# EDGAR Filing Document

**Accession Number:** 0001734520
**File Stem:** 0001734520-23-000011
**Filing Date:** 2023-2
**Character Count:** 223445
**Document Hash:** cdc4ab957683fee734c381afb6d12093
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001734520-23-000011.hdr.sgml**: 20230214

**ACCESSION NUMBER**: 0001734520-23-000011

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 9

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230214

**DATE AS OF CHANGE**: 20230214

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Alithya Group inc
- **CENTRAL INDEX KEY:** 0001734520
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A8
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38705
- **FILM NUMBER:** 23622217

**BUSINESS ADDRESS:**
- **STREET 1:** 1100 ROBERT-BOURASSA BLVD., SUITE 400
- **CITY:** MONTREAL
- **STATE:** A8
- **ZIP:** H3B3A5
- **BUSINESS PHONE:** 1-514-285-5552

**MAIL ADDRESS:**
- **STREET 1:** 1100 ROBERT-BOURASSA BLVD., SUITE 400
- **CITY:** MONTREAL
- **STATE:** A8
- **ZIP:** H3B3A5

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Alithya Group Inc
- **DATE OF NAME CHANGE:** 20180910

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** 9374-8572 QUEBEC INC.
- **DATE OF NAME CHANGE:** 20180314

**SECURITIES AND EXCHANGE COMMISSION** 

**WASHINGTON, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER**

**Pursuant to Rule 13a-16 or 15d-16**

**under the Securities Exchange Act of 1934**

**For the month of: February 2023**

**Commission File Number: 001-38705**

**ALITHYA GROUP INC.**

**(Translation of Registrant's name into English)**

**1100, Robert-Bourassa Boulevard, Suite 400**

**Montréal, Québec, Canada H3B 3A5**

**(Address of principal executive offices)**

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F&nbsp;&nbsp;&nbsp;&nbsp;☐&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Form 40-F&nbsp;&nbsp;&nbsp;&nbsp;☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):&nbsp;&nbsp;&nbsp;&nbsp;☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):&nbsp;&nbsp;&nbsp;&nbsp;☐

This Form 6-K shall be deemed incorporated by reference in the Registrant's Registration Statements on Form S-8, Reg. Nos. 333-228487 and 333-265666.

------

**SIGNATURE** 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| |
|:---|
| **ALITHYA GROUP INC.** |
| */s/ Nathalie Forcier* |
| Name: Nathalie Forcier |
| Title: Chief Legal Officer and Corporate Secretary |
| Date: February 14, 2023 |

---

**EXHIBIT INDEX** 

99.1 <u>[Interim Condensed Consolidated Financial Statements of Alithya Group inc. for the three months ended December 31, 2022](alithyagroupinterimfsengli.htm)</u>

99.2 <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations for the three months ended December 31, 2022](alithyagroupinterimmdaengl.htm)</u>

99.3 <u>[Chief Executive Officer Certification of Interim Filings](ceocertificationofinterimf.htm)</u>

99.4 <u>[Chief Financial Officer Certification of Interim Filings](cfocertificationofinterimf.htm)</u>

## Exhibit 99.1

**Exhibit 99.1**

![image_0a.jpg](image_0a.jpg)

---

| |
|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Interim Consolidated Financial Statements**<br>**of Alithya Group inc.** <br>For the three and nine months ended December 31, 2022 and 2021<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(unaudited) |
| ![alithyaa.jpg](alithyaa.jpg) |

---

------

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| | | Page |
| [Interim Consolidated Statements of Operations](#i2dcf8fca806d41a49ed728c01de28cfc_7) and Comprehensive Loss | [Interim Consolidated Statements of Operations](#i2dcf8fca806d41a49ed728c01de28cfc_7) and Comprehensive Loss | [3](#i2dcf8fca806d41a49ed728c01de28cfc_7) |
| [Interim Consolidated Statements of Financial Position](#i2dcf8fca806d41a49ed728c01de28cfc_10) | [Interim Consolidated Statements of Financial Position](#i2dcf8fca806d41a49ed728c01de28cfc_10) | [4](#i2dcf8fca806d41a49ed728c01de28cfc_10) |
| [Interim Consolidated Statements of Changes in Shareholders' Equity](#i2dcf8fca806d41a49ed728c01de28cfc_13) | [Interim Consolidated Statements of Changes in Shareholders' Equity](#i2dcf8fca806d41a49ed728c01de28cfc_13) | [5](#i2dcf8fca806d41a49ed728c01de28cfc_13) |
| [Interim Consolidated Statements of Cash Flows](#i2dcf8fca806d41a49ed728c01de28cfc_16) | [Interim Consolidated Statements of Cash Flows](#i2dcf8fca806d41a49ed728c01de28cfc_16) | [6](#i2dcf8fca806d41a49ed728c01de28cfc_16) |
| Notes to Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 | Notes to Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 |  |
| &nbsp;&nbsp;1. | [Governing statutes and nature of operations](#i2dcf8fca806d41a49ed728c01de28cfc_19) | [7](#i2dcf8fca806d41a49ed728c01de28cfc_19) |
| &nbsp;&nbsp;2. | [Basis of preparation](#i2dcf8fca806d41a49ed728c01de28cfc_22) | [7](#i2dcf8fca806d41a49ed728c01de28cfc_22) |
| &nbsp;&nbsp;3. | [Business combination](#i2dcf8fca806d41a49ed728c01de28cfc_25) | [11](#i2dcf8fca806d41a49ed728c01de28cfc_25) |
| &nbsp;&nbsp;4. | [Intangibles](#i2dcf8fca806d41a49ed728c01de28cfc_28) | [14](#i2dcf8fca806d41a49ed728c01de28cfc_28) |
| &nbsp;&nbsp;5. | [Goodwil](#i2dcf8fca806d41a49ed728c01de28cfc_31)l | [15](#i2dcf8fca806d41a49ed728c01de28cfc_31) |
| &nbsp;&nbsp;6. | [Long-term debt](#i2dcf8fca806d41a49ed728c01de28cfc_34) | [15](#i2dcf8fca806d41a49ed728c01de28cfc_34) |
| &nbsp;&nbsp;7. | [Share capital](#i2dcf8fca806d41a49ed728c01de28cfc_37) | [17](#i2dcf8fca806d41a49ed728c01de28cfc_37) |
| &nbsp;&nbsp;8. | [Related parties](#i2dcf8fca806d41a49ed728c01de28cfc_40) | [20](#i2dcf8fca806d41a49ed728c01de28cfc_40) |
| &nbsp;&nbsp;9. | [Earnings per share](#i2dcf8fca806d41a49ed728c01de28cfc_43) | [20](#i2dcf8fca806d41a49ed728c01de28cfc_43) |
| &nbsp;&nbsp;10. | [Additional information on](#i2dcf8fca806d41a49ed728c01de28cfc_46)[consolidated](#i2dcf8fca806d41a49ed728c01de28cfc_46)[loss](#i2dcf8fca806d41a49ed728c01de28cfc_46) | [21](#i2dcf8fca806d41a49ed728c01de28cfc_46) |
| &nbsp;&nbsp;11. | Business acquisition, integration and reorganization costs | [22](#i2dcf8fca806d41a49ed728c01de28cfc_49) |
| &nbsp;&nbsp;12. | [Net f](#i2dcf8fca806d41a49ed728c01de28cfc_52)[inancial expenses](#i2dcf8fca806d41a49ed728c01de28cfc_52) | [22](#i2dcf8fca806d41a49ed728c01de28cfc_52) |
| &nbsp;&nbsp;13. | [Supplementary cash flow information](#i2dcf8fca806d41a49ed728c01de28cfc_55) | [23](#i2dcf8fca806d41a49ed728c01de28cfc_55) |
| &nbsp;&nbsp;14. | [Segment information](#i2dcf8fca806d41a49ed728c01de28cfc_58) | [23](#i2dcf8fca806d41a49ed728c01de28cfc_58) |
| &nbsp;&nbsp;15. | Financial instruments | [26](#i2dcf8fca806d41a49ed728c01de28cfc_61) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

------

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
| ***(in thousands of Canadian dollars, except per share data) (unaudited)*** |  | **2022** | **2021** | **2022** | **2021** |
|  | **Notes** | **$** | **$** | **$** | **$** |
| Revenues | 14 | 130780 | 109713 | 386477 | 317911 |
| Cost of revenues | 10 | 91562 | 81456 | 275435 | 232841 |
| Gross margin |  | 39218 | 28257 | 111042 | 85070 |
| Operating expenses |  |  |  |  |  |
| Selling, general and administrative expenses | 10 | 31196 | 25002 | 90544 | 72634 |
| Business acquisition, integration and reorganization costs | 11 | 1290 | 857 | 5913 | 5489 |
| Depreciation | 10 | 1634 | 1400 | 4815 | 4200 |
| Amortization of intangibles | 4 | 7397 | 3438 | 18804 | 10268 |
| Foreign exchange loss (gain) |  | 163 | (27) | 63 | (1) |
|  |  | 41680 | 30670 | 120139 | 92590 |
| Operating loss |  | (2462) | (2413) | (9097) | (7520) |
| Net financial expenses | 12 | 2664 | 1203 | 6758 | 3227 |
| Loss before income taxes |  | **(5126)** | **(3616)** | **(15855)** | **(10747)** |
| Income tax expense (recovery) |  |  |  |  |  |
| Current |  | 159 | 62 | 207 | (134) |
| Deferred | 10 | 220 | (192) | (5958) | (2318) |
|  |  | 379 | (130) | (5751) | (2452) |
| Net loss |  | **(5505)** | **(3486)** | **(10104)** | **(8295)** |
| Other comprehensive income |  |  |  |  |  |
| *Items that may be classified subsequently to profit or loss* |  |  |  |  |  |
| Cumulative translation adjustment on consolidation of foreign subsidiaries |  | (668) | (171) | 5560 | 456 |
|  |  | (668) | (171) | 5560 | 456 |
| Comprehensive loss |  | **(6173)** | **(3657)** | **(4544)** | **(7839)** |
| Basic and diluted loss per share | 9 | (0.06) | (0.04) | (0.11) | (0.10) |

---

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

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 3

------

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

---

| | | | |
|:---|:---|:---|:---|
| **As at** | | **December 31,** | **March 31,** |
| ***(in thousands of Canadian dollars) (unaudited)*** |  | **2022** | **2022** |
|  | **Notes** | **$** | **$** |
| Assets |  |  |  |
| *Current assets* |  |  |  |
| Cash |  | 24019 | 17655 |
| Restricted cash |  |  | 3254 |
| Accounts receivable and other receivables |  | 92804 | 100867 |
| Unbilled revenues |  | 18821 | 17272 |
| Tax credits receivable |  | 12415 | 8515 |
| Prepaids |  | 6328 | 6162 |
|  |  | **154387** | **153725** |
| *Non-current assets* |  |  |  |
| Tax credits receivable |  | 9080 | 11873 |
| Other assets |  | 1204 | 1303 |
| Property and equipment |  | 10048 | 10412 |
| Right-of-use assets |  | 13212 | 15146 |
| Intangibles | 4 | 111376 | 101927 |
| Deferred tax assets |  | 6435 | 7247 |
| Goodwill | 5 | 167670 | 146088 |
|  |  | **473412** | **447721** |
| Liabilities and Shareholders' Equity |  |  |  |
| *Current liabilities* |  |  |  |
| Accounts payable and accrued liabilities |  | 87882 | 89660 |
| Deferred revenues |  | 22653 | 20409 |
| Current portion of lease liabilities |  | 3837 | 3510 |
| Current portion of long-term debt | 6 | 12816 | 19316 |
|  |  | **127188** | **132895** |
| *Non-current liabilities* |  |  |  |
| Long-term debt | 6 | 116948 | 87360 |
| Lease liabilities |  | 15615 | 17753 |
| Deferred tax liabilities |  | 9501 | 9962 |
|  |  | **269252** | **247970** |
| *Shareholders' equity* |  |  |  |
| Share capital | 7 | 311492 | 305222 |
| Deficit |  | (121503) | (111654) |
| Accumulated other comprehensive income (loss) |  | 4613 | (947) |
| Contributed surplus |  | 9558 | 7130 |
|  |  | **204160** | **199751** |
|  |  | **473412** | **447721** |

---

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

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 4

------

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| ***For the nine months ended December 31,***<br>***(in thousands of Canadian dollars, except share data) (unaudited)*** | | | | | | | |
| | **Notes** | **Shares<br>outstanding** | **Share capital** | **Deficit** | **Accumulated other<br>comprehensive<br>income (loss)** | **Contributed<br>surplus** | **Total** |
|  |  | **Number** | **$** | **$** | **$** | **$** | **$** |
| **Balance as at March 31, 2022** |  | **92725616** | **305222** | **(111654)** | **(947)** | **7130** | **199751** |
| Net loss |  |  |  | (10104) |  |  | (10104) |
| Other comprehensive income |  |  |  |  | 5560 |  | 5560 |
| Total comprehensive income (loss) |  | **—** | **—** | **(10104)** | **5560** | **—** | **(4544)** |
| Share-based compensation | 7 |  |  |  |  | 1875 | 1875 |
| Share-based compensation granted on business acquisition | 7 |  |  |  |  | 2261 | 2261 |
| Issuance of Subordinate Voting Shares pursuant to vesting of share-based compensation granted on business acquisitions | 7 | 738382 | 1708 |  |  | (1708) |  |
| Issuance of Subordinate Voting Shares in consideration of the acquisition of Datum, net of share issuance costs | 3, 7 | 1867262 | 5528 |  |  |  | 5528 |
| Issuance of Subordinate Voting Shares in consideration of the acquisition of Trafic 3W inc., net of share issuance costs | 4, 7 | 83449 | 276 |  |  |  | 276 |
| Shares purchased for cancellation | 7 | (354012) | (1242) | 255 |  |  | (987) |
| Total contributions by shareholders |  | 2335081 | 6270 | 255 |  | 2428 | 8953 |
| **Balance as at December 31, 2022** |  | **95060697** | **311492** | **(121503)** | **4613** | **9558** | **204160** |
| **Balance as at March 31, 2021** |  | **58695438** | **197537** | **(96190)** | **(508)** | **7173** | **108012** |
| Net loss |  |  |  | (8295) |  |  | (8295) |
| Other comprehensive income |  |  |  |  | 456 |  | 456 |
| Total comprehensive income (loss) |  | **—** | **—** | **(8295)** | **456** | **—** | **(7839)** |
| Share-based compensation |  |  |  |  |  | 1349 | 1349 |
| Share-based compensation granted on business acquisition |  |  |  |  |  | 1343 | 1343 |
| Issuance of Subordinate Voting Shares in consideration of the acquisition of R3D Consulting Inc. |  | 25182676 | 80585 |  |  |  | 80585 |
| Issuance of Subordinate Voting Shares pursuant to vesting of share-based compensation granted on business acquisitions |  | 534132 | 1849 |  |  | (1849) |  |
| Shares purchased for cancellation |  | (230600) | (761) | (6) |  |  | (767) |
| Issuance of Subordinate Voting Shares from exercise of stock options |  | 1500 | 6 |  |  | (2) | 4 |
| Total contributions by, and distributions to, shareholders |  | 25487708 | 81679 | (6) |  | 841 | 82514 |
| **Balance as at December 31, 2021** |  | **84183146** | **279216** | **(104491)** | **(52)** | **8014** | **182687** |

---

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

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 5

------

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
| ***(in thousands of Canadian dollars) (unaudited)*** |  | **2022** | **2021** | **2022** | **2021** |
|  | **Notes** | **$** | **$** | **$** | **$** |
|  |  |  | (note 2) |  | (note 2) |
| &nbsp;&nbsp;**Operating activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net loss |  | (5505) | (3486) | (10104) | (8295) |
| &nbsp;&nbsp;&nbsp;Items not affecting cash |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |  | 9031 | 4838 | 23619 | 14468 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net financial expenses | 12 | 2664 | 1203 | 6758 | 3227 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | 7 | 1668 | 841 | 4136 | 2692 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized foreign exchange loss (gain) |  | 152 | (17) | (583) | 131 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange loss (gain) on repayment of <br>long-term debt |  | 573 | (4) | 678 | (26) |
| &nbsp;&nbsp;&nbsp;&nbsp;Forgiveness of PPP loans |  |  |  |  | (5868) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  |  | 28 |  | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred taxes |  | 220 | (192) | (5958) | (2318) |
|  |  | **8803** | **3211** | **18546** | **4099** |
| &nbsp;&nbsp;&nbsp;Changes in non-cash working capital items | 13 | 26097 | 7842 | 5905 | 1433 |
| &nbsp;&nbsp;&nbsp;Net cash from operating activities |  | **34900** | **11053** | **24451** | **5532** |
| &nbsp;&nbsp;**Investing activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Additions to property and equipment |  | (472) | (450) | (1495) | (1186) |
| &nbsp;&nbsp;&nbsp;Additions to intangibles | 4 | (414) |  | (764) |  |
| &nbsp;&nbsp;&nbsp;Restricted cash |  |  | (5) | 3254 | (15) |
| &nbsp;&nbsp;&nbsp;Business acquisition, net of cash acquired | 3, 4 | 2286 |  | (14397) | (401) |
| &nbsp;&nbsp;&nbsp;Net cash from (used in) investing activities |  | **1400** | **(455)** | **(13402)** | **(1602)** |
| &nbsp;&nbsp;**Financing activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Increase in long-term debt, net of related transaction costs |  | 22795 | 8353 | 70482 | 61644 |
| &nbsp;&nbsp;&nbsp;Repayment of long-term debt |  | (57739) | (31550) | (66630) | (58791) |
| &nbsp;&nbsp;&nbsp;Exercise of stock options |  |  | 4 |  | 4 |
| &nbsp;&nbsp;&nbsp;Repayment of lease liabilities |  | (929) | (696) | (2709) | (1834) |
| &nbsp;&nbsp;&nbsp;Share issue costs | 7 | (5) |  | (29) |  |
| &nbsp;&nbsp;&nbsp;Shares purchased for cancellation | 7 | (148) | (677) | (987) | (767) |
| &nbsp;&nbsp;&nbsp;Net financial expenses paid | 12 | (2301) | (905) | (5820) | (2381) |
| &nbsp;&nbsp;&nbsp;Net cash used in financing activities |  | **(38327)** | **(25471)** | **(5693)** | **(2125)** |
| &nbsp;&nbsp;&nbsp;Effect of exchange rate changes on cash |  | 134 | (10) | 1008 | (29) |
| &nbsp;&nbsp;&nbsp;Net change in cash |  | **(1893)** | **(14883)** | **6364** | **1776** |
| &nbsp;&nbsp;&nbsp;Cash, beginning of period |  | 25912 | 23562 | 17655 | 6903 |
| &nbsp;&nbsp;&nbsp;Cash, end of period |  | **24019** | **8679** | **24019** | **8679** |
| &nbsp;&nbsp;&nbsp;Cash paid (included in cash flow from operating activities) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Income taxes paid (recovered) |  | 23 | 224 | 246 | (446) |

---

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

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 6

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

1. GOVERNING STATUTES AND NATURE OF OPERATIONS

Alithya Group inc. ("Alithya" or the "Company") and its subsidiaries (collectively with Alithya, the "Group") are trusted leaders in strategy and digital transformation. Alithya's integrated offer is based on four pillars of expertise: business strategies, enterprise cloud solutions, application services, and data and analytics. The Group deploys solutions, services, and expert consultants to design, build and implement innovative and efficient solutions for the complex business challenges of its clients, tailored to their business needs in the financial services, insurance, renewable energy, manufacturing, telecommunications, transportation and logistics, professional services, healthcare and government sectors.

The Company's Class A subordinate voting shares (the "Subordinate Voting Shares") trade on the Toronto Stock Exchange ("TSX") and on the NASDAQ Capital Market ("NASDAQ") under the symbol "ALYA".

The Company is the Group's ultimate parent company and its head office is located at 1100, Robert-Bourassa Boulevard, Suite 400, Montréal, Québec, Canada, H3B 3A5.

2. BASIS OF PREPARATION

*Statement of Compliance*

These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with International Financial Reporting Standards ("IFRS"), and should be read in conjunction with the annual audited consolidated financial statements for the year ended March 31, 2022. The Company applied the accounting policies adopted in the most recent annual audited consolidated financial statements for the year ended March 31, 2022, except for changes as detailed below.

These interim consolidated financial statements were approved and authorized for issue by the Board of Directors (the "Board") on February 13, 2023.

