Enhanced Investments - Financial Portal

Published: 2023-02-09





		SANGOMA TECHNOLOGIES CORPORATION

Condensed consolidated interim financial statements for
the three and six month periods ended December 31, 2022
			and 2021

				(Unaudited in thousands of US Dollars)

					100 Renfrew Drive, Suite 100,
	Markham, Ontario,
						Canada L3R 9R6


Sangoma Technologies Corporation December 31, 2022 and 2021 Table of contents Condensed consolidated interim statements of financial position ......................................................................... 3
Condensed consolidated interim statements of loss and comprehensive loss ..................................................... 4
Condensed consolidated interim statements of changes in shareholders’ equity ................................................ 5
Condensed consolidated interim statements of cash flows ................................................................................... 6
Notes to the condensed consolidated interim financial statements .................................................................. 7-27










	2


Sangoma Technologies Corporation
Condensed consolidated interim statements of financial positionAs at December 31, 2022 and June 30, 2022
(Unaudited in thousands of US dol ars, except per share data)
			December 31	June 30
					2022	2022
					$	$
Assets
Current assets
Cash and cash equivalents (Note 4)					6,799			12,702
Trade and other receivables (Note 4, 20)					22,511			23,943
Inventories (Note 6)					19,297			17,426
Income tax receivable					1,381		-
Contract assets					1,494			1,225
Derivative assets (Note 15)					1,245		648
Other current assets					2,478			4,364
					55,205			60,308
Non-current assets
Property and equipment (Note 7)					10,088			10,274
Right-of-use assets (Note 8)					15,003			16,974
Intangible assets (Note 9)			174,214				191,369
Development costs (Note 10)					5,546			2,861
Deferred income tax assets					2,793			2,762
Goodwil (Note 12)			210,009				210,009
Contract assets					3,032			2,567
Derivative assets (Note 15)					984		700
Other non-current assets					668		709
			477,542				498,533
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 4)					23,819			28,568
Provisions (Note 13)					212		200
Sales tax payable					5,759			5,895
Income tax payable					-			1,885
Consideration payable (Note 14)					9,826			8,986
Operating facility and loans (Note 15)					17,700			17,700
Contract liabilities (Note 16)					10,693			11,580
Lease obligations on right-of-use assets (Note 8)					3,133			3,592
					71,142			78,406
Long term liabilities
Consideration payable (Note 14)					1,362			3,782
Operating facility and loans (Note 15)					81,075			86,925
Contract liabilities (Note 16)					3,618			3,487
Non-current lease obligations on right-of-use assets (Note 8)					12,964			14,397
Deferred income tax liabilities					16,585			16,657
Other non-current liabilities					995			1,071
			187,741				204,725
Shareholders’ equity
Share capital			228,727				203,032
Shares to be issued			151,315				179,132
Contributed surplus					17,232			15,055
Accumulated other comprehensive income					1,488		839
Deficit			(108,961)				(104,250)
			289,801				293,808
			477,542				498,533
Subsequent events (Notes 17(i) and Note 21)
Approved by the Board(Signed)
							Al Guarino Director
		(Signed)						Al an Brett Director
The accompanying notes are an integral part of these condensed consolidated interim financial statements.


	3


Sangoma Technologies Corporation
Condensed consolidated interim statements of loss and comprehensive loss
For the three and six month periods ended December 31, 2022 and 2021
(Unaudited in thousands of US dol ars, except per share data)
				Six month periods ended		Three month periods ended
		December 31						December 31
		2022	2021	2022	2021
			(Note 2)		(Note 2)
		$	$	$	$
Revenue (Note 19)		62,035					53,186				126,086				104,685
Cost of sales		19,246					14,833				39,960				29,459
Gross profit		42,789					38,353				86,126				75,226
Expenses
Sales and marketing		15,613					13,195				31,261				25,302
Research and development		9,227					7,759				18,656				16,119
General and administration		19,518					18,148				38,811				35,415
Foreign currency exchange (gain) loss		(100)					92				(64)				85
		44,258					39,194				88,664				76,921
Loss before interest expense (net), business integration costs, gain on change in fair value of consideration payable
and income taxes		(1,469)					(841)				(2,538)				(1,695)
Interest expense (net) (Notes 4, 8, 14, 15)		1,632					597				3,210				1,253
Business integration costs		355					-				407				836
Exchange listing expense		-					1,051				-				1,051
(Gain) loss on change in fair value of consideration payable (Note 14)		(350)					(143)				(1,931)				104
		1,637					1,505				1,686				3,244
Loss before income tax		(3,106)					(2,346)				(4,224)				(4,939)
Provision for (recovery of) income taxes
Current (Note 11)		744					438				785				808
Deferred (Note 11)		(1,115)					(307)				(298)				(969)
Net loss		(2,735)					(2,477)				(4,711)				(4,778)
Other comprehensive income (loss)Items to be reclassified to net income (loss)
Change in fair value of interest rate
swaps, net of tax (Note 15)		212					112				649				151
Comprehensive loss		(2,523)					(2,365)				(4,062)				(4,627)
Loss per share
Basic (Note 17(i i))		(0.084)				$	(0.078)			$	(0.143)			$	(0.151)	$
Diluted (Note 17(i i))		(0.084)				$	(0.078)			$	(0.143)			$	(0.151)	$
Weighted average number
of shares outstanding (Note 17(iii))Basic
						32,512,058		31,726,308		33,039,477		31,721,761
		Diluted						32,512,058	31,726,308			33,039,477	31,721,761
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
	4


Sangoma Technologies Corporation
Condensed consolidated interim statements of changes in shareholders' equityFor the six month periods ended December 31, 2022 and 2021
(Unaudited in thousands of US dollars, except per share data)
			Number of	Shares	Accumulated other	Total
			common				Share	to be	Contributed	comprehensive		Retained	shareholders'
			shares				capital	issued	surplus	income (loss)				earnings (deficit)	equity
	$								$	$						$	$	$
Balance, July 1, 2021			19,021,642								172,462								192,102			5,393		(333)		6,530	376,154
Net loss											-		-									-								-		-				(4,778)		(4,778)
Change in fair value of interest rate swaps,
													net of tax (Note 15)	-		-							-										-		151			-	151
Deferred tax benefit on share issuance costs (Note 11)											-		138									-								-		-				-		138
Common shares issued
													for options exercised (Note 17(i))	39,594							524							-												(178)		-		-	346
Rounding of fractional shares
													after share consolidation	(28)		-							-										-		-			-	-
Share-based compensation expense (Note 17(i ))											-		-									-			4,452		-				-			4,452
Balance, December 31 2021			19,061,208								173,124								192,102			9,667		(182)		1,752	376,463
Balance, July 1, 2022			21,439,632								203,032								179,132			15,055		839		(104,250)	293,808
Net loss											-		-									-								-		-				(4,711)		(4,711)
Change in fair value of interest rate swaps,
													net of tax (Note 15)	-		-							-										-		649			-	649
Common shares issued
													as instalment for shares to be issued (Note 17(i))	1,838,458							27,817				(27,817)			-
Common shares issued
													for options exercised (Note 17(i))	9,234							57							-												(20)		-		-	37
Common shares
													purchased and cancelled (Note 17(i))	(78,822)							(477)							-												-		-		-	(477)
Common shares
													returned from escrow (Note 4)	(142,124)							(1,702)				-												-	-			-		(1,702)
Share-based compensation expense (Note 17(i ))											-		-									-			2,197		-				-			2,197
			Balance, December 31, 2022			23,066,378								228,727						151,315			17,232		1,488		(108,961)		289,801

