ compensation arrangements may be modified from time to time at the discretion of the Board.

Following Closing, it is expected that the non-employee directors of the Company will be entitled to be paid as members of the Board, and, if applicable, as Lead Director, Chair of the Board, Chair of the Audit Committee, Chair of the Nominating

130

and Governance Committee or Chair of the Compensation Committee, the following annual retainers:

Position	Type of Retainer(1)	Total Amount (U.S.$)
Chair of the Board	50% cash and 50% equity	200,000
Lead Director (if applicable), Chair of the Audit	50% cash and 50% equity
Committee, Chair of the Nominating and Governance		125,000
Committee, and Chair of the Compensation Committee
Member of the Board	50% cash and 50% equity	75,000

(1) Any NordStar nominee who is also a director, officer or employee of the NordStar Group or who is otherwise not “independent” within the meaning of the TSX Company Manual will be entitled to receive cash retainers only, and will not be eligible to participate in the Omnibus Incentive Plan.

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

The equity retainers will be paid in DSUs. The cash and equity retainers will be paid on a quarterly basis with the number of DSUs to be issued being determined based on the volume-weighted average trading price on the TSX for the five trading days prior to each such issuance. While DSUs vest immediately, they will only be paid out when a director ceases to be a member of the Board. See “ Executive Compensation – Equity Incentive Plans – Omnibus Incentive Plan ”.

Mr. Laidlaw does not and will not receive additional compensation for serving as a director on the Board.

Each director will be entitled to reimbursement for reasonable travel and other expenses incurred in connection with attending board meetings and meetings for any committee on which such director serves.

Share Ownership Guidelines

Our board of directors has discretion to prescribe minimum share ownership requirements for directors.

Hedging Prohibition

Our insider trading policy provides that all of our directors and officers are prohibited from buying, selling or entering into: (i) any short sale of securities of the Company; (ii) any put options, call options or other rights or obligations to buy or sell securities of the Company; (iii) any derivative instruments, agreements or securities, the market price, value or payment obligations of which are derived from, referenced to or based on the value of securities of the Company; and (iv) any other derivative instruments, agreements, arrangements or understandings (commonly known as equity monetization transactions) the effect of which is to alter, directly or indirectly, the director’s or officer’s economic interest in securities of, or economic exposure to, the Company.

INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND EMPLOYEES

None of our directors, executive officers, employees, former directors, former executive officers or former employees, and none of their associates, is or has at any time since the beginning of the most recently completed financial year been indebted to us or another entity whose indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar agreement or understanding provided by us, except for routine indebtedness as defined under applicable securities legislation and any indebtedness that has been entirely repaid before the date of this prospectus.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

We have not completed a transaction within the three years before the date of this prospectus that has materially affected or is reasonably expected to materially affect us or any of our subsidiaries in which any of our directors, executive officers or principal shareholders, or any of their associates or affiliates, had any material interest, either direct or indirect.

131

PLAN OF DISTRIBUTION

General

Pursuant to an underwriting agreement dated  , 2021 among us and the Underwriters (the “ Underwriting Agreement ”), the Company has agreed to sell and the Underwriters have agreed to severally purchase on the Closing Date an aggregate of  Subordinate Voting Shares at a price of C$  per Subordinate Voting Share for aggregate gross proceeds of C$125,000,000, payable in cash to the Company against delivery of the Subordinate Voting Shares.

In consideration for their services in connection with the Offering, the Company has agreed to pay the Underwriters an Underwriters’ Fee equal to 6.0% of the gross proceeds of the Offering representing C$  per Subordinate Voting Share including any Subordinate Voting Shares sold upon exercise of the Over-Allotment Option. It is estimated that the total expenses of the Offering, not including the Underwriters’ Fee or the 75,000 Subordinate Voting Shares issued to the Company’s legal counsel, will be approximately C$  . All such expenses of the Offering will be paid by the Company out of the gross proceeds of the Offering.

The Underwriters have agreed that up to  Subordinate Voting Shares to be sold in the Offering shall be reserved for sale to the President’s List Purchasers, subject to the terms and conditions of the Underwriting Agreement, including the reduction of the Underwriters Fee to 3.0% of the gross proceeds from sales of Subordinate Voting Shares to the President’s List Purchasers. No more than 10% of the aggregate number of Subordinate Voting Shares sold under the Offering will be sold to the President’s List Purchasers.

The Offering Price of C$  per Subordinate Voting Share was determined by negotiation between us and the Underwriters, and the Underwriters propose to offer the Subordinate Voting Shares initially at the Offering Price. After the Underwriters have made a reasonable effort to sell all of the Subordinate Voting Shares at the price specified on the cover page of this prospectus, the Offering Price may be decreased and may be further changed from time to time to an amount not greater than that set out on the cover page of this prospectus, and the compensation realized by the Underwriters will be decreased by the amount that the aggregate price paid by the purchasers for the Subordinate Voting Shares is less than the price paid by the Underwriters to us. Any such reduction will not affect the net proceeds received by us. The Underwriters may form a selling group including other qualified investment dealers and determine the fee payable to the members of such group, which fee will be paid by the Underwriters out of their fees. The obligation to pay the sub-underwriting fee is an obligation of the Underwriters and we shall not be responsible for ensuring that any dealer receives this payment from the Underwriters.

The Company has granted to the Underwriters the Over-Allotment Option, which is exercisable in whole or in part and at any time for a period of 30 days from the Closing Date to purchase from the Company up to an additional 15% of the aggregate number of Subordinate Voting Shares issued under the Offering on the same terms as set forth above solely to cover overallocations, if any. This prospectus also qualifies the grant of the Over-Allotment Option. A purchaser who acquires Subordinate Voting Shares forming part of the Underwriters’ over-allocation position acquires such Subordinate Voting Shares under this prospectus, regardless of whether the Underwriters’ over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.

Under the terms of the Underwriting Agreement, the Underwriters may, at their discretion terminate their obligations under the Underwriting Agreement upon the occurrence of certain stated events. The termination provisions in the Underwriting Agreement include customary “regulatory proceedings out”, “disaster out”, “market out”, “material change out” and “non compliance with conditions out” clauses. The Underwriters are, however, subject to certain closing conditions, severally obligated to take up and pay for all of the Subordinate Voting Shares that they have agreed to purchase if any of the Subordinate Voting Shares are purchased under the Underwriting Agreement.

There is currently no market through which the Subordinate Voting Shares may be sold. This may affect the pricing of the Subordinate Voting Shares in the secondary market, the transparency and availability of trading prices, the liquidity of the Subordinate Voting Shares and the extent of issuer regulation. See “ Risk Factors ”. The Subordinate Voting Shares have been conditionally approved for listing on the TSX under the symbol “FORA”. Listing is subject to fulfilling all of the listing requirements of the TSX.

Subscriptions for Subordinate Voting Shares will be received subject to rejection or allocation in whole or in part and the right is reserved to close the subscription books at any time without notice.

132

The Closing is expected to occur on  , 2021 or such other date as we and the Underwriters may agree, but in any event not later than  , 2021. Closing of the Offering is conditional on the Subordinate Voting Shares being approved for listing on the TSX.

Under applicable securities laws in Canada, certain persons and individuals, including us and the Underwriters, have statutory liability for any misrepresentation in this prospectus, subject to available defenses. We have agreed to indemnify the Underwriters and their directors, officers, employees and agents against certain liabilities, including, without restriction, civil liabilities under Canadian securities legislation, and to contribute to any payments that the Underwriters may be required to make in respect thereof.

The Subordinate Voting Shares have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state of the U.S. and may not be offered, sold or delivered, directly or indirectly, in the U.S., except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. Each Underwriter has agreed that it will not offer or sell the Subordinate Voting Shares within the U.S., except in transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws. The Underwriting Agreement provides that the Underwriters may re-offer and re-sell the Subordinate Voting Shares that they have acquired pursuant to the Underwriting Agreement through their U.S. registered broker-dealer affiliates in the U.S. to “qualified institutional buyers” (as defined in Rule 144A under the U.S. Securities Act) in accordance with Rule 144A under the U.S. Securities Act. The Underwriting Agreement also provides that the Underwriters may offer and sell the Subordinate Voting Shares outside the U.S. in accordance with Regulation S under the U.S. Securities Act.

In connection with the Offering, certain of the Underwriters may distribute this prospectus electronically.

In addition, until 40 days after the commencement of the Offering, an offer or sale of the Subordinate Voting Shares within the U.S. by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with an exemption from registration under the U.S. Securities Act.

Price Stabilization, Short Positions and Passive Market Making

In connection with the Offering, the Underwriters may, subject to applicable law, over-allocate or effect transactions which stabilize or maintain the market price of the Subordinate Voting Shares at levels other than those which otherwise might prevail on the open market, including: stabilizing transactions; short sales; purchases to cover positions created by short sales; and syndicate covering transactions.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of the Subordinate Voting Shares while the Offering is in progress. These transactions may also include making short sales of the Subordinate Voting Shares, which involve the sale by the Underwriters of a greater number of Subordinate Voting Shares than they are required to purchase in the Offering. Short sales may be “covered short sales”, which are short positions in an amount not greater than the Over-Allotment Option, or may be “naked short sales”, which are short positions in excess of that amount.

The Underwriters may close out any covered short position either by exercising the Over-Allotment Option, in whole or in part, or by purchasing Subordinate Voting Shares in the open market. In making this determination, the Underwriters will consider, among other things, the price of Subordinate Voting Shares available for purchase in the open market compared with the price at which they may purchase Subordinate Voting Shares from the Company through the Over-Allotment Option. If, following Closing, the market price of the Subordinate Voting Shares decreases, the short position created by the overallocation position in Subordinate Voting Shares may be filled through purchases in the market, creating upward pressure on the price of the Subordinate Voting Shares. If, following Closing, the market price of Subordinate Voting Shares increases, the over-allocation position in Subordinate Voting Shares may be filled through the exercise of the Over-Allotment Option in respect of Subordinate Voting Shares at the Offering Price.

The Underwriters must close out any naked short position by purchasing Subordinate Voting Shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of the Subordinate Voting Shares in the open market that could adversely affect investors who purchase in the Offering. Any naked short sales will form part of the Underwriters’ over-allocation position. A purchaser who acquires Subordinate Voting Shares forming part of the Underwriters’ over-allocation position resulting from any covered short sales

133

or naked short sales will, in each case, acquire such Subordinate Voting Shares under this prospectus, regardless of whether the Underwriters’ over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.

In addition, in accordance with rules and policy statements of certain Canadian securities regulatory authorities, the Underwriters may not, at any time during the period of distribution, bid for or purchase Subordinate Voting Shares. The foregoing restriction is, however, subject to exceptions where the bid or purchase is not made for the purpose of creating actual or apparent active trading in, or raising the price of, the Subordinate Voting Shares. These exceptions include a bid or purchase permitted under the by-laws and rules of applicable regulatory authorities and the TSX, including the Universal Market Integrity Rules for Canadian marketplaces, relating to market stabilization and passive market making activities and a bid or purchase made for and on behalf of a customer where the order was not solicited during the period of distribution.

As a result of these activities, the price of the Subordinate Voting Shares may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the Underwriters at any time. The Underwriters may carry out these transactions on any stock exchange on which the Subordinate Voting Shares are listed, in the over the counter market, or otherwise.

Non-Certificated Inventory System

No certificates representing the Subordinate Voting Shares to be sold in the Offering will be issued to purchasers under this prospectus. Registration will be made in the depository service of CDS, or to its nominee, and electronically deposited with CDS on the Closing Date. Each purchaser of Subordinate Voting Shares will typically only receive a customer confirmation of purchase from the participants in the CDS depository service (“ CDS Participants ”) from or through which such Subordinate Voting Shares are purchased, in accordance with the practices and procedures of such CDS Participant. Transfers of ownership of Subordinate Voting Shares will be effected through records maintained by the CDS Participants, which include securities brokers and dealers, banks and trust companies. Indirect access to the CDS book-entry system is also available to other institutions that maintain custodial relationships with a CDS Participant, either directly or indirectly.

Lock-Up Agreements

Pursuant to the Underwriting Agreement, the Company and each of the Company’s directors, executive officers and certain other securityholders will enter into a lock-up agreement (each, a “ Lock-Up Agreement ”) pursuant to which he, she or it will agree not to, directly or indirectly, without the prior written consent of the Lead Underwriters, on behalf of the Underwriters, such consent not to be unreasonably withheld, offer, sell, contract to sell, issue or grant any option, right or warrant to purchase, or otherwise lend, transfer or dispose of any shares of the Company, financial instruments or securities convertible into or exercisable or exchangeable for shares of the Company; make any short sale, engage in any hedging transaction, or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of shares of the Company, whether any such transaction is to be settled by delivery of shares, other securities, cash or otherwise, subject to customary exceptions; or agree to or announce any intention to do any of the foregoing for a period of (A) in the case of the Company, the Company’s directors and executive officers and certain other securityholders (other than the Principal Shareholders), 180 days after the Closing, and (B) in the case of the Principal Shareholders, 12 months after the Closing for NordStar Group and Hedgewood and 24 months after the Closing for RDL Ventures (subject to the release mechanisms described below), subject to customary exceptions. These exceptions include the issuance of securities by the Company (i) pursuant to the Legacy ESOP or the Omnibus Incentive Plan, (ii) as consideration in connection with acquisitions, provided that any issuances in connection with such other acquisitions in the aggregate do not exceed 5% of the shares of the Company (on a fully diluted basis) and (iii) as may be required pursuant to our Articles and shareholders agreement or for transactions related to the Offering, provided that in the case described in clause (ii), the holders shall be required to provide Lock-Up Agreements.

With respect to the extended lock-up period for the Principal Shareholders, each of the Principal Shareholders have the right to sell, grant, secure, pledge or otherwise transfer, dispose of or monetize (a) as it relates to NordStar Group and Hedgewood, (i) up to half of their Subordinate Voting Shares or other equity securities of the Company 180 days after the Closing; (ii) up to three quarters of their Subordinate Voting Shares or other equity securities of the Company nine months after the Closing; and (iii) any and all of their Subordinate Voting Shares or other equity securities of the Company 12 months after the Closing; and (b) as it relates to RDL Ventures, (i) up to one third of its Multiple Voting Shares, Subordinate Voting Shares or other equity securities of the Company 12 months after the Closing; (ii) up to two thirds of its Multiple Voting Shares, Subordinate Voting Shares or other equity securities of the Company 18 months after the Closing; and (iii) any and all of its Multiple

134

Voting Shares and Subordinate Voting Shares or other equity securities of the Company 24 months after the Closing.

The holder of a total of 2,957,265 Multiple Voting Shares and the holders of a total of 10,972,062 Subordinate Voting Shares, representing an aggregate of approximately  % of the issued and outstanding shares of the Company on a non-diluted basis (approximately  % on a fully diluted basis assuming the exercise of all options outstanding immediately following Closing) after the completion of Pre-Closing Reorganization and the Offering (assuming no exercise of the Over-Allotment Option), will enter into Lock-Up Agreements.

Directed Share Program

At our request, the Underwriters have reserved up to 10% of the Subordinate Voting Shares (as part of, and not incremental to, the President’s List) to be sold by us and offered by this prospectus for sale, at the Offering Price, through a directed share program for the Company’s employees and certain friends, family and business associates of the Company who are resident in Canada and the Cayman Islands. The number of Subordinate Voting Shares available for sale to the general public will be reduced by the number of reserved Subordinate Voting Shares sold to these individuals. Any reserved Subordinate Voting Shares not purchased by these individuals will be offered by the Underwriters to the general public on the same basis as the other Subordinate Voting Shares offered under this prospectus.

RELATIONSHIP BETWEEN US AND CERTAIN UNDERWRITERS

The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the Underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the Company and to persons and entities with relationships with the Company, for which they received or will receive customary fees and expenses.

In particular, RBC, National Bank and HSBC Securities (Canada) Inc. are affiliates of Canadian chartered banks that are currently lenders to the Company under its existing Credit Facilities. See “ Description of Material Indebtedness ”. Accordingly, the Company may be considered a “connected issuer”, as such term is defined in National Instrument 33-105 – Underwriting Conflicts , of RBC, National Bank and HSBC Securities (Canada) Inc.

As of the date hereof, the Company is in compliance in all material respects with the terms of its indebtedness to the lenders under the Credit Facilities. Other than as may be described in this prospectus, there has been no material adverse change in the financial position of the Company and its subsidiaries, or to the security for the indebtedness under the Credit Facilities since the date that the Credit Facilities were established. The lenders have not waived any breach of the Credit Agreement since the date that the Credit Facilities were established.

The terms of the Offering, including the Offering Price, were determined solely by negotiation among the Company and the Underwriters. The lending affiliates of RBC, National Bank and HSBC Securities (Canada) Inc. were not involved in the decision to proceed with the Offering and did not have any role in the determination of the terms of the Offering. As a consequence of the Offering, each of RBC, National Bank and HSBC Securities (Canada) Inc. will receive its proportionate share of the Underwriters’ Fee and the expenses of the Offering. While we intend to primarily use the net proceeds of the Offering to pursue our current pipeline of acquisitions, depending on market conditions for interest rates following Closing and depending upon the amount of proceeds received in the Offering, we may decide to reduce in whole or in part the amount of debt outstanding under the Credit Facilities, reduce our interest payments under the Credit Facilities by using net proceeds from the Offering to accelerate our debt repayments under the Credit Facilities or re-draw on the Credit Facilities to fund in whole or in part acquisition opportunities as they present themselves. See “ Use of Proceeds ”.

In the ordinary course of their various business activities, the Underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the Company (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the Company. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short

135

positions in such assets, securities and instruments.

RISK FACTORS

An investment in the Subordinate Voting Shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information in this prospectus before you decide to purchase the Subordinate Voting Shares. If any of the risks discussed in this prospectus actually occur, alone or together with additional risks and uncertainties not currently known to us, or that we currently deem immaterial, our business, financial condition, results of operations and prospects may be materially adversely affected. If this were to occur, the value of the Subordinate Voting Shares may decline and you may lose all or part of your investment.

Risks Relating to Our Business and Industry

We generate a significant portion of our revenue from digital advertising, and reduced advertising spending by our customers, a loss of partners, or new and existing technologies that block advertisements online and/or affect our ability to customize advertisements could adversely affect our business.

We generate revenue through digital advertising and e-commerce transactions, with the majority of our revenue being generated from digital advertising. Our success in generating digital advertising revenue is dependent on the volume, quality, and attractiveness of our communities to our users, as well as the breadth, depth and strength of our third-party advertising networks and supply-side platforms. We rely on customers to purchase Impressions from our communities for future revenue. Our contracts that help drive digital advertising revenue generally do not include long-term obligations requiring customers to purchase our Impressions. Our customers may not continue to do business with us if we do not create more value (such as new sales leads, increased brand awareness or more effective monetization) than their available alternatives. As a result, we may have limited visibility as to our future digital advertising revenue streams. We cannot ensure our digital advertising revenue generating sources will continue to operate or that we will be able to replace, in a timely or effective manner, departing customers with new sources that generate comparable revenue. Any non-renewal, renegotiation, cancellation or deferral of significant advertising contracts that in the aggregate account for a significant amount of revenue, could have a material adverse effect on our prospects, business, financial condition or results of operations.

Changes to our advertising policies and data privacy practices, as well as changes to other companies’ advertising and/or data privacy practices, may affect the digital advertising services that we are able to provide, which could harm our business. In addition, technologies have been developed that make customized advertisements more difficult or that block the display of advertisements altogether, and certain providers of online services have integrated technologies that could potentially impair the availability and functionality of third-party advertising. Failing to provide superior value or deliver advertisements effectively and competitively could adversely affect our business, financial condition, results of operations and ability to execute on our growth strategies.

In addition, advertising expenditures by customers tend to be impacted by seasonality, reflecting overall economic conditions and budgeting and consumer spending patterns, and as a result, our digital advertising revenue and e-commerce revenue are also impacted by seasonality.

Our ability to retain or attract users and customers may require us to engage increasingly in targeted advertising efforts that may not result in additional sales. If our efforts to expand our user and customer bases are not successful, our business, financial condition, and results of operations may be adversely affected.

We rely on third-party service providers, including third-party licenses, for many aspects of our platform and our business, and any failure to maintain these relationships could harm our business. If we are unable to obtain or fail to comply with the required licenses to operate our business or experience disputes with licensors or disruptions to our business relationships with our licensors, we could fail to obtain or lose license rights that are critical to our business.

Our platform relies on third-party licensed software, including XenForo. We have entered into license agreements with third parties and may need to obtain additional licenses from our existing licensors and others to advance or allow commercialization of our communities, services and platform. Our existing licensors may terminate our license agreements in certain situations or they may become insolvent or bankrupt. In addition, we may be unable to obtain any additional licenses at a reasonable cost or on reasonable terms, if at all. In any of the foregoing events, we may be required to expend significant time and resources to redesign our communities, services and platform, or to develop or license replacement technology, all

136

of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected communities, services and platform, which could disrupt and adversely affect our business.

Disputes may arise regarding intellectual property or technology, including software, data and content, that is subject to a licensing agreement, including the scope of rights granted under the license agreement, ownership of customizations, improvements, derivative works and other interpretation-related issues. In addition, the agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement. If these events were to occur, we may lose the right to continue to use and exploit such licensed intellectual property or technology in connection with our communities, services and platform, which could have a material adverse effect on our business, financial condition and results of operations.

We also rely on other third-party service providers. If any of these providers experience difficulty meeting our requirements or standards, become unavailable due to extended outages or interruptions, temporarily or permanently cease operations, increase their fees, or terminate their relationship with us it could adversely affect our operations, which in turn, could adversely affect our business, financial condition or results of operations until we replace such providers. There is no assurance that we will be successful in identifying high-quality service providers, negotiating cost-effective relationships or effectively managing these relationships.

We rely on search engines, advertising on the internet and social networking sites to attract a meaningful portion of our users. If we are not able to generate traffic to our websites through search engines, advertising on the internet and social networking sites, our ability to attract new users may be impaired.

Most of our users find our websites and communities through internet search engines, such as Google and Bing, and on social networking sites, such as Facebook and Reddit. The prominence of our content in response to internet searches is a critical factor in attracting potential users and customers to our websites, communities and services, and it could significantly be impacted by changes in algorithms across such third-party search engines and social platforms over which we have no control. If we are listed less prominently or fail to appear in search results for any reason, visits to our websites and communities could decline significantly, and we may not be able to replace this traffic.

Our ability to maintain and increase the number of users directed to our websites and communities from third-party search engines is not within our control. Search engines, such as Google, revise their algorithms from time to time in an attempt to optimize their search results. If search engines modify their algorithms, our websites and communities may appear less prominently or not at all in search results, which could result in reduced traffic to our websites and communities. Some of our websites have experienced declines in traffic and user growth as a result of these changes in the past, and we anticipate fluctuations as a result of such actions in the future.

To offset the impact on our user growth, we may need to pursue other growth strategies, such as paid marketing or other initiatives that drive user acquisition, which may cost more and be less effective. Competitors may in the future bid on the search terms that we use to drive traffic to our websites and communities. Such actions could also increase our marketing costs and result in decreased traffic to our websites and communities. In addition, search engines or social networking sites may change their advertising policies from time to time. If any change to these policies delays or prevents us from advertising through these channels, it could result in reduced traffic to our websites and communities. As well, new search engines or social networking sites may develop, particularly in specific jurisdictions, that reduce traffic on existing search engines and social networking sites and if we are not able to achieve awareness through advertising or otherwise, we may not achieve significant traffic to our websites and communities through these new platforms. If we are unable to continue to successfully promote and maintain user traffic on our websites and communities, or if we incur excessive expenses to do so, our business and operating results could be adversely affected.

We may be unable to identify and complete acquisitions or form partnerships or joint ventures under acceptable terms. Any future acquisitions, partnerships or joint ventures that we make or enter into may not produce our anticipated benefits, including Adjusted EBITDA results, and could disrupt our business and harm our financial condition.

Acquisitions, partnerships and joint ventures are an integral part of our growth strategy. We evaluate potential strategic acquisitions of, and partnerships or joint ventures with, websites providing content, platforms or services that are complementary or supplementary to our existing communities, services and platform, and other assets that expand the services

137

that we can offer our users and customers. However, we may not be successful in identifying acquisition, partnership and joint venture targets, or we may use estimates and judgments to evaluate the operations and future revenue of a target that turn out to be inaccurate. In addition, we may not be able to successfully finance or integrate a particular website, community, service or technology that we acquire or with which we invest or form a partnership or joint venture, and we may not achieve the anticipated benefits, including Adjusted EBITDA results, of such project or investment, or we may lose users or customers as a result. We may make acquisitions and investments without being certain that they will result in communities, services or technologies that will be attractive to or accepted by existing or prospective users or customers. Additionally, even if we are able to acquire, integrate and develop new communities, services and platforms, we cannot ensure that they will achieve market acceptance. If we are unable to successfully enhance our existing communities, services and platform to meet evolving user or customer requirements, increase and expand our user base, or if our efforts to increase the usage of our communities, services and platform are more expensive than we expect, then our business, results of operations and financial condition would be adversely affected.

There are various risks associated with the acquisition of communities, technologies, websites and related assets, including:

difficulty acquiring user and community acceptance as the new owner of such community, which could result in a loss of users and members;
difficulty enforcing our indemnities or other rights under the purchase agreement should a seller breach their obligations thereunder, including a breach of their non-compete obligations or a representation and warranty;
unforeseen or unknown costs or liabilities;
diversion of management time and focus from operating our business;
use of resources that are needed in other areas of our business;
possibility of adverse tax consequences;
implementation or remediation of controls, procedures and policies of the acquired company;
difficulty integrating the accounting systems and operations of the acquired company;
difficulty integrating, supporting or enhancing acquired communities, services, processes and platforms, including difficulty in transitioning acquired solutions developed with different source code architectures to our integrated platform and difficulty in supporting feature development across our full suite of house-built and acquired solutions;
coordination of product, engineering and selling and marketing functions, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company, as applicable, difficulties associated with supporting new communities or services, difficulty converting the users or customers of the acquired company onto our platform and difficulties associated with contract terms, including disparities in the revenue or licensing model of the acquired company;
retention and integration of employees from the acquired company and preservation of our corporate culture;
assumption of consulting arrangements from the acquired company;
adverse effects to our existing business relationships with partners as a result of the acquisition or investment;
unknown or unforeseen deficiencies with any proprietary technology or data of the acquired company;
litigation or other claims arising in connection with the acquired company or investment;
in the case of foreign acquisitions, the need to integrate operations across different cultures and to address the particular economic, currency, political and regulatory risks associated with specific countries; and
other outstanding or unforeseen legal, regulatory, contractual, employee or other issues.

138

As a result of any of the foregoing, we may spend time and money on projects that do not increase our Adjusted EBITDA, revenue or profitability.

Furthermore, the integration of any acquisition, partnership or joint venture may divert management’s time and resources from our existing business, disrupt our operations, and lead to unforeseen costs. Certain acquisitions, partnerships and joint ventures we may in the future make may prevent us from competing for certain customers or in certain markets or communities and may lead to a loss of customers to the extent we acquire businesses with non-competes or exclusivity provisions in their agreements with customers.

In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquire goodwill and other intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations.

We may not be able to identify acquisition or investment opportunities that meet our strategic objectives, or to the extent such opportunities are identified, we may not be able to negotiate terms with respect to the acquisition or investment that are acceptable to us. Furthermore, any increase to capital gains tax rates in the U.S. could make owners of targets reluctant to sell or impact valuation expectations. Moreover, our competitors may be willing or able to pay more than us for acquisitions, which may cause us to lose certain acquisitions that we would otherwise desire to complete. Even if we successfully compete for a certain acquisition, partnership or joint venture, we may finance the project with cash on hand, equity or debt, or a combination thereof, which could decrease our cash reserves, dilute our shareholders, including you, or significantly increase our level of indebtedness or place other restrictions on our operations. We cannot provide assurances that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations.

Our digital advertising revenue is dependent on targeting and measurement tools that incorporate data signals from user activity on websites and services that we do not control, and changes to the regulatory environment and third-party systems and browsers may impact the availability of such signals, which could adversely affect our digital advertising revenue.

Most advertisers, including our customers, rely on tools that measure the effectiveness of their advertisement campaigns in order to allocate their advertising spending among various forums, websites and platforms. If we are unable to measure the effectiveness of digital advertising on our communities or to convince customers that our communities and services should be part of their advertising budget, our ability to increase the demand and pricing of our digital advertising products and maintain or scale our revenue may be limited. Our tools may be less developed than those of other platforms with which we compete for advertising spending. Therefore, our ability to develop and offer tools that accurately measure the effectiveness of a campaign on our communities and through our services is critical to our ability to attract new customers and retain, and increase spending from, our existing customers.

We rely on data signals from user activity on websites that we do not control in order to deliver relevant and effective advertisements to our users. Our digital advertising revenue is dependent on targeting and measurement tools that incorporate these signals, and any changes in our ability to use such signals will adversely affect our business. For example, cookies are common tools used by thousands of websites and mobile applications to, among other things, store or gather information, market to consumers and enhance the user experience. However, many jurisdictions have adopted regulations governing the use of cookies, and the use thereof is becoming the subject of increasing scrutiny. Legislative and regulatory developments and guidance, such as PIPEDA, the GDPR and CCPA, have impacted, and we expect will continue to impact, our ability to use such signals in our advertisement products or place certain cookies on a user’s computer. In particular, we have seen an increasing number of users opt out of certain types of advertisement targeting users in Europe and California following adoption of the GDPR and CCPA, respectively. Regulatory guidance or decisions or new legislation may require us to make additional changes to our products in the future that further reduce our ability to use these signals.

Any other restriction, whether by law, regulation, policy (including third-party policies) or otherwise, on our ability to collect and share data that our users find useful, our ability to use or benefit from tracking and measurement technologies, including cookies, or that further reduce our ability to measure the effectiveness of digital advertising on our communities would impede our ability to attract, grow and retain customers. Users, customers and other third parties that provide data that help us deliver personalized, relevant digital advertising may restrict or stop sharing this data. If they stop sharing this data with us, it may not be possible for us to collect this data through our communities, services and platform or from another source.

139

Furthermore, the targeting and measurement tools we utilize enable us to target advertisements by a number of factors. There can be no assurance that the targeting and measurement tools we utilize will not be enhanced or rendered obsolete by advances in technology, or that we will be able to utilize the targeting and measurement tools necessary to remain competitive. This could have an adverse effect on our business, operations or financial condition. Moreover, the targeting and measurement tools we utilize are highly technical and complex and may now or in the future contain undetected errors, bugs, or vulnerabilities which may result in unsuccessful digital advertising campaigns. Any unsuccessful digital advertising campaigns could result in damage to our reputation, loss of users, loss of customers, loss of revenue, or liability for damages, any of which could adversely affect our business and financial results.

We rely heavily on our ability to collect and share data and metrics for our customers to help new and existing customers understand the performance of digital advertising campaigns. If customers do not perceive our metrics to be accurate representations of our user base and user engagement, or if we or our customers discover inaccuracies in our metrics, they may be less willing to allocate their budgets or resources to our communities, which could harm our business, revenue and financial results.

Problematic content on our communities, including unsafe content and other violations of our guidelines could affect the quality of our services, which could damage our reputation and deter our current and potential users from using our communities and services.

We, like others in the industry, face and may in the future face violations of our content guidelines across our communities, including sophisticated attempts by bad actors to disrupt or manipulate our hosting and digital advertising systems to fraudulently generate revenue, to display false, misleading or undesirable content, or to otherwise generate traffic that does not represent genuine user interest or intent. While we invest in security safeguards and other efforts to promote high-quality and relevant results and to detect and prevent low-quality content and invalid traffic, we may be unable to adequately detect and prevent such abuses or promote high-quality content, particularly during times of a natural disaster or pandemic (including COVID-19).

We also endeavor to keep divisive, disturbing or unsafe content from our communities. Through our employees and community moderators and administrators and community management programs, we monitor, delete or hide certain types of content, which could result in decreased user growth, retention or engagement. We apply significant judgement in making these determinations and may be unsuccessful in our efforts to remove such content in a manner that is (or is perceived to be) consistently applied and on a timely basis or at all, which could also result in decreased user growth, retention or engagement.

We also face other challenges with respect to our communities, including violations of our content guidelines involving incidents such as activities that threaten the safety and/or well-being of our users or personnel, both online or offline, and the spreading of disinformation, among other challenges.

If we fail to either detect and prevent an increase in problematic content or effectively promote high-quality content, it could hurt our reputation for delivering relevant information or reduce use of our communities and services, harming our financial condition and operating results. It may also subject us to litigation and regulatory inquiries, which could result in monetary penalties and damages, divert management’s time and attention, and lead to enhanced regulatory oversight. Furthermore, posting customer advertisements near problematic content may result in a breach of our agreement with such customer and the customer may terminate its relationship with us or seek damages for breach of contract, which could damage our reputation and adversely affect our business, financial condition and results of operations.

We intend to make significant investments in our business. If we are unable to generate adequate revenue growth and manage our expenses, we may incur significant losses and may not achieve or maintain profitability.

We expect to continue to make significant expenditures to expand our business in the future. We expect to increase our investment in sales and marketing as we continue to spend on marketing activities to attract new users and customers. We plan to increase our investment in research and development as we continue to introduce new communities and services and to extend the functionality of our platform, including costs and expenses related to the expansion of our Fora platform. We also intend to invest in maintaining our high level of customer service and support, which we consider critical for our continued success. We also expect to incur additional general and administrative expenses as a result of our growth. In order to support the continued growth of our business and to comply with continuously changing security and operational requirements, we plan to continue investing in our hosting and network infrastructure. We also plan to continue to selectively

140

pursue acquisition opportunities, which may require that we invest in additional resources and incur various expenses and fees of financial advisors, tax advisors and external counsel. These increased expenditures will make it harder for us to achieve or maintain historical levels of profitability and we cannot predict whether we will achieve or maintain profitability in the near term or at all. Historically, our costs have increased each year due to these factors and we expect to continue to incur increasing costs to support our anticipated future growth. If the costs associated with acquiring new users or customers, including online advertising and paid search costs, materially rise in the future, our expenses may rise significantly. If we are unable to generate adequate revenue growth and manage our expenses, we may continue to incur significant losses and may not achieve or maintain profitability.

As with the investment in our Fora platform, we may make decisions that would reduce our short-term operating results if we believe those decisions will improve the experiences of our users and customers and if we believe such decisions will improve our operating results over the long-term. These decisions may not be consistent with the expectations of investors and may not produce the long-term benefits that we expect, in which case our business may be materially and adversely affected.

Issues with the quality and reliability of our communities, services, platform and information technology systems could adversely impact our ability to attract and retain users and customers and, consequently, our business.

Our users and customers expect a consistent level of quality from our communities, services and platform. If the reliability or functionality of our communities, services or platform is compromised or if we fail to quickly detect and remediate any performance issues, we could experience significant processing or reporting errors. This, in turn, could lead us to lose existing users and customers, and we may find it harder to attract new users and customers.

In addition, the operation of our business is highly dependent on information technology systems, including those provided by certain third-party suppliers. We depend on our payroll, transaction, financial, accounting and other data processing systems. An inability to maintain and enhance our existing information technology systems or obtain new systems to accommodate additional customer growth or to support new products and services could also have a material adverse impact on our ability to acquire new customers, retain existing customers, produce accurate and timely billing, generate revenue growth and manage operating expenses, or comply with regulatory requirements, all of which could materially adversely impact our financial results and position.

We could suffer disruptions, outages, defects, and other performance and quality problems with the cloud infrastructure on which we rely.

Our operations depend entirely on the virtual cloud infrastructure hosted by our third-party service providers, as well as the information stored in these virtual data centers. Any incident affecting the infrastructures of our third-party cloud service providers that may be caused by power loss, telecommunications failures, unauthorized intrusion, computer viruses, disabling devices, natural disasters, war, criminal acts, military actions, terrorist attacks, and other similar events beyond our control could negatively affect the availability and reliability of our operations. A prolonged service disruption of our third-party cloud service providers affecting our operations for any of the foregoing reasons or the unplanned or unanticipated termination of our relationship with any one of our third-party cloud service providers could cause business disruption, which in turn may damage our reputation, expose us to or enhance legal liabilities or cause us to lose current or potential users. We may also incur significant costs for using alternative service providers, equipment or taking other actions in preparation for, or in reaction to, any such termination. Any precipitated transition of the cloud services currently provided by Google to another service provider would be difficult to implement and would cause us to incur significant time and expense.