*Basis of Measurement* 

These interim consolidated financial statements have been prepared under the historical cost basis except for

• Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination which are generally measured initially at their fair values at the acquisition date;

• Lease obligations, which are initially measured at the present value of the lease payments that are not paid at the lease commencement date;

• Equity classified share-based payment arrangements which are measured at fair value at grant date pursuant to IFRS 2, Share-Based Payment; and

• Derivatives, which are initially recognized at fair value on the date the derivative contract is entered into and are subsequently re-measured at their fair value at the end of each reporting period.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 7

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

2. BASIS OF PREPARATION (CONT'D)

CHANGE IN ACCOUNTING POLICY

*IAS 7 Statement of Cash Flows*

IAS 7 prescribes that interest paid is to be classified as operating cash flows (the Group's previous classification), or alternatively, interest paid may be classified as financing cash flows. As at October 1, 2022, as a result of recent business acquisitions financed through its senior revolving credit facility and balance of purchase price payable, the Group changed its cash flow presentation to present interest paid as financing cash flows instead of operating cash flows. This presentation provides more relevant information regarding the cash flows of the Group.

This change in accounting policy has been applied retrospectively. Changes to the comparative amounts in the Group's consolidated statements of cash flows are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31, 2021** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31, 2021** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31, 2021** |
| | **As previously reported** | **Adjustment** | **Restated amount** | **As previously reported** | **Adjustment** | **Restated amount** |
| | **$** | **$** | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Net cash from operating activities | 10148 | 905 | 11053 | 3151 | 2381 | 5532 |
| &nbsp;&nbsp;&nbsp;Net cash (used in) from financing activities | (24566) | (905) | (25471) | 256 | (2381) | (2125) |

---

SEGMENTED REPORTING

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other segments. An entity shall disclose separately information about each operating segment, and can combine operating segments, with similar economic characteristics or that do not meet quantitative thresholds, into one reportable segment.

As at April 1, 2022, as a result of organic growth and the integration of recent business acquisitions, the Group determined that it has three reportable segments based on geography: Canada, U.S. and International. Information for the comparative period has been restated to also present segment information for the three reportable segments (note 14).

INTANGIBLES

Tradenames are not amortized as they have an indefinite life, but are instead tested for impairment annually, or more frequently, should events or changes in circumstances indicate that the tradenames may be impaired.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 8

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

2. BASIS OF PREPARATION (CONT'D)

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

The Group enters into derivative financial instruments to manage its exposure to interest rate risks*.*

The resulting gain or loss on re-measurement at the fair value of the derivatives is recognized in the consolidated statements of operations, unless the derivative is designated and is effective as a hedging instrument, in which event the timing of the recognition in the consolidated statements of operations depends on the nature of the hedge relationship. The cash flows of the hedging instruments are classified in the same manner as the cash flows of the item being hedged.

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The documentation includes the identification of the nature of the risk being hedged, the economic relationship between the hedged items and the hedging instruments which should not be dominated by credit risk, the hedge ratio consistent with the risk management strategy pursued and how the Company will assess the effectiveness of the hedging relationship on an ongoing basis. Management evaluates hedge effectiveness at inception of the hedge instrument and quarterly thereafter. Hedge effectiveness is measured prospectively as the extent to which changes in the fair value or cash flows of the derivative offsets the changes in the fair value or cash flows of the underlying hedged item or risk when there is a significant mismatch between the terms of the hedging instrument and the hedged item.

*Cash flow hedge*

The effective portion of the change in the fair value of the derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. It is reclassified out of other comprehensive income into the consolidated statements of operations when the hedged item is recognized in the consolidated statements of operations.

The gain or loss relating to the ineffective portion, if any, is recognized immediately in the consolidated statements of operations.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in net loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to net loss.

ACCOUNTING STANDARD AMENDMENTS EFFECTIVE FOR THE YEAR ENDING MARCH 31, 2023

The following amendment to existing standards was adopted by the Group on April 1, 2022 and had no significant impact on the Group's consolidated financial statements.

*Onerous Contracts, Cost of Fulfilling a Contract*

In May 2020, the International Accounting Standards Board (''IASB'') issued Onerous Contracts - Cost of Fulfilling a Contract, which includes amendments to IAS 37. The amendments specify which costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The full cost approach considers that the 'cost of fulfilling' a contract comprises the 'costs that relate directly to the contract'. Costs that relate directly to a contract include incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 9

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

2. BASIS OF PREPARATION (CONT'D)

NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE

*IAS 1 - Presentation of Financial Statements*

On January 23, 2020, the IASB issued amendments to IAS 1 - Presentation of Financial Statements, to clarify the classification of liabilities as current or non-current. For the purposes of non-current classification, the amendments removed the requirement for a right to defer settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must have substance and exist at the end of the reporting period. After reconsidering certain aspects of the 2020 amendments, the IASB reconfirmed that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Additional disclosure will be required to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date. The amendments also clarify how a company classifies a liability that includes a counterparty conversion option. The amendments state that: settlement of a liability includes transferring a company's own equity instruments to the counterparty; and when classifying liabilities as current or non-current, a company can ignore only those conversion options that are recognized as equity. The amendments to IAS 1 apply retrospectively and are effective for annual periods beginning on or after January 1, 2024, with earlier application permitted. Management is currently evaluating the impact of the amendment on its consolidated financial statements.

*Amendments to IAS 1 and IFRS Practice Statement 2, Disclosure of Accounting Policy Information*

In February 2021, the IASB issued amendments to IAS 1 - Presentation of Financial Statements and IFRS Practice Statement 2 - Making Materiality Judgements. The amendments help entities provide accounting policy disclosures that are more useful to primary users of financial statements by:

• Replacing the requirement to disclose "significant" accounting policies under IAS 1 with a requirement to disclose "material" accounting policies. Under this, an accounting policy would be material if, when considered together with other information included in an entity's financial statements, it can reasonably be expected to influence decisions that primary users of general purpose financial statements make on the basis of those financial statements.

• Providing guidance in IFRS Practice Statement 2 to explain and demonstrate the application of the four-step materiality process to accounting policy disclosures.

The amendments shall be applied prospectively. The amendments to IAS 1 are effective for annual periods beginning on or after January 1, 2023. Earlier application is permitted. Once an entity applies the amendments to IAS 1, it is also permitted to apply the amendments to IFRS Practice Statement 2. Management is currently evaluating the impact of the amendment on its consolidated financial statements.

*Amendments to IAS 8, Definition of Accounting Estimates*

In February 2021, the IASB amended IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors to introduce a new definition of "accounting estimates" to replace the definition of "change in accounting estimates" and also include clarifications intended to help entities distinguish changes in accounting policies from changes in accounting estimates. This distinction is important because changes in accounting policies must be applied retrospectively while changes in accounting estimates are accounted for prospectively. The amendments are effective for annual periods beginning on or after January 1, 2023. Earlier application is permitted. Management is currently evaluating the impact of the amendment on its consolidated financial statements.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 10

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

2. BASIS OF PREPARATION (CONT'D)

*Amendments to IAS 12 - Income Taxes*

On May 7, 2021, the IASB issued amendments to IAS 12 - Income Taxes to narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. As a result, companies will be required to recognize a deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease and a decommissioning provision. The amendments apply for annual reporting periods beginning on or after January 1, 2023. Earlier application is permitted. Management is currently evaluating the impact of this standard on its consolidated financial statements.

3. BUSINESS COMBINATION

*Datum*

*Overview*

On July 1, 2022, the Company acquired 100% of the issued and outstanding equity interests of the U.S.-based Datum Consulting Group, LLC and its international affiliates ("Datum") (the "Datum Acquisition"), a leader in IP enabled digital transformation services for data-rich insurers and other regulated entities such as governments. Management expects that its modernization practice and cloud-based software as a service (SaaS) offering will be complementary to Alithya's existing offerings and will allow for cross-selling opportunities.

The Datum Acquisition was completed for purchase consideration and other consideration of up to US$45,488,000 ($58,550,000), in aggregate.

The purchase consideration of US$27,200,000 ($35,010,000), in aggregate, consisted of: (i) US$13,542,000 ($17,430,000) paid in cash, net of working capital adjustment; (ii) US$4,313,000 ($5,552,000) paid by the issuance of 1,867,262 Subordinate Voting Shares; and (iii) US$9,345,000 ($12,028,000) of balance of sale, representing deferred cash consideration, payable over three years on July 1, 2023, 2024 and 2025 (the "Anniversary Dates") (note 6).

The other consideration of up to US$18,288,000 ($23,540,000), consisted of: (i) deferred cash consideration of US$975,000 ($1,255,000); (ii) deferred share consideration of 1,867,261 Subordinate Voting Shares with a value of US$4,313,000 ($5,552,000); and (iii) potential earn-out consideration of up to US$13,000,000 ($16,733,000), all payable over three years on the Anniversary Dates.

The deferred cash consideration will be recognized as employee compensation on business acquisition, over three years (note 11).

The deferred share consideration will be recognized as share-based compensation to an employee, over three years.

The potential earn-out consideration is payable in cash (75%), which will be recognized as employee compensation on business acquisition, and by Subordinate Voting Shares (25%), which will be recognized as share-based compensation, with a maximum of 1,517,151 Subordinate Voting Shares available for issuance with a value of US$3,505,000 ($4,511,000). The potential earn-out consideration has earn-out periods ending on each of the Anniversary Dates. The potential earn-out consideration payable in cash will be expensed over three years as the related services are provided at the best estimate of the payout required to settle the present obligation at the end of the reporting period. The potential earn-out consideration payable in shares will be expensed over the three-year vesting period and the amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting dates.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 11

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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

3. BUSINESS COMBINATION (CONT'D)

The fair value of the assets acquired and liabilities assumed, and the purchase consideration is preliminary pending completion of an independent valuation. The most significant aspect remaining to be finalized relates to the valuation of intangibles. Should new information, obtained within one year of the date of acquisition, about the facts and circumstances that existed at the date of the Datum Acquisition, result in adjustments to the below amounts, or require additional provisions for conditions that existed at the date of the Datum Acquisition, the fair value will then be revised. Accordingly, the values in the table below are subject to change. The Datum Acquisition is being accounted for using the acquisition method of accounting.

For the three and nine months ended December 31, 2022, the Company incurred acquisition-related costs pertaining to the Datum acquisition of approximately $13,000 and $1,369,000, respectively. These costs have been recorded in the consolidated statement of operations in business acquisition, integration and reorganization costs.

*Purchase Price Allocation*

The preliminary allocation of the fair value of the assets acquired and the liabilities assumed is detailed as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;**Acquisition of Datum** | **$** |
| &nbsp;&nbsp;**Current assets** |  |
| &nbsp;&nbsp;&nbsp;Cash | 2798 |
| &nbsp;&nbsp;&nbsp;Accounts receivable and other receivables | 3552 |
| &nbsp;&nbsp;&nbsp;Unbilled revenue | 1301 |
| &nbsp;&nbsp;&nbsp;Prepaids | 159 |
|  | **7810** |
| &nbsp;&nbsp;**Non-current assets** |  |
| &nbsp;&nbsp;&nbsp;Other assets | 2 |
| &nbsp;&nbsp;&nbsp;Property and equipment | 55 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets | 135 |
| &nbsp;&nbsp;&nbsp;Intangibles (note 4) | 22525 |
| &nbsp;&nbsp;&nbsp;Goodwill | 14830 |
| &nbsp;&nbsp;**Total assets acquired** | **45357** |
| &nbsp;&nbsp;**Current liabilities** |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 4255 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 945 |
| &nbsp;&nbsp;&nbsp;Current portion of lease liabilities | 71 |
|  | **5271** |
| &nbsp;&nbsp;**Non-current liabilities** |  |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 64 |
| &nbsp;&nbsp;&nbsp;Deferred tax liabilities | 5987 |
| &nbsp;&nbsp;**Total liabilities assumed** | **11322** |
| &nbsp;&nbsp;**Net assets acquired** | **34035** |

---

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 12

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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

3. BUSINESS COMBINATION (CONT'D)

During the three months ended December 31, 2022, the purchase price was reduced by $2,438,000 (US$1,894,000), mainly due to working capital adjustments of $2,286,000 (US$1,776,000). Accordingly, the fair value of the assets acquired and the liabilities assumed have been adjusted to reflect the change. These adjustments impacted principally the goodwill value, which decreased by $2,137,000. The effects of the adjustments to the purchase price were not material to the financial statements for the three and six months ended September 30, 2022.

*Goodwill*

The goodwill recognized consists mainly of the future economic value attributable to the profitability of the acquired business, as well as its workforce and expected synergies from the integration of Datum into the Group's existing business. The Company does not expect the goodwill to be deductible for income tax purposes.

*Consideration paid*

The following table summarizes the acquisition date fair value of each class of consideration as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;**Acquisition of Datum** | **$** |
| &nbsp;&nbsp;&nbsp;Consideration transferred settled in cash | 17430 |
| &nbsp;&nbsp;&nbsp;Issuance of 1,867,262 Subordinate Voting Shares (note 7) | 5552 |
| &nbsp;&nbsp;&nbsp;Balance of purchase payable with a nominal value of US$9,345,000 ($12028000) (note 6) | 11053 |
| &nbsp;&nbsp;**Total consideration transferred** | **34035** |

---

*Datum's contribution to the Group results*

For the three and nine months ended December 31, 2022, the Datum business contributed revenues of approximately $5,929,000 and $10,834,000, respectively. For the three and nine months ended December 31, 2022, the Datum business contributed to the consolidated net loss of the Group, in the amount of $1,350,000 and $4,837,000, including amortization, primarily related to the acquired customer relationships, of $1,796,000 and $3,525,000, respectively, share-based compensation granted on business acquisitions of $946,000 and $1,913,000, respectively, and acquisition and integration costs of $314,000 and $2,027,000, respectively.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 13

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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

4. INTANGIBLES

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**As at** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **March 31, 2022** | **March 31, 2022** | **March 31, 2022** | **March 31, 2022** |
| | **Customer relationships** | **Software** | **Tradenames** | **Non-compete agreements** | **Total** | **Customer<br>relationships** | **Software** | **Non-compete agreements** | **Total** |
|  | **$** | **$** | **$** | **$** | **$** | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Opening cost | 145966 | 4989 |  | 6886 | 157841 | 67720 | 4334 | 6902 | 78956 |
| &nbsp;&nbsp;&nbsp;Additions, purchased |  | 8 |  |  | 8 |  | 22 |  | 22 |
| &nbsp;&nbsp;Additions through business acquisition <sup>(a)</sup> (note 3) | 12040 | 8238 | 2188 | 515 | 22981 | 78804 | 296 |  | 79100 |
| &nbsp;&nbsp;&nbsp;Additions, internally generated |  | 756 |  |  | 756 |  | 1339 |  | 1339 |
| &nbsp;&nbsp;&nbsp;Disposals / retirements |  |  |  |  |  |  | (999) |  | (999) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | 3797 | 422 | 114 | 175 | 4508 | (558) | (3) | (16) | (577) |
| &nbsp;&nbsp;**Subtotal** | **161803** | **14413** | **2302** | **7576** | **186094** | **145966** | **4989** | **6886** | **157841** |
| &nbsp;&nbsp;&nbsp;Opening accumulated amortization | 49958 | 2741 |  | 3215 | 55914 | 38033 | 2471 | 1862 | 42366 |
| &nbsp;&nbsp;&nbsp;Amortization | 15306 | 2406 |  | 1092 | 18804 | 11925 | 1007 | 1353 | 14285 |
| &nbsp;&nbsp;&nbsp;Disposals / retirements |  |  |  |  |  |  | (737) |  | (737) |
| &nbsp;&nbsp;**Subtotal** | **65264** | **5147** | **—** | **4307** | **74718** | **49958** | **2741** | **3215** | **55914** |
| &nbsp;&nbsp;**Net carrying amount** | **96539** | **9266** | **2302** | **3269** | **111376** | **96008** | **2248** | **3671** | **101927** |

---

<sup>(a)</sup> *On April 1, 2022, the Company acquired all of the issued and outstanding shares of Trafic 3W inc. (the "Trafic3W Acquisition") for total consideration of $2,005,000, comprised of cash, in the amount of $900,000, and a balance of purchase price payable in the amount of $1,105,000. The actual amount paid at acquisition, net of the cash acquired in the amount of $86,000, was $814,000. Intangible assets acquired at the date of acquisition consisted of customer relationships in the amount of $456,000. The balance of purchase price payable was settled in October 2022 with the issuance of 83,449 Subordinate Voting Shares, for a total value of $281,000, and the balance, in the amount of $824,000, was paid cash.* 

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 14

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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

5. GOODWILL

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**As at** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| | **Canada** | **France** | **EPM US** | **ERP US** | **Not allocated** <sup>(b)</sup> | **Total** |
|  | **$** | **$** | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Beginning balance as at April 1, 2022 | 77135 | 128 | 8852 | 29005 | 30968 | 146088 |
| &nbsp;&nbsp;Business acquisition <sup>(a)</sup> (note 3) | 1270 |  |  |  | 13781 | 15051 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  | 7 | 750 | 2456 | 3318 | 6531 |
| &nbsp;&nbsp;**Net carrying amount** | **78405** | **135** | **9602** | **31461** | **48067** | **167670** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**As at** | **March 31, 2022** | **March 31, 2022** | **March 31, 2022** | **March 31, 2022** | **March 31, 2022** | **March 31, 2022** |
| | **Canada** | **France** | **EPM US** | **ERP US** | **Not allocated** | **Total** |
|  | **$** | **$** | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Beginning balance as at April 1, 2021 | 34644 | 137 | 8915 | 29210 |  | 72906 |
| &nbsp;&nbsp;&nbsp;Business acquisition | 42491 |  |  |  | 31498 | 73989 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  | (9) | (63) | (205) | (530) | (807) |
| &nbsp;&nbsp;**Net carrying amount** | **77135** | **128** | **8852** | **29005** | **30968** | **146088** |

---

<sup>(a)</sup> *On April 1, 2022, the Company acquired all of the issued and outstanding shares of Trafic 3W inc, which has been allocated to Canada.* 

<sup>(b)</sup> *As at December 31, 2022, the Vitalyst, LLC and Datum purchase price allocations were preliminarily resulting in $32,467,000 and $15,600,000 of goodwill respectively, which have not yet been allocated to a cash-generating unit for the purpose of impairment testing. During the nine months ended December 31, 2022, the amount of goodwill related to Vitalyst, LLC has been reduced by $1,049,000 resulting from an adjustment to the purchase consideration.* 

6. LONG-TERM DEBT

The following table summarizes the Group's long-term debt:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**As at** | **December 31,** | **March 31,** |
|  | **2022** | **2022** |
|  | **$** | **$** |
| &nbsp;&nbsp;Senior secured revolving credit facility (the "Credit Facility") <sup>(a)</sup> | 85301 | 66631 |
| &nbsp;&nbsp;Secured loans <sup>(b)</sup> | 13192 | 8596 |
| &nbsp;&nbsp;Subordinated unsecured loans <sup>(c)</sup> | 20000 | 17500 |
| &nbsp;&nbsp;&nbsp;Balance of purchase price payable paid in April 2022 |  | 3100 |
| &nbsp;&nbsp;&nbsp;Balance of purchase price payable paid in October 2022 |  | 1748 |
| &nbsp;&nbsp;Balance of purchase price payable paid in December 2022 (March 31, 2022 - US$6,825,000) |  | 8178 |
| &nbsp;&nbsp;Balance of purchase price payable with a nominal value of $12,653,000 (US$9,345,000), non-interest bearing (4.4% effective interest rate), payable in annual installments of $4,218,000 (US$3,115,000), maturing on July 1, 2025  | 11877 |  |
| &nbsp;&nbsp;Deferral of employment tax payments (March 31, 2022 - US$1,219,000) |  | 1521 |
| &nbsp;&nbsp;&nbsp;Other |  | 120 |
| &nbsp;&nbsp;Unamortized transaction costs (net of accumulated amortization of $1,035,000 and $754,000) | (606) | (718) |
|  | **129764** | **106676** |
| &nbsp;&nbsp;&nbsp;Current portion of long-term debt | 12816 | 19316 |
|  | **116948** | **87360** |

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Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 15

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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

6. LONG-TERM DEBT (CONT'D)

<sup>(a)</sup> The Credit Facility is available to a maximum amount of $125,000,000 which can be increased under an accordion provision to $140,000,000, under certain conditions, and can be drawn in Canadian and the equivalent amount in U.S. dollars. It matures on April 1, 2024 and is renewable for additional one-year periods at the lender's discretion.

The advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.25% to 1.00%, or bankers' acceptances or SOFR rates, plus an applicable margin ranging from 1.50% to 2.25%, as applicable for Canadian and U.S. advances, respectively. The applicable margin is determined based on threshold limits for certain financial ratios.

