Exhibit 4.4 


 





 



 


 


 


SANGOMA
TECHNOLOGIES CORPORATION


 





 






 


Condensed consolidated
interim financial statements for

 the three month periods ended September 30, 2021 and 2020


 


(Unaudited in U.S. Dollars)


 


100
Renfrew Drive, Suite 100,


Markham, Ontario,


Canada
L3R 9R6


 






     


     


    

 


Sangoma Technologies Corporation


September 30, 2021 and 2020


 


Table of contents


 


	Condensed consolidated interim statements of financial
    position	 	3
	 	 	 
	Condensed consolidated interim statements of income (loss)
    and comprehensive income (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	 	7-28




 






    2


     


    

 


Sangoma
Technologies Corporation 


Condensed
consolidated interim statements of financial position


As at September 30, 2021 and June 30, 2021


(Unaudited in US dollars)


 





 



 


	 	 	September 30,	 	 	June 30,	 	 	June 30,	 
	 	 	2021	 	 	2021	 	 	2020	 
	 	 	$	 	 	$	 	 	$	 
	Assets	 	 	 	 	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents (Note 13)	 	 	19,128,844	 	 	 	22,095,596	 	 	 	19,995,497	 
	Trade receivables (Note 13)	 	 	14,070,530	 	 	 	14,734,417	 	 	 	8,243,720	 
	Inventories (Note 4)	 	 	12,686,934	 	 	 	11,820,123	 	 	 	9,277,765	 
	Income tax receivable	 	 	1,318,516	 	 	 	662,579	 	 	 	-	 
	Contract assets	 	 	831,246	 	 	 	739,966	 	 	 	473,507	 
	Other current
    assets	 	 	4,193,481	 	 	 	3,296,354	 	 	 	1,749,235	 
	 	 	 	52,229,551	 	 	 	53,349,035	 	 	 	39,739,724	 
	Non-current assets	 	 	 	 	 	 	 	 	 	 	 	 
	Property and equipment (Note 5)	 	 	7,363,355	 	 	 	7,653,015	 	 	 	2,202,587	 
	Right-of-use assets (Note 17)	 	 	13,422,310	 	 	 	13,529,916	 	 	 	11,871,529	 
	Intangible assets (Note 6)	 	 	186,323,874	 	 	 	193,978,453	 	 	 	36,840,607	 
	Development costs (Note 7)	 	 	1,700,288	 	 	 	1,532,786	 	 	 	1,799,805	 
	Deferred income tax assets (Note 10)	 	 	2,237,410	 	 	 	2,052,084	 	 	 	3,879,665	 
	Goodwill (Note 8)	 	 	269,397,741	 	 	 	267,397,741	 	 	 	32,295,582	 
	Contract assets	 	 	1,273,810	 	 	 	854,101	 	 	 	320,484	 
	 	 	 	533,948,339	 	 	 	540,347,131	 	 	 	128,949,983	 
	Liabilities	 	 	 	 	 	 	 	 	 	 	 	 
	Current liabilities	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities
    (Note 13)	 	 	20,841,326	 	 	 	22,360,494	 	 	 	10,409,258	 
	Provisions (Note 18)	 	 	391,143	 	 	 	442,464	 	 	 	486,456	 
	Sales tax payable	 	 	1,343,849	 	 	 	1,318,505	 	 	 	592,994	 
	Income tax payable	 	 	-	 	 	 	-	 	 	 	1,934,370	 
	Consideration payable (Note 16)	 	 	2,354,146	 	 	 	2,335,744	 	 	 	-	 
	Operating facility and loans (Note
    9)	 	 	14,550,000	 	 	 	14,550,000	 	 	 	12,400,000	 
	Contract liabilities (Note 15)	 	 	10,790,421	 	 	 	11,411,621	 	 	 	7,904,975	 
	Derivative liability (Note 9)	 	 	294,295	 	 	 	333,315	 	 	 	585,104	 
	Lease obligations
    on right-of-use assets (Note 17)	 	 	2,582,172	 	 	 	2,421,389	 	 	 	2,165,847	 
	 	 	 	53,147,352	 	 	 	55,173,532	 	 	 	36,479,004	 
	Long term liabilities	 	 	 	 	 	 	 	 	 	 	 	 
	Consideration payable (Note 16)	 	 	6,994,735	 	 	 	6,766,070	 	 	 	-	 
	Operating facility and loans (Note
    9)	 	 	56,775,000	 	 	 	60,412,500	 	 	 	24,650,000	 
	Contract liabilities (Note 15)	 	 	4,214,634	 	 	 	4,342,110	 	 	 	2,915,123	 
	Non-current lease obligations on right-of-use
    assets (Note 17)	 	 	11,604,797	 	 	 	11,821,289	 	 	 	10,031,680	 
	Deferred income tax liabilities (Note
    10)	 	 	24,284,189	 	 	 	24,760,637	 	 	 	-	 
	Other non-current
    liabilities	 	 	916,519	 	 	 	917,395	 	 	 	-	 
	 	 	 	157,937,226	 	 	 	164,193,533	 	 	 	74,075,807	 
	Shareholders’ equity	 	 	 	 	 	 	 	 	 	 	 	 
	Share capital	 	 	172,461,915	 	 	 	172,461,915	 	 	 	47,423,358	 
	Shares to be issued	 	 	192,101,973	 	 	 	192,101,973	 	 	 	-	 
	Contributed surplus	 	 	7,512,239	 	 	 	5,392,954	 	 	 	1,788,397	 
	Accumulated other comprehensive loss	 	 	(294,295	)	 	 	(333,315	)	 	 	(585,104	)
	Retained earnings	 	 	4,229,281	 	 	 	6,530,071	 	 	 	6,247,525	 
	 	 	 	376,011,113	 	 	 	376,153,598	 	 	 	54,874,176	 
	 	 	 	533,948,339	 	 	 	540,347,131	 	 	 	128,949,983	 



 


	Approved
    by the Board	 	 	 	 	 
	(Signed)
    	 	Al
    Guarino	Director	(Signed)	Allan
    Brett	Director	 


 


The accompanying
notes are an integral part of these condensed consolidated interim financial statements. The comparative periods have been retrospectively
adjusted to reflect the change in presentation currency from Canadian dollars to US dollars (Note 2).


 






    3


     


    

 


Sangoma
Technologies Corporation 


Condensed
consolidated interim statements of income (loss) and comprehensive income (loss)


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 



 


	 	 	Three month periods ended	 
	 	 	September
    30,	 
	 	 	2021	 	 	2020	 
	 	 	$	 	 	$	 
	Revenue (Note 19)	 	 	52,478,731	 	 	 	26,222,948	 
	Cost of sales	 	 	14,625,787	 	 	 	8,908,315	 
	Gross profit	 	 	37,852,944	 	 	 	17,314,633	 
	Expenses	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Sales and marketing	 	 	13,087,371	 	 	 	3,825,078	 
	Research and development	 	 	8,359,531	 	 	 	4,582,754	 
	General and administration	 	 	17,266,816	 	 	 	6,371,311	 
	Foreign currency exchange (gain) loss	 	 	(6,876	)	 	 	(12,023	)
	 	 	 	38,706,842	 	 	 	14,767,120	 
	Income (loss)
    before interest, income taxes, gain on change in fair value of consideration payable, business integration and acquisition costs	 	 	(853,898	)	 	 	2,547,513	 
	 	 	 	 	 	 	 	 	 
	Interest income (Note 13)	 	 	(275	)	 	 	(1,180	)
	Interest expense (Notes 9, 13, 17)	 	 	655,855	 	 	 	389,465	 
	Business integration costs	 	 	836,317	 	 	 	-	 
	Loss on change in fair value of consideration payable (Note
    16)	 	 	247,067	 	 	 	-	 
	Business acquisition costs (Note 20)	 	 	- 	 	 	 	58	 
	 	 	 	1,738,964	 	 	 	388,343	 
	 	 	 	 	 	 	 	 	 
