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Published: 2022-08-11 07:15:48 ET

EX-99.1 2 mogo-ex991_7.htm EX-99.1 mogo-ex991_7.htm

Exhibit 99.1

		Page
Interim Condensed Consolidated Statement of Financial Position as at June 30, 2022 and December 31, 2021		F-2
Interim Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2022 and 2021		F-3
Interim Condensed Consolidated Statement of Changes in Equity (Deficit) for the three and six months ended June 30, 2022 and 2021		F-4
Interim Condensed Consolidated Statement of Cash Flows for the three and six months ended June 30, 2022 and 2021		F-6
Notes to the Interim Condensed Consolidated Financial Statements		F-7

Mogo Inc.

Interim Condensed Consolidated Statement of Financial Position

(Unaudited)

(Expressed in thousands of Canadian Dollars)

	Note		June 30, 2022			December 31, 2021
Assets
Cash and cash equivalent				43,563			69,208
Digital assets		5		631			1,718
Loans receivable, net		4		58,833			55,832
Prepaid expenses, and other receivables and assets				14,699			10,302
Investment portfolio		17		15,085			18,088
Investment accounted for using the equity method		15		62,743			103,821
Property and equipment		6		1,300			1,186
Right-of-use assets				3,025			3,430
Intangible assets		7		50,970			52,304
Derivative financial assets		16		894			7,866
Goodwill				70,112			70,112
Total assets				321,855			393,867

Liabilities
Accounts payable, accruals and other				23,103			20,783
Lease liabilities				3,604			3,948
Credit facility		8		47,531			44,983
Debentures		9		39,542			39,794
Derivative financial liabilities		10		1,743			12,688
Deferred tax liability				1,688			1,894
Total liabilities				117,211			124,090

Equity
Share capital	19a			391,809			392,628
Contributed surplus				30,603			24,486
Revaluation reserve		5		—			468
Foreign currency translation reserve				1,236			458
Deficit				(219,004	)		(148,263	)
Total equity				204,644			269,777
Total equity and liabilities				321,855			393,867

Approved on Behalf of the Board

Signed by “Greg Feller” , Director

Signed by “Christopher Payne” , Director

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

F-2

Mogo Inc.

Interim Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)

(Unaudited)

(Expressed in thousands of Canadian Dollars, except per share amounts)

		Three months ended						Six months ended
	Note	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Revenue
Subscription and services			10,334			8,218			20,993			14,220
Interest revenue			6,956			5,447			13,553			10,865
	11a		17,290			13,665			34,546			25,085
Cost of revenue
Provision for loan losses, net of recoveries	4		4,191			774			7,088			2,309
Transaction costs			1,758			797			3,796			1,209
			5,949			1,571			10,884			3,518
Gross profit			11,341			12,094			23,662			21,567
Operating expenses
Technology and development			3,301			3,486			6,648			5,704
Marketing			3,436			3,897			8,112			6,664
Customer service and operations			3,583			3,420			7,604			5,583
General and administration			5,155			4,253			10,975			7,636
Stock-based compensation	19c		2,574			4,062			6,185			4,888
Depreciation and amortization	6,7		3,146			2,971			6,325			5,389
Total operating expenses	12		21,195			22,089			45,849			35,864
Loss from operations			(9,854	)		(9,995	)		(22,187	)		(14,297	)
Other expenses (income)
Credit facility interest expense	8		1,039			1,005			1,972			2,001
Debenture and other financing expense	9,20		846			871			1,657			1,823
Accretion related to debentures and convertible debentures	9		311			312			620			621
Share of loss in investment accounted for using the equity method	15		8,766			2,860			14,329			2,860
Revaluation loss (gain)	13		3,397			(24,850	)		2,249			(30,112	)
Impairment of investment accounted for using the equity method	15		26,749			—			26,749			—
Other non-operating expense	14		993			752			1,137			2,264
			42,101			(19,050	)		48,713			(20,543	)
Net (loss) income before tax			(51,955	)		9,055			(70,900	)		6,246
Income tax (recovery) expense			(84	)		10			(159	)		18
Net (loss) income			(51,871	)		9,045			(70,741	)		6,228
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Unrealized revaluation (loss) gain on digital assets	5		(370	)		(550	)		(468	)		26
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency transaction reserve gain			388			72			778			360
Other comprehensive income (loss)			18			(478	)		310			386
Total comprehensive (loss) income			(51,853	)		8,567			(70,431	)		6,614
Net (loss) income per share
Basic (loss) income per share			(0.68	)		0.14			(0.92	)		0.11
Diluted (loss) income per share			(0.68	)		0.13			(0.92	)		0.10
Weighted average number of basic common shares (in 000s)			76,743			63,597			76,719			55,368
Weighted average number of fully diluted common shares (in 000s)			76,743			67,352			76,719			60,195

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

F-3

Mogo Inc.

Interim Condensed Consolidated Statement of Changes in Equity (Deficit)

(Unaudited)

(Expressed in thousands of Canadian Dollars, except share amounts)

	Number of shares, net of treasury shares (000s)			Share capital			Contributed surplus			Revaluation reserve			Foreign currency translation reserve		Deficit			Total
Balance, December 31, 2021		76,391			392,628			24,486			468			458		(148,263	)		269,777
Net loss		—			—			—			—			—		(70,741	)		(70,741	)
Purchase of common shares for cancellation (Note 19a)		(800	)		(955	)		—			—			—		—			(955	)
Forfeiture of common shares		(3	)		—			—			—			—		—			—
Foreign currency translation reserve		—			—			—			—			778		—			778
Revaluation reserve (Note 5)		—			—			—			(468	)		—		—			(468	)
Stock-based compensation (Note 19c)		—			—			6,185			—			—		—			6,185
Options and restricted share units (“RSUs”) exercised or converted		62			136			(68	)		—			—		—			68
Balance, June 30, 2022		75,650			391,809			30,603			—			1,236		(219,004	)		204,644

	Number of shares, net of treasury shares (000s)			Share capital			Contributed surplus			Revaluation reserve			Foreign currency translation reserve		Deficit			Total
Balance, March 31, 2022		76,451		$	392,674		$	28,031		$	370		$	848	$	(167,133	)	$	254,790
Net loss		—			—			—			—			—		(51,871	)		(51,871	)
Purchase of common shares for cancellation (Note 19a)		(800	)		(955	)		—			—			—		—			(955	)
Forfeiture of common shares		(3	)		—			—			—			—		—			—
Foreign currency translation reserve		—			—			—			—			388		—			388
Revaluation reserve (Note 5)		—			—			—			(370	)		—		—			(370	)
Stock-based compensation (Note 19c)		—			—			2,574			—			—		—			2,574
Options and RSUs exercised or converted		2			90			(2	)		—			—		—			88
Balance, June 30, 2022		75,650			391,809			30,603			—			1,236		(219,004	)		204,644

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

F-4

Mogo Inc.