On September 29, 2022, the Credit Facility was amended to temporarily increase the maximum amount available under the Credit Facility to $140,000,000 for the period from September 29, 2022 to January 31, 2023 (the "Bulge Period"). The Group can terminate the Bulge Period at its option commencing December 31, 2022. During the Bulge Period, the advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.75% to 1.50%, or bankers' acceptances or SOFR rates, plus an applicable margin ranging from 2.00% to 2.75%, as applicable for Canadian and U.S. advances, respectively. On January 19, 2023, the Bulge Period was terminated.

As at December 31, 2022, the amount outstanding under the Credit Facility includes $85,301,000 (March 31, 2022 - $48,377,000) payable in U.S. dollars (US$63,000,000; March 31, 2022 - US$38,755,000).

On October 27, 2022, the Group entered into an additional operating credit facility available to a maximum amount of $2,708,000 (US$2,000,000), bearing interest at U.S. prime rate plus 1.00%, with the same securities and financial covenants as the Credit Facility. This operating credit facility can be terminated by the lender at any time. There was no amount outstanding under this additional operating credit facility as at December 31, 2022.

<sup>(b)</sup> The secured loans are with Investissement Québec to finance 2022 and 2023 refundable tax credits.

On November 8, 2022, the Group entered into a secured loan with Investissement Québec to finance its 2023 refundable tax credits to a maximum of the lesser of 90% of the eligible refundable tax credits and $10,670,000. At the same time, the maximum amount of the secured loan with Investissement Québec to finance its 2022 refundable tax credits was increased to the lesser of 90% of the eligible refundable tax credits and $8,776,000. The secured loans bear interest at the Canadian prime rate plus 1.25% for the 2023 refundable tax credits and at the Canadian prime rate plus 1.00% for the 2022 refundable tax credits. The loans are secured by a first ranking hypothec on the universality of the financed refundable tax credits and a subordinated ranking hypothec on accounts receivable and other receivables.

The secured loans are repayable on the earlier of the date of receipt of the refundable tax credits receivable and the maturity dates of March 31, 2025 for the 2023 financed refundable tax credits, in the amount of $4,473,000, and March 31, 2024 for the 2022 financed refundable tax credits, in the amount of $8,719,000.

The secured loan to finance its 2021 refundable tax credits, in the amount of $4,670,000, was repaid during the three months ended December 31, 2022.

<sup>(c)</sup> The subordinated unsecured loans are with Investissement Québec, in the amount of $20,000,000, and mature on October 1, 2025. Under the terms of the loans, the Group is required to maintain compliance with certain financial covenants which are measured on a quarterly basis.

<sup>(a)(c)</sup> The Group was in compliance with all of its financial covenants as at December 31, 2022.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 16

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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

7. SHARE CAPITAL

The following table presents information concerning issued share capital activity for the period:

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| | | | |
|:---|:---|:---|:---|
| | **Subordinate Voting Shares** | **Multiple Voting Shares** | **Multiple Voting Shares** |
| | **Number of shares** | $**Number of shares** | **$** |
| &nbsp;&nbsp;&nbsp;Beginning balance as at April 1, 2022 | 85554000 | 7171616 | 4321 |
| &nbsp;&nbsp;&nbsp;Shares issued pursuant to vesting of share-based compensation granted on business acquisitions | 738382 |  |  |
| &nbsp;&nbsp;&nbsp;Shares issued in consideration of the acquisition of Datum (note 3) | 1867262 |  |  |
| &nbsp;&nbsp;&nbsp;Shares issued in consideration of the acquisition of Trafic 3W inc. (note 4) | 83449 |  |  |
| &nbsp;&nbsp;&nbsp;Shares purchased for cancellation | (354012) |  |  |
| &nbsp;&nbsp;**Ending balance as at December 31, 2022** | **87889081** | **7171616** | **4321** |

---

During the nine months ended December 31, 2022, the following transactions occurred:

• As part of the Datum Acquisition (note 3), 1,867,262 Subordinate Voting Shares, with a total value of $5,552,000, were issued. The Company incurred share issue costs in the amount of $32,000, net of deferred income tax of $8,000, for net consideration of $5,528,000.

• As part of the Trafic3W Acquisition (note 4), 83,449 Subordinate Voting Shares, with a total value of $281,000, were issued. The Company incurred share issue costs in the amount of $7,000, net of deferred income tax of $2,000, for net consideration of $276,000.

• 354,012 Subordinate Voting Shares were purchased for cancellation under the Company's normal course issuer bid for a total cash consideration of $987,000 and a carrying value of $1,242,000. The excess of the carrying value over the purchase price in the amount of $255,000 was credited to deficit.

• As part of the acquisition of Matricis Informatique Inc., 157,882 Subordinate Voting Shares, with a total value of $600,000, reclassified from contributed surplus, were issued as settlement of the third anniversary share consideration.

• As part of the acquisition of Travercent LLC, 580,500 Subordinate Voting Shares, with a total value of US$819,000 ($1,108,000), reclassified from contributed surplus, were issued as settlement of the third anniversary share consideration.

During the nine months ended December 31, 2021, the Company acquired all of the outstanding shares of R3D Consulting Inc. (now Alithya IT Services Inc.). As part of the acquisition, 25,182,676 Subordinate Voting Shares, with a total value of $80,585,000, were issued.

*Normal Course Issuer Bid ("NCIB")*

On September 14, 2022, the Company's Board of Directors authorized and subsequently the TSX approved the renewal of its NCIB. Under the NCIB, the Company is allowed to purchase for cancellation up to 2,491,128 Subordinate Voting Shares, representing 5% of the Company's public float as of the close of markets on September 8, 2022.

The NCIB plan commenced on September 20, 2022 and will end on the earlier of September 19, 2023 and the date on which the Company will have acquired the maximum number of Subordinate Voting Shares allowable under the NCIB or will otherwise have decided not to make any further purchases. All purchases of Subordinate Voting Shares are made by means of open market transactions at their market price at the time of acquisition. Concurrently, the Company entered into an automatic share purchase plan ("ASPP") with a designated broker in connection with its NCIB. The ASPP allows for the designated broker to purchase for cancellation Subordinate Voting Shares, on behalf of the Company, subject to certain trading parameters established, from time to time, by the Company.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 17

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

7. SHARE CAPITAL (CONT'D)

*Stock options*

The following table presents information concerning stock option activity for the period:

---

| | | |
|:---|:---|:---|
| | **Number of stock options** | **Weighted average exercise price** |
| | | **$** |
| &nbsp;&nbsp;&nbsp;Beginning balance as at April 1, 2022 | 4084082 | 3.23 |
| &nbsp;&nbsp;&nbsp;Granted | 891355 | 3.25 |
| &nbsp;&nbsp;&nbsp;Forfeited | (124475) | 3.70 |
| &nbsp;&nbsp;&nbsp;Expired | (170000) | 3.59 |
| &nbsp;&nbsp;**Ending balance as at December 31, 2022** | **4680962** | **3.26** |
| &nbsp;&nbsp;**Exercisable as at December 31, 2022** | **1937005** | **3.41** |

---

Included in the 1,937,005 of stock options exercisable as at December 31, 2022, are 657,896 stock options exercisable to purchase Class B multiple voting shares ("Multiple Voting Shares").

On June 21, 2022, Alithya issued 626,230 and 265,125 stock options, to purchase a total of 891,355 Subordinate Voting Shares, at a grant date fair value of $1.38 and US$1.06, respectively.

The assumptions used to determine the grant date fair values of stock options granted to employees using the Black-Scholes stock option pricing model were as follows:

---

| | |
|:---|:---|
| | **For the nine months ended December 31,** |
| | **2022** |
| &nbsp;&nbsp;&nbsp;Weighted average assumptions |  |
| &nbsp;&nbsp;&nbsp;Share price | $3.25 |
| &nbsp;&nbsp;&nbsp;Exercise price | $3.25 |
| &nbsp;&nbsp;&nbsp;Risk-free interest rate | 3.50% |
| &nbsp;&nbsp;&nbsp;Expected volatility\* | 35.0% |
| &nbsp;&nbsp;&nbsp;Dividend yield |  |
| &nbsp;&nbsp;&nbsp;Expected option life (years) | 6.6 |
| &nbsp;&nbsp;&nbsp;Vesting conditions – time (years) | 3.3 |

---

*\* Determined on the basis of observed volatility in publicly traded companies operating in similar industries.*

*Deferred Share Units (DSUs)*

The following table presents information concerning DSU activity for the period:

---

| | |
|:---|:---|
| | **Number of DSU** |
| &nbsp;&nbsp;&nbsp;Beginning balance as at April 1, 2022 | 439521 |
| &nbsp;&nbsp;&nbsp;Granted | 173647 |
| &nbsp;&nbsp;**Ending balance as at December 31, 2022** | **613168** |

---

On June 30, 2022, 43,385 fully vested DSUs, in aggregate, were granted to non-employee directors of the Company at a fair value of $3.11, per DSU, for an aggregate fair value of $135,000. The amount has been recorded in share-based compensation expense.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 18

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

7. SHARE CAPITAL (CONT'D)

On September 30, 2022, 52,096 fully vested DSUs, in aggregate, were granted to non-employee directors of the Company at a fair value of $2.65, per DSU, for an aggregate fair value of $138,000. The amount has been recorded in share-based compensation expense.

On December 31, 2022, 78,166 fully vested DSUs, in aggregate, were granted to non-employee directors of the Company at a fair value of $2.03, per DSU, for an aggregate fair value of $159,000. The amount has been recorded in share-based compensation expense.

*Restricted Share Units (RSUs)*

As at December 31, 2022, there were 181,498 fully vested RSUs outstanding. None were granted, settled or canceled during the nine-month ended December 31, 2022.

*Performance Share Units (PSUs)*

The following table presents information concerning PSU activity for the period:

---

| | |
|:---|:---|
| | **Number of PSUs** |
| &nbsp;&nbsp;&nbsp;Beginning balance as at April 1, 2022 | 332263 |
| &nbsp;&nbsp;&nbsp;Granted | 528120 |
| &nbsp;&nbsp;**Ending balance as at December 31, 2022** | **860383** |

---

On June 21, 2022, 528,120 PSUs, in aggregate, were granted to employees of the Company at a grant date fair value of $3.25 (US$2.50), per PSU, for an aggregate fair value of $1,716,000. The PSUs granted will vest three years from the date of grant.

*Share-based compensation expense*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended <br>December 31,** | **For the nine months ended <br>December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Stock option plans | 251 | 236 | 737 | 634 |
| &nbsp;&nbsp;&nbsp;Share purchase plan – employer contribution | 331 | 298 | 1025 | 825 |
| &nbsp;&nbsp;&nbsp;Share-based compensation granted on business acquisitions | 1019 | 382 | 2261 | 1343 |
| &nbsp;&nbsp;&nbsp;Deferred share units | 159 | 132 | 432 | 441 |
| &nbsp;&nbsp;&nbsp;Restricted share units |  |  |  | 92 |
| &nbsp;&nbsp;&nbsp;Performance share units | 239 | 91 | 706 | 182 |
|  | **1999** | **1139** | **5161** | **3517** |

---

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 19

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

8. RELATED PARTIES

*Operating transactions with key management personnel*

In the normal course of operations, the Group incurred the following transactions with an entity controlled by a director. The transactions have been recorded at the contractual amount of the consideration established, which represents market rates, as agreed by the related parties. As at December 31, 2022, the entity was no longer a related party as its controlling shareholder ceased to be a director of the Group on September 14, 2022.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31,** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Revenues\* |  | 4922 | 6811 | 16322 |

---

*\* Under a ten-year commercial agreement, ending in April 2031, an entity controlled by a former director has committed to minimum annual gross margin, resulting from the procurement of consulting services, with annual surpluses and/or deficiencies thereof eligible to certain carryover provisions. Should the minimum contracted amounts not be met, the entity will make compensating payments based on a formula as defined in the commercial agreement. The commercial agreement may be extended to April 2034, however the minimum annual gross margin requirements will not be applicable to the extension period.*

As at December 31, 2022, trade accounts receivable in the amount of nil (March 31, 2022 - $4,287,000) were receivable from an entity controlled by a former director.

9. EARNINGS PER SHARE

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31,** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Net loss | (5505) | (3486) | (10104) | (8295) |
| &nbsp;&nbsp;Weighted average number of Common Shares<sup>(a)</sup> outstanding | 94660831 | 83940403 | 93891257 | 83898760 |
| &nbsp;&nbsp;**Basic and diluted loss per share** | **(0.06)** | **(0.04)** | **(0.11)** | **(0.10)** |

---

<sup>(a)</sup> *"Common Shares" include the Subordinate Voting Shares and Multiple Voting Shares*

The potentially dilutive outstanding equity instruments mentioned in Note 7 were not included in the calculation of diluted earnings per share since the Company incurred losses and the inclusion of these equity instruments would have an antidilutive effect.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 20

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

10. ADDITIONAL INFORMATION ON CONSOLIDATED LOSS

The following table provides additional information on the consolidated loss:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended <br>December 31,** | **For the nine months ended <br>December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;**Expenses by Nature** |  |  |  |  |
| &nbsp;&nbsp;Employee compensation and subcontractor costs | 115416 | 102998 | 345789 | 300557 |
| &nbsp;&nbsp;Government assistance |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- tax credits <sup>(a)</sup> | (2675) | (3064) | (7970) | (7823) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- grants and loan forgiveness <sup>(b)</sup> | (3) | 6 | (24) | (6062) |
| &nbsp;&nbsp;&nbsp;Other expenses | 10020 | 6518 | 28184 | 18803 |
| &nbsp;&nbsp;&nbsp;Depreciation of property and equipment | 689 | 621 | 2032 | 1891 |
| &nbsp;&nbsp;&nbsp;Depreciation of right-of-use assets | 945 | 779 | 2783 | 2309 |
|  | **124392** | **107858** | **370794** | **309675** |
| &nbsp;&nbsp;**Expenses by Function** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenues | 91562 | 81456 | 275435 | 232841 |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative expenses | 31196 | 25002 | 90544 | 72634 |
| &nbsp;&nbsp;&nbsp;Depreciation | 1634 | 1400 | 4815 | 4200 |
|  | **124392** | **107858** | **370794** | **309675** |

---

<sup>(a)</sup> *For the three months ended December 31, 2022*, *$2,628,000 (2021 - $2,991,000) was included in cost of revenues and $47,000 (2021 - $73,000) was included in selling, general and administrative expenses. For the nine months ended December 31, 2022, $7,829,000 (2021 - $7,632,000) was included in cost of revenues and $141,000 (2021 - $191,000) was included in selling, general and administrative expenses.*

<sup>(b)</sup> *Grants and loan forgiveness are included in cost of revenues, except for an amount of $1,324,000 that was included in selling, general and administrative expenses for the nine months ended December 31, 2021. Included in grants and loan forgiveness for the nine months ended December 31, 2021 was $5,868,000 related to the forgiveness of two loans received under the Paycheck Protection Program ("PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").*

*Deferred income tax recovery*

During the nine months ended December 31, 2022, the Group recognized a deferred tax asset in the amount of $6,026,000 that was probable of being realized as a result of the deferred tax liability recognized pursuant to the Datum Acquisition (note 3). The recognized deferred tax asset relates to previous years' net operating losses of the Group in the U.S. available for carryforwards as at July 1, 2022 in the amount of approximately $22,789,000 that was previously not recognized.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 21

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

11. BUSINESS ACQUISITION, INTEGRATION AND REORGANIZATION COSTS

The following table summarizes business acquisition, integration and reorganization costs:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended <br>December 31,** | **For the nine months ended <br>December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Acquisition costs | 16 | 36 | 1494 | 1444 |
| &nbsp;&nbsp;&nbsp;Integration costs | 243 | 821 | 1108 | 4045 |
| &nbsp;&nbsp;&nbsp;Reorganization costs related to modifications to cost structure | 829 |  | 2752 |  |
| &nbsp;&nbsp;&nbsp;Employee compensation on business acquisition (note 3) | 202 |  | 559 |  |
|  | **1290** | **857** | **5913** | **5489** |

---

The acquisition related costs consisted mainly of professional fees incurred in relation to business acquisitions. For the three months ended December 31, 2022, employee termination and benefits costs of $829,000 (2021 - nil) are included in reorganization costs related to modifications to cost structure. For the nine months ended December 31, 2022, employee termination and benefits costs of nil (2021 - $2,059,000) are included in integration costs and $2,752,000 (2021 - nil) are included in reorganization costs related to modifications to cost structure.

12. NET FINANCIAL EXPENSES

The following table summarizes net financial expenses:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended <br>December 31,** | **For the nine months ended <br>December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Interest on long-term debt | 2074 | 651 | 4960 | 1661 |
| &nbsp;&nbsp;&nbsp;Interest and financing charges | 174 | 93 | 462 | 274 |
| &nbsp;&nbsp;&nbsp;Interest on lease liabilities | 204 | 167 | 631 | 517 |
| &nbsp;&nbsp;&nbsp;Amortization of finance costs | 110 | 82 | 281 | 211 |
| &nbsp;&nbsp;&nbsp;Interest accretion on balances of purchase payable | 253 | 216 | 657 | 635 |
| &nbsp;&nbsp;&nbsp;Interest income | (151) | (6) | (233) | (71) |
|  | **2664** | **1203** | **6758** | **3227** |

---

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 22

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

13. SUPPLEMENTARY CASH FLOW INFORMATION

Changes in non-cash working capital items are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended <br>December 31,** | **For the nine months ended <br>December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Accounts receivable and other receivables | 7229 | (4222) | 15259 | (13758) |
| &nbsp;&nbsp;&nbsp;Income taxes receivable |  | (9) |  | 667 |
| &nbsp;&nbsp;&nbsp;Unbilled revenues | 12592 | 6376 | 54 | 3176 |
| &nbsp;&nbsp;&nbsp;Tax credits receivable | 3159 | (3086) | (1057) | (2609) |
| &nbsp;&nbsp;&nbsp;Prepaids | 189 | (184) | 394 | 1287 |
| &nbsp;&nbsp;&nbsp;Other assets | 52 |  | 115 |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 1593 | 5788 | (8937) | 8062 |
| &nbsp;&nbsp;&nbsp;Deferred revenues | 1283 | 3179 | 77 | 4608 |
|  | **26097** | **7842** | **5905** | **1433** |

---

During the three months ended December 31, 2022, non-cash investing and financing activities included additions to right-of-use assets and lease liabilities in the amount of $nil (2021 - $227,000). During the nine months ended December 31, 2022, non-cash investing and financing activities included additions to right-of-use assets and lease liabilities in the amount of $428,000 (2021 - $4,439,000).

14. SEGMENT INFORMATION

The Group has three reportable segments: Canada, U.S. and International.

The Group's chief operating decision maker assesses the performance of the reportable segments based on revenues and operating income by segment. Operating income by segment refers to operating income before head office general and administrative expenses and business acquisition, integration and reorganization costs, which are not considered when assessing the underlying financial performance of the reportable segments. Head office general and administrative expenses are expenses and salaries related to centralized functions, such as global finance, legal, human resources and technology teams, which are not allocated to segments. This measure also excludes the effects of depreciation, amortization and foreign exchange loss (gain).

The accounting policies of each reportable segment are the same as described in Note 2 of the Group's consolidated financial statements for the year ended March 31, 2022. The revenues and operating income by segment exclude intersegmental revenues and cost of revenues.