The accompanying notes are an integral part of these condensed consolidated interim financial statements.
		5


Sangoma Technologies Corporation
Condensed consolidated interim statements of cash flowsFor the six month periods ended December 31, 2022 and 2021
(Unaudited in thousands of US dollars, except per share data)
						Six month periods ended
								December 31
			2022	2021
Operating activities			$	$
					Net loss	(4,711)			(4,778)
					Adjustments for:
					Depreciation of property and equipment (Note 7)	2,499			984
					Depreciation of right-of-use assets (Note 8)	1,978			1,486
					Amortization of intangible assets (Note 9)	17,155			15,299
					Amortization of development costs (Note 10)	1,024			515
					Income tax expense (Note 11)	487			(969)
					Income tax paid	(3,946)			(1,633)
					Share-based compensation expense (Note 17(i ))	2,197			4,452
					Interest on obligation on right-of-use assets (Note 8)	252			217
					Unrealized foreign exchange gain (loss)	150			44
					Accretion expense (Note 14)	351			-
					Gain on lease modification (Note 8)	(36)			-
					Loss on disposal of property and equipment (Note 7)	158			-
					(Gain) loss on change in fair value of consideration payable (Note 14)	(1,931)			104
					Changes in working capital
					Trade receivables	(620)			(1,240)
					Inventories	(1,871)			(2,521)
					Income tax receivable	-			1,992
					Contract assets	(734)			(1,101)
					Other assets	1,927			(2,223)
					Sales tax payable	(136)			(373)
					Accounts payable and accrued liabilities	(4,749)			(1,465)
					Provisions	12			(159)
					Other non current liabilites	(76)			-
					Contract liabilities	(756)			(1,977)
Net cash flows from operating activities			8,624				6,654
Investing activities
					Purchase of property and equipment (Note 7)	(2,471)			(509)
					Development costs (Note 10)	(3,647)			(736)
					Business combinations, net of cash and cash
					equivalents acquired (Note 20)	-			(2,000)
Net cash flows used in investing activities			(6,118)				(3,245)
Financing activities
					Proceeds from operating facility and loan (Note 15)	3,000			-
					Repayments of operating facility and loan (Note 15)	(8,850)			(7,276)
					Repayment of right-of-use lease obligation (Note 8)	(2,119)			(1,623)
					Common shares purchased and cancel ed (Note 17(i))	(477)			-
					Issuance of common shares for stock options exercised (net) (Note 17(i))	37			347
Net cash flows used in financing activities			(8,409)				(8,552)

Decrease in cash and cash equivalents			(5,903)				(5,143)
Cash and cash equivalents, beginning of the period			12,702				22,096
		Cash and cash equivalents, end of the period				6,799			16,953

The accompanying notes are an integral part of these condensed consolidated interim financial statements.
	6

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


1.		General information
		Founded in 1984, Sangoma Technologies Corporation (“Sangoma” or the “Company”) is publicly traded on the Toronto Stock Exchange (TSX: STC) and NASDAQ (NASDAQ: SANG). The Company’s shares were traded on the TSX Venture Exchange under the symbol STC until November 1, 2021, at which point the Company’s shares commenced trading on the TSX. In conjunction with listing on the TSX, the Company’s shares were delisted from the TSX Venture Exchange. The Company’s shares commenced trading on NASDAQ on December 16, 2021. The Company was incorporated in Canada, its legal name is Sangoma Technologies Corporation and its primary operating subsidiaries for fiscal 2023 are Sangoma Technologies Inc., Sangoma US Inc., VoIP Supply LLC, Digium Inc., VoIP Innovations LLC, Star2Star Communications LLC, and NetFortris Corporation.
		Sangoma is a leading provider of hardware and software components that enable or enhance Internet Protocol Communications Systems for both telecom and datacom applications. Enterprises, smal to medium sized businesses (“SMBs”) and telecom operators in over 150 countries rely on Sangoma’s technology as part of their mission critical infrastructures. The product line includes data and telecom boards for media and signal processing, as well as gateway appliances and software.
		The Company is domiciled in Ontario, Canada. The address of the Company’s registered office is 100 Renfrew Dr., Suite 100, Markham, Ontario, L3R 9R6 and the Company operates in multiple jurisdictions.

2.		Significant accounting policies
		Statement of compliance and basis of presentation
		These interim financial statements for the three and six month periods ended December 31, 2022 and 2021 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”).
		These interim financial statements do not include al of the disclosures required by International Financial Reporting Standards (“IFRS”) for annual consolidated financial statements and accordingly should be read in conjunction with the Company’s audited consolidated financial statements for the year ended June 30, 2022 (“annual financial statements”) prepared in accordance with IFRS as issued by the IASB.
		During the fourth quarter ended June 30, 2022, the Company identified an inconsistency in its treatment of certain revenues being recorded gross versus net. As a result, the Company corrected the presentation of revenue in its annual consolidated financial statements for the year ended June 30, 2022. As indicated in our management discussion & analysis for the fourth quarter ended June 30, 2022 (the “Fiscal 2022 MD&A”), the impacts of these changes to each quarter of fiscal 2022 were not material. In these unaudited condensed consolidated interim financial statements, the comparative periods have been reclassified for these changes. As a result, revenue, gross margin and sales and marketing expense have been reduced by $1,050 and $2,030 in the three and six month periods ended December 31, 2021 as compared to amounts previously reported. The impact of this change had no impact on net loss or cash flow from operations for the comparative periods.
		The condensed consolidated interim financial statements were authorized for issue by the Board of Directors on February 9, 2023.







