Enhanced Investments - Financial Portal

Published: 2020-11-10




		SANGOMA TECHNOLOGIES CORPORATION

Condensed consolidated interim financial statements for
the three month periods ended September 30, 2020 and 2019
			(Unaudited in Canadian Dollars)

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


Sangoma Technologies Corporation September 30, 2020 Table of contents Condensed consolidated interim statements of financial position ......................................................................... 3
Condensed consolidated interim statements of income and comprehensive income ........................................... 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 ................................................................. 7-24










	2


Sangoma Technologies Corporation
Condensed consolidated interim statements of financial positionAs at September 30, 2020 and June 30, 2020
(Unaudited in Canadian dollars)
		September 30, 2020	June 30, 2020
				$	$
AssetsCurrent assets
Cash and cash equivalents (Note 13)					93,723,732	27,249,863
Trade receivables (Note 13)					9,162,155	11,234,541
Inventories (Note 4)					11,932,780	12,643,738
Contract assets					1,099,018	1,082,051
Other current assets					2,169,071	2,383,857
					118,086,756	54,594,050
Non-current assets
Property and equipment (Note 5)					2,819,917	3,001,687
Right-of-use assets (Note 15)					16,199,946	16,178,520
Intangible assets (Note 6)					47,188,044	50,206,378
Development costs (Note 7)					2,444,899	2,452,718
Deferred income tax assets (Note 10)					6,033,369	5,287,207
Goodwill (Note 8)					43,079,076	44,012,418
					235,852,007	175,732,978
LiabilitiesCurrent liabilities
Accounts payable and accrued liabilities (Note 13)					11,584,726	14,185,737
Provisions (Note 16)					768,991		662,942
Sales tax payable					578,316		808,074
Income tax payable					1,220,016	2,636,159
Operating facility and loans - current (Note 9)					7,736,620	16,898,720
Contract liabilities - current					8,448,589	10,772,900
Derivative liability (Note 9)					732,294		797,380
Lease obligations on right-of-use assets - current (Note 15)					2,910,532	2,951,616
					33,980,084	49,713,528
Long term liabilities
Operating facility and loans - long term (Note 9)					30,946,480	33,593,020
Contract liabilities - long term					4,874,011	3,972,730
Non-current lease obligation on right-of-use assets (Note 15)					13,785,236	13,671,174
					83,585,811	100,950,452
Shareholders’ equity
Share capital					141,289,422	64,628,552
Contributed surplus					2,642,122	2,437,227
Accumulated other comprehensive loss					(2,311,878)	(691,896)
Retained earnings					10,646,530	8,408,643
					152,266,196	74,782,526
					235,852,007	175,732,978
Approved by the Board
(Signed) Al Guarino Director
(Signed) Yves Laliberte Director


The accompanying notes are an integral part of these condensed consolidated interim financial statements
	3


Sangoma Technologies Corporation
Condensed consolidated interim statements of income and comprehensive income
For the three month periods ended September 30, 2020 and 2019(Unaudited in Canadian dollars)
					Three month periods ended
			September 30,
			2020	2019
			$	$
Revenue (Note 17)					35,032,874		28,005,144
Cost of sales					11,857,515		10,522,173
Gross profit					23,175,359		17,482,971
Expenses
Sales and marketing					5,087,138		4,929,209
Research and development					6,083,168		5,482,368
General and administration					8,492,154		5,456,328
Foreign currency exchange (gain) loss			(19,170)			9,528
					19,643,290		15,877,433
Income before interest, income taxes,
business integration and acquisition costs					3,532,069		1,605,538
Interest income (Note 13)			(1,567)			(22,566)
Interest expense (Notes 9, 13, 15)			519,546			397,321
			517,979			374,755
Income before income tax					3,014,090		1,230,783
Provision for income taxes
Current (Note 10)			261,364			-
Deferred (Note 10)			514,839			324,761
Net income					2,237,887		906,022
Other comprehensive income (loss)Items to be reclassified to net income
Change in fair value of interest rate
		swaps, net of tax (Note 9)	65,086			-
Foreign currency translation (loss) income					(1,685,068)		152,466
Comprehensive income			617,905			1,058,488
Earnings per share
Basic (Note 11(iii))			0.022			0.014
Diluted (Note 11(iii))			0.022			0.013
Weighted average number
of shares outstanding (Note 11(iii))Basic
					99,679,932		65,240,022
Diluted					101,332,314		68,481,528


		The accompanying notes are an integral part of these condensed consolidated interim financial statements
	4