In addition, Google may take actions beyond our control that could adversely harm our business, including:

discontinuing or limiting our access to its cloud platform;
increasing pricing terms;
terminating or seeking to terminate our contractual relationship altogether; or
establishing more favourable relationships or pricing terms with one or more of our competitors.

Google has broad discretion to change and interpret its terms of service and other policies with respect to us, and those actions

141

may be unfavourable to us. They may also alter how we are able to process data on their cloud platforms. If Google makes changes or interpretations that are unfavourable to us, our business could be materially adversely affected.

Our business depends on our communities, services and platform to be available without disruption We have experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with our communities, services and platform. We have also experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with the cloud infrastructure on which our communities, services and platform rely. These problems may be caused by a variety of factors, including introductions of new functionality, migrations to new versions of our technologies, vulnerabilities and defects in proprietary and open source software, human error or misconduct, capacity constraints, design limitations, as well as from cybersecurity incidents, data breaches, malware and viruses, ransomware, denial or degradation of service attacks, or other incidents.

Any disruptions, outages, defects, and other security performance and quality problems with our communities, services and platform or with the cloud and internet infrastructure on which they rely, or any material change in our contractual and other business relationships with our cloud providers, could result in reduced use of our communities, services and platform, increased expenses, including significant, unplanned capital investments and/or service credit obligations, and harm to our brands and reputation, any of which could have a material adverse effect on our business, financial condition, and results of operations.

If we fail to recruit, train and retain qualified or key personnel, our business, financial condition and results of operations may be adversely affected.

The success of our business strategy is dependent upon the ability and experience of a number of key personnel who have substantial experience with our operations, our rapidly changing industry and the markets in which we offer our services. Many of our key personnel have worked for us for a significant amount of time or were recruited by us specifically due to their industry experience. The loss of the services of one or a combination of our senior executives and key managers could have a material adverse effect on our business, financial condition and results of operations.

Our business functions at the intersection of rapidly changing technological, social, economic and regulatory developments that require a wide-ranging set of expertise and intellectual capital. In order for us to successfully compete and grow, we must attract, recruit, develop and retain the necessary personnel who can provide the needed expertise across the entire spectrum of our intellectual capital needs. Competition for executives, data scientists, engineers, software developers, sales personnel, and other key employees in our industry, and specifically in research and development, is intense, and we may not succeed in recruiting and retaining existing and additional personnel or we may fail to effectively replace departing personnel with qualified or effective successors.

New hires require significant training and may take significant time before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. As we continue to grow rapidly, a large percentage of our employees will have relatively little experience working with us and our business model. If our new and existing personnel are unable to achieve desired productivity levels in a reasonable period of time, our growth and results of operations could be negatively impacted. In addition, we are extremely selective in our hiring process which requires significant investment of time and resources from internal stakeholders and management. At times, we have experienced, and we may continue to experience, difficulty in hiring personnel who meet the demands of our selection process and with appropriate qualifications, experience, or expertise, and we may not be able to fill positions as quickly as desired.

Many of the companies with which we compete for experienced personnel have greater resources than we have, and some of these companies may offer more attractive compensation packages. Particularly in the technology industry, job candidates and existing employees carefully consider the value of the equity-based awards they receive in connection with their employment. If equity-based awards are not offered, if the perceived value of our equity-based awards declines, or if the mix of equity and cash compensation that we offer is unattractive, it may adversely affect our ability to recruit and retain highly skilled employees. Decreases in the exchange rate between the Canadian dollar relative to the U.S. dollar and other currencies could make it more difficult for us to offer compensation packages to new employees that are competitive with packages in the U.S. or elsewhere and could increase our costs of hiring and retaining qualified personnel, especially as our workforce becomes increasingly global. Job candidates may also be threatened with legal action under agreements with their existing employers if we attempt to hire them, which could impact hiring and result in a diversion of our time and resources. Additionally, laws and regulations, such as restrictive immigration laws, or export control laws, may limit our ability to recruit

142

internationally. We must also continue to retain and motivate existing employees through our compensation practices, company culture, and career development opportunities. Our compensation arrangements, notably our equity-based award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees and we may be required to grant additional awards or offer alternative forms of compensation to attract and retain highly skilled personnel.

We believe that an important contributor to our success has been our corporate culture, which we believe fosters innovation, teamwork and passion for our users and customers, and a focus on attractive design and technologically advanced and wellcrafted communities. As we continue to grow and develop the infrastructure of a public company, we must effectively integrate, develop and motivate our existing and new employees, most of whom are working remotely. In addition, we must preserve our ability to execute quickly in further developing our communities, services and platform and implementing new features and initiatives. As a result, we may find it difficult to maintain our corporate culture, which could limit our ability to innovate and operate effectively. Any failure to preserve our culture could also negatively affect our ability to recruit and retain personnel, to continue to perform at current levels or to execute on our business strategy effectively and efficiently.

Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition and results of operations. Our effort to retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability.

Our business relies on content providers, users and community moderators and administrators.

Our business is reliant on content providers, users and community moderators and administrators. The size of our user base and our users’ level of engagement are key to our success. In addition, our success is partially dependent on our ability to attract and retain quality content providers, users and community moderators and administrators. There can be no assurance that these relationships will be maintained or that new ones will be successfully formed. A breach or disruption in these relationships or failure to attract and retain such third parties could be detrimental to our business, financial condition or results of operations.

Our success in generating digital advertising revenue is dependent on the volume, quality, and attractiveness of our communities to our users, as well as the breadth, depth and strength of our third-party advertising networks and supply-side platforms. Our business model is focused on the growth and engagement of our user base, and our financial performance will be significantly affected by our success in adding, retaining, and engaging active users of our communities, services and platform. We anticipate our MAU growth rate will generally decline over time as the size of our active user base increases, and we expect that the size of our active user base will fluctuate or decline in one or more markets or communities from time to time, particularly in markets or communities where we have achieved higher penetration rates. If users do not perceive the content on our communities as interesting, unique, useful, reliable and trustworthy, we may not be able to attract or retain additional users, which could adversely affect our business. We would also be unable to grow our user base as is currently anticipated if a significant number of our current users stopped using our communities. There are a variety of reasons why users would discontinue using our communities, including competitive alternatives and shifts in consumer preference, and there can be no assurance that we will be able to successfully retain, and subsequently grow, our existing user base.

Any number of factors can negatively affect user retention, growth and engagement, including if:

users feel that their experience is diminished as a result of the decisions we make with respect to the frequency, prominence, format, size and quality of advertisements we display;
users have difficulty installing or updating mobile applications or otherwise accessing our communities or services on mobile devices as a result of actions by us or third parties on which we rely to make our communities and services available;
user behaviour on any of our communities changes, including decreases in the quality and frequency of content shared through our communities;
there is decreased user sentiment due to questions about trustworthiness of our user data practices, concerns about the quality or usefulness of content made available through our communities, or concerns related to privacy, safety, security, well-being or other factors;

143

we are unable to manage and prioritize information to ensure users are presented with content that is appropriate, interesting, useful and relevant to them;
we are unable to obtain or attract engaging third-party or user-generated content, or community moderators and administrators;
there is decreased engagement with our communities and services, or failure to accept our terms of service as part of the privacy-focused changes that we have implemented or may implement in the future, whether voluntarily, in compliance with laws, regulations, regulatory actions or otherwise;
technical or other problems prevent us from delivering our services in a rapid and reliable manner or otherwise affect the user experience, such as security breaches or failure to prevent or limit spam or similar content;
we adopt terms, policies or procedures related to areas such as sharing, content, user data or advertising, or take actions to enforce our policies, that are perceived negatively by our users, customers or the general public;
initiatives designed to attract, retain and engage users are unsuccessful or discontinued, whether as a result of actions by us, third parties or otherwise;
there is decreased engagement with our communities and services as a result of internet shutdowns or other actions by governments that affect the accessibility of our products in their countries;
we fail to expand and upgrade our personnel, technology systems and infrastructure to accommodate new or changing requirements in a timely manner; or
we are the subject of adverse media reports or other negative publicity, including as a result of our or third parties’ user data practices.

From time to time, certain of these factors have negatively affected user retention, growth and engagement to varying degrees. Any significant decrease in user retention, growth, or engagement could render our communities, services and platform less attractive to our users and customers, which could have a material and adverse impact on our revenue, business, financial condition and results of operations. If our MAU growth rate slows, we will become increasingly dependent on our ability to maintain or increase levels of user engagement and monetization in order to drive revenue growth.

Changes in laws or regulations relating to privacy and data protection, any actual or perceived failure by us to comply with such laws and regulations, or contractual or other obligation relating to privacy and data protection could adversely affect our business.

We receive from, store and process for, our users and customers, certain data, including personal data. We also collect, use, store and disclose personal data belonging to our employees. Personal data collected by us may be accessible by our employees, consultants, service providers, community moderators and administrators. As we expand our network of users and customers, including in new jurisdictions, we may be subject to additional laws, directives and regulations, as well as contractual obligations, relating to the collection, use, retention, security, disclosure, transfer, destruction, de-identification and other processing of such personal data in the jurisdictions in which we or our users reside and customers operate. The regulatory framework for privacy, data protection and data transfers worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Applicable privacy laws and court decisions could also impact our ability to transfer personal data internationally.

While we have certain policies and procedures in place relating to privacy, cybersecurity and anti-spam legislation, we cannot provide assurances that our employees and contractors will consistently comply with such personal data access or use policies and procedures and with applicable laws, at all times. We publicly post applicable privacy policies and terms of service on our various communities. Although we endeavour to comply with our published policies, we may at times fail to do so or be alleged to have failed to do so. The publication of our privacy policies that provide promises and assurances about privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair, inconsistent, or misrepresentative of our actual practices. Any failure, real or perceived, by us to comply with our posted privacy policies, terms of service or with any regulatory requirements, certifications or orders or other privacy or consumer protection-related laws and regulations applicable to us could cause current and potential users and customers to reduce their use of our

144

communities, services and platform, and could materially and adversely affect our business. In many jurisdictions, enforcement actions and consequences for noncompliance are rising and can be significant.

Laws and regulations in many jurisdictions apply broadly to the collection, processing and security of data that identifies or may be used to identify or locate an individual, such as names, email addresses, dates of birth and, in some jurisdictions, IP addresses. For a detailed explanation of the regulatory regimes to which we are subject or may become subject, see “ Our Business – Regulatory Environment and Industry Standards - Privacy and Data Protection Laws and Regulations ”.

In Canada, we are subject to PIPEDA, and the analogous provincial laws, which similarly impose data privacy and security obligations on our processing of personal data. For example, commencing in 2017, RateMDs, one of our communities, was the subject of an investigation by the OPC initiated by a complainant who wanted her information removed from ratemds.com. The OPC’s 2019-2020 Annual Report to Parliament included a summary of its investigation into RateMDs’ compliance with PIPEDA. RateMDs cooperated with the OPC during its investigation. RateMDs subsequently implemented the OPC’s recommendations that were deemed to be satisfactory and the matter was closed. The OPC encouraged RateMDs to explore alternative mechanisms to ensure the accuracy of the reviews on its site. More recently, the federal government has undertaken a process to draft and implement a new bill to reform PIPEDA providing expressly for the establishment of new rights related to privacy. We are also subject to the Private Sector Act, for which amendments have been proposed. Specifically, Bill 64 proposes to impose new obligations on Québec businesses while significantly increasing the powers of the Government of Québec’s privacy regulator.

In the U.S., for example, the CCPA requires companies subject to such laws to provide new disclosures to California consumers and afford such consumers new data protection rights, including the ability to opt-out of certain sales of personal data. The effects of the CCPA are potentially far-reaching and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Furthermore, in the U.S., CAN-SPAM applies to companies that send unsolicited commercial email. CAN-SPAM bans false or misleading header information and prohibits deceptive subject lines, among other things. Privacy laws inspired by the CCPA have also been introduced in a number of other U.S. states, including the California Privacy Rights Act in California.

The European Parliament and the Council of the European Union in 2016 adopted the European Union’s GDPR, which imposes more stringent data privacy and data protection requirements than its predecessor regulations. We also note the potential coming into force of the ePR which will replace the current ePrivacy Directive 2002/58/EC and which will regulate the use of electronic marketing and tracking technologies and may have an impact on our operations.

Complying with CCPA, PIPEDA, the Private Sector Act, the GDPR, CASL, CAN-SPAM or other laws, regulations or other obligations relating to privacy, data protection, data transfers, data localization, or information security may cause us to incur substantial compliance and operational costs or require us to modify our data practices. We may also be subject to data residency requirements that may require us to incur costs to hire and maintain local employees in particular jurisdictions. Non-compliance could result in proceedings against us by governmental entities or others, could result in substantial fines or other liability, and may otherwise adversely affect our business, financial condition and results of operations, including that such proceedings may require us to make additional changes to our business practices.

Additionally, some statutory requirements in Canada, the U.S. and abroad include obligations for companies to notify individuals of security breaches involving particular types of personal data, which could result from breaches experienced by us or our service providers. For example, laws in all 50 U.S. states require businesses to provide notice to users or customers whose personal data has been disclosed as a result of a data breach. The laws are not consistent, and compliance in the event of a widespread data breach is difficult and may be costly. U.S. states are also frequently amending existing laws, requiring attention to frequently changing regulatory requirements. The GDPR also contains data breach notification requirements. Any actual or perceived cybersecurity incident could harm our reputation and brand, expose us to potential legal liability (including litigation and regulatory investigations) or require us to expend significant resources on data security and in responding to any such actual or perceived breach. We note specifically the increase in recent years in the number of class action litigation following cybersecurity incidents and we expect this trend to continue for the foreseeable future. Any contractual protections we may have from our service providers or under our insurance policies may not be sufficient to adequately protect us from any such liabilities and losses, and we may be unable to enforce any such contractual protections.

In addition to government regulation, privacy advocates and industry groups have proposed and may in the future propose self-regulatory standards and voluntary codes from time to time. These and other industry standards may legally or contractually apply to us, or we may elect to comply, or facilitate our users’ and customers’ compliance, with such standards.

145

We expect that there will continue to be new proposed laws and regulations and guidance concerning privacy, data protection and information security, and we cannot yet determine the impact such future laws, regulations, standards and guidance may have on our reputation, business and operations. New laws, amendments to or re-interpretations of existing laws, regulations, industry standards, guidance, contractual obligations, user and customer expectations and other obligations may require us to incur additional costs or restrict our business operations. As the interpretation and application of laws, standards, contractual obligations and other obligations relating to privacy and data protection are still uncertain, it is possible that these obligations may be interpreted and applied in a manner that varies by jurisdiction and/or that is inconsistent with our data privacy policies and procedures. If so, we may face multiple fines, lawsuits, regulatory investigations, imprisonment of company officials and public censure, other claims and penalties, significant costs for remediation and damage to our reputation. We could also be required to fundamentally change our business activities and practices, which could adversely affect our business. We may be unable to make such changes and modifications in a timely fashion or commercially reasonable manner, or at all. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, policies and guidance that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our offering. Any inability to adequately address privacy, data protection, or information securityrelated concerns, even if unfounded, or to successfully negotiate related contractual terms with customers, or to comply with applicable laws, regulations, policies, standards and guidance relating to privacy, data protection and information security, including those with which we elect to comply, could result in additional cost and liability to us, harm our reputation and brand, damage our relationship with important providers and adversely affect our business, financial condition and results of operations.

Accidental or unauthorized access to or disclosure, loss, destruction or modification of data, through cybersecurity incidents, computer viruses or otherwise, human error, natural or man-made disasters, or disruption of our technologies could expose us to liability, protracted and costly litigation and damage to our reputation.

In connection with the communities, services and platform we provide to our users and customers, we collect, store, process and transmit the personal data of our users and customers, including but not limited to, names, email addresses, dates of birth, location details, device information and IP addresses.

Cybersecurity incidents are increasing in frequency and evolving in nature and include, but are not limited to, installation of malicious software, ransomware, viruses, social engineering (including phishing attacks), denial of service or other attacks, employee theft or misuse, unauthorized access to data and other incidents. Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental or unidentified technological failure(s), vulnerabilities or exploits. Concerns about security increase when we transmit information (including personal data). Electronic transmissions can be subject to attack, interception, loss or corruption. In addition, computer viruses and malware can be distributed and spread rapidly over the internet and could infiltrate our systems or those of our users, customers, service providers and other third parties with whom we interact. In the past, our and our third-party service providers’ systems have been the subject of cybersecurity attacks. Any cybersecurity incidents impacting our systems or those of our third-party service providers could lead to material disruptions in systems, accidental or unauthorized access to or disclosure, loss, destruction, disablement or encryption of, use or misuse of or modification of confidential or otherwise protected information (including personal data), and the corruption of data. For example, we engaged in voluntary discussions with the OPC regarding cybersecurity breaches that occurred in 2016 and 2017. As a result of those discussions, we implemented recommendations made by the OPC and no formal investigation was launched.

An increasing number of organizations, including technology companies, government institutions and other large organizations, have disclosed breaches of their information technology systems and data, some of which have involved sophisticated and highly targeted attacks, including on portions of their websites or infrastructure. Given the unpredictability of the timing, nature and scope of information technology disruptions, there can be no assurance that any security procedures and controls that we or our service providers have implemented or will implement will be sufficient to prevent cybersecurity incidents from occurring in the future. Furthermore, because there are many different security breach techniques and such techniques continue to continuously evolve and are generally not detected until after an incident has occurred, we may be unable to anticipate attempted breaches or other cybersecurity incidents, react in a timely manner, determine conclusively the nature or scope of an incident, or implement adequate preventive measures. Our security safeguards have not always been successful in preventing and may not prevent future unauthorized access or protect us against theft or use of sensitive data (including personal data) or against other cybersecurity incidents.

We rely on third-party service providers to host our users’ and customers’ data; their failure to handle and protect such data appropriately or the disruption of their services, for any reason, may have a material impact on our business or damage our

146

reputation. In connection with our offering, we host our users’ and customers’ data using third-party service providers such as Google. The accidental or unauthorized access to or disclosure, loss, destruction, disablement or encryption of, use or misuse of or modification of data of our users or customers by our third-party service providers could result in significant fines, penalties, orders, sanctions and proceedings or actions against us by the governmental bodies and other regulatory authorities, end users or third parties, which could have a material adverse effect on our business, financial condition and results of operations. Any such proceeding or action, and any related indemnification obligation, could damage our reputation, force us to incur significant expenses in defense of these proceedings, distract our management, increase our costs of doing business or result in the imposition of financial liability. There is also a risk that foreign authorities may access personal data of our users and customers where such information is stored by our third-party service providers established in jurisdictions that authorize such authority access, potentially irrespective of the location of such data.

Failure to select third-party service providers that have robust cybersecurity and privacy capabilities may also jeopardize our ability to attract new users and customers, who may factor their assessment of risks associated with such third-party service providers in their decision to engage with or retain us.

Any accidental or unauthorized access to or disclosure, loss, destruction, disablement or encryption of, use or misuse of or modification of data, cybersecurity incidents that we or our service providers have in the past experienced, and in the future could experience, or the perception that one has occurred or may occur, could harm our reputation, reduce the demand for our communities, services and platform, and disrupt normal business operations. In addition, it may require us to spend material resources to investigate or correct the incident and to prevent future security incidents, expose us to uninsured liability, increase our risk of regulatory scrutiny, expose us to legal liabilities, including litigation, regulatory enforcement, indemnity obligations, damages or other remedies for contract breach, and cause us to incur significant costs, any of which could materially adversely affect our business, financial condition and results of operations. Moreover, there could be public announcements regarding any such incidents and any steps we take to respond to or remediate such incidents, and if securities analysts or investors perceive these announcements to be negative, it could have a material adverse effect on the price of the Subordinate Voting Shares. In addition, our remediation efforts may not be successful. While no security incidents in the past have had a material adverse effect on our business, financial condition or results of operations, we cannot predict the impact of any such future events. These risks may increase as we continue to grow and collect, process, store and transmit increasingly large amounts of data, including personal data.

Claims by others that we have infringed their proprietary technology or other IP Rights could harm our business.

Our success depends, in part, on our ability to develop and commercialize our communities, services and platform without infringing, misappropriating or otherwise violating the IP Rights of third parties. The software industry is characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations by third parties of infringement, misappropriation or other violations of their IP Rights. We may receive communications from third parties claiming that we, including the content included in our communities by users, have infringed on the IP Rights of others. A third party could allege that the names of certain of our communities infringe their IP Rights. While we believe our community naming practices do not lead to confusion, if any such claim were to be successful, the consequences on our business would be significant if it were to apply to our communities more generally. We are currently involved in such a dispute and may, in the future, be sued by third parties for alleged infringement of their IP rights. We may also be subject to claims by third parties for breach of copyright, trademark, license usage or other IP Rights. The outcome of any litigation is inherently uncertain and our business may not be able to withstand any such third-party claims. Any intellectual property claims, with or without merit, could be time-consuming and expensive to resolve, could divert management attention from executing our business plan and could require us to change our technology, change our business practices and/or pay monetary damages, or enter into short or long-term royalty or licensing agreements which may not be available in the future at the same terms or at all. Furthermore, if we are unsuccessful in defending against third-party claims, the decision may affect the communities to which such infringement claims relate to and serve as precedent for the plaintiff and other third parties in relation to our other communities.

We may also be subject to adverse publicity or reputational harm, even if claims against us are later shown to be unfounded or unsubstantiated. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of the Subordinate Voting Shares. The award of damages, including material royalty payments, or the entry of an injunction against the development, marketing or operation of some or all of our communities, services and platform, or our entry into any license or settlement agreement in connection with such claims could affect our ability to compete with third parties and have a material adverse effect on our business, financial condition and results of operations.

147

The costs and effects of pending and future litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, financial position and results of operations. Our insurance may not be sufficient to cover all claims.

We are, and may be in the future, party to legal, arbitration and administrative investigations, inspections and proceedings arising in the ordinary course of our business or from extraordinary corporate, tax or regulatory events that involve us or our associated participants, particularly with respect to civil, tax and labour claims. Such matters can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses.

Our indemnities and insurance policies, including policies for data security, privacy liability and cyber-attacks, may not adequately cover risks to which we are exposed and may not be adequate for all liabilities actually incurred or indemnification claims against us. Any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. A significant claim not covered by our insurance, in full or in part, may result in significant expenditures by us. Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws. Should the ultimate judgments or settlements in any pending or future litigation or investigation significantly exceed our indemnity rights, they could have a material adverse effect on our business, financial condition, results of operations and the price of the Subordinate Voting Shares. Further, even if we adequately address issues raised by an investigation conducted by an agency or successfully defend our case in an administrative proceeding or court action, we may have to set aside significant financial and management resources to respond and settle issues raised by such proceedings, which could adversely affect our business.

Moreover, we may not be able to maintain insurance policies in the future at reasonable costs, on acceptable terms or at all, which may adversely affect our business. The successful assertion of one or more significant claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our business, financial condition and results of operations.

If we are unable to successfully obtain, maintain, protect, enforce or otherwise manage our intellectual property and proprietary rights, we may incur significant expenses and our business may be adversely affected.

Our success depends, in part, on obtaining, maintaining, protecting and enforcing relevant intellectual property and proprietary rights, which may include patent, copyright, trademark and domain name registrations (collectively, “ IP Rights ”). We cannot ensure that our means of obtaining, maintaining and enforcing our IP Rights in Canada, the U.S. or abroad will be adequate to protect such rights against infringement, misappropriation or other violation. We have not filed any patent applications with respect to our offering. We may not receive protection for future applications relating to IP Rights owned by or licensed to us, and the scope of protection granted under any issued or registered IP Rights may not be sufficiently broad to protect our communities, services, platform, systems, brands, trademarks or information.

We currently have registered and unregistered trademarks in Canada and the U.S. See “ Our Business – Our Intellectual Property ”. Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we may need to build name recognition among potential users and customers in our markets of interest. At times, competitors may adopt trademarks or trade names similar to ours or those of our communities, thereby impeding our ability to build brand identity and possibly leading to market confusion. Further, there could be potential trade name or trademark infringement claims brought by owners of other trademarks or trade names that incorporate variations of our trademarks, trade names or other marks used by us. If we are unable to successfully register and defend our trademarks and trade names and/or establish name recognition based on our trademarks and trade names, then our business may be adversely affected.

Also, because of the rapid pace of technological change in our industry, aspects of our business and our communities, services and platform rely on technologies and other forms of intellectual property developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all, and we may not be able to replace such licenses and technologies from alternative providers on reasonable terms or at all. Moreover, the laws of certain jurisdictions may not protect IP Rights to the same extent as the laws of Canada or the U.S. If we cannot adequately obtain, maintain, protect or enforce our IP Rights, third parties may be able to compete more successfully against us or develop and commercialize substantially identical communities, services or platforms, which could have a material adverse effect on our business, financial condition or results of operations.

148

Third parties may challenge, invalidate, circumvent, infringe or misappropriate our IP Rights, and such IP Rights may be lost or no longer sufficient to permit us to take advantage of current market trends or to otherwise provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain service offerings or other competitive harm. Others, including our competitors, may independently offer similar communities, services and platforms, duplicate our offering or design around our communities, services and platform, and in such cases, we may not be able to assert our IP Rights against such parties.

We rely heavily on trade secrets and proprietary know-how to protect our communities, services and platform and their development and commercialization, and rely in part on confidentiality agreements and IP Rights ownership and assignment agreements with suppliers and other partners, employees, independent contractors and consultants. However, we cannot guarantee that we have entered into such agreements with each party that has or may have developed intellectual property for us or had access to our trade secrets. Moreover, these agreements may be breached, and we may not have or be able to enforce adequate remedies for any such breach. There is also no guarantee that these agreements or other precautions will provide sufficient protection against any unauthorized access, use or misuse, misappropriation, counterfeiting, cloning, reverse engineering or disclosure of any of our trade secrets, proprietary know-how and any other information or technology. Trade secrets can be difficult to protect and some courts are unwilling or less willing to protect trade secrets as compared to other forms of intellectual property.

We might be required to spend significant resources to monitor and protect our IP Rights. Defending against unauthorized access, use or misuse, misappropriation, counterfeiting, cloning, reverse engineering or disclosure of our technology, trade secrets, proprietary know-how and other IP Rights and technology may result in lengthy and expensive litigation or other proceedings with uncertain outcomes and cause significant disruption to our business and operations. Any litigation, whether or not it is resolved in our favour, could result in significant expense to us and divert the efforts of our technical personnel and management. If we are unable to obtain, maintain, protect or effectively enforce our IP Rights, it could impact the design, development and commercialization of our communities, services and platform and have a material adverse effect on our business, financial condition or results of operations.

Our use of open source software could negatively affect our ability to commercialize our communities, services and platform and subject us to possible litigation.

Our communities, services and platform incorporate and are dependent, to some extent, on the use and development of thirdparty open source software and we intend to continue our use and development of open source software in the future. Such open source software is generally licensed by its authors or other third parties under so-called “open source” licenses and is typically freely accessible, usable and modifiable.

Pursuant to such open source licenses, we may be subject to certain conditions that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software, that we license such modifications or derivative works under the terms of the particular open source license or that we grant other licenses to our intellectual property. Certain components of our technologies incorporate software that is licensed under an open source license, which would require release of proprietary code if such technologies were released or distributed to third parties.

If an author or other third party that uses or distributes such open source software were to allege that we had not complied with the conditions of one or more of these open source licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the offering and commercialization of our communities, services and platform that contain or are dependent upon such open source software and required to comply with the foregoing conditions. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our technologies. As there is little or no legal precedent or judicial interpretation governing the interpretation of many of the terms of certain of these open source licenses, the potential impact of these terms on our business is uncertain and may result in unanticipated obligations regarding our communities, services and platform.

In addition to risks related to license requirements, use of open source software can lead to greater risks than use of thirdparty commercial software, as open source licensors generally do not provide warranties, controls on the origin or development of the software or remedies against the licensors, nor are there any guarantees of any updates to the open source software being released, which means that some open source software can be more susceptible to cybersecurity attacks than commercially available software. Many of the risks associated with usage of open source software cannot be eliminated and could adversely affect our business.

149

It is possible that we may not be aware of all instances where open source software has been incorporated into our proprietary software or used in connection with our communities, services and platform or our corresponding obligations under open source licenses. We do not have open source software usage policies or monitoring procedures in place. We rely on multiple software programmers to design our proprietary software and we cannot be certain that our programmers have not incorporated open source software into our proprietary software that we intend to maintain as confidential or that they will not do so in the future. To the extent that we have failed to comply with our obligations under particular licenses for open source software, we may lose the right to continue to use and exploit such open source software in connection with our communities, services and platform, which could harm our competitive advantage, and disrupt and adversely affect our business.

We are subject to risks associated with information disseminated through our communities, services and platform.

Online communities, forums and platforms, such as ours, may be subject to claims relating to information disseminated through their services, including claims alleging defamation, libel, breach of contract, invasion of privacy, negligence, copyright or trademark infringement. The laws relating to the liability of online services companies for information disseminated through their services are subject to frequent challenges in jurisdictions in which we operate. Any liabilities incurred as a result of these matters could require us to incur additional costs and harm our reputation and our business. The laws relating to the liability of online service providers for others’ activities on their services continue to evolve.

Our potential liability to third parties for the user-generated content on our communities may increase. If we become liable for information provided by our users on our communities or through our services in any jurisdiction in which we operate, we could be directly harmed and we may be forced to implement new measures to reduce our exposure to this liability, including expending substantial resources or discontinuing certain service offerings, which could adversely affect our business, financial condition, results of operations and ability to execute on our growth strategies.

Our operational metrics and other estimates, including estimates about our growth, are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics could harm our business, revenue and financial results.

We regularly review operating metrics, including the number of our active users (through MAU), registered members, revenue per user (through ARPU), the number of times advertisements and content are displayed to users (through Impressions), cost paid for view of an advertisement (through CPM), user engagement with our communities through content posts and other measures to evaluate growth trends, measure our performance and make strategic decisions. These metrics are calculated using internal company data and third-party data, such as Google Analytics for MAU, have not been validated by an independent third party, are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS. While these metrics are based on what we currently believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring how our communities and services are used across large populations globally. Our metrics calculations may be inaccurate, and we may not be able to identify those inaccuracies. In the past, we have relied on other metrics that measure different activities, as indicators of user growth and engagement. We have in the past implemented, and may from time to time in the future implement, new methodologies for calculating these metrics which may result in the metrics from prior periods changing, decreasing or not being comparable to prior periods. Our metrics may also differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology or data used.

Our operational metrics may also be impacted by our information quality efforts, which are our overall efforts to reduce malicious activity on our communities, including of false, spam and malicious automation accounts in existence on our communities. We regularly deactivate false, spam and malicious automation accounts that violate our terms of service, and exclude these users from the calculation of our operational metrics; however, we will not succeed in identifying and removing all false, spam and malicious accounts from our communities and platform. In addition, users are not prohibited from having more than one account on our communities, and we treat multiple accounts held by a single person as multiple users for purposes of calculating our active users and related operating metrics.

Furthermore, the ability to forecast future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth. Investors should consider our future prospects in light of the challenges and uncertainties that we face, including the fact that it may not be possible to discern fully the trends that affect us. We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by companies in rapidly changing industries. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ

150

materially from expectations, our growth rates may slow, and our business and financial condition could suffer.

Our brands, including the distinct brands of our communities, are integral to our success. If we fail to effectively maintain, promote and enhance our brands, our business and competitive advantage may be harmed.

We believe that maintaining, promoting and enhancing our brands, particularly the distinct brands of our communities, is critical to expanding our business. Maintaining and enhancing our brands will depend largely on our ability to continue to provide high-quality, well-designed, useful, reliable and innovative offerings, which we may not do successfully.

Errors, defects, data breaches, disruptions or other performance problems with our communities, services and platform, including through third-party applications, and content posted by our users, may harm our reputation and brands. We may introduce new technologies or terms of service that our users or customers do not like, which may negatively affect our brands.

Any unfavorable media coverage or negative publicity about our industry, our Company or any of our communities, including, for example, publicity relating to the quality and reliability of our communities, services and platform, our privacy and security practices, our product changes, litigation, regulatory activity, the actions of our users or customers, the content posted by our users, the actions taken by users on our communities, or the subject matter of the underlying communities, could seriously harm our reputation. Such negative publicity could also adversely affect the size, demographics, engagement, and loyalty of our users and result in decreased traffic and revenue, which could seriously harm our business. Critics of our industry and others have utilized and may utilize the internet, the press and other means to publish criticisms of our industry, our Company and our competitors, or make allegations regarding our business and operations, or the business and operations of our competitors. We or others in our industry may receive similar negative publicity or allegations in the future, and it could be costly, time consuming, distracting to management, cause fluctuations in the market price of the Subordinate Voting Shares and harm our business and reputation.

We may not be able to successfully implement our growth strategy on a timely basis or at all.

Our future growth, profitability and cash flows depend upon our ability to successfully implement our growth strategy, which, in turn, is dependent upon a number of factors, including our ability to:

retain and expand our user, content provider, community moderator and administrator, customer and partner bases;
enhance our user experience to drive user discovery and engagement, and accelerate growth;
pursue future acquisitions;
identify, develop and introduce new communities and services;
enhance our platform, including through the launch of new features;
expand digital advertising and e-commerce within communities;
leverage consumer behaviour and preferences in our communities;
support growth of existing communities, customers and partners;
develop and expand our research and development, sales and marketing capabilities; and
drive additional sales to existing customers.

There can be no assurance that we can successfully achieve any or all of the above initiatives in the manner or time period that we expect. Further, achieving these objectives will require investments that may result in short-term costs without generating any current revenue and therefore may be dilutive to our earnings. We cannot provide any assurance that we will realize, in full or in part, the anticipated benefits we expect our strategy will achieve or the benefits may be less significant than anticipated. The failure to realize those benefits, in full or in part, could have a material adverse effect on our business, financial condition and results of operations.

151

If we fail to manage our growth effectively, our business could be adversely affected.

In order to manage our growth effectively, we must continue to strengthen our existing infrastructure, develop and improve our processes and internal controls, create and improve our reporting systems, and address issues in a timely manner as they arise. The scalability and flexibility of our communities, services and platform depend on the functionality of our technology and network infrastructure and its ability to handle increased traffic and demand for bandwidth. The growth in the number of users and customers using our communities and services has increased the amount of data that we process. Any problems with the transmission of increased data could result in harm to our brands or reputation.

As we continue to strengthen our existing infrastructure and systems, we will also be required to hire additional personnel. These efforts may require substantial financial expenditures, commitments of resources, developments of our processes, and other investments and innovations. Our growth has placed, and will likely continue to place, a significant strain on our managerial, administrative, operational, financial and other resources. We intend to further expand our overall business, including headcount, with no assurance that our revenue will continue to grow. As we grow, we will be required to continue to improve our operational and financial controls and reporting procedures and we may not be able to do so effectively. In managing our growing operations, we are also subject to the risks of over-hiring and/or over-compensating our employees and over-expanding our operating infrastructure. As a result, we may be unable to manage our expenses effectively in the future, which may negatively impact our revenue or operating expenses.

Provisions of our present and future debt instruments may restrict our ability to pursue business strategies.

We currently rely on the Credit Facilities, which are guaranteed by all of our subsidiaries, other than immaterial subsidiaries, and secured by security interests granted in substantially all of our assets and those of the guarantors. Under the terms of the Credit Facilities, we are required to comply with certain covenants applicable to us and our subsidiaries that limit the ability to, among other things:

incur or assume liens on assets;
sell, lease or otherwise dispose of assets;
merge or amalgamate with other entities;
purchase shares, debt obligations or other securities, make loans or otherwise invest in other entities;
make acquisitions;
incur additional indebtedness;
engage in transactions with affiliates;
establish, terminate or wind up Canadian defined benefit pension plans;
declare or pay dividends or other distributions in respect of share capital (other than those paid only in shares), repurchase shares, make payments in respect of subordinated indebtedness or pay management or consulting fees to affiliates;
change accounting practices or our fiscal year, name or chief place of business;
permit to exist any restriction on the ability to pay dividends or other distributions or to incur liens (other than those securing the Credit Facilities); or
enter into sale and leaseback transactions.

In addition, an event of default will occur under the Credit Facilities if, among other customary events of default a change of control occurs.