	7

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


3.		Significant accounting judgments, estimates and uncertainties
		These unaudited condensed consolidated interim financial statements were prepared using the same
		basis of presentation, accounting policies and methods of computation as those of the audited consolidated financial statements for the year ended June 30, 2022. They were prepared using the same critical estimates and judgments in applying the accounting policies as those of the audited consolidated financial statements for the year ended June 30, 2022, except for the fol owing which are new in 2022.
		On December 13, 2022, the Company adopted the Omnibus Equity Incentive Plan (the “Plan”). Under the Plan, the Company may grant participants Options, Performance Share Units (PSUs), Restricted Share Units (RSUs) and Deferred Share Units (DSUs). The PSUs, RSUs and DSUs are redeemable either for one common share or for an amount in cash equal to the fair market value of one common share (at the option of the Company and as set out in the participant’s equity award agreement). Al PSUs, RSUs and DSUs are accounted for as equity-settled awards.
		DSUs general y vest immediately and become redeemable once a director no one longer serves on the board of the Company. RSUs vest over a three-year period after the date of grant. The expense is measured based on the fair value of the awards at the grant date.
		PSUs vest in ful at the end of a three-year period and the final amount is based 50% on market-based performance targets being met and 50% on non-market-based performance targets, with the conversion ratio for vested PSUs being from 0% to 150%. The expense related to the PSUs is measured (i) based on the fair value of the awards at the grant date using the Monte Carlo simulation, with respect to the 50% based on the market-based performance targets, and (i ) based on the fair value of the awards at the grant date using the volume weighted average trading price per share on the TSX during the immediately preceding five trading days.
		The preparation of the interim financial statements requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and reported assets, liabilities, revenue and expenses, consistent with those described in the Company’s annual financial statements and as described in these interim financial statements. Estimates and underlying assumptions are reviewed on an ongoing basis. Estimates are based on historical experience and other assumptions that are considered reasonable in the circumstances. The actual amount or values may vary in certain instances from the assumptions and estimates made. Changes wil be recorded, with the corresponding effect on profit or loss, when, and if, better information is obtained.

4. Financial instruments
		The fair values of the cash and cash equivalents, trade and other receivables, derivative assets, contract assets, other current assets, accounts payable and accrued liabilities, consideration payable and derivative liabilities approximate their carrying values due to the relatively short-term nature of these financial instruments or as these financial instruments are fair valued at each reporting period. The fair values of operating facility and loans approximate their carrying values due to variable interest loans or fixed rate loan, which represent market rate.

		Cash and cash equivalents are comprised of:
			December 31	June 30
				2022	2022
				$	$
		Cash at bank and on hand		6,799		12,702
		Cash includes demand deposits with financial institutions and cash equivalents consist of short-term, highly liquid investments purchased with original maturities of three months or less. As at December 31, 2022 and June 30, 2022 the Company had no cash equivalents.

	8

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


4.		Financial instruments
		Total interest income and interest expense for financial assets or financial liabilities that are not at fair value through profit or loss can be summarized as follows:
			Three month periods ended		Six month periods ended
			December 31		December 31
			2022	2021	2022	2021
			$	$	$	$
		Interest income	(30)		-		(30)		-
		Interest expense (Note 15)	1,363		500		2,638		1,036
		Accretion expense (Notes 8, 14)	299		97		602		217
		Interest expense (net)	1,632		597		3,210		1,253
		The Company examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, foreign currency risk, interest rate risk and market risk.
		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 obligations. Where possible, the Company uses an insurance policy with Export Development Canada (“EDC”) for its trade receivables to manage this risk and minimize any exposure.
						December 31	June 30
				2022	2022
				$	$
		Trade receivables		16,665			16,045
		Receivable related to working capital adjustment (Note 20)		5,846			7,898
		Trade and other receivables		22,511			23,943
		During the period ended December 31, 2022, the parties finalized the working capital provision in respect of the acquisition of NetFortris and the company received $2,052 from the escrow account, consisting of $350 in cash and $1,702 in the form of 142,124 common shares. The remaining balance of $5,846 as at December 31, 2022 relates to certain indemnification assets recorded in respect of liabilities assumed on the acquisition of Netfortris. (June 30, 2022-$7,898)
		The Company’s maximum exposure to credit risk for its trade receivables is summarized as fol ows with some of the over 90-day receivable not being covered by EDC:
						December 31	June 30
				2022	2022
				$	$
		Trade receivables aging:0-30 days
				12,077			12,809
		31-90 days		3,416			2,541
		Greater than 90 days		3,555			2,976
				19,048			18,326
		Expected credit loss provision		(2,383)			(2,281)
				16,665			16,045
		The movement in the provision for expected credit losses can be reconciled as follows:
						December 31	June 30
				2022	2022
				$	$
		Expected credit loss provision:Expected credit loss provision, beginning balance
				(2,281)				(1,096)
		Net change in expected credit loss provision during the period		(102)				(1,185)
		Expected credit loss provision, ending balance		(2,383)				(2,281)


	9

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


4.		Financial instruments
		The Company applies the simplified approach to provide for expected credit losses as prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables and contract assets. The expected credit loss provision is based on the Company’s historical collections and loss experience and incorporates forward-looking factors, where appropriate.
		Substantial y al of the Company’s cash and cash equivalents are held with major Canadian or US financial institutions and thus the exposure to credit risk is considered insignificant. Management actively monitors the Company’s exposure to credit risk under its financial instruments, including with respect to trade receivables.

		Liquidity risk
		Liquidity risk is the risk that the Company wil not be able to meet its obligations associated with financial liabilities. The Company has a planning and budgeting process in place by which it anticipates and determines the funds required to support its normal operating requirements. The Company coordinates this planning and budgeting process with its financing activities through its capital management process.
		The Company holds sufficient cash and cash equivalents and working capital, maintained through stringent cash flow management, to ensure sufficient liquidity is maintained. The fol owing are the undiscounted contractual maturities of significant financial liabilities of the Company as at December 31, 2022:
			within 12 months	12-24 months	24-36 months	>36 months	Total
							$	$	$	$	$
		Accounts payable and accrued liabilities					23,819					-	-			-	23,819
		Sales tax payable					5,759					-	-			-	5,759
		Consideration payable					10,252					627	627			261	11,767
		Operating facility and loans					17,700					17,700	22,775	40,600	98,775
		Lease obligations on right of use assets					3,556					3,101	2,716	8,458	17,831
		Other non-current liabilities					-					-	-			995	995
							61,086					21,428	26,118	50,314	158,946
		Foreign currency risk
		A portion of the Company’s transactions occur in a foreign currency (Canadian Dollars (CAD), Euros (EUR), and Great British Pounds (GBP), Hong Kong Dollars (HKD), Indian Rupees (INR), Philippine Peso (PHP), Australian Dol ar (AUD)) and, therefore, the Company is exposed to foreign currency risk at the end of the reporting period through its foreign denominated cash, trade receivables, contract assets, accounts payable and accrued liabilities, and operating facility and loans. As at December 31, 2022, a 10% depreciation or appreciation of the CAD, EUR, GBP, HKD, INR, PHP, and AUD currencies against the U.S. dol ar would have resulted in an approximate $71 (June 30, 2022 - $59) increase or decrease, respectively, in total comprehensive loss.