Interim Condensed Consolidated Statement of Changes in Equity (Deficit)

(Unaudited)

(Expressed in thousands of Canadian Dollars, except share amounts)

	Number of shares, net of treasury shares (000s)		Share capital		Contributed surplus			Revaluation reserve		Foreign currency translation reserve		Deficit			Total
Balance, December 31, 2020		32,731		106,730		13,560			—		—		(115,054	)		5,236
Net income		—		—		—			—		—		6,228			6,228
Foreign currency translation reserve		—		—		—			—		360		—			360
Revaluation reserve (Note 5)		—		—		—			26		—		—			26
Stock-based compensation (Note 19c & Note 19e)		—		—		4,888			—		—		—			4,888
Options and RSUs exercised or converted		766		2,624		(1,121	)		—		—		—			1,503
Shares issued – ATM arrangement, net		1,525		16,846		—			—		—		—			16,846
Shares issued – Bought deal financing		5,347		47,122												47,122
Shares issued on acquisition of Carta		10,000		54,800		—			—		—		—			54,800
Shares issued on acquisition of Moka		4,634		47,207		—			—		—		—			47,207
Shares issued – Replacement awards		366		—		—			—		—		—			—
Shares issued on investment accounted for using the equity method		6,741		63,878		13,901			—		—		—			77,779
Shares issued – Convertible debentures		3,179		8,783		—			—		—		—			8,783
Equity settled share-based payment		17		164		—			—		—		—			164
Warrants issued for broker services (Note 19e)		—		—		1,410			—		—		—			1,410
Warrants exercised (Note 19e)		3,497		7,840		(1,710	)		—		—		—			6,130
Balance, June 30, 2021		68,803		355,994		30,928			26		360		(108,826	)		278,482

	Number of shares, net of treasury shares (000s)		Share capital			Contributed surplus			Revaluation reserve			Foreign currency translation reserve		Deficit			Total
Balance, March 31, 2021		56,664	$	243,899		$	13,365		$	576		$	288	$	(117,871	)	$	140,257
Net income		—		—			—			—			—		9,045			9,045
Foreign currency translation reserve		—		—			—			—			72		—			72
Revaluation reserve (Note 5)		—		—			—			(550	)		—		—			(550	)
Stock-based compensation (Note 19c & Note 19e)		—		—			4,062			—			—		—			4,062
Options and RSUs exercised or converted		259		973			(305	)		—			—		—			668
Shares issued – ATM arrangement, net		—		(469	)		—			—			—		—			(469	)
Shares issued on acquisition of Moka		4,634		47,207			—			—			—		—			47,207
Shares issued – Replacement awards		366		—			—			—			—		—			—
Shares issued on investment accounted for using the equity method		6,741		63,878			13,901			—			—		—			77,779
Equity settled share-based payment		17		164			—			—			—		—			164
Warrants exercised (Note 19e)		122		342			(95	)		—			—		—			247
Balance, June 30, 2021		68,803		355,994			30,928			26			360		(108,826	)		278,482

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

F-5

Mogo Inc.

Interim Condensed Consolidated Statement of Cash Flows

(Unaudited)

(Expressed in thousands of Canadian Dollars)

		Three months ended						Six months ended
Cash provided by (used in) the following activities:	Note	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Operating activities
Net (loss) income			(51,871	)		9,045			(70,741	)		6,228
Items not affecting cash:
Depreciation and amortization			3,146			2,971			6,325			5,389
Provision for loan losses	4		4,342			961			7,431			2,822
Credit facility interest expense	8		1,039			1,005			1,972			2,001
Debenture and other financing expense	9,20		846			871			1,657			1,822
Accretion related to debentures and convertible debentures	9		311			312			620			621
Share of loss in investment using the equity method	15		8,766			2,860			14,329			2,860
Stock-based compensation expense	19c		2,574			4,062			6,185			4,888
Revaluation loss (gain)	14		3,397			(24,850	)		2,249			(30,112	)
Impairment of investment using the equity method	15		26,749			—			26,749			—
Other non-operating expense			77			164			77			490
Income tax recovery on deferred tax liability			(84	)		—			(160	)		—
			(708	)		(2,599	)		(3,307	)		(2,991	)
Changes in:
Net issuance of loans receivable			(6,250	)		(3,035	)		(10,431	)		(4,055	)
Prepaid expenses, and other receivables and assets			(1,291	)		(284	)		(4,322	)		(580	)
Accounts payable, accruals and other			1,154			(1,054	)		1,332			(1,197	)
Cash used in operating activities			(7,095	)		(6,972	)		(16,728	)		(8,823	)
Interest paid			(1,892	)		(1,875	)		(3,623	)		(3,807	)
Income taxes paid			(20	)		—			(47	)		—
Net cash used in operating activities			(9,007	)		(8,847	)		(20,398	)		(12,630	)

Investing activities
Cash acquired upon acquisition of subsidiary			—			(281	)		—			1,820
Proceeds from sale of investment			—			4,625			—			4,625
Cash invested in investment portfolio	17		(63	)		(1,700	)		(1,837	)		(1,794	)
Cash invested in investment using the equity method			—			(32,396	)		—			(32,396	)
Purchases of property and equipment	6		(65	)		(73	)		(342	)		(171	)
Investment in digital assets	5		—			(500	)		—			(1,250	)
Investment in intangible assets	7		(2,053	)		(1,038	)		(4,437	)		(2,221	)
Net cash used in investing activities			(2,181	)		(31,363	)		(6,616	)		(31,387	)

Financing activities
Lease liabilities – principal payments			(176	)		(197	)		(345	)		(339	)
Repayments on debentures	9		(454	)		(509	)		(971	)		(1,011	)
Advances (repayments) on credit facility	8		1,557			—			2,548			(168	)
Proceeds from issuance of common shares, net			—			(469	)		—			80,816
Repurchase of common shares	19a		(955	)		—			(955	)		—
Proceeds from exercise of warrants			—			247			—			6,130
Proceeds from exercise of options			74			1,223			74			1,504
Net cash provided by financing activities			46			295			351			86,932

Effect of exchange rate fluctuations			841			(146	)		1,018			372
Net (decrease) increase in cash and cash equivalent			(10,301	)		(40,061	)		(25,645	)		43,287
Cash and cash equivalent, beginning of period			53,864			95,467			69,208			12,119
Cash and cash equivalent, end of period			43,563			55,406			43,563			55,406

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

F-6

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

1.	Nature of operations

Mogo Inc. (“Mogo” or the "Company") was continued under the Business Corporations Act (British Columbia) on June 21, 2019 in connection with the combination with Mogo Finance Technology Inc. The address of the Company's registered office is Suite 1700, Park Place, 666 Burrard Street, Vancouver, British Columbia, Canada, V6C 2X8. The Company’s common shares (the “Common Shares”) are listed on the Toronto Stock Exchange (“TSX”) and the Nasdaq Capital Market under the symbol “MOGO”.

