Adcore : Annual Report

ADCORE INC.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2021

ADCORE INC.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2021

TABLE OF CONTENTS

	Page
Independent Auditors' Statement	1-5
Consolidated Statements of Financial Position	6-7
Consolidated Statements of Comprehensive Income	8
Consolidated Statements of Changes in shareholders' equity	9
Consolidated Statements of Cash Flows	10-11
Notes to the Consolidated Financial Statements	12-42

The amounts are stated in thousand US dollars

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INDEPENDENT AUDITORS' STATEMENT

TO THE SHAREHOLDERS OF

ADCORE INC.

We have audited the consolidated financial statements of Adcore Inc. (the "Company"), which comprise the consolidated statement of financial position as at December 31, 2021 and December 31, 2020 and the consolidated statements of comprehensive income (loss), changes in shareholders' equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2021 and December 31, 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRSs) 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 Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements relevant to the 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.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Recognition of Revenues

The Company offers its technologies on a self- serve basis for indirect agency customers ("Indirect") or acts as the principal for direct to customers advertisers ("Direct").

How the matter was addressed in our audit

We obtained a detailed understanding of each of the revenue streams and the processes for capturing and recording revenue. Our key audit procedures in relation to the recognition of revenue included:

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The key risks on revenue recognition are:

Cut-off where revenue is not recognized in line with the Company policy.

The presentation of revenue where the Company acts as a principal and revenue is recognized and presented on a gross rather than a net basis.

Refer to the revenue recognition in note 2 to the consolidated financial statements for further detail.

• Gaining an understanding of the recognition of the revenue process.
• Testing on a sample basis for invoices (i.e. media budget, fees related to its software products) to significate contracts.
• Considering the appropriateness and accuracy of any cut-off adjustments processed.
• Evaluating management's assessment whether revenue has been recognized in accordance with IFRS 15 'Revenue' and with the Company's accounting policy by reviewing details of the Company revenue recognition policy, the application of this, and any significant new contracts; and
• Confirming that all material temporary worker contractual arrangements where the Company acts as a principal and maintains the majority of the risk and rewards associated with the underlying agreement have been recognized and presented on a gross revenue basis in the financial statements.

Other Information

Management is responsible for the other information. The other information comprises:

• The information, other than the consolidated financial statements and our auditor's report thereon, included in the Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent

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with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained the Management's Discussion and Analysis prior to the date of this auditor's 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 this auditor's report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.

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

Auditor's responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated 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 consolidated 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

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