These restrictions and events of default could inhibit our ability to pursue acquisitions and other business strategies. The occurrence of defaults under our Credit Facilities, even if cured or waived, may lead to higher borrowing costs or reduced

152

availability of credit. If an event of default occurs under our Credit Facilities, and such event of default is not cured or waived, the lenders could terminate commitments to lend and cause all outstanding loans to become due and payable immediately.

In addition to scheduled quarterly repayments of principal, the Credit Facilities also include mandatory payment obligations from certain net proceeds of asset dispositions and events of loss (unless reinvested in the business within one year), from the issuance of debt securities or other indebtedness and from excess cash flow. Such repayment obligations may limit our ability to fund our operations or pursue strategic transactions, and more generally, our financial flexibility.

We may also refinance or replace the Credit Facilities or otherwise incur additional indebtedness in the future. The agreements and instruments governing such indebtedness could contain terms that are as restrictive, or more restrictive, than those to which we are presently subject.

Our ability to meet our payment and other obligations under our existing and future debt agreements and instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us under our existing or any future credit facilities or otherwise, in an amount sufficient to enable us to meet our current and future indebtedness and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital, which may have an adverse impact on our business, financial condition and results of operations.

We may not be able to secure financing on favourable terms, or at all, to meet our future capital needs.

We have funded our operations since inception primarily through operating cash flow, limited equity financings and the Credit Facilities. We do not know if our operations will generate sufficient cash flow to fund our operations, implement our business strategies or finance our capital expenditure programs or other investment requirements in future. We may therefore require additional capital to respond to business opportunities, refinancing needs, acquisitions or unforeseen circumstances and we may not be able to secure additional debt or equity financing or refinancing on favorable terms, in a timely manner, or at all. Our ability to secure any additional debt financing may also be subject to restrictions contained in the Credit Facilities or the agreements and instruments governing any future indebtedness, which may contain restrictions such as those described under “ Risk Factors – Provisions of our present and future debt instruments may restrict our ability to pursue business strategies ” and “ Description of Material Indebtedness ”.

We evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our development efforts, business plans, operating performance, and condition of the capital markets at the time we seek financing. Future sales and issuances of any of our securities or rights to purchase any of our securities could result in substantial dilution to our existing stockholders. We may issue Subordinate Voting Shares, Preferred Shares, convertible securities, and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time.

We cannot provide assurance that additional financing will be available to us on favorable terms when required, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, or at all, when we require it, our ability to continue to support our business growth, development efforts and to respond to business challenges could be significantly impaired, and our business, operating results and financial condition may be adversely affected. Our ability to secure financing on favourable terms, or at all, may also depend on factors that are outside of our control. For example, certain lenders may have policies that prohibit lending to companies in our industry. Future unwinding of monetary and fiscal stimulus related to the COVID-19 pandemic could lead to reduced availability and higher costs for debt and equity funding from certain external sources.

An increase in borrowing rates on our debt exposes us to interest expense risk, which could impact our debt service costs.

The borrowing rate under our Credit Facilities is variable, and we are currently experiencing the benefit of low borrowing rates. If the economy strengthens, the cost of borrowing is expected to increase. Such an increase in borrowing rates would result in higher interest expense, which would adversely impact our financial condition. Furthermore, any adverse credit market conditions could limit our ability to refinance our outstanding indebtedness.

153

We have concentration in various aspects of our business and a loss of a major customer or e-commerce merchant, a decline in economic conditions or consumer interest, or other adverse conditions could have a material adverse effect on our business, financial condition and results of operations.

We operate in the social networking industry, and we have a concentration in various aspects of our business, including the automotive and fitness sectors. Such concentration exposes us to risks relating to the key sectors and industries to which our communities relate, our most significant customers and e-commerce merchants, and our most successful communities, all of which have an impact on our revenue. For example, in Q1 2021, a significant portion of our MAU and revenue were derived from our automotive- and fitness-related communities. In addition, in 2020 two customers represented revenue totaling 16% and 10% of consolidated revenue (2019 – one customer represented 23% of revenue; 2018 – one customer represented 22% of revenue) , our three largest e-commerce merchants accounted for over 20% of our Q1 2021 total revenue, and our top communities account for a significant portion of our MAU and revenue.

In light of our MAU and revenue concentration relating to the automotive and fitness sectors, as well as to our top communities, we face more risks than if our MAU and revenue were less concentrated. The loss of a major customer or e- commerce merchant, a decline in economic conditions or consumer interest, or other adverse conditions in the social networking industry or any of the key sectors and industries to which our communities relate could lead to lower MAU and revenue, which could also have a material adverse effect on our business, financial condition and results of operations.

Macroeconomic pressures in the markets in which we operate, including, but not limited to, the effects of the COVID-19 pandemic, may adversely affect consumer spending, customer ad spending and our financial results.

In FY 2020, 56% of our revenue was from digital advertising and 44% was from e-commerce. To varying degrees, digital advertising revenue and e-commerce revenue are sensitive to changes in macroeconomic conditions that impact consumer spending. As a result, consumers may be affected in many different ways, including, for example whether or not they make a purchase, and their choice of brand, model or price-point.

Adverse macroeconomic conditions, including gross domestic product growth, consumer confidence, the COVID-19 pandemic, inflation, employment levels, oil prices, interest rates, tax rates, availability of consumer financing, housing market conditions, foreign currency exchange rate fluctuations, costs for items such as fuel and food and other macroeconomic trends can adversely affect consumer demand for the products and services of our e-commerce merchant partners. A decrease in consumer spending could have a material adverse effect on our business, financial condition and results of operations. In addition, these adverse macroeconomic conditions have also impacted the demand for digital advertising and resulted in fluctuations in the amount our customers spend on digital advertising, which could adversely affect our business, financial condition, results of operations and ability to execute on our growth strategies.

We operate in a competitive business environment and, if we are unable to compete effectively, it could have a material adverse effect on our business, financial condition and results of operations.

We compete with consumer internet companies that are either tools (search, e-commerce) or media (newsfeeds, video, social networks). We also face competition from a number of smaller, independent communities. See “ Our Business – Competition ”. Our competitors, or future competitors, vary in size and in the scope and breadth of their offerings. The competition we face may increase further if economic conditions or other circumstances cause customer spending to decrease, leaving service providers to compete for fewer customer resources. Our competitors, or future competitors, in some cases currently have, and may in the future have, greater name recognition, longer operating histories, access to larger user bases, larger sales and marketing budgets and significantly greater resources. Our competitors may develop products, features or services that are similar to ours or that achieve greater acceptance, and they may undertake more far-reaching and successful platform development efforts or marketing campaigns. In order to stay competitive, we may need to adjust our pricing models, or invest significantly more in innovation and development in relation to our platform and solutions. There can be no assurance that we will be able to compete successfully against current or future competitors or that the competitive pressures we face from consumer internet companies will not have a material adverse effect on our business, financial condition and results of operations.

In addition, certain of our competitors or partners could form an alliance or pursue an acquisition to expand and strengthen their overall offering, thereby limiting our ability to acquire into new categories and expand our own offering to further

154

promote our communities, services and platform. Such acquisitions could drive increased competition and pricing pressures in pursuing future acquisitions and forming partnerships.

We are subject to changes in the general economic conditions in Canada, the U.S. and globally and any negative economic events could adversely affect our business, financial condition, results of operations and ability to execute on our growth strategies.

We are subject to changes in the general economic conditions in Canada, the U.S. and globally, including but not limited to, international trade and global political conditions, recessionary or inflationary trends, capital market volatility, consumer credit availability, interest rates, currency exchange rates, consumers’ disposable income and spending levels, job security and unemployment, corporate taxation and overall consumer confidence. Any negative economic events could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Globally, recent market events and conditions, including the uncertain long-term consequences following the United Kingdom’s exit from the European Union (“ Brexit ”), ongoing impact of the COVID-19 pandemic, disruptions in the international credit markets and other financial systems and the American and European sovereign debt level, have resulted in a deterioration of global economic conditions. These conditions have continued to cause a decrease in confidence in the broader North American and global credit and financial markets and have created a climate of greater volatility, less liquidity, widening of credit spreads, a lack of price transparency, increased credit losses and tighter credit conditions. Notwithstanding various actions by governments, concerns remain about the general condition of capital markets, financial instruments, banks, investment banks, insurers and other financial institutions. These factors continue to negatively impact company valuations and impact the performance of the global economy.

Furthermore, economic conditions in Canada may be affected, directly or indirectly, by political events throughout the world that cause disruptions in the financial markets, such as Brexit and the imposition of trade tariffs and other barriers by the U.S. In particular, the United States-Mexico-Canada Agreement that came into effect on July 1, 2020, and certain other international trade agreements as well as conflicts or, conversely, peaceful developments, arising in the Middle East, the Korean Peninsula, Venezuela or Eastern Europe and other areas of the world that have a significant impact on the price of important commodities can have a significant impact on financial markets and the global economy. Any such negative impacts could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our results of operations may be adversely affected by changes in foreign currency exchange rates.

Although our financial results are reported in U.S. dollars, the majority of our revenue is in U.S. dollars whereas our wages and consulting expenses are primarily in Canadian dollars. We may from time to time enter into forward contracts to reduce our exposure to foreign currency risk and provide more certainty with cash flows. In situations where we are not hedged, either through hedging arrangements or through a natural hedging resulting from an offset in currencies, our results of operations will be affected by movements in these currencies against the Canadian dollar and the U.S. dollar. The value of the Canadian dollar relative to the U.S. dollar has varied significantly and investors are cautioned that past and current exchange rates are not indicative of future exchange rates. Significant fluctuations in relative currency values against the Canadian dollar and the U.S. dollar could thus have a significant impact on our results of operations.

A wide adoption of users that use ad-blockers may adversely affect our results of operations.

The success of our business model depend on our ability to deliver targeted, highly relevant advertisements to users of our communities. Targeted digital advertising is done primarily through analyses of data, much of which is collected on the basis of user-provided permissions. This data might include a user’s location, or data collected when a user views an advertisement or when a user clicks on or otherwise engages with an advertisement. Users may elect not to allow data sharing for targeted digital advertising for a number of reasons, such as privacy concerns. In addition, companies are constantly developing products that enable users to prevent advertisements from appearing on their web browsers. Wider adoption of these adblocker products could have a material adverse effect on our prospects, business, financial condition or results of operations.

We are dependent upon users’ and customers’ continued and unimpeded access to the internet, and upon their willingness to use the internet.

Our success depends upon the general public’s ability to access the internet, including through mobile devices, and its continued willingness to use the internet as a means to pay for purchases, communicate, access social media, research and

155

conduct commercial transactions. The adoption of any laws or regulations that adversely affect the growth, popularity or use of the internet, including changes to laws or regulations impacting internet neutrality, could decrease the demand for our communities and services, increase our operating costs, or otherwise adversely affect our business. Given uncertainty around these rules, we could experience discriminatory or anti-competitive practices that could impede both our and our customers’ growth, increase our costs or adversely affect our business. If users become unable, unwilling or less willing to use the internet for any reason, including lack of access to high-speed communications equipment, congestion of traffic on the internet, internet outages or delays, disruptions or other damage to users’ computers, increases in the cost of accessing the internet and security and privacy risks or the perception of such risks, our business could be adversely affected.

In the future, providers of internet browsers could introduce new features that would make it difficult for users to use our Fora platform. In addition, internet browsers for desktop, tablets or mobile devices could introduce new features or change existing browser specifications such that they would be incompatible with our platform, or prevent our e-commerce partners’ customers from accessing our e-commerce partners’ businesses. Any changes to technologies used in our Fora platform, existing features that we rely on, or operating systems or internet browsers that make it difficult for users to access our platform or consumers to access our e-commerce partners’ businesses, may make it more difficult for us to maintain or increase our revenue and could adversely impact our business and prospects.

Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks, which could expose us to losses and liability and otherwise harm our business.

We operate in a rapidly changing industry and our risk management policies and procedures may not be fully effective at identifying, monitoring and managing our risks. Some of our risk evaluation methods depend upon information provided by third parties regarding markets, users, customers or other matters that are otherwise inaccessible to us. In some cases, however, that information may not be accurate, complete or up-to-date. Our risk management policies, procedures, techniques and processes may not be effective at identifying all of the risks to which we are exposed or enabling us to mitigate the risks we have identified. In addition, when we introduce new services, focus on new business types or begin to operate in markets in which we have a limited history, we may be less able to forecast and reserve accurately for new risks. If our risk management policies and processes are ineffective, we may suffer large financial losses, become subject to civil and criminal liability and our business, financial condition and results of operations may be materially and adversely affected.

If our judgments or estimates relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the Subordinate Voting Share price.

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ”, the results of which form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of the Subordinate Voting Shares. Significant judgments, estimates, and assumptions used in preparing our consolidated financial statements include, or may in the future include, those related to revenue recognition, the capitalization of internally developed intangible assets, expected credit losses on trade and other receivables, the recognition of government grants including investment tax credits receivable, impairment assessments, the determination of the estimated useful lives of property and equipment and intangible assets, inputs used in the determination of the fair value of share option grants, the determination of contingent consideration and earn-outs, allocation of purchase consideration associated with business combinations to various assets and liabilities, as well as the allocation of website asset purchase consideration between the website and acquired content.

Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect our financial condition and results of operations.

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Future changes in accounting standards, pronouncements or interpretations could require us to change our policies and procedures. The materiality of such changes is difficult to predict, and such changes could materially impact how we

156

record and report our financial condition and results of operations. See note 3 to our consolidated financial statements for the year ended December 31, 2020 and 2019 and note 3 to our condensed consolidated financial statements for the three months ended March 31, 2021 and 2020 included elsewhere in this prospectus.

Additionally, our assumptions, estimates and judgments related to complex accounting matters could significantly affect our financial results. IFRS and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, including, but not limited to, revenue recognition, impairment of long-lived assets, leases and related economic transactions, intangibles, self-insurance, income taxes, property and equipment, litigation and equity-based compensation are highly complex and involve many subjective assumptions, estimates and judgments by us. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by us (i) could require us to make changes to our accounting systems to implement these changes that could increase our operating costs and (ii) could significantly change our reported or expected financial performance.

It may be difficult or impossible for investors to enforce judgments against our foreign subsidiaries and non-resident directors or officers.

Certain of our wholly-owned subsidiaries are organized under the laws of foreign jurisdictions and certain of our directors and officers, including Rob Laidlaw and Joe Pishgar, are residents of countries other than Canada. As a result, it may be difficult or impossible for investors to effect service within Canada upon such persons, or to realize against them in Canada upon judgments of courts of Canada predicated upon the civil liability provisions of applicable Canadian securities laws. There is some doubt as to the enforceability in the U.S. or other foreign courts by a court in original actions, or in actions to enforce judgments of Canadian courts, of civil liabilities predicated upon such applicable Canadian securities laws.

The COVID-19 pandemic had and could continue to have various impacts on our business, operations, and the markets and communities in which we and our customers operate, the extent of which are unknown.

The COVID-19 pandemic has caused general business disruption worldwide beginning in early 2020. In response to the outbreak, governmental authorities in Canada and internationally have introduced various recommendations and measures to try to limit the spread of the COVID-19 pandemic, including travel restrictions, border closures, nonessential business closures, quarantines, self-isolations, shelters-in-place and social distancing. While these effects are expected to be temporary, their duration and the related business disruptions and financial impact cannot be reasonably estimated at this time. The potential impact and duration of the COVID-19 pandemic on the global economy and our business are difficult to assess or predict. Potential impacts on our prospects, business, financial condition or results of operations include:

adverse impact on the businesses of our prospective and existing customers, which in turn may result in reduced digital advertising spend, lengthened sales cycles, reduced revenue from new customers and difficulties in collections of accounts receivables;
possible positive impact on our e-commerce revenue that may not be sustained;
continued impact on our workforce due to factors such as illness, quarantines, government actions, office closures, work from home arrangements or other restrictions;
inability of our workforce to work effectively, which in turn may decrease employee productivity and morale, and increase unwanted employee attrition;
increased risk of a cyber-attack;
continued fixed costs, particularly for real estate, while deriving reduced or no benefit from such costs;
continued disruptions and volatility in the global capital markets, which may increase cost of capital and adversely impact our ability to access capital;
anticipated costs in connection with returning to work at our offices, including changes to the workplace, such as space planning, maintenance and cleaning, food service and amenities;
costs incurred with maintaining a remote workforce structure, including providing any stipends and expense reimbursements in connection with work-from-home arrangements;

157

exposure to legal liability for safe workplace claims;
possible adverse tax consequences resulting from employees working outside of their intended geographic region for prolonged periods of time; and
our critical third-party service providers possibly going out of business.

The impact of any of the foregoing, individually or collectively, could adversely affect our business, financial condition and results of operations.

As a result of the COVID-19 pandemic, we temporarily closed our headquarters and other offices, required our employees to work remotely and implemented travel restrictions, all of which represented a significant change in our business operations. The operations of our customers have also been impacted. As a result of global business disruption, the COVID-19 pandemic had a negative impact on our direct and programmatic advertising revenue throughout 2020, and this impact has continued in respect of certain of our digital advertising customers in 2021. Our revenue from e-commerce activities realized significant growth in 2020 and in Q1 2021, which growth was accelerated by the lockdown measures imposed by governments in the U.S. and Canada as consumer behaviour accelerated towards making online purchases. It is uncertain that this rate of growth and level of e-commerce activity will continue in the future. To the extent we experience a decrease in our e-commerce revenue, our business performance will become increasingly dependent on other factors, including our digital advertising revenue and our ability to retain revenue from existing merchants.

Due to the economic hardships presented by the COVID-19 pandemic, we received benefits from the CEWS and the CARES Act for a PPP Loan. In order to apply for the CEWS and PPP Loan, we were required to meet the eligibility requirements of the CEWS and PPP Loan. If, despite our good-faith belief that we satisfied all eligible requirements for the CEWS and PPP Loan, it is later determined that we violated any of the laws of governmental regulations that apply to us in connection with the CEWS or PPP Loan or it is otherwise determined that we were ineligible to receive the CEWS or the PPP Loan, we may be subject to penalties and may be required to repay the full CEWS or PPP Loan, as applicable. In addition to incurring significant financial and management resources, such a determination could result in adverse publicity and damage our reputation. In addition, the Paycheck Protection Program provides that the PPP Loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent and utilities. However, no assurance is provided that forgiveness for any portion of the PPP Loan will be obtained.

We continue to work with our stakeholders (including suppliers, customers, and employees) to address this global pandemic responsibly and in compliance with applicable law. Management continues to monitor the situation, to assess further possible implications to our business, employees and customers, and to take actions in an effort to mitigate adverse consequences. We cannot at this time predict the long-term impact of the COVID-19 pandemic, but it could have a sustained material adverse effect on our business, financial position, results of operations and/or cash flows.

Moreover, to the extent the COVID-19 pandemic adversely affects our business, financial condition and results of operations, it may also have the effect of heightening many of the other risks described in this “ Risk Factors ” section, including but not limited to, those related to our ability to increase sales to existing and new customers, develop and deploy new offerings and applications, and maintain effective marketing and sales capabilities.

158

An occurrence of a widespread health epidemic, pandemic or other outbreaks, as well as natural or other disasters, could have a material adverse effect on our business, financial condition and results of operations.

Our business could be materially and adversely affected by natural disasters, such as fires or floods, the outbreak of a widespread health epidemic, pandemic, such as COVID-19, or other events, such as wars, acts of terrorism, power shortages or communication interruptions. In addition to previously identified risks associated with the current COVID-19 pandemic, the occurrence of a natural disaster or similar event could materially disrupt our business and operations. These events could limit or shut down our ability to operate temporarily, which would severely disrupt our operations and have a material adverse effect on our business, financial condition and results of operations. In addition, our net sales could be materially reduced to the extent that a natural disaster, health epidemic, such as COVID-19, or other major event harms the economies of the countries in which we operate. Our operations could also be severely disrupted if our users, customers, third-party providers or other stakeholders were affected by acts of war, natural or other disasters, health epidemics, such as COVID19, or other major events.

Federal, state and local tax authorities may seek to assess federal, state and local business taxes and sales and use taxes. If we are required to collect sales and use taxes in additional jurisdictions, we might be subject to tax liability for past sales.

There is a risk that U.S. jurisdictions could assert that we are liable for U.S. federal, state and local business activity taxes, which are levied upon income or gross receipts, or for the collection of U.S. local sales and use taxes. This risk exists regardless of whether we are subject to U.S. federal, state or local income tax. States are becoming increasingly active in asserting nexus for business activity tax purposes and imposing sales and use taxes on products and services provided over the internet. We may be subject to U.S. state and local business activity taxes if a state tax authority asserts that our activities or the activities of our non-U.S. subsidiaries are sufficient to establish nexus. We could also be liable for the collection of U.S. state and local sales and use taxes if a state tax authority asserts that distribution of our solutions over the internet is subject to sales and use taxes. Each state has different rules and regulations governing sales and use taxes, and these rules and regulations are subject to varying interpretations that change over time. We review these rules and regulations periodically and, when we believe we are subject to sales and use taxes in a particular state, voluntarily engage state and local tax authorities in order to determine how to comply with their rules and regulations. Further, the U.S. Supreme Court has recently held in South Dakota v. Wayfair, Inc. that a U.S. state may require an online retailer to collect sales and use taxes imposed by that state, even if the retailer has no physical presence in that state, thus permitting a wider enforcement of such sales and use tax collection requirements. Legislation adopted in the wake of this decision could require us or our e- commerce partners to incur substantial costs in order to comply, including costs associated with legal advice, tax calculation, collection, remittance and audit requirements, which could make selling in such markets less attractive and could adversely affect our business.

A successful assertion by one or more jurisdictions could also result in tax assessments, penalties, and interest, and we may be required to collect sales or other taxes in the future on subscription service revenue which could result in substantial tax liabilities for past transactions and otherwise harm our business. We cannot assure you that we will not be subject to sales and use taxes or related penalties for past sales in jurisdictions where we currently believe no such taxes are required. New obligations to collect or pay taxes of any kind could increase our cost of doing business.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition.

We are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have an adverse impact on our liquidity and results of operations. In addition, the authorities in several jurisdictions could review our tax returns and impose additional tax, interest and penalties, which could have an impact on us and on our results of operations.

Our future effective tax rates could be subject to volatility or adversely affected by a number of factors.

Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

changes in the valuation of our deferred tax assets and liabilities;

159

expected timing and amount of the release of any tax valuation allowances;
tax effects of share-based compensation;
costs related to intercompany restructurings or acquisitions;
changes in tax laws, regulations or interpretations thereof; or
future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates.

If two or more affiliated companies are located in different countries, the tax laws or regulations of each country generally will require that transfer prices be the same as those between unrelated companies dealing at arms’ length. While we believe that we operate in compliance with applicable transfer pricing laws and intend to continue to do so, our transfer pricing procedures are not binding on applicable tax authorities. If tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting arm’s length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which could result in us having a higher tax liability.

Our business is susceptible to risks associated with the use of our communities in various countries.

We currently have users in over 30 countries and we expect our user base to expand internationally in the future. While approximately 70% of our traffic originates in the U.S. and Canada, the use of our communities in various countries subjects us to risks that we do not generally face with respect to domestic use within North America. These risks may include, but are not limited to:

greater difficulty in enforcing contracts, including our universal terms of service and other agreements;
lack of familiarity and burdens and complexity involved with complying with multiple, conflicting and changing foreign laws, standards, regulatory requirements, tariffs, export controls and other barriers;
difficulties in ensuring compliance with countries’ multiple, conflicting and changing international trade, customs and sanctions laws;
data privacy laws that may require that user data be stored and processed in a designated territory;
different technology standards;
potentially adverse tax consequences, including the complexities of foreign value-added tax (or other tax) systems and restrictions on the repatriation of earnings;
uncertain political and economic climates;
reduced or uncertain protection for intellectual property rights in some countries;
new and different sources of competition;
lower levels of consumer spending; and
restricted access to and/or lower levels of use of the internet.

These factors may cause our international costs of doing business to exceed our comparable domestic costs and may also require significant management attention and financial resources. Any negative impact from our international business efforts could adversely affect our business, results of operations and financial condition.

160

Risks Relating to the Subordinate Voting Shares and the Offering

There is no existing market for the Subordinate Voting Shares, and listing on the TSX is subject to us fulfilling all of the listing requirements of the TSX. The Subordinate Voting Share price will fluctuate after the Offering, and you could lose a significant part of your investment.

Prior to the Offering, there has been no public market for the Subordinate Voting Shares. If an active trading market does not develop, you may have difficulty selling any of the Subordinate Voting Shares that you buy. We cannot predict the extent to which investor interest in us will lead to the development of an active trading market on the TSX, or how liquid that market might become. The Subordinate Voting Shares have been conditionally approved for listing on the TSX under the symbol “FORA”. Listing is subject to fulfilling all of the listing requirements of the TSX. If we are unable to obtain a listing on the TSX, the Offering may not be completed and we will not have sufficient funds to execute our growth strategies. If listing of the Subordinate Voting Shares occurs, we cannot predict the prices at which the Subordinate Voting Shares will trade and the Offering Price may not be indicative of the market price of the Subordinate Voting Shares after listing as the Offering Price for the Subordinate Voting Shares will be determined by negotiations between us and the Underwriters. If a market does not develop or is not maintained, the liquidity and price of the Subordinate Voting Shares could be seriously harmed. Consequently, you may not be able to sell the Subordinate Voting Shares at prices equal to or greater than the price paid by you in the Offering. There can be no assurance that there will be sufficient liquidity of the Subordinate Voting Shares on the trading market, or that we will continue to meet the listing requirements of the TSX.

The market price of the Subordinate Voting Shares could be subject to significant fluctuations after the Offering, and it may decline below the Offering Price. Some of the factors that may cause the market price of the Subordinate Voting Shares to fluctuate, many of which are beyond our control, include: volatility in the market price and trading volume of comparable companies; actual or anticipated changes or fluctuations in our operating results or in the expectations of market analysts or any failure by us to meet or exceed any of these expectations; adverse market reaction to any indebtedness we may incur or securities we may issue in the future; short sales, hedging and other derivative transactions in the Subordinate Voting Shares; litigation or regulatory action against us; investors’ general perception of us and the public’s reaction to our press releases, our other public announcements and our filings with Canadian securities regulators, including our financial statements; publication of research reports or news stories about us, our competitors or our industry; positive or negative recommendations or withdrawal of research coverage by securities analysts; changes in general political, economic, industry and market conditions and trends, including resulting from the ongoing COVID-19 pandemic; sales of the Subordinate Voting Shares by existing shareholders; recruitment or departure of key personnel; significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; and the other risks described in this “ Risk Factors ” section.

Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. As well, certain institutional investors may base their investment decisions on consideration of our environmental, governance and social practices and performance against such institutions’ respective investment guidelines and criteria, and failure to satisfy such criteria may result in limited or no investment in the Subordinate Voting Shares by those institutions, which could materially adversely affect the trading price of the Subordinate Voting Shares. There can be no assurance that fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue for a protracted period of time, our operations and the trading price of the Subordinate Voting Shares may be materially adversely affected.

In addition, the stock market in general has experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance, underlying asset values or prospects of particular companies affected. These broad market and industry factors may harm the market price of the Subordinate Voting Shares. Therefore, the price of the Subordinate Voting Shares could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce the price of the Subordinate Voting Shares even if our operating results, underlying asset values or prospects have not changed. In the past, following a significant decline in the market price of a company’s securities, there have been instances of securities class action litigation having been instituted against that company. If we were involved in any similar litigation, we could incur substantial costs, our management’s attention and resources could be diverted and it could harm our business, operating results and financial condition.

161

Our annual and quarterly results of operations may fluctuate. As a result, we may fail to meet or exceed the expectations of investors or securities analysts, which could cause the price of the Subordinate Voting Shares to decline.

Our annual and quarterly revenue and results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control. If our annual or quarterly revenue or results of operations fall below the expectations of investors or securities analysts, the price of the Subordinate Voting Shares could decline substantially. Fluctuations in our results of operations may be due to a number of factors, including:

demand for and market acceptance of our communities, services and platform;
seasonality of our digital advertising revenue, which is linked to the advertising budgets of our customers (including agencies and third-party advertising networks), and seasonality of our e-commerce revenue, which is linked to consumer spending patterns;
our ability to retain and increase sales to users and customers and attract new users and customers;
our ability to monetize our content, including our ability to disseminate such content to relevant users who are inclined or interested in making purchases from our customers;
changes in global economic conditions;
changes in our pricing practices or those of our competitors;
competition, including entry into the industry by new competitors and new offerings by existing competitors;
network outages or security breaches; and
the amount and timing of expenditures related to expanding our operations and improvements to our platform.

Due to the foregoing factors, and the other risks described in this “ Risk Factors ” section, you should not rely on quarter-toquarter comparisons of our results of operations as an indication of our future performance.

Sales of substantial amounts of the Subordinate Voting Shares in the public market, or the perception that these sales may occur, could cause the market price of the Subordinate Voting Shares to decline.

Sales of substantial amounts of the Subordinate Voting Shares in the public market could occur at any time after the expiration of the contractual lock-up periods (of up to 12 months and 24 months for the Principal Shareholders, subject to certain release mechanisms) and of 180 days for our Company and other locked-up shareholders described in “ Plan of Distribution – LockUp Agreements ”. These sales, or the market perception that these sales may occur, could cause the market price of the Subordinate Voting Shares to decline. This could also impair our ability to raise additional capital through the sale of our equity securities.

Under our Articles, immediately prior to the completion of the Offering, we will be authorized to issue an unlimited number of Multiple Voting Shares, an unlimited number of Subordinate Voting Shares and an unlimited number of Preferred Shares, issuable in series, of which 2,957,265 Multiple Voting Shares,  Subordinate Voting Shares and nil Preferred Shares will be outstanding following the Offering. In connection with the completion of the Offering, we, the Principal Shareholders, certain other shareholders, as well as each of our directors and executive officers, and their respective associates and affiliates holding our shares will agree not to offer, sell, or dispose of any Subordinate Voting Shares, Multiple Voting Shares or any other shares of our share capital or securities convertible into or exchangeable or exercisable for Subordinate Voting Shares or any shares of our share capital during the relevant lock-up period following the date of this prospectus. The Lead Underwriters, however, may, in their sole discretion, permit us, our directors, executive officers and current shareholders (including the Principal Shareholders) who will be subject to these Lock-Up Agreements to sell shares prior to the expiration of the LockUp Agreements. Following the expiration of the relevant lock-up period, the Subordinate Voting Shares (including those issuable upon conversion of the Multiple Voting Shares) that will be outstanding immediately following completion of the Offering will be available for sale in the public markets subject to restrictions under applicable securities laws. In addition, as of the date of this prospectus, there are outstanding options under the Legacy ESOP to acquire our shares which, following completion of the Offering, will be exercisable for Subordinate Voting Shares. The Subordinate Voting Shares issuable upon exercise of these options will, to the extent permitted by any applicable vesting requirements, Lock-Up Agreements and

162

restrictions under applicable securities laws, also become eligible for sale in the public market.

In addition, the Principal Shareholders will have the right, under certain circumstances, to require us to qualify by prospectus in Canada all or any portion of the Subordinate Voting Shares held by them for a distribution to the public, as described under “ Agreements with Principal Shareholders – Investor Rights Agreement – Registration Rights ”. Any sale of Subordinate Voting Shares by the Principal Shareholders by way of prospectus or otherwise could significantly reduce the market price of the Subordinate Voting Shares and impede our ability to raise capital through the issuance of additional Subordinate Voting Shares.

Further, we cannot predict the size of future issuances of our shares (including for capital raises, as consideration for acquisition, as incentive compensation or otherwise) or the effect, if any, that future sales and issuances of shares would have on the market price of the Subordinate Voting Shares.

Each of our Principal Shareholders beneficially owns a significant amount of our shares and may have interests that differ from, or may take actions that are not in the interests of, other shareholders.

Each of NordStar Group and Hedgewood is expected to hold approximately  % and  %, respectively, of the Subordinate Voting Shares, and approximately  % and  %, respectively, of the voting power attached to all of our issued and outstanding shares following the completion of the Offering (assuming no exercise of the Over-Allotment Option). RDL Ventures will hold 100% of the Multiple Voting Shares and approximately  % of the voting power attached to all of our issued and outstanding shares following the completion of the Offering (assuming no exercise of the Over-Allotment Option). In addition, each of the Principal Shareholders has director nomination rights under the Investor Rights Agreement generally as follows (provided the conditions under the Investor Rights Agreement are met, including share ownership thresholds): NordStar Group will be entitled to nominate two of our directors, one of whom must be Paul Rivett and one of whom must be independent; Hedgewood will be entitled nominate one of our directors; and RDL Ventures will be entitled to nominate one of our directors, which must be Rob Laidlaw so long as he is our Chief Executive Officer or executive officer. Each such nominee will be included as part of the slate of director candidates proposed by our Company in any management information circular relating to the election of directors, and the Company will solicit proxies and recommend that shareholders vote in favour of the Principal Shareholders’ nominees. See “ Agreements with Principal Shareholders – Investor Rights Agreement – Registration Rights ”.

Accordingly, the Principal Shareholders will have significant influence over our management and affairs and over all matters requiring shareholder approval, including the election of directors and significant corporate transactions, as well as all matters requiring board approval. In addition, as holders of Subordinate Voting Shares, will have for up to five years post-Closing the right to elect the remaining members of the Board who are not the Principal Shareholders’ nominees, NordStar Group as a significant holder of Subordinate Voting Shares will have significant influence over the election of director nominees who are not the Principal Shareholders’ nominees. Circumstances may occur in which the interests of the Principal Shareholders, as a group or individually, could be in conflict with the interests of other shareholders, and any of the Principal Shareholders would have significant influence to cause us to take actions that align with their interests.

Additionally, each of Hedgewood and NordStar Group (and their respective affiliates) is in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us.

The dual-class structure that will be contained in our Articles has the effect of concentrating voting control and the ability to influence corporate matters. Significant control by the holder of Multiple Voting Shares and significant ownership by the Principal Shareholders may adversely affect the market price of the Subordinate Voting Shares.

RDL Ventures, an entity controlled by our founder and Chief Executive Officer, Rob Laidlaw, will, directly or indirectly, own or control 100% of the Multiple Voting Shares. The Multiple Voting Shares have 10 votes per Multiple Voting Share and the Subordinate Voting Shares, the shares we are offering in the Offering, have one vote per Subordinate Voting Share.

Because of the 10-to-1 voting ratio between the Multiple Voting Shares and Subordinate Voting Shares, the holder of the Multiple Voting Shares, RDL Ventures, will continue to control a significant proportion of the combined voting rights of our voting shares even where the Multiple Voting Shares represent a substantially reduced percentage of our total outstanding shares. The concentrated voting control of the holder of the Multiple Voting Shares will limit the ability of our other shareholders to influence corporate matters for the foreseeable future, including the election of directors, as well as with respect to decisions regarding amending our share capital, creating and issuing additional classes of shares, making significant

163

acquisitions, selling significant assets or parts of our business, merging with other companies and undertaking other significant transactions. As a result, RDL Ventures, as the sole holder of Multiple Voting Shares, will have the ability to influence or control many matters affecting us and actions may be taken that our other shareholders may not view as beneficial.

The market price of the Subordinate Voting Shares could be adversely affected due to the significant influence and voting rights of the holder of Multiple Voting Shares. Additionally, the significant voting interest of the holder of Multiple Voting Shares may discourage transactions involving a change of control, including transactions in which an investor, as a holder of the Subordinate Voting Shares, might otherwise receive a premium for the Subordinate Voting Shares over the then-current market price, or discourage competing proposals if a going private transaction is proposed by one or more holders of Multiple Voting Shares.

Assuming the completion of the Offering and no exercise of the Over-Allotment Option, the Multiple Voting Shares held by RDL Ventures and the Subordinate Voting Shares held by NordStar Group and Hedgewood will collectively represent approximately  % of the voting rights attached to all of our outstanding voting securities. For so long as RDL Ventures, NordStar Group and Hedgewood, either directly or through one or more affiliates, maintains a significant voting interest in us, such Principal Shareholders will have the ability to exercise substantial influence with respect to our affairs and significantly affect the outcome of shareholder votes, and may have the ability to prevent certain fundamental transactions. Accordingly, the Subordinate Voting Shares may be less liquid and may trade at a relative discount compared to such Subordinate Voting Shares in circumstances where the Principal Shareholders did not have the ability to significantly influence or determine matters affecting us.