Sangoma Technologies Corporation
Condensed consolidated statements of changes in shareholders' equity For the three month periods ended September 30, 2020 and 2019(Unaudited in Canadian dol ars)
				Number of				Accumulated other	Total
				common						Share	Contributed	Warrant	comprehensive					Retained	shareholders'
				shares			capital				surplus	reserve	(loss) income					earnings	equity
	$														$	$						$	$	$
Balance, June 30, 2019				52,962,090				34,860,468						2,514,154										29,348				(54,169)					4,479,665					41,829,466
Impact on IFRS 16 adoption					-		-													-					-						-				346,895							346,895
Net Income					-		-													-					-						-				906,022							906,022
Other comprehensive income					-		-													-					-								152,466								-			152,466
Common shares issued
through short form prospectus (Note 11(i))				14,846,500				21,319,720										-						-					-							-			21,319,720
Common shares issued
for options exercised (Note 11(i))					1,424		649													(226)					-						-								-			423
Common shares issued
for broker warrants exercised (Note 11(i))				61,957				91,305										-								(29,348)				-							-			61,957
Share-based compensation expense (Note 11(ii))					-		-										141,987						-					-							-			141,987
Balance, September 30, 2019				67,871,971				56,272,142						2,655,915							-						98,297					5,732,582					64,758,936
Balance, June 30, 2020				76,087,735				64,628,552						2,437,227							-						(691,896)					8,408,643					74,782,526
Net Income					-		-													-					-						-				2,237,887							2,237,887
Other comprehensive income					-		-													-					-								(1,685,068)								-			(1,685,068)
Change in fair value of interest rate swaps,
net of tax (Note 9)					-		-													-					-								65,086								-			65,086
Common shares issued through
short form prospectus, net of costs (Note 11(i))				35,006,000				75,283,264										-						-					-							-			75,283,264
Deferred tax benefit on share issuance costs (Note 10)							1,375,940				1,375,940
Common shares issued
for options exercised (Note 11(i))					3,032							1,666									(549)					-						-								-			1,117
Share-based compensation expense (Note 11(ii))					-		-										205,444						-					-							-			205,444
			Balance, September 30, 2020				111,096,767				141,289,422						2,642,122						-							(2,311,878)				10,646,530						152,266,196
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 three month periods ended September 30, 2020 and 2019(Unaudited in Canadian dollars)
			Three month periods ended
			September 30,
			2020	2019
					$	$
	Operating activities
	Net income		2,237,887		906,022
	Adjustments for:
		Depreciation of property and equipment (Note 5)	206,835		117,345
		Depreciation of right-of-use assets (Note 15)	834,894		609,312
		Amortization of intangible assets (Note 6)	1,948,892		1,193,295
		Amortization of development costs (Note 7)	442,026		361,607
		Income tax expense (Note 10)	776,203		324,761
		Income tax paid	(1,813,360)		(456,141)
		Share-based compensation expense (Note 11(ii))	205,444		141,987
		Interest on obligation on right-of-use assets (Note 15)	109,976		54,679
		Unrealized foreign exchange gain	31,652		-
	Changes in working capital
		Trade receivables	1,831,667		1,018,060
		Inventories	442,233		(483,855)
		Contract assets	(39,859)		-
		Other current assets	164,011		(25,413)
		Sales tax payable	(212,335)		(259,423)
		Accounts payable and accrued liabilities	(2,297,083)		(370,969)
		Provisions	119,945		16,000
		Contract liabilities	(1,108,831)		(171,898)
	Net cash flows from operating activities		3,880,197		2,975,369
	Investing activities
	Purchase of property and equipment (Note 5)		(86,463)		(113,624)
	Development costs (Note 7)		(486,464)		(410,744)
	Net cash flows used in investing activities		(572,927)		(524,368)
	Financing activities
	Repayments of operating facility and loan (Note 9)		(10,658,790)		(1,031,158)
	Repayment of right-of-use lease obligation (Note 15)		(881,122)		(663,991)
	Issuance of common shares through private placement, net (Note 11(i))		75,283,264		21,319,720
	Issuance of common shares for broker warrants exercised (Note 11(i))				-		61,957
	Issuance of common shares for stock options exercised (Note 11(i))		1,117		423
	Net cash flows from financing activities		63,744,469		19,686,951
	Effect of foreign exchange rate changes on cash and cash equivalents		(577,870)		(466,785)
	Increase in cash and cash equivalents		66,473,869		21,671,167
	Cash and cash equivalents, beginning of the period		27,249,863		11,724,844
	Cash and cash equivalents, end of the period		93,723,732		33,396,011


		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 month periods ended September 30, 2020 and 2019 (In Canadian dollars)


1. General			information
				Founded in 1984, Sangoma Technologies Corporation (“Sangoma” or the “Company”) is publicly traded on the TSX Venture Exchange (TSX VENTURE: STC). The Company was incorporated in Canada, its legal name is Sangoma Technologies Corporation and its primary operating subsidiaries for fiscal 2021 are Sangoma Technologies Inc., Sangoma US Inc., VoIP Supply LLC, Digium Inc. and VoIP Innovations LLC.
				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, small 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

					The accompanying condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting. The condensed consolidated interim financial statements do not include all of the information required for annual consolidated financial statements and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended June 30, 2020.
			These condensed consolidated interim financial statements were, at the recommendation of the audit committee, approved and authorized for issuance by the Company’s Board of Directors on November 10, 2020.
			These 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, 2020, except for the change in functional currency of Sangoma Technologies Corporation and Sangoma Technologies Inc. from Canadian dollars to US dollars described below:
			Change in functional currency for the Company and Sangoma Technologies Inc.
			Management assessed the functional currency of the Company and its wholly-owned subsidiary Sangoma Technologies Inc. and concluded that the Company and its wholly-owned operating subsidiary should be measured using the US dollar as the functional currency. Effective July 1, 2020, the change in functional currency was applied on a prospective basis. The U.S. dollar translated amounts of nonmonetary assets and liabilities as at July 1, 2020 became the historical accounting basis for those assets and liabilities at July 1, 2020.
3.				Significant accounting judgments, estimates and uncertainties
				These condensed unaudited 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, 2020 and which are available at www.sedar.com. 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, 2020.