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 23

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

14. SEGMENT INFORMATION (CONT'D)

The following tables present the Group's operations based on reportable segments:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31, 2022** | **For the three months ended December 31, 2022** | **For the three months ended December 31, 2022** | **For the three months ended December 31, 2022** |
| | **Canada** | **U.S.** | **International** | **Total** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Revenues | 77512 | 48885 | 4383 | 130780 |
| &nbsp;&nbsp;&nbsp;Operating income by segment | 10094 | 7213 | 308 | 17615 |
| &nbsp;&nbsp;&nbsp;Head office general and administrative expenses |  |  |  | 9593 |
| &nbsp;&nbsp;&nbsp;Business acquisition, integration and reorganization costs |  |  |  | 1290 |
| &nbsp;&nbsp;&nbsp;Foreign exchange loss |  |  |  | 163 |
| &nbsp;&nbsp;&nbsp;Operating income before depreciation and amortization |  |  |  | 6569 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  |  | 9031 |
| &nbsp;&nbsp;**Operating loss** |  |  |  | **(2462)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** |
| | **Canada** | **U.S.** | **International** | **Total** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Revenues | 73140 | 33056 | 3517 | 109713 |
| &nbsp;&nbsp;&nbsp;Operating income by segment | 7564 | 2479 | 291 | 10334 |
| &nbsp;&nbsp;&nbsp;Head office general and administrative expenses |  |  |  | 7079 |
| &nbsp;&nbsp;&nbsp;Business acquisition, integration and reorganization costs |  |  |  | 857 |
| &nbsp;&nbsp;&nbsp;Foreign exchange gain |  |  |  | (27) |
| &nbsp;&nbsp;&nbsp;Operating income before depreciation and amortization |  |  |  | 2425 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  |  | 4838 |
| &nbsp;&nbsp;**Operating loss** |  |  |  | **(2413)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the nine months ended December 31, 2022** | **For the nine months ended December 31, 2022** | **For the nine months ended December 31, 2022** | **For the nine months ended December 31, 2022** |
| | **Canada** | **U.S.** | **International** | **Total** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Revenues | 230832 | 143319 | 12326 | 386477 |
| &nbsp;&nbsp;&nbsp;Operating income by segment | 25856 | 20015 | 1111 | 46982 |
| &nbsp;&nbsp;&nbsp;Head office general and administrative expenses |  |  |  | 26484 |
| &nbsp;&nbsp;&nbsp;Business acquisition, integration and reorganization costs |  |  |  | 5913 |
| &nbsp;&nbsp;&nbsp;Foreign exchange loss |  |  |  | 63 |
| &nbsp;&nbsp;&nbsp;Operating income before depreciation and amortization |  |  |  | 14522 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  |  | 23619 |
| &nbsp;&nbsp;**Operating loss** |  |  |  | **(9097)** |

---

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 24

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

14. SEGMENT INFORMATION (CONT'D)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the nine months ended December 31, 2021** | **For the nine months ended December 31, 2021** | **For the nine months ended December 31, 2021** | **For the nine months ended December 31, 2021** |
| | **Canada** | **U.S.** | **International** | **Total** |
| | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;Revenues | 209130 | 99102 | 9679 | 317911 |
| &nbsp;&nbsp;&nbsp;Operating income by segment | 17736 | 15282 | 781 | 33799 |
| &nbsp;&nbsp;&nbsp;Head office general and administrative expenses |  |  |  | 21363 |
| &nbsp;&nbsp;&nbsp;Business acquisition, integration and reorganization costs |  |  |  | 5489 |
| &nbsp;&nbsp;&nbsp;Foreign exchange gain |  |  |  | (1) |
| &nbsp;&nbsp;&nbsp;Operating income before depreciation and amortization |  |  |  | 6948 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  |  | 14468 |
| &nbsp;&nbsp;**Operating loss** |  |  |  | **(7520)** |

---

*Long-lived assets by geographic location*

The following table presents the total net book value of the Group's long-lived assets by geographic location:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**As at** | **December 31,** | **March 31,** |
|  | **2022** | **2022** |
|  | $**%** | $**%** |
| &nbsp;&nbsp;&nbsp;Canada | 48.6 | 56.4 |
| &nbsp;&nbsp;&nbsp;U.S. | 50.7 | 43.1 |
| &nbsp;&nbsp;&nbsp;International | 0.7 | 0.5 |
|  | **100.0** | **100.0** |

---

*Information about revenues* 

The following table presents the Group's revenues from customers for each major service category:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | $**%** | $**%** | $**%** | $**%** |
| &nbsp;&nbsp;&nbsp;Consulting services - time and materials arrangements | 76.3 | 83.4 | 75.8 | 83.6 |
| &nbsp;&nbsp;&nbsp;Consulting services - fixed-fee arrangements | 11.3 | 11.4 | 11.9 | 10.7 |
| &nbsp;&nbsp;&nbsp;Subscription, software and other revenues | 12.4 | 5.2 | 12.3 | 5.7 |
|  | **100.0** | **100.0** | **100.0** | **100.0** |

---

*Major customer* 

Contracts with one major customer accounted for $14,493,000 and 11.1% of revenues for the three months ended December 31, 2022 ($16,401,000 and 14.9% for the three months ended December 31, 2021) and contracts with two major customers accounted for $83,363,000 and 21.6% of revenues for the nine months ended December 31, 2022 ($46,934,000 and 14.8% for the nine months ended December 31, 2021 with one major customer). As at December 31, 2022, accounts receivable and other receivables from one major customer amounted to $12,338,000 or 13.3% of total accounts receivable and other receivables (March 31, 2022 - one major customer amounted to $19,771,000 or 19.6%).

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 25

------

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021

*(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)*

15. FINANCIAL INSTRUMENTS

*Interest rate risk*

On August 30, 2022, the Group entered into and designated as an effective hedging instrument, an interest rate swap for a nominal amount of $30,000,000 maturing on August 30, 2025 to fix the variability in interest rates on a designated portion of borrowings under its Credit Facility. Under the interest rate swap agreement, the Group pays interest based on a fixed rate of 3.97%, and receives interest based on the actual one-month BA/CDOR rate. The fair market value of the interest rate swap agreement as at December 31, 2022 is insignificant.

*Fair Value of Financial Instruments*

Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 - Valuation based on quoted prices observed in active markets for identical assets or liabilities.

• Level 2 - Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

• Level 3 - Valuation techniques with significant unobservable market inputs. A financial instrument is classified at the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

Fair value of derivatives instruments are determined under level 2.

The Group's long-term debt is carried at amortized cost. The fair value of the long-term debt is estimated by discounting expected cash flows at rates that would be currently offered to the Group for debts of the same remaining maturities and conditions (level 2).

The following table summarizes their carrying amounts:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**As at** | **December 31,** | **March 31,** |
|  | **2022** | **2022** |
|  | **$** | **$** |
| &nbsp;&nbsp;Credit Facility <sup>(a)</sup>  | 85301 | 66631 |
| &nbsp;&nbsp;Secured loans <sup>(a)</sup>  | 13192 | 8596 |
| &nbsp;&nbsp;Subordinated unsecured loans <sup>(b)</sup> | 20000 | 17500 |
| &nbsp;&nbsp;Balances of purchase price payable <sup>(c)</sup> | 11877 | 13026 |
|  | **130370** | **105753** |

---

<sup>(a)</sup> *The fair values of the Credit Facility and secured loans, bearing interest at variable rates, approximate their respective carrying amounts because the interest rates applied approximate current market interest rate.*

<sup>(b)</sup> *As at December 31, 2022, the fair value of the subordinated unsecured loans, bearing interest at fixed rates, was approximately $18,821,000 (March 31, 2022 - $16,982,000).*

<sup>(c)</sup> *As at December 31, 2022, the fair value of the balance of purchase price payable approximate its carrying amounts given the recent fair market value assessment at the time of acquisition. As at March 31, 2022, the fair value of the balances of purchase price payable approximate their carrying amounts given the short-term maturity of the balances of purchase price payable.* 

Alithya Group inc. – Interim Consolidated Financial Statements for the three and nine months ended December 31, 2022 and 2021 \| 26

## Exhibit 99.2

**Exhibit 99.2**

![coverfs.jpg](coverfs.jpg)

**Management's Discussion**<br>**and Analysis of Financial Condition and Results of Operations of Alithya Group inc.**<br>For the three and nine months ended December 31, 2022 <br>

------

![image_2.jpg](image_2.jpg)

**Table of Contents**

---

| | | | |
|:---|:---|:---|:---|
| | | | Page |
| 1. |  | [Basis of Presentation](#i99a291024ee840b9ad77a4f5a3e2dad4_7) | [1](#i99a291024ee840b9ad77a4f5a3e2dad4_7) |
| 2. |  | [Forward-Looking Statements](#i99a291024ee840b9ad77a4f5a3e2dad4_10) | [1](#i99a291024ee840b9ad77a4f5a3e2dad4_10) |
| 3. |  | [Business Overview](#i99a291024ee840b9ad77a4f5a3e2dad4_13) | [2](#i99a291024ee840b9ad77a4f5a3e2dad4_13) |
| 4. |  | [Strategic](#i99a291024ee840b9ad77a4f5a3e2dad4_16)[Business](#i99a291024ee840b9ad77a4f5a3e2dad4_16)[Plan](#i99a291024ee840b9ad77a4f5a3e2dad4_16) | [5](#i99a291024ee840b9ad77a4f5a3e2dad4_16) |
| 5. |  | [Non-IFRS](#i99a291024ee840b9ad77a4f5a3e2dad4_19)[and Other Financial](#i99a291024ee840b9ad77a4f5a3e2dad4_19)[Measures](#i99a291024ee840b9ad77a4f5a3e2dad4_19) | [6](#i99a291024ee840b9ad77a4f5a3e2dad4_19) |
| 6. |  | [Financial Highlight](#i99a291024ee840b9ad77a4f5a3e2dad4_22)s | [8](#i99a291024ee840b9ad77a4f5a3e2dad4_22) |
| 7. |  | [Business Combination](#i99a291024ee840b9ad77a4f5a3e2dad4_25) | [10](#i99a291024ee840b9ad77a4f5a3e2dad4_25) |
| 8. |  | [Results of Operations](#i99a291024ee840b9ad77a4f5a3e2dad4_28) | [13](#i99a291024ee840b9ad77a4f5a3e2dad4_28) |
|  | 8.1 | [Revenues](#i99a291024ee840b9ad77a4f5a3e2dad4_31) | [14](#i99a291024ee840b9ad77a4f5a3e2dad4_31) |
|  | 8.2 | [Gross Margin](#i99a291024ee840b9ad77a4f5a3e2dad4_34) | [15](#i99a291024ee840b9ad77a4f5a3e2dad4_34) |
|  | 8.3 | [Segment Reporting](#i99a291024ee840b9ad77a4f5a3e2dad4_37) | [16](#i99a291024ee840b9ad77a4f5a3e2dad4_37) |
|  | 8.4 | [Operating Expenses](#i99a291024ee840b9ad77a4f5a3e2dad4_40) | [18](#i99a291024ee840b9ad77a4f5a3e2dad4_40) |
|  | 8.5 | [Other Income and Expenses](#i99a291024ee840b9ad77a4f5a3e2dad4_43) | [22](#i99a291024ee840b9ad77a4f5a3e2dad4_43) |
|  | 8.6 | [Net Loss and Loss per Share](#i99a291024ee840b9ad77a4f5a3e2dad4_46) | [23](#i99a291024ee840b9ad77a4f5a3e2dad4_46) |
|  | 8.7 | [EBITDA and Adjusted EBITDA](#i99a291024ee840b9ad77a4f5a3e2dad4_49) | [24](#i99a291024ee840b9ad77a4f5a3e2dad4_49) |
| 9. |  | [Bookings](#i99a291024ee840b9ad77a4f5a3e2dad4_52) | [25](#i99a291024ee840b9ad77a4f5a3e2dad4_52) |
| 10. |  | [Liquidity and Capital Resources](#i99a291024ee840b9ad77a4f5a3e2dad4_55) | [25](#i99a291024ee840b9ad77a4f5a3e2dad4_55) |
|  | 10.1 | [Consolidated Statements of Cash Flows](#i99a291024ee840b9ad77a4f5a3e2dad4_58) | [25](#i99a291024ee840b9ad77a4f5a3e2dad4_58) |
|  | 10.2 | [Cash Flows](#i99a291024ee840b9ad77a4f5a3e2dad4_61)[-](#i99a291024ee840b9ad77a4f5a3e2dad4_61)[Operating Activities](#i99a291024ee840b9ad77a4f5a3e2dad4_61) | [25](#i99a291024ee840b9ad77a4f5a3e2dad4_61) |
|  | 10.3 | [Cash Flows](#i99a291024ee840b9ad77a4f5a3e2dad4_64)[-](#i99a291024ee840b9ad77a4f5a3e2dad4_64)[Investing Activities](#i99a291024ee840b9ad77a4f5a3e2dad4_64) | [26](#i99a291024ee840b9ad77a4f5a3e2dad4_64) |
|  | 10.4 | [Cash Flows](#i99a291024ee840b9ad77a4f5a3e2dad4_67)[-](#i99a291024ee840b9ad77a4f5a3e2dad4_67)[Financing Activities](#i99a291024ee840b9ad77a4f5a3e2dad4_67) | [27](#i99a291024ee840b9ad77a4f5a3e2dad4_67) |
|  | 10.5 | [Capital Resources](#i99a291024ee840b9ad77a4f5a3e2dad4_70) | [27](#i99a291024ee840b9ad77a4f5a3e2dad4_70) |
|  | 10.6 | [Long-Term Debt](#i99a291024ee840b9ad77a4f5a3e2dad4_73) and Net Debt | [28](#i99a291024ee840b9ad77a4f5a3e2dad4_73) |
|  | 10.7 | [Contractual Obligations](#i99a291024ee840b9ad77a4f5a3e2dad4_76) | [30](#i99a291024ee840b9ad77a4f5a3e2dad4_76) |
|  | 10.8 | [Off-Balance Sheet Arrangements](#i99a291024ee840b9ad77a4f5a3e2dad4_79) | [30](#i99a291024ee840b9ad77a4f5a3e2dad4_79) |
| 11. |  | [Share Capital](#i99a291024ee840b9ad77a4f5a3e2dad4_82) | [31](#i99a291024ee840b9ad77a4f5a3e2dad4_82) |
|  | 11.1 | [Issued](#i99a291024ee840b9ad77a4f5a3e2dad4_85) | [31](#i99a291024ee840b9ad77a4f5a3e2dad4_85) |
|  | 11.2 | [Normal Course Issuer Bid](#i99a291024ee840b9ad77a4f5a3e2dad4_88) | [32](#i99a291024ee840b9ad77a4f5a3e2dad4_88) |
| 12. |  | [Related Parties](#i99a291024ee840b9ad77a4f5a3e2dad4_91) | [32](#i99a291024ee840b9ad77a4f5a3e2dad4_91) |
| 13. |  | [Eight Quarter Summary](#i99a291024ee840b9ad77a4f5a3e2dad4_94) | [33](#i99a291024ee840b9ad77a4f5a3e2dad4_94) |
| 14. |  | [Critical Accounting Estimates](#i99a291024ee840b9ad77a4f5a3e2dad4_97) | [34](#i99a291024ee840b9ad77a4f5a3e2dad4_97) |
| 15. |  | [Change in Accounting Policy](#i99a291024ee840b9ad77a4f5a3e2dad4_521) | [34](#i99a291024ee840b9ad77a4f5a3e2dad4_521) |
| 16. |  | [Accounting Standard Amendments Effective for the Year Ending March 31, 2023](#i99a291024ee840b9ad77a4f5a3e2dad4_100) | [35](#i99a291024ee840b9ad77a4f5a3e2dad4_100) |
| 17. |  | [New Standards and Interpretations Issued but Not Yet Effective](#i99a291024ee840b9ad77a4f5a3e2dad4_103) | [35](#i99a291024ee840b9ad77a4f5a3e2dad4_103) |
| 18. |  | [Risks and Uncertainties](#i99a291024ee840b9ad77a4f5a3e2dad4_106) | [37](#i99a291024ee840b9ad77a4f5a3e2dad4_106) |
| 19. |  | [Management's Evaluation of](#i99a291024ee840b9ad77a4f5a3e2dad4_109)[O](#i99a291024ee840b9ad77a4f5a3e2dad4_109)[ur Disclosure Controls and Procedures](#i99a291024ee840b9ad77a4f5a3e2dad4_109) | [38](#i99a291024ee840b9ad77a4f5a3e2dad4_109) |

---

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;

------

![image_2.jpg](image_2.jpg)

1. Basis of Presentation

This Management's Discussion and Analysis ("MD&A") provides a review of the results of operations, financial condition and cash flows for Alithya Group inc. for the three-month and nine-month periods ended December 31, 2022. References to "Alithya", the "Company", the "Group", "we", "our" and "us" in this MD&A refer to Alithya Group inc. and its subsidiaries or any one or more of them, unless the context requires otherwise. This document should be read in conjunction with the information contained in the Company's interim consolidated financial statements (the "Q3 Financial Statements") and accompanying notes for the three-month and nine-month periods ended December 31, 2022 and 2021, as well as the audited consolidated financial statements and MD&A for the fiscal year ended March 31, 2022. These documents, as well as the Company's Annual Information Form, and additional information regarding the business of the Company, are available under the Company's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and the Electronic Data Gathering, Analysis and Retrieval system ("EDGAR") at www.sec.gov.

For reporting purposes, the Company prepared the Q3 Financial Statements in Canadian dollars in accordance with IAS 34 - Interim Financial Reporting of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Unless otherwise indicated, all dollar ("$") amounts and references in this MD&A are in Canadian dollars and references to "US$" are to U.S. dollars. Variances, ratios and percentage changes in this MD&A are based on unrounded numbers.

This MD&A contains both IFRS and non-IFRS financial measures. See section 5 titled "Non-IFRS and Other Financial Measures".

Unless otherwise stated, in preparing this MD&A, the Company has considered information available to it up to February 13, 2023, the date the Company's Board of Directors ("Board") approved this MD&A and the Q3 Financial Statements.

2. Forward-Looking Statements

This MD&A contains statements that may constitute "forward-looking information" within the meaning of applicable Canadian securities laws and "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and other applicable U.S. safe harbours (collectively "forward-looking statements"). Statements that do not exclusively relate to historical facts, as well as statements relating to management's expectations regarding the future growth, results of operations, performance and business prospects of Alithya, and other information related to Alithya's business strategy and future plans or which refer to the characterizations of future events or circumstances represent forward-looking statements. Such statements often contain the words "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "could," "would," "will," "may," "can," "continue," "potential," "should," "project," "target," and similar expressions and variations thereof, although not all forward-looking statements contain these identifying words.

Forward-looking statements in this MD&A include, among other things, information or statements about: (i) our ability to generate sufficient earnings to support our operations; (ii) our ability to take advantage of business opportunities and meet our goals set in our three-year strategic plan; (iii) our ability to develop new business, broaden the scope of our service offerings and enter into new contracts; (iv) our strategy, future operations, and prospects; (v) our need for additional financing and our estimates regarding our future financing and capital

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 1

------

![image_2.jpg](image_2.jpg)

requirements; (vi) our expectations regarding our financial performance, including our revenues, profitability, research and development, costs and expenses, gross margins, liquidity, capital resources, and capital expenditures; (vii) our ability to realize the expected synergies or cost savings relating to the integration of our business acquisitions, and (viii) the potential return to pre-COVID-19 pandemic operations.

Forward-looking statements are presented for the sole purpose of assisting investors and others in understanding Alithya's objectives, strategies and business outlook as well as its anticipated operating environment and may not be appropriate for other purposes. Although management believes the expectations reflected in Alithya's forward-looking statements were reasonable as at the date they were made, forward-looking statements are based on the opinions, assumptions and estimates of management and, as such, are subject to a variety of risks and uncertainties and other factors, many of which are beyond Alithya's control, and which could cause actual events or results to differ materially from those expressed or implied in such statements. Such risks and uncertainties include but are not limited to those discussed in the section titled "Risks and Uncertainties" of this MD&A, the MD&A for the year ended March 31, 2022, and the MD&A for the quarter ended June 30, 2022, as well as in Alithya's other materials made public, including documents filed with Canadian and U.S. securities regulatory authorities from time to time and which are available on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Additional risks and uncertainties not currently known to Alithya or that Alithya currently deems to be immaterial could also have a material adverse effect on its financial position, financial performance, cash flows, business or reputation.

Forward-looking statements contained in this MD&A are qualified by these cautionary statements and are made only as of the date of this MD&A. Alithya expressly disclaims any obligation to update or alter any forward-looking statements, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by applicable law. Investors are cautioned not to place undue reliance on forward-looking statements since actual results may vary materially from them.

3. Business Overview

Alithya is a trusted North American leader in strategy and digital transformation, employing a dedicated and highly skilled workforce of 3,700 professionals in Canada, the United States and internationally. Alithya's strategy is based on a plan of accelerated organic growth and complementary acquisitions to create a global leader. The Company's integrated offer is based on four pillars of expertise: business strategies, enterprise cloud solutions, application services, and data and analytics.

Alithya deploys solutions, services, and expert consultants to design, build and implement innovative and efficient solutions for the complex business challenges of its clients, tailored to their business needs in the financial services, insurance, renewable energy, manufacturing, telecommunications, transportation and logistics, professional services, healthcare and government sectors.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 2

------

![image_2.jpg](image_2.jpg)

*Business Offerings*

Alithya's business offerings include a comprehensive range of digital technology services to address client needs:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Business Strategy.** Alithya leads clients through essential decision-making processes regarding strategic planning, change management, systems evolution, operational processes, employee experience and transformative change enablement and more. Applying the most recurrent methodologies, we help our clients optimize efficiency and successfully navigate the digital transformation age. We achieve results by leveraging an array of Business Strategy services, including strategic consulting, digital transformation, organizational performance and enterprise architecture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Application Solutions Services.** Alithya's experts guide clients through all facets of Application Solutions Services, from migration of legacy systems into future-ready digital solutions, to the development of completely new solutions using state-of-the-art technologies. Our experts assist our clients in the choice between cloud, on-premise, and hybrid hosting strategies and solutions. Alithya's Application Solutions Services include digital applications DevOps, legacy systems modernization, control and software engineering, cloud infrastructure, quality assurance and automated testing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Enterprise Solutions.** Working with key industry partners, including some of the world's largest vendors of cloud-based Enterprise Solutions, Alithya's experts help clients deploy company-wide systems to improve the efficiency of their finance, human capital, operations, and marketing functions. Alithya's Enterprise Solutions services include Enterprise Resource Planning (ERP), Corporate Performance Management (CPM/EPM), Customer Relationship Management (CRM/CXM) and Human Capital Management (HCM).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Data and Analytics.** Data analysis plays a critical role in the optimization of business processes. Leveraging specialized IT systems and software, Alithya's data scientists help clients gain business insight and drive better decision-making through enhanced data collection, big data analytics, machine learning automation and reporting. Alithya's Data and Analytics services include business intelligence, data management, artificial intelligence and machine learning, as well as Internet of Things (IoT).