Shareholders will have limited control over our operations.

Holders of Subordinate Voting Shares will have limited control over changes in our policies and operations, which increases the uncertainty and risks of an investment in our Company. The Board will determine major policies, including policies regarding financing, growth, debt capitalization and any future dividends to shareholders. Generally, the Board may amend or revise these and other policies without a vote of the holders of Subordinate Voting Shares. The Board’s broad discretion in setting policies and the limited ability of holders of Subordinate Voting Shares to exert control over those policies increases the uncertainty and risks of an investment in our Company.

RDL Ventures will beneficially own and control all of the Multiple Voting Shares and will hold approximately  % of the voting power attached to our outstanding voting shares following the Offering (assuming no exercise of the Over-Allotment Option), and NordStar Group and Hedgewood will be entitled to certain director nomination and other governance rights under the Investor Rights Agreement. See “ Principal Shareholders ” and “ Agreements with Principal Shareholders ”. Accordingly, the Principal Shareholders will retain significant influence with respect to all matters submitted to our shareholders for approval, including without limitation the election and removal of directors, amendments to our constating documents and the approval of certain material transactions.

We do not anticipate paying any cash dividends in the foreseeable future.

There can be no assurance regarding the amount of income to be generated by our operations. The Subordinate Voting Shares are equity securities and are not fixed-income securities. Unlike fixed-income securities, we have no obligation to distribute to shareholders a fixed amount or to return the initial purchase price of a Subordinate Voting Share on a date in the future. We currently intend to retain our future earnings, if any, for the foreseeable future, to fund the operation of our business and future growth. We do not intend to pay any dividends to holders of the Subordinate Voting Shares for the foreseeable future. As a result, capital appreciation in the price of the Subordinate Voting Shares, if any, will be your only source of gain on an investment in the Subordinate Voting Shares.

New investors in the Subordinate Voting Shares will experience immediate and substantial book value dilution after the Offering.

The Offering Price will significantly exceed the net tangible book value per Subordinate Voting Share. Accordingly, if an investor purchases Subordinate Voting Shares under the Offering, the investor will incur immediate and substantial dilution of its investment. As a result of this dilution, investors purchasing Subordinate Voting Shares in the Offering may receive significantly less than the full purchase price that they paid for the Subordinate Voting Shares purchased in the Offering in the event of liquidation.

164

We may issue additional Subordinate Voting Shares and such issuance will result in immediate dilution to existing shareholders. Any issuance of Preferred Shares could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Subordinate Voting Shares, which could depress the price of our Subordinate Voting Shares.

Our Articles permit us to issue an unlimited number of Subordinate Voting Shares, an unlimited number of Multiple Voting Shares and an unlimited number of Preferred Shares, issuable in series. We anticipate that we will, from time to time, issue additional Subordinate Voting Shares or other securities convertible or exercisable for Subordinate Voting Shares, including in connection with equity-based awards to employees, directors and consultants under our current and future equity incentive plans, as well in connection with acquisitions or investments in complementary companies, products, or technologies. Subject to the requirements of the TSX, we will not be required to obtain the approval of shareholders for the issuance of additional Subordinate Voting Shares or other securities convertible or exercisable for Subordinate Voting Shares and shareholders do not have any pre-emptive rights. Although the rules of the TSX generally prohibit us from issuing additional Multiple Voting Shares, there may be certain circumstances where additional Multiple Voting Shares may be issued, including upon receipt of the requisite shareholder approval. Any further issuances of Subordinate Voting Shares, Multiple Voting Shares, Preferred Shares or other securities convertible or exercisable for Subordinate Voting Shares will result in immediate dilution to existing shareholders. New investors in such subsequent transactions could gain rights, preferences, and privileges senior to those of holders of the Subordinate Voting Shares. Furthermore, issuances of a substantial number of additional Subordinate Voting Shares, Multiple Voting Shares, Preferred Shares or other securities convertible or exercisable for Subordinate Voting Shares, or the perception that such issuances could occur, may adversely affect the prevailing market price for the Subordinate Voting Shares.

We have no present plans to issue any Preferred Shares. However, upon completion of the Offering, our Board will have the authority to issue the Preferred Shares, issuable in series, to determine the rights, privileges, restrictions and conditions of each series of shares, and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our shareholders. The Preferred Shares will be issued with liquidation, dividend and other rights superior to the rights of the Subordinate Voting Shares and Multiple Voting Shares. The potential issuance of Preferred Shares may delay or prevent a change in control of the Company, discourage bids for the Subordinate Voting Shares at a premium over the market price and adversely affect the market price and other rights of the holders of the Subordinate Voting Shares.

In creating and issuing additional securities, the Board will comply with the requirements of applicable securities law and the TSX requirements or requirements of any other public listing exchange on which the Subordinate Voting Shares may subsequently be listed, as the case may be, and the directors will act in accordance with his or her fiduciary duties.

We have broad discretion in the use of the net proceeds from the Offering.

Management will have broad discretion in the application of the net proceeds, including for any of the purposes described in “ Use of Proceeds ”. Accordingly, a purchaser of Subordinate Voting Shares will have to rely upon the judgment of our management with respect to the use of the proceeds, with only limited information concerning management’s specific intentions. Our management may spend a portion or all of the net proceeds from the Offering in ways that our shareholders might not desire, that might not yield a favourable return and that might not increase the value of an investor’s investment. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, prospects, financial condition, results of operations and financial condition. Pending their use, we may invest the net proceeds from the Offering in a manner that does not produce income or that loses value.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

We will incur significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact our financial performance and could cause our results of operations and financial condition to suffer.

We will incur significant legal, accounting, insurance and other expenses as a result of being a public company. The rules implemented by the OSC, the securities regulators in each of the other provinces and territories of Canada and the TSX, have required changes in corporate governance practices of public companies. We expect that compliance with these laws, rules and regulations will substantially increase our expenses, including our legal and accounting costs, and will make some activities more time-consuming and costly. Moreover, the securities regulators in Canada and the TSX may adopt new rules

165

and regulations relating to information disclosure, financial reporting and controls and corporate governance in the future, which could subject us to additional increases in legal, accounting and other compliance costs. The new obligations of being a public company will require attention from our senior management and could divert their attention away from the day-today management of our business. Given that the individuals who now constitute our management team have limited experience managing a publicly traded company and complying with the increasingly complex laws pertaining to public companies, initially, these new obligations could demand even greater attention. Our senior management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under Canadian securities laws.

We also expect these laws, rules and regulations to make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Board or as officers.

As a result of the foregoing, we expect a substantial increase in legal, accounting, insurance and certain other expenses in the future, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of the Subordinate Voting Shares, fines, sanctions and other regulatory action and potentially civil litigation.

As a public company, we will be required to develop and maintain proper and effective internal controls over financial reporting. We may not complete our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be effective, which could adversely affect investor confidence in our Company and, as a result, negatively impact the value of the Subordinate Voting Shares.

We are not currently required to comply with NI 52-109. As a publicly traded company, we will become subject to internal controls and financial reporting and other obligations under applicable Canadian securities laws, including NI 52-109, and the rules of the TSX. These reporting and other obligations will place significant demands on our management, administrative, operational and accounting resources. In order to meet such requirements, we will, among other things, implement financial and management controls, establish reporting systems and procedures and, if necessary, hire qualified accounting and finance staff. However, if we are unable to accomplish any such necessary objectives in a timely and effective manner, our ability to comply with our financial reporting obligations and other rules applicable to reporting issuers could be impaired. Moreover, any failure to maintain effective internal controls could cause us to fail to satisfy our reporting obligations or result in material misstatements in our financial statements. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results could be materially adversely affected which could also cause investors to lose confidence in our reported financial information, which could result in a reduction in the market price of the Subordinate Voting Shares.

We do not expect that our disclosure controls and procedures and internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well-designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within an organization are detected. The inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple errors or mistakes.

Controls can also be circumvented by individual acts of certain persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected in a timely manner or at all.

Our management has limited experience managing a public company.

The members of our management have limited or no experience managing a publicly company, interacting with public company investors and complying with the complex laws pertaining to public companies. Our management may not successfully or efficiently manage our transition to being a public company that is subject to significant regulatory oversight and reporting obligations under applicable securities laws, and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our management and could divert their attention away from the day-to-day management of the business, which could harm the business, financial condition, and

166

results of operations.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our Company or our business, the price of the Subordinate Voting Shares and our trading volume could decline.

The trading market for the Subordinate Voting Shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our Company. If no or too few securities or industry analysts commence coverage of our Company, the trading price for the Subordinate Voting Shares would likely be negatively affected. In the event that securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade the Subordinate Voting Shares or publish inaccurate or unfavorable research about our business, the price of the Subordinate Voting Shares would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for the Subordinate Voting Shares could decrease, which might cause the price of the Subordinate Voting Shares and trading volume to decline.

MATERIAL CONTRACTS

This prospectus includes a summary description of certain of our material agreements. The summary description discloses all attributes that the Company considers material to an investor in the Subordinate Voting Shares but is not complete and is qualified by reference to the terms of the material contracts, which will be filed with the Canadian securities regulatory authorities and available under our SEDAR profile at www.sedar.com . Investors are encouraged to read the full text of such material agreements.

The following are the only material contracts, other than those contracts entered into in the ordinary course of business, which we have entered into since the beginning of the last financial year before the date of this prospectus, entered into prior to such date but which contract is still in effect, or to which we are or will become a party on or prior to the completion of the Offering:

the Underwriting Agreement;
the Investor Rights Agreement; and
the Coattail Agreement.

See “ Plan of Distribution ”, “ Agreements with Principal Shareholders – Investor Rights Agreement ” and “ Description of Share Capital – Take-Over Bid Protection ”, respectively, for a description of the foregoing agreements. Copies of the abovelisted material will be available under our SEDAR profile at www.sedar.com .

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

We are from time to time involved in legal proceedings of a nature considered normal to our business. See “ Risk Factors ”. We believe that none of the legal proceedings in which we are currently involved, or have been involved since the beginning of the most recently completed financial year, individually or in the aggregate, is material to our financial condition, cash flows or results of operations.

We are not aware of penalties or sanctions imposed by a court relating to provincial and territorial securities legislation or by a securities regulatory authority within the three years immediately preceding the date of this prospectus. No other penalties or sanctions have been imposed by a court or regulatory body against the Company necessary for this prospectus to contain full, true and plain disclosure of all material facts. The Company has not entered into any settlement agreements before a court relating to provincial and territorial securities legislation or with a securities regulatory authority within the three years immediately preceding the date of this prospectus.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Norton Rose Fulbright Canada LLP, counsel to the Company, and Goodmans LLP, counsel to the Underwriters, the following is a general summary, as of the date hereof, of the principal Canadian federal income tax considerations under the Tax Act generally applicable to a holder who: (i) acquires as beneficial owner Subordinate Voting Shares pursuant to the Offering; (ii) for the purposes of the Tax Act and at all relevant times, acquires and holds the Subordinate Voting Shares as capital property; and (iii) for purposes of the Tax Act and at all relevant times, deals at arm’s

167

length and is not affiliated with the Company and the Underwriters and is not affiliated with the Company or any of the Underwriters (a “ Holder ”). A Subordinate Voting Share will generally be capital property to a Holder provided that the Holder does not hold or use such Subordinate Voting Share in the course of carrying on a business of trading or dealing in securities and such Holder has not acquired or been deemed to have acquired the Subordinate Voting Share in one or more transactions considered to be an adventure or concern in the nature of trade.

This summary is not applicable to a Holder: (i) that is a “financial institution” (as defined in the Tax Act for the purposes of the mark-to-market rules); (ii) that has an interest in which would be a “tax shelter investment” (as defined in the Tax Act); (iii) that is a “specified financial institution” (as defined in the Tax Act); (iv) that has elected to report its “Canadian tax results” (as defined in the Tax Act) in a currency other than Canadian currency; (v) that has entered into or will enter into a “synthetic disposition arrangement” or a “derivative forward agreement” (each as defined in the Tax Act) with respect to the Subordinate Voting Shares; (vi) that receives dividends on Subordinate Voting Shares under or as part of a “dividend rental arrangement” (as defined in the Tax Act); (vii) that acquired Subordinate Voting Shares as a result of the Pre-Closing Reorganization; or (viii) that is a corporation resident in Canada and is or becomes, or does not deal at arm’s length for purposes of the Tax Act with a corporation resident in Canada that is or becomes, as part of a transaction or event or series of transactions or events that includes the acquisition of Subordinate Voting Shares, controlled by a non-resident person or by a group of non-resident persons that do not deal with each other at arm’s length, for the purposes of the “foreign affiliate dumping” rules in section 212.3 of the Tax Act. Such investors should consult their own tax advisors with respect to an investment in the Subordinate Voting Shares.

This summary is based upon: (i) the provisions of the Tax Act and the regulations thereunder (the “ Regulations ”) in force as of the date hereof; (ii) all specific proposals to amend the Tax Act and the Regulations that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “ Proposed Amendments ”); and (iii) counsel’s understanding of the current administrative and assessing policies and practices of the Canada Revenue Agency (the “ CRA ”) published in writing prior to the date hereof. This summary assumes the Proposed Amendments will be enacted in the form proposed, however, no assurance can be given that the Proposed Amendments will be enacted in the form proposed, or at all. This summary is not exhaustive of all possible Canadian federal income tax considerations and, except for the Proposed Amendments, does not take into account any changes in the law, whether by legislative, regulatory, administrative governmental or judicial decision or action, nor does it take into account provincial, territorial or foreign tax considerations, which may differ significantly from those discussed herein. This summary also does not take into account any change in the administrative policies or assessing practices of the CRA.

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder or prospective Holder of Subordinate Voting Shares, and no representations with respect to the tax consequences to any Holder or prospective Holder are made therein. Accordingly, Holders and prospective Holders of Subordinate Voting Shares are urged to consult their own tax advisors about the specific tax consequences to them of acquiring, holding and disposing of Subordinate Voting Shares, having regard to their particular circumstances.

Residents in Canada

The following portion of this summary applies to a Holder who, at all relevant times, for purposes of the Tax Act and any applicable income tax treaty or convention, is or is deemed to be resident in Canada (a “ Resident Holder ”). Certain Resident Holders who might not otherwise be considered to hold their Subordinate Voting Shares as capital property may, in certain circumstances, be entitled to have their Subordinate Voting Shares, and all other “Canadian securities” (as defined in the Tax Act) owned by such Resident Holders in the year of the election and in any subsequent taxation year, treated as capital property by making the irrevocable election permitted by subsection 39(4) of the Tax Act. Resident Holders contemplating making an election under subsection 39(4) of the Tax Act should consult their own tax advisors.

Dividends on Subordinate Voting Shares

Dividends received or deemed to be received on Subordinate Voting Shares held by a Resident Holder will be included in the Canadian Resident Holder’s income for the purposes of the Tax Act.

Such dividends received by a Resident Holder who is an individual (other than certain trusts) will be subject to the gross-up and dividend tax credit rules normally applicable under the Tax Act to taxable dividends received from taxable Canadian corporations, including the enhanced gross-up and dividend tax credit in respect of dividends designated by the Company as

168

“eligible dividends” in accordance with the Tax Act. There may be limitations on the ability of the Company to designate dividends as “eligible dividends”.

Taxable dividends received or deemed to be received by a Resident Holder who is an individual (other than certain trusts) may result in such Resident Holder being liable for alternative minimum tax under the Tax Act. Resident Holders who are individuals should consult their own tax advisors in this regard.

Dividends received or deemed to be received on a Subordinate Voting Share by a Resident Holder that is a corporation will be included in computing such Resident Holder’s income for the taxation year and will generally also be deductible in computing its taxable income for that taxation year, subject to all relevant restrictions under the Tax Act. In certain circumstances a dividend received or deemed to be received by a Resident Holder that is a corporation may be deemed to be proceeds of disposition or a capital gain pursuant to subsection 55(2) of the Tax Act. Resident Holders that are corporations should consult their own tax advisors with respect to the application of subsection 55(2) of the Tax Act having regard to their own circumstances.

A Resident Holder that is a “private corporation” or a “subject corporation”, each as defined in the Tax Act, may be liable to pay an additional tax under Part IV of the Tax Act on dividends received or deemed to be received on a Subordinate Voting Share to the extent such dividends are deductible in computing the Resident Holder’s taxable income. Such additional tax may be refundable in certain circumstances.

Dispositions of Subordinate Voting Shares

A disposition or a deemed disposition of a Subordinate Voting Share (other than to the Company unless purchased by the Company in the open market in the manner in which shares are normally purchased by any member of the public in the open market) by a Resident Holder will generally result in a Resident Holder realizing a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of the Subordinate Voting Share exceed (or are less than) the aggregate of the adjusted cost base to the Resident Holder thereof and any reasonable costs of disposition. For this purpose, the adjusted cost base to a Resident Holder of a Subordinate Voting Share will be determined at any particular time by averaging the cost of such share with the adjusted cost base of any other Subordinate Voting Shares held by the Resident Holder as capital property at that time. Such capital gain (or capital loss) will be subject to the treatment described below under “ Certain Canadian Federal Income Tax Considerations – Residents in Canada – Taxation of Capital Gains and Capital Losses ”.

Taxation of Capital Gains and Capital Losses

Generally, one-half of any capital gain (a “ taxable capital gain ”) realized by a Resident Holder in a taxation year is included in computing the Resident Holder’s income for the year, and one-half of any capital loss (an “ allowable capital loss ”) realized by a Resident Holder in a taxation year is deducted from taxable capital gains realized by the Resident Holder in that year. Allowable capital losses in excess of taxable capital gains realized in a taxation year generally may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances described in the Tax Act.

If the Resident Holder is a corporation, the amount of any capital loss realized on the disposition or deemed disposition of a Subordinate Voting Share may, in certain circumstances, be reduced by the amount of any dividends received or deemed to be received by the Resident Holder on such Subordinate Voting Share (or on a share for which the Subordinate Voting Share has been substituted) to the extent and under the circumstances prescribed by the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns Subordinate Voting Shares, directly or indirectly through a partnership or a trust. Resident Holders to whom these rules may be relevant should consult their own tax advisor.

A Resident Holder that is, throughout the relevant taxation year, a “Canadian-controlled private corporation”, as defined in the Tax Act, may be liable to pay an additional tax (refundable under certain circumstances) on its “aggregate investment income”, which is defined in the Tax Act to include taxable capital gains.

Capital gains realized by a Resident Holder who is an individual (including certain trusts) may result in such Resident Holder being liable for alternative minimum tax under the Tax Act. Resident Holders who are individuals should consult their own tax advisors in this regard.

169

Non-Resident Holders

The following portion of this summary applies to a Holder who, at all relevant times, for purposes of the Tax Act and any relevant income tax treaty or convention: (i) is not resident or deemed to be resident in Canada; and (ii) does not, and is not deemed to, use or hold the Subordinate Voting Shares in carrying on a business in Canada (a “ Non-Resident Holder ”). Special rules, which are not discussed in this summary, may apply to a non-resident of Canada that is an insurer carrying on business in Canada and elsewhere or that is an “authorized foreign bank” for purposes of the Tax Act.

Dividends on Subordinate Voting Shares

Dividends paid or credited, or deemed to be paid or credited, on a Subordinate Voting Share to a Non-Resident Holder will generally be subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividend unless the rate is reduced under the provisions of an applicable income tax convention between Canada and the Non-Resident Holder’s country of residence. For example, where the Non-Resident Holder is a resident of the U.S., is entitled to the full benefits of the Canada-United States Income Tax Convention (1980) as amended, and is the beneficial owner of the dividends, the rate of Canadian withholding tax applicable to dividends is generally reduced to 15%. Non-Resident Holders should consult their own tax advisors in this regard.

Dispositions of Subordinate Voting Shares

A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such NonResident Holder on a disposition or deemed disposition of Subordinate Voting Shares unless the Subordinate Voting Shares constitute “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time of disposition and the Non-Resident Holder is not entitled to relief under an applicable income tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident.

Provided the Subordinate Voting Shares are listed on a “designated stock exchange”, as defined in the Tax Act (which currently includes the TSX), at the time of disposition, Subordinate Voting Shares generally will not constitute taxable Canadian property of a Non-Resident Holder unless at any time during the 60-month period that ends at the time of the disposition: (i)(a) the Non-Resident Holder; (b) persons with whom the Non-Resident Holder did not deal at arm’s length (for purposes of the Tax Act); (c) partnerships in which the Non-Resident Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships; or (d) the Non-Resident Holder together with all such persons, owned 25% or more of the issued shares of any class of the capital stock of the Company; and (ii) more than 50% of the fair market value of the Subordinate Voting Shares was derived directly or indirectly from one or any combination of: (a) real or immovable property situated in Canada; (b) “Canadian resource properties” (as defined in the Tax Act); (c) “timber resource properties” (as defined in the Tax Act); and (d) options in respect of, or interests in or for civil law rights in, property described in (a) to (c), whether or not such property exists. Notwithstanding the foregoing, Subordinate Voting Shares may be deemed to be taxable Canadian property of a Non-Resident Holder for purposes of the Tax Act.

A Non-Resident Holder contemplating a disposition of Subordinate Voting Shares that may constitute taxable Canadian property should consult their tax advisor prior to such disposition.

In the event that Subordinate Voting Shares constitute taxable Canadian property of a Non-Resident Holder and any capital gain that would be realized on the disposition thereof is not exempt from tax under the Tax Act or pursuant to an applicable income tax treaty or convention, the income tax consequences discussed above for Resident Holders under “ Certain Canadian Federal Income Tax Considerations – Residents in Canada – Dispositions of Subordinate Voting Shares ” will generally apply to the Non-Resident Holder.

ELIGIBILITY FOR INVESTMENT

In the opinion of Norton Rose Fulbright Canada LLP, our Canadian counsel, and Goodmans LLP, Canadian counsel to the Underwriters, based on the current provisions of the Tax Act and the Regulations, provided the Subordinate Voting Shares are listed on a designated stock exchange (which currently includes the TSX) at all relevant times, the Subordinate Voting Shares acquired pursuant to the Offering will be “qualified investments” under the Tax Act for trusts governed by, registered retirement savings plans (“ RRSPs ”), registered retirement income funds (“ RRIFs ”), registered education savings plans (“ RESPs ”), registered disability savings plans (“ RDSPs ”), deferred profit sharing plans (“ DPSPs ”) and tax-free savings accounts (“ TFSAs ”) (each as defined in the Tax Act).

170

Notwithstanding that the Subordinate Voting Shares may be “qualified investments” for a trust governed by a RRSP, RRIF, RDSP, RESP or a TFSA, a holder of a TFSA or RDSP, an annuitant of a RRSP or RRIF or a subscriber of a RESP, as applicable, will be subject to a penalty tax under the Tax Act with respect to Subordinate Voting Shares if the Subordinate Voting Shares are a “prohibited investment” for the RRSP, RRIF, RDSP, RESP or TFSA. A Subordinate Voting Share will not be a “prohibited investment” for a RRSP, RRIF, RDSP, RESP or TFSA provided that the holder of the TFSA or RDSP, the annuitant under the RRSP or RRIF or the subscriber of the RESP, as the case may be, deals at arm’s length with the Company for purposes of the Tax Act and does not have a “significant interest” (as defined in the Tax Act) in the Company for purposes of the Tax Act. In addition, a Subordinate Voting Share will not be a “prohibited investment” if it is an “excluded property”, as defined in the Tax Act, for purposes of the prohibited investment rules. Holders who intend to hold Subordinate Voting Shares in a TFSA, RRSP, RRIF, RDSP, RESP or DPSP should consult their own tax advisors.

EXPERTS

There is no person or company whose profession or business gives authority to a report, valuation, statement or opinion made by such person or company and who is named as having prepared or certified a report, valuation, statement or opinion in this prospectus other than Norton Rose Fulbright Canada LLP, Goodmans LLP and KPMG LLP.

Certain legal matters relating to the Offering will be passed upon on our behalf by Norton Rose Fulbright Canada LLP with respect to Canadian legal matters and Norton Rose Fulbright US LLP with respect to U.S. legal matters and on behalf of the Underwriters by Goodmans LLP with respect to Canadian legal matters. As at the date hereof, the partners and associates of each of Norton Rose Fulbright Canada LLP and Goodmans LLP beneficially own less than 1% of the outstanding shares of any class of the Company and its affiliates or associates. Norton Rose Fulbright Canada LLP received Subordinate Voting Shares as partial consideration for services in connection with the Offering. See “ Description of Share Capital – Pre-Closing Reorganization ”.

Our independent auditor, KPMG LLP, has confirmed that it is independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario.

INDEPENDENT AUDITOR, TRANSFER AGENT AND REGISTRAR

Our independent auditor is KPMG LLP, 100 New Park Place, Suite 1400, Vaughan, Ontario L4K 0J3, Canada.

The transfer agent and registrar for the Subordinate Voting Shares is TSX Trust Company at its principal office in Toronto, Ontario.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

Rob Laidlaw, our Chief Executive Officer and a director of the Company, resides outside of Canada and has appointed VerticalScope, 111 Peter Street, Suite 901, Toronto, Ontario M5V 2H1, Canada as agent for service of process in Canada. Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person that resides outside of Canada, even if such person has appointed an agent for service of process.

EXEMPTIONS

The staff of the OSC has notified the Company that it is currently of the view that Mr. Laidlaw is a promoter of the Company within the meaning of applicable securities laws in Canada. Pursuant to Section 58(5) of the Securities Act (Ontario), the Director has consented to Mr. Laidlaw not signing a Certificate of Promoter for this prospectus. The Company has been advised by the OSC that the issuance of a receipt by or on behalf of the applicable Canadian Securities Administrators by the OSC for this prospectus will evidence the granting of this consent. Neither the Company nor Mr. Laidlaw agree or admit that Mr. Laidlaw is a promoter of the Company.

Pursuant to an application (the “ Application ”) made to the OSC, as principal regulator, the Company has applied for exemptive relief as contemplated by Part 19 of National Instrument 41-101 from the requirement in Item 32 of Form 41101F1 – Information Required in a Prospectus (“ Form 41-101F1 ”) to include certain historical financial statements for four acquisitions of website domain names, content, databases and related intellectual property completed by the Company in the three most recently completed years before the date of the prospectus (collectively, the “ Prior Acquisitions ”), in each case, that may be considered to form part of the “primary business” of the Company for the purposes of Item 32 of Form 41-

171

101F1. The treatment of the Prior Acquisitions as forming part of the primary business of the Company would require the Company to include in this prospectus audited financial information for such businesses in respect of FY 2020, FY 2019 and FY 2018.

In the Application the Company made, among others, the following submissions:

The Prior Acquisitions are not significant, either individually or in the aggregate, and are not otherwise material having regard to the overall size and value of the Company’s business and operations.
With a platform of more than 1,200 websites, the Company does not believe a reasonable investor reading the prospectus would regard the “primary business” of the Company to be any one or more of the Prior Acquisitions.
The prospectus includes audited annual financials for FY 2020, FY 2019 and FY 2018, and interim financials for Q1, 2021 which capture the Prior Acquisitions on a consolidated basis for periods following such acquisitions. As such, the impact of the Prior Acquisitions is already fully reflected in the financial statements included in the prospectus.
Including financial statements for the Prior Acquisitions would be confusing to investors and would not provide additional meaningful disclosure.
Based on the foregoing, including financial statements of any or all of the Prior Acquisitions is not necessary for the prospectus to contain full, true and plain disclosure of all material facts with respect to the Company or its securities.

The Company has been advised by the OSC that the issuance of a receipt by or on behalf of the applicable Canadian Securities Administrators by the OSC for this prospectus will evidence the granting of the foregoing exemptions and/or consent.

PURCHASERS’ STATUTORY RIGHTS

Securities legislation in certain of the provinces and territories of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. In several of the provinces and territories, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that the remedies for rescission, revisions of the price or damages are exercised by the purchaser within the time limits prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of these rights or consult with a legal advisor.

172

GLOSSARY OF TERMS

The following is a glossary of certain industry and other defined terms used in this prospectus:

“ Adjusted EBITDA ” has the meaning set out under the heading “ IFRS and Non-IFRS Measures ”.

“ Adjusted EBITDA Margin ” has the meaning set out under the heading “ IFRS and Non-IFRS Measures ”.

“ Advance Notice Provisions ” has the meaning set out under the heading “ Description of Share Capital – Other Important Provisions of our Constating Documents – Advance Notice Provisions ”.

“ allowable capital loss ” has the meaning set out under the heading “ Certain Canadian Federal Income Tax Considerations – Residents in Canada – Taxation of Capital Gains and Capital Losses ”.

“ Application ” has the meaning set out under the heading “ Exemptions ”.

“ A&R Credit Agreement ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Amended and Restated Credit Agreement ”.

“ ARPU ” has the meaning set out under the heading “ IFRS and Non-IFRS Measures – Industry Metrics ”.

“ Articles ” means VerticalScope HoldCo’s articles of amendment.

“ Audit Committee ” means the Audit Committee of the Board.

“ Authorized Holder ” has the meaning set out under the heading “ Description of Material Indebtedness – Credit Agreement ” with Capital One .

“ Average Annual Bonus Value ” has the meaning set out under the heading “Executive Compensation – Employment Agreements, Termination and Change of Control Benefits ”.

“ awards ” has the meaning set out under the heading “ Executive Compensation – Equity Incentive Plans – Omnibus Incentive Plan ”.

“ Bill 64 ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ Board ” means the board of directors of the Company.

“ Borrower ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities ”.

“ Brexit ” means United Kingdom’s exit from the European Union.

“ CAD ” means Canadian dollar.

“ CAGR ” has the meaning set out under the heading “ Prospectus Summary – Our Business – Industry Overview and Trends – Advertising Budgets are Following Consumers Online ”.

“ CAN-SPAM ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ CARES Act ” means the U.S. Small Business Administration’s Coronavirus Aid, Relief, and Economic Security Act .

“ CASL ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ CCPA ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards –

173

Privacy and Data Protection Laws and Regulations ”.

“ CDS ” means CDS Clearing and Depository Services Inc.

“ CDS Participants ” has the meaning set out under the heading “ Plan of Distribution – Non-Certificated Inventory System ”.

“ CEWS ” means the Government of Canada’s Canadian Emergency Wage Subsidy.

“ Class A Common Shares ” means the Class A Common Shares in the capital of the Company, which will be deleted in connection with the Pre-Closing Reorganization.

“ Class A Preferred Shares ” means the Class A Preferred Shares in the capital of the Company, which will be deleted in connection with the Pre-Closing Reorganization.

“ Class B Common Shares ” means the Class B Common Shares in the capital of the Company, which will be deleted in connection with the Pre-Closing Reorganization.

“ Closing ” means the closing of the Offering.

“ Closing Date ” has the meaning set out on the cover page.

“ Coattail Agreement ” has the meaning set out under the heading “ Description of Share Capital – Take-Over Bid Protection” .

“ Code of Ethics and Business Conduct ” means the written code of ethics and business conduct applicable to all employees, officers and directors of the Company.

“ Company ” or “ VerticalScope ” has the meaning set out on the cover page.

“ Compensation Committee ” means that Compensation Committee of the Board.

“ CPM ” has the meaning set out under the heading “ IFRS and Non-IFRS Measures – Non-IFRS Measures – Industry Metrics ”.

“ CRA ” has the meaning set out under the heading “ Certain Canadian Federal Income Tax Considerations” .

“ Credit Agreement ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ Credit Facilities ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ Delayed Draw Term Loans ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ Dividend Share Units ” has the meaning set out under the heading “ Executive Compensation – Equity Incentive Plans - Omnibus Incentive Plan” .

“ DPA ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ DPSPs ” has the meaning set out under the heading “ Eligibility for Investment ”.

“ DSUs ” means deferred share units.

“ EBITDA ” net income (loss) excluding interest, income tax expense (recovery), and depreciation and amortization.

“ EEA ” means the European Economic Area.

174

“ ePR ” “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ ESA ” means the Employment Standards Act .

“ Exchange Rate ” has the meaning set out under the heading “ Currency Exchange Rate Data ”.

“ First Amendment ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ Fora ” is our cloud-based platform that combines our proprietary software with leading open-source, third-party software that is further described under the heading “ Our Business – The Fora Software Platform ”.

“ Form 41-101F1 ” has the meaning set out under the heading “ Exemptions ”.

“ Free Cash Flow ” has the meaning set out under “ IFRS and Non-IFRS Measures – Non-IFRS Measures ”.

“ Free Cash Flow Conversion Rate ” has the meaning set out under “ IFRS and Non-IFRS Measures – Non-IFRS Measures ”.

“ FTC ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ FY 2018 ” means the Company’s fiscal year ending December 31, 2018.

“ FY 2019 ” means the Company’s fiscal year ended December 31, 2019.

“ FY 2020 ” means the Company’s fiscal year ending December 31, 2020.

“ FY 2021 ” means the Company’s fiscal year ending December 31, 2021.

“ GDPR ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ Google ” means Google Inc.

“ Hedgewood ” means Hedgewood Inc.

“ Holder ” has the meaning set out under the heading “ Certain Canadian Federal Income Tax Considerations ”.

“ IASB ” means the International Accounting Standards Board.

“ IFRS ” means the International Financial Reporting Standards.

“ IFRS 16 ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Changes in Accounting Policies including Initial Adoption ”.

“ Impressions ” means programmatic advertising includes the monetization of impressions, being the number of times content is displayed to users (no matter if it was clicked).

“ Initial Term Loans ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ Investor Rights Agreement” has the meaning set out under the heading “ Agreements with Principal Shareholders – Investor Rights Agreement ”.

“ IP address ” means internet protocol address.

“ IP Rights ” has the meaning set out under the heading “ Risk Factors – Risks Relating to Our Business and Industry ”.

175

“ KPI ” means key performance indicator.

“ Lead Underwriters ” means RBC Dominion Securities Inc., Canaccord Genuity Corp., and National Bank Financial Inc.

“ Legacy ESOP ” means VerticalScope’s amended and restated stock option plan dated November 21, 2012 as currently existing and as will be amended in connection with the Pre-Closing Reorganization.

“ LIBOR ” means the London interbank offered rate.

“ Lock-Up Agreement ” has the meaning set out under the heading “ Plan of Distribution – Lock-Up Agreements ”.

“ LTM ” means last twelve months.

“ management ” means the persons who are identified in this prospectus as the executive officers of the Company.

“ MAU ” has the meaning set out under the heading “ IFRS and Non-IFRS Measures – Industry Metrics ”.

“ M&A ” means mergers and acquisitions.

“ MD&A ” means management’s discussion and analysis of financial condition and results of operations.

“ Multiple Voting Shares ” means the multiple voting shares in the capital of VerticalScope, as such shares will exist immediately after completion of the Pre-Closing Reorganization.

“ National Bank ” means National Bank Financial Inc.

“ NEOs ” means Named Executive Officers.

“ NI 52-109 ” means National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings , as amended from time to time.

“ NI 52-110 ” means National Instrument 52-110 – Audit Committees , as amended from time to time.

“ NI 58-101 ” means National Instrument 58-101 – Disclosure of Corporate Governance Practices , as amended from time to time.

“ Nominating and Governance Committee ” means the Nominating and Governance Committee of the Board.

“ Non-Resident Holder ” has the meaning set out under the heading “ Certain Canadian Federal Income Tax Considerations– Non-Resident Holders ”.

“ NordStar Group ” means NordStar Capital LP through certain of its wholly-owned subsidiaries.

“ Notice Date ” has the meaning set out under the heading “ Description of Share Capital – Other Important Provisions of our Constating Documents – Advance Notice Provisions ”.

“ OBCA ” means the Business Corporations Act (Ontario), as amended from time to time.

“ OEMs ” has the meaning set out under the heading “ Prospectus Summary – Our Business – Our Business Model – Digital Advertising ”.

“ Offering ” means the initial public offering of an aggregate of  Subordinate Voting Shares by VerticalScope.

“ Offering Price ” means the price of each Subordinate Voting Shares that will be issued pursuant to the Offering.

“ Omnibus Incentive Plan ” has the meaning set out under the heading “ Options To Purchase Securities ”.

“ OPC ” means the Office of the Privacy Commissioner of Canada.

176

“ Original Credit Agreement ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ OSC ” means the Ontario Securities Commission.