	Income (loss) before income tax	 	 	(2,592,862	)	 	 	2,159,170	 
	Provision for income taxes	 	 	 	 	 	 	 	 
	Current (Note 10)	 	 	369,808	 	 	 	195,940	 
	Deferred (Note 10)	 	 	(661,880	)	 	 	383,713	 
	Net income (loss)	 	 	(2,300,790	)	 	 	1,579,517	 
	 	 	 	 	 	 	 	 	 
	Other comprehensive income (loss)	 	 	 	 	 	 	 	 
	Items to be reclassified to net income	 	 	 	 	 	 	 	 
	Change in fair value of interest rate
    swaps, net of tax (Note 9)	 	 	39,020	 	 	 	36,117	 
	Comprehensive income (loss)	 	 	(2,261,770	)	 	 	1,615,634	 
	 	 	 	 	 	 	 	 	 
	Earnings per share	 	 	 	 	 	 	 	 
	Basic (Note 11(iii))	 	$	(0.073	)	 	 	$0.111	 
	Diluted (Note 11(iii))	 	$	(0.073	)	 	 	$0.109	 
	 	 	 	 	 	 	 	 	 
	Weighted average number of shares outstanding (Note 11(iii))	 	 	 	 	 	 	 	 
	Basic	 	 	31,717,214	 	 	 	14,239,990	 
	Diluted	 	 	31,717 214	 	 	 	14,480 806	 



 


The accompanying
notes are an integral part of these condensed consolidated interim financial statements. The comparative period has been retrospectively
adjusted to reflect the change in presentation currency from Canadian dollars to US dollars (Note 2).


 






    4


     


    

 


Sangoma
Technologies Corporation 


Condensed
consolidated interim statements of changes in shareholders' equity


For
the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 


 


	 	 	Number of	 	 	 	 	 	Shares	 	 	 	 	 	Accumulated other	 	 	 	 	 	Total	 
	 	 	common	 	 	Share	 	 	to be	 	 	Contributed	 	 	comprehensive	 	 	Retained	 	 	shareholders'	 
	 	 	shares	 	 	capital	 	 	issued	 	 	surplus	 	 	loss	 	 	earnings	 	 	equity	 
	 	 	 	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Balance, June 30, 2020	 	 	10,869,676	 	 	 	47,423,358	 	 	 	-	 	 	 	1,788,397	 	 	 	(585,104	)	 	 	6,247,525	 	 	 	54,874,176	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,579,517	 	 	 	1,579,517	 
	Change
    in fair value of interest rate swaps, net of tax (Note 9)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	36,117	 	 	 	-	 	 	 	36,117	 
	Common
    shares issued through short form prospectus, net of costs (Note 11(i))	 	 	5,000,857	 	 	 	56,295,235	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	56,295,235	 
	Deferred tax benefit on share
    issuance costs (Note 10)	 	 	-	 	 	 	1,082,713	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,082,713	 
	Common
    shares issued for options exercised (Note 11(i))	 	 	433	 	 	 	1,251	 	 	 	-	 	 	 	(412	)	 	 	-	 	 	 	-	 	 	 	839	 
	Share-based
    compensation expense (Note 11(ii))	 	 	-	 	 	 	-	 	 	 	-	 	 	 	154,478	 	 	 	-	 	 	 	-	 	 	 	154,478	 
	Balance, September 30, 2020	 	 	15,870,966	 	 	 	104,802,557	 	 	 	-	 	 	 	1,942,463	 	 	 	(548,987	)	 	 	7,827,042	 	 	 	114,023,075	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance, June 30, 2021	 	 	19,021,644	 	 	 	172,461,915	 	 	 	192,101,973	 	 	 	5,392,954	 	 	 	(333,315	)	 	 	6,530,071	 	 	 	376,153,598	 
	Net loss	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(2,300,790	)	 	 	(2,300,790	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Change
    in fair value of interest rate swaps, net of tax (Note 9)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	39,020	 	 	 	-	 	 	 	39,020	 
	Rounding
    of fractional shares after share consolidation (Note 2)	 	 	(30	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Share-based
    compensation expense (Note 11(ii))	 	 	-	 	 	 	-	 	 	 	-	 	 	 	2,119,285	 	 	 	-	 	 	 	-	 	 	 	2,119,285	 
	Balance, September 30,
    2021	 	 	19,021,614	 	 	 	172,461,915	 	 	 	192,101,973	 	 	 	7,512,239	 	 	 	(294,295	)	 	 	4,229,281	 	 	 	376,011,113	 



 


The
accompanying notes are an integral part of these condensed consolidated interim financial statements. The comparative periods have been
retrospectively adjusted to reflect the change in presentation currency from Canadian dollars to US dollars (Note 2).


 






    5


     


    

 


Sangoma
Technologies Corporation 


Condensed
consolidated interim statements of cash flows


For the three month periods ended September
30, 2021 and 2020


(Unaudited
in us dollars)


 


 


	 	 	2021	 	 	2020	 
		 	$	 	 	$	 
	Operating activities	 	 	 	 	 	 
	Net income (loss)	 	 	(2,300,790	)	 	 	1,579,517	 
	Adjustments for:	 	 	 	 	 	 	 	 
	Depreciation of property and equipment
    (Note 5)	 	 	442,646	 	 	 	153,368	 
	Depreciation of right-of-use assets
    (Note 17)	 	 	730,189	 	 	 	625,905	 
	Amortization of intangible assets (Note
    6)	 	 	7,654,579	 	 	 	1,464,607	 
	Amortization of development costs (Note
    7)	 	 	174,951	 	 	 	330,106	 
	Deferred income tax expense (recovery)
    (Note 10)	 	 	(661,880	)	 	 	383,713	 
	Income tax paid	 	 	(1,009,922	)	 	 	(1,359,442	)
	Share-based compensation expense (Note
    11(ii))	 	 	2,119,285	 	 	 	154,478	 
	Interest on obligation on right-of-use
    assets (Note 17)	 	 	119,607	 	 	 	82,447	 
	Unrealized foreign exchange loss (gain)	 	 	387,204	 	 	 	393,176	 
	Loss on consideration payable	 	 	247,067	 	 	 	-	 
	Changes in working capital	 	 	 	 	 	 	 	 
	Trade receivables	 	 	663,887	 	 	 	1,375,022	 
	Inventories	 	 	(866,811	)	 	 	331,982	 
	Income tax receivable	 	 	9,914	 	 	 	-	 
	Contract assets	 	 	(510,989	)	 	 	(29,922	)
	Other current assets	 	 	(897,127	)	 	 	123,123	 
	Sales tax payable	 	 	25,344	 	 	 	(159,399	)
	Accounts payable and accrued liabilities	 	 	(1,519,168	)	 	 	(1,724,404	)
	Provisions	 	 	(51,321	)	 	 	90,042	 
	Contract liabilities	 	 	(748,676	)	 	 	(832,393	)
	Net cash flows from operating activities	 	 	4,007,989	 	 	 	2,981,926	 
	Investing activities	 	 	 	 	 	 	 	 
	Purchase of property and equipment
    (Note 5)	 	 	(196,890	)	 	 	(64,820	)
	Development costs (Note 7)	 	 	(342,453	)	 	 	(363,237	)
	Business
    combinations, net of cash and cash equivalents acquired (Note 20)	 	 	(2,000,000	)	 	 	-	 
	Net cash flows used in investing
    activities	 	 	(2,539,343	)	 	 	(428,057	)
	Financing activities	 	 	 	 	 	 	-	 
	Repayments of operating facility and
    loan (Note 9)	 	 	(3,637,500	)	 	 	(8,050,000	)
	Repayment of right-of-use lease obligation
    (Note 17)	 	 	(797,898	)	 	 	(660,561	)
	Issuance of common shares through short
    form prospectus, net (Note 11(i))	 	 	- 	 	 	 	56,295,235	 
	Issuance of common
    shares for stock options exercised (Note 11(i))	 	 	- 	 	 	 	839	 
	Net cash flows (used in) from
    financing activities	 	 	(4,435,398	)	 	 	47,585,513	 
	 	 	 	 	 	 	 	 	 
	(Decrease) Increase in cash and cash equivalents	 	 	(2,966,752	)	 	 	50,139,382	 
	Cash and cash equivalents, beginning
    of the period	 	 	22,095,596	 	 	 	19,995,497	 
	Cash and cash equivalents, end of
    the period	 	 	19,128,844	 	 	 	70,134,879	 



 


The accompanying
notes are an integral part of these condensed consolidated interim financial statements. The comparative period has been retrospectively
adjusted to reflect the change in presentation currency from Canadian dollars to US dollars (Note 2).


