Implantica Annual Report 2022

Plain-text annual report

2022 ANNUAL REPORT Intermap Technologies Corporation Corporate Information OFFICES Canadian Corporate Office Intermap Technologies Corp. 840–6th Avenue SW Suite 200 Calgary, AB T2P 3E5 Canada Phone: (403) 266-0900 Fax: (403) 265-0499 Denver Worldwide Headquarters Intermap Technologies, Inc. 8310 South Valley Highway Suite 240 Englewood, CO 80112-5809 United States Phone: (303) 708-0955 Fax: (303) 708-0952 BOARD OF DIRECTORS Partick A. Blott Chairman and CEO New York, New York, USA Philippe Frappier Director Toronto, Ontario, Canada TRANSFER AGENT Odyssey Trust Company 1230 - 300 5th Ave SW Calgary, Alberta T2P 3C4 Canada AUDITORS KPMG LLP 150 Elgin Street Suite 1800 Ottawa, ON K2P 2P8 Canada P.T. ExsaMap Asia Wisma Anugraha - 2nd Floor Jl. Taman Kemang No.32B Jakarta, Selatan 12510 Indonesia Phone: +62 021 719 3808 Fax: +62 021 719 3818 Intermap Technologies s.r.o. Zelený pruh 95/97 140 00 Prague 4 Czech Republic Phone: +420 261 341 411 Fax +420 261 341 414 Jordan Tongalson Director New York, New York, USA John Hild Director Ellicott City, Maryland, USA STOCK EXCHANGE INTERMAP STOCK IS LISTED ON THE TORONTO STOCK EXCHANGE UNDER THE SYMBOL “IMP” AND THE OTCQX® BEST MARKET UNDER THE SYMBOL “ITMSF” OFFICERS AND KEY PERSONNEL Patrick A. Blott Chairman and CEO Jennifer S. Bakken Exceutive Vice President and CFO Management’s Discussion and Analysis 1 For the year ended December 31, 2022 For purposes of this discussion, “Intermap®” or the “Company” refers to Intermap Technologies® Corporation and its subsidiaries. This management’s discussion and analysis (MD&A) is provided as of March 31, 2023 and should be read together with the Company’s audited Consolidated Financial Statements and the accompanying notes for the years ended December 31, 2022 and 2021. The results reported herein have been prepared in accordance with International Financial Reporting Standards (IFRS) and, unless otherwise noted, are expressed in United States dollars. The audited Consolidated Financial Statements have been prepared on a going concern basis in accordance with IFRS. The going concern basis of presentation assumes the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. The Consolidated Financial Statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern basis were not appropriate for these financial statements, then adjustments would be necessary to the carrying amounts of assets and liabilities, the reported expenses and the classifications used in the statements of financial position. Additional information relating to the Company, including the Company’s AIF, can be found on the Company’s website at www.intermap.com and on SEDAR at www.sedar.com. NON-IFRS MEASURES This MD&A makes reference to certain non-IFRS measures such “EBITDA” and “Adjusted EBITDA”. These non-IFRS measures are not recognized, defined or standardized measures under IFRS. The Company’s definition of EBITDA and Adjusted EBITDA will likely differ from that used by other companies and therefore comparability may be limited. EBITDA and Adjusted EBITDA should not be considered a substitute for or in isolation from measures prepared in accordance with IFRS. These non-IFRS measures should be read in conjunction with the Company’s audited Consolidated Financial Statements and the accompanying notes for the years ended December 31, 2022 and 2021. Readers should not place undue reliance on non-IFRS measures and should instead view them in conjunction with the most comparable IFRS financial measures. See the reconciliation of EBITDA and Adjusted EBITDA to the most comparable IFRS financial measure in the Reconciliation of Non-IFRS Measures section of this MD&A. FORWARD-LOOKING STATEMENTS In the interest of providing the shareholders and potential investors of Intermap Technologies® Corporation (“Intermap” or the “Company”) with information about the Company and its subsidiaries, including management’s assessment of Intermap’s and its subsidiaries’ future plans, operations and financing alternatives, certain statements and information provided in this MD&A constitute forward-looking statements or information (collectively, “forward-looking statements”). Forward-looking statements are typically identified by words such as “may”, “will”, “should”, “could”, “anticipate”, “expect”, “project”, “estimate”, “forecast”, “plan”, “intend”, “target”, “believe”, and similar expressions suggesting future outcomes, and includes statements that actions, events, or conditions “may,” “would,” “could,” or “will” be taken or occur in the future. These forward-looking statements may be based on assumptions that the Company believes to be reasonable based on the information available on the date such statements are made, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties, and other factors which may cause actual results, levels of activity, and 2 achievements to differ materially from those expressed or implied by such statements. The forward-looking information contained in this MD&A is based on certain assumptions and analysis by management of the Company in light of its experience and perception of historical trends, current conditions and expected future development and other factors that it believes are appropriate. Forward-looking information and statements in this MD&A include, but are not limited to the following: • • • • • •increases in recurring revenue generated from multi-license contracts in Europe and software subscription renewal value increase; •all trade receivable balances are highly likely to be paid in full by the customer; •the factors noted under “Liquidity and Capital Resources” in the aggregate indicate there are material uncertainties which may cast significant doubt about the Company’s ability to continue as a going concern; •management’s belief that an improved capital structure, including the Q4 2022 private placement raising gross proceeds of $1.3 million will provide much needed investment in revenue growth; and •failure to achieve certain requirements could have a material adverse effect on the Company’s financial condition and/or results of operations. The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to, the following: (i) there will be adequate liquidity available to the Company to carry out its operations; (ii) payments on material contracts will occur within a reasonable period of time after contract completion; (iii) the continued sales success of Intermap’s products and services; (iv) the continued success of business development activities; (v) there will be no significant delays in the development and commercialization of the Company’s products; (vi) the Company will continue to maintain sufficient and effective production and software development capabilities to compete on the attributes and cost of its products; (vii) there will be no significant reduction in the availability of qualified and cost-effective human resources; (viii) the continued existence and productivity of subsidiary operations; (ix) demand for geospatial related products and services will continue to grow in the foreseeable future; (x) there will be no significant barriers to the integration of the Company’s products and services into customers’ applications; (xi) the Company will be able to maintain compliance with applicable contractual and regulatory obligations and requirements, (xii) superior technologies/products do not develop that would render the Company’s current product offerings obsolete, and (xiii) impact of a potential future pandemic on the Company’s future operations and performance. Intermap’s forward-looking statements are subject to risks and uncertainties pertaining to, among other things, cash available to fund operations, availability of capital, revenue fluctuations, nature of government contracts, economic conditions, loss of key customers, retention and availability of executive talent, competing technologies, continued listing of its common shares on the Toronto Stock Exchange or equivalent exchange, common share price volatility, loss of proprietary information, software functionality, internet and system infrastructure functionality, information technology security, breakdown of strategic alliances, and international and political considerations, including but not limited to those risks and uncertainties discussed under the heading “Risk Factors” in the annual MD&A and the Company’s other filings with securities regulators. The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent, and the Company’s future course of action depends on Management’s assessment of all information available at the relevant time. Except to the extent required by law, the Company assumes no obligation to publicly update or revise any forward-looking statements made in this MD&A, whether as a result of new information, future events, or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company’s behalf, are expressly qualified in their entirety by these cautionary statements. 2022 Annual Report | Management’s Discussion and Analysis3 BUSINESS OVERVIEW Intermap is a global geospatial intelligence company, creating a wide variety of geospatial solutions and analytics for its customers. Intermap is a premier worldwide provider of geospatial data solutions. Intermap currently generates revenue from three primary business activities, composed of (i) data acquisition and collection, using proprietary radar sensor technologies; (ii) value-added data products and services, which leverage the Company’s proprietary NEXTMap® database, together with proprietary software and fusion technologies; and (iii) commercial applications and solutions, including a webstore and software sales targeting selected industry verticals that rely on accurate high resolution elevation data. These geospatial solutions are used in a wide range of applications including, but not limited to, location- based information, risk assessment, geographic information systems (GIS), engineering, utilities, global positioning systems (GPS) maps, oil and gas, renewable energy, hydrology, environmental planning, land management, wireless communications, transportation, advertising, and 3D visualization. Intermap has the ability to create its own digital 3D geospatial data using its proprietary multi-frequency radar mounted in Learjet aircraft. Intermap’s radar-based technology allows it to collect data at any time of the day, including under conditions such as cloud and tree cover, or darkness, which are conditions that limit most competitive technologies. The Company’s proprietary radar also enables data to be collected over larger areas, at higher collection speeds, and at accuracy levels that are difficult to achieve with competitive technologies. In addition to data collection, the Company is a world leader in data fusion, analytics, and orthorectification, and has decades of experience aggregating data derived from a number of different sensor technologies and data sources. The Company processes raw digital elevation and image data from its own and other sources to create three high resolution geospatial datasets that provide a ground-true foundation layer upon which accurate value-added products and services can be developed. The three high resolution data sets include digital surface models (DSM), digital terrain models (DTM), and orthorectified radar images (ORI). These datasets are further augmented with additional elevation and resolution data layers and served to customers by web service to create other value-added products, such as viewsheds, line of sight maps, and orthorectified mosaic tiles. Unlike many geospatial companies, because of its unique acquisition and processing capability, Intermap retains exclusive ownership of its high resolution NEXTMap® database, which covers the entire globe. Intermap’s NEXTMap database, together with third party data and our in-house analytics team, provide a variety of applications and geospatial solutions for its customers. The NEXTMap database contains a fusion of proprietary multi-frequency radar imagery and data, including unique Interferometric Synthetic Aperture Radar (IFSAR)-derived data, proprietary data models, and purchased third-party data, collected from multiple commodity sensor technologies, such as light detection and ranging (LiDAR), photogrammetry, satellite, and other available sources. The NEXTMap database also includes proprietary information developed by our analytical teams such as 3D city models, census data, real-time traffic, 3D road vectors, outdoor advertising assets, weather related hazards, points of interest, cellular towers, flood models and wildfire models. The Company generates revenue by licensing its geospatial products using its proprietary data, analytics, and applications for specific industries. 2022 Annual Report | Management’s Discussion and Analysis4 FINANCIAL INFORMATION The following table sets forth selected financial information for the periods indicated. Selected Annual Information U.S. $ millions, except per share data Revenue: Acquisition services Value-added data Software and solutions Total revenue Operating loss Financing costs Net (loss) income EPS basic EPS diluted Adjusted EBITDA(1) Assets: 2022 2021 2020 $ 1.1 2.3 3.4 $ 1.4 1.7 2.7 $ 1.4 0.9 2.4 $ 6.8 $ 5.8 $ 4.7 $ (5.2) $ (5.5) $ (5.1) $ (0.1) $ (0.1) $ (1.3) $ (5.3) $ (3.4) $ 26.5 $ (0.16) $ (0.12) $ 1.35 $ (0.16) $ (0.12) $ 1.29 $ (1.8) $ (2.1) $ (2.3) Cash, amounts receivable, unbilled revenue $ 2.1 $ 1.0 $ 2.4 Total assets Liabilities: $ 6.3 $ 7.4 $ 7.6 Long-term liabilities (including lease obligations) $ 0.8 $ 1.0 $ 1.2 Total liabilities $ 7.8 $ 6.6 $ 6.2 (1)Adjusted EBITDA is a non-IFRS measure. See “Reconciliation of Non-IFRS Measures” below. Revenue Year-to-date Revenue On a year-to-date basis, consolidated revenue for the year ended December 31, 2022 increased to $6.8 million, compared to $5.8 million for 2021. Approximately 69% of consolidated revenue was generated outside the United States, compared to 73% for 2021. Acquisition Services Acquisition services revenue was $1.1 million for the year ended December 31, 2022, compared to $1.4 million for the year ended December 31, 2021. The revenue for both years was the strategic data infrastructure contract for the government of Malaysia. Value-added Data Value-added data revenue increased to $2.3 million for the year ended December 31, 2022 as compared to $1.7 million for 2021. The increase relates to government program awards which should continue to generate revenue from future updates and refresh data required by recurring customers, with similar annual updates expected to continue. Software and Solutions Software and solutions revenue increased to $3.4 million for the year ended December 31, 2022, compared to $2.7 million for 2021. The Company recognized a 40% increase in subscription-based revenue, driven by increases in contract values of renewals and the addition multi-license agreements in Europe. 2022 Annual Report | Management’s Discussion and Analysis Classification of Operating Costs The composition of the operating costs on the Consolidated Statements of Loss and Other Comprehensive Loss is as follows: 5 U.S. $ millions Personnel Purchased services & materials Facilities and other expenses Travel Personnel 2022 2021 $ $ 6.6 2.8 0.7 0.1 10.2 5.6 2.9 0.7 0.1 9.3 $ $ Personnel expense includes direct labor, employee compensation, employee benefits, and commissions. Personnel expense for the years ended December 31, 2022 and 2021 totaled $6.6 million and $5.6 million, respectively. The increase is due to the first salary adjustments in over four years, required to maintain high quality specialized personnel and increased commission earnings resulting from increased revenue. As of December 31, 2022, 37% of the headcount relates to software and data development, 32% is in the Jakarta Production Center, 18% relates to sales and marketing and 13% is corporate services. Non-cash compensation expense is included in operating costs and relates to the Company’s omnibus incentive plan, share options, and shares granted to employees and non-employees. Non-cash share-based compensation for the years ended December 31, 2022 and 2021, increased to $412 thousand from $146 thousand, respectively. The change in compensation for non-cash share-based compensation period over period resulted from the issuance of 1,132,860 restricted share units to both employees and directors and advisors (see note 15(f) to the Consolidated Financial Statements). Purchased Services and Materials Purchased services and materials (PS&M) includes (i) aircraft and radar related costs, including jet fuel; (ii) insurance, professional and consulting costs; (iii) third-party support services related to the collection, processing and editing of the Company’s airborne radar data collection activities; (iv) third-party data collection activities (i.e., LiDAR, satellite imagery, air photo, etc.); and (v) third-party software expenses (including maintenance and support). For the years ended December 31, 2022 and 2021, PS&M expense was $2.8 million and $2.9 million, respectively. The decrease is primarily related to the timing of subcontractor charges on the acquisition services project during 2022 compared to 2021. Facilities and Other Expenses For the years ended December 31, 2022 and 2021, facilities and other expenses remained unchanged at $0.7 million for each year. Travel For the years ended December 31, 2021 and 2020, travel expense remained unchanged at $0.1 million for each year. Government Grants The Company participated in three government grant programs during 2021 related to COVID-19 support and was eligible to receive $1.1 million during 2021 from these programs (see Note 14 of the Consolidated Financial Statements). These grant programs were not available for 2022. 