“ Over-Allotment Option ” means the option granted by the Company to the Underwriters to acquire up to  additional Subordinate Voting Shares, representing 15% of the number of Subordinate Voting Shares offered under this prospectus, to cover over-allotments, if any, and for market stabilization purposes, and exercisable at the Offering Price for a period of 30 days from the Closing Date.

“ PIPEDA ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ PPP Loan ” means a loan from the Paycheck Protection Program.

“ Pre-Closing Reorganization ” has the meaning set out under the heading “ Description of Share Capital – Pre-Closing Reorganization ”.

“ Preferred Shares ” has the meaning set out under the heading “ The Offering ”.

“ President’s List Purchasers ” has the meaning set out on the cover page.

“ Principal Shareholders ” means NordStar Group, RDL Ventures and Hedgewood.

“ Prior Acquisitions ” has the meaning set out under the heading “ Exemptions ”.

“ Private Sector Act ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ Programmatic Guaranteed ” has the meaning set out under the heading “ Prospectus Summary – Our Business – Our Business Model – Digital Advertising ”.

“ Proposed Amendments ” has the meaning set out under the heading “ Certain Canadian Federal Income Tax Considerations ”.

“ Protected Employment Period ” has the meaning set out under the heading “Executive Compensation – Employment Agreements, Termination and Change of Control Benefits ”.

“ PSUs ” means performance share units.

“ Q1 ” means the first fiscal quarter.

“ Q2 ” means the second fiscal quarter.

“ Q3 ” means the third fiscal quarter.

“ Q4 ” means the fourth fiscal quarter.

“ Q1 2019 ” means the Company’s three-month fiscal period ending March 31, 2019.

“ Q1 2020 ” means the Company’s three-month fiscal period ending March 31, 2020.

“ Q1 2021 ” means the Company’s three-month fiscal period ending March 31, 2021.

“ RBC ” means RBC Dominion Securities Inc.

“ RDL Ventures ” means RDL Ventures Inc.

177

“ RDSP ” has the meaning set out under the heading “ Eligibility for Investment ”.

“ Regulations ” has the meaning set out under the heading “ Certain Canadian Federal Income Tax Considerations ”.

“ Resident Holder ” has the meaning set out under the heading “ Certain Canadian Federal Income Tax Considerations – Residents in Canada ”.

“ RESP ” has the meaning set out under the heading “ Eligibility for Investment ”.

“ Restated Term Loan ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Amended and Restated Credit Agreement ”.

“ Revolving Loans ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ ROAS ” has the meaning set out under the heading “ Prospectus Summary – Our Business – Industry Overview & Trends – Advertising Budgets are Following Consumers Online ”.

“ RRIF ” has the meaning set out under the heading “ Eligibility for Investment ”.

“ RRSP ” has the meaning set out under the heading “ Eligibility for Investment ”.

“ RSUs ” means restricted share units.

“ RTB ” has the meaning set out under the heading “ Prospectus Summary – Our Business – Our Business Model – Digital Advertising ”.

“ SBA ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Forgivable Loan ”.

“ Second Amendment ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ SEDAR ” means the system for electronic document analysis and retrieval.

“ SR&ED ” means the Canadian federal Scientific Research and Experimental Development Program.

“ Subordinate Voting Shares ” means the subordinate voting shares in the capital of VerticalScope, as such shares will exist immediately after completion of the Pre-Closing Reorganization.

“ Tax Act ” means the Income Tax Act (Canada), as amended.

“ taxable capital gain ” has the meaning set out under the heading “ Certain Canadian Federal Income Tax Considerations – Residents in Canada – Taxation of Capital Gains and Capital Losses ”.

“ TCA ” has the meaning set out under the heading “ Our Business – Regulatory Environment and Industry Standards – Privacy and Data Protection Laws and Regulations ”.

“ Term Loans ” has the meaning set out under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Credit Facilities – Existing Credit Agreement ”.

“ TFSA ” has the meaning set out under the heading “ Eligibility for Investment” .

“ TSX ” means the Toronto Stock Exchange.

“ U.K. ” means the United Kingdom.

“ U.S. ” means the United States.

178

“ U.S. Securities Act ” means the United States Securities Act of 1933 , as amended.

“ Underwriters’ Fee ” has the meaning set out on the cover page.

“ Underwriters ” has the meaning set out on the cover page.

“ Underwriting Agreement ” has the meaning set out under the heading “ Plan of Distribution – General ”.

“ VerticalScope HoldCo ” means VerticalScope Holdings Inc.

“ VerticalScope OpCo ” means VerticalScope Inc.

“ VWAP ” means the volume weighted average trading price of the listed securities on the TSX, or another stock exchange where the majority of the trading volume and value of the listed securities occurs, calculated by dividing the total value by the total volume of securities traded for the relevant period, with appropriate adjustments to exclude block trades, internal crosses and other special terms trades.

“ YoY ” means year-over-year.

179

MANDATE OF THE BOARD OF DIRECTORS

1 PURPOSE

The board of directors (the “ Board ”) of VerticalScope Holdings Inc. (the “ Company ”) directly, and through its committees, oversees the management of, and provides stewardship over, the Company’s affairs. The Board’s primary goal is to act in the best interests of the Company. Directors may consider the interests of stakeholders such as shareholders, employees, creditors, customers, suppliers, governments and the community in which the Company operates in determining the long- and shortterm interests of the Company.

The organization and authority of the Board are subject to any restrictions, limitations or requirements set out in the Company’s constating documents, including its articles and by-laws, as well as in any investor rights agreement or similar agreements which may exist, from time to time, between the Company and certain securityholders (“ Investor Agreements ”), as well as any restrictions and limitations or requirements set out under applicable laws and regulations, including the Business Corporations Act (Ontario), Canadian securities legislation and the standards, rules, policies and guidelines of the stock exchange(s) on which the Company’s securities are listed (collectively, the “ Applicable Laws ”).

2 COMPOSITION AND QUALIFICATION

2.1 Selection and Orientation of Members

The number of directors shall be fixed by the Board in accordance with the Company’s constating documents and Applicable Laws, upon the recommendation of the Nominating and Governance Committee. The size of the Board should be one that can function effectively as a board.

Directors must have an appropriate mix of skills, knowledge and experience in business and an understanding of the industry and the geographical areas in which the Company operates. Without limiting the foregoing, directors are expected to possess the following characteristics and traits: (i) demonstrate high ethical standards and integrity in their personal and professional dealings, (ii) provide independent judgment on a broad range of issues, and (iii) understand and challenge the key business plans and the strategic direction of the Company.

2.2 Board Term

Subject to the Company’s Investor Agreements and Applicable Laws, directors are appointed at an annual general meeting of shareholders (“ AGM ”) and the term of office for each of the directors expires at the end of the next AGM or until such director’s resignation, replacement or removal.

2.3 Independence

A majority of the directors on the Board must be independent in accordance with Applicable Laws.

3 DUTIES AND RESPONSIBILITIES

In furtherance of its purpose and in addition to such responsibilities as may be required by Applicable Laws, the Board assumes the following duties and responsibilities:

3.1 Strategic Planning and Budgets

(a) As part of the strategic planning process:

approves annually the Company’s overall strategic plan and direction which takes into account, among other things, the opportunities, risks and sustainability of the Company’s business and affairs identified by management;

monitors and assesses developments which may affect the Company’s strategic plan; and

180

monitors and oversees the execution of the strategic plan by management.

(b) Approves the Company’s annual operating and capital budgets and receives reports from management in respect of the Company’s actual results and a comparison of the actual results to the Company’s annual budgets.
(c) Reviews and, where appropriate, approves the Company’s financial objectives, plans and actions, including significant capital allocations and expenditures.
(d) Reviews and approves material transactions that are not in the ordinary course of business.

3.2 Risk Management, Ethics and Compliance

(a) Oversees the identification and monitoring of the principal risks of the Company’s business, including those related to compensation and incentive plans, and ensures the implementation of appropriate systems to mitigate and manage these risks.
(b) Oversees legal and regulatory compliance and the effectiveness of the Company’s compliance and enterprise risk management practices, including reviewing reports provided at least annually by management on the risks inherent in the Company’s business (including crisis preparedness, information system controls, business continuity, cybersecurity and disaster recovery).
(c) Oversees and monitors the implementation of procedures and initiatives relating to corporate, social and environmental responsibilities, and health and safety rules and regulations, including with respect to diversity, oversees their compliance with applicable legal and regulatory requirements and considers and monitors any issues relating to environmental and safety matters and management’s response thereto.
(d) Reviews and approves the Company’s governance policies and practices and any update, amendment or restatement thereof and ensures that such policies comply with applicable legislation and stay current with best practices in corporate governance.
(e) Reviews and approves the Company’s code of ethics and business conduct (the “ Code ”) with the purpose of promoting integrity, deterring wrongdoing and building a culture of honesty and accountability throughout the Company, and reviews the recommendations of the Nominating and Governance Committee and makes determinations regarding changes to the Code.
(f) Reviews the recommendations of the Nominating and Governance Committee and makes determinations regarding violations of the Code, waivers granted in respect thereof, and disclosure required in connection therewith under Applicable Laws (or as otherwise deemed appropriate by the Board).
(g) Reviews and approves the Company’s disclosure, trading and confidentiality policies with the purpose of establishing proper process and practices, reviews the recommendations of the Audit Committee and the Nominating and Governance Committee and makes determinations regarding changes to such policies, and ensures such policies are widely distributed to officers and employees.
(h) Performs any other activities consistent with this Mandate, the Company’s constating documents, Investor Agreements and Applicable Laws that the Board determines are necessary or appropriate.

3.3 Financial Reporting, Public Disclosure and Internal Controls

(a) Approves, after they have been recommended for approval by the Audit Committee and before their publication, the Company’s annual and interim financial statements, MD&A, prospectus-type documents, earnings press releases (including financial outlook, future-oriented financial information and other forward-looking information, and any pro forma or non-IFRS information included therein) and other disclosure material filed with any securities commission.

181

(b) Reviews and monitors, with the assistance of the Audit Committee, (i) the quality and integrity of the Company’s financial statements and related information, (ii) the qualifications, independence, appointment and performance of the external auditor, (iii) the accounting and financial reporting policies, practices and procedures of the Company, and (iv) the adequacy and effectiveness of the Company’s system of internal controls over financial reporting, including any significant deficiencies and significant changes in internal controls, and its disclosure controls and procedures, in the latter case with a view to ensuring all public disclosures are timely, factual, accurate and broadly disseminated in accordance with Applicable Laws.
(c) Approves, based on the recommendation of the Audit Committee, the external auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other services for the Company, and approves the compensation of the external auditor.

3.4 Stakeholder Engagement

Oversees communications with shareholders, other stakeholders, analysts and the public, including the adoption of measures for receiving feedback from stakeholders.

3.5 Board Composition and Administration

(a) Subject to the terms of the Investor Agreements, oversees the recruitment and selection, taking into account the evaluation criteria recommended by the Nominating and Governance Committee, of new directors and retention of existing directors.
(b) Subject to the terms of the Investor Agreements, approves, in conjunction with the Nominating and Governance Committee, those individuals proposed to be director nominees for each AGM, taking into consideration past performance and the competencies and skills it considers necessary for effective board operation, as well as diversity of candidates, particularly with respect to the representation of women on the Board.
(c) Considers the recommendations of the Nominating and Governance Committee as to the adequacy, amount and form of director compensation in light of retention objectives and each director’s time commitments, responsibilities and risks faced.
(d) Receives and reviews the Nominating and Governance Committee’s annual review and assessment of the performance, effectiveness and contributions of the Board, its committees and the directors themselves.
(e) In accordance with the Investor Agreements, identifies individuals qualified to become members of the Audit Committee in light of the independence, financial literacy, experience and other membership requirements set forth under Applicable Laws.
(f) Provides a comprehensive orientation program for new directors to the Board and continuing education opportunities for all directors to ensure that directors can maintain and enhance their abilities and ensure that their knowledge of the business of the Company remains current.
(g) Develops written position descriptions for the Chair of the Board and the Chair of each Committee of the Board.

3.6 Executive Officers

(a) Appoints the executive officers of the Company including, but not limited to, the Chief Executive Officer (or an officer carrying out the function of CEO) (“ CEO ”) and the Chief Financial Officer (or an officer carrying out the function of CFO) (“ CFO ”).
(b) Adopts and maintains a written position description for the role of CEO.

182

(c) Develops the corporate goals and objectives that each executive officer is responsible for meeting and reviews, in conjunction with the Compensation Committee, the performance of each executive officer against such corporate goals and objectives.
(d) Approves, upon recommendation of the Compensation Committee, the Company’s compensation and benefits policies or any changes thereto for executive officers to ensure such compensation and benefits policies create and reinforce good conduct, ethical behaviour and promote reasonable risk taking.
(e) Takes steps to satisfy itself as to the integrity of the executive officers and senior management, and that the executive officers and senior management foster a culture of integrity throughout the Company.
(f) With the assistance of the Nominating and Governance Committee, oversees that appropriate succession planning programs are in place, including programs to appoint, train, develop and monitor executive officers and senior management.

4 PROCEDURAL MATTERS

4.1 Meetings

(a) Meetings of the Board will be called, scheduled and held in accordance with the Company’s constating documents and Applicable Laws.
(b) Subject to the quorum requirements of the Company’s constating documents or Investor Agreements, the majority of the Board shall constitute a quorum for the transaction of business at a meeting.
(c) At a meeting, any question shall be decided by a majority of the votes cast.
(d) The Board and the Chair of the Board may invite any officer or employee of the Company or such other persons or external advisors as it deems appropriate, from time to time, to attend Board meetings (or any part thereof) and assist in the discussion and consideration of matters relating to the Board, and may exclude from all or any portion of its meetings any person it deems appropriate in order to carry out its responsibilities.
(e) The Chair of the Board is responsible for developing and setting the agenda for Board meetings and determining the time, place and frequency (which shall be at least quarterly) of Board meetings.
(f) All directors are expected to attend and be prepared to participate, including reviewing all meeting materials before every Board meeting.
(g) The independent members of the Board will also meet, as required, without the non-independent directors and members of management before or after each regularly scheduled meeting in camera .
(h) The proceedings and deliberations of the Board and its committees are confidential. Each director shall maintain the confidentiality of all information received in his or her capacity as a director of the Company, except as may be required by law or as may be determined, from time to time, by the Board, or if the information is publicly disclosed by the Company.

4.2 Board Committees

(a) Subject to the limitations set forth under Applicable Laws, the Board may discharge its responsibilities, including those listed herein, through one or more Board committees. The Board is responsible for the establishment of all committees to facilitate the carrying out of the Board’s Mandate and approval of their respective mandates and material changes thereto, the appointment of members on such committees, their qualification, compensation and their good standing. The Board has established three (3) standing committees, namely (i) the Audit Committee, (ii) the Compensation Committee, and (iii) the Nominating

183

and Governance Committee (collectively, the “ Committees ”), to facilitate the carrying out of its duties and responsibilities and meet applicable statutory and policy requirements. Other committees or subcommittees may be established on an ad hoc basis, from time to time, by Board resolution to deal with particular matters.

(b) The Board must adopt and maintain a mandate for each Committee, outlining such Committee’s responsibilities, including those responsibilities set out in National Policy 58-201 – Corporate Governance Guidelines . Every Committee mandate must be disclosed in accordance with National Instrument 58-101 – Corporate Governance Practices .
(c) The Board appoints the members of each Committee promptly after each AGM. Each Committee member shall be appointed and hold office in accordance with the mandate of the Committee to which such member is appointed.
(d) The Board evaluates the experience of the various directors with a view to selecting as members of the Committees directors that are independent and have the qualifications described in the respective mandates for such Committees.
(e) Each Committee generally reports to the Board after each Committee meeting.
(f) The Board reviews and discusses, from time to time, with each of the Committees the appropriateness of their respective mandates and any changes to such mandates which may be recommended by such Committee to the Board.

4.3 Chair of the Board

The Board shall appoint its chair (the “ Chair of the Board ”) from among the Company’s directors, which Chair of the Board shall have the following duties and responsibilities:

(a) Leadership

Effectively leads the Board in discharging all duties set out in its Mandate.

Sets the tone for the Board to foster effective, ethical and responsible decision making, appropriate oversight of management and strong governance practices.

(b) Board Management

Oversees all aspects of the Board’s direction and administration in fulfilling the terms of its Mandate.

Manages the affairs of the Board to ensure that the Board is organized properly and functions effectively.

Regularly reviews the structure, size, composition, membership (including independence, financial literacy and expertise) of the Board and its committees to favour effective decision making.

(c) Board Effectiveness

Ensures that the Board works as a cohesive group, including by maintaining effective communication and working relationships between directors, the Board, management and advisors.

Makes Board information available to any director upon request.

Ensures that a process is in place for the assessment on a regular basis of the effectiveness of the Board and its committees and the attendance record and contribution of each director, and that the results are reviewed with the chair of the Nominating and Governance Committee.

184

In consultation with the Nominating and Governance Committee, monitors and reviews, as appropriate, the Company’s orientation and continuing education programs for directors.

Monitors developments and best practices relating to the Board’s Mandate and provides information and guidance to the Board regarding such developments and practices and their potential adoption by the Company.

(d) Board Meetings

Ensures the Board meets as frequently as necessary to carry out its duties effectively (which shall be at least quarterly) and ensures that there is sufficient time during Board meetings to fully discuss all business properly put before the Board.

Chairs and the members of the Board, management and advisors, as appropriate, calls, sets the agenda and determines frequency, dates and locations of Board meetings, provided that if the Chair of the Board is absent from a meeting, the Board will, by majority vote, select another director to preside at that meeting.

Ensures the independent directors have the opportunity, if and when required, to meet separately without non-independent directors and management present.

Ensures that (i) meeting materials are delivered to Board members in sufficient time in advance of Board meetings for a thorough review, (ii) matters are properly presented for consideration at Board meetings, (iii) directors are free to express their viewpoints, and (iv) directors have an appropriate opportunity to question executive officers, management, employees and advisors regarding financial results, internal controls, the collection of financial information and all other matters of importance to the Board.

(e) Interactions with Board Committees

Recommends committee chairs to the Board, in consultation with the Nominating and Governance Committee.

Meets with the committee chairs on a regular basis and, when appropriate, acts as liaison between the committee chairs and the CEO and management.

Discusses any issue related to the committee functions or management with committee chairs.

Ensures that where functions are delegated to appropriate committees, the functions are carried out and results are reported to the Board.

(f) Stakeholder Engagement

Except as otherwise provided in the by-laws of the Company, chairs the meetings of shareholders and is available to answer questions and participate in any matter concerning shareholders.

Ensures that all business set out in the agenda of each shareholder meeting is discussed and brought to resolution, as required.

In conjunction with management, responds to shareholders’ concerns and reports concerns to the Board, when appropriate.

Supports an open and transparent process for stakeholders to contact and engage with the Board.

At the request of the Board or the CEO, represents the Company to external groups and other stakeholders, including local community groups, associations and governments.

(g) Advisors and Resources

Ensures that resources and expertise are available to the Board (in particular, timely and relevant information) so that it may conduct its work effectively and efficiently.

185

Coordinates with the Board to retain, oversee and compensate independent advisors to assist the Board in its activities.

(h) Other Responsibilities

Performs such other duties and responsibilities as may be required by Applicable Laws.

Unless otherwise provided by an investor rights agreement or similar agreement that may exist, from time to time, between the Company and certain securityholders, the Chair of the Board may be removed from the position at any time at the discretion of the Board. The incumbent Chair of the Board will continue in office until a successor is appointed or he or she is removed by the Board or ceases to be a director of the Company.

4.4 Lead Director

If at any point the Chair of the Board is not independent, the Board shall also appoint one (1) independent director as a lead director (the “ Lead Director ”), which Lead Director shall have the following duties and responsibilities:

(a) Ensures that the Board acts and functions independently from management in fulfilling its fiduciary obligations, including that the Board evaluates performance of management objectively and understands the boundaries between the Board and management responsibilities.
(b) Performs the duties of the Chair of the Board when there is a conflict of interest between the Chair of the Board and executive officer roles.
(c) Evaluates any conflicts of interest between the Company, the minority shareholders and any major shareholders, and determines the process for dealing with the same.
(d) Works with the Chair of the Board, CEO and other executive officers, where appropriate, to monitor progress on the strategic plan, policy implementation and succession planning.
(e) Advises the Chair of the Board and CEO, as required, on the appropriate flow of information to the Board.
(f) Collaborates with the Chair of the Board, the members of the Board, management and advisors, as appropriate, on the frequency, dates and locations of the meetings of the Board and on the preparation of the meeting agendas to ensure the Board efficiently carries out its duties and responsibilities.
(g) Ensures that directors have the opportunity, at each regularly scheduled meeting, to meet separately without management personnel (including the Chair of the Board and CEO) being present.
(h) Has the authority to hold meetings of the independent directors when deemed necessary or when requested by other independent directors and, when held, chairs any such meetings.
(i) Generally serves as the principal liaison and ensures an effective relationship between, the independent directors and the Chair of the Board and between the independent directors and management.
(j) In the absence of the Chair of the Board, serves as acting chair presiding over meetings of the Board and shareholders.
(k) Performs such other duties and responsibilities as may be required by Board, depending on needs and circumstances.

5 LIMITATION ON DUTIES

Notwithstanding the foregoing and subject to applicable law, nothing contained in this Mandate is intended to require the Board to ensure the Company’s compliance with Applicable Laws.

186

The Board shall discharge its responsibilities and shall assess the information provided by the Company’s management and any external advisors, including the external auditor, in accordance with its business judgment. Directors are entitled to rely, absent knowledge to the contrary, on the integrity of the persons from whom they receive information and the accuracy and completeness of the information provided.

Nothing in this Mandate is intended or may be construed as to impose on any director a standard of care or diligence that is in any way more onerous or extensive than the standard to which the directors are subject to under Applicable Laws. This Mandate is not intended to change or interpret the Company’s constating documents, Investor Agreements or Applicable Laws to which the Company is subject, and this Mandate should be interpreted in a manner consistent with all such Applicable Laws. The Board may, from time to time, permit departures from the terms hereof, either prospectively or retrospectively, and no provision contained herein is intended to give rise to civil liability on the part of the Company or its directors or officers to shareholders, security holders, customers, suppliers, competitors, employees or other persons, or to any other liability whatsoever on their part.

6 RESOURCES

The Board will be granted unrestricted access to all information regarding the Company that is necessary or desirable to fulfill its duties.

To fulfill its roles, duties and responsibilities effectively, the Board may communicate directly with the Company’s external auditors and the Company’s officers and employees and request Company information and documentation from these persons. In addition, the Board may, in its sole discretion, retain and obtain the advice and assistance of independent outside counsel and such other advisors as it deems necessary to fulfil its duties and responsibilities under this Mandate. The Board may set the compensation and oversee the work of any outside counsel and other advisors to be paid by the Company.

7 MANDATE REVIEW

The Board reviews and assesses the adequacy of this Mandate, from time to time, and shall make such changes to this Mandate as it considers necessary or appropriate.

187

AUDIT COMMITTEE CHARTER

1 PURPOSE

The Audit Committee (the “ Committee ”) assists the board of directors (the “ Board ”) of VerticalScope Holdings Inc. (the “ Company ”) in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, internal control and legal compliance functions, including the Board’s oversight of (i) the quality, integrity, fairness and completeness of the Company’s financial statements and financial information, (ii) the accounting and financial reporting policies, practices and procedures, (iii) the qualifications, appointment, performance and independence of the external auditor, (iv) the performance of the internal audit function, (v) the Company’s disclosure controls and procedures, internal controls over financial reporting and management’s responsibility for assessing and reporting on the effectiveness of such controls, (vi) the Company’s risk management practices and financial reporting compliance, (vii) the preparation of disclosures and reports required to be prepared by the Committee by any applicable laws, regulations, rules and listing standards (the “ Applicable Laws ”), and (viii) the Company’s compliance with Applicable Laws.

In addition, the Committee provides an avenue for communication between the external auditor, management and other employees of the Company, as well as the Board, concerning accounting, financial reporting and auditing matters.

The composition and meetings of the Committee are subject to the requirements set forth in the articles and by-laws of the Company, as well as in any investor rights agreement or similar agreements which may exist, from time to time, between the Company and certain shareholders (the “ Investor Agreements ”), as well as in Applicable Laws.

2 COMPOSITION, QUALIFICATION AND APPOINTMENT

2.1 The Committee consists of such number of directors as the Board may, from time to time, by resolution determine, in no event to be less than three (3). Every Committee member must be a director of the Company.
2.2 Every Committee member must meet the independence test and other membership requirements (including, subject to the exemptions provided therein, the financial literacy requirements pursuant to National Instrument 52-110 – Audit Committees ) under Applicable Laws, as determined by the Board.
2.3 Committee members are appointed by the Board. The members of the Committee are appointed promptly after each annual shareholders’ meeting.
2.4 Any member of the Committee may be removed and replaced at any time by the Board and also automatically cease to be a member of the Committee as soon as such member ceases to be a director. If and whenever a vacancy exists, the remaining members may exercise all the powers of the Committee as long as a quorum remains in office.
2.5 Where a vacancy occurs at any time in the membership of the Committee, it may be filled by the Board on the recommendation of the Committee and will be filled by the Board if the membership of the Committee falls below three (3) directors.

3 DUTIES AND RESPONSIBILITIES

The Committee shall perform the functions customarily performed by audit committees and any other functions assigned by the Board. In furtherance of its purpose and in addition to such responsibilities as may be required by Applicable Laws, the Committee assumes the following duties and responsibilities:

3.1 Accounting Policies, Financial Reporting and Control

(a) Reviews the Company’s accounting policies to ensure completeness and acceptability with the accounting standards adopted by the Company as part of the approval of the financial statements.
(b) Reviews with management and the external auditor any proposed changes in major accounting policies and key estimates and judgments that may be material to financial reporting.

188

(c) Discusses with management, the internal audit function and the external auditor the acceptability, appropriateness (within the range of acceptable options and alternatives), degree of aggressiveness/conservatism and quality of underlying accounting policies, disclosures and key estimates and judgments.
(d) Discusses with management, the internal audit function and the external auditor the Company’s internal controls and the integrity of the financial reporting and related attestations by the external auditors of the Company’s internal controls over financial reporting.
(e) Discusses with management and the external auditor the clarity and completeness of the Company’s financial and non-financial disclosures.
(f) Without limiting the foregoing, discusses with management, the internal audit function and the external auditor (i) major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company’s selection or application of accounting principles, and issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies, (ii) any analysis prepared by management and/or the external auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including the adoption of all major accounting policies and practices, any proposed changes in major accounting policies, complex or unusual transactions and highly judgmental areas, such as the presentation and impact of significant risks and uncertainties, unusual or sensitive matters such as disclosure of related party transactions, significant non-recurring events, significant risks and changes in provisions, estimates or provisions included in any financial statements, and key estimates and judgments of management that may be material to financial reporting, (iii) the effect of regulatory and accounting developments, as well as any off-balance sheet arrangements, on the financial statements of the Company, (iv) any corporate governance issues which could significantly affect the financial statements, and (v) all matters required to be communicated to the Committee under accounting policies, auditing standards or other applicable requirements.

3.2 External Auditor

(a) Recommends to the Board the external auditor to be nominated for the purpose of preparing the external auditor’s report, as well as the external auditor’s compensation for doing so.
(b) Oversees the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Company, including the resolution of disagreements between management and the external auditor regarding financial reporting.
(c) Reviews and approves in advance the proposed audit scope, focus areas, timing and key decisions (including materiality and reliance on internal audit) underlying the audit plan and the appropriateness and reasonableness of the proposed audit fees.
(d) Establishes effective communication processes with management, the Board and the external auditor so that it can objectively monitor the quality and effectiveness of the external auditor’s relationship with management and the Committee.
(e) At least annually, considers, assesses, and reports to the Board on (i) the independence of the external auditor, (ii) the external auditor’s written statement delineating all relationships between the external auditor and the Company, assuring that lead audit partner rotation is carried out, as required by law, and delineating any other relationships that may adversely affect the independence of the external auditor, and (iii) the evaluation of the lead audit partner, taking into account the opinions of management.
(f) At least annually, receives and reviews reports from the external auditor on (i) all critical accounting policies and practices used by the Company, (ii) all material selections of accounting policies when there is a choice of policies available under International Financial Reporting Standards (“ IFRS ”), as issued by

189

the International Accounting Standards Board of London, England and adopted by the Canadian Accounting Standards Board, Generally Accepted Auditing Standards of Canada, that have been discussed with management, including the ramifications of the use of such alternative treatment and the alternative preferred by the external auditor, (iii) other material written communications between the external auditor and management, and (iv) the adequacy of procedures in place for the review of public disclosure of financial information extracted or derived from the financial statements.

(g) Receives and reviews regular reports from the external auditor on the progress against the approved audit plan, important findings, recommendations for improvements and the auditors’ final report.
(h) Regularly meets with the external auditor without management present.
(i) Reviews with the external auditor any audit issues raised by the external auditor and management’s response thereto, including any restrictions on the scope of the activities of the external auditor or access to requested information and any significant disagreements with management.
(j) Considers and reviews with management the internal control memorandum or management letter containing the external auditor’s recommendations and management’s response, if any, including an evaluation of the adequacy and effectiveness of the Company’s internal financial controls and procedures for financial reporting and following up with respect to any identified weaknesses.
(k) Receives and reviews, at least as frequently as required by Applicable Laws, a report by the external auditor describing its internal quality control procedures and all relationships between the external auditor or any affiliates thereof and the Company or persons in financial reporting oversight roles at the Company that, as of the report’s date, may reasonably be thought to bear on independence, and discussing with the external auditor the potential effects of such relationships.
(l) Reviews and approves the Company’s hiring policies regarding partners, employees and former partners and employees of the Company’s present and former external auditors.
(m) Pre-approves all audit and non-audit services (or delegate such pre-approval if and to the extent permitted by Applicable Laws) to be provided to the Company or its subsidiaries by the Company’s external auditor where such pre-approval is required by Applicable Laws. Considers whether the auditor’s provision of permissible non-audit services is compatible with the auditor’s independence.
(n) Engages the external auditor to perform a review of the interim financial statements required to be prepared by any Applicable Laws and reviewing their findings; however, no formal report from the external auditor will be required.

3.3 Internal Audit

(a) Reviews and approves the mandate, nature, scope of work and organizational structure of the internal audit function as well as the annual audit plan and any major changes thereon.
(b) Ensures that the internal audit function has the necessary resources to fulfill its mandate and responsibilities.
(c) Periodically reviews the audit plan status, including a progress report on the internal audit mandates and a follow-up on past due recommendations.
(d) Reviews internal audit reports, including management responses, and ensures that the necessary steps are taken to follow up on important report recommendations.
(e) Reviews, with the assistance of the executive officers, the internal audit budget, resource plan, activities and organizational structure of the internal audit function.

190

(f) Ensures the independence and effectiveness of the internal audit function, including by requiring that the function be free of any influence that could adversely affect its ability to objectively assume its responsibilities, by ensuring that it reports to the Committee and by meeting regularly with the lead of the internal audit function, without management being present in order to discuss, among others, the questions they raise regarding the relationship between the internal audit function and management and access to the information required.
(g) Regularly meets with the internal audit function without management and the external auditor present.

3.4 Oversight of the Company’s Risk Management

(a) Reviews, monitors, reports and, where appropriate, provides recommendations to the Board on the Company’s major business, operational, and financial risk exposures and the guidelines, policies and practices regarding risk assessment and risk management including the following:
(i) the Company’s processes for identifying, assessing and managing risks;
(ii) the Company’s insurance coverage, as well as the Company’s major financial risks, including derivative and tax risks, and operational risk exposures and the steps the Company has taken to monitor and control such exposures;
(iii) the Company’s major security risks and security trends, including cybersecurity risks, that may impact the Company’s operations and business; and
(iv) the Company’s business continuity plans, including work stoppage and disaster recovery plans.
(b) Reviews, monitors, reports and, where appropriate, provides recommendations to the Board on the Company’s compliance with internal policies and practices regarding risk assessment and risk management and the Company’s progress in remedying any material deficiencies thereto.
(c) Identifies the principal financial risks and assesses on the Company’s “appetite” or tolerance for such financial risks, in consultation with management and the internal audit function.
(d) Reviews, on a periodic basis, the Company’s insurance program coverage and related insured risks, including coverage for product liability, property damage, business interruption, liabilities, and directors and officers’ liability.
(e) Reviews with management the credit worthiness, liquidity and important treasury matters including financial plans and strategies of the Company.
(f) Reviews the Company’s tax strategy, including its tax planning and compliance with applicable tax laws.
(g) Reviews with management any hedging strategy that may be in place, from time to time, including with respect to foreign exchange and interest rate hedging, financial or physical, intended to manage, mitigate or eliminate risks relation to foreign exchange and interest rate fluctuations.
(h) Reviews the findings of any examinations by regulatory agencies, and any external auditors observations made regarding those findings.

3.5 Ethical and Legal Compliance

(a) Reviews and discusses with management, legal counsel and the external auditor, monitors, reports and, when appropriate, provides recommendations to the Board on the adequacy of the Company’s processes for complying with laws, regulations and applicable accounting standards and the results of management’s investigation and follow-up of any instances of non-compliance.

191

(b) Reviews, on a periodic basis with legal counsel, the Company’s compliance with respect to (i) the legal and regulatory matters which may have a material effect on the Company and/or its financial statements, including with respect to pending or threatened material litigations, and (ii) corporate compliance policies and codes of conduct, as well as the Company’s progress in remedying any material deficiencies that could have a significant impact on the Company.

3.6 Internal Controls and Deviations

(a) Reviews and discusses with management, the internal audit function and the external auditor (i) the adequacy and effectiveness of the Company’s internal controls over financial reporting, including information technology security and control (including any weakness, deficiency, significant finding or recommendation in relation therewith and any significant changes in internal controls), (ii) management’s annual plan for monitoring of internal controls over financial reporting, (iii) the plan and scope of the annual audit with respect to planned reliance and testing of controls, (iv) major points contained in the auditor’s management letter resulting from control evaluation and testing, (v) the Company’s disclosure controls and procedures, including any significant deficiencies in or material non-compliance with, such controls and procedures, (vi) compliance with the policies and practices of the Company relating to business conduct and ethics, and (vii) the relationship of the Committee with other committees of the Board and management, as appropriate.
(b) Reviews plans of the external auditors to ensure the combined evaluation and testing of control is comprehensive, well coordinated, cost effective and appropriate to risks, business activities and changing circumstances.
(c) Receives from management and the external auditors regular reports on all major control deviations, or indications/detection of fraud, and how such control breakdowns have been corrected.
(d) Regularly meets with management without the external auditor present.
(e) Reviews the risk of management’s ability to override the Company’s internal controls.
(f) Reviews and discusses with the Company’s Chief Executive Officer (or an officer carrying out the function of CEO) (the “ CEO ”) and Chief Financial Officer (or an officer carrying out the function of CFO) (the “ CFO ”) the process for the certifications to be provided and receives and reviews any disclosure from the Company’s CEO and CFO made in connection with the required certifications of the Company’s quarterly and annual reports filed, including (i) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial data, and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls.

3.7 Complaints and Concerns

Establishes procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters, including allegations with respect to fraud, accounting misconduct, harassment, violence and retaliation.

3.8 Public Disclosure

(a) Reviews and discusses with management and the external auditor, reports and, where appropriate, provides recommendations to the Board on the following, prior to their public disclosure:
(i) the Company’s annual and interim financial statements and associated MD&A (including the discussion of critical accounting estimates included therein), annual information form, prospectus-

192

type documents, earnings press releases (including financial outlook, future-oriented financial information and other forward-looking information, and any pro-forma or non-IFRS information included therein); and

(ii) to the extent not previously reviewed by the Committee, all financial statements included in any prospectus, business acquisition report or offering memoranda and all other financial reports required by regulatory authorities and/or requiring approval by the Board.
(b) To the extent deemed appropriate, reviews and supervises the preparation by management of (i) any information of the Company required to be filed by the Company with applicable securities regulators or stock exchanges, (ii) press releases of the Company containing material financial information, earnings guidance, forward-looking statements, information about operations or any other material information, (iii) correspondence broadly disseminated to the shareholders of the Company, and (iv) other relevant material written and oral communications or presentations.
(c) Reviews with management its evaluation of the Company’s procedures and controls designed to assure that information required to be disclosed in the Company’s periodic public reports is recorded, processed, summarized and reported in such reports within the time periods specified by Applicable Laws for the filing of such reports, and considers whether any changes are appropriate in light of management’s evaluation of the effectiveness of such disclosure controls.
(d) Oversees by direct involvement or by delegation to a committee of management the administration of the Company’s disclosure policies, including with respect to release of earnings press releases as well as for the release of financial information and earnings guidance provided to analysts and rating agencies, and make recommendations to the Board regarding changes to such policies.
(e) Takes steps to satisfy itself that adequate procedures are in place for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s financial statements and periodically assesses the adequacy of those procedures.