Mogo, one of Canada’s leading financial technology companies, is empowering its 2.0 million members with simple digital solutions to help them get in control of their financial health while also making a positive impact with their money. Through the free Mogo app, consumers can access a digital spending account with the Mogo Visa* Platinum Prepaid Card featuring automatic carbon offsetting, easily buy and sell bitcoin, get free monthly credit-score monitoring and ID fraud protection and access personal loans and mortgages. Mogo’s new MogoTrade app offers commission-free stock trading that helps users make a positive impact with every investment and together with Moka, Mogo’s wholly owned subsidiary bringing automated, fully-managed flat-fee investing to Canadians, forms the heart of Mogo’s digital wealth platform. Mogo’s wholly owned subsidiary, Carta Worldwide, offers a digital payments platform that powers the next-generation card programs from innovative fintech companies in Europe, North America and APAC. To learn more, please visit mogo.ca or download the mobile app (iOS or Android).

2.	Basis of presentation

Statement of compliance

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standards ("IAS") 34, Interim Financial Reporting. The policies applied in these interim condensed consolidated financial statements were based on IFRS issued and outstanding at June 30, 2022.

The Company presents its interim condensed consolidated statement of financial position on a non-classified basis in order of liquidity.

These interim condensed consolidated financial statements were authorized by the Board of Directors (the “Board”) to be issued on August 11, 2022.

These interim condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due in the normal course.

Management routinely plans future activities which includes forecasting future cash flows. Management has reviewed their plan and has collectively formed a judgment that the Company has adequate resources to continue as a going concern for the foreseeable future, which Management have defined as being at least the next 12 months. In arriving at this judgment, Management has considered the following: (i) cash flow projections of the Company, which incorporates a rolling forecast and detailed cash flow modeling through the next 12 months from the date of these interim condensed consolidated financial statements, and (ii) the base of investors and debt lenders historically available to the Company. The expected cash flows have been modeled based on anticipated revenue and profit streams with debt programmed into the model. Refer to Notes 8, 9, and 18 for details on amounts that may come due in the next 12 months.

For these reasons, the Company continues to adopt a going concern basis in preparing the interim condensed consolidated financial statements.

F-7

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

2.	Basis of presentation (Continued from previous page)

Functional and presentation currency

These interim condensed consolidated financial statements are presented in Canadian dollars. The functional currency of each subsidiary is determined based on the currency of the primary economic environment in which that subsidiary operates. The functional currency of each subsidiary that is not in Canadian dollars is as follows: Carta Financial Services Ltd. (GBP), Carta Solutions Processing Services Cyprus Ltd. (EUR), Carta Solutions Processing Services Corp. (MAD), Carta Solutions Singapore PTE. Ltd. (SGD), Carta Americas Inc. (USD), Moka Financial Technologies Europe (EUR), Tactex Asset Management Inc. (EUR), and Tactex Advisors Inc. (USD).

3.	Significant accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2021.

Significant accounting judgements, estimates and assumptions

The preparation of the interim condensed consolidated financial statements requires management to make estimates, assumptions and judgments that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amount of revenues and expenses during the period. The critical accounting estimates and judgments have been set out in the notes to the Company’s consolidated financial statements for the year ended December 31, 2021.

COVID-19 Pandemic

The overall impact of the pandemic continues to be uncertain and is dependent on actions taken by the Canadian government, businesses, and individuals to limit spread of the COVID-19 virus, as well as governmental economic response and support efforts. The Company has taken into consideration the economic impact of the COVID-19 pandemic and the significant economic volatility and uncertainty it has created when making estimates and assumptions in preparation of the interim condensed consolidated financial statements. Other than the impact on measurement of allowance for loan losses and fair valuation of our investment portfolio, there are no material accounting impacts from uncertainties surrounding the COVID-19 pandemic. For information on the Company’s allowance for loan losses and measurement of fair value, refer to Note 4 and Note 17, respectively.

New and amended standards and interpretations

Certain new or amended standards and interpretations became effective on January 1, 2022, but do not have an impact on the interim condensed consolidated financial statements of the Company. The Company has not adopted any standards or interpretations that have been issued but are not yet effective.

F-8

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

4.	Loans receivable

Loans receivable represent unsecured installment loans and lines of credit advanced to customers in the normal course of business. Current loans are defined as loans to customers with terms of one year or less, while non-current loans are those with terms exceeding one year. The breakdown of the Company’s gross loans receivable as at June 30, 2022 and December 31, 2021 are as follows:

	As at
	June 30, 2022		December 31, 2021
Current (terms of one year or less)		70,577		65,397
Non-current (terms exceeding one year)		304		248
		70,881		65,645

The following table provides a breakdown of gross loans receivable and allowance for loan losses by aging bucket, which represents our assessment of credit risk exposure and by their IFRS 9 – Financial Instruments expected credit loss (“ECL”) measurement stage. The entire loan balance of a customer is aged in the same category as its oldest individual past due payment, to align with the stage groupings used in calculating the allowance for loan losses under IFRS 9. Stage 3 gross loans receivable include net balances outstanding and still anticipated to be collected for loans previously charged off and these are carried in gross receivables at the net expected collectable amount with no associated allowance.

		As at June 30, 2022
Risk Category	Days past due	Stage 1			Stage 2			Stage 3			Total
Strong	Not past due		55,730			—			—			55,730
Lower risk	1-30 days past due		3,875			—			—			3,875
Medium risk	31-60 days past due		—			1,543			—			1,543
Higher risk	61-90 days past due		—			990			—			990
Non-performing	91+ days past due or bankrupt		—			—			8,743			8,743
	Gross loans receivable		59,605			2,533			8,743			70,881
	Allowance for loan losses		(5,552	)		(1,312	)		(5,184	)		(12,048	)
	Loans receivable, net		54,053			1,221			3,559			58,833

F-9

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

4.	Loans receivable (Continued from previous page)

		As at December 31, 2021
Risk Category	Days past due	Stage 1			Stage 2			Stage 3			Total
Strong	Not past due		54,067			—			—			54,067
Lower risk	1-30 days past due		2,797			—			—			2,797
Medium risk	31-60 days past due		—			1,284			—			1,284
Higher risk	61-90 days past due		—			798			—			798
Non-performing	91+ days past due or bankrupt		—			—			6,699			6,699
	Gross loans receivable		56,864			2,082			6,699			65,645
	Allowance for loan losses		(5,291	)		(1,119	)		(3,403	)		(9,813	)
	Loans receivable, net		51,573			963			3,296			55,832

In determination of the Company’s allowance for loan losses, internally developed models are used to factor in credit risk related metrics, including the probability of defaults, the loss given default and other relevant risk factors. Management also considered the impact of key macroeconomic factors and determined that historic loan losses are most correlated with unemployment rate, inflation rate, bank prime rate and GDP growth. As part of the process, these macroeconomic factors were used to generate various forward-looking scenarios. If management were to assign 100% probability to a pessimistic scenario forecast, the allowance for credit losses would have been $842 higher than the reported allowance for credit losses as at June 30, 2022 (December 31, 2021 – $705 higher).