2022 Annual Report | Management’s Discussion and Analysis 6 Net (Loss) Income Net loss worsened to a loss of $5.2 million from $3.4 million for the years ended December 31, 2022 and 2021, respectively, due to the gain on the investment and government grants received during 2021. Reconciliation of Non-IFRS Measures To supplement the audited Consolidated Financial Statements, which are prepared and presented in accordance with IFRS, the Company provides the following non-IFRS financial measures: EBITDA and Adjusted EBITDA, as EBITDA and Adjusted EBITDA are included as a supplemental disclosure because Management believes that such measurement provides a better assessment of the Company’s operations on a continuing basis by eliminating certain non-cash charges or gains that are nonrecurring. The term Earnings before interest, taxes, depreciation and amortization (EBITDA) consists of net income (loss) and excludes interest (financing costs), taxes, and depreciation. Adjusted EBITDA also excludes working capital investment, share-based compensation, restructuring costs and fair value adjustments. The most directly comparable measure to EBITDA and Adjusted EBITDA calculated in accordance with IFRS is net income (loss). The following is a reconciliation of the Company’s net loss to Adjusted EBITDA. U.S. $ millions Net loss Financing costs Amortization of intangible assets Depreciation of property and equipment Depreciation of right of use assets EBITDA Working capital investment Increase in unearned revenue Share-based compensation Restructuring costs Loss (gain) on fair value of investment Adjusted EBITDA 2022 2021 $ (5.3) 0.1 0.3 1.1 0.3 $ (3.4) 0.1 0.1 1.4 0.3 $ (3.5) $ (1.5) 1.2 0.4 - 0.1 0.1 0.1 0.3 (1.1) $ (1.8) $ (2.1) Adjusted EBITDA for the year ended December 31, 2022 was negative $1.8 million, compared to negative $2.1 million for 2021. The decrease in Adjusted EBITDA is primarily attributable to the increase in net loss and the increase in current liabilities. Financing Costs Financing costs for the year ended December 31, 2022 totaled $57 thousand compared to $61 thousand for 2021. Amortization of Intangible Assets Amortization expense for intangible assets for the years ended December 31, 2022 and 2021 were $312 thousand and $71 thousand, respectively. Two large assets were placed into service during the end of 2021, thus the increase in amortization during 2022. Depreciation of Property and Equipment Depreciation expense for property and equipment for the years ended December 31, 2022 and 2021 were $1.1 million and $1.4 million, respectively. Depreciation of Right of Use Assets Depreciation expense for right of use assets remained unchanged at $0.3 million for the years ended December 31, 2022 and 2021. 2022 Annual Report | Management’s Discussion and Analysis 7 Loss (Gain) on Fair Value of Investment Loss on fair value of investment was $0.1 million for the year ended December 31, 2022, compared to a gain of $1.1 million for the year ended December 312021. The investment is marked to fair value at each reporting period and is estimated using a market-based approach. Gain on Disposal of Equipment Gain on disposal of equipment was $Nil and $6 thousand for the years ended December 31, 2022 and 2021, respectively. During 2021, the Company disposed of assets with a net book value of $Nil and received cash proceeds equal to the recognized gain. Amounts Receivable and Unbilled Revenue Work is performed on contracts that provide invoicing upon the completion of identified contract milestones. Revenue on certain of these acquisition services contracts is recognized using the percentage- of-completion method of accounting based on the ratio of costs incurred to date over the estimated total costs to complete the contract. While an effort is made to align payments on contracts with work performed, the completion of milestones does not always coincide with the costs incurred on a contract, resulting in revenue being recognized in excess of billings. These amounts are recorded in the consolidated statements of financial position as unbilled revenue. Amounts receivable and unbilled revenue increased to $1.3 million at December 31, 2022 from $1.6 million at December 31, 2021. The Company reviews the amounts receivable aging monthly and monitors the payment status of each invoice to determine the collectability. At the statement of financial position date, $Nil has been reserved as uncollectible as all trade receivable balances greater than 90 days are highly likely to be paid in full by the customer. Property and Equipment Property and equipment include aircraft and engines, radar and mapping equipment, furniture and fixtures, leasehold improvements and assets under construction. The decrease of property and equipment from December 31, 2021 of $2.5 million to $1.4 million at December 31, 2022 is mainly due to depreciation of $1.1 million, offset by additions of $32 thousand. Intangible Assets Intangible assets include data library products the Company builds with the use of proprietary software and intellectual property for the use in software subscription and data license sales. The decrease of intangible assets from December 31, 2021 of $1.1 million to $1.0 million at December 31, 2022 relates to internal labor to build the library of $0.2 million, offset by amortization of $0.3 million. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities generally include trade payables, project-related accruals and personnel-related costs. Accounts payable and accrued liabilities decreased to $3.6 million at December 31, 2022 from $3.7 million at December 31, 2021. U.S. $ millions Accounts payable Accrued liablities VAT payable December 31, December 31, 2022 2021 $ 1.9 $ 2.0 1.6 0.1 1.7 - $ 3.6 $ 3.7 2022 Annual Report | Management’s Discussion and Analysis 8 Government Loans The government loans balance remained flat at $0.5 million at December 31, 2022 and 2021. The loans were available to help off-set the impacts of the COVID-19 pandemic and will be repaid. Unearned Revenue The unearned revenue balance at December 31, 2022 increased to $3.0 million from $1.7 million at December 31, 2021. This balance consists of payments received from customers for contracts that are in progress and have not yet fulfilled the necessary revenue recognition criteria. At December 31, 2022 and 2021, 91% and 89% of the total balance, respectively, is related to software and solutions license revenue, in which the license fee is paid upfront for the term of the license. The balance relates to the collection of milestone billings on acquisition services contracts. 2022 Annual Report | Management’s Discussion and Analysis9 QUARTERLY FINANCIAL INFORMATION Selected Quarterly Information The following table sets forth selected quarterly financial information for Intermap’s eight most recent fiscal quarters. This information is unaudited, but reflects all adjustments of a normal, recurring nature that are, in the opinion of management, necessary to present a fair statement of Intermap’s consolidated results of operations for the periods presented. Quarter-to-quarter comparisons of Intermap’s financial results are not necessarily meaningful and should not be relied on as an indication of future performance. For the last eight quarters, the Company has been severely undercapitalized and was therefore required to self-finance the advancement of high-growth opportunities in the insurance, aviation and telecommunications verticals. As a result, revenue has been delayed. Management believes an improved capital structure, including the Q4 2022 private placements raising gross proceeds of $1.3 million, will provide much needed investment in revenue growth. U.S. $ millions, except per share data Q1 2021 Q2 2021(1) Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Total revenue Depreciation $ 0.9 $ 1.2 $ 1.4 $ 2.3 $ 2.0 $ 2.4 $ 1.2 $ 1.2 $ 0.3 $ 0.4 $ 0.4 $ 0.3 $ 0.4 $ 0.3 $ 0.3 $ 0.1 Financing costs $ - $ - $ 0.1 $ - $ - $ - $ - $ 0.1 Operating (loss) income $ (1.8) $ (1.7) $ (1.2) $ (0.8) $ (1.2) $ (0.7) $ (1.9) $ (1.4) Net (loss) income $ (1.1) $ (1.6) $ (1.0) $ 0.3 $ (1.3) $ (0.6) $ (1.8) $ (1.6) Net (loss) income per share - basic and diluted $ (0.04) $ (0.06) $ (0.04) $ 0.02 $ (0.04) $ (0.02) $ (0.06) $ (0.04) Adjusted EBITDA(2) $ (0.5) $ (0.5) $ (0.1) $ (1.0) $ (0.1) $ (0.1) $ (1.6) $ - (1)Operating income (loss) and net income (loss) amounts have been adjusted as a result of an adjustment identified in connection with issuing our condensed consolidated financial statements for the period ended September 30, 2021. (2)Adjusted EBITDA is a non-IFRS measure. See “Reconciliation of Non-IFRS Measures” above. During the periods in the above table, Intermap’s results were impacted by the following factors and trends: • Intermap experienced immediate delays in government contracting, and closed its first government contract in 5 quarters in Q2 2021; • With additional government contract awards announced in Q3 2021, the Company is experiencing improvements in revenue; • With the support of the COVID-19 wages subsidy programs in the United States and Canada, Intermap was able to retain key talent to build automation and process improvements, resulting in increased fixed assets and depreciation, beginning in Q1 2021 • The growth in subscription revenue provided strong foundation revenue in Q3 and Q4 2022, offset by a decline in project based acquisition services revenue compared to the same quarters in the prior year. Quarterly Revenue Consolidated revenue for the fourth quarter of 2022 totaled $1.2 million, compared to $2.3 million for the same period in 2021 due to the start of the Malaysia project at the end of 2021, with no comparable acquisition project during the end of 2022. Approximately 54% of consolidated revenue was generated outside the United States, compared to 85% for 2021. 2022 Annual Report | Management’s Discussion and Analysis 10 Acquisition Services Acquisition services revenue for the quarter ended December 31, 2022 totaled $22 thousand, compared to $1.2 million for 2021. The decrease is due to the nature and timing of government contracting and the related revenue recognition activities. Value-added Data Value-added data revenue decreased to $0.2 million for the quarter ended December 31, 2022 as compared to $0.4 million for 2021. The decrease was due to timing differences of data requested and delivered to customers. Software and Solutions Software and solutions revenue increased to $1.2 million from $0.7 million for the fourth quarters of 2022 and 2021, respectively. The Company recognized a 59% increase in subscription-based revenue. Personnel Personnel expense for the three-month periods ended December 31, 2022 and 2021, totaled $1.5 million and $1.4 million, respectively. Non-cash compensation expense for the quarters ended December 31, 2022 and 2021, increased to $98 thousand from $45 thousand, respectively. Purchased Services and Materials For the three-month periods ended December 31, 2022 and 2021, PS&M expense was $0.5 million and $1.1 million, respectively. The decrease was due to continued increased spending on acquisition revenue projects during the end of 2021. Facilities and Other Expenses For the three-month periods ended December 31, 2022 and 2021, facilities and other expenses were $0.2 million for both periods. Travel For the quarters ended December 31, 2022 and 2021, travel expense was $20 thousand and $66 thousand, respectively. 2022 Annual Report | Management’s Discussion and Analysis11 USE OF PROCEEDS The Company completed the following Private Placements with the proposed use of proceeds for working capital to fund continuing operations. U.S. $ millions Proposed use of net proceeds Use of proceeds Remaining Actual use of net proceeds April 2021 Private Placement Continuing operations Net proceeds July 2021 Private Placement Continuing operations Net proceeds August 2021 Private Placement Continuing operations Net proceeds September 2021 Private Placement Continuing operations Net proceeds February 2022 Private Placement Continuing operations Net proceeds March 2022 Private Placement Continuing operations Net proceeds October 2022 Private Placement Continuing operations Net proceeds November 2022 Private Placement Continuing operations Net proceeds December 2022 Private Placement Continuing operations Net proceeds $ 0.4 $ 0.4 $ - $ 0.4 $ 0.4 $ - $ 1.3 $ 1.3 $ - $ 1.3 $ 1.3 $ - $ 0.7 $ 0.7 $ - $ 0.7 $ 0.7 $ - $ 0.3 $ 0.3 $ - $ 0.3 $ 0.3 $ - $ 1.0 $ 1.0 $ - $ 1.0 $ 1.0 $ - $ 0.6 $ 0.6 $ - $ 0.6 $ 0.6 $ - $ 0.3 $ 0.3 $ - $ 0.3 $ 0.3 $ - $ 0.9 $ 0.2 $ 0.7 $ 0.9 $ 0.2 $ 0.7 $ 0.1 $ - $ 0.1 $ 0.1 $ - $ 0.1 The Company has cash of $0.8 million at December 31, 2022. CONTRACTUAL OBLIGATIONS Contractual obligations include (i) lease obligations on office locations and computer equipment; (ii) project financing; (iii) government loans; and (iv) operating leases on low value equipment. Principal and interest repayments of these obligations are as follows: Payments due by Period (US $ thousands) Contractual obligations Lease obligations Project financing Government loans Bank loan Operating leases Total Total $ 419 177 607 144 259 1,606 $ Less than 1 year 269 $ - 131 48 259 707 $ $ 1 - 3 years 150 177 260 96 - 683 $ 4 - 5 years After 5 years - $ - 18 - - $ 18 - $ - 198 - - 198 $ 2022 Annual Report | Management’s Discussion and Analysis 12 LIQUIDITY AND CAPITAL RESOURCES Management continually assesses liquidity in terms of the ability to generate sufficient cash flow to fund the business. Net cash flow is affected by the following items: (i) operating activities, including the level of trade receivables, unbilled receivables, accounts payable, accrued liabilities and unearned revenue; (ii) investing activities, including the purchase of property and equipment; and (iii) financing activities, including debt financing and the issuance of capital stock. Operating Activities During the year ended December 31, 2022, the Company generated an operating loss of $5.3 and incurred negative Adjusted EBITDA of $1.8 million. Revenue for the year ended December 31, 2022 was $6.8 million, which is a $1.0 million increase as compared to the same period in 2021. At December 31, 2022, the Company has a shareholders’ deficit of $1.4 million. Cash used in operations during the year ended December 31, 2022 totaled $1.5 million, compared to $2.5 million during the same period in 2021. At December 31, 2022, the Company has a deficiency of current assets of $2.5 million and current liabilities of $6.9 million, resulting in a working capital deficit of $4.4 million. Of that balance, $3.0 million relates to unearned revenue, which is the accounting treatment for contracts in which the revenue recognition criteria have not been met at the time of payment. The Company has the obligation to deliver the required services (software) over the term of the license, and there is no incremental cash cost or payment. At the end of the fourth quarter of 2022, the Company began executing on new contract awards exceeding $1.5 million to be recognized over the next 12 months, and increasing its recurring revenue base by $0.7 million, along with significant government and commercial pipeline, and as such, management expects to meet the obligations as they come due through operations. Investing Activities Net cash used in investing activities totaled $0.2 million and $1.4 million for the years ended December 31, 2022 and 2021, respectively. For the year ended December 31, 2022, the balance related to the purchase of computer related equipment and the capitalization of labor and materials to build the data archive, processing capabilities, and software assets. Net cash used in investing activities in 2021 related to the purchase of radar equipment, avionics upgrades, computer related equipment and the capitalization of labor and materials to build the data archive, processing capabilities, and software assets. Financing Activities Net cash provided by financing activities totaled $2.4 million for the year ended December 31, 2022, as compared to cash provided by financing activities of $2.3 million in 2021. The net cash used during the year ended December 31, 2022 resulted from proceeds from a private placement of $2.9 million offset by private placement issuance costs of $0.2 million and the payment of lease obligations of $0.3 million. The net cash provided during the year ended December 31, 2021 resulted from proceeds from a private placement of $3.0 million offset by private placement issuance costs of $0.4 million and the payment of lease obligations of $0.3 million. The Company is dependent upon its cash flow from operations to fund its business as it currently has no line of credit or credit facility in place. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully secure sales with upfront payments, and / or obtain additional financing. Failure to achieve one or more of these requirements could have a materially adverse effect on the Company’s financial condition and / or results of operations. The Board of Directors and management continue to take actions to address these issues including raising capital through a private placement, exploring options for additional capital and 1 Adjusted EBITDA is a non-IFRS measure. See “Reconciliation of Non-IFRS Measures above” 2022 Annual Report | Management’s Discussion and Analysis13 material contracts executed during the fourth quarter, exceeding $1.5 million to be recognized over the next twelve months. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Revenue Recognition Revenue is recognized when a customer obtains control of the good or services. Determining the timing of the transfer of control, at a point in time or overtime, requires judgement. Acquisition Service Contracts Revenue from acquisition service contracts is recognized over time based on the ratio of costs incurred to estimated total contract costs. The use of this method of measuring progress towards complete satisfaction of the performance obligations requires estimates to determine the cost to complete each contract. These estimates are reviewed monthly and adjusted as necessary. Provisions for estimated losses, if any, are recognized in the period in which the loss is determined. Invoices are issued according to contractual terms and are usually payable within 30 days. Revenue recognized in advance of billings are presented as unbilled revenue. Data Licenses Revenue from the sale of data licenses in the ordinary course of business is measured at the fair value of the consideration received or receivable. Customers obtain control of data products upon receipt of a physical hard drive or download of the data from a web link provided. Invoices are generated, and revenue is recognized at that point in time. Invoices are generally paid within 30 days. Software Subscriptions Software subscriptions are paid at the beginning of the license term. Revenue is recognized overtime, and payments for future months of service are recognized in unearned revenue. While the license agreements are for a fixed term, some agreements also contain a limited number of clicks or uses. If the limit is reached prior to the end of the term, the license ends early. Use of estimates Preparing financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from these estimates. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year include the following: Depreciation and amortization rates In calculating the depreciation and amortization expense, management is required to make estimates of the expected useful lives of property and equipment and intangible assets. Amounts receivable The Company uses historical trends and performs specific account assessments when determining the expected credit losses. These accounting estimates are in respect to the amounts receivable line item in the Company’s consolidated statements of financial position. At December 31, 2022, amounts receivable represented 20% of total assets. The estimate of the Company’s expected credit losses could change from period to period due to the allowance being a function of the balance and composition of trade receivables. At December 31, 2022, the expected credit losses of trade receivables were $Nil due to only $6 thousand in receivables were aged over 61 days past due. 2022 Annual Report | Management’s Discussion and Analysis14 Investments The valuation and accounting for investments requires the application of management estimates and judgments with respect to the determination of appropriate valuation method applied at each reporting date. The assumptions for estimating fair value of investments are disclosed in Note 8 to the Consolidated Financial Statements. Share-based compensation The Company uses the Black-Scholes option-pricing model to determine the grant date fair value of share- based compensation. The following assumptions are used in the model: dividend yield; expected volatility; risk-free interest rate; expected option life; and fair value. Changes to assumptions used to determine the grant date fair value of share-based compensation awards can affect the amounts recognized in the consolidated financial statements. Revenue Revenue from acquisition service contracts is recognized over time based on the ratio of costs incurred to estimated total contract costs. The determination of estimated total contract costs of acquisition services contracts requires the use of significant assumptions related to estimated purchased services, materials, and labor costs. Changes to the assumptions used to measure revenue could impact the amount of revenue recognized in the Consolidated Financial Statements. Impairment The carrying value of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable and assesses the impairment for intangible assets not yet available for use on an annual basis. The Company has determined that its long-lived assets belong to two distinct cash-generating units (CGUs). The significant assumptions used in determining estimated discounted future cash flows include projected revenues and discount rates. Judgment is required in determining the level at which to test impairment, including the grouping of CGUs that generate cash inflows. OFF-BALANCE SHEET ARRANGEMENTS As at March 31, 2023 and December 31, 2022, the Company did not have any material off-balance sheet arrangements. OUTSTANDING SHARE DATA The Company’s authorized capital consists of an unlimited number of Class A common shares without par value and an unlimited number of Class A participating preferred shares without par value. At the close of business on March 31, 2023, 37,396,710 Class A common shares were issued and outstanding. There are currently no Class A participating preferred shares issued and outstanding. As of March 31, 2023, potential dilutive securities include (i) 801,943 outstanding share options with a weighted average exercise price of C$0.72, (ii) 2,453,744 restricted share units, and (iii) 3,840,467 warrants outstanding with a weighted average exercise price of US$0.47. Each option and warrant entitles the holder to purchase one Class A common share. The following warrants expire on the dates listed below: • • • • • 60,000 warrants expire on April 27, 2023; 131,166 warrants expire on July 29, 2023; 45,000 warrants expire on August 8, 2023; 12,000 warrants expire on August 17, 2023; 6,666 warrants expire on September 19, 2023; 2022 Annual Report | Management’s Discussion and Analysis15 • • • • 43,500 warrants expire on February 10, 2024; 88,235 warrants expire on March 18, 2024; 3,188,900 warrants expire on November 17, 2024; and 265,000 warrants expire on December 6, 2024. Other than as listed above, the Company does not currently have any material financial instruments which can be converted into additional common shares. INTERNAL CONTROLS AND DISCLOSURE CONTROLS AND PROCEDURES Internal Control Over Financial Reporting The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have designed, or have caused to be designed under their supervision, internal control over financial reporting as defined under National Instrument 52-109 – Certification of Disclosure in Issuer’s Annual and Interim Filings, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Company’s internal control over financial reporting and have determined, based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (2013) and on this evaluation, that such internal controls over financial reporting were effective at December 31, 2022. Changes in Internal Control Over Financial Reporting There have been no significant changes in the design of internal control over financial reporting that occurred during the year ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Disclosure Controls and Procedures The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have designed, or have caused to be designed under their supervision, disclosure controls and procedures to provide reasonable assurance that material information relating to the Company has been made known to them and that information required to be disclosed in the Company’s annual filings, interim filings or other reports filed by it or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified by applicable securities legislation. The Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officer have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Company’s disclosure controls and procedures and have determined, based on that evaluation, that such disclosure controls and procedures were effective at December 31, 2022. RISKS AND UNCERTAINTIES The risks and uncertainties described below are not exhaustive. Additional risks not presently known currently deemed immaterial may also impair the Company’s business operation. If any of the events described in the following business risks actually occur, overall business, operating results, and the financial condition of the Company could be materially adversely affected. Negative Cash Flow from Operating Activities The Company did not achieve positive operating cash flow in its most recently completed financial year. Accordingly, the Company may experience negative cash flow from operations in the future. The Company has incurred net losses in the past and may incur losses in the future unless it can derive sufficient revenues from its business. Such future losses could have an adverse effect on the market price of the Securities, which could cause investors to lose part or all of their investment. 2022 Annual Report | Management’s Discussion and Analysis16 Cash Flow and Liquidity Uncertainty The Company is dependent upon its cash flow from operations to fund its business because it has no line of credit or credit facility currently in place. As of December 31, 2022, the Company had cash on hand of $0.8 million, current assets of $2.5 million and current liabilities of $6.9 million, resulting in a working capital deficiency of $4.4 million. Given the Company’s cash balance, together with its potential sources of funding and working capital needs, including raising gross proceeds of $1.3 million from an issuer private placement, the Company believes it has sufficient cash to fund its operations for the next 12 months. This expectation reflects certain assumptions of management, including, among other things, growth estimates in respect of the Company’s revenues based on the Company’s ability to successfully secure sales with upfront payments, and anticipated levels of capital expenditures and other costs expected to be incurred over the next 12 months. If these assumptions prove to be incorrect and the Company generates negative operating cash flows in a future period, the Company may need to obtain alternative sources of funding. However, there can be no assurance that additional funding will be available or, if available, that it will be available on acceptable terms. If adequate funds are not available, the Company may have to substantially reduce or otherwise eliminate certain expenditures, which could have a material adverse effect on the Company’s operations and financial condition. There can be no assurance that the Company will be able to raise additional capital if its capital resources are depleted or exhausted. Availability of Capital Cash generated from its operations may not be enough to satisfy its current liquidity requirements. As such, the Company will require additional capital. The extent of the Company’s future capital requirements will depend on many factors, including, but not limited to, the market acceptance of its products and services, demand for geospatial related products and service, and competition within this industry. No assurance can be given that any such additional funding will be available or that, if available, it can be obtained on terms favorable to the Company. Revenue Fluctuations Intermap’s revenue has fluctuated over the years. Acquisition services projects, the purchase of value- added data, and the purchase of software and solutions by the Company’s customers are all scheduled per customer requirements and the timing of regulatory and/or budgetary decisions. The commencement or completion of acquisition projects within a particular quarter or year, the timing of regulatory approvals, operating decisions of clients, and the fixed-cost nature of Intermap’s business, among other factors, may cause the Company’s results to vary significantly between fiscal years and between quarters in the same fiscal year. Nature of Government Contracts Intermap conducts a significant portion of its business either directly or in cooperation with the United States government, other governments around the world, and international funding agencies. In many cases, the terms of these contracts provide for cancellation at the option of the government or agency at any time. In addition, many of Intermap’s products and services require government appropriations and regulatory licenses, permits, and approvals, the timing and receipt of which are not within Intermap’s control. Any of these factors could have an effect on Intermap’s revenue, earnings, and cash flow. Foreign Operations A significant portion of Intermap’s revenue is expected to come from customers outside of the United States and is therefore subject to additional risks, including foreign currency exchange rate fluctuations, agreements that may be difficult to enforce, receivables difficult to collect through a foreign country’s legal system, and the imposition of foreign-country-imposed withholding taxes or other foreign taxes. 2022 Annual Report | Management’s Discussion and Analysis17 Dilution The Company may issue additional securities, which may dilute existing securityholders, including purchasers of the Securities hereunder. The Company may also issue debt securities that have priority over holders of other Securities with respect to payment in the event of an insolvency or winding-up of the Company. Securityholders will have no pre-emptive rights in connection with any such further issuances. The Company’s board of directors has the discretion to determine the price and terms of any Debt Securities and the price and terms for any issuances of Common Shares, Preferred Shares, Subscription Receipts, Warrants and Units. Key Customers During 2022, the Company had one key customer that accounted for16% of total revenue. During 2021, 32% of the revenue was attributable to two key customers. To the extent that significant customers cancel or delay orders, Intermap’s revenue, earnings, and cash flow could be materially and adversely affected. Executive Talent Intermap is focused on aligning its resources with its acquisition services, value-added data and software and solutions revenue opportunities. This realignment requires the retention of executive talent. The Company will continue to invest in training and leadership development to retain talent. Competing Technologies With respect to the Company’s software applications, several direct and indirect competitors are currently in the market with product offerings that could be considered at least partially competitive to Intermap’s products. These potential competitors vary in size and could have greater technical and/or financial resources than the Company, to develop and market their products. The financial performance of the Company may be adversely affected by such competition. Intermap continues to evaluate its data collection capabilities and look for improvements to the performance of its radar technology. Although there are only a few direct Intermap competitors currently, the industry is characterized by rapid technological progress. Intermap’s ability to continue to develop and introduce new products and services, or incorporate enhancements to existing products and services, may require significant additional research and development expenditures and investments in support infrastructure. Another approach to production of digital elevation models is the use of auto correlation software to analyze common points in two or more optical images of the same area taken from different viewing angles. Essentially this is the same principle that is used by technicians as they extract elevation points using stereo photogrammetric techniques, but in this case, it is automated using computer software image matching algorithms. This process is well known and has seen incremental, evolutionary improvement over time. Advances in computing power, coupled with massive storage solutions, may make this technology useful over larger areas in the future, and if so, could represent a significant competing technology. Any required additional financing needed by the Company to remain competitive with these other technologies may not be available or, if available, may not be on terms satisfactory to the Company. Common Share Price Volatility The market price of the Company’s common shares has fluctuated widely in recent periods and is likely to continue to be volatile. A number of factors can affect the market price of Intermap’s common stock including (i) actual or anticipated variations in operating results, (ii) the low daily trading volume of the Company’s stock, (iii) announcement of technological innovations or new products by the Company or its competitors, (iv) competition, including pricing pressures and the potential impact of competitors products on sales, (v) changing conditions in the geospatial and related industries, (vi) unexpected production 2022 Annual Report | Management’s Discussion and Analysis18 difficulties, (vii) changes in financial estimates or recommendations by stock market analysts regarding Intermap or its competitors, (viii) announcements by Intermap or its competitors of acquisitions, strategic partnerships, or joint ventures, (ix) additions or departures of senior