3.9 Other Responsibilities

(a) Reviews the Company’s policies and procedures for reviewing and approving or ratifying related party transactions. Reviews and approves or ratifies all related party transactions and real, potential or apparent conflicts of interest.
(b) After consultation with the CFO and the external auditor, gains reasonable assurance, at least annually, of the quality and sufficiency of the Company’s accounting and financial personnel and other resources.
(c) Is informed of the appointment of the Company’s senior financial executives.
(d) Performs such other functions as may, from time to time, be assigned to the Committee by the Board.

4 PROCEDURAL MATTERS

4.1 Committee Chair

The Board appoints one (1) Committee member to act as its chair (the “ Committee Chair ”), provided that if the Board does not so designate a Committee Chair, the Committee, by a majority vote, may designate a Committee Chair. The Committee Chair may be removed at any time at the discretion of the Board. The incumbent Committee Chair continues in office until (i) a successor is appointed, (ii) he or she is removed by the Board, or (iii) he or she ceases to be a director of the Company. If the Committee Chair is absent from a meeting, the Committee will, by majority vote, select another Committee member to preside at that meeting.

The Committee Chair has the following responsibilities and duties:

193

(a) Effectively leads the Committee in discharging all duties set out in this Charter.
(b) Chairs meetings of the Committee.
(c) In consultation with the chair of the Board (the “ Board Chair ”) and the secretary of the Company (the “ Company Secretary ”), develops and sets the agenda for Committee meetings and determines the time, place and frequency of Committee meetings.
(d) Ensures, in consultation with the Board Chair, that (i) meeting materials are delivered to Committee members in sufficient time in advance of Committee meetings for a thorough review, (ii) all matters requiring the Committee’s approval are properly tabled and presented for consideration at Committee meetings, and (iii) Committee members are free to express their viewpoints.
(e) Ensures the Committee meets as frequently as necessary to carry out its duties effectively and ensures that there is sufficient time during Committee meetings to fully discuss all business properly put before the Committee.
(f) In consultation with the CEO, the CFO, the Company Secretary (or persons carrying out the functions of such roles) and others, as required, reviews the Committee’s annual work plan.
(g) Reports to the Board on the matters reviewed by, and on any decisions or recommendations of, the Committee at the next meeting of the Board following any meeting of the Committee.
(h) Ensures that the Committee works as a cohesive group, including by maintaining effective communication and working relationships between members of the Committee, the Board, management and advisors.
(i) Ensures that the resources available to the Committee (in particular, timely and relevant information) are adequate to support its work.
(j) Ensures that a process is in place for the evaluation on an annual basis of the effectiveness and performance of the Committee and the contribution of each Committee member, and that the results are reviewed with the Board Chair. Leads the Committee in each such assessment.
(k) Meets with all Committee members and seeks their feedback on Board and committee performance and other matters.
(l) Exercises all powers of the Committee between meetings, while attempting to involve all other members as appropriate prior to the exercise of any powers and, in any event, advises all other members of any decisions made or powers exercised.
(m) Carries out any other or special assignments or any functions as may be requested by the Board.

4.2 Meetings

(a) Meetings of the Committee may be called at the request of any member of the Committee, the CFO or the external auditor or otherwise as required by law. Any such request will set out in reasonable detail the business proposed to be conducted at the meeting so requested. The Committee shall fix its own procedure at meetings and for the calling of meetings. The Committee meets at least each quarter and otherwise as necessary.
(b) The CFO shall have direct access to the Committee and shall attend all meetings of the Committee, and the CEO and the Board Chair shall receive notice of and have the right to attend all meetings of the Committee, except in each case such part of the meeting, if any, which is a private session not involving all or some of these officers as determined by the Committee. The external auditor of the Company is given notice of every Committee meeting and, at the expense of the Company, is entitled to attend and be heard thereat,

194

except such part of the meeting, if any, which is a private session not involving the external auditor. If requested by a Committee member, the external auditor attends every Committee meeting held during such external auditor’s term of office.

(c) Unless otherwise determined, from time to time, by resolution of the Board, a majority of the Committee constitutes a quorum. No business may be transacted by the Committee except by resolution in writing signed by all the Committee members (whether in writing or electronically) or at a Committee meeting at which a quorum of the Committee is present in person or by means of such telephonic, electronic or other communication facilities that permits all participants to communicate adequately with each other during the meeting. At Committee meetings, Committee actions shall require approval of a majority of the votes cast by Committee members, except where only two (2) members are present, in which case any question shall be decided unanimously.
(d) The Committee and the Committee Chair may invite any directors, officers or employees of the Company and any advisors or such other persons as it sees fit, from time to time, to attend Committee meetings (or any part thereof) and assist in the discussion and consideration of matters relating to the Committee, and may exclude from all or any portion of its meetings any person it deems appropriate in order to carry out its responsibilities.
(e) The Committee meets in camera , in the absence of management and the external auditor, at each regularly scheduled meeting.
(f) The Company Secretary will be the secretary of all meetings. If the Company Secretary is not in attendance at any meeting, the Committee appoints a secretary to the Committee who need not be a director or officer of the Company. Minutes of Committee meetings will be recorded and maintained by the Committee’s secretary and will be presented to the Committee Chair for review and approval.

4.3 Reporting to the Board

The Committee will report to the Board in a timely manner with respect to each of its meetings held. This report may take the form of circulating copies of the minutes of each meeting held.

5 DELEGATION

The Committee has the authority to delegate to subcommittees, provided however that the Committee shall not delegate any power or authority required by Applicable Laws to be exercised by the Committee as a whole.

6 LIMITATIONS ON DUTIES

Notwithstanding the foregoing and subject to applicable law, nothing contained in the present Charter is intended to require the Committee to ensure the Company’s compliance with Applicable Laws.

The Committee shall discharge its responsibilities and shall assess the information provided by the Company’s management and any external advisors, including the external auditor, in accordance with its business judgment. Committee members are not full-time Company employees and are not, and do not represent themselves to be, professional accountants or auditors. The authority and responsibilities set forth in this Charter do not create any duty or obligation of the Committee to (i) plan or conduct any audits, (ii) determine or certify that the Company’s financial statements are complete, accurate, fairly presented or in accordance with IFRS, as applicable, and Applicable Laws, (iii) guarantee the external auditor’s reports, or (iv) provide any expert or special assurance as to internal controls or management of risk. Committee members are entitled to rely, absent knowledge to the contrary, on the integrity of the persons from whom they receive information, the accuracy and completeness of the information provided and management’s representations as to any audit or non-audit services provided by the external auditor.

Nothing in this Charter is intended or may be construed as to impose on any Committee member or the Board a standard of care or diligence that is in any way more onerous or extensive than the standard to which the directors are subject under

195

Applicable Laws. This Charter is not intended to change or interpret the Company’s constating documents, Investor Agreements or Applicable Laws to which the Company is subject, and this Charter should be interpreted in a manner consistent with all such Applicable Laws. The Committee is a committee of the Board and is not and shall not be deemed to be an agent of the Company’s shareholders for any purpose whatsoever. The Board may, from time to time, permit departures from the terms hereof, either prospectively or retrospectively, and no provision contained herein is intended to give rise to civil liability on the part of the Company or its directors or officers to shareholders, security holders, customers, suppliers, competitors, employees or other persons, or to any other liability whatsoever on their part.

Any action that may or is to be taken by the Committee may, to the extent permitted by law or regulation, be taken directly by the Board.

7 RESOURCES

To fulfill its roles, duties and responsibilities effectively, the Committee may communicate directly with the Company’s external auditors and the Company’s officers and employees and request Company information and documentation from these persons. The Committee may investigate any matter relating to the Company’s audit and accounting practices, or anything else within its scope of responsibility, and obtain full access to all Company books, records, facilities and personnel. In addition, the Committee may, in its sole discretion, retain and obtain the advice and assistance of independent outside counsel and such other advisors as it deems necessary to fulfil its duties and responsibilities under this Charter. The Committee may set the compensation and oversee the work of any outside counsel and other advisors to be paid by the Company.

8 EVALUATION OF COMMITTEE AND CHARTER REVIEW

On an annual basis, the Committee shall review and evaluate its performance. In conducting this review, the Committee shall address such matters that the Committee considers relevant to its performance and evaluate whether this Charter appropriately addresses the matters that are or should be within its scope. The review and evaluation shall be conducted in such a manner as the Committee deems appropriate. Among other things, the Committee shall evaluate and assess the financial literacy of its members. The Committee shall deliver to the Board a report, which may be oral, setting forth the results of its review and evaluation, including any recommended changes to this Charter and any recommended changes to the Company’s or the Board’s policies or procedures, as it deems necessary or appropriate.

This Charter is not intended to give rise to civil liability on the part of the Company or its directors or officers to shareholders, other security holders, customers, suppliers, competitors, employees or other persons or to any other liability whatsoever on their part.

196

INDEX TO FINANCIAL STATEMENTS

==> picture [465 x 143] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Audited Consolidated Financial Statements of VerticalScope Holdings Inc. for the years ended|
|December 31, 2020, 2019 and 2018|. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-2|
|Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-3|
|Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-7|
|Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . .|F-8|
|Consolidated Statements of Shareholders’ Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-9|
|Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-10|
|Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-11|

----- End of picture text -----

==> picture [465 x 122] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Interim Condensed Consolidated Financial Statements of VerticalScope Holdings Inc. for the three|
|months ended March 31, 2021 and 2020|. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-62|
|Interim Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-63|
|Interim Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) . . . . . . .|F-64|
|Interim Condensed Consolidated Statements of Shareholders’ Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-65|
|Interim Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-66|
|Notes to Interim Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|F-67|

----- End of picture text -----

F-1

Consolidated Financial Statements (In US dollars)

VERTICALSCOPE HOLDINGS INC.

And Independent Auditors' Report thereon

For the years ended December 31, 2020, December 31, 2019 and December 31, 2018

F-2

==> picture [81 x 35] intentionally omitted <==

KPMG LLP Vaughan Metropolitan Centre 100 New Park Place, Suite 1400 Vaughan ON L4K 0J3 Canada Tel 905-265-5900 Fax 905-265-6390

INDEPENDENT AUDITORS' REPORT

To the Shareholders of VerticalScope Holdings Inc.

Opinion

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

the consolidated balance sheets as at December 31, 2020 and December 31, 2019
the consolidated statements of income (loss) and comprehensive (loss) for each of the years in the three-year period ended December 31, 2020
the consolidated statements of shareholders' deficiency for each of the years in the three-year period ended December 31, 2020
the consolidated statements of cash flows for each of the years in the three-year period ended December 31, 2020
and notes to the consolidated financial statements, including a summary of significant accounting policies

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

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2020 and 2019, its consolidated financial performance and its consolidated cash flows for each of the years in the three-year period ended December 31, 2020 in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for Opinion

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

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

F-3

Page 2

==> picture [81 x 35] intentionally omitted <==

Other Information

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

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditors' report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors' report.

We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS as issued by the IASB, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

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

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

F-4

==> picture [81 x 35] intentionally omitted <==

Page 3

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

F-5

==> picture [81 x 35] intentionally omitted <==

Page 4

Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

==> picture [145 x 66] intentionally omitted <==

Chartered Professional Accountants, Licensed Public Accountants

Vaughan, Canada June 14, 2021

F-6

VERTICALSCOPE HOLDINGS INC.

Consolidated Balance Sheets

(In US dollars)

	December 31,	December 31,	December 31,	December 31,
		2020		2019
Assets
Current assets:
Cash	$	4,603,609	$	5,112,990
Trade and other receivables (note 5)		14,664,272		12,227,281
Income taxes receivable		536,423		485,138
Prepaid expenses		270,763		490,479
Derivativeinstruments (note18)		80,506		–
		20,155,573		18,315,888
Property and equipment (note 7)		1,751,800		2,043,962
Right-of-use asset (note 8)		2,712,995		3,330,291
Intangible assets (note 9)		32,707,475		47,248,941
Investments (note 10)		2,449,999		2,929,999
Goodwill (note 9)		11,840,039		11,840,039
Deferred tax asset (note 14)		16,065,696		16,287,068
Total assets	$	87,683,577	$	101,996,188
Liabilities and Shareholders' Deficiency
Current liabilities:
Accounts payable and accrued liabilities	$	4,449,234	$	8,363,139
Derivative instruments (note 18)		–		451
Deferred revenue		810,457		698,109
Current portion of long-term debt (note 11)		8,323,090		8,458,859
Leaseliability (note 8)		708,248		701,673
		14,291,029		18,222,231
Deferred revenue		58,477		114,462
Long-term debt (note 11)		93,142,219		103,023,519
Lease liability (note 8)		2,525,799		2,980,125
Deferred tax liability (note14)		210,700		656,044
Total liabilities		110,228,224		124,996,381
Shareholder's deficiency:
Share capital (note 12)		34,183,524		34,183,524
Contributed surplus (note 13)		10,371,945		8,410,416
Deficit		(67,100,116)		(65,594,133)
		(22,544,647)		(23,000,193)
Commitments and contingencies (note 16)
Subsequent event (note 11)
Total liabilities and shareholders' deficiency	$	87,683,577	$	101,996,188

See accompanying notes to consolidated financial statements.

F-7

VERTICALSCOPE HOLDINGS INC.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (In US dollars, except per share amounts)

Forthe years endedDecember31:		2020		2019		2018
Revenue	$	56,923,265	$	58,454,607	$	68,347,518
Operating expenses (income):
Wages and consulting		21,465,409		22,922,646		25,356,415
Share-based compensation		1,961,529		1,165,318		2,011,232
Platform and technology		6,366,223		5,613,261		5,267,718
General and administrative		3,356,465		4,791,911		6,743,580
Depreciation and amortization
(notes 7, 8 and 9)		20,190,271		21,810,233		37,610,572
Adjustment to contingent consideration
(note 4)		–		(1,563,919)		1,146,375
		53,339,897		54,739,450		78,135,892
Operating income (loss)		3,583,368		3,715,157		(9,788,374)
Other expenses (income):
Gain on sale of assets		(358,807)		(12,659)		–
Interest expense (note 11)		5,634,257		8,194,297		8,638,170
Gain on sale of investments		(530,046)		–		–
Foreignexchangeloss (gain)		227,364		171,979		(162,612)
		4,972,768		8,353,617		8,475,558
Loss before income taxes		(1,389,400)		(4,638,460)		(18,263,932)
Current income tax expense (note 14)		340,555		490,187		828,230
Deferred income tax expense (recovery)
(note14)		(223,972)		(3,395,424)		(4,993,046)
Income tax expense (recovery)		116,583		(2,905,237)		(4,164,816)
Net loss and comprehensive loss	$	(1,505,983)	$	(1,733,223)	$	(14,099,116)
Net income (loss) per share (note 22):
Basic and diluted	$	(0.11)	$	(0.12)	$	(1.01)

See accompanying notes to consolidated financial statements.

F-8

VERTICALSCOPE HOLDINGS INC.

Consolidated Statements of Shareholders' Deficiency (In US dollars)

	Class A Number of shares Amount	Class B Number of Contributed Accumulated shares Amount surplus deficit Total 28,125 $ 309,375 $ 5,233,866 $ (49,761,794) $ (10,344,404) – – – (14,099,116) (14,099,116) – – 2,011,232 – 2,011,232 28,125 309,375 7,245,098 (63,860,910) (22,432,288) – – – (1,733,223) (1,733,223) – – 1,165,318 – 1,165,318 28,125 309,375 8,410,416 (65,594,133) (23,000,193) – – – (1,505,983) (1,505,983) – – 1,961,529 – 1,961,529 28,125 $ 309,375 $10,371,945 $ (67,100,116) $ (22,544,647)
Balance as at December 31, 2017 Net loss Share-based compensation	13,929,327 $ 33,874,149 – – – –
Balance as at December 31, 2018 Net loss Share-based compensation	13,929,327 33,874,149 – – – –
Balance as at December 31, 2019 Net loss Share-based compensation	13,929,327 33,874,149 – – – –
Balance as at December 31,2020	13,929,327 $ 33,874,149

See accompanying notes to consolidated financial statements.

3 F-9

VERTICALSCOPE HOLDINGS INC.

Consolidated Statements of Cash Flows

(In US dollars)

For the years endedDecember31:		2020		2019		2018
Cash provided by (used in):
Operating activities:
Net loss	$	(1,505,983)	$	(1,733,223)	$	(14,099,116)
Items not involving cash:
Depreciation and amortization
(notes 7, 8 and 9)		20,190,271		21,810,233		37,610,572
Interest expense (note 11)		5,671,125		8,282,262		7,648,699
Gain on sale of assets		(358,807)		(12,659)		–
Gain on sale of investments		(530,046)		–		–
Unrealized loss (gain) in derivative
instruments		(80,957)		(252,292)		534,181
Income tax expense (recovery)		116,583		(2,905,237)		(4,164,816)
Share-based compensation		1,961,529		1,165,318		2,011,232
		25,463,714		26,354,402		29,540,752
Change in non-cash operating assets
and liabilities (note 15)		(4,339,543)		(1,179,051)		(489,634)
Interest paid		(6,629,541)		(7,563,800)		(5,010,404)
Income taxes paid		(391,840)		(1,041,974)		(2,180,415)
		14,102,790		16,569,577		21,860,299
Investing activities:
Additions to property and equipment,
right-of use and intangible assets
(notes 7, 8 and 9)		(4,716,869)		(5,666,929)		(18,725,520)
Proceeds from sale of assets		442,665		18,712		–
Proceeds from sale of investments		819,250		–		–
Acquisitions (note4)		–		–		(33,037,974)
		(3,454,954)		(5,648,217)		(51,763,494)
Financing activities:
Repayment of initial term loan (note 11)		(8,250,000)		(4,125,000)		(2,750,000)
Proceeds from issuance of delayed draw
term loan (note 11)		–		–		27,700,000
Repayment of delayed draw term loan (note 11)		(2,912,578)		(16,609,946)		(462,500)
Credit facility financing fees (note 11)		(109,178)		(526,349)		(92,659)
Lease payments (note 8)		(822,191)		(651,662)		(615,235)
Proceeds from forgivable loan (note 11)		899,289		–		–
Returnofcapital		–		–		(572,018)
		(11,194,658)		(21,912,957)		23,207,588
Decrease in cash		(546,822)		(10,991,597)		(6,695,607)
Cash, beginning of year		5,112,990		16,070,322		22,863,163
Foreign exchange impact on cash held		37,441		34,265		(97,234)
Cash,end ofyear	$	4,603,609	$	5,112,990	$	16,070,322

See accompanying notes to consolidated financial statements.

4 F-10

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements

(In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

1. Organization and nature of operations:

VerticalScope Holdings Inc. and its wholly owned subsidiaries (together the "Company" or "VSHI") was incorporated on November 19, 2012 under the Ontario Business Corporation Act. The Company is a technology company that has built and operates a cloud-based digital community platform for online enthusiast communities. The Company's headquarters and registered office is located at 111 Peter Street, Suite 901, Toronto, Ontario M5V 2H1.

2. Basis of presentation:

(a) Statement of compliance:

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The consolidated financial statements are presented in US dollars, which is the Company's functional currency.

These consolidated financial statements were approved and authorized for issuance by the Board of Directors of the Company on June 13, 2021.

F-11

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued)

(In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

2. Basis of presentation (continued):

(b) Basis of consolidation:

These consolidated financial statements include the accounts of VerticalScope Holdings Inc., and its wholly owned subsidiaries:

	Percentage of
	ownership
	interest	Nature ofsubsidiary
VerticalScope Inc.	100	Cdn. Operating Company
VerticalScope USA Inc.	100	US Operating Company
VerticalScope USA LLC	100	US Holding Company
RateMDs Inc.	100	US Operating Company
Second Media Corp.	100	Cdn. Operating Company
Second Media Inc.	100	US Operating Company
Versatile Solutions Holdings Inc.	100	Cayman Islands Holding Company
Versatile Solutions Inc.	100	Cayman Islands Operating Company
Adlogix Inc.	100	Cdn. Operating Company
Web Site Acquisitions Inc.	100	Cayman Islands Operating Company
Outside Hub Holdings, Inc.	100	US Holding Company
Outdoor Hub, LLC	100	US Operating Company

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated upon consolidation.

Adlogix Inc. was dissolved on October 14, 2020

F-12

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

VERTICALSCOPE HOLDINGS INC.

For the years ended December 31, 2020, 2019 and 2018

2. Basis of presentation (continued):

The preparation of consolidated financial statements often involves management's judgment and the use of estimates and assumptions deemed to be reasonable at the time they are made. The Company reviews estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the year in which the estimates are revised and may impact future years as well. Other results may be derived with different judgments or using different assumptions or estimates and events may occur that could require a material adjustment. Significant areas requiring the use of management estimates include the expected credit losses ("ECL") on trade and other receivables, the recognition of government grants including investment tax credits receivable, impairment assessments, the determination of the estimated useful lives of property and equipment and intangible assets and inputs used in the determination of the fair value of share option grants. Significant areas requiring the use of management's judgment and estimates include revenue recognition, the capitalization of internally developed intangible assets, the determination of contingent consideration and earn-outs, allocation of purchase consideration associated with business combinations to various assets and liabilities, as well as the allocation of community asset purchase consideration between the community and acquired content. Actual results could differ from these estimates.

The Company is closely monitoring the impact of COVID-19 on all aspects of its business. COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020. The COVID 19 pandemic has had disruptive effects in countries in which the Company operates. The pandemic may have an adverse impact on many of the Company's customers, including their ability to satisfy ongoing payment obligations to the Company, which could increase the Company's bad debt exposure. The future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving. It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affected and the resulting economic impact may adversely affect the Company's results of operations, cash flows and financial position as well as its customers in future periods, and this impact could be material.

7 F-13

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies:

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements unless otherwise indicated.

(a) Revenue recognition:

The Company has two primary streams of revenue: digital advertising and e-commerce. The digital advertising stream includes revenue generated from (i) direct advertising campaigns, (ii) custom content solutions, and (iii) programmatic advertising. The e- commerce revenue stream includes revenue generated from (i) commissions, (ii) referral payments and (iii) subscriptions.

(i) Digital advertising:

Direct advertising campaigns include placement of advertising for end-advertiser customers. Revenue is recognized based on fees for the delivery of display ad impressions, being the number of times content is displayed to users ("Impressions"). Substantially all Impressions are delivered on websites owned by the Company ("Communities"). Impressions are tracked using both first-and-third party advertising management platforms and follow the guidelines established by the Interactive Advertising Bureau.

Custom content solutions include contracts for the production of custom content for customers using the Company's in-house production studio. The projects are shortterm in nature. Revenue is recognized over time on a proportionate performance basis as control is transferred to the customer and considering production milestones.

Programmatic advertising includes sales of display ad inventory on a per-Impression basis through an auction run by the Company's ad exchange and supply-side platform partners, or premium Impression auctions in the Company's private marketplace. Revenue is recognized for the fees the Company retains from these sales in the period the Impressions are delivered.

8 F-14

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

(ii) E-commerce:

The Company receives commissions from third party sales attributable to traffic sent to partners, with rates of up to 15% of transaction value purchased. Commissioned sales are driven by product reviews from the Company's network of freelance writers and by user-generated product links posted in Communities. Commission revenue is recognized in the same period the commissioned transactions occur based on the contract terms.

For certain e-commerce customers, referral fees are earned for traffic directed from the Company's Communities, even if no transaction is completed. Referral fees are recognized in the period the transaction occurs which triggers the referral fee, as this is when the Company's performance is completed.

Subscription-related e-commerce revenue is generated from term-based subscriptions with customers that: (i) enables merchants to maintain a presence on the Company's Communities, (ii) provide presence in an online business directory that connects consumers with service providers; and (iii) memberships that provide access to the Company's Communities with fewer advertisements. Revenue from subscription contracts is recognized evenly over the term of the subscription as the customer receives and consumes the benefits of the subscription services.

(b) Deferred revenue:

Deferred revenue represents the portion of goods or services to be transferred to the customer for the contractual subscription term or membership term remaining as at the year-end date and amounts received in advance of services to be delivered.

(c) Deferred commissions:

The Company defers sales commissions that are incremental to the acquisition of customer contracts. The Company uses the practical expedient to expense commission as incurred when the period of benefit would be one year or less. The Company determines the period of benefit for commissions paid for the acquisition of contracts by taking into consideration the commitment term of the customer contract, the existence and extent of commissions on contract renewals, and the estimated customer relationship period. To date, deferred contract commissions have been insignificant.

F-15

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

VERTICALSCOPE HOLDINGS INC.

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

(d) Investments:

Investments are recorded at cost less accumulated impairment losses where the Company does not exercise significant influence or control. The Company's determination of significant influence is based on consideration of voting interest in the investees along with other indicators, such as representation on the Board of Directors, participation in policymaking processes, material intercompany transactions, interchange of managerial personnel or provision of technical information.

(e) Property and equipment:

Property and equipment are initially measured at cost on recognition and subsequently measured at historical cost, less accumulated depreciation and accumulated impairment losses, if any. Effective February 1, 2020, the Company changed its method for depreciating property and equipment (excluding leasehold improvements) from the declining-balance method to the straight-line method of depreciation, as this method better approximates the useful life of the asset. The change was applied prospectively as a change in estimate. Depreciation was recognized in 2018 and 2019 using the following methods and rates:

Asset	Basis	Rate
Office furniture and equipment	Declining balance	20%
Computer equipment	Declining balance	30% - 45%
Leasehold improvements	Straight line	Term of lease

Subsequent to February 1, 2020, depreciation is recognized using the following methods and rates:

Asset	Basis	Rate
Office furniture and equipment	Straight line	3 to 7 years
Computer equipment	Straight line	3 years
Leasehold improvements	Straight line	3 to 7 years

10 F-16

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

(f) Intangible assets:

Intangible assets with finite lives that are acquired separately are measured on initial recognition at cost, which comprises its purchase price plus any directly attributable costs of preparing the asset for its intended use. Intangible assets acquired as part of a business combination that are recognized separately from goodwill are initially measured at fair value.

The Company incurs internal and external costs for its revenue-generating website Communities. Costs incurred during the planning stage (pre-development) are expensed as incurred. Costs incurred during the application and infrastructure development stage, the graphical design stage and the content development stage are capitalized as internally generated intangible assets if the criteria for capitalizing development costs are met. This applies to costs that can be directly attributed and necessary to creating, producing or preparing the community for it to be capable of operating in the manner intended by management. Costs incurred to operate the Communities once complete are expensed as incurred except for costs associated with additions to the Communities that separately meet the capitalization criteria.

For costs associated with other internally developed intangible assets controlled by the Company, such as the Company's community software platform and computer software, costs incurred during the development phase of the software are capitalized once it can be demonstrated that software is technically feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Capitalization ceases once the asset is capable of operating in the manner intended by management. Other costs are expensed as incurred.

11 F-17

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

VERTICALSCOPE HOLDINGS INC.

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

Following initial recognition, intangible assets are carried at cost less accumulated amortization and impairment losses. Intangible assets are amortized over the periods in the in the tables below. The estimated useful life and amortization method are reviewed annually, with the effect of any change in estimate being accounted for on a prospective basis. Effective February 1, 2020, the Company changed its method for amortizing computer software from the declining-balance method with 30% as the rate to the straightline method of depreciation, as this method better approximates the useful life of the asset. The change was applied prospectively as a change in estimate and resulted in additional amortization of $526,329 being charged in 2020 based on the application of the updated estimate method. Amortization is recognized using the following methods and rates:

Asset	Basis	Rate
Communities	Straight line	5 years
Acquired content	Straight line	1 year
Customer relationships	Straight line	5 years
Computer software	Straight line	3 to 5 years

(g) Business combinations and goodwill:

The Company follows the acquisition method to account for business combinations in accordance with IFRS 3, Business Combinations. The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their estimated fair values on the date of a business acquisition.

The amounts included in the consolidated statement of income (loss) and comprehensive (loss) under acquisition-related compensation arise from business combinations made by the Company. Acquisition costs that are tied to continuing employment of pre-existing shareholders are required to be recognized as acquisition-related compensation and recognized in accordance with the vesting terms in the acquisition agreement. Consequently, those costs are not included in the total purchase consideration of the business combination. All other costs that are not eligible for capitalization related to the acquisition are expensed as incurred.

New information obtained during the measurement period, up to 12 months following the acquisition date, about facts and circumstances existing at the acquisition date affect the acquisition accounting.

12 F-18

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

Goodwill represents the excess of the acquisition cost in a business combination over the fair value of the Company's share of the identifiable net assets acquired. Goodwill is carried at cost less accumulated impairment losses.

(h) Impairment of long-lived assets:

Long-lived assets, including property and equipment, intangible assets subject to amortization and goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. The recoverable amount of goodwill is estimated annually on December 31 of each year or whenever events or changes in circumstances indicate that the carrying value may be impaired.

An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of: (i) an asset's fair value less costs of disposal, and (ii) value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).

The Company has not identified any impairment indicators in relation to its long-lived assets for the any of the years presented in these consolidated financial statements, accordingly no impairment analysis has been undertaken. In each of the years ended December 31, 2018, 2019 and 2020, management completed an analysis of the carrying amount of goodwill and determined no impairment had occurred.

(i) Leases:

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

13 F-19

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives receivable. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, which is considered the appropriate useful life of any such asset.

In addition, the right-of-use asset is reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability, to the extent necessary.

The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. Lease terms range from 36 to 120 months for offices.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determinable, the Company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, including in-substance fixed payments and variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date.

The lease liability is subsequently measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, lease term, or if the Company changes its assessment of

whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company has elected not to recognize right-of-use assets and lease liability for shortterm leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

F-20

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

On the consolidated statements of cash flows, lease payments related to short-term leases, low value assets and variable lease payments not included in lease liability are classified as cash outflows from operating activities, whereas the remaining lease payments are classified as cash flows from financing activities.

(j) Government grants and investment tax credits:

Government grants are recorded as a reduction of the related expense or the cost of the assets acquired. Government grants are recognized when reasonable assurance exists that the Company has complied with the terms and conditions of the approved program.

Investment tax credits are accounted for under the cost reduction method, whereby the investment tax credits are applied against the carrying value of the related expense or asset. Investment tax credits are recorded when the qualifying expenditure has been incurred provided there is reasonable assurance that the tax credits will be realized. Investment tax credits are subject to audit by the tax authorities. Tax credits receivable are recorded within trade and other receivables in the consolidated balance sheets.

Refundable digital media tax credits are recorded directly to profit or loss based on the accounting of the initial costs incurred to which the tax credits were applied. The Company has applied an approach that reflects the economic substance of the applicable tax credit.

(k) Share-based compensation:

The fair value of all share options granted to employees is recorded in share-based compensation in the consolidated statements of income (loss) and comprehensive income (loss). The fair value of the options is determined using the Black-Scholes option pricing model. Each tranche of an award is considered a separate award with its own vesting period and grant date fair value. Expected volatility is determined using historical volatility of publicly-traded comparable companies, the risk-free interest rates are based on Government of Canada bond yields and the expected term of the option is calculated based on a combination of each tranche's time to vest plus the actual or expected life of an award based on the past activity or remaining time to expiry on outstanding awards.

15 F-21

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

The fair value of the granted share options that are ultimately expected to vest is amortized to compensation expense over the vesting period of the tranche of shares being considered. Estimated forfeitures are based on historical experience and management's estimates. When options are exercised, the amount of proceeds, together with the amount recorded in additional paid-in capital in respect of the exercised options, is recorded to share capital.

(l) Translation of foreign currencies:

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions or when items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the changes at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in loss (gain) on foreign exchange within the statements of income (loss) and comprehensive income (loss).

(m) Income taxes:

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable or recoverable is based on taxable profit or loss for the year.

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and their corresponding tax bases (known as temporary differences).

Deferred tax liabilities are generally recognized for all temporary differences that will result in taxable amounts in determining taxable profit (tax loss) of future years when the carrying amount of the asset or liability is recovered or settled (taxable temporary differences). Deferred tax assets are generally recognized for all temporary differences that will result in amounts that are deductible in determining taxable profit (tax loss) of future years when the carrying amount of the asset or liability is recovered or settled (deductible temporary differences) - but only to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to reflect the current assessment of future taxable profits. Any adjustments are recognized in profit or loss.

F-22

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

Deferred tax is calculated at the tax rates that are expected to apply to the taxable profit (tax loss) of the years in which it expects the deferred tax asset to be realized or the deferred tax liability to be settled, on the basis of tax rates that have been enacted or substantively enacted by the end of the reporting year.

(n) Financial instruments:
(i) Financial assets:

Initial recognition and measurement:

The Company's financial assets comprise cash, trade and other receivables, investments and derivative instruments. All financial assets are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset other than financial assets measured at fair value through profit or loss ("FVTPL").

On initial recognition, a financial asset is classified as measured at: amortized cost; fair value through other comprehensive income ("FVOCI") equity or debt investment; or FVPTL.

Subsequent measurement and derecognition:

Cash is carried at fair value with gains and losses recognized in the consolidated statements of net income (loss) and comprehensive (loss).

Trade receivables are carried at amortized cost using the effective interest rate method. For information on impairment losses on trade and other receivables, refer to the impairment of financial assets section below.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income ("OCI"). These assets are subsequently measured at fair value. Dividends, if any, are recorded in profit or loss until clearly related to a recovery of part of the cost of the investment. Other new gains and losses are recognized in OCI and are never reclassified into profit and loss.

17 F-23

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

Financial assets are derecognized when the rights to receive cash flows from the asset have expired.

All financial assets not designated at amortized cost or FVOCI, including freestanding derivative instruments that are not in a qualifying hedging relationship are subsequently measured at FVTPL at each reporting period with changes in fair value recognized in profit or loss.

(ii) Impairment of financial assets:

The Company assesses at each reporting date whether there is any evidence that its trade receivables are impaired. The Company uses the simplified approach for measuring impairment for its trade receivables as these financial assets do not have a significant financing component as defined under IFRS 15, Revenue from Contracts with Customers. Therefore, the Company does not determine if the credit risk for these instruments has increased significantly since initial recognition. Instead, a loss allowance is recognized based on lifetime ECL at each reporting date. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows expected to be received.

The shortfall is then discounted at an approximation to the asset's original effective interest rate. To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The Company has established a provision matrix that is based on its historical credit loss experiences, adjusted for forward-looking factors specific to the debtors and the economic environment. Impairment losses and subsequent reversals are recognized in profit or loss and are the amounts required to adjust the loss allowance at the reporting date to the amount that is required to be recognized based on the aforementioned policy. As for the exposure at default for financial assets, it is represented by the assets' gross carrying amount at the reporting date.

18 F-24

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

(iii) Financial liabilities:

Initial recognition and measurement:

The Company's financial liabilities comprise accounts payable and accrued liabilities, lease liability, other liabilities, credit facility, due to shareholders and former shareholders, derivative liabilities, and contingent consideration payable in cash. All financial liabilities except lease liability are recognized initially at fair value, less directly attributable transaction costs for liabilities not classified as FVTPL. The Company determines the classification of its financial liabilities at initial recognition. The Company also assesses whether embedded derivative financial instruments are required to be separated from host contracts when the Company first becomes party to the contract. Financial liabilities are classified as financial liabilities at FVTPL or amortized cost, as appropriate.

Subsequent measurement and derecognition:

Financial liabilities that do not meet the criteria of FVTPL or are not designated as such are subsequently measured at amortized cost using the effective interest method. The effective interest method amortization is included as interest expense in the consolidated statements of income (loss) and comprehensive income (loss). Gains and losses are recognized in the consolidated statements of income (loss) and comprehensive (loss) when the liabilities are derecognized.

The Company accounts for contingent consideration payable in cash and derivative liabilities as financial liabilities measured at FVTPL and subsequently re-measures fair value at the end of each reporting period. The fair value of the contingent consideration, if above nil, is presented as a component of accounts payable and accrued liabilities as well as other long-term liabilities on the consolidated balance sheets. The change in the fair value of the contingent consideration, if any, is recognized as an adjustment to contingent consideration in the consolidated statements of income (loss) and comprehensive (loss).