		7

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)



4. Inventories
		Inventories recognized in the condensed consolidated interim statements of financial position are comprised of:
			September 30, 2020	June 30, 2020
					$	$
		Finished goods				7,631,906	8,381,484
		Parts				4,636,314	4,604,963
						12,268,220	12,986,447
		Provision for obsolescence				(335,440)	(342,709)
		Net inventory carrying value				11,932,780	12,643,738


	8

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


5. Property				and	equipment
	Office furniture						Stockroom and
	and computer					Software	production	Tradeshow	Leasehold
					equipment	and books	equipment	equipment	improvements	Total
Cost		$					$	$		$	$	$
Balance at June 30, 2019					1,875,588						285,249						1,642,909					64,338	353,152					4,221,236
Additions through business combinations (Note 18)		307,553						249,585			-		-				-				557,138
Additions		493,749														3,383					59,469		-							74,737			631,338
Effects of movements in exchange rates		34,450						24,300						61,876			-						10,642					131,268
Balance at June 30, 2020					2,711,340						562,517						1,764,254					64,338	438,531					5,540,980
Additions		50,588							-						35,875			-		-					86,463
Effects of movements in exchange rates		(57,493)						(11,929)						(37,365)					(1,364)								(9,300)				(117,451)
Balance at September 30, 2020																2,704,435				550,588						1,762,764					62,974				429,231	5,509,992
Accumulated depreciationBalance at June 30, 2019
					1,056,938						203,367						362,883					50,754	123,765					1,797,707
Depreciation expense		284,223						92,569						286,993				2,455						34,710					700,950
Effect of movements in exchange rates		21,263														8,219					21,177			26							(10,049)			40,636
Balance at June 30, 2020					1,362,424						304,155						671,053					53,235	148,426					2,539,293
Depreciation expense		101,666						30,526						61,881				545						12,217					206,835
Effects of movements in exchange rates		(31,332)														(6,381)					(14,093)						(1,127)					(3,120)			(56,053)
Balance at September 30, 2020																1,432,758				328,300						718,841					52,653				157,523	2,690,075
Net book value as at:June 30, 2020
																1,348,916				258,362						1,093,201					11,103				290,105	3,001,687
September 30, 2020																1,271,677				222,288						1,043,923					10,321				271,708	2,819,917

Depreciation expense is included in general and administration expense in the condensed consolidated interim statements of income and comprehensive income.
			9

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


6.		Intangible	assets
					Other
						Copyright	Purchased					Customer	purchased
						to software	technology							Website	relationships		Brand intangibles* Total
									$	$	$	$	$	$	$
				CostBalance at June 30, 2019
						2,948,461		7,821,004								227,702	19,179,146		7,996,687			2,274,667				40,447,667
				Business combinations (Note 18)					-		3,466,848										-	19,965,689	919,240		1,326,332			25,678,109
				Effects of movements on exchange rates					-		327,516							9,003		1,542,265		333,829		144,066			2,356,679
				Balance at June 30, 2020		2,948,461		11,615,368								236,705	40,687,100		9,249,756			3,745,065				68,482,455
				Effects of movements on exchange rates		(62,526)		(246,319)								(5,020)	(862,824)		(196,153)			(79,419)				(1,452,261)
				Balance at September 30, 2020		2,885,935		11,369,049								231,685	39,824,276		9,053,603			3,665,646				67,030,194
				Accumulated amortizationBalance at June 30, 2019
						2,916,587		2,743,350								212,957	3,408,372		1,040,991			671,864				10,994,121
				Amortization expense		31,874		1,358,513								14,927	3,794,315		890,253			858,554				6,948,436
				Effects of movements on exchange rates					-		33,779							8,821		206,455		43,525		40,940			333,520
				Balance at June 30, 2020		2,948,461		4,135,642								236,705	7,409,142		1,974,769			1,571,358				18,276,077
				Amortization expense					-		383,251										-	1,105,616	227,400		232,625			1,948,892
				Effects of movements on exchange rates		(62,526)		(88,588)								(5,020)	(152,171)		(41,756)			(32,758)				(382,819)
				Balance at September 30, 2020		2,885,935		4,430,305								231,685	8,362,587		2,160,413			1,771,225				19,842,150
				Net book value as at:Balance at June 30, 2020
									-		7,479,726										-	33,277,958	7,274,987		2,173,707			50,206,378
				Balance at September 30, 2020					-		6,938,744										-	31,461,689	6,893,190		1,894,421			47,188,044
				* Other purchase intangibles include non-compete agreements and backlog.