officers, (x) changes in economic or political conditions (xi) the selling of significant holdings by large investors, and (xii) the Company’s ability to meet the continued listing requirements of the Toronto Stock Exchange to maintain the listing of its common shares. Loss of Proprietary Information Intermap currently holds patents on the technology used in its operations and relies heavily on trade secrets, know-how, expertise, experience, and the marketing ability of its personnel to remain competitive. Although Intermap requires all employees, consultants, and third parties to agree to keep its proprietary information confidential, no assurance can be given that the steps taken by Intermap will be effective in deterring misappropriation of its technologies. Additionally, no assurance can be given that employees or consultants will not challenge the legitimacy or scope of their confidentiality obligations, or that third parties, in time, could not independently develop and deploy equivalent or superior technologies. Software Functionality Defects in the Company’s software applications, delays in delivery, and failures or mistakes in the Company’s software code could materially harm the Company’s business, including customer relationships and operating results. Internet and System Infrastructure Functionality The end customers of the Company’s software applications depend on internet service providers, online service providers and the Company’s infrastructure for access to the software applications the Company provides to its customers. These services are subject to service outages and delays due to system failures, stability or interruption. As a result, the Company may not be able to meet a satisfactory level of service as agreed to with its customers, which could have a material adverse effect on the Company’s business, revenues, operating results and financial condition. Information Technology Security The Company’s software applications are dependent on its ability to protect its computer equipment and the information stored in its data centers against damage that may be caused by fire, power loss, telecommunication failures, unauthorized intrusion, computer viruses, disabling devices and other similar events. A failure in the Company’s production systems or a disaster or other event affecting production systems or business operations, both internally and externally, could result in a disruption to the Company’s software services. Such a disruption could also impact the Company’s reputation and cause it to lose customers, revenue, face litigation, or necessitate customer service/repair work that would involve substantial costs and could ultimately have a material impact on the Company. Intermap’s geospatial database is a valuable asset to the Company. While Intermap has invested in database management, information technology security, firewalls, and offsite duplicate storage, there is a risk of a loss of data through unauthorized access or a customer violating the terms of the Company’s end user licensing agreements and distributing unauthorized copies of its data. Intermap has, and will continue to invest, in both legal resources to strengthen its licensing agreements with its customers and in overall information technology protection. Cybersecurity The Company’s software applications and geospatial database are dependent upon protection against damage or loss that may be caused by a cyberattack. Loss or theft of the Company’s geospatial database could result in lost revenue or the ability of a competitor to provide competing software solutions. A hostile Denial of Service (DoS) action could disrupt the Company’s software services. Such a disruption could 2022 Annual Report | Management’s Discussion and Analysis19 impact the Company’s reputation and cause it to lose customers, revenue, face litigation, or necessitate customer service/repair work that would involve substantial costs and could ultimately have a material impact on the Company. Intermap has invested in database management, information technology security, and firewalls to mitigate the risk of loss or theft of the Company’s data. Further investments have been made to prevent DoS activities and improvements to the software services’ defenses against such attacks. The Company undertakes periodic reviews of its information technology infrastructure and security policies using the SANS CIS Critical Security Controls as a framework. The areas of focus for review pertain to user and system authentication and access; internal network configuration and security; data storage resiliency and security; and hosted application access security. These periodic reviews serve to proactively shore up areas of vulnerability and ensure policies are effective and enforced. However, the risk cannot be eliminated entirely, and the Company has invested in insurance to mitigate loss in the event of a cyberattack. Exporting Products – Political Considerations Intermap’s data collection systems contain technology that is classified as a defense article under the International Traffic and Arms Regulations. All mapping efforts undertaken outside the United States, therefore, constitute a temporary export of a defense article, requiring prior written approval by the United States Department of State for each country within which mapping operations are to be performed. The Company does not currently anticipate that requirements for export permits will have a material impact on the Company’s operations, although either government policy or government relations with select foreign countries may change to the point of affecting the Company’s operational opportunities. Environmental Regulation Changes in environmental regulation could have an adverse effect on the Company’s airborne data acquisition services business. For example, requirements for cleaner burning aircraft fuel could result in increased costs which could impact the Company’s pricing model for acquisition services projects. The complexity and breadth of environmental and climate change related issues make it extremely difficult to predict the potential impact on the Company. Compliance with environmental regulation can be costly, and non-compliance can result in fines, penalties and loss of licenses. Political Instability Political or significant instability in a region where Intermap is conducting data collection activities, or where Intermap has clients, could adversely impact Intermap’s business. Regulatory Approvals The development and application of certain of the Company’s products requires the approval of applicable regulatory authorities. A failure to obtain such approval on a timely basis, or material conditions imposed by such authority in connection with the approval, would materially affect the prospects of the Company. Aircraft / Radar Lost or Damaged Although the Company believes that the probability of one of the Company’s aircraft or radar sustaining significant damage or being lost in its entirety is extremely low, such damage or loss could occur. The Company expects to have available to it, for data collection purposes, one additional aircraft at any given time. The risk to the Company of loss from the damage of an aircraft is therefore considered to be minimal. In the event that a radar mapping system is lost in its entirety through the destruction of the aircraft, it would take the Company approximately six to nine months to replace the lost equipment, if required. 2022 Annual Report | Management’s Discussion and Analysis20 Global Positioning System (GPS) Failure GPS satellites have been available to the commercial market for many years. The continued unrestricted GPS satellites have been available to the commercial market for many years. The continued unrestricted access to the signals produced by these GPS satellites are helpful, but not required, in the collection of the Company’s IFSAR data. A loss of GPS would have such a global impact that it is believed that controlling authorities would almost certainly make another system available to GPS receivers in relatively short order. Information Openly Available to the Public The Company accesses information available to the public via the Internet and may incorporate portions of such information into its products. If a source of public information determined that the Company was profiting from free information, there is risk it could seek compensation. Force Majeure The Company’s projects may be adversely affected by risks outside the control of the Company including labor unrest, civil disorder, war, subversive activities or sabotage, fires, floods, explosions or other catastrophes, epidemics, or quarantine restrictions. Additional Information Additional risk factors may be detailed in the Company’s Annual Information Form, which can be found on the Company’s Web site at www.intermap.com and on SEDAR at www.sedar.com. 2022 Annual Report | Management’s Discussion and AnalysisManagement’s Report 21 The accompanying financial statements of Intermap Technologies Corporation and all the information in this annual report are the responsibility of the Company‘s management. The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board, using best estimates and judgments, where appropriate. Management has prepared the financial information presented elsewhere in this annual report and has ensured that it is consistent with the financial statements. Management maintains appropriate systems of internal control that provide reasonable assurance that assets are adequately safeguarded and that the financial reports are sufficiently well-maintained for the timely preparation of the consolidated financial statements. The Audit Committee members, all of whom are non-management directors, are appointed by the Board of Directors. The Committee has reviewed these statements with the Auditors and management. The Board of Directors has approved the financial statements of the Company, which are contained in this report. Patrick A. Blott Chairman of the Board and Chief Executive Officer Jennifer S. Bakken Executive Vice President and Chief Financial Officer 22 THIS PAGE INTENTIONALLY LEFT BLANK. Independent Auditors’ Report 23 TO THE SHAREHOLDERS OF INTERMAP TECHNOLOGIES CORPORATION Opinion We have audited the consolidated financial statements of Intermap Technologies Corporation (the Entity), which comprise: • • • • • the consolidated statements of financial position as at December 31, 2022 and December 31, 2021 the consolidated statements of loss and other comprehensive loss for the years then ended the consolidated statements of changes in shareholders’ (deficiency) equity for the years then ended the consolidated statements of cash flows for the years then ended and notes to the consolidated financial statements, including a summary of significant accounting policies (Hereinafter referred to as the “financial statements”). In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2022 and December 31, 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. 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 Financial Statements” section of our auditor’s 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. Material Uncertainty Related to Going Concern We draw attention to Note 2(a) in the financial statements, which indicates that Intermap Technologies Corporation has incurred recurring operating losses in current and prior years, negative cash flows from operating activities in the current and prior years, has negative working capital (current assets less current liabilities) and a shareholders’ deficit at December 31, 2022. As stated in Note 2(a) in the financial statements, these events or conditions, along with other matters as set forth in Note 2(a) in the financial statements, indicate that a material uncertainty exists that may cast significant doubt on the Entity’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the “Material Uncertainty related to Going Concern” section of the auditor’s report, we have determined the matters described below to be the key audit matters to be communicated in our auditor’s report. 24 Independent Auditors’ Report Evaluation of Impairment of Long-Lived Assets Description of the matter We draw attention to Notes 2(d)(vi), 3(j), 5, 6 and 7 to the financial statements. The long-lived assets of the Entity consist of property and equipment, intangible assets and right of use assets. The property and equipment, intangible assets and right of use assets balances are $1,387 thousand, $1,016 thousand and $343 thousand, respectively. The Entity reviews long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable and assesses impairment for intangible assets not yet available for use on an annual basis. In testing for impairment, the recoverable amount of cash generating units (CGUs) are estimated in order to determine the extent of the impairment loss, if any. The determination of the recoverable amount is based on each CGU’s value in use and requires the Entity to make significant estimates and assumptions which include projected revenues and discount rates. Why the matter is a key audit matter We identified the evaluation of the impairment of long-lived assets as a key audit matter. This matter represented an area of significant risk of material misstatement given the magnitude of the long-lived assets. This matter required significant auditor judgment in evaluating the results of our audit procedures due to the high degree of estimation uncertainty involved in the Entity’s estimates and assumptions. How the matter was addressed in the audit The primary procedures we performed to address this key audit matter included the following: We compared the Entity’s historical revenue projections to actual results to assess the Entity’s ability to accurately project revenues. We evaluated the Entity’s projected revenue assumptions for each CGU by comparing those assumptions to 2022 actual results and the Entity’s expected growth plans. We took into account changes in conditions and events affecting each CGU to assess the adjustments or lack of adjustments made in arriving at projected revenues. We involved valuation professionals with specialized skills and knowledge to assist in assessing the discount rate assumptions used in the estimated recoverable amounts, by comparing them to discount rate ranges that were independently developed using publicly available market data and considering the risk profile of each CGU. Evaluation of the Fair Value of the Investment in a Privately Held Company Description of the matter We draw attention to Notes 2(d)(iii), 3(f) and 8 of the financial statements. At December 31, 2022, the Entity had an investment in a privately held company (“investment”) which was valued at $1,011 thousand over which the Entity exercises no control or significant influence. The investment is carried at fair value, with the change recognized in profit or loss. The fair value of the investment at December 31, 2022 was estimated using a market-based approach with primarily unobservable inputs, including the comparable enterprise value to revenue multiples discounted for considerations such as the lack of marketability and other differences between the comparable peer group and the privately held company. Why the matter is a key audit matter We identified the evaluation of the fair value of the investment in a privately held company as a key audit matter. This matter represented a significant risk of material misstatement given the magnitude of the investment. In addition, significant auditor judgment and specialized skills and knowledge were required in evaluating the results of our audit procedures regarding the Entity’s unobservable inputs identified above. Independent Auditors’ Report 25 How the matter was addressed in the audit The primary procedures we performed to address this key audit matter included the following: We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the appropriateness of the comparable enterprise value to revenue multiples (“multiples”) discounted for considerations such as the lack of marketability and other differences between the comparable peer group and the privately held company. The multiples were evaluated by comparing them to independently developed multiples using publicly available market data, adjusted for the lack of marketability of the privately held company and other considerations. With the assistance of our valuation professionals, we developed an independent range of estimates of the fair value and compared our estimates to management’s estimate. Other Information Management is responsible for the other information. Other information comprises: • • the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions. the information, other than the financial statements and the auditors’ report thereon, included in a document likely to be entitled “2022 Annual Report”. 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 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 the auditor’s report. We have nothing to report in this regard. The information, other than the financial statements and the auditor’s report thereon, included in a document likely to be entitled “2022 Annual Report” is expected to be made available to us after the date of this auditor’s report. If, based on the work we will perform on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact to those charged with governance. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, 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. 