Financial liabilities are derecognized when the obligation under the liability is discharged, cancelled, or expires.

19 F-25

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

(iv) Fair value of financial instruments:

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm's-length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis or other valuation models.

An analysis of fair values of financial instruments and further details as to how they are measured is provided in note 18.

(o) Segment information:

The Company's Chief Operating Decision-Maker (CODM) is the Chief Executive Officer, The CODM is the highest level of management responsible for assessing the Company's overall performance and making operational decisions such as resource allocations related to operations, product prioritization, and delegation of authority. Management has determined that the Company operates in a single operating and reportable segment.

(p) Income (loss) per share:

Basic income (loss) per share is calculated by dividing net income (loss) attributable to common equity holders of the Company by the weighted average number of common shares outstanding during the year.

Diluted income (loss) per share is calculated by dividing net loss attributable to common equity holders of the Company by the weighted average number of common shares outstanding during the year, plus the effect of dilutive potential common shares outstanding during the year. This method requires that diluted income (loss) per share be calculated as if all dilutive potential common shares had been exercised at the latest of the beginning of the year or on the date of issuance, as the case may be, and that the funds obtained thereby (plus an amount equivalent to the unamortized portion of related share-based compensation costs) be used to purchase common shares of the Company at the average fair value of the common shares during the year.

F-26

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

(q) New and revised IFRS:

(i) Amendments to IAS 37, Onerous Contracts - Cost of Fulfilling a Contract:

The amendments specify that the 'cost of fulfilling' a contract comprises the 'costs that relate directly to the contract'. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labour or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property and equipment in fulfilling the contract).

The amendments are effective for annual periods beginning on or after January 1, 2022, with early application permitted. The Company is currently evaluating and does not expect it to have a material impact on the consolidated financial statements.

(ii) Reference to the Conceptual Framework - Amendments to IFRS 3:

The IASB also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential "day 2" gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21, Levies, if incurred separately. At the same time, the IASB decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements.

21 F-27

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued)

(In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and apply prospectively. The Company is evaluating the impact and does not currently expect it to have a material impact on the consolidated financial statements.

(iii) Annual improvements to IFRS Standards 2018-2020 cycle:

In May 2020, the IASB issued minor amendments to certain standards including IFRS 1, IFRS 9, Financial Instruments and IFRS 16, Leases ("IFRS 16"). The annual improvements process is used to make necessary but non-urgent changes to IFRS that are not included in other projects. The amendments issued are effective for annual periods beginning on or after January 1, 2022. The Company is currently evaluating and does not expect it to have a material impact on the consolidated financial statements.

(iv) Interest Rate Benchmark Reform:

Interest Rate Benchmark Reform (Phase 1)

Amendments to Hedge Accounting Requirements - Interbank Offered Rates ("IBOR") Reform (Phase 1) On September 26, 2019, the IASB issued amendments for some of its requirements for hedge accounting in IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement, as well as the related Standard on disclosures, IFRS 7 Financial Instruments: Disclosures in relation to Phase 1 of IBOR Reform and its Effects on Financial Reporting project. The amendments modify specific hedge accounting requirements to allow entities to assume that the interest rate benchmark on which the hedged cash flows and the cash flows of which the hedging instrument are based on, are not altered as a result of IBOR reform. The amendments are effective for annual periods beginning on or after January 1, 2020. The adoption of the amendments to this standard did not have a material impact on the consolidated financial statements in the current or comparative periods.

22 F-28

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

Interest Rate Benchmark Reform (Phase 2)

The amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 address issues that might affect financial reporting as a result of the reform of an interest rate benchmark, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate. The amendments provide practical relief from certain requirements in IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to:

(i) Change in basis for determining cash flows:

The amendments will require an entity to account for a change in the basis for determining the contractual cash flows of a financial asset or financial liability that is required by interest rate benchmark reform by updating the effective interest rate of the financial asset or financial liability.

(ii) Hedge accounting:

The amendments provide exceptions to the hedge accounting requirements in the following areas.

Allow amendment of the designation of a hedging relationship to reflect changes that are required by the reform.
When a hedged item in a cash flow hedge is amended to reflect the changes that are required by the reform, the amount accumulated in the cash flow hedge reserve will be deemed to be based on the alternative benchmark rate on which the hedged future cash flows are determined.
When a group of items is designated as a hedged item and an item in the group is amended to reflect the changes that are required by the reform, the hedged items are allocated to subgroups based on the benchmark rates being hedged.

23 F-29

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

3. Significant accounting policies (continued):

If an entity reasonably expects that an alternative benchmark rate will be separately identifiable within a period of 24 months, it is not prohibited from -
designating the rate as a non contractually specified risk component if it is not separately identifiable at the designation date.

The amendments are applied for annual periods beginning on or after January 1, 2021. The Company is currently evaluating material impact on the consolidated financial statements.

4. Business combinations:

(a) Acquisition of TrustedPros Inc.:

On February 13, 2018, the Company entered into an agreement to acquire 100% of the outstanding shares of TrustedPros Inc. ("TrustedPros"). TrustedPros allows homeowners to find and hire contractors for home improvement projects. TrustedPros is a site with a presence in Canada and the US. At the time of acquisition, the TrustedPros site had over 31,000 contractors listed in its directory. Revenue from the site comes from contractors who subscribe for premium services. The total purchase consideration summarized below includes an estimated earn-out of $260,820, based on probability and growth assumptions.

Net assets acquired:
Communities	$	141,866
Acquired content		362,999
Customer relationships		1,232,805
Deferred tax liability		(460,483)
Deferredrevenue		(133,430)
		1,143,757
Goodwill		862,252
Totalpurchase consideration	$	2,006,009

The goodwill recognized in connection with this acquisition is primarily attributable to the application of the Company's best practices to improve the operations of the business acquired, synergies with existing platforms of the Company, and other intangible assets that do not qualify for separate recognition including assembled workforce.

24 F-30

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

4. Business combinations (continued):

Goodwill is not deductible for income tax purposes.

The acquisition of TrustedPros contributed revenue of $547,030 and a net loss of $429,216 during the year ended December 31, 2018.

(b) Acquisition of Outside Hub Holdings, Inc.:

On March 23, 2018, the Company entered into an agreement to acquire 100% of the outstanding shares of Outside Hub Holdings, Inc. ("Outside Hub"). Outside Hub is a holding company that owns Outdoor Hub, LLC, a company with a portfolio of online enthusiast communities targeting outdoor enthusiasts in the US and several direct advertising relationships.

Net assets acquired:
Communities	$	283,582
Acquired content		7,248,339
Customer relationships		9,444,007
Property and equipment		173,202
Deferred tax liability		(2,288,614)
Working capital		1,946,107
		16,806,623
Goodwill		3,815,740
Totalpurchase consideration	$	20,622,363

The acquired working capital consists of trade receivables and prepaid expenses in the amount of $3,156,316, for which book value approximated fair value, offset by accounts payable and accrued liabilities and deferred revenue of $1,210,209. The contractual amounts of acquired receivables were all expected to be collected.

25 F-31

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

4. Business combinations (continued):

Goodwill is not deductible for income tax purposes.

The acquisition of Outside Hub contributed revenue of $4,867,175 and a net loss of $6,187,956 during the year ended December 31, 2018.

On August 21, 2018, the Company entered into an agreement with Yellow Pages Digital & Media Solutions Limited to acquire RedFlagDeals.com ("RFD"), a Canadian-based shopping and bargain discussion and information community.

Net assets acquired:
Communities	$	5,621,769
Acquired content		1,791,910
Customer relationships		1,395,801
		8,809,480
Goodwill		399,922
Totalpurchase consideration	$	9,209,402

Goodwill in the amount of $399,922 is deductible for income tax purposes.

The acquisition of RFD contributed revenue of $1,595,349 and a net loss of $157,082 during the year ended December 31, 2018.

26 F-32

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

4. Business combinations (continued):

Pro Forma Results of Operations (Unaudited):

The financial information in the table below summarizes selected results of operations on a pro forma basis as if the Company had acquired TrustedPros, Outside Hub, and RFD as of January 1, 2018. This pro forma information is for information purposes only and does not purport to represent what the Company's actual results of operations for the periods presented would have been had the acquisitions of TrustedPros, Outside Hub, and RFD occurred at January 1, 2018, or to project its results of operations for any future period.

							Year ended	Year ended
						December31,2018
Revenue							$	71,868,817
Net loss								(16,910,752)
Contingent consideration:
		FitGroup		TrustedPros		SleepJudge		Total
Balance, January 1, 2018	$	2,697,224	$	–	$	–	$	2,697,224
Payments		(3,000,000)		–		–		(3,000,000)
Additions		–		186,016		1,202,853		1,388,869
Adjustments		1,146,375		–		–		1,146,375
Interestand accretion		733,597		50,771		292,155		1,076,523
Balance,
December 31, 2018		1,577,196		236,787		1,495,008		3,308,991
Payments		–		(201,423)		(1,550,000)		(1,751,423)
Adjustments		(1,577,196)		(41,715)		54,992		(1,563,919)
Foreign exchange on payment		–		6,351		–		6,351
Balance, December 31,
2019 and 2020	$	–	$	–	$	–	$	–

(d) Contingent consideration:

27 F-33

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

4. Business combinations (continued):

In relation to earn-outs accrued from three acquisitions (Fit Group, SleepJudge and TrustedPros), the Company incurred interest accretion cost of nil in the year (2019 - nil, 2018 - $1,076,504).

In November 2018, the Company paid $3,000,000 for the year 1 earn-out related to the Fit Group acquisition, acquired in 2017, and realized a contingent consideration cost of $1,146,375 based on the actual performance exceeding the expected earn-out accrued. In November 2019, the Company determined that the criteria for the year 2 earn-out related to the Fit Group acquisition was not met and recognized a contingent consideration gain of $1,577,176 on reversal of the expected earn-out accrued.

In March 2019, the Company paid $1,550,000 for the earn-out related to the SleepJudge asset acquisition, acquired in 2018, and realized a contingent consideration loss of $54,992 based on higher actual performance compared to the expected earn-out accrued.

In April 2019, the Company paid $201,423 for the earn-out related to the TrustedPros acquisition and realized a contingent consideration gain of $41,715 based on lower actual performance compared to the expected earn-out accrued.

As at December 31, 2020, the Company does not have any contingent consideration payable.

5. Trade and other receivables:

	2020	2019
Trade receivables	$ 14,295,973	$ 11,819,512
Investment tax credits recoverable	131,261	92,000
Sundry receivables	237,038	315,769
	$14,664,272	$12,227,281

28 F-34

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

6. Revenue from contracts with customers:

(a) Disaggregation of revenue:

The main sources of the Company's revenue are as follows:

	2020	2019	2018
Digital advertising	$ 32,054,976	$ 39,964,219	$ 46,505,733
E-commerce	24,868,289	18,490,388	21,841,785
Total revenue	$56,923,265	$58,454,607	$68,347,518

(b) Deferred revenue:

Deferred revenue consists of billings or payments received in advance of revenue recognition and is recognized as the revenue recognition criteria are met. The Company generally invoices its customers annually in advance for its e-commerce subscription arrangements. Accordingly, the deferred revenue balance does not represent the total contract value of multi-year, non-cancelable subscription agreements.

The following table presents the changes in deferred revenue during the years:

		2020		2019
Balance, beginning of year	$	812,571	$	961,609
Increase due to amounts invoiced
or cash received		754,094		847,147
Decrease due to recognition of
deferred revenue from balance at
beginning of year or acquired		(697,731)		(996,185)
Balance,end ofyear	$	868,934	$	812,571
Comprised of:
Current	$	810,457	$	698,109
Non-current		58,477		114,462

The amount of revenue recognized in the years ended December 31, 2020, 2019 and 2018 from performance obligations satisfied in previous periods was insignificant.

29 F-35

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

6. Revenue from contracts with customers (continued):

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized ("contracted not yet recognized") and includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted not yet recognized revenue was approximately $868,934 as of December 31, 2020, of which the Company expects to recognize an estimated 95% of the revenue over the next 12 months and the remainder thereafter.

30 F-36

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

7. Property and equipment:

		Office
	furniture and			Computer		Leasehold
		equipment		equipment	improvements			Total
Cost
Balance, December 31, 2018	$	1,101,906	$	961,438	$	1,948,735	$	4,012,079
Additions		42,923		488,459		32,318		563,700
Disposals		–		(9,924)		–		(9,924)
Balance, December 31, 2019		1,144,829		1,439,973		1,981,053		4,565,855
Additions		44,424		181,931		262,270		488,625
Disposals		–		(280,006)		–		(280,006)
Balance,December 31,2020	$	1,189,253	$	1,341,898	$	2,243,323	$	4,774,474
Accumulated depreciation
Balance, December 31, 2018	$	687,733	$	581,652	$	677,624	$	1,947,009
Depreciation		83,055		174,368		323,673		581,096
Disposals		–		(6,212)		–		(6,212)
Balance, December 31, 2019		770,788		749,808		1,001,297		2,521,893
Depreciation		88,078		247,374		361,478		696,930
Disposals		–		(196,149)		–		(196,149)
Balance,December 31,2020	$	858,866	$	801,033	$	1,362,775	$	3,022,674
Carrying amounts
December 31, 2018	$	414,173	$	379,786	$	1,271,111	$	2,065,070
December 31, 2019		374,041		690,165		979,756		2,043,962
December 31, 2020		330,387		540,865		880,548		1,751,800

31 F-37

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

8. Right-of-use asset and lease liability:

The Company leases certain properties under non-cancellable lease agreements that relate to office space. The expected remaining lease terms are between 36 and 120 months. The Company also has leased properties that are then subleased to third parties.

(a) As a lessee:

The following reconciles the right-of-use asset as at December 31:

	2020	2019
Balance, beginning of year	$ 3,330,291	$ 3,842,264
Additions	106,335	85,127
Depreciation	(723,631)	(597,100)
Balance,end ofyear	$2,712,995	$3,330,291

The following reconciles the lease liability as at December 31:

		2020		2019
Balance, beginning of year	$	3,681,798	$	3,840,841
Additions		98,500		85,127
Interest accretion		229,321		253,424
Lease payments		(822,191)		(651,662)
Foreign exchange		46,619		154,068
Balance,end ofyear	$	3,234,047	$	3,681,798
Current	$	708,248	$	701,673
Non-current		2,525,799		2,980,125
	$	3,234,047	$	3,681,798

During 2020, the weighted average incremental borrowing rate used to measure the lease liability was 6% (2019 - 6.5%).

32 F-38

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

8. Right-of-use asset and lease liability (continued):

Lease payments related to low-value assets were $5,277 at December 31, 2020 (2019 - $6,059; 2018 - nil).

The Company has two leases that have renewal options, one of which the Company was reasonably certain that was exercised on January 1, 2018.

(b) As a lessor:

The Company sublet a portion of its Toronto office space to a subtenant. During 2020, $123,020 (2019- $87,733; 2018 - nil) was recognized as lease income for its operating lease. The undiscounted lease payments to be received for the remaining lease terms at December 31, 2020 are $916,221.

9. Intangible assets:

		Acquired	Customer		Computer
	Communities	content	relationships		software	Total
Cost
Balance, December 31, 2018	$ 135,620,188	$ 83,368,337	$ 21,684,430	$	3,608,252	$ 244,281,207
Additions acquired separately	293,132	30,281	–		96,023	419,436
Additions arising from internal
development	–	–	–		4,683,793	4,683,793
Balance, December 31, 2019	135,913,320	83,398,618	21,684,430		8,388,068	249,384,436
Additions acquired separately	143,635	77,342	–		58,455	279,432
Additions arising from internal
development	–	–	–		3,948,812	3,948,812
Disposals	(453,357)	–	–		–	(453,357)
Balance,December 31,2020	$135,603,598	$83,475,960	$21,684,430	$	12,395,335	$253,159,323

F-39

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

9. Intangible assets (continued):

				Acquired		Customer		Computer
		Communities		content		relationships		software		Total
Accumulated depreciation
Balance, December 31, 2018	$	94,894,423	$	80,051,988	$	5,326,541	$	1,228,164	$	181,501,116
Amortization		11,908,533		3,340,073		4,300,821		1,082,610		20,632,037
Adjustments		1,753		–		–		589		2,342
Balance, December 31, 2019		106,804,709		83,392,061		9,627,362		2,311,363		202,135,495
Amortization		11,993,507		11,854		4,248,548		2,515,800		18,769,709
Disposals		(453,356)		–		–		–		(453,356)
Balance,December 31,2020	$	118,344,860	$	83,403,915	$	13,875,910	$	4,827,163	$	220,451,848
Carrying amounts
December 31, 2018	$	40,725,765	$	3,316,349	$	16,357,889	$	2,380,088	$	62,780,091
December 31, 2019		29,108,611		6,557		12,057,068		6,076,705		47,248,941
December 31, 2020		17,258,738		72,045		7,808,520		7,568,172		32,707,475

In 2020, the Company capitalized third party costs of $1,075,675 (2019 - $3,620,521) and internal costs of $2,160,416 (2019 - $733,238) in relation to development of computer software for a proprietary next generation community platform for the Company's Communities.

The Company also capitalized costs for significant enhancements to the Company's owned and on-premise licensed customer relationship management and finance computer software in the amount of $696,755 (2019 - $162,076).

Goodwill:

	December 31,	December 31,
	2020	2019
Balance, beginning of year	$ 11,840,039	$ 11,840,039
Additions	–	–
Balance,end ofyear	$11,840,039	$11,840,039

34 F-40

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

10. Investments:

On September 29, 2015, the Company entered into an agreement to purchase 947,119 Series AA preferred shares in Wide Open Spaces, Inc. ("WOS, Inc.") for $240,000. On October 28, 2016, the Company entered into an agreement to purchase an additional 527,056 Series AA preferred shares in WOS, Inc. for $240,000. The Company classified these investments at FVTPL. On July 31, 2020, the Company received a Notice for Consent to Merger (or Right of Dissent and Appraisal) for its share in WOS, Inc. The Company agreed to the merger and liquidated its share in WOS, Inc. At a merger price of $0.68516 per share, the Company expects to receive a total of $1,010,046 inclusive of its initial investment of $480,000. On August 11, 2020, $819,250 in cash was received and a holdback of $190,796 was recorded and is expected to be paid out in August 2021. As a result, the Company realized a gain on this investment of $530,046.

VerticalScope Inc. and Cakes Inc. are parties to a Simple Agreement for Future Equity dated June 14, 2017 pursuant to which VerticalScope Inc. has a right to $250,000 worth of shares in Cakes Inc.'s capital stock in the event of an equity financing. The Company designated this investment at FVTPL.

VerticalScope Inc. held $1,000,000 of 2017A convertible promissory notes in Tapatalk, Inc. earning simple interest of 2% per annum, and on April 23, 2020, these were converted to 501,932 Series 4 preferred shares. At December 31, 2020, VerticalScope Inc. holds a 4.12% diluted interest in Tapatalk, Inc. The Company designated this investment at FVTPL.

On April 30, 2018, the Company entered into an agreement to purchase 557,491 Series A preferred shares in Threadloom, Inc. ("Threadloom") at a price of $2.1525 per share for total consideration of $1,199,999. At December 31, 2020, VerticalScope Inc. holds a 5.13% diluted interest in Threadloom. The Company designated this investment at FVTPL.

35 F-41

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

11. Long-term debt:

		Forgivable	Term		Delayed
		loan	loan		draw loan	Total
Balance, December 31, 2018	$	–	$ 104,806,719	$	27,208,433	$ 132,015,152
Payments		–	(4,125,000)		(16,609,946)	(20,734,946)
Interest accretion		–	236,784		(34,612)	202,172
Balance, December 31, 2019		–	100,918,503		10,563,875	111,482,378
Advances		899,295	–		–	899,295
Payments		–	(8,250,000)		(2,912,577)	(11,162,577)
Interest accretion		–	(366,134)		612,347	246,213
Balance, December 31, 2020		$ 899,295	$ 92,302,369	$	8,263,645	101,465,309
Current portion of long-term debt						8,323,090
Long-term debt						$93,142,219

Term loan and delayed draw loan:

On October 5, 2017, the Company entered into a new credit agreement (the "2017 Credit Facility") with Capital One, National Association, as successor from Antares Capital LP. The 2017 Credit Facility consists of a revolving credit facility in the amount of $20,000,000, a term loan in the amount of $110,000,000 and a delayed draw term loan in the amount of $70,000,000, which all bear a floating interest of LIBOR plus a margin determined by the Company's net leverage ratio. The 2017 Credit Facility has an expiry date of October 4, 2022. The Company incurred transaction costs of $3,068,004, directly attributable to the issuance of the 2017 Credit Facility, which were capitalized against the Credit Facility and are being amortized using the effective interest method.

On December 20, 2019, the Company entered into the First Amendment to the Credit Facility (the "Amendment" or "Credit Facility"). The Amendment increased the amortization to 7.5% per annum (from 5%), Maximum Total Net Leverage to 4.50x (from 3.50x) and decreased the Minimum Fixed Charge Coverage Ratio to 1.05x (from 1.25x). The Company incurred transaction costs of $476,349, directly attributable to the issuance of the Amendment, which were capitalized against the Credit Facility and are being amortized using the effective interest method.

36 F-42

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

11. Long-term debt (continued):

The Company is required to pay a quarterly commitment fee for the total undrawn amount of the revolving credit facility. As at December 31, 2020, the fee was 0.5% per annum. For future periods, the fee is dependent on the Company's Total Net Leverage Ratio as set forth in the credit agreement. During the year ended December 31, 2020, the total interest expense on the Credit Facility was $5,441,804 (2019 - $8,028,838, 2018 - $8,503,985).

As at December 31, 2020, the Company had borrowings of $102,589,976 (2019 - $113,752,554) under the Credit Facility and had accrued interest of $28,895 (2019 - $1,572,030).

Principal repayments required on the Company's Credit Facility are due as follows:

	2021	2022
Principal payments:
Term loan	$ 8,250,000	$ 86,132,116
Delayed draw loan	909,375	7,520,664
	$9,159,375	$93,652,779

Obligations under the Credit Facility are secured by collateral (as defined in the Credit Agreement) granted by the Company. The Credit Facility contains a number of affirmative and negative covenants that, among other things, require the Company to satisfy certain financial covenants and restrict the ability of the Company to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its shares, prepay certain long-term debt, create liens, enter into agreements with subsidiaries, modify the nature of its business, enter into sale leaseback transactions, transfer and sell material assets and merge or consolidate. Under the Credit Facility, the Company would be subject to an event of default in the event that RDL Ventures Inc. ("RDL"), Hedgewood Inc. and Torstar Corporation ("Torstar") fail to own greater than 51% of the voting power of VSHI, RDL fails to own greater than 15% of the voting power of VSHI, and RDL and Hedgewood Inc. fail to maintain, in the aggregate, at least 50% of the board of director seats of VSHI. As at December 31, 2020, the Company was in compliance with all covenants.

37 F-43

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

11. Long-term debt (continued):

On May 25, 2021, the Company entered into the second amendment to the Original Credit Agreement (the "Second Amendment" and the 2017 Credit Facility, as amended by the First Amendment and the Second Amendment, the "Credit Agreement") which provides for certain amendments to the event of default related to a Change of Control (as defined in the Credit Agreement).

At any time following the consummation of the Company's first public offering, a Change of Control will occur if (a) any person or persons constituting a group (other than RDL Ventures, Hedgewood and NordStar Group and their respective affiliates (each an "Authorized Holder") become the beneficial owner, directly or indirectly, of the Company's common shares or share equivalent representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding share or share equivalents and the percentage of aggregate ordinary voting power so held is greater than the percentage represented by the share or share equivalents beneficially owned, directly or indirectly, in the aggregate by the Authorized Holders (for purposes of measuring beneficial ownership held by any person that is not a Authorized Holder, share or share equivalents held by any Authorized Holder will be excluded) or (b) the Company's ceases to own one hundred percent (100%) of the issued and outstanding share and share equivalents of VerticalScope Inc.

Forgivable Loan:

The US Paycheck Protection Program ("US PPP"), offered by the U.S. Small Business Administration ("SBA"), was a COVID-19 relief loan designed to provide a direct incentive for small businesses to keep their workers on payroll. The Company applied for the loan, through its US subsidiaries, and was approved for the amount of $899,289 in June 2020. The loan is eligible for forgiveness based on specified criteria from the SBA. The Company has submitted an application for the loan forgiveness in early 2021 and is awaiting confirmation from our lenders. The loan balance is included in long-term debt on the consolidated balance sheets as at December 31, 2020.

12. Share capital:

	Class A		Class B
	shares	Amount	shares		Amount
Balance as at December 31,
2019 and 2020	13,929,327	$ 33,874,149	28,125	$	309,375

F-44

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

12. Share capital (continued):

The authorized share capital of VSHI consists of an unlimited number of Class A common shares, an unlimited number of Class B common shares and an unlimited number of Class A preferred shares.

The Class A common shares are voting shares that are eligible to receive non-cumulative dividends as and when declared by VSHI's Board of Directors. The Class B common shares are non-voting shares that are eligible to receive non-cumulative dividends as and when declared by VSHI's Board of Directors in the same amount per share to be paid to holders of Class A common shares.

13. Share-based compensation:

A share-based compensation plan was created for VSHI ("VSHI Plan"). Under this plan, in exchange for services rendered, employees receive VSHI share options at an agreed upon exercise price. Persons that held VerticalScope Inc. share options exchanged such options for VSHI share options.

Under the terms of the VSHI Plan, VSHI may grant share options on its Class B common shares to directors, officers, employees or consultants of VSHI or its subsidiaries. The current maximum number of Class B common shares that can be reserved for issuance under the VSHI Plan is 937,500 shares as at December 31, 2020. The Board of Directors of VSHI assesses the value at the date of the grant and assigns the exercise price of share options issued under the plan. This value typically approximates the fair market value of the VSHI's Class A common shares at the grant date; however, this may be adjusted by the VSHI Board of Directors, in its sole discretion, to give effect to the number of shares resulting from, among other things, an offer to purchase a majority of the issued and outstanding shares of VSHI or the sale of all or substantially all of its assets or business. Share options granted under the VSHI Plan shall vest and become exercisable at such date or dates as the VSHI Board of Directors may determine in its discretion. The maximum term of each share option granted may not exceed five years but may be extended at the discretion of the Board of Directors.

Effective April 21, 2020, the Board of Directors extended the expiry date of certain fully vested options to July 31, 2025 and December 31, 2025. The incremental benefit of the extension of $1,006,655 was recorded as share-based compensation at the time of the modification.

39 F-45

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

13. Share-based compensation (continued):

The following table summarizes share options that are outstanding under the VSHI Plan as at December 31, 2020 and 2019:

	2020		2019
		Weighted		Weighted
		average		average
		exercise		exercise
	Number of	price	Number of	price
	options	pershare	options	pershare
Outstanding share options,
beginning balance	687,500	$ 21.84	672,500	$ 22.00
Granted share options	265,000	15.63	15,000	14.97
Forfeited share options	(15,000)	14.97	–	–
Outstanding share options,
endingbalance	937,500	20.19	687,500	21.84
Exercisable share options,
ending balance	571,666	$ 21.20	427,500	$ 20.14

40 F-46

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except per share amounts and as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

13. Share-based compensation (continued):

Outstanding share options comprising:

2020:

		Weighted
		average
	Number of	remaining
Exercise price	options	life (years)
$ 2.50	62,500	4.58
$ 20.21	100,000	0.39
$ 23.18	360,000	2.89
$ 27.08	90,000	1.95
$ 30.56	60,000	2.08
$ 15.95	10,000	4.09
$ 15.17	50,000	4.17
$ 16.22	30,000	4.52
$ 15.63	175,000	4.89
Total	937,500	3.10
2019:

		Weighted
		average
	Number of	remaining
Exercise price	options	life (years)
$ 2.50	62,500	5.59
$ 20.21	100,000	1.39
$ 23.18	360,000	2.85
$ 27.08	90,000	2.96
$ 30.56	60,000	3.08
$ 14.97	15,000	4.09
Total	687,500	2.94

41 F-47

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

VERTICALSCOPE HOLDINGS INC.

For the years ended December 31, 2020, 2019 and 2018

13. Share-based compensation (continued):

The fair value of the share options was estimated at the date of grant based on the calculated value model using the Black-Scholes option pricing model. The weighted average expected option life is calculated based on the remaining expected option life of each option granted. As the VSHI Class A common shares have not historically received dividends, no dividend yield is included in the fair value calculation for the share options granted.

During the year ended December 31, 2020, the Company granted 265,000 (2019 - 15,000) options under the VSHI Plan. The Company recorded $1,961,529 (2019 - $1,165,318; 2018 - $2,011,232) of share-based compensation for the year ended December 31, 2020 against contributed surplus. The following assumptions were used to determine the fair value of options issued in 2019 and 2020:

	2020	2019
Risk-free interest rate	0.43%	1.78%
Expected life (years)	3.5 Years	3.75 Years
Volatility	74.63%	61.85%
Dividend yield	0.00%	0.00%

During the year ended December 31, 2020, 15,000 options (2019 - nil) that were granted were cancelled on September 29, 2020.

42 F-48

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

14. Income taxes:

(a) The income tax amounts recognized in profit and losses are as follows:

	2020		2019		2018
Current income taxes:
Current period and other	$ 340,555	$	490,187	$	828,230
Deferred income taxes:
Origination and reversal of
temporary differences	(223,972)		(3,395,424)		(4,993,046)
Total income tax expense(recovery)	$116,583	$	(2,905,237)	$	(4,164,816)

(b) Below is a summary of the movement of the deferred tax assets and liabilities during 2020 and 2019:

			Property,
			plant,
	Operating		equipment			R&D
	losses		and		Intangible	expenditure
	carryforward		software		assets	pool	Others	Total
December 31, 2018	$ 6,592,587	$	(528,633)	$	5,484,915	$ 151,002	$ 535,729	$ 12,235,600
Recovery (expense) in
net income	712,221		(394,173)		3,034,032	153,440	(110,096)	3,395,424
December 31, 2019	7,304,808		(922,806)		8,518,947	304,442	425,633	15,631,024
Recovery (expense) in
net income	(2,153,617)		(110,687)		2,571,200	(46,426)	(36,498)	223,972
December 31,2020	$5,151,191	$	(1,033,493)	$	11,090,147	$258,016	$389,135	$15,854,996

								Net
				Deferred		Deferred		deferred
				tax		tax		tax
				assets		liability		assets
December	31,	2018	$	12,764,233	$	(528,633)	$	12,235,600
December	31,	2019		16,553,830		(922,806)		15,631,024
December	31,	2020		16,888,489		(1,033,493)		15,854,996

43 F-49

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

14. Income taxes (continued):

(c) The following table presents losses and deductible temporary differences for which deferred tax assets were not recognized:

		2020		2019
Operating losses carry-forward in
foreign jurisdiction	$	657,683	$	70,283
Realized and unrealized capital
losses		4,112,000		4,112,000
Total unrecognized deductible
temporarydifferences	$	4,769,683	$	4,182,283

(d) The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 26.5% (2019- 26.50%, 2018- 26.5%) to the effective tax rate is as follows:

		2020	2019	2018
Loss before tax	$	(1,389,400)	$ (4,638,460)	$ (18,263,932)
Statutory income tax rate		26.50%	26.50%	26.50%
Computed income tax expense
(recovery)	$	(368,191)	$ (1,229,192)	$ (4,839,942)
Increase (decrease) resulting from:
Non-deductible expenses		530,897	326,369	972,035
Difference in foreign tax rates		(178,139)	(1,447,553)	(185,864)
Temporary differences not
recognized		216,644	22,995	–
Prior period adjustments and
other		(84,628)	(577,856)	(111,045)
Total income tax expense(recovery)	$	116,583	$ (2,905,237)	$ (4,164,816)

(e) Unrecognized deferred tax liability:

The Company has taxable temporary differences related to $18.7 million (2019 - $18.1 million) undistributed earnings from its investment in certain foreign subsidiaries. Deferred tax liabilities have not been recognized for these temporary differences because reversing these taxable temporary differences is not expected to result in any significant tax implications.

F-50

VERTICALSCOPE HOLDINGS INC. Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

15. Change in non-cash operating assets and liabilities:

	2020		2019		2018
Trade and other receivables	$ (2,206,934)	$	884,449	$	1,618,004
Investment taxes receivable	(39,261)		–		(92,000)
Prepaid expenses	219,716		(64,848)		181,918
Accounts payable and accrued liabilities	(2,370,770)		(1,969,417)		(1,577,742)
Deferred revenue	56,363		(149,038)		(480,224)
Foreign exchange	1,343		119,803		(139,590)
	$ (4,339,543)	$	(1,179,051)	$	(489,634)

16. Commitments and contingencies:

(a) Commitments:

The Company has the following payment commitments with respect to variable lease payments and other contractual obligations:

2021			$	1,228,500
2022				2,047,500
2023				2,593,500
2024				2,730,000
2025	-	2027		3,412,500
			$	12,012,000

(b) Contingencies:

The Company is, from time to time, involved in various claims, legal proceedings and complaints arising in the ordinary course of business. As at December 31, 2020, it does not believe that adverse decisions in any pending or threatened proceedings, or any amount it may be required to pay by reason thereof, will have a material adverse effect on the financial condition or future results of operations of the Company.

F-51

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

17. Related party transactions and balances:

In 2017, Star Media Group, a wholly owned subsidiary of Torstar, entered into an agreement with Adlogix Inc., a wholly owned subsidiary of VSHI, to use its header bidding services to optimize its website revenue. Per the agreement, Adlogix Inc. retains 15% of the revenue generated. Star Media Group ended the agreement on May 31, 2018. As at December 31, 2020, VSHI had a receivable of nil (2019 - $18,944; 2018 - nil) related to the content and digital media services revenue and a payable of nil (2019 - nil; 2018 - $88,622) related to the portion of header bidding revenue due to Star Media Group.

On June 26, 2019, an employee of the Company acted as an agent for the Company to purchase the domain name of www.fora.com in the amount of $285,000 on behalf of the Company. The employee was reimbursed, by the Company, for the purchase price of the domain name as outlined in the agreement.

In 2020, Star Media Group purchased $51,765 (2019 - $53,581; 2018 - $54,013) of automobile content from a website owned by VerticalScope Inc. Metroland, a division of Torstar, purchased $4,786 of digital advertising services.

Key management personnel compensation:

The key management personnel of the Company are the members of the Company's executive management team at the Company and Board of Directors.

	2020	2019	2018
Short-term employee benefits
and other benefits	$ 1,762,639	$ 1,288,843	$ 1,527,422
Share based compensation	478,215	569,665	1,150,407

There were no post-employment benefits or other long-term benefits attributed to the key management personnel.

46 F-52

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

VERTICALSCOPE HOLDINGS INC.

For the years ended December 31, 2020, 2019 and 2018

18. Financial instruments:

(a) Fair values:

The fair values of cash, trade and other receivables, and accounts payable and accrued liabilities are assumed to approximate their carrying amounts because of their short term to maturity. The carrying value of the Company's term loan and delayed draw loan approximate fair value due to the variable interest rate in the Credit Facility.

In addition, for financial reporting purposes, fair value measurement is categorized into Levels 1, 2 or 3 based on the degree to which the inputs to the fair value are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 - This level includes assets and liabilities measured at fair value based on unadjusted quoted prices for identical assets and liabilities in active markets that are accessible at the measurement date.
Level 2 - This level includes valuations determined using directly (i.e., as prices) or indirectly (i.e., derived from prices) observable inputs other than quoted prices included within Level 1. Derivative instruments in this category are valued using models or other standard valuation techniques derived from observable market inputs.
Level 3 - This level includes valuations based on inputs, which are less observable, unavailable or when the observable data does not support a significant portion of the instruments' fair value.

Investments (note 10) are measured at fair value and categorized as Level 3 in the fair value hierarchy.

The following table presents the changes in the fair value measurements in Level 3 of the fair value hierarchy:

Balance, beginning of year	$ 2,929,999
Fair value measurement	530,046
Disposition of a Level 3 investment	(1,010,046)
Balance,end ofyear	$2,449,999

47 F-53

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

18. Financial instruments (continued):

Estimates of the fair value of investments is assessed on a quarterly basis. There were no transfers of fair value measurement between Level 1, 2, and 3 of the fair value hierarchy during the years ended December 31, 2020 and 2019.