Geographically, Alithya's operations span across Canada, the U.S. and internationally, providing a full spectrum of strategy and digital technology services with deep expertise in a range of technologies and business domains.

*Competitive Environment*

Today, for many companies, digital systems and infrastructures are among their most important and strategic assets. Not only do these assets require significant investments, but they increasingly serve as key differentiators and drivers of growth for customers.

Accordingly, businesses are seeking solutions that allow them to maintain their ability to differentiate themselves from competitors with proprietary business processes, combined with product customization. That is where digital transformation comes into play, inviting companies to make a shift in their approach and to evolve from traditional information technologies to flexible digital technologies.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 3

------

![image_2.jpg](image_2.jpg)

As businesses' technology spending continues to increase, digital technology firms such as Alithya are striving to deliver innovative thinking and in-depth vertical industry expertise, while facilitating business process transformation through the use of the most optimal technologies.

Alithya believes it is well positioned to respond to these trends in clients' investments in digital technology. Alithya's business model is built on a philosophy of offering flexible and creative solutions, enabling clients to realize maximum benefits from their digital technology investments. Alithya positions itself as an agile trusted advisor and consulting partner capable of delivering rapid results for its clients.

Alithya's competitors include systems integration firms, contract programming companies, application software companies, cloud computing service providers, large or traditional consulting firms, professional services groups of computer equipment companies, infrastructure management and outsourcing companies and boutique digital companies. In addition, Alithya competes with numerous smaller local companies in the various geographic markets in which it operates.

Alithya competes based on the following principal differentiating factors: vision and strategic advisory ability, digital services capabilities, performance and reliability, quality of technical support, training and services, responsiveness to client needs, reputation and experience, financial stability and strong corporate governance and competitive pricing of services.

Alithya also relies on the following measures to compete effectively: (a) investments to scale its services practice areas; (b) a well-developed recruiting, training and retention model; (c) a successful service delivery model; (d) intrapreneurial culture and approach; (e) a broad referral base; (f) continual investment in process improvement and knowledge capture; (g) investment in infrastructure and research and development; (h) continued focus on responsiveness to client needs, quality of services and competitive prices; and (i) project management capabilities and technical expertise.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 4

------

![image_2.jpg](image_2.jpg)

4. Strategic Business Plan

Alithya has adopted a three-year strategic plan which sets as a goal to consolidate its position to become a trusted leader in digital transformation.

According to this plan, Alithya's consolidated scale and scope should allow it to leverage its geographies, expertise, integrated offerings, and position on the value chain to target the fastest growing IT services segments. Alithya's specialization in digital technologies and its flexibility to deploy enterprise solutions and deliver solutions tailored to specific business objectives, responds directly to client expectations.

More specifically, Alithya has established a three-pronged growth plan focusing on:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Increasing scale through organic growth and complementary acquisitions by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Generating profitable organic growth through innovation, higher-value offerings and client relationships based on trust;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Completing value enhancing business acquisitions by way of a North American geographic expansion to complement current market presence, including geography, while progressively adding major integrated enterprise solutions offerings and selected specialized expertise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Achieving best-in-class employee engagement by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Fostering a culture of collaboration, diversity, and ownership;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Cultivating employee well-being and personal growth;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Investing in the development of its leaders and employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Providing its investors, partners and stakeholders with long-term growing return on investment by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Strengthening its existing relationships with clients, as a key trusted advisor, by generating long-term value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Investing in innovation and higher value service offerings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Acting responsibly, with a sustainable and respectful vision for its stakeholders and articulating its Environmental, Social and Governance framework and priorities.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 5

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![image_2.jpg](image_2.jpg)

5. Non-IFRS and Other Financial Measures

Alithya reports its financial results in accordance with IFRS. This MD&A includes certain non-IFRS and supplementary financial measures and ratios to assess Alithya's financial performance. These measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS.

The non-IFRS measures used by Alithya are described below:

*EBITDA and EBITDA Margin*

"EBITDA" refers to net income (loss) before adjusting for income tax expense (recovery), net financial expenses, amortization of intangibles, and depreciation of property and equipment and right-of-use assets.

"EBITDA Margin" refers to the percentage of total revenue that EBITDA represents for a given period.

Management believes that EBITDA and EBITDA Margin are useful measures for investors as they provide an indication of the results generated by Alithya's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration non-cash depreciation and amortization. For a reconciliation of net loss to EBITDA, see section 8.7 titled "EBITDA and Adjusted EBITDA".

*Adjusted EBITDA and Adjusted EBITDA Margin*

"Adjusted EBITDA" refers to net income (loss) before adjusting for income tax expense (recovery), net financial expenses, foreign exchange, amortization of intangibles, depreciation of property and equipment and right-of-use assets, impairment of intangibles and goodwill, share-based compensation, business acquisition, integration and reorganization costs, internal ERP systems implementation, and other redundant and non-recurring items.

"Adjusted EBITDA Margin" refers to the percentage of total revenue that Adjusted EBITDA represents for a given period.

Management believes that Adjusted EBITDA and Adjusted EBITDA Margin are useful measures for investors as they allow comparability of operating results from one period to another. These measures provide an indication of the profitability generated by Alithya's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration the non-cash and other items listed above. For a reconciliation of net loss to Adjusted EBITDA, see section 8.7 titled "EBITDA and Adjusted EBITDA".

*Constant Dollar Revenue and Constant Dollar Growth*

"Constant Dollar Revenue" is a measure of revenue and revenue by geographic location before foreign currency translation impacts. This measure is calculated by translating current period revenue and revenue by geographic location in local currency using the exchange rates from the equivalent period of the prior year.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 6

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![image_2.jpg](image_2.jpg)

"Constant Dollar Growth" is a measure of revenue growth and revenue growth by geographic location, expressed as a percentage, before foreign currency translation impacts. This measure is calculated by dividing Constant Dollar Revenue as described above with prior period revenue.

Management believes that Constant Dollar Revenue and Constant Dollar Growth are useful measures for investors as they allow revenue to be adjusted to exclude the impact of currency fluctuations to facilitate period-to-period comparisons of business performance. For a reconciliation of revenues to Constant Dollar Revenue by geographic location, see section 8.1 titled "Revenues".

*Net Debt*

"Net Debt" refers to long-term debt, including the current portion, less cash and restricted cash. For the calculation of Net Debt, see section 10.6 titled "Long-Term Debt and Net Debt". Management believes that Net Debt is a useful measure for investors as it provides an indication of the liquidity of the Company.

*Other Financial Measures*

The other financial measures used by Alithya are described below:

"Gross Margin as a Percentage of Revenues" is calculated by dividing gross margin by revenues.

"Selling, General and Administrative Expenses as a Percentage of Revenues" is calculated by dividing selling, general and administrative expenses by revenues.

"Bookings" refers to the amount of signed revenue agreements during the period, which includes new contracts, including those acquired through acquisitions, as well as renewals, extensions and changes to existing contracts. Management believes information regarding bookings can provide useful trend insight to investors regarding changes in the volume of new business over time.

"Book-to-Bill Ratio" is calculated by dividing Bookings by revenues, for the same period. Management believes this measure allows for the monitoring of the Company's backlog and offers useful insight to investors on how the business varies and evolves over time. This measure is best used over a long period as it could fluctuate significantly from one quarter to the other.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 7

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![image_2.jpg](image_2.jpg)

6. Financial Highlights

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
| **Results of Operations**<br>**(in $ thousands)** | **2022** | **2021** | **2022** | **2021** |
|  | **$** | **$** | **$** | **$** |
| Revenues | 130780 | 109713 | 386477 | 317911 |
| Gross Margin | 39218 | 28257 | 111042 | 85070 |
| Gross Margin as a Percentage of Revenues <sup>(1)</sup> | 30.0% | 25.8% | 28.7% | 26.8% |
| Selling, General and Administrative Expenses | 31196 | 25002 | 90544 | 72634 |
| Selling, General and Administrative Expenses as a Percentage of Revenues <sup>(1)</sup> | 23.9% | 22.8% | 23.4% | 22.8% |
| Net Loss | (5505) | (3486) | (10104) | (8295) |
| Basic and Diluted Loss per Share | (0.06) | (0.04) | (0.11) | (0.10) |
| Adjusted EBITDA <sup>(2)</sup> | 10021 | 4514 | 25659 | 16561 |
| Adjusted EBITDA Margin <sup>(2)</sup> | 7.7% | 4.1% | 6.6% | 5.2% |

---

---

| | | |
|:---|:---|:---|
| **Other**<br>**(in $ thousands)** | **December 31,**<br>**2022** | **March 31,**<br>**2022** |
|  | **$** | **$** |
| Total Assets | 473412 | 447721 |
| Non-Current Financial Liabilities <sup>(3)</sup> | 132563 | 105113 |
| Total Long-Term Debt | 129764 | 106676 |
| Net Debt <sup>(4)</sup> | 105745 | 85767 |

---

---

| | |
|:---|:---|
| **Shares, Stock Options and Share Units Outstanding** | **February 10,**<br>**2023** |
| Class A Subordinate Voting Shares ("Subordinate Voting Shares") | 87889081 |
| Class B Multiple Voting Shares ("Multiple Voting Shares") | 7171616 |
| Stock Options <sup>(5)</sup> | 4645003 |
| Deferred Share Units ("DSUs") | 613168 |
| Restricted Share Units ("RSUs") | 181498 |
| Performance Share Units ("PSUs") | 860383 |

---

<sup>1</sup> This is an other financial measure. Refer to section 5 titled "Non-IFRS and Other Financial Measures" for an explanation of the composition of this other financial measure.

<sup>2</sup> This is a non-IFRS financial measure. Refer to section 5 titled "Non-IFRS and Other Financial Measures" for an explanation of the composition and usefulness of this non-IFRS financial measure and to section 8.7 titled "EBITDA and Adjusted EBITDA" for a quantitative reconciliation to the most directly comparable IFRS measures.

<sup>3</sup> Non-current financial liabilities include the long-term portion of the long-term debt and the long-term portion of lease liabilities.

<sup>4</sup> This is a non-IFRS financial measure. Refer to section 5 titled "Non-IFRS and Other Financial Measures" for an explanation of the composition and usefulness of this non-IFRS financial measure and to section 10.6 titled "Long-Term Debt and Net Debt" for a quantitative reconciliation to the most directly comparable IFRS measures.

<sup>5</sup> Includes 657,896 stock options to purchase Multiple Voting Shares.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 8

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![image_2.jpg](image_2.jpg)

*For the three months ended December 31, 2022:*

• Revenues increased 19.2% to $130.8 million, compared to $109.7 million for the same quarter last year.

• Gross margin increased 38.8% to $39.2 million, compared to $28.3 million for the same quarter last year.

• Gross margin as a percentage of revenues was 30.0%, compared to 25.8% for the same quarter last year. On a sequential basis, gross margin as a percentage of revenues increased from 29.3% for the second quarter of this year.

• Adjusted EBITDA increased 122.0% to $10.0 million, or 7.7% of revenues, compared to $4.5 million, or 4.1% of revenues, for the same quarter last year.

• Net loss was $5.5 million, or $0.06 per share, compared to a net loss of $3.5 million, or $0.04 per share, for the same quarter last year.

• Cash flow from operating activities and changes in non-cash working capital items, in the third quarter, contributed to a notable sequential long-term debt reduction of $36.4 million, or 21.9%, from $166.2 million as at September 30, 2022 to $129.8 million as at December 31, 2022.

• Q3 bookings<sup>(1)</sup> reached $136.6 million, which translated into a book-to-bill ratio<sup>(1)</sup> of 1.04 for the quarter, and on a trailing twelve months basis, bookings were $508.5 million, which translated into a book-to-bill ratio of 1.00.

<sup>1</sup> This is an other financial measure. Refer to section 5 titled "Non-IFRS and Other Financial Measures" for an explanation of the composition of this other financial measure.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 9

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![image_2.jpg](image_2.jpg)

7. Business Combination

Datum Consulting Group, LLC and its Affiliates

*Overview*

On July 1, 2022, the Company acquired 100% of the issued and outstanding equity interests of the U.S.-based Datum Consulting Group, LLC and its international affiliates ("Datum") (the "Datum Acquisition"), a leader in IP enabled digital transformation services for data-rich insurers and other regulated entities such as governments. Management expects that its modernization practice and cloud-based software as a service (SaaS) offering will be complementary to Alithya's existing offerings and will allow for cross-selling opportunities.

The Datum Acquisition was completed for purchase consideration and other consideration of up to US$45,488,000 ($58,550,000), in aggregate.

The purchase consideration of US$27,200,000 ($35,010,000), in aggregate, consisted of: (i) US$13,542,000 ($17,430,000) paid in cash, net of working capital adjustment; (ii) US$4,313,000 ($5,552,000) paid by the issuance of 1,867,262 Subordinate Voting Shares; and (iii) US$9,345,000 ($12,028,000) of balance of sale, representing deferred cash consideration, payable over three years on July 1, 2023, 2024 and 2025 (the "Anniversary Dates").

The other consideration of up to US$18,288,000 ($23,540,000), consisted of: (i) deferred cash consideration of US$975,000 ($1,255,000); (ii) deferred share consideration of 1,867,261 Subordinate Voting Shares with a value of US$4,313,000 ($5,552,000); and (iii) potential earn-out consideration of up to US$13,000,000 ($16,733,000), all payable over three years on the Anniversary Dates.

The deferred cash consideration will be recognized as employee compensation on business acquisition, over three years.

The deferred share consideration will be recognized as share-based compensation to an employee, over three years.

The potential earn-out consideration is payable in cash (75%), which will be recognized as employee compensation on business acquisition, and by Subordinate Voting Shares (25%), which will be recognized as share-based compensation, with a maximum of 1,517,151 Subordinate Voting Shares available for issuance with a value of US$3,505,000 ($4,511,000). The potential earn-out consideration has earn-out periods ending on each of the Anniversary Dates. The potential earn-out consideration payable in cash will be expensed over three years as the related services are provided at the best estimate of the payout required to settle the present obligation at the end of the reporting period. The potential earn-out consideration payable in shares will be expensed over the three-year vesting period and the amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting dates.

The fair value of the assets acquired and liabilities assumed, and the purchase consideration is preliminary pending completion of an independent valuation. The most significant aspect remaining to be finalized relates to the valuation of intangibles. Should new information, obtained within one year of the date of acquisition, about

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 10

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![image_2.jpg](image_2.jpg)

the facts and circumstances that existed at the date of the Datum Acquisition, result in adjustments to the below amounts, or require additional provisions for conditions that existed at the date of the Datum Acquisition, the fair value will then be revised. Accordingly, the values in the table below are subject to change. The Datum Acquisition is being accounted for using the acquisition method of accounting.

For the three and nine months ended December 31, 2022, the Company incurred acquisition-related costs pertaining to the Datum acquisition of approximately $13,000 and $1,369,000, respectively. These costs have been recorded in the consolidated statement of operations in business acquisition, integration and reorganization costs.

*Purchase Price Allocation*

The preliminary allocation of the fair value of the assets acquired and the liabilities assumed is detailed as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;**Acquisition of Datum (in $ thousands)** | **$** |
| &nbsp;&nbsp;**Current assets** |  |
| &nbsp;&nbsp;&nbsp;Cash | 2798 |
| &nbsp;&nbsp;&nbsp;Accounts receivable and other receivables | 3552 |
| &nbsp;&nbsp;&nbsp;Unbilled revenue | 1301 |
| &nbsp;&nbsp;&nbsp;Prepaids | 159 |
|  | **7810** |
| &nbsp;&nbsp;**Non-current assets** |  |
| &nbsp;&nbsp;&nbsp;Other assets | 2 |
| &nbsp;&nbsp;&nbsp;Property and equipment | 55 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets | 135 |
| &nbsp;&nbsp;&nbsp;Intangibles | 22525 |
| &nbsp;&nbsp;&nbsp;Goodwill | 14830 |
| &nbsp;&nbsp;**Total assets acquired** | **45357** |
| &nbsp;&nbsp;**Current liabilities** |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 4255 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 945 |
| &nbsp;&nbsp;&nbsp;Current portion of lease liabilities | 71 |
|  | **5271** |
| &nbsp;&nbsp;**Non-current liabilities** |  |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 64 |
| &nbsp;&nbsp;&nbsp;Deferred tax liabilities | 5987 |
| &nbsp;&nbsp;**Total liabilities assumed** | **11322** |
| &nbsp;&nbsp;**Net assets acquired** | **34035** |

---

During the three months ended December 31, 2022, the purchase price was reduced by $2,438,000 (US$1,894,000), mainly due to working capital adjustments of $2,286,000 (US$1,776,000). Accordingly, the fair value of the assets acquired and the liabilities assumed have been adjusted to reflect the change. These adjustments impacted principally the goodwill value, which decreased by $2,137,000. The effects of the

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 11

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![image_2.jpg](image_2.jpg)

adjustments to the purchase price were not material to the financial statements for the three and six months ended September 30, 2022.

*Goodwill*

The goodwill recognized consists mainly of the future economic value attributable to the profitability of the acquired business, as well as its workforce and expected synergies from the integration of Datum into the Group's existing business. The Company does not expect the goodwill to be deductible for income tax purposes.

*Consideration paid*

The following table summarizes the acquisition date fair value of each class of consideration as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;**Acquisition of Datum (in $ thousands)** | **$** |
| &nbsp;&nbsp;&nbsp;Consideration transferred settled in cash | 17430 |
| &nbsp;&nbsp;&nbsp;Issuance of 1,867,262 Subordinate Voting Shares | 5552 |
| &nbsp;&nbsp;&nbsp;Balance of purchase payable with a nominal value of US$9,345,000 ($12028000) | 11053 |
| &nbsp;&nbsp;**Total consideration transferred** | **34035** |

---

*Datum's contribution to the Group results*

For the three and nine months ended December 31, 2022, the Datum business contributed revenues of approximately $5,929,000 and $10,834,000, respectively. For the three and nine months ended December 31, 2022, the Datum business contributed to the consolidated net loss of the Group, in the amount of $1,350,000 and $4,837,000, including amortization, primarily related to the acquired customer relationships, of $1,796,000 and $3,525,000, respectively, share-based compensation granted on business acquisitions of $946,000 and $1,913,000, respectively, and acquisition and integration costs of $314,000 and $2,027,000, respectively.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 12

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![image_2.jpg](image_2.jpg)

8. Results of Operations

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
|<br>**(in $ thousands, except for per share data)** | **2022** | **2021** | **2022** | **2021** |
|  | **$** | **$** | **$** | **$** |
| Revenues | 130780 | 109713 | 386477 | 317911 |
| Cost of revenues | 91562 | 81456 | 275435 | 232841 |
| Gross margin | 39218 | 28257 | 111042 | 85070 |
| Operating expenses |  |  |  |  |
| Selling, general and administrative expenses | 31196 | 25002 | 90544 | 72634 |
| Business acquisition, integration and reorganization costs | 1290 | 857 | 5913 | 5489 |
| Depreciation | 1634 | 1400 | 4815 | 4200 |
| Amortization of intangibles | 7397 | 3438 | 18804 | 10268 |
| Foreign exchange loss (gain) | 163 | (27) | 63 | (1) |
|  | 41680 | 30670 | 120139 | 92590 |
| Operating loss | (2462) | (2413) | (9097) | (7520) |
| Net financial expenses | 2664 | 1203 | 6758 | 3227 |
| Loss before income taxes | **(5126)** | **(3616)** | **(15855)** | **(10747)** |
| Income tax expense (recovery) |  |  |  |  |
| Current | 159 | 62 | 207 | (134) |
| Deferred | 220 | (192) | (5958) | (2318) |
|  | 379 | (130) | (5751) | (2452) |
| Net loss | **(5505)** | **(3486)** | **(10104)** | **(8295)** |
| Basic and diluted loss per share | (0.06) | (0.04) | (0.11) | (0.10) |

---

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 13

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![image_2.jpg](image_2.jpg)

**8.1Revenues**

The following table reconciles Constant Dollar Revenue<sup>(1)</sup> to revenues by geographic location:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **For the three months ended<br>December 31,** | **For the three months ended<br>December 31,** | **For the three months ended<br>December 31,** | **For the nine months ended<br>December 31,** | **For the nine months ended<br>December 31,** | **For the nine months ended<br>December 31,** |
|<br>**(in $ thousands, except for percentages)** | **2022** | **2021** | **%**<sup>(2)</sup> | **2022** | **2021** | **%** |
| **Total Alithya revenue as reported** | **130780** | **109713** | **19.2%** | **386477** | **317911** | **21.6%** |
| &nbsp;&nbsp;&nbsp;Variation prior to foreign currency impact | **16.2%** |  |  | **19.7%** |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency impact | **3.0%** |  |  | **1.9%** |  |  |
| &nbsp;&nbsp;**Variation over previous period** | **19.2%** |  |  | **21.6%** |  |  |
| Canada |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Constant Dollar Revenue | 77512 | 73140 | **6.0%** | 230832 | 209130 | **10.4%** |
| &nbsp;&nbsp;&nbsp;Foreign currency impact |  |  |  |  |  |  |
| &nbsp;&nbsp;**Canada revenue as reported** | **77512** | **73140** | **6.0%** | **230832** | **209130** | **10.4%** |
| U.S. |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Constant Dollar Revenue | 45405 | 33056 | **37.4%** | 136429 | 99102 | **37.7%** |
| &nbsp;&nbsp;&nbsp;Foreign currency impact | 3480 |  |  | 6890 |  |  |
| &nbsp;&nbsp;**U.S. revenue as reported** | **48885** | **33056** | **47.9%** | **143319** | **99102** | **44.6%** |
| International |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Constant Dollar Revenue | 4562 | 3517 | **29.7%** | 13377 | 9679 | **38.2%** |
| &nbsp;&nbsp;&nbsp;Foreign currency impact | (179) |  |  | (1051) |  |  |
| &nbsp;&nbsp;**International revenue as reported** | **4383** | **3517** | **24.6%** | **12326** | **9679** | **27.3%** |

---

<sup>1</sup> Non-IFRS measure. See section 5 titled "Non-IFRS and Other Financial Measures" for an explanation of the composition and usefulness of this non-IFRS financial measure.