 






    6


     


    

 



 


Sangoma
Technologies Corporation 


Notes
to the condensed consolidated interim financial statement


For the three month periods ended September 30, 2021 and 2020


(Unaudited
in US dollars)


 


 


		1.	General
                                            information 



 


Founded
in 1984, Sangoma Technologies Corporation (“Sangoma” or the “Company”) is publicly traded on the Toronto
Stock Exchange (TSX: STC). 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 w ere delisted from the TSX Venture Exchange. 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., VoIP Innovations LLC and Star2Star Communications 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 al l 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, 2021.


 


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 12, 2021.


 


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, 2021, except for the
change in presentation currency of the Company from Canadian dollar to US dollar described below:


 


Change
in presentation currency of the Company 


 


Effective
July 1, 2021, the Company elected to change the presentation currency in its condensed consolidated interim financial statements from
Canadian dollar to US dollar, which was applied on a retrospective basis.


 


Since
July 1, 2020, the Company and all of its wholly-owned operating subsidiaries are measured in US dollar as its the functional
currency. The US 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. Transactions in non-USD currencies are initially recorded in the US dollar
by applying the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in other than
US dollar are revaluated at the foreign exchange rate at the reporting date. Foreign exchange differences arising on translation are
recognized in the income statement. As both its functional currency and presentation currency are US dollar, there is no further
need to translate for its presentation.


 






    7


     


    

 


Sangoma
Technologies Corporation 


Notes
to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited
in US dollars)


 


 


		2.	Significant
                                            accounting policies (continued) 



 


Change
in presentation currency of the Company (continued) 


 


A
change in presentation currency represents a change in an accounting policy in terms of IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors. The Company has retrospectively applied the change to its comparative information for the three month period
ended September 30, 2020 and for the fiscal year ended June 30, 2021 by removing the translation adjustments applied in prior year’s
statements and reverting to present the amounts and balances in their US dollar functional currency.


 


It
should be noted that the functional currencies of the Company’s primary economic environments in which underlying businesses operate
remain unchanged and that foreign exchange exposures will therefore be unaffected by the change, albeit that the effects of such exposures
will be presented in US dollar. All other accounting policies remain consistent with those adopted in the audited consolidated financial
statements for the year ended June 30, 2021.


 


Share
consolidation (reverse stock split)


 


On
November 2, 2021, the Company implemented a consolidation ( the “reverse stock split”) of its outstanding Common Shares
on the basis of one new Common Share for every seven currently outstanding Common Shares (the “Consolidation Ratio”). At
the special meeting of the Company’s shareholders held on September 23, 2021, the Company’s shareholders granted the
Company’s Board of Directors discretionary authority to implement a consolidation of the issued and outstanding common shares
of the Company on the basis of a consolidation ratio of up to 20 pre-consolidation common shares for one post-consolidation common
share. The Board of Directors selected a share consolidation ratio of seven pre-consolidation common shares for one
post-consolidation common share. The Company’s common shares began trading on the TSX on a post-consolidation basis under the
Company’s existing trade symbol "STC" on November 8, 2021. In accordance with International Financial Reporting
Standards (“IFRS”), the change has been applied retrospectively.


 


The
reverse stock split did not cause an adjustment to the par value or the authorized shares of the common stock. As a result of the reverse
stock split, the Company further adjusted the share amounts and exercise prices under its option plans and outstanding options.


 


IAS
33 Earnings per Share (paragraph 64) requires retrospective restatement of earnings per share for a reverse stock split that occurs
subsequent to the balance sheet date but before the date of authorization of the statements. As a result, all disclosures of common shares,
per common share data and data related to options in the accompanying condensed consolidated interim financial statements and related
notes reflect this reverse stock split for all periods presented.


 


		3.	Significant
                                            accounting judgments, estimates and uncertainties 



 


Except
for the change in the Company’s presentation currency, 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, 2021 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, 2021.


 






    8


     


    

 


Sangoma
Technologies Corporation 


Notes
to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited
in US dollars)


 


 


		4.	Inventories
                                            



 


Inventories
recognized in the consolidated statements of financial position are comprised of:


 


	 	 	September 30,	 	 	June 30,	 
	 	 	2021	 	 	2021	 
	 	 	$	 	 	$	 
	Finished goods	 	 	8,269,412	 	 	 	8,422,594	 
	Parts	 	 	4,895,934	 	 	 	3,902,439	 
	 	 	 	13,165,346	 	 	 	12,325,033	 
	Provision for obsolescence	 	 	(478,412	)	 	 	(504,910	)
	Net inventory carrying value	 	 	12,686,934	 	 	 	11,820,123	 




 






    9


     


    

 


Sangoma
Technologies Corporation 


Notes
to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited
in US dollars)


 


 


	5.	Property and
    equipment	 	 	 	 	 	 



 


	 	 	Office furniture	 	 	 	 	 	Stockroom and	 	 	 	 	 	 	 	 	 	 
	 	 	and computer	 	 	Software and	 	 	production	 	 	Tradeshow	 	 	Leasehold	 	 	 	 
	 	 	equipment	 	 	books	 	 	equipment	 	 	equipment	 	 	improvements	 	 	Total	 
	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at June 30, 2020	 	1,989,536	 	 	412,766	 	 	1,290,759	 	 	47,210	 	 	321,787	 	 	4,062,058	 
	Additions through business combinations (Note 20)	 	473,123	 	 	-	 	 	4,861,810	 	 	 	 	 	 	 	 	5,334,933	 
	Additions	 	867,227	 	 	3,990	 	 	235,053	 	 	-	 	 	26,676	 	 	1,132,946	 
	Disposals	 	 	 	 	 	 	 	(132,789	)	 	 	 	 	 	 	 	(132,789	)
	Balance at June 30, 2021	 	3,329,886	 	 	416,756	 	 	6,254,833	 	 	47,210	 	 	348,463	 	 	10,397,148	 
	Additions	 	106,113	 	 	40,602	 	 	39,900	 	 	-	 	 	10,275	 	 	196,890	 
	Disposals	 	(3,241	)	 	-	 	 	(40,663	)	 	 	 	 	 	 	 	(43,904	)
	Balance at September 30, 2021	 	3,432,758	 	 	457,358	 	 	6,254,070	 	 	47,210	 	 	358,738	 	 	10,550,134	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at June 30, 2020	 	995,761	 	 	223,697	 	 	491,742	 	 	39,063	 	 	109,208	 	 	1,859,471	 
	Depreciation expense	 	375,727	 	 	90,498	 	 	380,338	 	 	1,806	 	 	36,293	 	 	884,662	 
	Balance at June 30, 2021	 	1,371,488	 	 	314,195	 	 	872,080	 	 	40,869	 	 	145,501	 	 	2,744,133	 
	Depreciation expense	 	157,384	 	 	21,847	 	 	253,364	 	 	312	 	 	9,739	 	 	442,646	 
	Balance at September 30, 2021	 	1,528,872	 	 	336,042	 	 	1,125,444	 	 	41,181	 	 	155,240	 	 	3,186,779	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net book value as at:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at June 30, 2021	 	1,958,398	 	 	102,561	 	 	5,382,753	 	 	6,341	 	 	202,962	 	 	7,653,015	 
	Balance at September 30, 2021	 	1,903,886	 	 	121,316	 	 	5,128,626	 	 	6,029	 	 	203,498	 	 	7,363,355	 






 


For
the three month period ended September 30, 2021, depreciation expense of $248,392 (three month period ended September 30, 2020 - $153,368)
was recorded in general and administration expense in the condensed consolidated interim statements of income (loss) and comprehensive
income (loss). Depreciation expense in the amount of $194,254 was included in cost of sales for the three month period ended September
30, 2021 (three month period ended September 30, 2020 - $nil).