				Amortization expense is included in general and administration expense in the condensed consolidated interim statements of income and comprehensive income.
	10

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


7. Development	costs
		$
			Cost
			Balance at June 30, 2019		21,727,446
			Additions		1,964,684
			Investment tax credits		(136,716)
			Balance at June 30, 2020		23,555,414
			Additions		486,464
			Effects of movements in exchange rates		(501,466)
			Balance at September 30, 2020		23,540,412
			Accumulated amortization
			Balance at June 30, 2019		(19,602,943)
			Amortization		(1,499,753)
			Balance at June 30, 2020		(21,102,696)
			Amortization		(442,026)
			Effects of movements in exchange rates		449,209
			Balance at September 30, 2020		(21,095,513)
						September 30, 2020	June 30, 2020
							$	$
			Net capitalized development costs					2,444,899	2,452,718
			Each period, additions to development costs are recognized net of investment tax credits accrued. In addition to the above amortization, the Company has recognized $5,641,142 of engineering expenditures as an expense during the three month period ended September 30, 2020 (three month period ended September 30, 2019 - $5,120,761).
8. Goodwill
			The carrying amount and movements of goodwill was as follows:
		$
			Balance at June 30, 2019		21,405,420
			Addition through business combinations (Note 18)		21,025,465
			Effect of movements in exchange rates		1,581,533
			Balance at June 30, 2020		44,012,418
			Effect of movements in exchange rates		(933,342)
			Balance at September 30, 2020		43,079,076

			The addition to goodwill for the year ended June 30, 2020 is from the acquisition of VoIP Innovations LLC on October 18, 2019 and .e4 LLC on February 29, 2020 (Note 18).

9.			Operating facility and loan and derivative liability
			(a) Operating facility and loans

			(i)	The Company entered into a new loan facility with two banks and drew down the first tranche of $45,699,360 ($34,800,000 USD) 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. A further $7,879,200 ($6,000,000 USD) is available and may be drawn in a second tranche to pay any contingent consideration arising from the VoIP Innovations transaction at the end of the one-year assessment period. These term facilities are repayable over six years on a straight-line basis.
		11

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


9.		Operating facility and loan and derivative liability (continued)
		(a) Operating facility and loans (continued)
			The interest rates charged are based on Prime rate, US Base rate, London Inter-bank Offered Rate (LIBOR) or Canadian Dollar 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 $8,700,000 USD million each. The swaps together with protection against the 0% LIBOR floor have effectively converted one half of the variable LIBOR rate to a fixed loan of approximately 4.2% for five years of the six-year remaining balance on the loan. The repayment schedule for the loan has not been impacted by either of these changes. The balance outstanding against this term loan facility as of September 30, 2020 is $38,683,100 ($29,000,000 USD) (June 30, 2020 – $41,497,260 ($30,450,000 USD)). As at September 30, 2020, term loan facility balance of $7,736,620 (June 30, 2020 - $7,904,240) is classified as current and $30,946,480 (June 30, 2020 - $33,593,020) as long-term in the condensed consolidated interim statements of financial position.
		(ii)	The Company also has revolving credit facilities which includes a committed revolving credit facility for up to $8,000,000 and a committed swingline credit facility for up to $2,000,000 both of which may be used for general business purposes. On April 3, 2020, the Company drew down $1,838,460 ($1,300,000 USD) on the swingline credit facility available under the Credit Agreement. On April 17, 2020, the Company drew down $7,439,610 ($5,300,000 USD) from the revolving credit facility. The Company drew down the credit facility to maximize its cash balance in order to take advantage of opportunities that may arise, as well as to fully prepare itself for any further uncertainties during the COVID-19 pandemic. The balances outstanding as at June 30, 2020 for the swingline credit facility and revolving credit facility were $1,771,640 and $7,222,840 respectively and were classified as current. During August 2020, the Company paid back the outstanding amounts of $1,723,020 ($1,300,000 USD) on the swingline credit facility and $6,993,350 ($5,300,000 USD) on the revolving credit facility. The balances outstanding as at September 30, 2020 for the swingline credit facility and revolving credit facility were $nil. Both of these facilities remain fully available to the Company.

		For the three month period ended September 30, 2020, the Company incurred interest costs to service the borrowing facilities in the amount of $409,570 (three month period ended September 30, 2019 - $342,642). During the three month period ended September 30, 2020, the Company borrowed $nil (three month period ended September 30, 2019 - $nil) in operating facility and loans and repaid $10,658,790 (three month period ended September 30, 2019 - $1,031,158). 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 September 30, 2020 and June 30, 2020, the Company was in compliance with all covenants related to its credit agreements. (b) Derivative liability The Company use derivative financial instruments to hedge its exposure to interest rate risks. All 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 document the hedge relationship and designate
	12

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


9.		Operating facility and loan and derivative liability (continued)
		(b) Derivative liability (continued) 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, net of tax in the condensed consolidated interim statements of financial position and will 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 $8,700,000 USD 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 $17,400,000 USD and decreases in line with the term of the loan facility. As of September 30, 2020, the notional amount of the interest rate swap was $15,130,436 USD (June 30, 2020 – 15,886,958 USD). The interest rate swap has a weighted average fixed rate of 1.65% (June 30, 2020 – 1.65%) and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting. As at September 30, 2020, the fair value of the interest rate swap liability was valued at $732,294 (June 30, 2020 - $797,380) and was recorded as derivative liability in the condensed consolidated interim statements of financial position. For the three month period ended September 30, 2020, the change in fair value of the interest rate swaps, net of tax, in the amount of $65,086 (three month period ended September 30, 2019 - $nil) is recorded in other comprehensive income (loss) in the condensed consolidated interim statements of income and comprehensive income. 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 LIBOR 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 LIBOR rate.
10. Income			tax
		The Company income tax expense is determined as follows:
				September 30,		September 30,
					2020	2019
		Statutory income tax rate			26.30%		26.50%
					$	$
		Net income before income taxes						3,014,090		1,230,783
		Expected income tax expense			794,689				326,158
		Tax rate changes and other adjustments			(410)				14,530
		Share based compensation and non-deductible expenses			8,580				37,626
		Difference in foreign tax rates			(26,656)				(53,553)
		Income tax expense			776,203				324,761
		The Company's income tax expense			$	$
		is allocated as fol ows:
		Current tax expense			261,364		-
		Deferred income tax recovery			514,839				324,761
		Income tax expense			776,203				324,761
	13