Allowance for loan losses	Three months ended						Six months ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021

Balance, beginning of period		10,502			9,182			9,813			8,886
Provision for loan losses
Originations		660			651			1,254			1,169
Repayments		(215	)		(318	)		(470	)		(678	)
Re-measurement		3,897			628			6,647			2,331
Charge offs		(2,796	)		(1,904	)		(5,196	)		(3,469	)
Balance, end of period		12,048			8,239			12,048			8,239

The provision for loan losses in the interim condensed consolidated statement of operations and comprehensive income (loss) is recorded net of recoveries for the three and six months ended June 30, 2022 of $151 and $343, respectively (June 30, 2021 – $187 and $513, respectively).

F-10

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

5.	Digital assets

Digital assets represent investments in cryptocurrencies which the company expects to hold for the foreseeable future. The following table summarizes the Company’s digital assets as at June 30, 2022:

	Quantities		Average cost per unit		Fair value per unit		Total fair value ($000s)		Historical cost ($000s)		Cumulative revaluation gain (loss) ($000s)

Bitcoin (BTC)		17.82	$	42,079	$	24,155	$	430	$	750	$	(320	)
Ethereum (ETH)		145.99		3,425		1,374		201		500		(299	)
								631		1,250		(619	)

During the three and six months ended June 30, 2022, the Company recorded a revaluation loss on digital assets in other comprehensive income of $370 and $468, respectively (June 30, 2021 – loss of $550 and gain of $26, respectively).

During the three and six months ended June 30, 2022, the Company recorded a revaluation loss on digital assets in net loss of $619 (June 30, 2021 – loss of $92).

As at June 30, 2022, the carrying value of the Company’s digital assets held was $631 (December 31, 2021 – $1,718).

6.	Property and equipment

	Computer equipment			Furniture and fixtures			Leasehold improvements		Total
Cost
Balance, December 31, 2020		2,083			1,180			2,055		5,318
Additions		462			2			—		464
Additions through business combinations		298			31			—		329
Effects of movement in exchange rate		(20	)		(1	)		—		(21	)
Balance, December 31, 2021		2,823			1,212			2,055		6,090
Additions		357			—			—		357
Effects of movement in exchange rate		(16	)		—			—		(16	)
Balance, June 30, 2022		3,164			1,212			2,055		6,431

Accumulated depreciation
Balance, December 31, 2020		1,547			824			2,055		4,426
Depreciation		400			78			—		478
Balance, December 31, 2021		1,947			902			2,055		4,904
Depreciation		193			34			—		227
Balance, June 30, 2022		2,140			936			2,055		5,131

Net book value
Balance, December 31, 2021		876			310			—		1,186
Balance, June 30, 2022		1,024			276			—		1,300

Depreciation of $128 and $227 for the three and six months ended June 30, 2022, respectively (June 30, 2021 – $127 and $212, respectively) for property and equipment is included in depreciation and amortization.

F-11

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

7.	Intangible assets

	Internally generated– completed		Internally generated– in progress			Software licenses			Acquired technology assets		Customer relationships		Brand		Regulatory licenses		Total
Cost
Balance, December 31, 2020		39,504		1,529			3,356			—		—		—		—		44,389
Additions		1,200		6,303			—			—		—		—		—		7,503
Additions through a business combination		—		—			628			21,000		8,900		1,000		6,800		38,328
Impairment		—		(898	)		—			—		—		—		—		(898	)
Transfers		3,936		(3,936	)		—			—		—		—		—		—
Effects of movement in exchange rate		—		—			(8	)		—		—		—		—		(8	)
Balance, December 31, 2021		44,640		2,998			3,976			21,000		8,900		1,000		6,800		89,314
Additions		195		4,266			—			—		—		—		—		4,461
Transfers		2,344		(2,344	)		—			—		—		—		—		—
Effects of movement in exchange rate		—		—			(27	)		—		—		—		—		(27	)
Balance, June 30, 2022		47,179		4,920			3,949			21,000		8,900		1,000		6,800		93,748

Accumulated depreciation
Balance, December 31, 2020		22,231		—			3,246			—		—		—		—		25,477
Amortization		7,279		—			218			1,722		1,427		—		887		11,533
Balance, December 31, 2021		29,510		—			3,464			1,722		1,427		—		887		37,010
Amortization		3,419		—			86			1,050		533		—		680		5,768
Balance, June 30, 2022		32,929		—			3,550			2,772		1,960		—		1,567		42,778

Net book value
Balance, December 31, 2021		15,130		2,998			512			19,278		7,473		1,000		5,913		52,304
Balance, June 30, 2022		14,250		4,920			399			18,228		6,940		1,000		5,233		50,970

Amortization of intangible assets of $2,886 and $5,768 for the three and six months ended June 30, 2022, respectively (June 30, 2021 – $2,379 and $4,533, respectively) is included in depreciation and amortization.

F-12

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

8.	Credit facility

The credit facility consists of a $60,000 senior secured credit facility maturing on July 2, 2025. The credit facility is subject to variable interest rates that reference to 1 month USD LIBOR, or under certain conditions, the Federal Funds Rate in effect. Interest on advance is payable at 1 month USD LIBOR plus 8% with no LIBOR floor. There is a 0.33% fee on the available but undrawn portion of the $60,000 facility. The principal and interest balance outstanding for the credit facility as at June 30, 2022 was $47,531 (December 31, 2021 – $44,983).

The credit facility is subject to certain covenants and events of default. As at June 30, 2022, the Company was in compliance with these covenants. Interest expense on the credit facility is included in credit facility interest expense in the interim condensed consolidated statement of operations and comprehensive income (loss).

The Company has provided its senior lenders with a general security interest in all present and after acquired personal property of the Company, including certain pledged financial instruments, cash and cash equivalents.

9.	Debentures

On September 30, 2020, the Company and its debenture holders approved certain amendments to the terms of the debentures, with an effective date of July 1, 2020. Among other things, the amendments include:

a reduction in the weighted average coupon interest rate, from approximately 14% to approximately 7% and the extension of the maturity date for 50% of the principal balance to January 31, 2023, and the remainder to January 31, 2024;

ii)

replacement of the former monthly interest payable by a new quarterly payment (the “Quarterly Payment”), the amount of which is fixed at 12% per annum (3% per quarter) of the principal balance of the debentures as at September 29, 2020. Debenture holders received an election to either receive the Quarterly Payment as a) an interest payment of 8% per annum (2% per quarter) with the remainder of the payment going towards reducing the principal balance of the debenture, or b) a reduction of the principal balance of the debenture equal to the amount of the Quarterly Payment;

iii)

settlement of the new Quarterly Payment on the first business day following the end of a calendar quarter at the Company’s option either in cash or Common Shares; and

iv)

an option for all debenture holders to receive a lump-sum payout of their previously unpaid interest for the period from March 1, 2020 to June 30, 2020, at a reduced interest rate of 10%. Those who elected this option were paid in Common Shares in October 2020 subsequent to the end of the quarter.