26 Independent Auditors’ Report 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 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 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. 27 • • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. Determine, from the other matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Chartered Professional Accountants, Licensed Public Accountants The engagement partner on the audit resulting in this auditor’s report is Andrew Watson. Ottawa, Canada March 31, 2023 28 Consolidated Financial Statements CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (In thousands of United States dollars) Assets Current assets: Cash Amounts receivable (Note 19(a)) Unbilled revenue (Note 12) Prepaid expenses Prepaid expenses Property and equipment (Note 5) Intangible assets (Note 6) Right of use assets (Note 7) Investment (Note 8) Total assets Liabilities and Shareholders' (Deficiency) Equity Current liabilities: Accounts payable and accrued liabilities (Note 9) Bank loan (Note 10(a)) Current portion of government loans (Note 10(c)) Lease obligations (Note 11) Unearned revenue (Note 12) Income taxes payable Bank loan (Note 10(a)) Long-term project financing (Note 10) Long-term government loans (Note 10(c)) Lease obligations (Note 11) Total liabilities Shareholders' (deficiency) equity: Share capital (Note 15(b)) Warrants Accumulated other comprehensive loss Contributed surplus (Note 15(c)) Deficit Total shareholders' (deficiency) equity Going concern (Note 2(a)) December 31, December 31, 2021 2022 $ 843 1,290 8 382 2,523 $ 188 914 679 472 2,253 55 1,387 1,016 343 1,011 6,335 $ 39 2,480 1,117 497 1,062 7,448 $ $ 3,633 37 108 223 2,953 - 6,954 71 177 375 177 7,754 208,406 493 (141) 26,603 (236,780) (1,419) $ 3,656 - 9 251 1,721 4 5,641 - 188 477 290 6,596 206,102 232 (129) 26,144 (231,497) 852 Total liabilities and shareholders' equity $ 6,335 $ 7,448 See accompanying notes to consolidated financial statements. On behalf of the Board: (Signed) Patrick A. Blott Patrick A. Blott Chairman and CEO On behalf of the Board: (Signed) Phillippe Frappier Phillippe Frappier Independent Director CONSOLIDATED STATEMENTS OF LOSS INCOME AND OTHER COMPREHENSIVE LOSS (In thousands of United States dollars, except per share information) For the years ended December 31, 2022 2021 29 Revenue (Note 12) Expenses: Operating costs (Note 13(a)) Restructuring costs (Note 13(b)) Depreciation of property and equipment (Note 5) Amortization of intangible assets (Note 6) Depreciation of right of use assets (Note 7) Gain on disposal of equipment (Note 5) Operating loss (Loss) gain on fair vale of investment (Note 8) Government grants (Note 13) Financing costs (Note 13(c)) Financing income Loss on foreign currency translation Loss before income taxes Income tax expense: Current Loss for the period Other comprehensive (loss) income: Items that are or may be reclassified subsequently to profit or loss: Foreign currency translation differences $ 6,795 $ 5,799 10,225 - 1,125 312 338 - 12,000 (5,205) (51) - (57) 6 20 (5,287) 4 4 9,280 238 1,375 71 316 (6) 11,274 (5,475) 1,062 1,135 (61) 3 (2) (3,338) (18) (18) $ (5,283) $ (3,356) (12) (14) Comprehensive loss for the period $ (5,295) $ (3,370) Basic and diluted loss per share $ (0.16) $ (0.12) Weighted average number of Class A common shares - basic and diluted (Note 15(c)) See accompanying notes to consolidated financial statements. 33,378,811 27,039,139 2022 Annual Report | Consolidated Financial Statements 30 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIENCY) EQUITY (In thousands of United States dollars) Share Capital Warrants Contributed Surplus Accumulated Other Comprehensive (Loss) Income Deficit Total Balance at December 31, 2020 $ 203,642 $ 93 $ 26,007 $ (115) $ (228,141) $ 1,486 Comprehensive loss for the period Share-based compensation Private placement proceeds (Note 15(b)) Issuance costs RSU conversion - - 2,976 (525) 9 - - - 139 - - 146 - - (9) (14) - - - - (3,356) - - - - (3,370) 146 2,976 (386) - Balance at December 31, 2021 $ 206,102 $ 232 $ 26,144 $ (129) $ (231,497) $ 852 Comprehensive loss for the period Share-based compensation Private placement proceeds (Note 15(b)) Issuance costs Expiry of warrants - $ - 2,588 (284) - - $ - 294 60 (93) - $ 366 - - 93 (12) $ - - - - $ (5,283) - - - - (5,295) 366 2,882 (224) - Balance at December 31, 2022 $ 208,406 $ 493 $ 26,603 $ (141) $ (236,780) $ (1,419) See accompanying notes to consolidated financial statements. 2022 Annual Report | Consolidated Financial Statements CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of United States dollars) For the years ended December 31, 2022 2021 31 Operating activities: Net loss for the period Interest paid Income tax paid Adjustments for: Loss (gain) on fair value of investment Depreciation of property and equipment Amortization of intangible assets Depreciation of right of use assets Share-based compensation expense Gain on disposal of equipment Financing costs Current income tax expense Changes in working capital: Amounts receivable Unbilled revenue and prepaid expenses Accounts payable and accrued liabilities Unearned revenue Loss (gain) on foreign currency translation Cash flows used in operating activities Investing activities: Purchase of property and equipment Additions to intangible assets Proceeds from sale of property and equipment Cash flows used in investing activities Financing activities: Proceeds from private placement Issuance costs Payment of lease obligations Proceeds from bank loan Repayment of government loans Cash flows provided by financing activities Effect of foreign exchange on cash Increase (decrease) in cash Cash, beginning of period Cash, end of period See accompanying notes to consolidated financial statements. $ (5,283) (23) - $ (3,356) (25) (19) 51 1,125 312 338 412 - 57 (4) (391) 756 (109) 1,232 18 (1,509) (32) (211) - (243) 2,882 (224) (339) 99 (9) 2,409 (2) 655 188 (1,062) 1,375 71 316 146 (6) 61 18 (337) (295) 538 114 (32) (2,493) (1,124) (267) 6 (1,385) 2,976 (386) (317) - (4) 2,269 19 (1,590) 1,778 $ 843 $ 188 2022 Annual Report | Consolidated Financial Statements 32 Notes to Consolidated Financial Statements (In thousands of United States dollars, except per share information) 1. Reporting entity: Intermap Technologies ® Corporation (the Company) is incorporated under the laws of Alberta, Canada. The head office of Intermap is located at 8310 South Valley Highway, Suite 240, Englewood, Colorado, USA 80112. Its registered office is located at 400, 3rd Avenue SW, Suite 3700, Calgary, Alberta, Canada T2P 4H2. Intermap is a global location-based geospatial intelligence company, creating a wide variety of geospatial solutions and analytics for its customers. Intermap’s geospatial solutions and analytics can be used in a wide range of applications including, but not limited to, location-based information, geospatial risk assessment, geographic information systems, engineering, utilities, global positioning systems maps, oil and gas, renewable energy, hydrology, environmental planning, wireless communications, transportation, advertising, and 3D visualization. 2. Basis of preparation: a. Going concern: These consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes the Company will continue in operation for the foreseeable future and can realize its assets and discharge its liabilities and commitments in the normal course of business. During the year ended December 31, 2022, the Company reported an operating loss of $5,205, net loss of $5,283, and negative cash flows from operating activities of $1,509. In addition, the Company has a shareholders’ deficit of $1,419 and negative working capital of $4,431(current assets less current liabilities) at December 31, 2022. The above factors in the aggregate indicate there are material uncertainties which may cast significant doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully secure sales with upfront payments, and / or obtain additional financing. There can be no assurance that such plans will be achieved. Failure to achieve one or more of these requirements could have a materially adverse effect on the Company’s financial condition and / or results of operations. The Board of Directors and management continue to take actions to address these issues including exploring options for additional capital and securing subscription-based contracts which will increase revenue in future periods. The consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption was not appropriate. If the going concern basis was not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying value of assets and liabilities, the reported revenues and expenses, and the statement of financial position classifications used. b. 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 significant accounting policies are summarized in Note 3. The policies applied in these consolidated financial statements are based on IFRS issued and effective as of March 31, 2023, the date the Board of Directors approved the consolidated financial statements. c. Measurement basis: The consolidated financial statements have been prepared mainly on the historical cost basis. Other measurement bases used are described in the applicable notes. d. Use of estimates: Preparing consolidated financial statements in conformity with IFRS requires management to make 33 judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimates are reviewed and in any future periods affected. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year include the following: i. Depreciation and amortization rates: In calculating the depreciation and amortization expense, management is required to make estimates of the expected useful lives of property and equipment. ii. Trade receivables: The Company uses historical trends and performs specific account assessments when determining the expected credit losses. These accounting estimates are in respect to the trade receivables line item in the Company’s consolidated statements of financial position. At December 31, 2022, trade receivables represented 20% of total assets. The estimate of the Company’s expected credit losses could change from period to period due to the allowance being a function of the balance and composition of trade receivables. iii. Investments: The valuation and accounting for the Company’s investment in a privately held company requires the application of management estimates and judgments with respect to the determination of appropriate valuation method applied at each reporting date. The assumptions for estimating fair value of the investment are disclosed in Note 8. iv. Share-based compensation: The Company uses the Black-Scholes option-pricing model to determine the grant date fair value of share-based compensation. The following assumptions are used in the model: dividend yield; expected volatility; risk-free interest rate; expected option life; and fair value. Changes to assumptions used to determine the grant date fair value of share-based compensation awards can affect the amounts recognized in the consolidated financial statements. v. Revenue: Revenue from acquisition service contracts, which are fixed-price contracts, is recognized over time based on the ratio of costs incurred to estimated total contract costs. The determination of estimated total contract costs of acquisition services contracts requires the use of significant assumptions related to estimated purchased services, materials, and labor costs. Changes to the assumptions used to measure revenue could impact the amount of revenue recognized in the consolidated financial statements (see Note 3(k)). vi. Impairment: The carrying value of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable and assesses the impairment for intangible assets not yet available for use on an annual basis. The Company has determined that its long-lived assets belong to two distinct cash-generating units (“CGUs”). The Company determines the value in use based on estimated discounted future cash flows and an impairment is recognized if the carrying value exceeds that estimate. The significant assumptions used in determining estimated discounted future cash flows include projected revenues and discount rates. 2022 Annual Report | Consolidated Financial Statements34 Judgment is required in determining the level at which to test impairment, including the grouping of CGUs that generate cash inflows (see Note 3(j)). e. Functional and presentation currency: These consolidated financial statements are presented in United States dollars, which is the Company’s functional currency. All financial information presented in United States dollars has been rounded to the nearest thousand. f. Foreign currency translation: Items included in the financial statements of each of the Company’s subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the functional currency). Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities not denominated in the functional currency of an entity are recognized in net loss for the period. Assets and liabilities of entities with functional currencies other than United States dollars are translated at the period end rates of exchange, and the results of their operations are translated at exchange rates prevailing at the dates of transactions. The resulting translation adjustments are included in accumulated other comprehensive income in shareholders’ deficiency. 3. Summary of material accounting policies: a. Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Intermap Technologies Inc. (a U.S. corporation); Intermap Insurance Solutions Inc. (a U.S. corporation), Intermap Technologies PTY Ltd (an Australian corporation); Intermap Technologies s.r.o. (a Czech Republic corporation); and PT ExsaMap Asia (an Indonesian corporation). Inter-company balances and transactions, and any unrealized income and expenses arising from intra- group transactions, are eliminated in preparing the consolidated financial statements. The accounting policies of all subsidiaries are consistent with the Company’s policies. b. Cash: Cash includes unrestricted cash balances. c. Property and equipment: Property and equipment are measured at cost less accumulated depreciation. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of aircraft overhauls is capitalized and depreciated over the period until the next overhaul. When parts of an item of property and equipment have different useful lives, they are accounted for as separate items. Depreciation is calculated over the depreciable amount, which is the cost of an asset, less its residual value. Depreciation is provided on the straight-line basis over the following useful lives of the assets: Assets Aircraft Aircraft engines Mapping equipment - hardware and software Radar equipment Furniture and fixtures Years 10 7 3 5 5 Leasehold improvements Shorter of useful life or term of lease Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted, if appropriate. 2022 Annual Report | Consolidated Financial Statements35 Assets under construction are not depreciated until available for use by the Company. Expenditures for maintenance and repairs are expensed when incurred. The cost of replacing an item of property and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property and equipment are recognized in profit or loss as incurred. Gains and losses on disposal of property and equipment are determined by comparing the proceeds from disposal with the carrying amount and are recognized net of costs associated with the disposal within other income in net loss for the period. d. Intangible assets: Intangible assets include data library products the Company builds with the use of proprietary software and intellectual property for use in software subscription sales and data license sales. Intangible assets are measured at cost less accumulated amortization, and they are amortized over a straight-line basis of five years. The amortization method, estimate of the useful life, and residual values of intangible assets are reviewed annually. e. Research and development: Research costs are expensed as incurred. Development costs are expensed in the year incurred unless management believes a development project meets the specified criteria for deferral and amortization. f. Investments: Investments include the common and preferred shares of a privately held company over which the Company exercises no control or significant influence. The investment is carried at fair value, with the change recognized in profit or loss. g. Leases: At inception of a contract, the Company assesses the right to control the use of an identified asset for a period of time in exchange for consideration to determine if the contract is a lease. 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 received. The asset is depreciated to the earlier of the end of the useful life or the lease term using the straight-line method. The lease term includes periods covered by an option to extend if the Company is reasonably certain to use that option. Lease terms range from two to five years for offices and data facilities. The right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the Company’s incremental borrowing rate. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in the future lease payments, if there is a change in the Company’s estimated amount expected to be paid, or if the Company changes its assessment of if 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. 