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


10.		Income tax (continued)
		The following table summarizes the components of deferred tax assets:
			September 30,	June 30,
					2020	2020
					$	$
		Deferred income tax assets (liabilities)
		Non-deductible reserves - Canadian			108,180		106,857
		Non-deductible reserves - USA	2,810,300		2,568,308
		SR&ED investment tax credits, net of 12(1)(x)	1,988,790		1,988,657
		Property and equipment - Canadian			(284,890)		(310,810)
		Property and equipment - USA			(623,010)		(679,817)
		Deferred development costs	(1,001,980)		(1,001,984)
		Intangible assets including goodwil - Canadian			(92,480)		(89,607)
		Intangible assets including goodwil - USA	(3,484,950)		(3,812,802)
		Non-capital losses carried forward - USA	4,513,830		5,551,484
		Capital losses carried forward and other - Canadian			4,370		370,626
		Non-capital losses carried forward - Canadian			-		127,473
		Right of use assets net of obligations - Canadian			7,650		7,833
		Right of use assets net of obligations - USA			116,860		103,662
		Share issuance costs - Canadian	1,642,140		357,327
		Other - USA			328,559		-
		Net deferred income tax assets	6,033,369		5,287,207

		Deferred tax assets and liabilities have been offset where they relate to income taxes levied by the same taxation authority and the Company has the legal right and intent to offset. The following table shows the movement in net deferred tax assets:
			September 30,	June 30,
					2020	2020
					$	$
		Balance at the beginning of the period	5,287,207		4,176,043
		Recognized in profit/loss			(514,839)		479,929
		Recognized in equity	1,375,940		432,590
		Other foreign exchange movement			(114,939)		198,645
		Balance at the end of the period	6,033,369		5,287,207


		The Company has deducted available scientific research and experimental development (“SR&ED”) for federal and provincial purposes and unutilized SR&ED tax credits. These condensed consolidated interim financial statements take into account an income tax benefit resulting from tax credits available to the Company to reduce its net income for federal and provincial income tax purposes in future years as follows:






	14

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)



10.			Income tax (continued)
			Year of	Federal tax credits	Ontario tax credits
			expiration			carry forward	carry forward
								$	$
			2033			317,501		-
			2034			347,033		-
			2035			288,821		-
			2036			334,585						12,036
			2037			300,386						68,347
			2038			227,599						50,686
			2039			325,909						54,213
			2040			334,069						50,401
						2,475,903				235,683

			The income tax benefit of eligible SR&ED costs incurred in prior years but not utilized have been taken into account in these condensed consolidated interim financial statements.
11. Shareholders’	equity
			(i) Share	capital
			The Company’s authorized share capital consists of an unlimited number of common shares without par value. As at September 30, 2020, the Company’s issued and outstanding common shares consist of the following:
										September 30,	September 30,
								2020	2019
					#	#
			Shares issued and outstanding:Outstanding, beginning of the period
								76,087,735			52,962,090
			Shares issued through private placement (Note 18)					35,006,000			14,846,500
			Shares issued upon exercise of options					3,032			1,424
			Shares issued upon exercise of broker warrants		-						61,957
			Shares issued and outstanding, end of the period					111,096,767	67,871,971

			On July 30, 2020, the Company closed its equity offering with 35,006,000 common shares being issued at a price of $2.30 per common share including 4,566,000 common shares sold pursuant to the exercise in full of the over-allotment option grant to the Underwriter for aggregate gross proceeds of $80,513,800 and net proceeds of $75,283,264. The Company intends to use the net proceeds of the offering to fund any future acquisitions, for debt repayment, and for general corporate purposes.

			On July 16, 2019, the Company closed a short-form bought deal prospectus offering of 14,846,500
			common shares, including 1,936,500 common shares issued upon the exercise in full of the over-allotment option granted to the Underwriters, at a price of $1.55 per common share for aggregate gross proceeds of $23,012,075 and net proceeds of $21,319,720.

			During the three month period ended September 30, 2020, a total of 3,032 (three month period ended September 30, 2019 – 1,424) options were exercised for cash consideration of $1,117 (three month period ended September 30, 2019 - $423), and the Company recorded a charge of $549 (three month period ended September 30, 2019 – $226) from contributed surplus to share capital.
		15

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)



11. Shareholders’	equity			(continued)
			(i)		Share capital (continued)
			During the three month period ended September 30, 2019, a total of 61,957 broker warrants were exercised for cash consideration of $61,957 and the Company recorded a charge of $29,348 from warrant reserve to share capital. As at September 30, 2020, no broker warrants were outstanding.