 






    10


     


    

 


Sangoma
Technologies Corporation 


Notes
to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited
in US dollars)


 


 


	6.	 Intangible
    assets



 


	 	 	Copyright	 	 	Purchased	 	 	 	 	 	Customer	 	 	 	 	 	Other

purchased	 	 	 	 
	 	 	to software	 	 	technology	 	 	Website	 	 	relationships	 	 	Brand	 	 	intangibles*	 	 	Total	 
	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at June 30, 2020	 	2,163,532	 	 	8,523,164	 	 	173,690	 	 	29,855,518	 	 	6,787,317	 	 	2,748,066	 	 	50,251,287	 
	Business combinations (Note 20)	 	-	 	 	86,800,000	 	 	-	 	 	82,400,000	 	 	-	 	 	-	 	 	169,200,000	 
	Balance at June 30, 2021	 	2,163,532	 	 	95,323,164	 	 	173,690	 	 	112,255,518	 	 	6,787,317	 	 	2,748,066	 	 	219,451,287	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at September 30, 2021	 	2,163,532	 	 	95,323,164	 	 	173,690	 	 	112,255,518	 	 	6,787,317	 	 	2,748,066	 	 	219,451,287	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accumulated amortization	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at June 30, 2020	 	2,163,532	 	 	3,034,665	 	 	173,690	 	 	5,436,705	 	 	1,449,052	 	 	1,153,036	 	 	13,410,680	 
	Amortization expense	 	-	 	 	4,774,716	 	 	-	 	 	5,898,778	 	 	686,021	 	 	702,639	 	 	12,062,154	 
	Balance at June 30, 2021	 	2,163,532	 	 	7,809,381	 	 	173,690	 	 	11,335,483	 	 	2,135,073	 	 	1,855,675	 	 	25,472,834	 
	Amortization expense	 	-	 	 	3,903,319	 	 	-	 	 	3,405,873	 	 	170,569	 	 	174,818	 	 	7,654,579	 
	Balance at September 30, 2021	 	2,163,532	 	 	11,712,700	 	 	173,690	 	 	14,741,356	 	 	2,305,642	 	 	2,030,493	 	 	33,127,413	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net book value as at:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance at June 30, 2021	 	-	 	 	87,513,783	 	 	-	 	 	100,920,035	 	 	4,652,244	 	 	892,391	 	 	193,978,453	 
	Balance at September 30, 2021	 	-	 	 	83,610,464	 	 	-	 	 	97,514,162	 	 	4,481,675	 	 	717,573	 	 	186,323,874	 





 


*
Other purchased intangibles include non-compete agreements and backlog.


 


Amortization
expense is included in general and administration expense in the consolidated statements of income (loss) and comprehensive income (loss).
For the three month period ended September 30, 2021, amortization expenses were $7,654,579 (three month period ended September 30, 2020
- $1,464,607).


 






    11


     


    

 


Sangoma
Technologies Corporation 


Notes
to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited
in US dollars)


 


 


	7.	Development
    costs	 	 



 


	 	 	$	 
	Cost	 	 	 
	Balance at June 30, 2020	 	17,284,963	 
	Additions	 	1,551,158	 
	Investment tax credits	 	(448,347	)
	Cost fully amortized	 	(15,028,049	)
	Balance at June 30, 2021	 	3,359,725	 
	Additions	 	342,453	 
	Balance at September 30, 2021	 	3,702,178	 
	 	 	 	 
	Accumulated amortization	 	 	 
	Balance at June 30, 2020	 	(15,485,158	)
	Amortization	 	(1,369,830	)
	Cost fully amortized	 	15,028,049	 
	Balance at June 30, 2021	 	(1,826,939	)
	Amortization	 	(174,951	)
	Balance at September 30, 2021	 	(2,001,890	)





 


	 	 	September 30, 2021	 	 	June 30, 2021	 
	 	 	$	 	 	$	 
	Net capitalized development costs	 	 	1,700,288	 	 	 	1,532,786	 




 


Each
period, additions to development costs are recognized net of investment tax credits accrued. In addition to the above amortization, the
Company has recognized $8,184,579 of engineering expenditures as an expense during the three month period ended September 30, 2021 (three
month period ended September 30, 2020 - $4,140,728).


 


		8.	Goodwill
                                            



 


The
carrying amount and movements of goodwill was as follows:


 


	 	 	$	 
	Balance at June 30, 2020	 	 	32,295,582	 
	Addition through business combinations (Note 20)	 	 	235,102,159	 
	Balance at June 30, 2021	 	 	267,397,741	 
	Addition through business combinations (Note 20)	 	 	2,000,000	 
	Balance at September 30, 2021	 	 	269,397,741	 




 


For
the three month period ended September 30, 2021, the addition to goodwill was from the acquisition of M2 on July 16, 2021 (Note 20).
The addition to goodwill for the year ended June 30, 2021 was from the acquisition of StarBlue Inc. on March 31, 2021(Note 20).


 






    12


     


    

 



 


Sangoma Technologies Corporation 


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars) 


 





 



 


		9.	Operating facility and loan
                                            and derivative liability 



 


		(a)	Operating facility and loan
                                            



 


		(i)	The Company entered
                                            into a new loan facility with two banks and drew down the first tranche of $34,800,000 ($45,699,360
                                            CAD) on October 18, 2019. This loan facility was used to pay down and close all existing
                                            loans and to fund part of the purchase of VoIP Innovations LLC. Th is 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 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 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, 2021 is $23,200,000 (June 30, 2021 – $24,650,000). As at September 30, 2021, term loan facility
balance of $5,800,000 (June 30, 2021 - $5,800,000) is classified as current and $17,400,000 (June 30, 2021 - $18,850,000) as long-term
in the condensed consolidated interim statements of financial position.


 


		(ii)	The Company also had revolving credit
                                            facilities which included a committed revolving credit facility for up to CAD $8,000,000
                                            and a committed swingline credit facility for up to CAD $2,000,000 both of which may be used
                                            for general business purposes. On April 3, 2020, the Company drew down $1,300,000 ($1,838,460
                                            CAD) on the swingline credit facility available under the Credit Agreement. On April 17,
                                            2020, the Company drew down $5,300,000 ($7,439,610 CAD) from the revolving credit facility.
                                            During August 2020, the Company paid back in full the outstanding amounts on the swingline
                                            credit facility and the revolving credit facility. Both facilities remain fully available
                                            to the Company.



 


		(iii)	On March 31, 2021, the Company amended
                                            its term loan facility with its lenders and drew down an additional $52,500,000 to fund part
                                            of the acquisition of StarBlue Inc. At the time of the draw down of the additional amounts,
                                            the following 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 $2,000,000 to USD $1,500,000.



 


		●	The revolver facility was converted
                                            from CAD $8,000,000 to USD $6,000,000.



 


		●	The debt to equity
                                            ratio calculation now allows the Company to offset up to US $10,000,000 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 Dollar Offered Rate (CDOR) plus the applicable
margin. The incremental draw is repayable, on a straight-line basis, through quarterly payments of $2,187,500 and is due to mature on
October 18, 2024. As at September 30, 2021, $8,750,000 (June 30, 2021 - $8,750,000) of the incremental facility is classified as current
and $39,375,000 (June 30, 2021 – $41,562,500) is classified as long-term in the condensed consolidated interim statements of financial
position.