On October 7, 2020, Mogo issued 4,479,392 warrants (the “Debenture Warrants”) to its debenture holders in connection with the debenture amendments approved on September 30, 2020, at an exercise price of $2.03 per Common Share. The Debenture Warrants are exercisable at any time until December 31, 2022. As at June 30, 2022, 3,295,377 Debenture Warrants have been exercised and converted into Common Shares for cash proceeds of $6,686. As at June 30, 2022, 1,184,015 Debenture Warrants remain outstanding and exercisable.

F-13

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

9.	Debentures (Continued from previous page)

The Company’s debentures balance includes the following:

	As at
	June 30, 2022			December 31, 2021
Principal balance		40,431			41,375
Discount		(1,632	)		(2,323	)
		38,799			39,052
Interest payable		743			742
		39,542			39,794

The debenture principal repayments will be made according to the following schedule and are payable in either cash or Common Shares at Mogo’s option:

	Principal component of quarterly payment		Principal due on maturity		Total
2022		2,187		—		2,187
2023		3,301		16,215		19,516
2024		943		17,785		18,728
		6,431		34,000		40,431

10.	Derivative financial liabilities

On February 24, 2021, in connection with a registered direct offering, the Company issued stock warrants to investors to purchase up to an aggregate of 2,673,268 Common Shares at an exercise price of US$11.00 at any time prior to three and a half years following the date of issuance.

On December 13, 2021, as part of a registered direct offering, the Company issued stock warrants to investors to purchase up to an aggregate of 3,055,556 Common Shares at an exercise price of US$4.70 at any time prior to three and a half years following the date of issuance.

The stock warrants are classified as a liability under IFRS by the sole virtue of their exercise price being denominated in USD. As such, the warrants are subject to revaluation under the Black Scholes model at each reporting date, with gains and losses recognized to the interim condensed consolidated statement of operations and comprehensive income (loss). The stock warrants are classified as a derivative liability, and not equity, due to the exercise price being denominated in USD, which is different than the Company's functional currency.

F-14

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

10.	Derivative financial liabilities (Continued from previous page)

In the event that these warrants are fully exercised, the Company would receive cash proceeds of US$43,767, with the balance of the liability reclassified to equity at that time. If the warrants were to expire unexercised, then the liability would be extinguished through a gain in the interim condensed consolidated statement of operations and comprehensive income (loss).

	As at
	June 30, 2022			December 31, 2021
Balance, beginning of period		12,688			—
Stock warrants issued		—			23,986
Change in fair value due to revaluation of derivative financial liabilities		(11,106	)		(11,276	)
Change in fair value due to foreign exchange		161			(22	)
Balance, end of period		1,743			12,688

The change in fair value due to revaluation of derivative financial liabilities for the three and six months ended June 30, 2022 was a gain of $8,917 and $11,106, respectively (June 30, 2021 – gain of $2,108 and $1,820, respectively). Change in fair value due to foreign exchange for the three and six months ended June 30, 2022 was a loss of $246 and $161, respectively (June 30, 2021 – gain of $303 and $257, respectively).

Details of the derivative financial liabilities as at June 30, 2022 are as follows:

	Warrants outstanding and exercisable (000s)		Weighted average exercise price $
Balance, December 31, 2021		5,729		9.69
Warrants issued		—		—
Balance, June 30, 2022		5,729		9.69

The 5,728,824 warrants outstanding noted above have expiry dates of August 2024 and June 2025.

The fair value of the warrants outstanding was estimated using the Black-Scholes option pricing model with the following assumptions:

	As at
	June 30, 2022	December 31, 2021
Risk-free interest rate	2.92 - 2.99%	0.97%
Expected life	2.2 - 3.0 years	2.7 - 3.5 years
Expected volatility in market price of shares	114%	102 - 109%
Expected dividend yield	0%	0%
Expected forfeiture rate	0%	0%

F-15

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

11.	Geographic information

(a)

Revenue

Revenue presented below has been based on the geographic location of customers.

	Three months ended				Six months ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Canada		15,631		11,653		30,769		21,906
Europe		1,601		1,869		3,420		3,014
Other		58		143		357		165
Total		17,290		13,665		34,546		25,085

(b)

Non-current assets

Non-current assets presented below has been based on geographic location of the assets.

	As at
	June 30, 2022		December 31, 2021
Canada		202,631		255,315
Europe		508		609
Other		990		883
Total		204,129		256,807

12.	Expense by nature and function

The following table summarizes the Company’s operating expenses by nature:

	Three months ended				Six months ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Personnel expense		7,629		7,442		16,180		12,201
Marketing		3,146		3,609		7,591		6,090
Depreciation and amortization		3,146		3,805		6,325		4,362
Stock-based compensation		2,574		2,971		6,185		5,389
Hosting and software licenses		1,750		983		3,158		1,630
Professional services		613		999		1,853		1,928
Insurance and licenses		796		601		1,461		1,068
Credit verification costs		311		532		822		1,057
Premises		293		221		575		427
Others		937		926		1,699		1,712
Total		21,195		22,089		45,849		35,864

F-16

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

12.	Expense by nature and function (Continued from previous page)

The following table summarizes the Company’s operating expenses by function including stock-based compensation and depreciation and amortization:

	Three months ended				Six months ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Technology and development		7,110		6,969		14,432		11,477
Marketing		3,500		4,192		8,276		7,232
Customer service and operations		4,111		4,378		8,917		6,553
General and administration		6,474		6,550		14,224		10,602
Total		21,195		22,089		45,849		35,864

13.	Revaluation losses (gains)

	Three months ended						Six months ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Change in fair value due to revaluation of derivative financial asset		6,980			(24,808	)		6,972			(24,808	)
Change in fair value due to revaluation of derivative financial liabilities		(8,917	)		(2,107	)		(11,106	)		(1,820	)
Unrealized loss (gain) on investment portfolio		4,566			1,901			4,927			(3,884	)
Unrealized loss on digital assets		619			92			619			92
Unrealized exchange loss		149			72			837			308
		3,397			(24,850	)		2,249			(30,112	)

14.	Other non-operating expenses

	Three months ended						Six months ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Credit facility prepayment and related expenses		—			—			—			(5	)
Government grants		(56	)		(602	)		(92	)		(1,208	)
Direct offering transaction costs allocated to derivative financial liabilities		—			—			—			1,466
Acquisition costs, restructuring and other		1,049			1,355			1,229			2,011
		993			752			1,137			2,264

F-17

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

15.	Investment accounted for using the equity method

During the year ended December 31, 2021, the Company completed its strategic investment in Coinsquare Ltd. (“Coinsquare”), one of Canada’s leading digital asset trading platforms, pursuant to which Mogo acquired 12,518,473 Coinsquare common shares, representing an approximately 38% ownership interest in Coinsquare.