<sup>2</sup> Constant Dollar Growth, which is a Non-IFRS measure. See section 5 titled "Non-IFRS and Other Financial Measures" for an explanation of the composition and usefulness of this non-IFRS financial measure.

Revenues amounted to $130.8 million for the three months ended December 31, 2022, including $12.6 million from Vitalyst, LLC ("Vitalyst") and Datum, following their acquisitions by the Company on January 31, 2022 and July 1, 2022, respectively, representing a $21.1 million increase, or 19.2%, from $109.7 million for the three months ended December 31, 2021. On a sequential basis, revenues also increased by $1.9 million, from $128.9 million for the second quarter of this year.

Revenues in Canada increased by $4.4 million, or 6.0%, to $77.5 million for the three months ended December 31, 2022, from $73.1 million for the three months ended December 31, 2021. The increase in revenues was due to organic growth in all areas, including growth from the two long-term contracts signed as part of an acquisition in the first quarter of last year.

U.S. revenues increased by $15.8 million, or 47.9%, to $48.9 million for the three months ended December 31, 2022, from $33.1 million for the three months ended December 31, 2021, due to revenues of $12.6 million from the acquisitions of Vitalyst and Datum, and a favorable US$ exchange rate impact of $3.5 million, partially offset by a decrease of revenues in certain areas of the business.

International revenues increased by $0.9 million, or 24.6%, to $4.4 million for the three months ended December 31, 2022, from $3.5 million for the three months ended December 31, 2021, driven by organic growth

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 14

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![image_2.jpg](image_2.jpg)

in activity levels, partially offset by an unfavorable foreign exchange rate impact of $0.2 million between the two periods.

Revenues amounted to $386.5 million for the nine months ended December 31, 2022, including $34.2 million from the acquisitions of Vitalyst and Datum, representing a $68.6 million increase, or 21.6%, from $317.9 million for the nine months ended December 31, 2021.

Revenues in Canada increased by $21.7 million, or 10.4%, to $230.8 million for the nine months ended December 31, 2022, from $209.1 million for the nine months ended December 31, 2021. The increase in revenues was due to organic growth in all areas, including growth from the two long-term contracts signed as part of an acquisition in the first quarter of last year.

U.S. revenues increased by $44.2 million, or 44.6%, to $143.3 million for the nine months ended December 31, 2022, from $99.1 million for the nine months ended December 31, 2021, due primarily to revenues of $34.2 million from the acquisitions of Vitalyst and Datum, a favorable US$ exchange rate impact of $6.9 million, and organic growth in certain areas of the business.

International revenues increased by $2.6 million, or 27.3%, to $12.3 million for the nine months ended December 31, 2022, from $9.7 million for the nine months ended December 31, 2021, driven by organic growth in activity levels, partially offset by an unfavorable foreign exchange rate impact of $1.1 million between the two periods.

**8.2Gross Margin**

Gross margin increased by $10.9 million, or 38.8%, to $39.2 million for the three months ended December 31, 2022, from $28.3 million for the three months ended December 31, 2021. Gross margin as a percentage of revenues increased to 30.0% for the three months ended December 31, 2022, from 25.8% for the three months ended December 31, 2021. On a sequential basis, gross margin as a percentage of revenues increased from 29.3% for the second quarter of this year.

In Canada, gross margin as a percentage of revenues increased, compared to the same quarter last year, due to increased revenues from permanent employees relative to subcontractors, higher average revenue per employee, and higher margin offerings. Gross margin as a percentage of revenues also increased on a sequential basis, mainly due to higher average revenue per employee and higher margin offerings, compared to the second quarter of this year.

In the U.S., gross margin as a percentage of revenues increased, compared to the same quarter last year, as a result of a positive margin impact from the acquisitions of Vitalyst and Datum, higher average revenue per employee, and improved project performance in other areas of the business. Gross margin as a percentage of revenues also increased on a sequential basis, mainly due to higher average revenue per employee and improved project performance in certain areas of the business, compared to the second quarter of this year.

International gross margin as a percentage of revenues decreased compared to the same quarter last year, mainly as a result of inflationary pressures on salary costs and more non-billable hours.

Gross margin increased by $25.9 million, or 30.5%, to $111.0 million for the nine months ended December 31, 2022, from $85.1 million for the nine months ended December 31, 2021. Gross margin as a

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 15

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![image_2.jpg](image_2.jpg)

percentage of revenues increased to 28.7% for the nine months ended December 31, 2022, from 26.8% for the nine months ended December 31, 2021, despite annual salary increases which came into effect in the first quarter of this year and the non-recurrence of the forgiveness of the $4.6 million in Paycheck Protection Program ("PPP") loans recorded to cost of revenues in the first quarter of last year.

In Canada, gross margin as a percentage of revenues increased for the nine months ended December 31, 2022, compared to the same period last year, due to increased revenues from permanent employees relative to subcontractors, higher average revenue per employee, and increased subscription, software and other revenues, which carry higher margins, partially offset by inflationary pressures on salary costs.

In the U.S., gross margin as a percentage of revenues increased for the nine months ended December 31, 2022, compared to the same period last year, as a result of the positive margin impact from the acquisitions of Vitalyst and Datum, higher average revenue per employee, and improved project performance in other areas of the business. This increase was partially offset by reduced governmental wage subsidies, mainly the forgiveness of the PPP loans recorded in the first quarter of last year, as explained above, and market pressures on salary costs.

International gross margin as a percentage of revenues decreased for the nine months ended December 31, 2022, compared to the same period last year, mainly as a result of inflationary pressures on salary costs.

**8.3Segment Reporting** 

As at April 1, 2022, as a result of organic growth and the integration of recent business acquisitions, the Group determined that it has three reportable segments based on geography: Canada, U.S. and International. Information for the comparative period has been restated to also present segment information for the three reportable segments.

Operating income by segment refers to operating income before head office general and administrative expenses and business acquisition, integration and reorganization costs, which are not considered when assessing the underlying financial performance of the reportable segments. Head office general and administrative expenses are expenses and salaries related to centralized functions, such as global finance, legal, human resources and technology teams, which are not allocated to segments. This measure also excludes the effects of depreciation, amortization and foreign exchange loss (gain).

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 16

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![image_2.jpg](image_2.jpg)

The following tables present the Group's operations based on reportable segments:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31, 2022** | **For the three months ended December 31, 2022** | **For the three months ended December 31, 2022** | **For the three months ended December 31, 2022** |
|<br>**(in $ thousands)** | **Canada** | **U.S.** | **International** | **Total** |
|  | **$** | **$** | **$** | **$** |
| Revenues | 77512 | 48885 | 4383 | 130780 |
| Operating income by segment | 10094 | 7213 | 308 | 17615 |
| Head office general and administrative expenses |  |  |  | 9593 |
| Business acquisition, integration and reorganization costs |  |  |  | 1290 |
| Foreign exchange loss |  |  |  | 163 |
| Operating income before depreciation and amortization |  |  |  | 6569 |
| Depreciation and amortization |  |  |  | 9031 |
| **Operating loss** |  |  |  | **(2462)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** |
|<br>**(in $ thousands)** | **Canada** | **U.S.** | **International** | **Total** |
|  | **$** | **$** | **$** | **$** |
| Revenues | 73140 | 33056 | 3517 | 109713 |
| Operating income by segment | 7564 | 2479 | 291 | 10334 |
| Head office general and administrative expenses |  |  |  | 7079 |
| Business acquisition, integration and reorganization costs |  |  |  | 857 |
| Foreign exchange gain |  |  |  | (27) |
| Operating income before depreciation and amortization |  |  |  | 2425 |
| Depreciation and amortization |  |  |  | 4838 |
| **Operating loss** |  |  |  | **(2413)** |

---

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the nine months ended December 31, 2022** | **For the nine months ended December 31, 2022** | **For the nine months ended December 31, 2022** | **For the nine months ended December 31, 2022** |
|<br>**(in $ thousands)** | **Canada** | **U.S.** | **International** | **Total** |
|  | **$** | **$** | **$** | **$** |
| Revenues | 230832 | 143319 | 12326 | 386477 |
| Operating income by segment | 25856 | 20015 | 1111 | 46982 |
| Head office general and administrative expenses |  |  |  | 26484 |
| Business acquisition, integration and reorganization costs |  |  |  | 5913 |
| Foreign exchange loss |  |  |  | 63 |
| Operating income before depreciation and amortization |  |  |  | 14522 |
| Depreciation and amortization |  |  |  | 23619 |
| **Operating loss** |  |  |  | **(9097)** |

---

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 17

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![image_2.jpg](image_2.jpg)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the nine months ended December 31, 2021** | **For the nine months ended December 31, 2021** | **For the nine months ended December 31, 2021** | **For the nine months ended December 31, 2021** |
|<br>**(in $ thousands)** | **Canada** | **U.S.** | **International** | **Total** |
|  | **$** | **$** | **$** | **$** |
| Revenues | 209130 | 99102 | 9679 | 317911 |
| Operating income by segment | 17736 | 15282 | 781 | 33799 |
| Head office general and administrative expenses |  |  |  | 21363 |
| Business acquisition, integration and reorganization costs |  |  |  | 5489 |
| Foreign exchange gain |  |  |  | (1) |
| Operating income before depreciation and amortization |  |  |  | 6948 |
| Depreciation and amortization |  |  |  | 14468 |
| **Operating loss** |  |  |  | **(7520)** |

---

**8.4Operating Expenses**

**8.4.1Selling, General and Administrative Expenses**

Selling, general and administrative expenses include salary, wages and other benefits for selling and administrative employees, professional fees, occupancy costs, information technology and communications costs, share-based compensation, public listing and investor fees, and other administrative expenses.

Selling, general and administrative expenses totaled $31.2 million for the three months ended December 31, 2022, an increase of $6.2 million, or 24.8%, from $25.0 million for the three months ended December 31, 2021. Selling, general and administrative expenses, as a percentage of revenues, amounted to 23.9% for the three months ended December 31, 2022, compared to 22.8% for the same period last year, driven mostly by the higher historical selling, general and administrative expense percentage of Vitalyst and an unfavorable US$ exchange rate impact of $1.0 million, partially offset by reductions in other expense categories. On a sequential basis, expenses increased by $0.8 million, from $30.4 million for the second quarter, driven by an unfavorable US$ exchange rate impact of $0.5 million and sequential increases in certain discretionary spending categories such as travel, business development, and information technology and communications costs, partially offset by reductions in other expense categories.

In Canada, expenses increased by $1.3 million, or 8.5%, to $17.0 million for the three months ended December 31, 2022, from $15.7 million for the three months ended December 31, 2021, due primarily to increases of $0.9 million in information technology and communications costs, including $0.7 million related to specific discretionary projects, $0.8 million in non-cash share-based compensation, $0.3 million in business development costs, $0.2 million in employee training costs, and $0.1 million in travel costs, as these activities are returning to pre-Covid-19 levels. These increases were partially offset by decreases of $0.5 million in occupancy costs, $0.4 million in recruiting fees, and $0.2 million in employee compensation costs.

U.S. expenses increased by $4.7 million, or 55.4%, to $13.3 million for the three months ended December 31, 2022, from $8.6 million for the three months ended December 31, 2021. The increase was due primarily to expenses of $3.7 million from Vitalyst and Datum, and increases of $0.7 million in employee compensation costs and $0.2 million in travel costs, partially offset by reductions in other expense categories. The increased expenses include an unfavorable US$ exchange rate impact of $1.0 million.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 18

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![image_2.jpg](image_2.jpg)

International expenses increased by $0.1 million, or 13.8%, to $0.8 million for the three months ended December 31, 2022, from $0.7 million for the the three months ended December 31, 2021, primarily due to increased travel costs.

Selling, general and administrative expenses totaled $90.5 million for the nine months ended December 31, 2022, an increase of $17.9 million, or 24.7%, from $72.6 million for the nine months ended December 31, 2021. Selling, general and administrative expenses, as a percentage of revenues, amounted to 23.4% for the nine months ended December 31, 2022, compared to 22.8% for the same period last year, driven mostly by the higher historical selling, general and administrative expense percentage of Vitalyst and an unfavorable US$ exchange rate impact of $1.8 million, partially offset by reductions in other expense categories.

In Canada, expenses increased by $3.7 million, or 8.0%, to $50.6 million for the nine months ended December 31, 2022, from $46.9 million for the nine months ended December 31, 2021, due primarily to increases of $2.1 million in information technology and communications costs, including $1.7 million related to specific discretionary projects, $1.4 million in non-cash share-based compensation, $0.8 million in employee training costs, $0.5 million in travel costs and $0.4 million in business development costs, as these activities are returning to pre-Covid-19 levels.These increases were partially offset by decreases of $0.8 million in employee compensation costs and $0.8 million in occupancy costs.

U.S. expenses increased by $13.8 million, or 57.7%, to $37.6 million for the nine months ended December 31, 2022, from $23.8 million for the nine months ended December 31, 2021. The increase was due primarily to expenses of $10.0 million from Vitalyst and Datum, and increases of $3.2 million in employee compensation costs, as salaries and variable compensation increased with revenues, and as governmental wage subsidies decreased, mainly the forgiveness of $1.3 million in PPP loans recorded in the first quarter of last year, and $0.4 million in travel costs, partially offset by a $0.2 million decrease in recruiting fees. The increased expenses include an unfavorable US$ exchange rate impact of $1.8 million.

International expenses increased by $0.4 million, or 20.7%, to $2.3 million for the nine months ended December 31, 2022, from $1.9 million for the nine months ended December 31, 2021, primarily due to increased travel and employee compensation costs.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 19

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![image_2.jpg](image_2.jpg)

**8.4.2Share-Based Compensation**

Share-based compensation is included in cost of revenues and selling, general and administrative expenses and is detailed in the table below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
|<br>**(in $ thousands)** | **2022** | **2021** | **2022** | **2021** |
|  | **$** | **$** | **$** | **$** |
| Stock option plans | 251 | 236 | 737 | 634 |
| Share purchase plan – employer contribution | 331 | 298 | 1025 | 825 |
| Share-based compensation granted on business acquisitions | 1019 | 382 | 2261 | 1343 |
| DSUs | 159 | 132 | 432 | 441 |
| RSUs |  |  |  | 92 |
| PSUs | 239 | 91 | 706 | 182 |
|  | **1999** | **1139** | **5161** | **3517** |

---

Share-based compensation amounted to $2.0 million for the three months ended December 31, 2022, representing an increase of $0.9 million, from $1.1 million for the three months ended December 31, 2021. The increase in share-based compensation was driven primarily by increased expenses related to share-based compensation granted on business acquisitions and increased expenses related to PSUs.

Share-based compensation amounted to $5.2 million for the nine months ended December 31, 2022, representing an increase of $1.7 million, from $3.5 million for the nine months ended December 31, 2021. The increase in share-based compensation was driven primarily by increased share-based compensation granted on business acquisitions, increased expenses related to PSUs, and increased employer contributions to the share purchase plan, partially offset by decreased expenses related to RSUs.

**8.4.3Business Acquisition, Integration and Reorganization Costs**

Having reached a certain critical mass through acquisitions and continued organic growth, Alithya initiated a review of its cost structure in the fourth quarter of last year and has incurred certain reorganization costs in the current year.

Business acquisition, integration and reorganization costs amounted to $1.3 million for the three months ended December 31, 2022, representing an increase of $0.4 million, from $0.9 million for the three months ended December 31, 2021. The increase was driven primarily by $0.8 million in reorganization costs related to modifications to Alithya's cost structure during the three months ended December 31, 2022, consisting entirely of employee termination and benefits costs, and an increase of $0.2 million in employee compensation on business acquisition, related mainly to the Datum Acquisition. These costs were partially offset by a decrease of $0.7 million in integration costs, related mainly to the integration of R3D Consulting Inc. ("R3D") in the third quarter of last year.

Business acquisition, integration and reorganization costs amounted to $5.9 million for the nine months ended December 31, 2022, representing an increase of $0.4 million, from $5.5 million for the nine months ended December 31, 2021. The increase was driven primarily by $2.8 million in reorganization costs related to

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 20

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![image_2.jpg](image_2.jpg)

modifications to Alithya's cost structure during the nine months ended December 31, 2022, consisting entirely of employee termination and benefits costs, and increases of $0.6 million in employee compensation on business acquisition and $0.1 million in acquisition costs, related mainly to the Datum Acquisition. These costs were partially offset by a decrease of $2.9 million in integration costs, related mainly to the integration of R3D last year.

**8.4.4Depreciation**

Depreciation totaled $1.6 million for the three months ended December 31, 2022, compared to $1.4 million for the three months ended December 31, 2021. These costs consisted primarily of depreciation of Alithya's property and equipment, which increased by $0.1 million, and right-of-use assets, which increased by $0.1 million.

Depreciation totaled $4.8 million for the nine months ended December 31, 2022, compared to $4.2 million for the nine months ended December 31, 2021. These costs consisted primarily of depreciation of Alithya's property and equipment, which increased by $0.1 million, and right-of-use assets, which increased by $0.5 million.

**8.4.5Amortization of Intangibles**

Amortization of intangibles totaled $7.4 million for the three months ended December 31, 2022, compared to $3.4 million for the three months ended December 31, 2021. These costs consisted primarily of amortization of customer relationships recognized on acquisitions, which increased by $3.1 million, and amortization of software, which increased by $0.8 million. The increases resulted primarily from the amortization of intangibles recognized on the acquisitions of Vitalyst and Datum.

Amortization of intangibles totaled $18.8 million for the nine months ended December 31, 2022, compared to $10.3 million for the nine months ended December 31, 2021. These costs consisted primarily of amortization of customer relationships recognized on acquisitions, which increased by $6.8 million, and amortization of software, which increased by $1.5 million. The increases resulted primarily from the amortization of intangibles recognized on the acquisitions of Vitalyst and Datum.

**8.4.6Foreign Exchange Loss (Gain)**

Foreign exchange loss amounted to $0.2 million for the three months ended December 31, 2022, compared to a gain of $0.03 million for the three months ended December 31, 2021.