			(ii) Stock	options

			During the year ended June 30, 2020, the shareholders of the Company amended the stock option plan
			(the “plan”) for officers, employees and consultants of the Company. The number of common shares that may be set aside for issuance under the plan (and under all other management stock option and employee stock option plans) is limited to 10% of the outstanding common shares of the corporation provided that the Company complies with the provisions of policies, rules and regulations of applicable securities legislation. The maximum number of common shares that may be reserved for issuance to any one person under the plan is 5% of the common shares outstanding at the time of grant (calculated on a non-diluted basis) less the number of common shares reserved for issuance to such person under any stock option to purchase common shares granted as a compensation or incentive mechanism. Any common shares subject to a stock option, which for any reason are terminated, cancelled, exercised, expired or surrendered will be available for a subsequent grant under the plan, subject to regulatory requirements.
			The stock option price of any common shares cannot be less than the closing price or the minimum price
			as determined by applicable regulatory authorities of the relevant class or series of shares, on the day immediately preceding the day on which the stock option is granted. Stock options granted under the plan may be exercised during a period not exceeding five years from the date of grant, subject to earlier termination on the termination of the optionee’s employment, on the optionee’s ceasing to be an employee, officer or director of the Company or any of its subsidiaries, as applicable, or on the optionee’s retiring, becoming permanently disabled or dying, subject to certain grace periods to allow the optionee or his or her personal representative time to exercise such stock options. The stock options are non-transferable. The plan contains provisions for adjustment in the number of common shares issuable thereunder in the event of the subdivision, consolidation, reclassification or change of the common shares, a merger or other relevant changes in the Company’s capitalization. The board of directors may, from time to time, amend or revise the terms of the plan or may terminate the plan at any time.
			The following table shows the movement in the stock option plan:
						Number	Weighted
			Measurement date			of options average price
								#	$
			Balance, June 30, 2019			5,239,342				0.58
					Exercised	(1,424)				(0.30)
					Forfeited	(3,625)				(0.34)
			Balance, September 30, 2019			5,234,293				0.58
			Balance, June 30, 2020			4,498,203				1.55
					Exercised	(3,032)				(0.37)
					Expired	(24,002)				(1.50)
					Forfeited	(42,654)				(1.16)
			Balance, September 30, 2020			4,428,515				1.55


The Company uses the fair value method to account for all share-based awards granted to employees, officers and directors. The estimated fair value of stock options granted is determined using the Black-Scholes option pricing model and is recorded as a charge to income over the vesting period of the stock options, with a corresponding increase to contributed surplus. Stock options are granted at a price equal to
		16

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)



11.		Shareholders’ equity (continued)
		(ii)	Stock options (continued)
or above the fair value of the common shares on the day immediately preceding the date of the grant. The consideration received on the exercise of stock options is added to stated capital at the time of exercise.
There were no stock options granted during the three month period ended September 30, 2020 (three month period ended September 30, 2019 – nil).
The following table summarizes information about the stock options outstanding and exercisable at the end of each year:
					September 30, 2020			September 30, 2019
				Number of stock		Weighted	Number of stock		Weighted
					options	average		options	average
		Exercise price
				outstanding and		remaining	outstanding and		remaining
					exercisable	contractual life							exercisable		contractual life

		$0.26 - $0.50			523,003						0.59	2,403,841		1.28
		$0.51 - $0.75			127,952						2.24					176,592	3.25
		$1.01 - $1.25			327,509						3.24					-	-
		$1.51 - $1.75			37,110						3.67					-	-
					1,015,574						1.76	2,580,433		1.41

		For the three month period ended September 30, 2020, the Company recognized share-based compensation expense in the amount of $205,444 (three month period ended September 30, 2019 - $141,987).

		(iii)	Earnings per share
		Both the basic and diluted earnings per share have been calculated using the net income attributable to the shareholders of the Company as the numerator.
							September 30,		September 30,
								2020	2019
		Number of shares:Weighted average number of shares
								99,679,932	65,240,022
		used in basic earnings per share
		Shares deemed to be issued						1,652,382	3,241,505
		in respect of options and warrants
		Weighted average number of shares
		used in diluted earnings per share						101,332,314	68,481,528
		Net income for the year						2,237,887	$	906,022	$
		Earnings per share:Basic earnings per share
								0.022	$	0.014	$
		Diluted earings per share						0.022	$	0.013	$





	17

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)



12. 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 the following balances with related parties excluding key management compensation:
				September 30,		June 30,
					2020	2020
					$	$
			Accounts payable and accrued liabilities		7,500			5,000

13. Financial		instruments
			The fair values of the cash and cash equivalents, trade receivables, contract assets, accounts payable and accrued liabilities approximate their carrying values due to the relatively short-term nature of these financial instruments and 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:
				September 30,		June 30,
					2020	2020
					$	$
			Cash at bank and on hand	93,723,732			27,249,863
				93,723,732			27,249,863

			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. There were no cash equivalents as at September 30, 2020 and June 30, 2020.
			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:
				September 30,			September 30,
					2020	2019
							$	$
			Interest income		(1,567)			(22,566)
			Interest expense (Notes 9, 15)		519,546			397,321
			Net interest expense		517,979			374,755

			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.