2022 Annual Report | Consolidated Financial Statements36 The Company has elected to apply the practical expedient not to recognize right of use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with these leases is recognized as an expense on a straight-line basis over the lease term. h. Provisions: A provision is recognized, if as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. i. Restructuring: A provision for restructuring is recognized when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating losses are not provided for. ii. Onerous contracts: A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with the contract. i. Income taxes: Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. 2022 Annual Report | Consolidated Financial Statements37 j. Impairment: The carrying values of all long-lived assets, including property and equipment, intangible assets, and right of use assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Intangible assets that are not yet available for use are assessed annually regardless of whether there is an indication that the related assets may be impaired. In testing for impairment, the recoverable amount of the CGU is estimated in order to determine the extent of the impairment loss, if any. The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or CGU). An impairment loss is recorded when the recoverable amount of an asset or its CGU is less than its carrying amounts. Impairment losses are evaluated for potential reversals when events or changes in circumstances warrant such consideration. k. Revenue recognition: Revenue is recognized upon transfer of control of goods or services to the buyer in an amount that reflects the consideration the Company expects to receive in exchange for those good or services. The Company’s goods and services are generally distinct and accounted for as separate performance obligations. Billings in excess of revenue are recorded as unearned revenue. Revenue recognized in excess of billings is recorded as unbilled revenue. The company recognizes an asset related to the incremental costs of obtaining a contract with a customer. The Company has elected to make use of the practical expedient and will expense sales commission costs when incurred if the amortization period is less than 12 months. i. Data licenses: Revenue from the sale of data licenses in the ordinary course of business is measured at the fair value of the consideration received or receivable. Customers obtain control of data products upon receipt of a physical hard drive or download of the data from a web link provided. Invoices are generated, and revenue is recognized when control is transferred. Invoices are generally paid within 30 days. ii. Software subscriptions: Software subscriptions are generally at least one year, with invoices issued and paid at the beginning of the license term. Revenue is recognized over time, and payments for future months of service are recognized in unearned revenue. While the license agreements are for a fixed term, some agreements also contain a limited number of clicks or uses. If the limit is reached prior to the end of the term, the license ends early. iii. Fixed-price contracts: Revenue from acquisition service contracts is recognized over time based on the ratio of costs incurred to estimated total contract costs. Provisions for estimated losses, if any, are recognized in the period in which the loss is determined. Contract losses are measured in the amount by which the estimated costs of the related project exceed the estimated total revenue for the project. Invoices are issued according to contractual terms and are usually payable within 30 days. Revenue recognized in excess of billings is recorded as unbilled revenue. 2022 Annual Report | Consolidated Financial Statements38 iv. Multiple performance obligations: When a single sales transaction requires more than one performance obligation, the total amount of consideration to be received is allocated to distinct products or services deliverables based on the stand-alone selling price of each. l. Share-based compensation: The grant date fair value of equity-settled share-based payment awards granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company. m. Earnings per share: The basic earnings per share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share, except the weighted average number of common shares outstanding are increased to include additional shares from the assumed exercise of share options and warrants, if dilutive. n. Financial instruments: i. Initial measurement and classification: Non-derivative financial assets: The Company initially recognizes trade receivables on the date that they are originated. All other financial assets are recognized initially on the date at which the Company becomes a party to the contractual provisions of the instrument. The Company determines the classification of its financial assets on the basis of both the business model for managing financial assets and the contractual cash flow characteristics of the financial assets. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets. Assets at amortized cost: Trade receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at fair value through profit and loss: Equity investments that are held for trading are classified at FVTPL Financial liabilities at amortized cost: The Company initially recognizes debt liabilities on the date that they are originated. All other financial liabilities are recognized initially on the date at which the Company becomes a party to the contractual provisions of the instrument. ii. Subsequent measurement: Non-derivative financial assets: The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual 2022 Annual Report | Consolidated Financial Statements39 cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability. Financial assets and liabilities are offset, and the net amount presented in the consolidated statements of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Assets at amortized cost: Subsequent to initial recognition, trade receivables are measured at amortized cost using the effective interest method, less any impairment losses. Financial assets at fair value through profit and loss: Equity investments are measured at fair value. Net changes in the fair value are recognized in profit and loss. Financial liabilities at amortized cost: The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. The following is a summary of the classification the Company has applied to each of its significant categories of financial instruments outstanding: iii. Fair value measurement: Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); Level 3 – valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs). During the reporting periods, there were no transfers between Level 1 and Level 2 fair value measurements. Financial instrument: Cash Amounts receivable Investments Classification: Assets at amortized cost Assets at amortized cost Financial assets at fair vaule through profit and loss Accounts payable and accrued liabilities Long-term project financing Bank loans Long-term government loans Lease obligations under finance leases Financial liabilities at amortized cost Financial liabilities at amortized cost Financial liabilities at amortized cost Financial liabilities at amortized cost Financial liabilities at amortized cost iv. Impairment of financial assets: Loss allowances are measured based on the lifetime expected credit losses (ECLs). When determining whether the credit risk of a financial asset has increased significantly since initial recognition and then estimating ECLs, the Company considers reasonable and supportable 2022 Annual Report | Consolidated Financial Statements40 information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on historical experience and forward- looking information. The Company considers a financial asset to be in default when the customer is highly unlikely to pay its obligation in full and then impairs the asset. o. Share capital: Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity, net of any tax effects. p. Warrants: Warrants are classified as equity. Proceeds from the sale of combined financial instruments that include warrants are allocated to their components based on their relative fair values. The fair value of warrants is estimated using the Black-Scholes option pricing model at the time of their issuance. If warrants are exercised, a pro-rata portion of the amount recognized at their original issuance is transferred to common shares. If warrants expire unexercised, the amount recognized at their original issuance is transferred to contributed surplus. q. Government grants: Government grants are recognized at fair value once there is reasonable assurance that the Company will comply with the conditions attached to the grants and that the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes the costs for which the grants are intended to compensate. A forgivable loan from the government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan. 4. New and revised IFRS accounting pronouncements: a. Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies During the fourth quarter of 2022, the Company early adopted Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of accounting policies issued on February 12, 2021. The amendments to IAS 1 require that an entity disclose its material accounting policies, instead of its significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to accounting policy disclosures. The Company has applied these changes in the current period in Note 3. The IASB and International Financial Reporting Interpretations Committee (IFRIC) issued the following standards that have not been applied in preparing these consolidated financial statements, as their effective dates fall within annual periods beginning after the current reporting period. a. Amendments to IAS 1 – Classification of Liabilities as current or non-current On January 23, 2020, the IASB issued amendments to IAS 1 – Presentation of financial statements, providing a more general approach to the classifications of liabilities based on the contractual agreements in place at the reporting date. The amendments apply to annual reporting periods beginning on or after January 1, 2023. Early adoption is permitted. The Company assessed the potential impact of the amendment and determined there will be no material impact on the consolidated financial statements. b. Amendments to IAS 8 – Definition of accounting estimates On February 12, 2021, the IASB issued amendments to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, to assist entities to distinguish between accounting policies and accounting estimates. The amendments apply to annual periods beginning on or after January 1, 2023. The amendments to IAS 8 replace the definition of a “change in accounting estimates” with a definition of “accounting estimates”. Under the new definition, accounting estimates are “monetary amounts 2022 Annual Report | Consolidated Financial Statements41 in financial statements that are subject to measurement uncertainty”. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involved measurement uncertainty. The amendments confirm that a change in an accounting estimate that results from new information or new developments is not a correction of an error. The Company assessed the potential impact of the amendment and determined there will be no material impact on the consolidated financial statements. 5. Property and equipment: Aircraft and engines Radar and mapping equipment Furniture and fixtures Leasehold improvements Under construction Total Balance at December 31, 2020 $ 187 $ 2,094 $ 11 $ 9 $ 430 $ 2,731 Additions Transfer from under construction Depreciation 257 185 (99) 503 455 (1,263) 1 - (4) - - (9) 363 (640) - 1,124 - (1,375) Balance at December 31, 2021 $ 530 $ 1,789 $ 8 $ - $ 153 $ 2,480 Additions Depreciation - (100) 14 (1,021) - (4) - - 18 - 32 (1,125) Balance at December 31, 2022 $ 430 $ 782 $ 4 $ - $ 171 $ 1,387 Aircraft and engines Radar and mapping equipment Furniture and fixtures Leasehold improvements Under construction Total Cost $ 10,618 $ 33,225 $ 345 $ 1,074 $ 153 $ 45,415 Accumulated depreciation (10,088) (31,436) (337) (1,074) - (42,935) Balance at December 31, 2021 $ 530 $ 1,789 $ 8 $ - $ 153 $ 2,480 Cost $ 10,618 $ 33,239 $ 345 $ 1,074 $ 171 $ 45,447 Accumulated depreciation (10,188) (32,457) (341) (1,074) - (44,060) Balance at December 31, 2022 $ 430 $ 782 $ 4 $ - $ 171 $ 1,387 During the twelve months ended December 31, 2022, the Company disposed of assets with an original cost of $Nil (December 31, 2021 - $54), a net book value of $Nil (December 31, 2021 - $Nil), recognized a gain of $Nil (December 31, 2021 - $6) on those assets and received cash proceeds of $Nil (December 31, 2021 - $6). 2022 Annual Report | Consolidated Financial Statements 42 6. Intangible assets: Data library not yet available for use Data library Total Balance at December 31, 2020 $ 220 $ 701 $ 921 Additions Transfer Amortization - 797 (71) 267 (797) - 267 - (71) Balance at December 31, 2021 $ 946 $ 171 $ 1,117 Additions Transfer Amortization - 18 (312) 211 (18) - 211 - (312) Balance at December 31, 2022 $ 652 $ 364 $ 1,016 Data library not yet available for use Data library Total Cost $ 1,017 $ 171 $ 1,188 Accumulated amortization (71) - (71) Balance at December 31, 2021 $ 946 $ 171 $ 1,117 Cost 1,035 364 1,399 Accumulated amortization (383) - (383) Balance at December 31, 2022 $ 652 $ 364 $ 1,016 7. Right of use assets: Beginning Balance Depreciation New leases Adjustment Foreign Exchange Ending Balance December 31, December 31, 2021 2022 $ 497 $ 778 (338) 174 10 - 343 $ (316) 33 - $ 2 497 During the twelve months ended December 31, 2022, the Company executed a 2-year equipment lease, extended the office facility leases in Colorado and Jakarta by one year, and adjusted a lease with an increased payment. During the twelve months ended December 31, 2021, the Company extended the office facility lease in the Czech Republic by one year. 2022 Annual Report | Consolidated Financial Statements 43 8. Investment: The Company has an investment in a privately held company over which the Company exercises no control or significant influence. The fair value of the investment at December 31, 2022 was estimated using a market-based approach with primarily unobservable inputs, including the comparable enterprise value to revenue multiples discounted for considerations such as the lack of marketability and other differences between the comparable peer group and the privately held company. Revenue multiples were selected from comparable public companies based on, industry, size, target markets, and other factors that the Company considers to be reasonable. The comparable enterprise value to revenue multiple was applied to the trailing twelve months actual revenues of the privately held company to determine the enterprise value of the privately held company. Once the enterprise value of the privately held company was determined the net debt was removed (total debt less cash) and the remaining equity value was allocated to the capital of the privately held company in order of ranking (e.g., preferred shares, common shares). At December 21, 2021, the Company valued this investment using a market-based approach with primarily unobservable inputs, including but not limited to non-binding offers entertained by the privately held company. The Company changed its method of estimating the fair value of this investment because of a greater availability of market comparable data. At December 31, 2022, the fair value was estimated to be $1,011 (December 31, 2021 - $1,062) and is a level 3 fair value measurement. A 20% change in the estimated value of the investment would impact net income by approximately $202. 9. Accounts payable and accrued liabilities: December 31, 2022 December 31, 2021 Accounts payable Accrued liablities VAT payable $ $ 1,934 1,592 107 3,633 1,969 1,686 1 3,656 $ $ During the twelve months ended December 31, 2022, the Company reversed excess vendor payables of $6 (December 31, 2021 - $53) recorded in prior years based on IFRS 9 derecognition of financial liabilities as the liabilities have expired. 2022 Annual Report | Consolidated Financial Statements 44 10. Financial liabilities: The following table provides a reconciliation of movements of liabilities to cash flows arising from financing activities and balances at December 31, 2022 and 2021: Balance at December 31, 2020 $ - $ 188 $ 464 $ 792 $ 1,444 Bank Loan Project Financing Government Loans Lease Obligations (Note 11) Total Changes from financing activities: Payment of lease obligations Repayment of government loans Total changes from financing activities Foreign exchange Other changes: Financing costs Interest paid New leases (Note 7) - - - - - - - - - - - - - - - (4) (4) 3 26 (3) - (317) - (317) (317) (4) (321) 21 24 32 (20) 33 58 (23) 33 Balance at December 31, 2021 $ - $ 188 $ 486 $ 541 $ 1,215 Changes from financing activities: Proceeds from bank loan Payment of lease obligations Repayment of government loans Total changes from financing activities Foreign exchange Other changes: Financing costs Interest paid New leases (Note 7) Adjustment (Note 7) 99 - - 99 9 4 (4) - - - - - - (11) - - - - - - (9) (9) (14) 26 (6) - - - (339) - (339) - 27 (13) 174 10 99 (339) (9) (249) (16) 57 (23) 174 10 Balance at December 31, 2022 $ 108 $ 177 $ 483 $ 400 $ 1,168 a. Bank Loan: Bank loan Less current portion December 31, 2022 December 31, 2021 $ 108 $ - 108 (37) - - Long-term portion of project financing $ 71 $ - On August 8, 2022, the Company executed a bank loan in the Czech Republic to finance the purchase of foundation data for 2,500,000 Czech Republic koruna (equivalent $110 thousand). Interest will accrue at 10.71% and minimum monthly installment payments of $4 thousand began in December 2022. b. Project financing: Reimbursable project development funds provided by a corporation designed to enable the development and commercialization of geomatics solutions in Canada. The funding is repayable upon the completion of a specific development project and the first sale of any of the resulting product(s). Repayment is to be made in quarterly installments equal to the lesser of 20% of the funding amount or 25% of the prior quarter’s sales. There were no sales of the related products during the years ended December 31, 2022 and 2021. 