Foreign exchange loss amounted to $0.1 million for the nine months ended December 31, 2022, compared to nil for the nine months ended December 31, 2021.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 21

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![image_2.jpg](image_2.jpg)

**8.5Other Income and Expenses**

**8.5.1Net Financial Expenses** 

Net financial expenses are summarized in the table below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
|<br>**(in $ thousands)** | **2022** | **2021** | **2022** | **2021** |
|  | **$** | **$** | **$** | **$** |
| Interest on long-term debt | 2074 | 651 | 4960 | 1661 |
| Interest and financing charges | 174 | 93 | 462 | 274 |
| Interest on lease liabilities | 204 | 167 | 631 | 517 |
| Amortization of finance costs | 110 | 82 | 281 | 211 |
| Interest accretion on balances of purchase payable | 253 | 216 | 657 | 635 |
| Interest income | (151) | (6) | (233) | (71) |
|  | **2664** | **1203** | **6758** | **3227** |

---

Net financial expenses amounted to $2.7 million for the three months ended December 31, 2022, representing an increase of $1.5 million, or 121.3%, from $1.2 million for the three months ended December 31, 2021, driven mainly by the increase in long-term debt, as described in section 10.6, and increased variable interest rates, which accounted for the increase in interest on long-term debt.

Net financial expenses amounted to $6.8 million for the nine months ended December 31, 2022, representing an increase of $3.6 million, or 109.1%, from $3.2 million for the nine months ended December 31, 2021, driven mainly by the increase in long-term debt, as described in section 10.6, and increased variable interest rates, which accounted for the increase in interest on long-term debt.

**8.5.2Income Taxes**

Income tax expense was $0.4 million for the three months ended December 31, 2022, representing an increase of $0.5 million, from a recovery of $0.1 million for the three months ended December 31, 2021, due primarily to increased current tax expense, as a result of increased taxable income in certain jurisdictions, and increased deferred tax expense, mainly resulting from the use of tax losses in certain jurisdictions.

Income tax recovery was $5.8 million for the nine months ended December 31, 2022, representing an increase of $3.3 million, from $2.5 million for the nine months ended December 31, 2021, due primarily to an increase in deferred tax recovery, partially offset by an increase in current tax expense. During the nine months ended December 31, 2022, the Group recognized a deferred tax asset in the amount of $6.0 million that was probable of being realized as a result of the deferred tax liability recognized pursuant to the Datum Acquisition. The recognized deferred tax asset relates to previous years' net operating losses of the Group in the U.S. available for carryforwards as at July 1, 2022 in the amount of approximately $22.8 million that was previously not recognized.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 22

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![image_2.jpg](image_2.jpg)

**8.6Net Loss and Loss per Share**

Net loss for the three months ended December 31, 2022 was $5.5 million, an increase of $2.0 million, from $3.5 million for the three months ended December 31, 2021. The increased loss was driven mainly by increased business acquisition, integration and reorganization costs and increased depreciation and amortization of intangibles, as a result of the Datum Acquisition, as well as increased selling, general and administrative expenses, increased net financial expenses, and increased income tax expense, partially offset by increased gross margin in the three months ended December 31, 2022, compared to the three months ended December 31, 2021. On a per share basis, this translated into a basic and diluted net loss per share of $0.06 for the three months ended December 31, 2022, compared to a net loss of $0.04 per share for the three months ended December 31, 2021.

Net loss for the nine months ended December 31, 2022 was $10.1 million, an increase of $1.8 million, from $8.3 million, including the forgiveness of $5.9 million in PPP loans, for the nine months ended December 31, 2021. The increased loss was driven mainly by increased business acquisition, integration and reorganization costs and increased depreciation and amortization of intangibles, as a result of the Datum Acquisition, as well as decreased governmental wage subsidies, mainly the forgiveness of the PPP loans recorded in the first quarter of last year, increased selling, general and administrative expenses, and increased net financial expenses, partially offset by increased gross margin and increased income tax recovery in the nine months ended December 31, 2022, compared to the nine months ended December 31, 2021. On a per share basis, this translated into a basic and diluted net loss per share of $0.11 for the nine months ended December 31, 2022, compared to a net loss of $0.10 per share for the nine months ended December 31, 2021.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 23

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![image_2.jpg](image_2.jpg)

**8.7EBITDA and Adjusted EBITDA**

The following table reconciles net loss to EBITDA and Adjusted EBITDA:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
|<br>**(in $ thousands)** | **2022** | **2021** | **2022** | **2021** |
|  | **$** | **$** | **$** | **$** |
| **Revenues** | **130780** | **109713** | **386477** | **317911** |
| **Net loss** | **(5505)** | **(3486)** | **(10104)** | **(8295)** |
| Net financial expenses | 2664 | 1203 | 6758 | 3227 |
| Income tax expense (recovery) | 379 | (130) | (5751) | (2452) |
| Depreciation | 1634 | 1400 | 4815 | 4200 |
| Amortization of intangibles | 7397 | 3438 | 18804 | 10268 |
| **EBITDA** | **6569** | **2425** | **14522** | **6948** |
| EBITDA Margin | **5.0%** | **2.2%** | **3.8%** | **2.2%** |
| *Adjusted for:* |  |  |  |  |
| Foreign exchange loss (gain) | 163 | (27) | 63 | (1) |
| Share-based compensation | 1999 | 1139 | 5161 | 3517 |
| Business acquisition, integration and reorganization costs | 1290 | 857 | 5913 | 5489 |
| Internal ERP systems implementation |  | 120 |  | 608 |
| **Adjusted EBITDA** | **10021** | **4514** | **25659** | **16561** |
| Adjusted EBITDA Margin | **7.7%** | **4.1%** | **6.6%** | **5.2%** |

---

EBITDA amounted to $6.6 million for the three months ended December 31, 2022, representing an increase of $4.1 million, from $2.4 million for the three months ended December 31, 2021. EBITDA Margin was equal to 5.0% for the three months ended December 31, 2022, compared to 2.2% for the three months ended December 31, 2021.

Adjusted EBITDA amounted to $10.0 million for the three months ended December 31, 2022, representing an increase of $5.5 million, or 122.0%, from $4.5 million for the three months ended December 31, 2021. As explained above, increased gross margin and the contributions from the acquisitions of Vitalyst and Datum were partially offset by increased selling, general and administrative expenses. Adjusted EBITDA Margin was 7.7% for the three months ended December 31, 2022, compared to 4.1% for the three months ended December 31, 2021.

EBITDA amounted to $14.5 million for the nine months ended December 31, 2022, representing an increase of $7.6 million, from $6.9 million for the nine months ended December 31, 2021. EBITDA Margin was equal to 3.8% for the nine months ended December 31, 2022, compared to 2.2% for the nine months ended December 31, 2021.

Adjusted EBITDA amounted to $25.7 million for the nine months ended December 31, 2022, representing an increase of $9.1 million, or 54.9%, from $16.6 million, including the forgiveness of $5.9 million in PPP loans, for the nine months ended December 31, 2021. As explained above, increased gross margin and the contributions from the acquisitions of Vitalyst and Datum were partially offset by increased selling, general and administrative expenses and decreased governmental wage subsidies, mainly the forgiveness of the PPP loans recorded in

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 24

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![image_2.jpg](image_2.jpg)

the first quarter of last year. Adjusted EBITDA Margin was 6.6% for the nine months ended December 31, 2022, compared to 5.2% for the nine months ended December 31, 2021.

9. Bookings

Bookings during the three months ended December 31, 2022 were $136.6 million, which translated into a book-to-bill ratio of 1.04 for the quarter. For the trailing twelve months, bookings were $508.5 million, which translated into a book-to-bill ratio of 1.00.

Management believes information regarding bookings can provide useful trend insight to investors regarding changes in the volume of new business over time. However, contracts typically provide termination clauses at the option of the customer. Furthermore, modifications of the scope of work and demand-driven usage may occur. As such, the amount of the contract actually realized could materially differ from the initial bookings amount.

10. Liquidity and Capital Resources

**10.1Consolidated Statements of Cash Flows** 

Alithya's ongoing operations and growth are financed through a combination of operating cash flows, borrowings under its existing credit facility, secured loans and a subordinated unsecured loan, and the issuance of equity. Alithya seeks to maintain an optimal level of liquidity through the active management of its assets and liabilities, as well as its cash flows. The following table summarizes Alithya's cash flow activities for the three and nine months ended December 31, 2022 and 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
|<br>**(in $ thousands)** | **2022** | **2021** | **2022** | **2021** |
|  | **$** | **$** | **$** | **$** |
| Net cash from operating activities | 34900 | 11053 | 24451 | 5532 |
| Net cash from (used in) investing activities | 1400 | (455) | (13402) | (1602) |
| Net cash used in financing activities | (38327) | (25471) | (5693) | (2125) |
| Effect of exchange rate changes on cash | 134 | (10) | 1008 | (29) |
| Net change in cash | **(1893)** | **(14883)** | **6364** | **1776** |
| Cash, beginning of period | 25912 | 23562 | 17655 | 6903 |
| Cash, end of period | **24019** | **8679** | **24019** | **8679** |

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**10.2Cash Flows - Operating Activities**

For the three months ended December 31, 2022, net cash from operating activities was $34.9 million, representing an increase of $23.8 million, or 215.8%, from $11.1 million for the three months ended December 31, 2021. The cash flows for the three months ended December 31, 2022 resulted primarily from the net loss of $5.5 million, plus $14.3 million of non-cash adjustments to the net loss, consisting primarily of depreciation and amortization, net financial expenses, share-based compensation, foreign exchange loss on

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 25

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![image_2.jpg](image_2.jpg)

repayment of long-term debt, deferred taxes, and unrealized foreign exchange, and $26.1 million in favorable changes in non-cash working capital items. In comparison, the cash flows for the three months ended December 31, 2021 resulted primarily from the net loss of $3.5 million, plus $6.7 million of non-cash adjustments to the net loss, consisting primarily of depreciation and amortization, net financial expenses, and share-based compensation, and $7.8 million in favorable changes in non-cash working capital items.

Favorable changes in non-cash working capital items of $26.1 million during the three months ended December 31, 2022 consisted primarily of a $12.6 million decrease in unbilled revenues, a $7.2 million decrease in accounts receivable and other receivables, a $3.2 million decrease in tax credits receivable, a $1.6 million increase in accounts payable and accrued liabilities, a $1.3 million increase in deferred revenues, and a $0.2 million decrease in prepaids. For the three months ended December 31, 2021, favorable changes in non-cash working capital items of $7.8 million consisted primarily of a $6.4 million decrease in unbilled revenues, a $5.8 million increase in accounts payable and accrued liabilities, and a $3.2 million increase in deferred revenues, partially offset by a $4.2 million increase in accounts receivable and other receivables, a $3.1 million increase in tax credits receivable, and a $0.2 million increase in prepaids.

For the nine months ended December 31, 2022, net cash from operating activities was $24.5 million, representing an increase of $19.0 million, or 342.0%, from $5.5 million for the nine months ended December 31, 2021. The cash flows for the nine months ended December 31, 2022 resulted primarily from the net loss of $10.1 million, plus $28.7 million of non-cash adjustments to the net loss, consisting primarily of depreciation and amortization, net financial expenses, share-based compensation, and foreign exchange loss on repayment of long-term debt, partially offset by deferred taxes and unrealized foreign exchange, and $5.9 million in favorable changes in non-cash working capital items. In comparison, the cash flows for the nine months ended December 31, 2021 resulted primarily from the net loss of $8.3 million, plus $12.4 million of non-cash adjustments to the net loss, consisting primarily of depreciation and amortization, net financial expenses, and share-based compensation, partially offset by the forgiveness of PPP loans and deferred taxes, and $1.4 million in favorable changes in non-cash working capital items.

Favorable changes in non-cash working capital items of $5.9 million during the nine months ended December 31, 2022 consisted primarily of a $15.3 million decrease in accounts receivable and other receivables, a $0.4 million decrease in prepaids, a $0.1 million decrease in other assets, and a $0.1 million increase in deferred revenues, partially offset by a $8.9 million decrease in accounts payable and accrued liabilities and a $1.1 million increase in tax credits receivable. For the nine months ended December 31, 2021, favorable changes in non-cash working capital items of $1.4 million consisted primarily of a $8.1 million increase in accounts payable and accrued liabilities, a $4.6 million increase in deferred revenues, a $3.2 million decrease in unbilled revenues, a $1.3 million decrease in prepaids, and a $0.7 million decrease in income taxes receivable, partially offset by a $13.8 million increase in accounts receivable and other receivables and a $2.6 million increase in tax credits receivable.

**10.3Cash Flows - Investing Activities** 

For the three months ended December 31, 2022, net cash from investing activities was $1.4 million, representing an increase of $1.9 million, from $0.5 million of cash used for the three months ended December 31, 2021. The cash flows for the three months ended December 31, 2022 resulted primarily from the working capital adjustment received as part of the Datum Acquisition, partially offset by purchases of property and equipment and intangibles as part of the ordinary course of business. In comparison, the cash used in the

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 26

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![image_2.jpg](image_2.jpg)

three months ended December 31, 2021 resulted primarily from purchases of property and equipment as part of the ordinary course of business.

For the nine months ended December 31, 2022, net cash used in investing activities was $13.4 million, representing an increase of $11.8 million, from $1.6 million for the nine months ended December 31, 2021. The cash flows for the nine months ended December 31, 2022 resulted primarily from the Datum Acquisition, net of the working capital adjustment, and purchases of property and equipment and intangibles as part of the ordinary course of business, partially offset by a decrease in restricted cash. In comparison, the cash used in the nine months ended December 31, 2021 resulted primarily from the acquisition of R3D and purchases of property and equipment as part of the ordinary course of business.

**10.4&nbsp;&nbsp;&nbsp;&nbsp;Cash Flows - Financing Activities**

For the three months ended December 31, 2022, net cash used in financing activities was $38.3 million, representing an increase of $12.8 million, from $25.5 million for the three months ended December 31, 2021. The cash flows for the three months ended December 31, 2022 resulted primarily from $57.7 million in long-term debt repayments, $2.3 million in net financial expenses paid, $0.9 million in repayments of lease liabilities, and $0.1 million in shares purchased for cancellation, partially offset by $22.8 million in proceeds from long-term debt, net of related transaction costs, as described in section 10.6. In comparison, the cash flows for the three months ended December 31, 2021 resulted primarily from $31.6 million in long-term debt repayments, $0.9 million in net financial expenses paid, $0.7 million in repayments of lease liabilities, and $0.7 million in shares purchased for cancellation, partially offset by $8.4 million in proceeds from long-term debt, net of related transaction costs.

For the nine months ended December 31, 2022, net cash used in financing activities was $5.7 million, representing an increase of $3.6 million, from $2.1 million for the nine months ended December 31, 2021. The cash flows for the nine months ended December 31, 2022 resulted primarily from $66.6 million in long-term debt repayments, $5.8 million in net financial expenses paid, $2.7 million in repayments of lease liabilities, and $1.0 million in shares purchased for cancellation, partially offset by $70.5 million in proceeds from long-term debt, net of related transaction costs, as described in section 10.6. In comparison, the cash flows for the nine months ended December 31, 2021 resulted primarily from $58.8 million in long-term debt repayments, $2.4 million in net financial expenses paid, $1.8 million in repayments of lease liabilities, and $0.8 million in shares purchased for cancellation, partially offset by $61.6 million in proceeds from long-term debt, net of related transaction costs.

**10.5Capital Resources**

Alithya's capital consists of cash, restricted cash, long-term debt and total equity. Alithya's main objectives when managing capital are to provide a strong capital base in order to maintain shareholders', creditors' and other stakeholders' confidence and to sustain future growth and development of the business, to maintain a flexible capital structure that optimizes the cost of capital at an acceptable risk level and preserves the ability to meet its financial obligations, to ensure sufficient liquidity to pursue its organic growth strategy and undertake selective acquisitions, and to provide returns on investment to shareholders.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 27

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![image_2.jpg](image_2.jpg)

In managing its capital structure, Alithya monitors performance throughout the year to ensure anticipated working capital requirements and maintenance capital expenditures are funded from operations, available cash and, where applicable, bank borrowings.

**10.6&nbsp;&nbsp;&nbsp;&nbsp;Long-Term Debt and Net Debt**

The following table summarizes the Group's long-term debt:

---

| | | |
|:---|:---|:---|
| **As at**<br>**(in $ thousands)** | **December 31,**<br>**2022** | **March 31,**<br>**2022** |
|  | **$** | **$** |
| Senior secured revolving credit facility (the "Credit Facility") <sup>(a)</sup> | 85301 | 66631 |
| Secured loans <sup>(b)</sup> | 13192 | 8596 |
| Subordinated unsecured loans <sup>(c)</sup> | 20000 | 17500 |
| Balance of purchase price payable paid in April 2022 |  | 3100 |
| Balance of purchase price payable paid in October 2022 |  | 1748 |
| Balance of purchase price payable paid in December 2022 (March 31, 2022 - US$6,825,000) |  | 8178 |
| Balance of purchase price payable with a nominal value of $12,653,000 (US$9,345,000), non-interest bearing (4.4% effective interest rate), payable in annual installments of $4,218,000 (US$3,115,000), maturing on July 1, 2025 | 11877 |  |
| Deferral of employment tax payments (March 31, 2022 - US$1,219,000) |  | 1521 |
| Other |  | 120 |
| Unamortized transaction costs (net of accumulated amortization of $1,035,000 and $754,000) | (606) | (718) |
|  | **129764** | **106676** |
| Current portion of long-term debt | 12816 | 19316 |
|  | **116948** | **87360** |

---

<sup>(a)</sup> The Credit Facility is available to a maximum amount of $125,000,000 which can be increased under an accordion provision to $140,000,000, under certain conditions, and can be drawn in Canadian and the equivalent amount in U.S. dollars. It matures on April 1, 2024 and is renewable for additional one-year periods at the lender's discretion.

The advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.25% to 1.00%, or bankers' acceptances or SOFR rates, plus an applicable margin ranging from 1.50% to 2.25%, as applicable for Canadian and U.S. advances, respectively. The applicable margin is determined based on threshold limits for certain financial ratios.

On September 29, 2022, the Credit Facility was amended to temporarily increase the maximum amount available under the Credit Facility to $140,000,000 for the period from September 29, 2022 to January 31, 2023 (the "Bulge Period"). The Group can terminate the Bulge Period at its option commencing December 31, 2022. During the Bulge Period, the advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.75% to 1.50%, or bankers' acceptances or SOFR rates, plus an applicable margin ranging from 2.00% to 2.75%, as applicable for Canadian and U.S. advances, respectively. On January 19, 2023, the Bulge Period was terminated.

As at December 31, 2022, the amount outstanding under the Credit Facility includes $85,301,000 (March 31, 2022 - $48,377,000) payable in U.S. dollars (US$63,000,000; March 31, 2022 - US$38,755,000).

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 28

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![image_2.jpg](image_2.jpg)

On October 27, 2022, the Group entered into an additional operating credit facility available to a maximum amount of $2,708,000 (US$2,000,000), bearing interest at U.S. prime rate plus 1.00%, with the same securities and financial covenants as the Credit Facility. This operating credit facility can be terminated by the lender at any time. There was no amount outstanding under this additional operating credit facility as at December 31, 2022.

<sup>(b)</sup> The secured loans are with Investissement Québec to finance 2022 and 2023 refundable tax credits.

On November 8, 2022, the Group entered into a secured loan with Investissement Québec to finance its 2023 refundable tax credits to a maximum of the lesser of 90% of the eligible refundable tax credits and $10,670,000. At the same time, the maximum amount of the secured loan with Investissement Québec to finance its 2022 refundable tax credits was increased to the lesser of 90% of the eligible refundable tax credits and $8,776,000. The secured loans bear interest at the Canadian prime rate plus 1.25% for the 2023 refundable tax credits and at the Canadian prime rate plus 1.00% for the 2022 refundable tax credits. The loans are secured by a first ranking hypothec on the universality of the financed refundable tax credits and a subordinated ranking hypothec on accounts receivable and other receivables.

The secured loans are repayable on the earlier of the date of receipt of the refundable tax credits receivable and the maturity dates of March 31, 2025 for the 2023 financed refundable tax credits, in the amount of $4,473,000, and March 31, 2024 for the 2022 financed refundable tax credits, in the amount of $8,719,000.

The secured loan to finance its 2021 refundable tax credits, in the amount of $4,670,000, was repaid during the three months ended December 31, 2022.

<sup>(c)</sup> The subordinated unsecured loans are with Investissement Québec, in the amount of $20,000,000, and mature on October 1, 2025. Under the terms of the loans, the Group is required to maintain compliance with certain financial covenants which are measured on a quarterly basis.

<sup>(a)(c)</sup> The Group was in compliance with all of its financial covenants as at December 31, 2022.

Total long-term debt as at December 31, 2022 increased by $23.1 million, to $129.8 million, from $106.7 million as at March 31, 2022, due primarily to an increase of $18.7 million in drawings under the Credit Facility in order to fund the Datum Acquisition and to fund operations, the addition of a $11.9 million balance of purchase price payable as part of the Datum Acquisition, an increase of $2.5 million in the subordinated unsecured loan, an increase of $4.6 million in the secured loans, and a general increase due to the foreign exchange rate impact on long-term debt denominated in U.S. dollars, partially offset by payments of $13.0 million in balances of sale related to previous acquisitions and $1.5 million in deferred employment taxes. The increase in total long-term debt resulted in a $6.4 million increase in cash as at December 31, 2022 compared to March 31, 2022.