		Interest rate risk
		The Company’s exposure to interest rate fluctuations is with its credit facility (Note 15) which bears interest at a floating rate. As at December 31, 2022, a change in the interest rate of 1% per annum would have an impact of approximately $463 (December 31, 2021 - $568) per annum in finance costs. The Company also entered an interest rate swap arrangement for its loan facility (Note 15) to manage the exposure to changes in LIBOR-rate based interest rate. The fair value of the interest rate swaps was estimated based on the present value of projected future cash flows using the LIBOR forward rate curve. The model used to value the interest rate swaps included inputs of readily observable market data, a Level 2 input. As described in detail in Note 15, the fair value of the interest rate swaps was a current asset of $1,245 and non-current asset of $984 on December 31, 2022 (June 30, 2022- current asset $648 and non-current asset of $700).

	10

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


5. Capital management
		The Company’s objectives in managing capital are to safeguard the Company’s assets, to ensure sufficient liquidity to sustain the future development of the business via advancement of its significant research and development efforts, to conservatively manage financial risk and to maximize investor, creditor, and market confidence. The Company considers its capital structure to include its shareholders’ equity and operating facilities and loans. Working capital is optimized via stringent cash flow policies surrounding disbursement, foreign currency exchange and investment decision-making. There have been no changes in the Company’s approach to capital management during the year and apart from the financial covenants as discussed in Note 15, the Company is not subject to any other capital requirements imposed by external parties.

6.		Inventories
		Inventories recognized in the condensed consolidated interim statements of financial position are comprised of:
			December 31	June 30
				2022	2022
				$	$
		Finished goods		14,924		13,190
		Parts		5,353		5,155
				20,277		18,345
		Provision for obsolescence		(980)		(919)
		Net inventory carrying value		19,297		17,426

	11

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


7. Property and equipment
				Office furniture		Stockroom
	and computer				Software and	and production	Tradeshow	Leasehold
	equipment				books	equipment	equipment	improvements	Total
			Cost		$	$	$							$	$	$
			Balance at July 1, 2021	3,329									417		6,255						47		348					10,396
			Additions through business combinations (Note 20)								540						2	3,619					-				11		4,172
			Additions								893									41	808							-		126	1,868
			Disposals								(25)									(2)	(231)							-		(10)	(268)
			Balance at June 30, 2022	4,737									458		10,451						47		475					16,168
			Additions								541									-	1,930							-		-	2,471
			Disposals		(2)									-		(156)						-		-		(158)
			Balance at December 31, 2022	5,276									458		12,225						47		475					18,481
			Accumulated depreciation
			Balance at July 1, 2021	1,371									314		872						41		146		2,744
			Depreciation expense	1,081									99		1,888						6		78		3,152
			Disposals								-									-	(1)							-		(1)	(2)
			Balance at June 30, 2022	2,452									413		2,759						47		223		5,894
			Depreciation expense								582									10	1,875							-		32	2,499
			Balance at December 31, 2022	3,034									423		4,634						47		255		8,393
			Net book value as at:Balance at June 30, 2022
	2,285									45		7,692							-			252			10,274
			Balance at December 31, 2022	2,242									35		7,591						-		220					10,088


			For the three and six month periods ended December 31, 2022, depreciation expenses of $261 and $524 (three and six month periods ended December 31, 2021 - $247 and $496) were recorded in general and administration expense in the condensed consolidated interim statements of loss and comprehensive loss. Depreciation expenses in the amounts of $932 and $1,975 were included in cost of sales for the three and six month periods ended December 31, 2022 (three and six month periods ended December 31, 2021 - $294 and $488).
		12

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


8. Leases: Right-of-use assets and lease obligations
			The Company’s lease obligations and right-of-use assets are presented below:
				Right-of-use assets
	$
			Balance at July 1, 2021	17,955
			Additions	5,536
			Addition through business combination (Note 20)	3,277
			Terminations	(1,536)
			Adjustments due to lease modification	(2,002)
			Balance at June 30, 2022	23,230
			Additions	41
			Terminations	(280)
			Balance at December 31, 2022	22,991
			Accumulated depreciation and repaymentsBalance at July 1, 2021
	4,425
			Depreciation expense	3,308
			Terminations	(1,477)
			Balance at June 30, 2022	6,256
			Depreciation expense	1,978
			Terminations	(246)
			Balance at December 31, 2022	7,988
			Net book value as at:June 30, 2022
	16,974
			December 31, 2022	15,003
				Lease Obligations
	$
			Balance at July 1, 2021	14,243
			Additions	5,535
			Addition through business combination (Note 20)	3,277
			Adjustments due to lease modification	(2,107)
			Repayments	(3,407)
			Accretion expense	442
			Effects of movements on exchange rates	6
			Balance at June 30, 2022	17,989
			Additions	41
			Adjustments due to lease modification	(36)
			Repayments	(2,119)
			Accretion expense	252
			Effects of movements on exchange rates	(30)
			Balance at December 31, 2022	16,097
			Lease Obligations - Current	3,133
			Lease Obligations - Non-current	12,964
	16,097


		13

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


			9.	Intangible assets
					Other
						Purchased	Customer	purchased
						technology	relationships		Brand	intangibles	Total
	$	$										$	$	$
				CostBalance at July 1, 2021
	95,323												112,256					6,787			2,748			217,114
				Business combinations (Note 20)	14,800										14,200				-						-	29,000
				Balance at June 30, 2022	110,123										126,456				6,787			2,748			246,114
				Balance at December 31, 2022	110,123										126,456				6,787			2,748			246,114
				Accumulated amortizationBalance at July 1, 2021
	7,809												11,336					2,135			1,856			23,136
				Amortization expense	16,097										14,128				685			699			31,609
				Balance at June 30, 2022	23,906										25,464				2,820			2,555			54,745
				Amortization expense	8,903											7,774	405			73			17,155
				Balance at December 31, 2022	32,809										33,238				3,225			2,628			71,900
				Net book value as at:Balance at June 30, 2022
	86,217												100,992					3,967			193			191,369
				Balance at December 31, 2022	77,314										93,218				3,562			120			174,214