2022 Annual Report | Consolidated Financial Statements 45 c. Government loans: SBA loan Western Development Canada loan Less current portion December 31, 2022 December 31, 2021 $ 150 333 $ 154 332 483 (108) 486 (9) Long-term portion of project financing $ 375 $ 477 i. SBA loan: On July 17, 2020, the Company received a $150 long-term loan from the Small Business Administration (SBA). Interest will accrue at the rate of 3.75% per annum and payments of $0.7 monthly began twelve months from the date the funds were received. The balance of principal and interest will be payable thirty years from the date of the note. ii. Western Development Canada loan: On December 29, 2020, the Company received a $385 (C$494) long-term loan from Western Economic Diversification in Canada. The loan will be repaid in 36 monthly installments starting in January 2023. The loan is non-interest bearing, and therefore the fair value at inception must be estimated to account for an imputed interest factor. The value at inception was determined to be $312, based on the estimated discount rate of 6.07%, and is subject to estimation uncertainty. The resulting discount of $73 was recognized in government grants at December 31, 2020 and will be accreted through interest expense over the term of the loan using the effective interest method. 11. Lease obligations: The following table presents the contractual undiscounted cash flows for lease obligations which require the following payments for each period ending December 31: 2023 2024 2025 $ $ 269 93 58 420 Interest expense on lease obligations for the year ended December 31, 2022 was $27 (December 31, 2021 – $32). Total cash outflow for leases was $339 (December 31, 2021 – $321), and $292 (December 31, 2021 – $316) for short-term and low-value operating leases for equipment and office spaces. The Company also has contractual undiscounted cash flows for short-term and low-value operating leases for equipment and maintenance that are not on the statements of financial position which require the payments of $259 for the twelve months ending December 31, 2023. 2022 Annual Report | Consolidated Financial Statements 46 12. Revenue: Details of revenue are as follows: For the twelve months ended December 31, 2022 2021 Acquisition services Value-added data Software and solutions Primary geographical market United States Asia/Pacific Europe Timing of revenue recognition Upon delivery Services overtime $ $ $ $ $ $ $ $ $ $ $ $ 1,099 2,339 3,357 6,795 2,121 2,401 2,273 6,795 2,745 4,050 6,795 1,403 1,688 2,708 5,799 1,594 1,996 2,209 5,799 2,100 3,699 5,799 Changes in the unbilled revenue balance are as follows: For the twelve months ended December 31, 2022 2021 Unbilled revenue, beginning of period Increase in unbilled revenue recognized Amounts invoiced included in the beginning balance Amounts invoiced in the current period Foreign exchange Unbilled revenue, end of period Changes in the unearned revenue balance are as follows: $ 679 1,210 $ 47 1,775 (679) (1,202) - $ 8 (38) (1,096) (9) 679 $ For the twelve months ended December 31, 2022 2021 Unbilled revenue, beginning of period Increase in unbilled revenue recognized Amounts invoiced included in the beginning balance Amounts invoiced in the current period Foreign exchange Unbilled revenue, end of period Changes in the unearned revenue balance are as follows: $ 679 1,210 $ 47 1,775 (679) (1,202) - $ 8 (38) (1,096) (9) 679 $ For the twelve months ended December 31, 2022 2021 Unearned revenue, beginning of period Recognition of unearned revenue included in the beginning balance Recognition of unearned revenue in the current period Amounts invoiced and revenue unearned Foreign exchange Unearned revenue, end of period $ 1,721 $ 1,607 (1,135) (1,533) 3,914 (14) 2,953 $ (1,025) (956) 2,089 6 1,721 $ 2022 Annual Report | Consolidated Financial Statements 47 The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the expected benefit of those costs is longer than one year. The Company determined that certain commissions paid to sales employees meet the requirement to be capitalized. Total capitalized cost included in prepaid expenses and other assets to obtain contracts at December 31, 2022 was $60 (2021 – $82). 13. Operating and non-operating costs: a. Operating costs: For the twelve months ended December 31, 2022 2021 Personnel Purchased services & materials (1) Travel Facilities and other expenses 2,932 86 659 9,280 (1) Purchased services and materials include aircraft costs, project costs, professional and consulting fees, and selling and marketing costs. 2,818 151 660 10,225 $ 6,596 $ 5,603 $ $ b. Restructuring costs: During the twelve months ended December 31, 2022, the Company incurred $Nil in restructuring costs (December 31, 2021 - $238). c. Financing costs: For the twelve months ended December 31, 2022 2021 Interest on bank loan Interest on government loans Interest on lease obligations Interest on accounts payable 14. Government grants: 4 $ 26 27 - $ 57 - 26 32 3 61 $ The Company participated the following government assistance programs that were made available by various government agencies during 2021 to support COVID-19 relief, without any corresponding programs during 2022: Twelve months ended December 31, 2022 2021 Paycheck Protection Program Canada Emergency Wage Subsidy Employee Retention Credit a. Paycheck Protection Program (PPP): - $ - - $ - $ 562 123 450 1,135 $ The Company received $562 under the second round of the Paycheck Protection Program (PPP) in the United States in 2021. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act, provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after twenty- four weeks if the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP and $562 from the second round in 2021 has been forgiven. 2022 Annual Report | Consolidated Financial Statements 48 b. Canada Emergency Wage Subsidy (CEWS): During 2021, the Company was eligible for $149, reduced by $26 for the portion of wages that were capitalized, under the CEWS program to cover a portion of employee wages and to help prevent future job losses and to ease the business back into normal operations. The Company has received all the funds. c. Employee Retention Credit: The Company was eligible for $494 (reduced by $44 for the portion of wages that were capitalized) under the Employee Retention Credit (ERC) in the United States during 2021. The ERC is a refundable tax credit against certain employment taxes equal 70% of the qualified wages an eligible employer pays to employees. For each employee, wages up to ten thousand can be counted to determine the amount of the credit each quarter the Company meets the qualification criteria. 15. Share capital: a. Authorized: The authorized share capital of the Company consists of an unlimited number of Class A common shares and an unlimited number of Class A participating preferred shares. There are no Class A participating preferred shares outstanding. b. Issued: Class A common shares Shares Amount Shares Amount December 31, 2022 Number of December 31, 2021 Number of Balance, beginning of period: Private placement Issuance costs RSU conversion Balance, end of period: 29,415,422 8,278,288 - - 37,693,710 $ $ 206,102 2,588 (284) - 208,406 25,198,529 4,166,893 - 50,000 29,415,422 $ $ 203,642 2,976 (525) 9 206,102 On December 7, 2022, the Company completed a private placement resulting in the issuance of 250,000 Units for aggregate consideration of $74. Each Unit had a purchase price of C$0.40 and consisted of one Class A common share of the Corporation and one Class A common share purchase warrant. Each warrant entitles the holder to purchase one Class A common share at a purchase price of US$0.44 per share for a period of two years from the issue date. The total consideration received was allocated to Share Capital and Warrants on a relative fair value basis. The fair value of the warrants was determined using the Black Scholes pricing model based on the risk-free rate of 3.86%, average expected warrant life of 2 years, share price estimated volatility of 83% and expected dividend payments of Nil. In addition, the Corporation paid finder’s fees of $7 and issued 15,000 warrants to a third party for services rendered in connection with the transaction. The finder’s fee warrants were issued on the same terms as the private placement warrants with an exercise price of US$0.44. The Company recorded non-cash issuance costs related to this award based on the fair value of the award at the date of the closing of $2, bringing the total costs of the issuance to $9. During November 2022, the Company completed a private placement resulting in the issuance of 3,020,000 Units for aggregate consideration of $906. Each Unit had a purchase price of C$0.40 and consisted of one Class A common share of the Corporation and one Class A common share purchase warrant. Each warrant entitles the holder to purchase one Class A common share at a purchase price of US$0.45 per share for a period of two years from the issue date. The total consideration received was allocated to Share Capital and Warrants on a relative fair value basis. The fair value of the warrants was determined using the Black Scholes pricing model based on the risk-free rate of 3.87%, average expected warrant life of 2 years, share price estimated volatility of 84% and expected dividend payments of Nil. In addition, the Corporation paid finder’s fees of $81 and issued 168,900 warrants to 2022 Annual Report | Consolidated Financial Statements 49 a third party for services rendered in connection with the transaction. The finders fee warrants were issued on the same terms as the private placement warrants with an exercise price of US$0.45. The Company recorded non-cash issuance costs related to this award based on the fair value of the award at the date of the closing of $29, bringing the total costs of the issuance to $110. On October 14, 2022, the Company issued 1,000,00 Class A common shares at C$0.40 per share in connection with a private placement. The Company received $291 in proceeds and issuance costs of $26 was paid in cash. On March 18, 2022, the Company issued 1,470,588 Class A common shares at C$0.51 per share in connection with a private placement. The Company received $596 in proceeds and recorded $111 in issuance costs, of which $19 settled through warrants (see Note 16) and $92 was paid in cash. During February 2022, the Company issued 2,537,700 Class A common shares at C$0.51 per share in connection with two private placements. The Company received $1,015 in proceeds and recorded $28 in issuance costs, of which $11 settled through warrants (see Note 16) and $17 was paid in cash. On April 27, 2021, the Company issued 613,005 Class A common shares at C$0.87 per share in connection with a private placement. The Company received $434 in proceeds and recorded $73 in issuance costs, of which $28 settled through warrants (see Note 16) and $45 was paid in cash. On July 30, 2021, the Company issued 2,241,667 Class A common shares at C$0.90 per share in connection with the first tranche of a private placement. The company received $1,605 in proceeds and recorded $79 of issuance costs settled through warrants (see Note 16). During August 2021, the Company issued 750,000 Class A common shares and 200,000 Class A common shares at C$0.90 per share in connection with the second tranche of a private placement. The Company received $680 in proceeds and recorded $29 in issuance costs settled through warrants (see Note 16). On August 11, 2021, 50,000 restricted share units (RSUs) were converted to common shares that had a value of $9 in contributed surplus that was reclassified to share capital (see Note 15(c) and (f). On September 20, 2021, the Company issued 362,221 Class A common shares at C$0.90 per share in connection with the third tranche of a private placement. The Company received $257 in proceeds and recorded $3 in issuance costs settled through warrants (see Note 16). The Company also paid $341 in cash relating to all three tranches during the third quarter of 2021. c. Contributed surplus: Balance, beginning of period Share-based compensation Expiration of warrants Converted RSUs Balance, end of period d. Loss per share: December 31, 2022 December 31, 2021 $ 26,144 366 93 - $ 26,007 146 - (9) $ 26,603 $ 26,144 The calculation of loss per share is based on the weighted average number of Class A common shares outstanding. Where the impact of the exercise of options or warrants is anti-dilutive, they are not included in the calculation of diluted loss per share. The Company has incurred a net loss for each period presented and the inclusion of the outstanding options and warrants in the loss per share calculation are anti-dilutive and therefore not included in the calculation. The underlying Class A common shares pertaining to 801,943 outstanding share options, 2,453,744 restricted share units (RSUs), and 3,840,467 outstanding warrants could potentially dilute earnings. 2022 Annual Report | Consolidated Financial Statements 50 e. Share option plan: The Company established a share option plan to provide long-term incentives to attract, motivate, and retain certain key employees, officers, directors, and consultants providing services to the Company. The plan permitted granting options to purchase up to 10% of the outstanding Class A common shares of the Company. The share option plan was replaced at the Annual General Meeting on March 15, 2018 (see Note 15(f), and all options issued and outstanding at that time will remain until such time they are exercised, expired, or forfeited. As of December 31, 2022, 801,943 share options are issued and outstanding. No additional options will be issued under this plan. The following tables summarize information regarding share options outstanding: Options outstanding, beginning of period Expired December 31, 2022 December 31, 2021 Number of shares under option Weighted average exercise price (CDN) Number of shares under option Weighted average exercise price (CDN) 822,943 (21,000) $ 0.77 2.70 895,325 (72,382) $ 0.81 1.25 Options outstanding, end of period 801,943 $ 0.72 822,943 $ 0.77 Options exercisable, end of period 801,943 $ 0.72 822,943 $ 0.77 Exercise Price (CDN$) 0.70 0.80 Options outstanding 631,011 170,932 801,943 Weighted average remaining contractual life 4.28 years 3.88 years 4.20 years Options exercisable 631,011 170,932 801,943 During the twelve months ended December 31, 2022, the Company recognized $Nil (twelve months ended December 31, 2021 – $Nil) of non-cash compensation expense related to the share option plan. f. Omnibus plan: The omnibus plan was approved by the shareholders at the Annual General Meeting on March 15, 2018 and replaces the share option plan, the employee share compensation plan and the director’s share compensation plan, which provided for shares to be issued to employees and directors as compensation for services. The omnibus plan permits the issuance of options, stock appreciation rights, restricted share units and other share-based awards under one single plan. The maximum number of common shares reserved under the omnibus plan was 3,363,631. Any common shares reserved under the predecessor share option plan related to awards that expire or forfeit will be rolled into the omnibus plan. At the Annual General Meeting on June 29, 2021, shareholders approved replenishment of 997,253 Common Shares reserved for issuance under the Omnibus Incentive Plan, for a total reserve of 4,360,884. As of December 31, 2022, 801,943 share options (2021 – 822,943) and 2,453,744 RSUs (2021 – 1,330,884) are issued and outstanding. In addition, 872,183 Class A common shares were issued during 2018, 125,070 Class A common shares were issued during 2020, and 50,000 shares were issued during 2021 (see Note 15(b)) under the plan, leaving 57,944 awards remain available for future issuance. 