Share of loss in investment accounted for using the equity method was $8,766 and $14,329 for the three and six months ended June 30, 2022 (June 30, 2021 – $2,860)

As at June 30, 2022, the Company identified indicators of impairment related to the Company’s investment in Coinsquare, which has been accounted for using the equity method. Coinsquare has experienced lower trading volumes amidst the recent broader cryptocurrency and equity market declines in the period. The Company assessed the carrying value of the investment against the estimated recoverable amount that was determined using a market approach. The estimated recoverable amount of the investment in Coinsquare was $62,743. As a result of this assessment, the Company recognized an impairment on its equity method investment in the amount of $26,749 (June 30, 2021 – $nil).

16.	Derivative financial assets

As part of the Company’s investment in Coinsquare, the Company obtained warrants to acquire 7,240,665 additional Coinsquare common shares through treasury at an exercise price of $8.29 per share, subject to certain conditions and payable by Mogo at least 50% in cash and the remainder in Common Shares (the “Coinsquare Warrant”).

The Company determined that the Coinsquare Warrant is classified as derivative financial assets on the statement of financial position, fair valued using the Black-Scholes valuation model at initial recognition, and subsequently remeasured to fair value as at each reporting date. Any change in the fair value of these derivative financial assets is recognized to revaluation gains (losses) in the interim condensed consolidated statement of operations and comprehensive income (loss).

	As at
	June 30, 2022			December 31, 2021
Balance, beginning of period		7,866			—
Additions		—			11,591
Change in fair value due to revaluation of derivative financial assets		(6,972	)		1,788
Exercised		—			(5,513	)
Balance, end of period		894			7,866

F-18

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

16.	Derivative financial assets (Continued from previous page)

The fair value of the Coinsquare Warrant was estimated using the Black-Scholes option pricing model with the following assumptions:

	As at
	June 30, 2022	December 31, 2021
Risk-free interest rate	2.09%	0.38%
Expected life	0.3 years	0.5 years
Expected volatility in market price of shares	74%	71%
Expected dividend yield	0%	0%
Expected forfeiture rate	0%	0%

17.	Fair value of financial instruments

The fair value of a financial instrument is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants which takes place in the principal (or most advantageous) market at the measurement date. The fair value of a liability reflects its non-performing risk. Assets and liabilities recorded at fair value in the interim condensed consolidated statement of financial position are measured and classified in a hierarchy consisting of three levels for disclosure purposes. The three levels are based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability's classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are defined as follows:

•

Level 1: Unadjusted quoted prices in an active market for identical assets and liabilities.

•

Level 2: Quoted prices in markets that are not active or inputs that are derived from quoted prices of similar (but not identical) assets or liabilities in active markets.

•

Level 3: Unobservable inputs that are supported by little or no market activity and are significant to the estimated fair value of the assets or liabilities.

(a)

Valuation process

The Company maximizes the use of quoted prices from active markets, when available. A market is regarded as active if transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Where independent quoted market prices are not available, the Company uses quoted market prices for similar instruments, other third-party evidence or valuation techniques.

The fair value of financial instruments determined using valuation techniques include the use of recent arm’s length transactions and discounted cash flow analysis for investments in unquoted securities, discounted cash flow analysis for derivatives, third-party pricing models or other valuation techniques commonly used by market participants and utilize independent observable market inputs to the maximum extent possible.

The use of valuation techniques to determine the fair value of a financial instrument requires management to make assumptions such as the amount and timing of future cash flows and discount rates and incorporate the Company’s estimate of assumptions that a market participant would make when valuing the instruments.

F-19

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

17.	Fair value of financial instruments (Continued from previous page)

(b)

Accounting classifications and fair values

The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. During the three months ended June 30, 2022, there have not been any transfers between fair value hierarchy levels.

			Carrying amount								Fair value
As at June 30, 2022	Note		FVTPL		Financial asset at amortized cost		Other financial liabilities		Total		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Investment portfolio				15,085		—		—		15,085		1,192		—		13,893		15,085
Derivative financial assets		16		894		—		—		894		—		—		894		894
				15,979		—		—		15,979
Financial assets not measured at fair value
Cash and cash equivalent				—		43,563		—		43,563		43,563		—		—		43,563
Loans receivable – current		4		—		70,577		—		70,577		—		70,577		—		70,577
Loans receivable – non-current		4		—		304		—		304		—		—		304		304
Other receivables				—		11,520		—		11,520		—		11,520		—		11,520
				—		125,964		—		125,964
Financial liabilities measured at fair value
Derivative financial liabilities	10			1,743		—		—		1,743		—		1,743		—		1,743
				1,743		—		—		1,743
Financial liabilities not measured at fair value
Accounts payable, accruals and other				—		—		23,103		23,103		—		23,103		—		23,103
Credit facility		8		—		—		47,531		47,531		—		47,531		—		47,531
Debentures		9		—		—		39,542		39,542		—		39,542		—		39,542
				—		—		110,176		110,176

F-20

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

17.	Fair value of financial instruments (Continued from previous page)

			Carrying amount								Fair value
As at December 31, 2021	Note		FVTPL		Financial asset at amortized cost		Other financial liabilities		Total		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Investment portfolio				18,088		—		—		18,088		1,785		—		16,303		18,088
Derivative financial assets		16		7,866		—		—		7,866		—		—		7,866		7,866
				25,954		—		—		25,954
Financial assets not measured at fair value
Cash and cash equivalent				—		69,208		—		69,208		69,208		—		—		69,208
Loans receivable – current		4		—		65,397		—		65,397		—		65,397		—		65,397
Loans receivable – non-current		4		—		248		—		248		—		—		248		248
Other receivables				—		8,259		—		8,259		—		8,259		—		8,259
				—		143,112		—		143,112
Financial liabilities measured at fair value
Derivative financial liabilities	10			12,688		—		—		12,688		—		12,688		—		12,688
				12,688		—		—		12,688
Financial liabilities not measured at fair value
Accounts payable, accruals and other				—		—		20,783		20,783		—		20,783		—		20,783
Credit facility		8		—		—		44,983		44,983		—		44,983		—		44,983
Debentures		9		—		—		39,794		39,794		—		39,794		—		39,794
				—		—		105,560		105,560

(c)

Measurement of fair values:

(i)

Valuation techniques and significant unobservable inputs

The Company has been closely monitoring developments related to COVID-19, including the existing and potential impact on its investment portfolio. As a result of the ongoing and developing COVID-19 pandemic and its resulting impact on the global economy, the Company believes that there is increased uncertainty to input factors on fair value of our Level 3 investments, including revenue multiples, time to exit events and increased equity volatility.