				Amortization expense is included in general and administration expense in the consolidated interim statements of loss and comprehensive loss. For the three and six month periods ended December 31, 2022, amortization expenses were $8,578 and $17,155 (three and six month periods ended December 31, 2021 - $7,644 and $15,298).
		14

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


10.		Development costs
		Cost	$
		Balance at July 1, 2021	3,360
		Additions	3,237
		Investment tax credits	(628)
		Balance at June 30, 2022	5,969
		Additions	3,647
		Investment tax credits	62
		Balance at December 31, 2022	9,678
		Accumulated amortization
		Balance at July 1, 2021	(1,827)
		Amortization	(1,281)
		Balance at June 30, 2022	(3,108)
		Amortization	(1,024)
		Balance at December 31, 2022	(4,132)
				December 31, 2022	June 30, 2022
					$	$
		Net capitalized development costs			5,546		2,861

		Each period, additions to development costs are recognized net of investment tax credits accrued. In addition to the above amortization, the Company has recognized $8,625 and $17,632 of engineering expenditures as expenses during the three and six month periods ended December 31, 2022 (three and six month periods ended December 31, 2021 - $7,419 and $15,604).


	15

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


11. Income tax
		The Company income tax expense is determined as fol ows:
					Six month periods ended	Three month periods ended
								December 31	December 31
			2022	2021	2022	2021
		Statutory income tax rate	26.15%	26.37%	26.15%	26.37%
			$	$	$	$
		Net loss before income taxes	(3,106)				(2,346)			(4,224)	(4,939)
		Expected income tax expense	(812)				(619)			(1,104)	(1,302)
		Difference in foreign tax rates	(1)				17			(10)	10
		Share based compensation	335				579			574	1,174
		Other non deductible expenses	(52)				23			(33)	44
		Change in estimates	23				(23)			23	(23)
		Scientific Research and Experimental Development (SR&ED)	36				-			36	-
		Sec 481(a) adjustment	(34)				-			-	-
		Gain on consideration payable	(92)				(35)			(506)	26
		Stock options deduction revaluation adjustment	183				180			1,350	(99)
		Earn-out amortization	46				-			92	-
		Changes in tax benefits not recognized	(3)				9			65	9
		Income tax expense	(371)				131			487	(161)
		The Company's income tax expense is al ocated as fol ows:	$	$	$	$
		Current tax expense	744				438			785	808
		Deferred income tax expense	(1,115)				(307)			(298)	(969)
		Income tax expense	(371)				131			487	(161)

	16

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


12.		Goodwill
		The carrying amount and movements of goodwil was as follows:
	$
		Balance at July 1, 2021	267,398
		Addition through business combinations (Note 20)	34,296
		Goodwil Impairment	(91,685)
		Balance at June 30, 2022	210,009
		Balance at December 31, 2022	210,009


		For the three and six month periods ended December 31, 2022, there is no addition to goodwil . The company has evaluated for triggers of impairment at December 31, 2022 and has not identified any impairment.


13. Provisions
				Sales returns	Stock
					Warranty & allowances	rotation
					provision	provision		provision	Total
				$			$	$	$
		Balance at July 1, 2021						241		175	26	442
		Additional provision recognized (reversed)						(168)		(48)	(26)	(242)
		Balance at June 30, 2022		73			127		-		200
		Additional provision recognized (reversed)		(2)			(89)		103		12
		Balance at December 31, 2022		71			38		103		212


		The provision for warranty obligations represents the Company’s best estimate of repair and/or replacement costs to correct product failures. The sales returns and al owances provision represent the Company’s best estimate of the value of the products sold in the current financial period that may be returned in a future period. The stock rotation provision represents the Company’s best estimate of the value of the products sold in the current financial period that may be exchanged for alternative products in a future period. The Company accrues for product warranties, stock rotation, and sales returns and allowances at the time the product is delivered.

	17

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


14. Consideration payable
			As described in the annual consolidated financial statements, additional consideration in the amount of $13,269 could be payable as part of the acquisition of Star2Star on March 31, 2021. The fair value of consideration payable as of December 31, 2022 in the amount of $4,204 (June 30, 2022 - $6,017) was determined using an effective tax rate of 26.22% (June 30, 2022 – 26.22%) and a discount rate of 4.9% (June 30, 2022 – 4.9%). The fair value of the consideration payable is dependent upon the Company’s share price, foreign exchange rates and the Company’s ability to utilize the underlying tax losses as they become available in each reporting period. During the period ended December 31, 2022, the Company made payments of $nil (December 31, 2021-$nil). For the three and six month periods ended December 31, 2022, the company recognized accretion expense of $59 and $118 (three and six month periods ended December 31, 2021-$nil), and recognized a gain on change in fair value of $350 and $1,931 (three and six month periods ended December 31, 2021 – gain of $143 and loss of $104).

			As described in Note 20, additional consideration of up to $11,500 could be payable as part of the acquisition of NetFortris Corporation. The fair value of consideration payable as of December 31, 2022 in the amount of $6,984 (June 30, 2022-$6,751) was determined using a discount rate of 13.0% (June 30, 2022-13.0%). The fair value of the consideration payable is dependent upon the Company’s ability to meet certain operating targets as specified in the acquisition agreement. During the period ended December 31, 2022, the Company made payments of $nil (December 31, 2021- $nil). For the three and six month periods ended December 31, 2022, the Company recognized accretion expenses of $117 and $233 (three and six month periods ended December 31, 2021-$nil), and recognized a loss on change in fair value of $nil (three and six month periods ended December 31, 2021 - $nil).

			The fair value of consideration payable as at December 31, 2022 is summarized below:
		$
			Opening balance, July 1, 2021	9,102
			Additions through business combination (Note 20)	6,543
			Payments	(1,421)
			Accretion value of earn out (Note 4)	798
			Gain on change in fair value	(2,254)
			Ending balance, June 30, 2022	12,768
			Accretion value of earn out (Note 4)	351
			Gain on change in fair value	(1,931)
			Ending balance, December 31, 2022	11,188
			Consideration payable - Current	9,826
			Consideration payable - Non-current	1,362
	11,188