 






    13


     


    

 


Sangoma Technologies Corporation 


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 






 


		9.	Operating facility and loan
                                            and derivative liability (continued) 



 


For the three month period ended September
30, 2021, the Company incurred interest costs to service the borrowing facilities in the amount of $536,249 (for the three month period
ended September 30, 2020 - $307,338). During the three month period ended September 30, 2021, the Company borrowed $nil (three month
period ended September 30, 2020 - $nil) in operating facility and loans and repaid $3,637,500 (three month period ended September 30,
2020 - $8,050,000).


 


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, 2021 and June 30, 2021, the Company
was in compliance with all covenants related to its credit agreements.


 


(b) Derivative liability


 


The Company uses 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 documents the hedge relationship and designates the instrument for financial reporting
purposes as a fair value hedge, a cash fl ow 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 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 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 and decreases in line with the term of the loan facility. As of September 30, 2021, the notional amount
of the interest rate swap was $12,104,348 (June 30, 2021 – $12,860,870). The interest rate swap has a weighted average fixed rate
of 1.65% (June 30, 2021 – 1.65%) and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting.
As at September 30, 2021, the fair value of the interest rate swap liability was valued at $294,295 (June 30, 2021 - $333,315) and was
recorded as derivative liability in the condensed consolidated interim statements of financial position. For the three month period ended
September 30, 2021, the change in fair value of the interest rate swaps, net of tax, was a gain of $39,020 (three month period ended
September 30, 2020 – gain of $36,117) was recorded in other comprehensive income (loss) in the condensed consolidated interim statements
of income (loss) and comprehensive income (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 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.


 






    14


     


    

 


Sangoma Technologies Corporation 


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 



 


10.       Income tax


 


The Company income tax expense is determined as follows:


 


	 	 	Three month periods

    ended September 30,	 
	 	 	2021	 	 	2020	 
	Statutory income tax rate	 	 	26.37	%	 	 	26.30	%
	 	 	 	$	 	 	 	$	 
	Net income (loss) before income taxes	 	 	(2,592,862	)	 	 	2,159,170	 
	 	 	 	 	 	 	 	 	 
	Expected income tax expense	 	 	(683,629	)	 	 	569,282	 
	Difference in foreign tax rates	 	 	(6,930	)	 	 	(19,095	)
	Tax rate changes and other adjustments	 	 	(68	)	 	 	(294	)
	Share based compensation	 	 	596,496	 	 	 	6,146	 
	Other non deductible expenses	 	 	20,524	 	 	 	23,614	 
	Gain on consideration payable	 	 	60,680	 	 	 	-	 
	Stock options deduction revaluation adjustment	 	 	(279,145	)	 	 	-	 
	Income tax expense (recovery)	 	 	(292,072	)	 	 	579,653	 
	 	 	 	 	 	 	 	 	 
	The Company's income tax expense is allocated as follows:	 	 	$	 	 	 	$	 
	Current tax expense	 	 	369,808	 	 	 	195,940	 
	Deferred income tax expense (recovery)	 	 	(661,880	)	 	 	383,713	 
	Income
    tax expense (recovery)	 	 	(292,072	)	 	 	579,653	 




 


The following table summarizes the components of deferred
tax assets (liabilities):


 


	 	 	September 30,	 	 	June 30,	 
	 	 	2021	 	 	2021	 
	 	 	$	 	 	$	 
	Deferred income tax assets and liabilities	 	 	 	 	 	 	 	 
	Non-deductible reserves - Canadian	 	 	436,418	 	 	 	316,605	 
	Non-deductible reserves - USA	 	 	4,694,257	 	 	 	4,711,599	 
	SR&ED investment tax credits, net of 12(1)(x)	 	 	1,457,391	 	 	 	1,457,466	 
	Property and equipment - Canadian	 	 	(194,857	)	 	 	(211,565	)
	Property and equipment - USA	 	 	(1,493,645	)	 	 	(1,492,571	)
	Deferred development costs	 	 	(608,339	)	 	 	(608,370	)
	Intangible assets including goodwill - Canadian	 	 	(83,726	)	 	 	(81,574	)
	Intangible assets including goodwill - USA	 	 	(40,303,287	)	 	 	(41,967,482	)
	Non-capital losses carried forward - USA	 	 	3,716,864	 	 	 	5,159,051	 
	Non-capital losses carried forward - Canadian	 	 	128,427	 	 	 	-	 
	Capital losses carried forward and other - Canadian	 	 	3,529	 	 	 	3,528	 
	Right of use assets net of obligations - Canadian	 	 	28,747	 	 	 	29,988	 
	Right of use assets net of obligations - USA	 	 	161,032	 	 	 	148,445	 
	Share issuance costs - Canadian	 	 	1,069,819	 	 	 	1,146,005	 
	Acquisition costs & other - USA	 	 	401,733	 	 	 	420,608	 
	Stock options - USA	 	 	8,538,858	 	 	 	8,259,714	 
	Net deferred income tax liabilities	 	 	(22,046,779	)	 	 	(22,708,553	)


 






    15


     


    

 


Sangoma Technologies Corporation 


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 






 


		10.	Income tax (continued) 



 


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 (liabilities):


 


	 	 	September 30,	 	 	June 30,	 
	 	 	2021	 	 	2021	 
	 	 	$	 	 	$	 
	Balance at the beginning of the period	 	 	(22,708,553	)	 	 	3,879,665	 
	Recognized in profit/loss	 	 	661,880	 	 	 	(2,167,141	)
	Recognized in goodwill	 	 	-	 	 	 	(25,462,043	)
	Recognized in equity	 	 	-	 	 	 	1,162,220	 
	Recognized in deferred development costs	 	 	-	 	 	 	(123,917	)
	Other foreign exchange movement	 	 	(106	)	 	 	2,663	 
	Balance at the end of the period	 	 	(22,046,779	)	 	 	(22,708,553	)

 





Unrecognized deferred tax assets


 


Deferred taxes are provided as a result
of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities.
Deferred tax assets have not been recognized in respect of the following deductible temporary differences:


 


	 	 	September 30,	 	 	June 30,	 
	 	 	2021	 	 	2021	 
	 	 	 	 	 	$	 
	Capital losses carried forward and other - Canadian	 	40,635	 	 	40,637	 
	Capital losses carried forward - USA	 	12,884,540	 	 	12,884,540	 




 


The net capital loss carry forward
may be carried forward indefinitely but can only be used to reduce capital gains. Deferred tax assets have not been recognized in respect
of these items because it is not probable that future taxable profit will be available against which the group can utilize the benefits
therefrom.


 


The Company has deducted available
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:


 


	Year of	 	 	Federal tax credits	 	 	Ontario tax credits	 
	expiration	 	 	carry forward	 	 	carry forward	 
	 	 	 	$	 	 	$	 
	2034	 	 	 	211,910	 	 	 	-	 
	2035	 	 	 	233,033	 	 	 	-	 
	2036	 	 	 	269,957	 	 	 	-	 
	2037	 	 	 	242,364	 	 	 	-	 
	2038	 	 	 	183,636	 	 	 	-	 
	2039	 	 	 	262,957	 	 	 	-	 
	2040	 	 	 	243,520	 	 	 	34,645	 
	2041	 	 	 	332,760	 	 	 	49,122	 
	 	 	 	 	1,980,137	 	 	 	83,767	 


 









    16


     


    

 





Sangoma Technologies Corporation 


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 



 





		10.	Income tax (continued) 



 


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, 2021 and 2020, the Company’s issued
and outstanding common shares consist of the following:


 


	 	 	Three month periods	 
	 	 	ended September 30,	 
	 	 	2021	 	 	2020	 
	 	 	#	 	 	#	 
	Shares issued and outstanding:	 	 	 	 	 	 	 	 
	Outstanding, beginning of the period	 	 	19,021,644	 	 	 	10,869,676	
	Shares issued through short form prospectus	 	 	-	 	 	 	5,000,857	 
	Shares issued upon exercise of options	 	 	-	 	 	 	433	 
	Rounding of fractional shares after share consolidation	 	 	(30	)	 	 	-	 
	 	 	 	19,021,614	 	 	 	15,870,966	 

 


On March 31, 2021, the Company acquired
StarBlue Inc. and issued 3,018,685 common shares valued in the amount of $66,873,399 as part of the consideration, and 18,456 common
shares valued in the amount of $330,460 as part of the acquisition costs (Note 20). Under the terms of the agreement, a further 12,695,600
common shares valued in the amount of $192,101,973 will be issued in instalments over fourteen quarters commencing on April 1, 2022 which
would bring the total common shares to 31,717,214. The $192,101,973 discounted value of the 12,695,600 common shares not yet issued is
recorded as shares to be issued in the condensed consolidated interim statements of changes in shareholders’ equity.