	18

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


13. Financial		instruments	(continued)
				Credit risk (continued)
				The Company’s maximum exposure to credit risk for its trade receivables is summarized as follows with some of the over 90-day receivable not being covered by EDC:
					September 30,	June 30,
							2020	2020
							$	$
				Trade receivables aging:
				0-30 days	7,902,809		9,312,820
				31-90 days	1,036,227		1,838,303
				Greater than 90 days			823,991		671,596
					9,763,027		11,822,719
				Expected credit loss provision			(600,872)		(588,178)
				Net trade receivables	9,162,155		11,234,541


				The movement in the provision for expected credit losses can be reconciled as follows:

					September 30,	June 30,
							2020	2020
							$	$
				Expected credit loss provision:
				Expected credit loss provision, beginning balance	(588,178)		(287,372)
				Net change in expected credit loss provision during the period			(12,694)		(300,806)
				Expected credit loss provision, ending balance	(600,872)		(588,178)


				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. The provision matrix below shows the expected credit loss rate for each aging category of trade receivables.

							September 30, 2020
										Up to 30	Over 30	Over 90
									Total	days past	days past	days past
					due		due	due
				Default rates	1.72%		10.82%	42.80%
				Trade receivables							$	9,763,027	$ 7,902,809		$ 1,036,227		$	823,991
				Expected credit loss provision							$	600,872	$	136,119		$		112,112	$	352,641
								June 30, 2020
										Up to 30	Over 30	Over 90
									Total	days past	days past	days past
					due		due	due
				Default rates	1.68%		5.39%	49.58%
				Trade receivables							$	11,822,719	$ 9,312,820		$ 1,838,303		$	671,596
				Expected credit loss provision							$	588,178	$	156,043		$		99,164	$	332,971

	19

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


13. Financial		instruments	(continued)
				Credit risk (continued)
				Substantially all 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 will 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. Maturity analysis of liabilities which are due in next twelve months can be summarized as follows:
					September 30,		June 30,
						2020	2020
						$	$
				Accounts payable and accrued liabilities	11,584,726			14,185,737
				Operating facility and loans	7,736,620			16,898,720
				Lease obligations on right-of-use assets	2,910,532			2,951,616
					22,231,878			34,036,073

				Foreign currency risk
				A large portion of the Company’s transactions occur in a foreign currency (mainly in US dollars) 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 September 30, 2020, a 10% depreciation or appreciation of the U.S. dollar, Euro, and GBP against the Canadian dollar would have resulted in an approximate $8,608,340 (2019 - $387,379) increase or decrease, respectively, in total comprehensive income (loss).
				Interest rate risk
				The Company’s exposure to interest rate fluctuations is with its credit facility (Note 9) which bears interest at a floating rate. As at September 30, 2020, a change in the interest rate of 1% per annum would have an impact of approximately $193,154 (three month period ended September 30, 2019 - $293,044) per annum in finance costs. The Company also entered into an interest rate swap arrangement for its loan facility (Note 9) 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 9, the fair value of the interest rate swaps was a $732,294 (June 30, 2020 – $797,380) liability at September 30, 2020.
14. 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 the Company is not subject to any capital requirements imposed by external parties.
	20

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)


15.		Leases: Right-of-use assets and lease obligations
		The Company’s lease liabilities and right-of-use assets are presented below:
			Right-of-use assets	Lease Obligations
					$	$
		Present value of leasesBalance at June 30, 2019
						17,241,779				17,123,225
		Additions				1,620,892				1,620,892
		Effects of movements on exchange rates				697,732				694,785
		Balance at June 30, 2020				19,560,403				19,438,902
		Additions				1,196,170				1,196,170
		Terminations				(222,111)				(99,633)
		Effects of movements on exchange rates				(383,725)				(386,385)
		Balance at September 30, 2020				20,150,737	20,149,054
		Accumulated depreciation and repaymentsBalance at June 30, 2019
					-		-
		Depreciation expense				3,366,767	-
		Repayments			-				3,285,223
		Interest expense			-				(481,697)
		Effects of movements on exchange rates				15,116				12,586
		Balance at June 30, 2020				3,381,883				2,816,112
		Depreciation expense				834,894		-
		Terminations				(222,111)				(99,633)
		Repayments			-				881,122
		Interest expense			-				(109,976)
		Effects of movements on exchange rates				(43,875)				(34,339)
		Balance at September 30, 2020				3,950,791	3,453,286
		Net book value as at:June 30, 2020
						16,178,520				16,622,790
		September 30, 2020				16,199,946				16,695,768
		Lease Obligations - Current					2,910,532
		Lease Obligations - Non-current					13,785,23616,695,768









	21

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)



16. Provisions
					Sales returns &	Stock
	Warranty				allowances	rotation
	provision						provision	provision	Total
								$	$	$	$
			Balance at June 30, 2019	208,481							48,230	300,294	557,005
			Additional provision recognized	5,676							46,227	54,034	105,937
			Balance at June 30, 2020	214,157							94,457	354,328	662,942
			Additional provision recognized	212,288							35,319	(141,558)	106,049
			Balance at September 30, 2020	426,445							129,776	212,770	768,991