		18

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


15.			Operating facility and loan and derivative assets and liabilities
			(a) Operating facility and loan

			(i)	The Company entered into a new loan facility with two banks and drew down the first tranche of $34,800 (CAD$45,699) on October 18, 2019. This new loan facility was used to pay down and close all existing loans and to fund part of the purchase of VoIP Innovations LLC. This term facility is repayable over six years on a straight-line basis. The interest rates charged are based on Prime rate, US Base rate, London Inter-Bank Offered Rate (LIBOR) or Canadian Dol ar Offered Rate (CDOR) plus the applicable margin. Under the terms of these term facilities, the Company may convert the loans from variable to a fixed loan. The Company is required to lock in the interest rate on one half of the term loan within three months of each draw down. On January 21, 2020, the Company converted its US Base Rate loan to a one-month LIBOR loan plus the credit spread based on the syndicated loan agreement entered on October 18, 2019. Separately, as required under the agreement, the Company locked in half of the original loan amount by entering a 5-year interest rate credit swap with the two banks for $8.70 each. On March 28, 2022 the credit agreement was amended and the LIBOR rate was replaced with the Secured Overnight Financing Rate (SOFR). The repayment schedule for the loan has not been impacted by these changes. The balance outstanding against this term loan facility as of December 31, 2022 is $15,950 (June 30, 2022- $18,850). As at December 31, 2022, term loan facility balance of $5,800 (June 30, 2022- $5,800) is classified as current and $10,150 (June 30, 2022 - $13,050) as long-term in the condensed consolidated interim statements of financial position.
			(ii)	On March 31, 2021, the Company amended its term loan facility with its lenders and drew down an additional $52,500 to fund part of the acquisition of StarBlue Inc. At the time of the draw down of the additional amounts, the fol owing amendments were made to the agreement:

	• The provision for additional funding related to VoIP Innovations under the original
	agreement was no longer necessary and has been cancelled.
	• The swingline facility was converted from CAD $2,000 to USD $1,500
	• The revolver facility was converted from CAD $8,000 to USD $6,000
	• The debt to equity ratio calculation now al ows the Company to offset up to $10,000 of
	unrestrained funds against the outstanding amount of the debt.

				The interest rates charged continue to be based on Prime rate, US Base rate, London Inter-Bank Offered Rate (LIBOR) or Canadian Dol ar Offered Rate (CDOR) plus the applicable margin until March 28, 2022 when the LIBOR rate was replaced with the Secured Overnight Financing Rate (SOFR). The incremental draw is repayable, on a straight-line basis, through quarterly payments of $2,188 and is due to mature on October 18, 2024. As at December 31, 2022, $8,750 (June 30, 2022 - $8,750) of the incremental facility is classified as current and $28,438 (June 30, 2022 - $32,812) is classified as long-term in the condensed consolidated interim statements of financial position.
			(ii )	On March 28, 2022, the Company amended its term loan facility with its lenders and drew down an additional $45,000 to fund part of the acquisition of NetFortris Corporation. At the time of the draw down of the additional amounts, the following amendments were made to the agreement: The interest rates charged is based on Prime Rate Loans, US Base Rate Loans, US Prime Rate Loans, Secured Overnight Financing Rate (SOFR) or Canadian Dollar Offered Rate (CDOR) plus the applicable margin. The incremental draw is repayable, on a straight-line basis, through quarterly payments of $1,875 and is due to mature on March 28, 2027. On June 28, 2022, the Company amended its term loan facility with its lenders, the amended repayment for the first twelve quarterly payments of $788 and $2,963 thereafter.
		19

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


15.		Operating facility and loan and derivative assets and liabilities
		(a) Operating facility and loan
			As at December 31, 2022, $3,150 (June 30, 2022-$3,150) of the incremental facility is classified as current and $39,487 (June 30, 2022-$41,063) is classified as long-term in the condensed consolidated interim statements of financial position.

		(iv)	The Company also had revolving credit facilities which included a committed revolving credit facility for up to $6,000 and a committed swingline credit facility for up to $1,500 both of which may be used for general business purposes. On October 19, 2022, the Company drew down $3,000 from the revolving credit facility and as of December 31, 2022, the amount remains outstanding and is classified as long term in the condensed consolidated interim statements of financial position.

		For the three and six month periods ended December 31, 2022, the Company incurred interest costs to service the borrowing facilities in the amount of $1,363 and $2,638 (three and six month periods ended December 31, 2021 - $500 and $1,036). During the six month period ended December 31, 2022, the Company borrowed $3,000 (December 31, 2021 - $nil) in operating facility and loans and repaid $8,850 (December 31, 2021 - $7,275). Under its credit agreements with its lenders, the Company must satisfy certain financial covenants, principally in respect of total funded debt to earnings before interest, taxes and amortization (“EBITDA”), and debt service coverage ratio. As at December 31, 2022 and June 30, 2022 the Company was in compliance with all covenants related to its credit agreements
		(b) Derivative assets and liabilities

		The Company uses derivative financial instruments to hedge its exposure to interest rate risks. Al derivative financial instruments are recognized as either assets or liabilities at fair value on the condensed consolidated interim statements of financial position. Upon entering into a hedging arrangement with an intent to apply hedge accounting, the Company formally documents the hedge relationship and designates the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge. When the Company determines that a derivative financial instrument qualifies as a cash flow hedge and is effective, the changes in fair value of the instrument are recorded in accumulated other comprehensive income (loss), net of tax in the condensed consolidated interim statements of financial position and wil be reclassified to earnings when the hedged item affects earnings.

		On January 21, 2020, the Company converted its US Base Rate loan to a one-month LIBOR loan plus the credit spread based on the syndicated loan agreement entered into on October 18, 2019. Separately, as required under the agreement, the Company locked in half of the original loan amount by entering into a 5-year interest rate credit swap with the two banks for $8,700 each to manage its exposure to changes in LIBOR-based interest rates. The interest rate swap hedges the variable cash flows associated with the borrowings under the loan facility, effectively providing a fixed rate of interest for five years of the six-year loan term.

		The interest rate swap arrangement with two banks became effective on January 31, 2020, with a maturity date of December 31, 2024. The notional amount of the swap agreement at inception was $17,400 and decreases in line with the term of the loan facility. Effective March 31, 2022, Sangoma US Inc. entered into a fixed rate swap transaction worth $43,750 over a five year period and terminating on February 28, 2027. As of December 31, 2022, the notional amount of the interest rate swap was $45,509 (June 30, 2022 – $51,397). The interest rate swap has a weighted average fixed rate of 1.80% (June 30, 2022 – 1.65%) and have been designated as an effective cash flow hedge and therefore qualifies for hedge accounting.
	20

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


15.				Operating facility and loan and derivative assets and liabilities
				(b) Derivative assets and liabilities
				As at December 31, 2022, the fair value of the interest rate swap assets were valued at current $1,245 (June 30, 2022-$649) and non-current $984 (June 30, 2022-$700). The current and non-current derivative assets were recorded in the condensed consolidated interim statements of financial position.