 


On July 30, 2020, the Company closed
its short-form prospectus offering with 5,000,857 common shares being issued at a price of CAD$16.10 per common share including 652,285
common shares issued upon the exercise in full of the over-allotment option grant to the Underwriter for aggregate gross proceeds of
CAD $80,513,800 and net proceeds of CAD $75,283,264 ($56,295,235).


 


During the three month period ended
September 30, 2021, no options were exercised. During the three month period ended September 30, 2020 – 433 options were exercised
for cash consideration of $839, and the Company recorded a charge of $412 from contributed surplus to share capital.


 






    17


     


    

 


Sangoma Technologies Corporation 


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 



 


		11.	Shareholders’ equity
                                            (continued) 



 


		(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 earl ier 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, 2020	 	 	642,600	 	 	 	8.13	 
	Exercised	 	 	(433	)	 	 	(1.94	)
	Expired	 	 	(3,429	)	 	 	(7.87	)
	Forfeited	 	 	(6,093	)	 	 	(6.09	)
	Balance, September 30,2020	 	 	632,645	 	 	 	8.13	 
	Balance, June 30, 2021	 	 	1,587,310	 	 	 	19.89	 
	Granted	 	 	285,714	 	 	 	18.62	 
	Expired	 	 	(60	)	 	 	6.37	 
	Forfeited	 	 	(84,069	)	 	 	19.12	 
	Balance, September 30, 2021	 	 	1,788,895	 	 	 	19.72	 




 


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 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.


 






    18


     


    

 



 


Sangoma Technologies Corporation


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 


 


		11.	Shareholders’ equity (continued) 



 


		(ii)	Stock options (continued) 



 


On September 30, 2021, the Company
granted 285,714 stock options to employees, officers, and directors at a strike price of $18.62 vesting over a period of four years.


 


	 	 	September 30,	 	 	September 30 ,	 
	 	 	2021	 	 	2020	 
	Share price	 	$	18.62	 	 	 	-	 
	Exercise price	 	$	18.62	 	 	 	-	 
	Expected volatility	 	 	59.82	%	 	 	-	 
	Expected option life	 	 	5
                                            years	 	 	 	-	 
	Risk-free interest rate	 	 	0.78	%	 	 	-	 







 


The following table summarizes information about the stock
options outstanding and exercisable at the end of each period:


 


	 	 	September 30, 2021	 	 	September 30 , 2020	 
	 	 	Number of stock	 	 	Weighted	 	 	Number of stock	 	 	Weighted	 
	 	 	options	 	 	average	 	 	options	 	 	average	 
	 	 	outstanding and	 	 	remaining	 	 	outstanding and	 	 	remaining	 
	Exercise price	 	exercisable	 	 	contractual life	 	 	exercisable	 	 	contractual life	 
	$0.01 - $7.00	 	 	25,849	 	 	 	1.24	 	 	 	92,993	 	 	 	0.91	 
	$7.01 - $10.50	 	 	66,906	 	 	 	2.24	 	 	 	46,787	 	 	 	3.24	 
	$10.51 -$14 .00	 	 	8,650		 	 	2.67	 	 	 	5,301	 	 	 	3.67	 
	$14.01 - $21.00	 	 	89,965	 	 	 	3.68	 	 	 	-	 	 	 	-	 
	 	 	 	191,370	 	 	 	2.80	 	 	 	145,081	 	 	 	1.76	 




 


For the three month period ended September
30, 2021, the Company recognized share-based compensation expense in the amount of $2,119,285 (three month period ended September 30,
2020 - $154,478).


 


		(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.


 






    19


     


    

 


Sangoma Technologies Corporation


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 



 


		11.	Shareholders’ equity (continued)



 


		(iii)	Earnings per share (continued)



 


	 	 	Three month periods 
 ended September 30,	 
	 	 	2021	 	 	2020	 
	Number of shares:	 	 	 	 	 	 
	Weighted average number of shares outstanding	 	 	19,021,614	 	 	 	14,239,990	 
	Shares
    to be issued	 	 	12,695,600	 	 	 	-	 
	Weighted average number of shares used in basic earnings per	 	 	31,717,214	 	 	 	14,239,990	 
	Shares
    deemed to be issued in respect of options and warrants	 	 	-	 	 	 	240,816	 
	per share	 	 	31,717,214	 	 	 	14,480,806	 
	Net income (loss) for the period	 	$	(2,300,790	)	 	$	1,579,517	 
	Earnings per share:	 	 	 	 	 	 	 	 
	Basic earnings per share	 	$	(0.073	)	 	$	0.111	 
	Diluted earings per share	 	$	(0.073	)	 	$	0.109	 





 


Under the terms of the StarBlue Inc. share purchase agreement,
a further 12,695,600 shares will be issued in instalments over the fourteen quarters commencing on April 1, 2022.


 


		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 incurred no related
party transactions during the three month period ended September 30, 2021 (three month ended September 30, 2020 - $nil) and had no outstanding
balance with related parties as at September 30, 2021 (June 30, 2021 - $nil).


 


		13.	Financial instruments 



 


The
fair values of the cash and cash equivalents, trade receivables, contract assets, other current assets, accounts payable and accrued
liabilities, consideration payable and derivative liability 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: 




 


	 	 	September 30,	 	 	June 30,	 
	 	 	2021	 	 	2021	 
	 	 	$	 	 	$	 
	Cash at bank and on hand	 	 	19,128,844	 	 	 	22,095,596	 




 


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 September 30, 2021 and June 30, 2021, the Company had no cash equivalents.


 






    20


     


    

 


Sangoma Technologies Corporation


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 


		13.	Financial instruments (continued) 



 


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 September 30,	 
	 	 	2021	 	 	2020	 
	 	 	$	 	 	$	 
	Interest income	 	 	(275	)	 	 	(1,180	)
	Interest expense (Notes 9, 17)	 	 	655,855	 	 	 	389,465	 
	Net interest expense	 	 	655,580	 	 	 	388,285	 

 


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.


 


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	 	 	June 30,	 
	 	 	2021	 	 	2021	 
	 	 	$	 	 	$	 
	Trade receivables aging:	 	 	 	 	 	 
	0-30 days	 	10,599,134	 	 	11,691,613	 
	31-90 days	 	2,730,534	 	 	2,786,708	 
	Greater than 90 days	 	1,784,544	 	 	1,350,796	 
	 	 	15,114,212	 	 	15,829,117	 
	Expected credit loss provision	 	(1,043,682	)	 	(1,094,700	)
	 	 	14,070,530	 	 	14,734,417	 

 


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




 


	 	 	September	 	 	June 30,	 
	 	 	2021	 	 	2021	 
	 	 	$	 	 	$	 
	Expected credit loss provision:	 	 	 	 	 	 
	Expected credit loss provision, beginning balance	 	(1,094,700	)	 	(431,595	)
	Net change in expected credit loss provision during the period	 	51,018	 	 	(663,105	)
	Expected credit loss provision, ending balance	 	(1,043,682	)	 	(1,094,700	)




 






    21


     


    

 


Sangoma Technologies Corporation


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 


		13.	Financial instruments (continued) 



 