F-21

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

17.	Fair value of financial instruments (Continued from previous page)

The following tables show the valuation techniques used in measuring Level 3 fair values for financial instruments in the interim condensed consolidated statement of financial position, as well as the significant unobservable inputs used.


Type	Valuation technique	Significant unobservable inputs	Inter-relationship between significant unobservable inputs and fair value
Investment portfolio:
Equities
Unlisted	• Price of recent investments in the investee company • Implied multiples from recent transactions of the underlying investee companies • Offers received by investee companies • Revenue multiples derived from comparable public companies and transactions • Option pricing model	• Third-party transactions • Revenue multiples • Balance sheets and last twelve-month revenues for certain of the investee companies • Equity volatility • Time to exit events	• Increases in revenue multiples increases fair value • Increases in equity volatility can increase or decrease fair value depending on class of shares held in the investee company • Increases in estimated time to exit event can increase or decrease fair value depending on class of shares held in the investee company

Partnership interest and others	• Adjusted net book value	• Net asset value per unit • Change in market pricing of comparable companies of the underlying investments made by the partnership	• Increases in net asset value per unit or change in market pricing of comparable companies of the underlying investment made by the partnership can increase fair value

Loan receivable non-current	• Discounted cash flows: Considering expected prepayments and using management’s best estimate of average market interest rates with similar remaining terms.	• Expected timing and amount of cash flows • Discount rate 12%	• Changes to the expected amount and timing of cash flow changes fair value • Increases to the discount rate can decrease fair value

Derivative financial assets	• Option pricing model	• Equity stock price and volatility	• Increase in equity stock price and volatility will increase fair value

F-22

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

17.	Fair value of financial instruments (Continued from previous page)

The following table presents the changes in fair value measurements of the Company’s investment portfolio recognized at fair value at June 30, 2022 and December 31, 2021 and classified as Level 3:

	As at
	June 30, 2022			December 31, 2021
Balance of Level 3 investments, opening		16,303			18,291
Additions		1,814			3,555
Disposal		—			(9,272	)
Unrealized exchange gain (loss)		112			(90	)
Realized gain on investment portfolio		—			4,120
Unrealized loss on investment portfolio		(4,336	)		(301	)
Balance of level 3 investments, end of period		13,893			16,303

Unrealized exchange gain (loss) for the three and six months ended June 30, 2022 was a gain of $292 and $112, respectively (June 30, 2021 – loss of $130 and $377, respectively).

Unrealized gain (loss) on investment portfolio for the three and six months ended June 30, 2022 was a loss of $4,348 and a $4,336, respectively (June 30, 2021 – loss of $4,273 and gain of $1,424, respectively).

(ii)

Sensitivity analysis

For the fair value of equity securities, reasonably possible changes at the reporting date to one of the significant unobservable inputs, holding other inputs constant, would have the following effects.

		Profit or loss
		Increase		Decrease
Investment portfolio:
June 30, 2022	Adjusted market multiple (5% movement)		687		(687	)

December 31, 2021	Adjusted market multiple (5% movement)		920		(920	)

F-23

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

18.	Nature and extent of risk arising from financial instruments

Risk management policy

In the normal course of business, the Company is exposed to financial risk that arises from a number of sources. Management’s involvement in operations helps identify risks and variations from expectations. As a part of the overall operation of the Company, Management takes steps to avoid undue concentrations of risk. The Company manages these risks as follows:

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter‑party to a financial instrument fails to meet its contractual obligations and arises primarily from the Company’s loans receivable. The maximum amount of credit risk exposure is limited to the gross carrying amount of the loans receivable disclosed in these financial statements.

The Company acts as a lender of unsecured consumer loans and lines of credit and has little concentration of credit risk with any particular individual, company or other entity, relating to these services. However, the credit risk relates to the possibility of default of payment on the Company’s loans receivable. The Company performs on‑going credit evaluations, monitors aging of the loan portfolio, monitors payment history of individual loans, and maintains an allowance for loan loss to mitigate this risk.

The credit risk decisions on the Company’s loans receivable are made in accordance with the Company’s credit policies and lending practices, which are overseen by the Company’s senior management. Credit quality of the customer is assessed based on a credit rating scorecard and individual credit limits are defined in accordance with this assessment. The consumer loans receivable is unsecured. The Company develops underwriting models based on the historical performance of groups of customer loans which guide its lending decisions. To the extent that such historical data used to develop its underwriting models is not representative or predictive of current loan book performance, the Company could suffer increased loan losses.

The Company cannot guarantee that delinquency and loss levels will correspond with the historical levels experienced and there is a risk that delinquency and loss rates could increase significantly.

F-24

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

18.	Nature and extent of risk arising from financial instruments (Continued from previous page)

The Company’s accounts payable and accruals are substantially due within 12 months. The maturity schedule of the Company’s credit facilities and debentures are described below. Management’s intention is to continue to refinance any outstanding amounts owing under the credit facilities and debentures, in each case as they become due and payable. The debentures are subordinated to the credit facilities which has the effect of extending the maturity date of the debentures to the later of contractual maturity or the maturity date of credit facilities. See Note 8 and 9 for further details.

	2022		2023		2024		2025		2026		Thereafter
Commitments - operational
Lease payments		662		1,297		1,206		1,240		1,255		1,472
Accounts payable		5,342		—		—		—		—		—
Accruals and other		17,761		—		—		—		—		—
Interest – Credit facility (Note 8)		2,298		4,596		4,596		2,298		—		—
Interest – Debentures (Note 9)		1,461		1,502		—		—		—		—
Purchase obligations		263		—		—		—		—		—
		27,787		7,395		5,802		3,538		1,255		1,472
Commitments – principal repayments
Credit facility (Note 8)		—		—		—		47,531		—		—
Debentures (Note 9)		2,187		19,516		18,728		—		—		—
		2,187		19,516		18,728		47,531		—		—
Total contractual obligations		29,974		26,911		24,530		51,069		1,255		1,472

F-25

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

19.

Equity

(a)	Share capital

The Company’s authorized share capital is comprised of an unlimited number of Common Shares with no par value and an unlimited number of preferred shares issuable in one or more series. The Board is authorized to determine the rights and privileges and number of shares of each series.

For the six months ended June 30, 2022, the Company repurchased 800,000 Common Shares for cancellation under the share repurchase program at an average price of CAD$1.19 per share, for a total repurchase cost of $955.

As at June 30, 2022, there are 75,952,490 (December 31, 2021 – 76,693,859) Common Shares and no preferred shares issued and outstanding.

(b)	Treasury share reserve

The treasury share reserve comprises the cost of the shares held by the Company. As at June 30, 2022, the Company held 303,816 of Common Shares (December 31, 2021 – 303,816).