				For the three and six month periods ended December 31, 2022, the change in fair value of the interest rate swaps, net of tax, was a gain of $212 and $649 (three and six month periods ended December 31, 2021 – $112 and $151) was recorded in other comprehensive income (loss) in the condensed consolidated interim statements of loss and comprehensive loss. The fair value of interest rate swap is determined based on the market conditions and the terms of the interest rate swap agreement using the discounted cash flow methodology. Any differences between the hedged SOFR rate and the fixed rate are recorded as interest expense on the same period that the related interest is recorded for the loan facility based on the SOFR rate.
16.				Contract liabilities
				Contract liabilities, which includes deferred revenues, represent the future performance obligations to customers in respect of services or customer activation fees for which consideration has been received upfront and is recognized over the expected term of the customer relationship. Contract liabilities
		as at December 31, 2022 and June 30, 2022 are below:
			$
				Opening balance, July 1 , 2021	15,754
				Revenue deferred during the period	40,273
				Deferred revenue recognized as revenue during the period	(42,625)
				Additions through business combination (Note 20)	1,666
				Ending balance, June 30, 2022	15,068
				Revenue deferred during the period	17,659
				Deferred revenue recognized as revenue during the period	(18,416)
				Ending balance, December 31, 2022	14,311
				Contract liabilities - Current	10,693
				Contract liabilities - Non-current	3,618
	14,311











			21

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


17.		Shareholders’ equity
		(i)	Share capital
		The Company’s authorized share capital consists of an unlimited number of common shares without par value. As at December 31, 2022 and 2021, the Company’s issued and outstanding common shares consist of the following:
							Three month periods ended		Six month periods ended
				December 31		December 31
				2022	2021	2022	2021
				#	#	#	#
		Shares issued and outstanding:Outstanding, beginning of the period
				22,289,373				19,021,614			21,439,632	19,021,642
		Shares issued as instalment for shares to be issued		981,314				-			1,838,458	-
		Shares purchased and cancel ed		(62,622)				-			(78,822)	-
		Shares returned from escrow (Note 4)		(142,124)				-			(142,124)	-
		Shares issued upon exercise of options		437				39,594			9,234	39,594
		Rounding of fractional shares in 2021 after share consolidation		-				-			-	(28)
		Outstanding, end of the period		23,066,378	19,061,208	23,066,378				19,061,208

		On March 31, 2021, the Company acquired StarBlue Inc. and issued 3,018,685 common shares valued in the amount of $66,873 as part of the consideration, and 18,456 common shares valued in the amount of $330 as part of the acquisition costs. Under the terms of the agreement, a further 12,695,600 common shares valued in the amount of $192,102 are to be issued in instalments commencing on April 1, 2022. On August 3, 2022, 857,144 common shares and on November 8, 2022, 981,314 common shares were issued to StarBlue sellers in accordance with the instalment schedule defined in the share purchase agreement. Following these issuances 10,000,000 common shares remain to be issued and the remaining $151,315 discounted value of the common shares is recorded as shares to be issued in the condensed consolidated interim statements of changes in shareholders’ equity. During the six month period ended December 31, 2022, a total of 9,234 (December 31, 2021 – 39,594) options were exercised for cash consideration of $37 (December 31, 2021 – $346), and the Company recorded a charge of $20 (December 31, 2021 –$178) from contributed surplus to share capital. In the fourth quarter of fiscal 2022, the Company announced its intention to make an NCIB with respect to its Shares. Pursuant to the NCIB, Sangoma may, during the 12-month period commencing June 23, 2022 and ending no later than June 22, 2023, purchase up to 1,071,981 shares, representing 5% of the total number of 21,439,632 Shares outstanding, through the facilities of the TSX, the Nasdaq Global Select Market or alternative Canadian trading systems. Under the term of the Normal Course Issuer Bid (“NCIB”), during the six month period ended December 31, 2022, the Company repurchased a total of 103,122 common shares (December 31, 2021 -nil) at an average price of $5.42 per share, for total consideration of $57. During the six month period 73,322 of those common shares were settled and cancelled along with 5,500 common shares that were repurchased in the fourth fiscal quarter of 2022, and the company recorded a total reduction of $477 (December 31, 2021-nil) in share capital for the value of share repurchased. The remaining 29,800 common shares of the 62,200 common shares repurchased during the second quarter of 2023, were settled and cancel ed in January 2023.
	22

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


17.		Shareholders’ equity
		(ii)	Share based payments
		On December 13, 2022, the Corporation’s shareholders approved the Plan, which replaces the previous
		share option plan (the “Legacy Plan”). No further grants wil be made under the Legacy Plan.

		For the three and six month periods ended December 31, 2022, the Company recognized share-based compensation expense in the amount of $1,282 and $2,197 (three and six month periods ended December 31, 2021 - $2,333 and $4,452).
		Stock Options Under the Plan (and previously under the Legacy Plan), employees are periodical y granted share options
		to purchase common shares at prices not less than the market price of the common shares on the day prior to the date of grant or the volume weighted average trading price per share on the TSX during the five trading days immediately preceding the grant date. The fair value of each option grant is estimated at the date of grant using the Black-Scholes option pricing model. Expected volatility is determined by the amount the Corporation’s daily share price fluctuated over a period commensurate with the expected life of the options. During the six month period ended December 31, 2022, the Corporation did not grant any options (December 31, 2021 – nil).

		The fol owing table shows the movement in the stock option plan:
				Number	Weighted
		Measurement date		of options	average price
							#	$
		Balance, July 1, 2021		1,587,310					19.55
			Granted	285,714					18.62
			Exercised	(39,594)					(8.80)
			Expired	(277)					(9.28)
			Forfeited	(127,459)					(18.62)
		Balance, December 31 2021		1,705,694					19.71
		Balance, July 1, 2022		1,207,908					14.02
			Exercised	(9,234)					(4.02)
			Expired	(82,536)					(16.13)
			Forfeited	(181,218)					(17.59)
		Balance, December 31, 2022		934,920					13.24
		The key assumptions used to fair value the grants were as fol ows:

						December 31			December 31
						2022	2021
		Share price						-		$18.62
		Exercise price						-		$18.62
		Expected volatility						-		59.82%
		Expected option life						-		5 years
		Risk-free interest rate						-		0.78%