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, 2021	 
	 	 	 	 	 	 	 	 	Over 30	 	 	 	 
	 	 	 	 	 	Up to 30 days	 	 	days past	 	 	Over 90 days	 
	 	 	Total	 	 	past due	 	 	due	 	 	past due	 
	Default rates	 	 	 	 	 	 	1.38	%	 	 	11.09	%	 	 	33.34	%
	Trade receivables	 	$	15,114,212	 	 	$	10,599,134	 	 	$	2,730,534	 	 	$	1,784,544	 
	Expected credit loss provision	 	$	1,043,682	 	 	$	145,824	 	 	$	302,834	 	 	$	595,024	 





 


	 	 	June 30, 2021	 
	 	 	 	 	 	 	 	 	Over 30	 	 	 	 
	 	 	 	 	 	Up to 30 days	 	 	days past	 	 	Over 90 days	 
	 	 	Total	 	 	past due	 	 	due	 	 	past due	 
	Default rates	 	 	 	 	 	 	1.80	%	 	 	16.81	%	 	 	30.76	%
	Trade receivables	 	$	15,829,117	 	 	$	11,691,613	 	 	$	2,786,708	 	 	$	1,350,796	 
	Expected credit loss provision	 	$	1,094,700	 	 	$	210,648	 	 	$	468,484	 	 	$	415,568	 





 


 


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.
The following are the undiscounted contractual maturities of significant financial liabilities of the Company as at September 30, 2021:


 





	 	 	For the twelve-month periods ended	 
	 	 	September	 	 	September	 	 	September	 	 	September	 	 	 	 	 	 	 
	 	 	30,
    2022	 	 	30,
    2023	 	 	30,
    2024	 	 	30,
    2025	 	 	Thereafter	 	 	Total	 
	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Accounts payable and accrued liabilities	 	20,841,326	 	 	-	 	 	-	 	 	-	 	 	-	 	 	20,841,326	 
	Consideration payable	 	2,411,173	 	 	2,389,518	 	 	2,306,003	 	 	2,306,003	 	 	960,834	 	 	10,373,531	 
	Operating facility and loans	 	14,550,000	 	 	14,550,000	 	 	14,550,000	 	 	14,550,000	 	 	13,125,000	 	 	71,325,000	 
	Lease obligations on right of use assets	 	2,855,208	 	 	2,537,206	 	 	2,060,235	 	 	2,041,388	 	 	6,248,302	 	 	15,742,339	 
	Other non-current liabilities	 	-	 	 	-	 	 	-	 	 	-	 	 	916,519	 	 	916,519	 
	 	 	40,657,707	 	 	19,476,724	 	 	18,916,238	 	 	18,897,391	 	 	21,250,655	 	 	119,198,715	 



 






    22


     


    

 


Sangoma Technologies Corporation


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 


		13.	Financial instruments (continued) 



 


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)) 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, 2021,
a 10% depreciation or appreciation of the CAD, EUR, and GBP against the U.S. dollar would have resulted in an approximate $21,768
(September 30, 2020 - $110,303) 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, 2021, a
change in the interest rate of 1% per annum would have an impact of approximately $597,250 (September 30, 2020 - $145,000) per annum
in finance costs. The Company also entered 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 liability of $294,295 on September 30, 2021 (June 30, 2021 – $333,315).


 


		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 period and apart from the financial covenants as discussed in Note 9, the Company is not subject to any other
capital requirements imposed by external parties.


 


		15.	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 September 30, 2021 and June 30, 2021 are below:


 


	 	 	$	 
	Opening balance, June 30, 2020	 	 	10,820,098	 
	Revenue deferred during the year	 	 	19,775,691	 
	Deferred revenue amortized into income during the year	 	 	(20,374,484	)
	Additions through business combination (Note 20)	 	 	5,532,426	 
	Ending balance, June 30, 2021	 	 	15,753,731	 
	Revenue deferred during the period	 	 	9,826,402	 
	Deferred revenue amortized into income during the period	 	 	(10,575,078	)
	Ending balance, September 30, 2021	 	 	15,005,055	 
	 	 	 	 	 
	Contract liabilities - Current	 	 	10,790,421	 
	Contract liabilities - Non-current	 	 	4,214,634	 
	 	 	 	15,005,055	 



 






    23


     


    

 


Sangoma Technologies Corporation


Notes to the condensed consolidated interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 





 


		16.	Consideration payable 



 


As described in Note 20,
consideration in the amount of $13,269,000 was payable as part of the acquisition of Star2Star. The fair value of consideration
payable as of September 30, 2021 was determined using an effective tax rate of 24.56% and a discount rate of 4.9%. The fair value of
the consideration payable is dependent upon the Company’s share price, foreign exchange rates and Company’s ability to
utilize the underlying tax losses as they become available in each reporting period. The Company recognized a loss on change in fair
value of consideration payable in the amount of $247,067 for the three month period ended September 30, 2021 (three month period
ended September 30, 2020 - $nil). The balance of consideration payable as at September 30, 2021 is summarized below:


 


	 	 	$	 
	Opening balance, June 30, 2020	 	 	-	 
	Additions through business combination (Note 20)	 	 	13,269,000	 
	Gain on change in fair value	 	 	(4,167,186	)
	Ending balance, June 30, 2021	 	 	9,101,814	 
	Loss on change in fair value	 	 	247,067	 
	Ending balance, September 30, 2021	 	 	9,348,881	 
	 	 	 	 	 
	Consideration payable - Current	 	 	2,354,146	 
	Consideration payable - Non-current	 	 	6,994,735	 
	 	 	 	9,348,881	 

 


		17.	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	 
	 	 	$	 
	Present value of leases	 	 	 	 
	Opening IFRS 16 value as at July 1, 2020	 	 	14,353,099	 
	Additions	 	 	1,904,906	 
	Addition through business combination (Note 20)	 	 	2,584,109	 
	Terminations	 	 	(886,786	)
	Balance at June 30, 2021	 	 	17,955,328	 
	Additions	 	 	622,583	 
	Balance at September 30, 2021	 	 	18,577,911	 
	 	 	 	 	 
	Accumulated depreciation and repayments	 	 	 	 
	Opening IFRS 16 value as at July 1, 2020	 	 	2,481,570	 
	Depreciation expense	 	 	2,513,417	 
	Terminations	 	 	(569,575	)
	Balance at June 30, 2021	 	 	4,425,412	 
	Depreciation expense	 	 	730,189	 
	Balance at September 30, 2021	 	 	5,155,601	 
	 	 	 	 	 
	Net book value as at:	 	 	 	 
	June 30, 2021	 	 	13,529,916	 
	September 30, 2021	 	 	13,422,310	 



 






    24


     


    

 


 


 


 



 


Sangoma Technologies Corporation 


Notes to the condensed consolidated
interim financial statements

For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 


 


	17.	Leases: Right-of-use assets and lease obligations (continued)



 


	 	 	Lease
    Obligations	 
	 	 	$	 
	Present value of leases	 	 	 	 
	 	 	 	 	 
	Opening IFRS 16 value as at July 1, 2020	 	 	12,197,527	 
	Additions	 	 	1,904,906	 
	Addition through business combination (Note 20)	 	 	2,662,967	 
	Repayments	 	 	(2,605,217	)
	Interest expense	 	 	374,154	 
	Terminations	 	 	(291,660	)
	Balance at June 30, 2021	 	 	14,242,677	 
	Additions	 	 	622,583	 
	Repayments	 	 	(797,898	)
	Interest expense	 	 	119,607	 
	Balance at September 30, 2021	 	 	14,186,969	 
	 	 	 	 	 
	Lease Obligations - Current	 	 	2,582,172	 
	Lease Obligations - Non-current	 	 	11,604,797	 
	 	 	 	14,186,969	 
	 	 	 	 	 







		(1)	Includes
                                            the impact of recognition exemptions including those for short-term and low-dollar value
                                            leases; includes the impact of judgment applied with regard to renewal options in the lease
                                            terms in which the Company is a lessee.
		(2)	Right-of-use
                                            assets opening balance includes the impact of estimated restoration costs.
		(3)	Addition
                                            through business combination represents the right-of-use asset and leased obligation of the
                                            leased office building of Star2Star Communications LLC, which was acquired on March 31, 2021.