(b) Credit risk:

The Company is exposed to credit risk on the trade receivables from its customers. The Company establishes an allowance for doubtful accounts that corresponds to the specific credit risk of its customers. As at December 31, 2020, the Company has 29% of its ending trade receivables balance with two customers for 20% and 9%, respectively (2019 - 15% of its ending trade receivables balance with two customers for 8% and 7%, respectively). These customers are in the online advertising economic sector.

In 2020, two customers generated revenue totaling 16% and 10% of consolidated revenue (2019 - one customer 23% of consolidated revenue; 2018 - one customer 22% of consolidated revenue). No other customers represented 10% or more of consolidated revenue in any of the years presented in these consolidated financial statements.

	2020	2019	2018
Trade receivables aging:
0-30 days	$ 10,165,953	$ 9,239,640	$ 8,608,309
31-60 days	2,961,065	1,597,030	1,927,525
61-90 days	623,358	477,664	1,046,614
Greater than 90 days	592,075	788,340	1,285,680
	14,342,451	12,102,674	12,868,128
Expected credit loss
provision	(46,478)	(283,162)	(243,943)
Net trade receivables	$14,295,973	$11,819,512	$12,624,185

48 F-54

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

18. Financial instruments (continued):

2020	Total	0-60 days		61-90 days	Over90 days	Over90 days
Default rates		0.0%		0.0%		7.8%
Trade receivables	$ 14,342,451	$ 13,127,018	$	623,358	$	592,075
Expected credit loss
provision	(46,478)	–		(68)		(46,410)

2019	Total	0-60 days		61-90 days	Over90 days
Default rates		0.0%		0.8%		35.1%
Trade receivables	$ 12,102,674	$ 10,836,670	$	477,664	$	788,340
Expected credit loss
provision	(283,162)	(2,821)		(3,906)		(276,435)

2018	Total	0-60 days		61-90 days	Over90 days
Default rates		0.0%		0.0%		19.0%
Trade receivables	$ 12,868,128	$ 10,535,834	$	1,046,614	$	1,285,680
Expected credit loss
provision	(243,943)	–		–		(243,943)

49 F-55

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

18. Financial instruments (continued):

The Company is exposed to interest rate risk on its Credit Facility, which bears interest at a LIBOR plus a margin determined by the Company's net leverage ratio.

		2020		2019		2018
Interest income	$	(37,131)	$	(88,936)	$	(95,650)
Interest accretion expense -
leases	$	229,321	$	253,424	$	221,374
Interest on long term debt		5,441,804		8,028,838		8,503,985
Interest expense - other		263		971		8,461
Interest expense	$	5,671,388	$	8,283,233	$	8,733,820
Net interest expense	$	5,634,257	$	8,194,297	$	8,638,170

The Company is also exposed to interest rate risk on the utilized portion of the Credit Facility. If there was a 1% increase in the interest rate on the Credit Facility, there would be a corresponding decrease in income before income tax of $1,081,713. There would be an equal and opposite impact if there was a 1% decrease in the interest rate.

50 F-56

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

VERTICALSCOPE HOLDINGS INC.

For the years ended December 31, 2020, 2019 and 2018

18. Financial instruments (continued):

(d) Foreign currency risk:

The Company obtains services from vendors and employees located in Canada which are subject to foreign exchange fluctuations. The Company manages this risk by monitoring its Canadian dollar ("CAD") cash flow. The Company has the following CAD-denominated balances as at December 31:

		2020		2019
Cash	$	715,299	$	217,004
Trade and other receivables		1,751,254		2,087,898
Investment taxes receivable		131,261		92,000
Accounts payable and accrued liabilities		2,684,030		4,160,508

Foreign currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. A large portion of the Company's operating expenses occur in foreign currencies (mainly in Canadian dollars) and, therefore, the Company is exposed to foreign currency risk at the end of the reporting period through its Canadian denominated accounts payable and cash. As at December 31, 2020, a 1% depreciation or appreciation of the Canadian dollar against the U.S. dollar would have resulted in an approximate $98,634 and $100,121 decrease or increase, respectively, in income (loss) before income taxes.

From time to time, the Company enters into foreign exchange contracts with financial institutions to hedge the value of foreign currency-denominated liabilities, or future commitments. Gains and losses from these contracts offset the losses and gains from the underlying hedged transactions. At December 31, 2020, the Company has entered into foreign exchange forward contracts to sell US dollars in exchange for CAD. These contracts outstanding as at December 31, 2020 have a notional value of $1,449,997 (2019 - $252,782, 2018 - $7,500,000), carrying value of $1,530,503 (2019 - $252,331, 2018 - $7,247,257) and an unrealized gain of $80,957 (unrealized gain of $252,292 and unrealized loss of $534,181 in 2019 and 2018 respectively. The contracts outstanding as at December 31, 2020 will settle throughout 2021.

51 F-57

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

18. Financial instruments (continued):

(e) Liquidity risk:

Liquidity risk is the risk that the Company will be unable to fulfill its obligations on a timely basis or at a reasonable cost. The Company manages its liquidity risk by monitoring its operating requirements. The Company maintains sufficient cash on hand and access to additional shareholder funding to ensure it has sufficient funds to fulfill its obligations. There has been no change to the risk exposures for the year ended December 31, 2020.

The majority of the Company's financial liabilities recorded in accounts payable and accrued liabilities are due within 60 days. The details of the Company's lease liability and long-term debt are disclosed in note 8 and note 11, respectively.

(f) Concentration of risk - industry:

The Company operates in the social networking industry with a significant focus on the automotive sector and is affected by general economic trends. A decline in economic conditions, consumer interest or other adverse conditions could lead to reduced revenue and gross margin.

19. Capital risk management:

The Company's capital structure consists of shareholders' equity and long-term debt. The Company manages its capital structure based on the funds available to it in order to support the continuation and expansion of its operations and to fund future acquisitions. The Company intends to rely on positive cash flows from operations and funds available under our Credit Facility to achieve its growth strategies.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the year ended December 31, 2020. Neither the Company nor its subsidiaries are subject to externally imposed capital requirements aside from the covenants described in note 11.

52 F-58

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

20. Government grants and investment tax credits:

During the year ended December 31, 2020, the Company recorded:

Refundable investment tax credits of $151,400 (2019 - nil, 2018 - $92,000). The Company recorded $100,614 (2019 - nil, 2018 - $92,000) as a reduction of current period expenses and $50,786 (2019 - nil, 2018 - nil) as a reduction of the cost of the related asset that will be recognized as a reduction of the related depreciation and amortization of the useful life of the related assets.
Government assistance from the Government of Canada as part of the Canada Emergency Wage Subsidy (CEWS) of $943,465 (2019 - nil, 2018 - nil). The Company recorded $810,573 as a reduction of current period expenses and $132,892 as a reduction of the cost of the related asset that will be recognized as a reduction of the related depreciation and amortization of the useful life of the related assets.
A low interest forgivable loan under the US PPP, that may be forgiven based on certain criteria. The benefit of low interest was insignificant. As at December 31, 2020 the government funds received under the US PPP program has been accounted for as a loan (note 11).

In addition, during the year ended December 31, 2020, the Company recorded a tax credit receivable of $115,296 (2019 - nil) with an offsetting reduction in trade and other receivables relating to Ontario Interactive Digital Media Tax Credit claims. The amount was unpaid as at December 31, 2020.

53 F-59

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

21. Geographical information:

The Company operates in multiple countries, principally in the US and Canada. In presenting the geographical information, revenue is based on the country in which the revenue is transacted. Assets are based on the geographic location of the assets.

		2020		2019		2018
Geographic revenue:
US	$	35,279,566	$	36,304,334	$	43,218,669
Canada		6,885,712		6,706,648		6,013,839
Other		14,757,987		15,443,625		19,115,010
	$	56,923,265	$	58,454,607	$	68,347,518

				2020		2019
Geographic non-current assets*
US			$	4,480,042	$	7,619,636
Canada				30,385,923		41,333,263
Other				2,306,305		3,670,295
			$	37,172,270	$	52,623,194

*Non-current assets include property and equipment, right-of-use assets and intangible assets

54 F-60

VERTICALSCOPE HOLDINGS INC.

Notes to Consolidated Financial Statements (continued) (In US dollars, except as otherwise indicated)

For the years ended December 31, 2020, 2019 and 2018

22. Net loss per share:

The following table sets forth the calculation of basic and diluted loss per share:

		2020		2019		2018
Numerator:
Loss for the year	$	(1,505,983)	$	(1,733,223)	$	(14,099,116)
Denominator:
Weighted average number of shares:
Basic		13,957,452		13,957,452		13,957,452
Diluted		13,957,452		13,957,452		13,957,452
Loss per share:
Basic	$	(0.11)	$	(0.12)	$	(1.01)
Diluted		(0.11)		(0.12)		(1.01)

During the year ended December 31, 2020, there were 937,500 (2019 - 682,500, 2018 - 672,500) weighted average outstanding stock options excluded from the computation of diluted loss per share as they were anti-dilutive.

F-61

Interim Condensed Consolidated Financial Statements (In U.S. dollars)

VERTICALSCOPE HOLDINGS INC.

Three months ended March 31, 2021 and 2020 (Unaudited)

F-62

VERTICALSCOPE HOLDINGS INC.

Interim Condensed Consolidated Balance Sheets (In U.S. dollars) (Unaudited)

		March 31,	December 31,	December 31,
		2021		2020
Assets
Current assets:
Cash	$	5,466,211	$	4,603,609
Trade and other receivables (note 4)		10,273,014		14,664,272
Income taxes receivable		477,740		536,423
Prepaid expenses		471,633		270,763
Derivative instruments		26,827		80,506
		16,715,425		20,155,573
Property and equipment (note 6)		1,701,735		1,751,800
Right-of-use asset (note 7)		3,024,144		2,712,995
Intangible assets (note 8)		29,582,610		32,707,475
Investments		2,449,999		2,449,999
Goodwill		11,840,039		11,840,039
Deferred tax asset		15,773,423		16,065,696
	$	81,087,375	$	87,683,577

Liabilities and Shareholders' Deficiency

Current liabilities:
Accounts payable and other liabilities	$	4,618,141	$	4,449,234
Deferred revenue		812,490		810,457
Current portion of long-term debt (note 9)		7,833,175		8,323,090
Leaseliability (note7)		794,417		708,248
		14,058,223		14,291,029
Deferred revenue		33,340		58,477
Long-term debt (note 9)		85,036,864		93,142,219
Lease liability (note 7)		2,810,775		2,525,799
Deferred tax liability		372,959		210,700
		102,312,161		110,228,224
Shareholders' deficiency:
Share capital (note 10)		34,183,524		34,183,524
Contributed surplus		10,837,564		10,371,945
Deficit		(66,245,874)		(67,100,116)
		(21,224,786)		(22,544,647)
Subsequent event (note 9)
	$	81,087,375	$	87,683,577

See accompanying notes to interim condensed consolidated financial statements.

1 F-63

VERTICALSCOPE HOLDINGS INC.

Interim Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (In U.S. dollars, except per share amounts) (Unaudited)

		Three months ended	Three months ended	Three months ended
			March 31,
		2021		2020
Revenue (note 5)	$	15,918,392	$	11,264,620
Operating expenses:
Wages and consulting		6,019,861		5,818,351
Share-based compensation		465,619		221,864
Platform and technology		1,642,800		1,519,165
General and administrative		744,154		996,026
Depreciationand amortization(notes 6,7and 8)		4,582,933		5,228,290
		13,455,367		13,783,696
Operating income (loss)		2,463,025		(2,519,076)
Other expenses:
Loss (gain) on loss of assets		169		(192,383)
Interest expense (note 12)		1,093,506		2,216,571
Foreignexchangeloss (gain)		49,673		(231,035)
		1,143,348		1,793,153
Income (loss) before income taxes		1,319,677		(4,312,229)
Income taxes (recovery):
Current		10,903		154,707
Deferred		454,532		(1,465,131)
		465,435		(1,310,424)
Net income(loss)and comprehensive income(loss)	$	854,242	$	(3,001,805)
Income (loss) per share (note 14):
Basic	$	0.06	$	(0.22)
Diluted		0.06		(0.22)

See accompanying notes to interim condensed consolidated financial statements.

F-64

VERTICALSCOPE HOLDINGS INC.

Interim Condensed Consolidated Statements of Shareholders' Deficiency (In U.S. dollars) (Unaudited)

Threemonths endedMarch31,2021	Class A Number of shares Amount	Class B Number of Contributed Accumulated shares Amount surplus deficit Total 28,125 $ 309,375 $ 10,371,945 $ (67,100,116) $ (22,544,647) – – – 854,242 854,242 – – 465,619 – 465,619 28,125 $ 309,375 $10,837,564 $ (66,245,874) $ (21,224,786) Class B Number of Contributed Accumulated shares Amount surplus deficit Total 28,125 $ 309,375 $ 8,410,416 $ (65,594,133) $ (23,000,193) – – – (3,001,805) (3,001,805) – – 221,864 – 221,864 28,125 $ 309,375 $ 8,632,280 $ (68,595,938) $ (25,780,134)
Balance, December 31, 2020 Net income Share-based compensation	13,929,327 $ 33,874,149 – – – –
Balance,March 31,2021	13,929,327 $33,874,149

Threemonths endedMarch31,2020	Class A Number of shares Amount
Balance, December 31, 2019 Loss for the period Share-based compensation	13,929,327 $ 33,874,149 – – – –
Balance,March 31,2020	13,929,327 $33,874,149

See accompanying notes to interim condensed consolidated financial statements.

3 F-65

VERTICALSCOPE HOLDINGS INC.

Interim Condensed Consolidated Statements of Cash Flows (In U.S. dollars) (Unaudited)

		Three months ended	Three months ended	Three months ended
			March	31,
		2021		2020
Cash provided by (used in):
Operating activities:
Net income (loss)	$	854,242	$	(3,001,805)
Items not involving cash:
Depreciation and amortization		4,582,933		5,228,290
Interest expense		1,093,506		2,216,571
Loss (gain) on sale of assets		169		(192,383)
Unrealized loss in derivative instruments		53,678		202,147
Income tax expense (recovery)		465,435		(1,310,424)
Share-based compensation		465,619		221,864
		7,515,582		3,364,260
Change in non-cash operating assets and
liabilities (note 11)		3,520,790		3,893,292
Interest paid		(74,375)		(3,033,906)
Income taxes paid		48,737		(102,316)
		11,010,734		4,121,330
Financing activities:
Repayment of initial term loan (note 9)		(2,062,500)		(2,062,500)
Repayment of delayed draw term loan (note 9)		(6,642,643)		(649,256)
Lease payments		(217,757)		(204,749)
		(8,922,900)		(2,916,505)
Investing activities:
Additions to property and equipment, right-of-use and
intangible assets		(1,236,271)		(1,429,452)
Proceedsfromthe sale ofassets		2,763		195,892
		(1,233,508)		(1,233,560)
Increase (decrease) in cash		854,326		(28,735)
Cash, beginning of year		4,603,609		5,112,990
Effect of movement of exchange rates on cash held		8,276		(51,223)
Cash,end of theyear	$	5,466,211	$	5,033,032

See accompanying notes to interim condensed consolidated financial statements.

4 F-66

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

1. Organization and nature of operations:

VerticalScope Holdings Inc. (and its wholly owned subsidiaries (together the "Company" or "VSHI")) was incorporated on November 19, 2012 under the Ontario Business Corporation Act. The Company is an integrated digital platform media company for enthusiast communities that builds, acquires and operates digital communities. The Company's headquarters and registered office is located at 111 Peter Street, Suite 901, Toronto, Ontario M5V 2H1.

The Company is closely monitoring the impact of COVID-19 on all aspects of its business. COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020. The COVID-19 pandemic has had disruptive effects in countries in which the Company operates. The pandemic may have an adverse impact on many of the Company's customers, including their ability to satisfy ongoing payment obligations to the Company, which could increase the Company's bad debt exposure. The future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving. It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affected and the resulting economic impact may adversely affect the Company's results of operations, cash flows and financial position as well as its customers in future periods, and this impact could be material.

2. Basis of presentation:

(a) Statement of compliance:

The unaudited condensed interim consolidated financial statements ("Interim Financial Statements") have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB"). They do not include all the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") and should be read in conjunction with the annual consolidated financial statements of the Company for the year ended December 31, 2020. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and performance since the last annual consolidated financial statements as at and for the year ended December 31, 2020.

The Interim Financial Statements were authorized for issuance by the Board of Directors on June 13, 2021.

F-67

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

2. Basis of presentation (continued):

(b) Basis of consolidation:

These Interim Financial Statements include the accounts of VerticalScope Holdings Inc., and its wholly owned subsidiaries:

	Percentage
	of ownership	Nature of
	interest	subsidy
VerticalScope Inc.	100	Cdn. Operating Company
VerticalScope USA Inc.	100	USA Operating Company
VerticalScope USA LLC	100	USA Holding Company
RateMDs Inc.	100	USA Operating Company
Second Media Corp.	100	Cdn. Operating Company
Second Media Inc.	100	USA Operating Company
Versatile Solutions Holdings Inc.	100	Cayman Islands Holding Company
Versatile Solutions Inc.	100	Cayman Islands Operating Company
Adlogix Inc.	100	Cdn. Operating Company
Web Site Acquisitions Inc.	100	Cayman Islands Operating Company
Outside Hub Holdings, Inc.	100	USA Holding Company
Outdoor Hub, LLC	100	USA Operating Company

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated upon consolidation. Adlogix Inc. was dissolved on October 14, 2020 but is included in three-month period ended March 31, 2020 balances.

(c) Use of estimates and judgments:

The preparation of Interim Financial Statements often involves management's judgment and the use of estimates and assumptions deemed to be reasonable at the time they are made. The Company reviews estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the year in which the estimates are revised and may impact future years as well. Other results may be derived with different judgments or using different assumptions or estimates and events may occur that could require a material adjustment. The significant judgments made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2020. Actual results could differ from these estimates.

6 F-68

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

3. Significant accounting policies:

The Interim Financial Statements have been prepared using the accounting policies outlined in note 3 of the audited consolidated financial statements as at and for the year ended December 31, 2020, except the following:

The Company has initially adopted Interest Rate Benchmark Reform Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (the "phase 2 amendments") from January 1, 2021.

The Company applied the phase 2 amendments retrospectively. However, in accordance with the exceptions permitted in the phase 2 amendments, the Company has elected not to restate the prior period to reflect the application of these amendments, including not providing additional disclosures for 2020. There is no impact on opening equity balances as a result of retrospective application.

The phase 2 amendments provide practical relief from certain requirements in IFRS standards. These reliefs relate to modifications of financial instruments and lease contracts or hedging relationships triggered by a replacement of a benchmark interest rate in a contract with a new alternative benchmark rate.

If the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changes as a result of interest rate benchmark reform, the Company updates the effective interest rate of the financial asset or financial liability to reflect the change is required by the reform.

If changes are made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, then the Company first updates the effective interest rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. Subsequently, the Company applies the policies on accounting for modifications set out above to the additional changes.

The amendments also provide an exception to use a revised discount rate that reflects the change in interest rate when remeasuring a lease liability because of a lease modification that is required by interest rate benchmark reform.

7 F-69

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

3. Significant accounting policies (continued):

Finally, the phase 2 amendments provide a series of temporary exceptions from certain hedge accounting requirements when a change required by interest rate benchmark reform occurs to a hedged item and / or hedging instrument that permit the hedge relationship to be continued without interruption. The adoption did not have a material impact in Q1 2021.

4. Trade and other receivables:

	March 31,	December 31,
	2021	2020
Trade accounts receivable	$ 10,010,838	$ 14,295,973
Investment tax credits recoverable	–	131,261
Sundry receivable	262,176	237,038
	$10,273,014	$14,664,272

5. Revenue from contracts with customers:

Disaggregation of revenue:

		Three months ended	Three months ended
			March 31,
		2021	2020
Digital advertising	$	8,905,850	$ 6,731,243
E-commerce		7,012,542	4,533,377
	$	15,918,392	$11,264,620

8 F-70

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

6. Property and equipment:

		Office
		furniture		Computer		Leasehold
		equipment		equipment	improvements		Total
Cost
Balance,
December 31, 2020	$	1,189,253	$	1,341,898	$	2,243,323	$ 4,774,474
Additions		9,198		37,961		95,932	143,091
Disposals		–		(3,596)		–	(3,596)
Balance,March 31,2021	$	1,198,451	$	1,376,263	$	2,339,255	$4,913,969
Accumulated depreciation
Balance,
December 31, 2020	$	858,866	$	801,033	$	1,362,775	$ 3,022,674
Depreciation		24,257		63,807		102,159	190,223
Disposals		–		(663)		–	(663)
Balance,March 31,2021	$	883,123	$	864,177	$	1,464,934	$3,212,234
Carrying amounts
December 31, 2020	$	330,387	$	540,865	$	880,548	$ 1,751,800
March 31, 2021		315,328		512,086		874,321	1,701,735

7. Right-of-use asset and lease liability:

	March 31,
Right-of-use asset	2021
Balance, December 31, 2020	$ 2,712,995
Additions	485,814
Depreciation	(174,665)
Balance,March 31,2021	$3,024,144

9 F-71

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

7. Right-of-use asset and lease liability (continued):

		March 31,
Leaseliability		2021
Balance, December 31, 2020	$	3,234,047
Additions		485,814
Interest accretion		58,520
Foreign exchange		44,568
Lease payments		(217,757)
Balance,March 31,2021	$	3,605,192
Current	$	794,417
Non-current		2,810,775
	$	3,605,192

8. Acquired and other intangible assets:

				Acquired		Customer		Computer
		Communities		content		relationship		software		Total
Cost
Balance, December 31, 2020	$	135,603,598	$	83,475,960	$	21,684,430	$	12,395,335	$	253,159,323
Additions acquired
separately		–		–		–		5,556		5,556
Additions arising
from internal
development		–		–		–		1,087,624		1,087,624
Balance,March 31,2021	$	135,603,598	$	83,475,960	$	21,684,430	$	13,488,515	$	254,252,503
Accumulated depreciation
Balance, December 31, 2020	$	118,344,860	$	83,403,915	$	13,875,910	$	4,827,163	$	220,451,848
Depreciation		2,409,390		19,071		972,010		817,574		4,218,045
Balance,March 31,2021	$	120,754,250	$	83,422,986	$	14,847,920	$	5,644,737	$	224,669,893
Carrying amounts
December 31, 2020	$	17,258,738	$	72,045	$	7,808,520	$	7,568,172	$	32,707,475
March 31, 2021		14,849,348		52,974		6,836,510		7,843,778		29,582,610

10 F-72

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

8. Acquired and other intangible assets (continued):

In Q1 2021, the Company capitalized third party costs of $177,353 (Q1 2020 - $592,000) and internal costs of $848,736 (Q1 2020 - $382,415) in relation to a next generation community platform for the Company's forum communities.

In Q1 2021, the Company capitalized for significant enhancements to the Company's owned and on-premise licensed customer relationship management and finance computer software in the amount of $5,074 (Q1 2020 - $364,776).

9. Long-term debt:

		Forgivable	Term		Delayed
		loan	loan		draw loan		Total
Balance,
December 31, 2020	$	899,295	$ 92,302,369	$	8,263,645	$	101,465,309
Payments		–	(2,062,500)		(6,642,643)		(8,705,143)
Interest and accretion		–	164,585		(54,712)		109,873
Balance,
March 31, 2021		899,295	90,404,454		1,566,290		92,870,039
Current portion of
long-term debt		–	–		–		7,833,175
Long-term debt	$	899,295	$90,404,454	$	1,566,290	$	85,036,864

Term loan and delayed draw loan:

On October 5, 2017, the Company entered into a new credit agreement (the "2017 Credit Facility") with Capital One, National Association, as successor from Antares Capital LP. The 2017 Credit Facility consists of a revolving credit facility in the amount of $20,000,000, a term loan in the amount of $110,000,000 and a delayed draw term loan in the amount of $70,000,000, which all bear a floating interest of LIBOR plus a margin determined by the Company's net leverage ratio. The 2017 Credit Facility has an expiry date of October 4, 2022. The Company incurred transaction costs of $3,068,004, directly attributable to the issuance of the 2017 Credit Facility, which were capitalized against the 2017 Credit Facility and are being amortized using the effective interest method.

11 F-73

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

9. Long-term debt (continued):

On December 20, 2019, the Company entered into the first amendment to the credit facility (the "Amendment" or "Credit Facility"). The Amendment increased the amortization to 7.5% per annum (from 5.50%), Maximum Total Net Leverage to 4.50x (from 3.50x) and decreased the Minimum Fixed Charge Coverage Ratio to 1.05x (from 1.25x). The Company incurred transaction costs of $476,349, directly attributable to the issuance of the Amendment, which were capitalized against the Credit Facility and are being amortized using the effective interest method.

The Company is required to pay a quarterly commitment fee for the total undrawn amount of the revolving credit facility and delayed draw term loan facility. As at March 31, 2021, the fee was 0.375% per annum. For future quarters, the fee is dependent on the Company's Total Net Leverage Ratio as set forth in the credit agreement. During Q1 2021, the total interest expense on the Credit Facility was $959,664 (Q1 2020 - $1,576,903).

As at March 31, 2021, the Company had borrowings of $93,884,834 (December 31, 2020 - $102,589,976) under the Credit Facility and had accrued interest of $914,184 (December 31, 2020 - $28,895).

Principal repayments required on Credit Facility are due as follows:

	2021	2022
Term loan	$ 8,250,000	$ 86,625,000
Delayed draw loan	201,838	1,013,139
	$8,451,838	$87,638,139

12 F-74

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

9. Long-term debt (continued):

Obligations under the 2017 Credit Facility are secured by collateral (as defined in the Credit Agreement) granted by the Company. The 2017 Credit Facility contains a number of affirmative and negative covenants that, among other things, require the Company to satisfy certain financial covenants and restrict the ability of the Company to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its shares, prepay certain long-term debt, create liens, enter into agreements with subsidiaries, modify the nature of its business, enter into sale leaseback transactions, transfer and sell material assets and merge or consolidate. Under the 2017 Credit Facility, the Company would be subject to an event of default in the event that RDL Ventures Inc. ("RDL"), Hedgewood Inc. and Torstar Corporation ("Torstar") fail to own greater than 51% of the voting power of VerticalScope Holdings Inc. ("VSHI"), RDL fails to own greater than 15% of the voting power of VSHI, and RDL and Hedgewood Inc. fail to maintain, in the aggregate, at least 50% of the board of director seats of VSHI. As at March 31, 2021, the Company was in compliance with all covenants.

At any time following the consummation of the Company's first public offering, a Change of Control will occur if (a) any person or persons constituting a group (other than RDL Ventures, Hedgewood and NordStar Group and their respective affiliates (each an "Authorized Holder") become the beneficial owner, directly or indirectly, of the Company’s common shares or share equivalent representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding share or share equivalents and the percentage of aggregate ordinary voting power so held is greater than the percentage represented by the share or share equivalents beneficially owned, directly or indirectly, in the aggregate by the Authorized Holder (for purposes of measuring beneficial ownership held by any person that is not a Authorized Holder, share or share equivalents held by any Authorized Holder will be excluded) or (b) the Company's ceases to own one hundred percent (100%) of the issued and outstanding share and share equivalents of VerticalScope Inc.

13 F-75

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

9. Long-term debt (continued):

Forgivable loan:

The Paycheck Protection Program, offered by the U.S. Small Business Administration, was a COVID-19 relief loan designed to provide a direct incentive for small businesses to keep their workers on payroll. The Company applied for the loan, through its US subsidiaries, and was approved for the amount of $899,289 in June 2020. The loan is eligible for forgiveness based on specified criteria from the SBA. The Company has submitted an application for the loan forgiveness in early 2021 and is awaiting confirmation from its lenders. The loan balance is included in the Credit Facility on the interim condensed consolidated balance sheet as at March 31, 2021.

10. Share capital:

	Class A			Class B
	shares		Amount	shares		Amount
Balance,
March 31, 2021 and
December 31, 2020	13,929,327	$	33,874,149	28,125	$	309,375

The authorized share capital of VSHI consists of an unlimited number of Class A common shares, an unlimited number of Class B common shares and an unlimited number of Class A preferred shares.

14 F-76

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

11. Changes in non-cash operating assets and liabilities:

		Three months ended	Three months ended	Three months ended
			March	31,
		2021		2020
Trade and other receivables	$	4,424,751	$	4,215,879
Prepaid expenses		(110,870)		(55,266)
Accounts payable and accrued liabilities		(805,325)		(722,283)
Deferred revenue		(23,104)		649,206
Foreign exchange		35,338		(194,244)
	$	3,520,790	$	3,893,292
Interest expense:
		Three months ended
			March	31,
		2021		2020
Interest income	$	(34,588)	$	(8,439)
Interest accretion expense - leases		58,520		59,030
Interest on long-term debt		1,069,536		2,165,954
Interest expense-other		38		26
Interest expense		1,128,094		2,225,010
Net interest expense	$	1,093,506	$	2,216,571

12. Interest expense:

13. Government grants:

The Company also received a low interest forgivable loan under the US Paycheck Protection Program. The benefit of low interest was insignificant. The Company will record the benefit of loan forgiveness once it is reasonably assured the requirements for forgiveness will be met. As at March 31, 2021 the government funds received under the US Paycheck Protection Program has been accounted for as a loan (note 9).

15 F-77

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

14. Income (loss) per share:

The following table summarizes the calculation of the weighted average number of basic and diluted common shares and basic and diluted income (loss) per share:

	Q1	Q1
	2021	2020
Issued common shares	13,957,452	13,957,452
Weighted average shares outstanding - basic	13,957,452	13,957,452
Weighted average shares outstanding - diluted	14,078,116	13,957,452
Income (loss) per share:
Basic	$ 0.06	$ (0.22)
Diluted	0.06	(0.22)

During Q1 2021, there were 510,000 (Q1 2020 - 747,500) weighted average outstanding share options excluded from the computation of diluted loss per share as they were anti-dilutive.

15. Financial instruments:

The fair values of cash, trade and other receivables, and accounts payable and other liabilities are assumed to approximate their carrying amounts because of their short term to maturity. The carrying value of the Company's term loan and delayed draw loan approximate fair value due to the variable interest rate in the Credit Facility.

Level 1 - this level includes assets and liabilities measured at fair value based on unadjusted quoted prices for identical assets and liabilities in active markets that are accessible at the measurement date.
Level 2 - this level includes valuations determined using directly (i.e., as prices) or indirectly (i.e., derived from prices) observable inputs other than quoted prices included within Level 1. Derivative instruments in this category are valued using models or other standard valuation techniques derived from observable market inputs.

F-78

VERTICALSCOPE HOLDINGS INC.

Notes to Interim Condensed Consolidated Financial Statements (continued) (in U.S. dollars, except per share amounts and as otherwise indicated)

Three months ended March 31, 2021 and 2020 (Unaudited)

15. Financial instruments (continued):

Level 3 - this level includes valuations based on inputs, which are less observable, unavailable or when the observable data does not support a significant portion of the instruments' fair value.

Investments are measured at fair value and categorized as Level 3 in the hierarchy. Estimates of the fair value of investments are assessed on a quarterly basis. There were no transfers of fair value measurement between Levels 1, 2, and 3 of the fair value hierarchy during the three months ended March 31, 2021 and year ended December 31, 2020.

16. Related party transactions:

In Q1 2021, Star Media Group, a wholly owned subsidiary of Torstar, purchased $15,643 (Q1 2020 - $15,160) of automobile content from a website owned by the Company.

17 F-79

CERTIFICATE OF THE COMPANY

Dated: June 14, 2021

This prospectus, together with the documents and information incorporated by reference, will, as of the date of the supplemented prospectus providing the information permitted to be omitted from this prospectus, constitute, full, true and plain disclosure of all material facts relating to the securities offered by this prospectus as required under the securities legislation of each of the provinces and territories of Canada.

(Signed) “Rob Laidlaw” (Signed) “Vincenzo Bellissimo” Chief Executive Officer SVP, Finance

On behalf of the Board of Directors

(Signed) “Jesse Rasch” (Signed) “Paul Rivett” Director Director

C-1

CERTIFICATE OF THE UNDERWRITERS

Dated: June 14, 2021

To the best of our knowledge, information and belief, this prospectus, together with the documents and information incorporated by reference, will, as of the date of the supplemented prospectus providing the information permitted to be omitted from this prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus as required under the securities legislation of each of the provinces and territories of Canada.

RBC DOMINION SECURITIES INC. (Signed) “James McKenna” Managing Director RAYMOND JAMES LTD. (Signed) “Yong Kwon” Managing Director CORMARK SECURITIES INC. (Signed) “James Austen” Managing Director	CANACCORD GENUITY CORP. (Signed) “Myles Hiscock” Managing Director TD SECURITIES INC. (Signed) “Matt Boelen” Director	NATIONAL BANK FINANCIAL INC. (Signed) “Colin Ryan”
		Managing Director DESJARDINS SECURITIES INC. (Signed) “Andrew Kennedy”
		Managing Director HSBC SECURITIES (CANADA) INC. (Signed) “Brad Meiers”
		Managing Director

C-2

==> picture [234 x 79] intentionally omitted <==

AI assistant

VerticalScope Holdings Inc. — Capital/Financing Update 2021

48141_rns_2021-06-14_50deff72-0603-4fd3-a68a-ebb70fe4102a.pdf

BASE PREP PROSPECTUS

Initial Public Offering

VERTICALSCOPE HOLDINGS INC. C$125,000,000  Subordinate Voting Shares

Unless otherwise indicated, all information in this prospectus assumes that the Over-Allotment Option will not be exercised.

A Leading Digital Platform for Enthusiast Communities

The Fora Software Platform

Proprietary, Cloud-based Community Platform

Benefits of our Unified, Cloud-Based Community Software Platform

Improved User Experience and Engagement

Community Management & Moderation

Our Investment in Fora Has Accelerated Our Growth

Strong Financial Performance and Free Cash Flow Generation with a Large Acquisition TAM

Massive Acquisition TAM

Acquisition Pipeline

Revenue[(2)]

Adj. EBITDA & Margin[(2)(4)]

Free Cash Flow[[(3)(4)]]

TABLE OF CONTENTS

GENERAL MATTERS

CURRENCY EXCHANGE RATE DATA

IFRS AND NON-IFRS MEASURES

Non-IFRS Measures

Industry Metrics

FORWARD-LOOKING INFORMATION

revenue;

MARKET AND INDUSTRY DATA

MARKETING MATERIALS

TRADEMARKS, TRADENAMES AND COPYRIGHTS

A LETTER FROM ROB LAIDLAW

VERTICALSCOPE’S FOUNDER AND CEO

PROSPECTUS SUMMARY

OUR BUSINESS

Business Overview

Our Communities and Users

Our Acquisition Strategy

Current Acquisition Pipeline

Our Acquisition Process

Acquisition Criteria

Integration and Improvement

Select Acquisition Case Studies

RedFlagDeals

MTBR

Piloteers.org

SpeakEV

The Fora Software Platform

Our Transition to Fora

Industry Overview & Trends

Topic-Focused Communities are Thriving

Advertising Budgets are Following Consumers Online

As E-Commerce Spending Grows, Social Networks and Communities are Closing the Loop from Influence to Purchase

Our Market Opportunity

Our Strengths

Dedicated Spaces for Hyper-Specific Enthusiast Communities

Powerful Network Effects & Passion at Scale

Proven, Accretive Acquisition Playbook

The Fora Platform

Robust Value Proposition for Advertisers and E-Commerce Merchants

Attractive Business Model Providing High Margin Cash Flows

Our Business Model

Digital Advertising

E-Commerce

Select Customer Case Study

Our Four-Pronged Approach to Profitability

Long-Tail, User-Generated Content

Engaged Moderators and Administrators

Organic Audience

The Fora Platform

Growth Strategy

Grow our User Base and Increase Engagement on our Communities

Expand our Commerce Capabilities

Acquire and Enhance Enthusiast Communities

Develop and Launch New Features and Products

Competition

THE OFFERING

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Selected Information from Consolidated Statement of Income (Loss) and Comprehensive Income (Loss)

Selected Information from Consolidated Balance Sheet

VerticalScope Holdings Inc. Capital/Financing Update 2021