			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 allowances 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. 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: United States of America (“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 month periods ended September 30, 2020 and 2019 as follows:
									September 30,		September 30,
									2020	2019
						$	$
			Products						15,267,535			17,073,977
			Services						19,765,339			10,931,167
			Total revenues						35,032,874			28,005,144


			The sales, in Canadian dollars, in each of these geographic locations for the three month periods ended September 30, 2020 and 2019 as follows:
									September 30,		September 30,
									2020	2019
						$	$
			USA						28,720,369			20,477,994
			Canada						1,375,493		1,463,560
			All other countries						4,937,012		6,063,590
			Total revenues						35,032,874			28,005,144

		22

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)



17.		Segment disclosures (continued)
		The non-current assets, in Canadian dollars, in each of the geographic locations as at September 30, 2020 and June 30, 2020 are below:
				September 30, 2020	June 30, 2020
						$	$
		Canada					9,558,059	7,516,113
		USA					108,207,192	113,622,815
		Total non-current assets					117,765,251	121,138,928


18. Business combinations
		a) On October 18, 2019, Sangoma Technologies US Inc., a wholly owned subsidiary of Sangoma
			Technologies Inc., acquired all the membership interest of VoIP Innovations LLC, a US based company. The total discounted consideration for the acquisition was $46,028,032 ($35,050,283 USD). The discounted purchase price consisted of $39,171,420 ($29,828,982 USD) in cash paid on closing and the issuance of 5,500,417 common shares valued at $6,553,938 ($4,990,815 USD) based on a share price of $1.40 ($1.066 USD) per common share on closing and a discount of 14.9% to reflect the 12-month lock up. In addition, the Company is required to pay additional consideration of up to $7,879,200 ($6,000,000 USD) if certain performance criteria are met for the twelve month period from the date of acquisition. The Company expects this potential payment to be $nil and the working capital adjustment was finalized at $302,674 ($230,486 USD). Of the cash consideration paid to the vendors, $4,281,032 ($3,260,000 USD) was paid to an escrow agent to be held for periods ranging from 4 months to 2 years to cover potential working capital, indemnification and USF special indemnity adjustments. The cash held in escrow for working capital and indemnification purposes was discounted using a 5.0% discount for a period of four to twelve months, respectively for an amount of $1,163,074 ($885,679 USD) and $450,240 ($342,857 USD). The cash held in escrow for USF Special Indemnity purposes was discounted using a 1.72% and 1.64% discount for a period of one and two years, respectively for an amount of $2,194,691 ($1,671,254 USD) and $381,349 ($290,397 USD). The Company acquired VoIP Innovations LLC to expand its suite of service offerings and increase recurring revenue.

			The Company incurred transaction costs in the amount of $2,581,854 which was expensed and included in the consolidated statements of income and comprehensive income of the fiscal year ended June 30, 2020. The acquisition has been accounted for using the acquisition method under IFRS 3, Business Combinations.
	23

Sangoma Technologies Corporation Notes to the condensed consolidated interim financial statements For the three month periods ended September 30, 2020 and 2019 (In Canadian dollars)



18.				Business combinations (continued)
			Consideration USD	CAD
			Cash consideration on closing		$26,638,795	$34,982,066
			Net working capital adjustment		$230,486	$302,674
			Cash held in escrow for working capital		$885,679	$1,163,074
			Cash held in escrow for indemnification		$342,857	$450,240
			Cash held in escrow for USF Special Indemnity (1 year)		$1,671,254	$2,194,691
			Cash held in escrow for USF Special Indemnity (2 year)		$290,397	$381,349
			Common shares		$4,990,815	$6,553,938
					$35,050,283	$46,028,032
			Purchase price allocation				USD	CAD
			Cash		$1,513,854	$1,987,993
			Accounts receivable		$582,676	$765,170
			Prepaids and other deposits		$294,739	$387,051
			Property and equipment		$424,260	$557,138
			Right-of-use assets		$516,648	$678,462
			Accounts payable and accrued liabilities		($561,890)	($737,874)
			Other liabilities		($978,715)	($1,285,249)
			Contract Liabilities		($628,728)	($825,646)
			Lease obligations on right-of-use assets		($516,648)	($678,462)
			Customer relationships		$15,030,000	$19,737,396
			Technology		$2,640,000	$3,466,848
			Brand		$700,000	$919,240
			Non-compete		$1,010,000	$1,326,332
			Goodwil		$15,024,087	$19,729,633
					$35,050,283	$46,028,032



			b) On February 29, 2020, the Company acquired .e4 LLC in order to strengthen its sales capabilities
			in its FreePBX® ecosystem. Given the relative size of this transaction, no financial details were publicly disclosed.

			Goodwill arises primarily from the ability to benefit from the assembled workforce, future growth and potential synergies in the form of cost savings.
19. Subsequent	events
				On October 7, 2020, $601,823 ($449,256 USD) was released to the Company from the funds held in escrow in connection with the VoIP Innovations LLC acquisition for further payment by the Company to the Universal Service Fund (“USF”). This was the last payment outstanding and was made in full and final settlement of all amounts due as at December 31, 2019. It has further been agreed between the parties that the remaining balance of the USF escrow will be released to the sellers.


20.				Authorization of the condensed consolidated interim financial statements
				The condensed consolidated interim financial statements were authorized for issuance by the Board of Directors on November 10, 2020.
		24