  


	18.	Provisions
                                            



 


	 	 	Warranty	 	 	Sales returns &

    allowances	 	 	Stock 

    rotation	 	 	 	 
	 	 	provision	 	 	provision	 	 	provision	 	 	Total	 
	 	 	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 
	Balance at June 30, 2020	 	 	157,145	 	 	 	69,311	 	 	 	260
                                            ,000	 	 	 	486,456	 
	Additional
    provision recognized	 	 	84,317	 	 	 	105,853	 	 	 	(234,162	)	 	 	(43,992	)
	Balance at June 30, 2021	 	 	241,462		 	 	175,164	 	 	 	25,838	 	 	 	442,464	
	Additional
    provision recognized	 	 	(66,321	)		 	15,000	 	 	 	-	 	 	 	(51,321	)
	Balance at
    September 30, 2021	 	 	175,141	 	 	 	190,164	 	 	 	25,838	 	 	 	391,143	 


 


	 	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.




 






    25


     


    

 





Sangoma Technologies Corporation 


Notes to the condensed consolidated
interim financial statements

For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 


 


	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 month periods ended
September 30, 2021 and 2020 as follows:




 


	 	 	Three month periods
    
 ended September 30,	 
	 	 	2021	 	 	2020	 
	 	 	$	 	 	$	 
	Products	 	 	15,640,351	 	 	 	11,428,424	 
	Services	 	 	36,838,380	 	 	 	14,794,524	 
	Total revenues	 	 	52,478,731	 	 	 	26,222,948	 





 


	 	The sales, in US dollars, in each of these geographic locations for the three month periods ended September
30, 2021 and 2020 as follows:




 


	 	 	Three month periods

    ended September 30,	 
	 	 	2021	 	 	2020	 
	 	 	$	 	 	$	 
	USA	 	 	47,050,785	 	 	 	21,497,886	 
	Canada	 	 	1,341,055	 	 	 	1,029,589	 
	All other countries	 	 	4,086,891	 	 	 	3,695,473	 
	Total revenues	 	 	52,478,731	 	 	 	26,222,948	 




 


	 	The non-current assets, in US dollars, in each of the geographic locations as at September 30, 2021 and
June 30, 2021 are below:




 


	 	 	September 30,	 	 	June 30,	 
	 	 	2021	 	 	2021	 
	 	 	$	 	 	$	 
	Canada	 	 	7,118,553	 	 	 	6,714,850	 
	USA	 	 	474,600,235	 	 	 	480,283,246	 
	Total non-current assets	 	 	481,718,788	 	 	 	486,998,096	 




 






    26


     


    

 





Sangoma Technologies Corporation 


Notes to the condensed consolidated
interim financial statements


For the three month periods
ended September 30, 2021 and 2020


(Unaudited in US dollars)


 


 


	20.	Business
                                            combinations 



 


		a)	On
                                            March 31, 2021, the Company acquired all of the shares of StarBlue Inc. (dba Star2Star Communications,
                                            herein “Star2Star”). The Company paid an aggregate purchase price of $381,636,405,
                                            which comprised of $109,392,033 cash consideration (adjusted from $105,000,000 as a result
                                            of initial closing adjustments), 15,714,285 common shares at a discounted value of $258,975,372,
                                            and an additional consideration payable for future tax benefit in the amount of $13,269,000.
                                            The Company issued 3,018,685 common shares (3,142,857 common shares less 124,172 shares representing
                                            a holdback for indemnification purposes) on closing of the acquisition, with the remaining
                                            12,571,428 common shares to be issued and distributed in fourteen quarterly installments
                                            commencing on April 1, 2022. The fair value of the share consideration is determined using
                                            a put option pricing model with a share price of $22.99 ($28.91 CAD), volatility of 56.58%,
                                            risk free rate of 0.221% - 0.855%, time to maturity of 0.003 – 4.25 years. The fair
                                            value of $13,269,000 of consideration payable is related to estimated tax losses to be utilized
                                            in future years, and is determined using an effective tax rate of 24.56% and a discount rate
                                            of 4.9%. The Company acquired Star2Star to expand and broaden the suite of service offerings,
                                            add key customers and realize synergies by removing redundancies.




 


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




 


	Consideration	 	USD	 
	Cash consideration on closing	 	 	101,110,566	 
	Net working capital adjustment	 	 	446,834	 
	Cash paid relating to debt	 	 	2,581,193	 
	Cash held in escrow for working capital	 	 	1,000,000	 
	Cash held in escrow for PPP loan forgiveness	 	 	4,253,440	 
	Additional consideration for tax	 	 	13,269,000	 
	Common shares issued on closing	 	 	66,873,399	 
	Common shares reserved in escrow for indemnification	 	 	2,129,067	 
	Common shares reserved for future issuance	 	 	189,972,906	 
	 	 	 	381,636,405	 





 


	Purchase price allocation	 	USD	 
	Cash	 	 	3,830,067	 
	Accounts receivable	 	 	5,562,064	 
	Inventory	 	 	1,448,237	 
	Property and equipment	 	 	5,334,933	 
	Right-of-use assets	 	 	2,584,109	 
	Other current assets	 	 	1,496,235	 
	Accounts payable and accrued liabilities	 	 	(8,324,491	)
	Contract liabilities	 	 	(5,532,426	)
	Other liabilities	 	 	(925,334	)
	Lease obligations on right-of-use assets	 	 	(2,662,967	)
	Intangible assets	 	 	169,200,000	 
	Deferred tax liability on intangible	 	 	(25,476,181	)
	Goodwill	 	 	235,102,159	 
	 	 	 	381,636,405	 




 






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Sangoma Technologies Corporation 


Notes to the condensed consolidated
interim financial statements


For the three month periods ended September 30, 2021 and 2020


(Unaudited in US dollars)


 


 


	20.	Business combinations (continued)




 


	 	The Company incurred estimated transaction costs in the amount of $3,887,238 which were expensed and included
in the condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the year ended June 30, 2021. These
costs were including 18,456 common shares valued at $330,460, which were issued at closing to an advisor. The acquisition has been accounted
for using the acquisition method under IFRS 3, Business Combinations. 




 


		b)	On
                                            July 16, 2021, the Company purchased certain assets of M2 Telecom LLC. M2 was a channel partner
                                            for the Company’s wholesale Trunking as a Service “TaaS” business and the
                                            Company has taken
over the sales team. The Company paid an aggregate purchase price of $2.0 million ($2.5 million CAD) which was allocated as goodwill
(Note 8).



  


	21.	Government
                                            assistance 



 


	 	The outbreak of the novel strain of coronavirus, specifically identified as “COVID -19”, has
resulted in governments worldwide enacting emergency measures to combat the spread of the virus. Government Canada and the Bank of Canada
have responded with significant monetary and fiscal interventions designed to stabilize economic conditions as temporary measures and
one of them is the Canada Emergency Wage Subsidy (CEWS). The CEWS program offers assistance in the form of wage subsidy for qualifying
businesses faced with specified levels of revenue decline , and the subsidy is targeted to either retain workforce on payroll or to re-hire
furloughed employees. The CEWS program is applicable from March 15 to December 19, 2020 for eligible entities that experienced a reduction
in gross revenue for the period as determined by the program.




 


	 	The Company received $nil under the CEWS for the three month period ended September 30, 2021 (three month
period ended September 30, 2020 – $106,899 which was recorded as an offset against salaries and wages in operating expenses in
the condensed consolidated interim statements of income (loss) and comprehensive income (loss)).




 


	22. 	Subsequent events




 


	 	On November 1, 2021 the Company graduated from the TSX Venture Exchange to the Toronto Stock Exchange.




 


	 	On November 2, 2021 as previously authorized by its shareholders, the Company implemented a consolidation
(reverse stock split) of its outstanding common shares on the basis of one new common share for every seven previously outstanding common
shares. Common Shares commenced trading on the Toronto Stock Exchange on a post-consolidation basis beginning at the open of markets
on November 8, 2021.




 


	23.	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 12, 2021.




  



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