(c)

Options

The Company has a stock option plan (the “Plan”) that provides for the granting of options to directors, officers, employees and consultants. The exercise price of an option is set at the time that such option is granted under the Plan. The maximum number of Common Shares reserved for issuance under the Plan is the greater of i) 15% of the number of Common Shares issued and outstanding and ii) 3,800,000. As a result of a business combination with Mogo Finance Technology Inc. completed on June 21, 2019, there were additional options issued, which were granted pursuant to the Company’s prior stock option plan (the “Prior Plan”). As at June 30, 2022, there are 97,000 of these options outstanding that do not contribute towards the maximum number of Common Shares reserved for issuance under the Plan as described above.

Each option converts into one Common Share upon exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither right to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of expiry. Options issued under the Plan have a maximum contractual term of eight years, and options issued under the Prior Plan have a maximum contractual term of ten years.

F-26

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

19.	Equity (Continued from previous page)

(c)	Options (Continued from previous page)

A summary of the status of the stock options and changes in the period is as follows:

	Options outstanding (000s)			Weighted average grant date fair value $		Weighted average exercise price $		Options exercisable (000s)		Weighted average exercise price $
Balance, December 31, 2020		4,977			—		3.07		2,965		3.47
Options issued		5,410			4.76		7.47		—		—
Exercised		(810	)		—		1.77		—		—
Forfeited		(653	)		—		6.24		—		—
Balance, December 31, 2021		8,924			—		4.64		3,036		3.93
Options issued		1,439			1.66		2.40		—		—
Exercised		(48	)		1.22		1.26		—		—
Forfeited		(386	)		3.19		3.35		—		—
Balance, June 30, 2022		9,929			—		3.59		3,788		4.06

The above noted options have expiry dates ranging from July 2022 to June 2030.

With the exception of performance-based stock options, the fair value of each option granted was estimated using the Black-Scholes option pricing model with the following assumptions:

	Six months ended
	June 30, 2022	June 30, 2021
Risk-free interest rate	1.73 - 2.58%	0.58%
Expected life	5 years	5 years
Expected volatility in market price of shares	87 - 90%	84%
Expected dividend yield	0%	0%
Expected forfeiture rate	0% - 15%	0% - 15%

These options generally vest either immediately or monthly over a three-to-four-year period.

On September 30, 2021, the Company granted performance-based stock options that vest monthly over a two-year period starting on January 1, 2022. Vesting of these options is dependent on certain performance criteria being met.

Total stock-based compensation costs related to options and RSUs for the three and six months ended June 30, 2022 was $2,542 and $6,095 respectively (June 30, 2021 – $3,805 and $4,362, respectively).

F-27

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

19.	Equity (Continued from previous page)

(d)

RSUs

RSUs are granted to executives and other key employees. The fair value of an RSU at the grant date is equal to the market value of one Common Share. Executives and other key employees are granted a specific number of RSUs for a given performance period based on their position and level of contribution. RSUs vest fully after three years of continuous employment from the date of grant and, in certain cases, if performance objectives are met as determined by the Board. The maximum number of Common Shares which may be made subject to issuance under RSUs awarded under the RSU Plan is 500,000.

Details of outstanding RSUs as at June 30, 2022 are as follows:

	Number of RSUs (000s)
Balance, December 31, 2020		77
Converted		(30	)
Expired		(5	)
Balance, December 31, 2021		42
Converted		(14	)
Expired		—
Balance, June 30, 2022		28

(e)

Warrants

	Warrants outstanding (000s)			Weighted average exercise price $		Warrants exercisable (000s)		Weighted average exercise price $
Balance, December 31, 2020		5,035			1.80		4,386		1.88
Warrants issued		573			11.25		—		—
Warrants exercised		(3,618	)		1.76		—		—
Balance, December 31, 2021		1,990			4.60		1,757		5.04
Warrants issued		—			—		—		—
Warrants exercised		—			—		—		—
Balance, June 30, 2022		1,990			4.60		1,874		4.80

The 1,990,231 warrants outstanding noted above have expiry dates ranging from December 2022 to June 2025, and do not include the stock warrants accounted for as a derivative financial liability discussed in Note 10.

On October 7, 2020, Mogo issued 4,479,392 Debenture Warrants to its debenture holders in connection with the debenture amendments approved on September 30, 2020, at an exercise price of $2.03 per Common Share. The Debenture Warrants are exercisable at any time until December 31, 2022. There were 1,184,015 Debenture Warrants outstanding as at June 30, 2022 (December 31, 2021 – 1,184,015). During the three and six months ended June 30, 2022, no Debenture Warrants were exercised into Common Shares (June 30, 2021 – 121,556 and 2,184,183, respectively) resulting in no cash proceeds (June 30, 2021 – $247 and $4,434, respectively).

F-28

Mogo Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of Canadian dollars, except per share amounts)

For the three and six months ended June 30, 2022 and 2021

19.	Equity (Continued from previous page)

(e)	Warrants (Continued from previous page)

In connection with a marketing collaboration agreement with Postmedia Network Inc. (“Postmedia”) dated January 25, 2016 and amended on January 1, 2018 and January 1, 2020 effective until December 31, 2022, Mogo issued Postmedia a total of 1,546,120 warrants, of which 1,312,787 have been exercised by June 30, 2022 for cash proceeds of $1,696. 233,333 warrants remain outstanding as at June 30, 2022 with 116,667 having vested and the remaining 116,667 vesting on February 24, 2023. The warrants remain exercisable until August 24, 2023 subject to an earlier liquidation event. Subsequent to an amendment entered into on June 3, 2020, the exercise price of the warrants was reduced to $1.292. Under the marketing collaboration agreement, Postmedia also receives a quarterly payment of $263.

During the year ended December 31, 2021, the Company also issued 572,883 warrants with exercise prices ranging from USD $5.63 to USD $12.63 per warrant in connection with broker services rendered on offerings during the period. As at June 30, 2022, these warrants remain outstanding and exercisable.

Warrants issued to investors are denominated in a currency other than the functional currency of the Company therefore do not meet the definition of an equity instrument and are classified as derivative financial liabilities. Refer to Note 10 for more details.

20.	Related party transactions

Related party transactions during the three and six months ended June 30, 2022, include transactions with debenture holders that incur interest. The related party debentures balance as at June 30, 2022, totaled $314 (December 31, 2021 – $322). The debentures bear annual coupon interest of 8.0% (December 31, 2021 – 8.0%) with interest expense for the three and six months ended June 30, 2022, totalling $6 and $13, respectively (June 30, 2021 – $5 and $12, respectively). The related parties involved in such transactions include shareholders, officers, directors, and management, close members of their families, or entities which are directly or indirectly controlled by close members of their families. The debentures are ongoing contractual obligations that are used to fund our corporate and operational activities.

F-29