	23

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


17.			Shareholders’ equity
			(ii) Share based payments
			Stock Options
			The fol owing table summarizes information about the stock options outstanding and exercisable at the end of each period:
						December 31, 2022	December 31 2021
	Number of stock					Number of stock options			Weighted average		Number of stock	Number of stock	Weighted average
	options							outstanding and	remaining contractual			options	options outstanding and	remaining contractual
			Exercise price	outstanding							exercisable		life	outstanding		exercisable	life
			$3.01 - $5.00	18,018														18,018		0.08			29,906		20,913		0.99
			$5.01 - $7.00	67,338														53,569		0.99		115,409		65,760		1.99
			$7.01-$9.00	241,000														-		4.50	-					-		-
			$9.01 - $12.00	191,479														100,641		2.42		262,641		86,553		3.42
			$12.01-$15.00	55,000														-		4.25
			$15.01-$18.00	178,965														67,211		3.50		239,778		-		4.50
			$18.01-$20.00	75,713														23,667		3.67		285,711		-		4.73
			$20.01-$27.00	107,407														47,077		3.11		772,249		-		4.11
				934,920														310,183		3.30		1,705,694		173,226		3.96
			Share Units

			During the three month period ended December 31, 2022, 655,000 were granted (December 31, 2021 – nil). As at December 31, 2022, there were 655,000 RSUs and PSUs issued. (December 31, 2021 – nil). There were no DSUs issued. (December 31, 2021 – nil).
											PSU		RSU	Total
			Awards outstanding July 1, 2022								-					-		-
			Awards granted during the period							302,500		352,500					655,000
			Awards outstanding December 31, 2022							302,500		352,500					655,000

			The fair value of each RSU is $4.20 per share. The fair value of each of the PSUs tied to non-market based performance targets is $4.20 per share. The fair value of each of the PSUs tied to market-based performance targets is $3.69 per share using the Monte Carlo simulation. The key assumptions used in the Monte Carlo simulation are:
										December 31, 2022	December 31, 2021
			Share price								3.69		-
			Expected volatility								60.00%	-
			Time to expirty							2.52 years	-
					Risk-free interest rate								4.08%	-
			(ii )
					Loss per share
			Both the basic and diluted loss per share have been calculated using the net loss attributable to the shareholders of the Company as the numerator.
													Six month periods ended			Three month periods ended
										December 31			December 31
										2022		2021			2022	2021
			Number of shares:Weighted average number of shares outstanding
										22,512,058	19,030,708		23,039,477	19,026,161
			Shares to be issued							10,000,000	12,695,600			10,000,000	12,695,600
			Weighted average number of shares used in diluted earnings per share							32,512,058	31,726,308		33,039,477	31,721,761
			Net loss for the period							(2,735.00)		(2,477.00)			(4,711.00)		(4,778.00)
			Loss per share:Basic loss per share
										(0.084)	$		(0.078)	$		(0.143)	$	(0.151)	$
			Diluted loss per share							(0.084)	$		(0.078)	$		(0.143)	$	(0.151)	$
		24

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


18.		Related parties
		The Company’s related parties include key management personnel and directors. Unless otherwise stated, none of the transactions incorporated special terms and conditions and no guarantees were given or received. Outstanding balances payable are usually settled in cash and relate to director fees.
		The Company had incurred no related party transactions and had no outstanding balance with related parties for the three and six month periods ended December 31, 2022 and 2021.

19.		Segment disclosures
		The Company operates in one operating segment; development, manufacturing, distribution and support of voice and data connectivity components for software-based communication applications. The majority of the Company’s assets are located in Canada and the United States of America (“USA”). The Company sells into three major geographic centers: USA, Canada and other foreign countries. The Company has determined that it has a single reportable segment as the Company’s decision makers review information on a consolidated basis.
		Revenues for group of similar products and services can be summarized for the three and six month periods ended December 31, 2022 and 2021 as follows:
						Three month periods ended		Six month periods ended
			December 31		December 31
			2022	2021	2022	2021
				(Note 2)	(Note 2)
			$	$	$	$
		Products	12,604				16,447			28,331	32,088
		Services	49,431				36,739			97,755	72,597
		Total revenues	62,035				53,186			126,086	104,685
		The sales, in US dollars, in each of these geographic locations for the three and six month periods ended December 31, 2022 and 2021 as follows:
						Three month periods ended		Six month periods ended
			December 31		December 31
			2022	2021	2022	2021
				(Note 2)	(Note 2)
			$	$	$	$
		USA	57,163				46,998			116,845	93,069
		Canada	957				1,562			1,965	2,903
		All other countries	3,915				4,626			7,276	8,713
		Total revenues	62,035				53,186			126,086	104,685

		The non-current assets, in US dollars, in each of the geographic locations as at December 31, 2022 and June 30, 2022 are below:
							December 31	June 30
				2022	2022
				$	$
		Canada		6,578				7,000
		USA					415,759		431,225
		Total non-current assets					422,337		438,225




	25

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


20. Business combinations

			On March 28, 2022, the Company acquired all the shares of NetFortris Corporation. The Company paid an aggregate purchase price of $64,820, net of a net working capital adjustment of ($8,942), and comprised of $50,418 cash consideration, 1,494,536 common shares at a fair value of $16,801. The Company issued 1,494,536 common shares including 327,241 shares representing a holdback for indemnification purposes on closing of the acquisition. The Company estimates that a further payment of $6,543 wil be paid as part of an earn out that is up to $12,000 if certain operating targets are met. The Company incurred estimated transaction costs in the amount of $2,939 which were expensed and included in the condensed consolidated interim statements of loss and comprehensive loss for the three month period ended March 31, 2022. The acquisition has been accounted for using the acquisition method under IFRS 3, Business Combinations.

The fol owing table summarizes the fair value of consideration paid on the acquisition date and the
			preliminary allocation of the purchase price to the assets and liabilities acquired.

			Consideration	$
			Cash consideration on closing	43,868
			Net working capital adjustment	(8,942)
			Cash held in escrow for working capital	350
			Cash held in escrow for telecom taxes	3,400
			Cash held in escrow for indemnification	2,800
			Additional consideration for earn out	6,543
			Common shares issued on closing	13,122
			Common shares reserved in escrow for indemnification	3,679
	64,820
			Purchase price allocation	$
			Cash	1,706
			Trade receivables	1,822
			Inventories	416
			Property and equipment	4,172
			Right-of-use assets	3,277
			Other current assets	796
			Other non-current assets	370
			Deferred income tax asset	11,091
			Accounts payable and accrued liabilities	(9,442)
			Sales tax payable	(5,506)
			Contract liabilities	(1,666)
			Lease obligations on right-of-use assets	(3,277)
			Other non-current liabilities	(235)
			Intangible assets	29,000
			Goodwil	32,296
	64,820



		26

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three and six month periods ended December 31, 2022 and 2021 (Unaudited in thousands of US dollars, except per share data)


21.		Subsequent events
		There is no subsequent event.
22.		Authorization of the condensed consolidated interim financial statements
		The condensed consolidated interim financial statements were authorized for issuance by the Board of Directors on February 9, 2023.
	27