2022 Annual Report | Consolidated Financial Statements 51 The following tables summarize information regarding RSUs outstanding: RSUs outstanding, beginning of period Issued Converted to common shares Forfeitures December 31, 2022 Number of RSUs December 31, 2021 Number of RSUs 1,330,884 1,132,860 - (10,000) 1,224,126 188,159 (50,000) (31,401) RSUs outstanding, end of period 2,453,744 1,330,884 During the twelve months ended December 31, 2022, 1,132,860 RSUs (twelve months ended December 31, 2021 – 188,159) were issued at a weighted average grant date fair value of C$0.58 per share (twelve months ended December 31, 2021 – C$0.91 per share). During the twelve months ended December 31, 2022, the Company recognized $412 (twelve months ended December 31, 2021 – $146) of non-cash compensation expense related to the RSUs. g. Share-based compensation expense: Non-cash compensation expense has been included in operating costs with respect to the share options, RSUs and shares granted to employees and non-employees as follows: For the twelve months ended December 31, Employees Directors and advisors Non-cash compensation 2022 2021 $ 215 197 $ 73 73 $ 412 $ 146 16. Class A common share purchase warrants: The following table details the number of Class A common share purchase warrants outstanding at each statement of financial position date: Grant Date Expiry Date Exercise Price Granted Number of Warrants Outstanding December 31, 2021 Number of Warrants Outstanding December 31, 2022 Issued Expired 8/5/2020 8/17/2020 4/27/2021 7/30/2021 8/9/2021 8/18/2021 9/20/2021 2/11/2022 3/19/2022 7/31/2022 US$ 0.42 8/14/2022 US$ 0.42 4/27/2023 US$ 0.73 7/29/2023 US$ 0.80 8/8/2023 US$ 0.80 8/17/2023 US$ 0.88 9/19/2023 US$ 0.87 2/10/2024 US$ 0.54 3/18/2024 US$ 0.54 11/16/2022 11/15/2024 US$ 0.45 11/18/2022 11/17/2024 US$ 0.45 12/6/2024 US$ 0.44 12/7/2022 139,284 19,718 60,000 131,166 45,000 12,000 6,666 - - - - - 139,284 19,718 60,000 131,166 45,000 12,000 6,666 - - - - - - - - - - - - 43,500 88,235 2,929,900 259,000 265,000 (139,284) (19,718) - - - - - - - - - - - - 60,000 131,166 45,000 12,000 6,666 43,500 88,235 2,929,900 259,000 265,000 413,834 413,834 3,585,635 (159,002) 3,840,467 2022 Annual Report | Consolidated Financial Statements 52 The following table details the value of the broker and non-broker Class A common share purchase warrants outstanding at each statement of financial position date. Non-Broker Broker Number of Warrants Value Number of Warrants Value Total Number of Warrants Value Balance at January 1, 2020 Issued Balance at December 31, 2021 - - - $ - 159,002 $ 93 159,002 $ 93 - 254,832 139 254,832 139 $ - 413,834 $ 232 413,834 $ 232 Issued Expired 3,270,000 - 294 - 315,635 (159,002) 60 (93) 3,585,635 (159,002) 354 (93) Balance at December 31, 2022 3,270,000 $ 294 570,467 $ 199 3,840,467 $ 493 Each warrant entitles its holder to purchase one Class A common share. 17. Income Taxes: a. Current tax (expense) recovery: December 31, Current period b. Reconciliation of effective tax rate: 2022 2021 $ 4 $ (18) $ 4 $ (18) Income tax expense varies from the amount that would be computed by applying the basic federal and provincial income tax rates to the net income (losses) before taxes as follows: December 31, Net Income (Losses), excluding income tax Tax rate 2022 2021 $ (5,287) $ (3,338) 24.0% 25.0% Expected Canadian income tax recovery (expense) $ 1,271 $ 833 Decrease resulting from: Change in unrecognized temporary differences Difference between Canadian statutory rate and those applicable to U.S. and other foreign subsidiaries Non-deductible expenses and non-taxable income Adjustment for prior years income tax matters Expiry of tax losses Other c. Recognized deferred tax assets and liabilities: (1,273) 229 (22) 88 (36) - (24) $ 4 (7) 207 (1,230) - (50) (18) $ Deferred income taxes reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. Deferred tax assets and liabilities recognized at December 31, 2022 and 2021, are as follows: Assets Liabilities Net December 31, Property and equipment Intangible assets Note payable Tax loss carryforwards Tax (assets) liabilities Set off of tax Net tax (assets) liabilities 2022 2021 2022 $ - - - (678) $ - - - (608) $ 553 116 9 2021 . $ 487 113 8 2022 2021 $ 553 116 9 (678) $ 487 113 8 (608) - - $ (678) $ (608) $ 678 $ 608 $ - 678 $ - 608 $ - (678) $ - (608) $ - - $ - $ - - $ - 2022 Annual Report | Consolidated Financial Statements 53 d. Unrecognized deferred tax assets: Deferred tax assets have not been recognized in respect of the following items: December 31, Deductible temporary differences Tax loss carryforwards 2022 2021 $ 21,818 198,306 $ 21,247 192,299 $ 220,124 $ 213,546 The deferred tax asset is recognized when it is probable that future taxable profit will be available to utilize the benefits. The Company has not recognized deferred tax assets with respect to these items due to the uncertainty of future Company earnings. Loss carry forwards: At December 31, 2022, approximately $198,348 of loss carry forwards and $2,405 of tax credits were available in various jurisdictions. At December 31, 2022, $3,381 of loss carry forwards were recognized as a deferred tax asset. A summary of losses by year of expiry are as follows: 2023 2024-2040 Indefinite $ 770 182,972 14,606 198,348 $ e. Movement in deferred tax balances during the year: Balance at Recognized in December 31, 2021 Profit and Loss Recognized in Equity Balance at December 31, 2022 Property and equipment Intangible assets Note payable Tax loss carryforwards $ 487 113 8 (608) $ 66 3 1 (70) - $ - - - $ 553 116 9 (678) Net tax (assets) liabilities $ - $ - $ - $ - 18. Segmented information: The operations of the Company are in one industry segment: digital mapping and related services. Revenue by geographic segment is included in Note 12. Property and equipment of the Company are located as follows: December 31, 2022 December 31, 2021 United States Europe Asia/Pacific $ $ 1,362 19 6 1,387 2,425 37 18 2,480 $ $ A summary of sales to major customers that exceeded 10% of total sales during each period are as follows: Year ended December 31, Customer A 19. Financial risk management: 2022 2021 $ $ 1,099 1,099 $ $ 1,365 1,365 The Company has exposure to the following risks from its use of financial instruments: credit risk, market risk, liquidity risk, and capital risk. Management, the Board of Directors, and the Audit Committee monitor risk management activities and review the adequacy of such activities. This note presents information about the Company’s exposure to each of the risks as well as the objectives, policies and processes for measuring and managing those risks. 2022 Annual Report | Consolidated Financial Statements 54 The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. a. Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Such risks arise principally from certain financial assets held by the Company consisting of outstanding trade receivables and investment securities. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk. Approximately 16 percent of the Company’s revenue is attributable to transactions with one key customer (year ended December 31, 2021 – 32 percent of the revenue was attributable to two key customers), approximately 1 percent of the Company’s trade receivables at year end are attributable to customers located in Asia/Pacific (December 31, 2021 – approximately 21 percent), and approximately 97 percent of the Company’s trade receivables at year end are attributable to customers located in Europe (December 31, 2021 – approximately 50 percent). The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. A significant portion of the Company’s customers have transacted with the Company in the past or are reputable large Companies and losses have occurred infrequently. The maximum exposure to credit risk of the Company at period end is the carrying value of these financial assets. i. Trade receivables Expected credit losses are made on a customer-by-customer basis. All write downs against receivables are recorded within sales, general and administrative expense in the statement of operations. The Company is exposed to credit-related losses on sales to customers outside North America, due to potentially higher risks of collectability. Amounts receivable as of December 31, 2022 and 2021, consist of: Trade receivables Other miscellaneous receivables Trade receivables by geography consist of: United States Europe Asia/Pacific December 31, December 31, 2021 2022 $ 1,268 22 $ 398 516 $ 1,290 $ 914 December 31, December 31, 2021 2022 $ 34 1,226 8 $ 117 198 83 $ 1,268 $ 398 2022 Annual Report | Consolidated Financial Statements 55 An aging of the Company’s trade receivables are as follows: Current 31-60 days 61-90 days Over 91 days December 31, December 31, 2021 2022 $ 1,232 30 - 6 $ 362 36 - - $ 1,268 $ 398 The balance of the past due amounts relates to reoccurring customers and are considered collectible. ii. Cash The Company manages its credit risk surrounding cash by dealing solely with what management believes to be reputable banks and financial institutions and limiting the allocation of excess funds into financial instruments that management believes to be highly liquid, low risk investments. The balance at December 31, 2022, is held in unrestricted cash at banks within the United States, Canada, Europe, and Asia to facilitate the payment of operations in those jurisdictions. b. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s income or the value of its holding of financial instruments. i. Foreign exchange risk The Company operates internationally and is exposed to foreign exchange risk from various currencies, primarily the Canadian dollar, Euro, British pound, Indonesian rupiah, Czech Republic koruna, Malaysian ringgit and Australian dollar. Foreign exchange risk arises from sales and purchase transactions as well as recognized financial assets and liabilities that are denominated in a currency other than the United States dollar, which is the functional currency of the Company and most its subsidiaries. The Company’s primary objective in managing its foreign exchange risk is to preserve sales values and cash flows and reduce variations in performance. Although management monitors exposure to such fluctuations, it does not employ any external hedging strategies to counteract the foreign currency fluctuations. The balances in foreign currencies at December 31, 2022, are as follows: (in USD) Cash Trade receivables Accounts payable and accrued liabilities Project financing Government loans Bank loan Australian Dollar Canadian Dollar Euro British Pound Indonesian Rupiah Czech Republic Koruna $ - 9 (5) - - - $ 230 7 $ 8 23 (592) (177) (333) - (28) - - - $ - 58 (15) - - - $ 9 18 $ 495 97 (162) - - - (364) - - (108) $ 4 $ (865) $ 3 $ 43 $ (135) $ 120 2022 Annual Report | Consolidated Financial Statements 56 The balances in foreign currencies at December 31, 2021, are as follows: (in USD) Cash Trade receivables Accounts payable and accrued liabilities Project financing Government loans Australian Dollar Canadian Dollar Euro British Pound Indonesian Rupiah Czech Republic Koruna - $ 38 2 $ 8 $ 19 10 - $ 93 10 $ - 6 $ 41 (2) - - (595) (188) (332) (29) - - (16) - - (161) - - (151) - - $ 36 $ (1,105) $ - $ 77 $ (151) $ (104) Based on the net exposures at December 31, 2022 and 2021, and if all other variables remain constant, a 10% depreciation or appreciation of the United States dollar against the following currencies would result in an increase / (decrease) in net earnings by the amounts shown below: December 31, 2022 United States dollar: Depreciates 10% Appreciates 10% December 31, 2021 United States dollar: Depreciates 10% Appreciates 10% ii. Interest rate risk Australian Dollar Canadian Dollar Euro British Pound Indonesian Rupiah Czech Republic Koruna - $ - $ 86 (86) - $ - $ (4) 4 $ 13 (13) $ (12) 12 Australian Dollar Canadian Dollar Euro British Pound Indonesian Rupiah Czech Republic Koruna $ (4) 4 $ 111 (111) - $ - $ (8) 8 $ 15 (15) $ 10 (10) 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. Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company does not have any debt instruments outstanding with variable interest rates at December 31, 2022, or December 31, 2021. Financial liabilities that bear interest at fixed rates are subject to fair value interest rate risk. No currency hedging relationships have been established for the related monthly interest and principal payments. The Company manages its interest rate risk by minimizing financing costs on its borrowings and maximizing interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-day basis. c. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company’s approach to managing capital is to ensure, as far as possible, that it will have sufficient liquidity to meets its obligations. The Company manages its liquidity risk by evaluating working capital availability and forecasting cash flows from operations and anticipated investing and financing activities. At December 31, 2022, the Company has a cash balance of $843 (December 31, 2021 – $188) and working capital (current assets less current liabilities) of negative $4,431 (December 31, 2021 – negative $3,388). The Company’s liquidity is dependent on management’s ability to successfully secure sales with upfront payments, and / or obtain additional financing. 2022 Annual Report | Consolidated Financial Statements 57 The following are the contractual maturities of the undiscounted cash flows of financial liabilities as of December 31, 2022: Accounts payable and accrued liabilities Project financing Government loans Bank loan Lease obligations Payment due: In less than 3 months Between 3 months and 6 months Between 6 months and 1 year Between 1 year and 2 years Between 2 years and 28 years $ 3,474 - 33 12 78 $ - - 33 12 85 $ 159 - 66 24 106 - $ 177 131 48 93 $ - - 345 48 58 $ 3,597 $ 130 $ 355 $ 449 $ 451 The following are the contractual maturities of the undiscounted cash flows of financial liabilities as of December 31, 2021: Payment due: In less than 3 months Between 3 months and 6 months Between 6 months and 1 year Between 1 year and 2 years Between 2 years and 28 years $ 3,498 - 2 75 $ - - 2 80 $ 158 - 4 126 $ - 188 138 170 $ - - 490 125 $ 3,575 $ 82 $ 288 $ 496 $ 615 Accounts payable and accrued liabilities Project financing Government loans Lease obligations d. Capital risk The Company’s objectives when managing its capital risk is to safeguard its assets, while at the same time maintaining investor, creditor, and market confidence, and to sustain future development of the business and ultimately protect shareholder value. The Company manages its risks and exposures by implementing the strategies below. The Company includes shareholders’ deficiency, long-term bank loan, long-term portion of project financing, long-term government loans, and long-term portion of lease obligations in the definition of capital. Total capital at December 31, 2022, was negative $619 (December 31, 2021 – positive $1,807). To maintain or adjust the capital structure, the Company may issue new shares, issue new debt with different characteristics, acquire or dispose of assets, or adjust the amount of cash balances held. The Company has established a budgeting and planning process with a focus on cash, working capital, and operational expenditures and continuously assesses its capital structure considering current economic conditions and changes in the Company’s short-term and long-term plans. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 58 20. Fair values: Set out below is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments that are carried in the consolidated statement of financial position: December 31, 2022 Carrying Amount Fair Value December 31, 2021 Carrying Amount Fair Value Financial assets Cash Amounts receivable Investments Financial liabilities Accounts payable and accrued liabilities Project financing Bank loan Government loans $ $ $ $ 843 1,290 1,062 3,195 843 1,290 1,062 3,195 188 914 1,062 2,164 188 914 1,062 2,164 $ $ $ $ 3,633 177 108 483 4,401 $ 3,633 177 108 483 4,401 $ 3,656 188 - 486 4,330 $ 3,656 188 - 486 4,330 $ The fair values of the financial assets and liabilities are determined at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: • • • Cash, amounts receivable, accounts payable and accrued liabilities and provisions approximate their carrying amounts largely due to the short-term maturities of these instruments. Carrying amount of project financing, bank loan and government loans approximates fair value due to prevailing interest rates and the risk characteristics of the instrument. The fair value of the warrants is estimated using the Black-Scholes option pricing model incorporating various inputs including the underlying price volatility and discount rate. 21. Key management personnel and director compensation: The Company’s compensation program specifically provides for total compensation for executive officers, which is a combination of base salary, performance-based incentives and benefit programs that reflect aggregated competitive pay considering business achievement, fulfillment of individual objectives and overall job performance. Executive officers participate in the Company’s omnibus plan (Note 15(f )). The compensation of non-employee directors consists of a cash component and a share component. Directors participate in the Company’s omnibus plan (Note 15(f )). The following summarizes key management personnel and directors’ compensation for the years ended December 31, 2022 and 2021: Year ended December 31, Compensation and benefits Share-based compensation 2022 2021 $ $ $ $ 1,368 337 1,705 1,307 131 1,438 The following summarizes key management personnel and directors share ownership of the Company as of December 31, 2022, and 2021: December 31, Number of Class A Common shares held Percentage of total Class A Common shares issued 2022 6,496,696 17.24% 2021 6,496,696 22.09% THIS PAGE INTENTIONALLY LEFT BLANK. THIS PAGE INTENTIONALLY LEFT BLANK. THIS PAGE INTENTIONALLY LEFT BLANK. THIS PAGE INTENTIONALLY LEFT BLANK. Intermap Technologies 8310 South Valley Highway, Suite 240 Englewood, Colorado 80112-5809 United States Phone: +1 (303) 708-0955 +1 (303) 708-0952 Fax: info@intermap.com E-mail: www.intermap.com Web: Denver · Calgary · Jakarta · Prague

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