As at December 31, 2022, cash amounted to $24.0 million and $85.3 million was drawn under the Credit Facility and classified as long-term debt. In comparison, as at March 31, 2022, cash amounted to $17.7 million, restricted cash held in trust as required by contractual obligations arising from business acquisitions was $3.3 million, and $66.6 million was drawn under the Credit Facility and classified as long-term debt.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 29

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![image_2.jpg](image_2.jpg)

The following table reconciles long-term debt to Net Debt<sup>(1)</sup>:

---

| | | |
|:---|:---|:---|
| **As at**<br>**(in $ thousands)** | **December 31,**<br>**2022** | **March 31,**<br>**2022** |
|  | **$** | **$** |
| Current portion of long-term debt | 12816 | 19316 |
| Non-current portion of long-term debt | 116948 | 87360 |
| **Total long-term debt** | **129764** | **106676** |
| Less: |  |  |
| Cash | 24019 | 17655 |
| Restricted cash |  | 3254 |
|  | **24019** | **20909** |
| **Net Debt** | **105745** | **85767** |

---

<sup>1</sup> Non-IFRS measure. See section 5 titled "Non-IFRS and Other Financial Measures" for an explanation of the composition and usefulness of this non-IFRS financial measure.

During the nine months ended December 31, 2022, Alithya's Net Debt increased primarily as a result of the increased borrowing under the Credit Facility, as explained above, and the decrease in restricted cash, partially offset by the increase in cash.

**10.7&nbsp;&nbsp;&nbsp;&nbsp;Contractual Obligations**

Alithya is committed under the terms of contractual obligations which have various expiration dates, primarily for the rental of premises and technology licenses and infrastructure. Please refer to section 10.7 of Alithya's MD&A for the year ended March 31, 2022 for an overview of such obligations as at such date. Excluding the deferred consideration and potential earn-out consideration related to the Datum Acquisition, as described in section 7 of this MD&A, there have been no material changes with respect to contractual obligations since March 31, 2022 outside of Alithya's ordinary course of business.

**10.8Off-Balance Sheet Arrangements** 

Alithya uses off-balance sheet financing for operating commitments for technology licenses and infrastructure. Please refer to section 10.8 of Alithya's MD&A for the year ended March 31, 2022 and Note 13 of the annual audited consolidated financial statements for the same period for an overview of such arrangements as at such date. There have been no material changes with respect to off-balance sheet arrangements since March 31, 2022 outside of Alithya's ordinary course of business.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 30

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![image_2.jpg](image_2.jpg)

11. Share Capital

**11.1Issued**

The following table presents information concerning issued share capital activity for the period:

---

| | | | |
|:---|:---|:---|:---|
| | | **Multiple Voting Shares** | **Multiple Voting Shares** |
|<br>**(in $ thousands)** | **Subordinate Voting Shares**<br>**Number of shares** | $**Number of shares** | **$** |
| Beginning balance as at April 1, 2022 | 85554000 | 7171616 | 4321 |
| Shares issued pursuant to vesting of share-based compensation granted on business acquisitions | 738382 |  |  |
| Shares issued in consideration of the acquisition of Datum | 1867262 |  |  |
| Shares issued in consideration of the acquisition of Trafic 3W Inc. (the "Trafic3W Acquisition") | 83449 |  |  |
| Shares purchased for cancellation | (354012) |  |  |
| **Ending balance as at December 31, 2022** | **87889081** | **7171616** | **4321** |

---

During the nine months ended December 31, 2022, the following transactions occurred:

• As part of the Datum Acquisition, 1,867,262 Subordinate Voting Shares, with a total value of $5,552,000, were issued. The Company incurred share issue costs in the amount of $32,000, net of deferred income tax of $8,000, for net consideration of $5,528,000.

• As part of the Trafic3W Acquisition, 83,449 Subordinate Voting Shares, with a total value of $281,000, were issued. The Company incurred share issue costs in the amount of $7,000, net of deferred income tax of $2,000, for net consideration of $276,000.

• 354,012 Subordinate Voting Shares were purchased for cancellation under the Company's normal course issuer bid ("NCIB") for a total cash consideration of $987,000 and a carrying value of $1,242,000. The excess of the carrying value over the purchase price in the amount of $255,000 was credited to deficit.

• As part of the acquisition of Matricis Informatique Inc., 157,882 Subordinate Voting Shares, with a total value of $600,000, reclassified from contributed surplus, were issued as settlement of the third anniversary share consideration.

• As part of the acquisition of Travercent LLC, 580,500 Subordinate Voting Shares, with a total value of US$819,000 ($1,108,000), reclassified from contributed surplus, were issued as settlement of the third anniversary share consideration.

During the nine months ended December 31, 2021, the Company acquired all of the outstanding shares of R3D (now Alithya IT Services Inc.). As part of the acquisition, 25,182,676 Subordinate Voting Shares, with a total value of $80,585,000, were issued.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 31

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![image_2.jpg](image_2.jpg)

**11.2Normal Course Issuer Bid**

On September 14, 2022, the Company's Board of Directors authorized and subsequently the TSX approved the renewal of its NCIB. Under the NCIB, the Company is allowed to purchase for cancellation up to 2,491,128 Subordinate Voting Shares, representing 5% of the Company's public float as of the close of markets on September 8, 2022.

The NCIB plan commenced on September 20, 2022 and will end on the earlier of September 19, 2023 and the date on which the Company will have acquired the maximum number of Subordinate Voting Shares allowable under the NCIB or will otherwise have decided not to make any further purchases. All purchases of Subordinate Voting Shares are made by means of open market transactions at their market price at the time of acquisition. Concurrently, the Company entered into an automatic share purchase plan ("ASPP") with a designated broker in connection with its NCIB. The ASPP allows for the designated broker to purchase for cancellation Subordinate Voting Shares, on behalf of the Company, subject to certain trading parameters established, from time to time, by the Company.

12. Related Parties

*Operating transactions with key management personnel*

In the normal course of operations, the Group incurred the following transactions with an entity controlled by a director. The transactions have been recorded at the contractual amount of the consideration established, which represents market rates, as agreed by the related parties. As at December 31, 2022, the entity was no longer a related party as its controlling shareholder ceased to be a director of the Group on September 14, 2022.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the nine months ended December 31,** | **For the nine months ended December 31,** |
|<br>**(in $ thousands)** | **2022** | **2021** | **2022** | **2021** |
|  | **$** | **$** | **$** | **$** |
| Revenues\* |  | 4922 | 6811 | 16322 |

---

*\* Under a ten-year commercial agreement, ending in April 2031, an entity controlled by a former director has committed to minimum annual gross margin, resulting from the procurement of consulting services, with annual surpluses and/or deficiencies thereof eligible to certain carryover provisions. Should the minimum contracted amounts not be met, the entity will make compensating payments based on a formula as defined in the commercial agreement. The commercial agreement may be extended to April 2034, however the minimum annual gross margin requirements will not be applicable to the extension period.*

As at December 31, 2022, trade accounts receivable in the amount of nil (March 31, 2022 - $4,287,000) were receivable from an entity controlled by a former director.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 32

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![image_2.jpg](image_2.jpg)

13. Eight Quarter Summary

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **For the three months ended** | **For the three months ended** | **For the three months ended** | **For the three months ended** | **For the three months ended** | **For the three months ended** | **For the three months ended** | **For the three months ended** |
| **(in $ thousands, except for per share data)** | **Mar 31,** | **Jun 30,** | **Sep 30,** | **Dec 31,** | **Mar 31,** | **Jun 30,** | **Sep 30,** | **Dec 31,** |
| **(in $ thousands, except for per share data)** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** | **2022** |
| Revenues | 77971 | 102921 | 105277 | 109713 | 119974 | 126764 | 128933 | 130780 |
| Cost of revenues | 54517 | 74581 | 76804 | 81456 | 88891 | 92700 | 91173 | 91562 |
| Gross margin | 23454 | 28340 | 28473 | 28257 | 31083 | 34064 | 37760 | 39218 |
|  | 30.1% | 27.5% | 27.0% | 25.8% | 25.9% | 26.9% | 29.3% | 30.0% |
| Operating expenses |  |  |  |  |  |  |  |  |
| Selling, general and administrative expenses | 21740 | 22747 | 24885 | 25002 | 26204 | 28927 | 30421 | 31196 |
| Business acquisition, integration and reorganization costs | 718 | 3943 | 689 | 857 | 6128 | 1882 | 2741 | 1290 |
| Depreciation | 1058 | 1553 | 1247 | 1400 | 1235 | 1579 | 1602 | 1634 |
| Amortization of intangibles | 2490 | 3380 | 3450 | 3438 | 4017 | 4699 | 6708 | 7397 |
| Foreign exchange loss (gain) | 74 | 68 | (42) | (27) | (25) | (164) | 64 | 163 |
|  | 26080 | 31691 | 30229 | 30670 | 37559 | 36923 | 41536 | 41680 |
| Operating loss | (2626) | (3351) | (1756) | (2413) | (6476) | (2859) | (3776) | (2462) |
| Net financial expenses | 849 | 949 | 1075 | 1203 | 1352 | 1793 | 2301 | 2664 |
| Loss before income taxes | **(3475)** | **(4300)** | **(2831)** | **(3616)** | **(7828)** | **(4652)** | **(6077)** | **(5126)** |
| Income tax recovery | (950) | (2268) | (54) | (130) | (575) | (488) | (5642) | 379 |
| Net loss | **(2525)** | **(2032)** | **(2777)** | **(3486)** | **(7253)** | **(4164)** | **(435)** | **(5505)** |
| Basic and diluted loss per share | (0.04) | (0.02) | (0.03) | (0.04) | (0.08) | (0.04) |  | (0.06) |

---

Quarterly variances in Alithya's results are due primarily to the timing of acquisitions. Quarterly variations can also be attributed to seasonality. The revenues generated by Alithya's consultants are impacted by the number of working days in a particular quarter, which can vary as a result of vacations and other paid time off and statutory holidays. Similarly, customer information technology investment cycles are also affected by the seasonality of their own operations.

Over the eight-quarter period, revenues have increased mainly due to business acquisitions, and organic growth in most areas of the Company's business. Fluctuations in gross margin over the previous eight quarters can be attributed to a steady migration towards higher value-added services, offset by the negative impacts of the COVID-19 pandemic, net of government subsidies received, and the April 1, 2021 acquisition of R3D, whose revenues historically show a higher proportion from billable subcontractors. Selling, general and administrative expenses have increased mainly from business acquisitions, net of synergies, and additional costs associated with carrying out the strategic business plan and increased recruiting in order to grow revenues. As a percentage of consolidated revenues, total selling, general and administrative expenses have generally remained steady over the period. Other expenses, such as business acquisition, integration and reorganization costs, depreciation, amortization of intangibles, and income tax recovery, have also varied as a result of business acquisitions.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 33

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![image_2.jpg](image_2.jpg)

14. Critical Accounting Estimates

The preparation of Alithya's consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the amounts reported as assets, liabilities, income and expenses in the consolidated financial statements. Actual results could differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which they occur and in any future periods affected.

The Q3 Financial Statements have been prepared in accordance with the accounting policies adopted in the most recent annual audited consolidated financial statements for the year ended March 31, 2022, except for changes as detailed below. The accounting policies have been applied consistently by all entities of the Group.

15. Change in Accounting Policy

*IAS 7 Statement of Cash Flows*

IAS 7 prescribes that interest paid is to be classified as operating cash flows (the Group's previous classification), or alternatively, interest paid may be classified as financing cash flows. As at October 1, 2022, as a result of recent business acquisitions financed through its senior revolving credit facility and balance of purchase price payable, the Group changed its cash flow presentation to present interest paid as financing cash flows instead of operating cash flows. This presentation provides more relevant information regarding the cash flows of the Group.

This change in accounting policy has been applied retrospectively. Changes to the comparative amounts in the Group's consolidated statements of cash flows are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** | **For the three months ended December 31, 2021** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31, 2021** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31, 2021** | &nbsp;&nbsp;&nbsp;**For the nine months ended December 31, 2021** |
|<br>**(in $ thousands)** | **As previously reported** | **Adjustment** | **Restated amount** | **As previously reported** | **Adjustment** | **Restated amount** |
|  | **$** | **$** | **$** | **$** | **$** | **$** |
| Net cash from operating activities | 10148 | 905 | 11053 | 3151 | 2381 | 5532 |
| Net cash (used in) from financing activities | (24566) | (905) | (25471) | 256 | (2381) | (2125) |

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Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 34

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![image_2.jpg](image_2.jpg)

16. Accounting Standard Amendments Effective for the Year Ending March 31, 2023

The following amendment to existing standards was adopted by the Group on April 1, 2022 and had no significant impact on the Group's consolidated financial statements.

*Onerous Contracts, Cost of Fulfilling a Contract*

In May 2020, the IASB issued Onerous Contracts - Cost of Fulfilling a Contract, which includes amendments to IAS 37. The amendments specify which costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The full cost approach considers that the 'cost of fulfilling' a contract comprises the 'costs that relate directly to the contract'. Costs that relate directly to a contract include incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts.

17. New Standards and Interpretations Issued but Not Yet Effective

At the date of authorization of the Q3 Financial Statements, certain new standards, amendments and interpretations, and improvements to existing standards have been published by the IASB but are not yet effective and have not been adopted early by the Group. Management anticipates that all the relevant pronouncements will be adopted in the first reporting period following the date of application. Information on new standards, amendments and interpretations, and improvements to existing standards, which could potentially impact the Group's consolidated financial statements, are detailed as follows:

*IAS 1 - Presentation of Financial Statements*

On January 23, 2020, the IASB issued amendments to IAS 1 - Presentation of Financial Statements, to clarify the classification of liabilities as current or non-current. For the purposes of non-current classification, the amendments removed the requirement for a right to defer settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must have substance and exist at the end of the reporting period. After reconsidering certain aspects of the 2020 amendments, the IASB reconfirmed that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Additional disclosure will be required to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date. The amendments also clarify how a company classifies a liability that includes a counterparty conversion option. The amendments state that: settlement of a liability includes transferring a company's own equity instruments to the counterparty; and when classifying liabilities as current or non-current, a company can ignore only those conversion options that are recognized as equity. The amendments to IAS 1 apply retrospectively and are effective for annual periods beginning on or after January 1, 2024, with earlier application permitted. Management is currently evaluating the impact of the amendment on its consolidated financial statements.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 35

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![image_2.jpg](image_2.jpg)

*Amendments to IAS 1 and IFRS Practice Statement 2, Disclosure of Accounting Policy Information*

In February 2021, the IASB issued amendments to IAS 1 - Presentation of Financial Statements and IFRS Practice Statement 2 - Making Materiality Judgements. The amendments help entities provide accounting policy disclosures that are more useful to primary users of financial statements by:

• Replacing the requirement to disclose "significant" accounting policies under IAS 1 with a requirement to disclose "material" accounting policies. Under this, an accounting policy would be material if, when considered together with other information included in an entity's financial statements, it can reasonably be expected to influence decisions that primary users of general purpose financial statements make on the basis of those financial statements.

• Providing guidance in IFRS Practice Statement 2 to explain and demonstrate the application of the four-step materiality process to accounting policy disclosures.

The amendments shall be applied prospectively. The amendments to IAS 1 are effective for annual periods beginning on or after January 1, 2023. Earlier application is permitted. Once an entity applies the amendments to IAS 1, it is also permitted to apply the amendments to IFRS Practice Statement 2. Management is currently evaluating the impact of the amendment on its consolidated financial statements.

*Amendments to IAS 8, Definition of Accounting Estimates*

In February 2021, the IASB amended IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors to introduce a new definition of "accounting estimates" to replace the definition of "change in accounting estimates" and also include clarifications intended to help entities distinguish changes in accounting policies from changes in accounting estimates. This distinction is important because changes in accounting policies must be applied retrospectively while changes in accounting estimates are accounted for prospectively. The amendments are effective for annual periods beginning on or after January 1, 2023. Earlier application is permitted. Management is currently evaluating the impact of the amendment on its consolidated financial statements.

*Amendments to IAS 12 - Income Taxes*

On May 7, 2021, the IASB issued amendments to IAS 12 - Income Taxes to narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. As a result, companies will be required to recognize a deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease and a decommissioning provision. The amendments apply for annual reporting periods beginning on or after January 1, 2023. Earlier application is permitted. Management is currently evaluating the impact of this standard on its consolidated financial statements.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 36

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![image_2.jpg](image_2.jpg)

18. Risks and Uncertainties

Alithya is subject to a number of risks and uncertainties and is affected by a number of factors which could have a material adverse effect on Alithya's financial position, financial performance, cash flows, business or reputation. These risks should be considered when evaluating an investment in Alithya and may, among other things, cause a decline in the price of the Subordinate Voting Shares.

Such risks and uncertainties include, but are not limited to, those discussed in the section entitled "Risks and Uncertainties" of the Company's MD&A for the fiscal year ended March 31, 2022 and the MD&A for the quarter ended June 30, 2022, all of which are hereby incorporated by reference. The following update, which highlights separately from the existing risk factor entitled "Raising additional capital", as amended below, the risks associated with the Company's inability to service its debt and the related impacts of higher leverage, should be read in conjunction with these risks and uncertainties, which have not materially changed.

**Inability to service our debt**

Alithya uses its Credit Facility and other debt arrangements to fund its activities, including acquisitions. Accordingly, depending on its level of indebtedness, which may, from time to time, be substantial and involve significant interest payment requirements, Alithya may be required to dedicate an important part of its cash flow to make interest and capital payments on its debt. Alithya's ability to generate sufficient cash flow to service its debt depends upon future performance, which is subject to prevailing economic conditions as well as financial, competitive and other factors, many of which are outside of its control. There is no assurance that Alithya will be able to generate sufficient cash flow to meet its obligations under its outstanding debt. If Alithya is unable to do so, Alithya may be required to refinance, restructure or otherwise amend some or all of its obligations, sell assets, raise additional cash through issuances of equity or convertible debt securities, or be forced to reduce or delay investments that are important to Alithya's growth, thereby placing it at a disadvantage compared to competitors that may have less debt or making it more vulnerable in a downturn in general economic conditions.

In addition, Alithya's Credit Facility and other debt arrangements contain financial and other covenants, including covenants that require that certain financial ratios and/or other financial or other covenants be maintained. If Alithya were to breach these covenants, it could be required to repay or refinance its existing debt obligations prior to their scheduled maturity and its ability to do so could be restricted or limited by prevailing economic conditions, available liquidity and other factors. Alithya's inability to service its debt or its inability to fulfill its financial or other covenants in its Credit Facility and other debt arrangements could have an adverse effect on Alithya's business, financial condition and results of operations.

Also, a significant portion of Alithya's debt bears interest at variable interest rates and is therefore subject to interest rate fluctuations. If interest rates increase, debt service obligations would increase even though the amount borrowed would remain the same, and net income and cash flows would decrease accordingly, which could have an adverse effect on Alithya's business, financial condition and results of operations.

**Raising additional capital**

Alithya's future growth is contingent on the execution of its business strategy, which, in turn, is dependent on its ability to grow the business organically as well as through acquisitions. In the event Alithya would need to fund any currently unidentified or unplanned future acquisitions and other growth opportunities, Alithya may have to

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 37

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![image_2.jpg](image_2.jpg)

raise additional capital through a combination of public and private equity offerings and debt financings and there can be no assurance that such funding will be available in amounts and on terms acceptable to Alithya. Alithya's ability to raise the required funding depends on the capacity of the capital markets to meet Alithya's equity and/or debt financing needs in a timely fashion and on the basis of interest rates and/or share prices that are reasonable in the context of Alithya's commercial objectives. Interest rate fluctuations, financial market volatility, including volatility in Alithya's share price, credit market disruptions and the capacity of Alithya's current lenders to meet Alithya's additional liquidity requirements are all factors that may have a material adverse effect on any acquisitions or growth activities that Alithya may, in the future, identify or plan. If Alithya is unable to obtain the necessary funding, it may be unable to achieve its growth objectives.

To the extent that Alithya raises additional capital through the sale of equity or convertible debt securities, the ownership interests of Alithya's shareholders will be diluted, and the terms may include liquidation or other preferences that could adversely affect the rights of Alithya's shareholders. The incurrence of additional indebtedness would result in increased payment obligations and could involve additional or increased financial and other covenants, such as limitations on Alithya's ability to incur additional debt and other operating restrictions that could adversely impact its ability to conduct its business.

19. Management's Evaluation of Our Disclosure Controls and Procedures

*Disclosure Controls and Procedures* 

The Company has established and maintains disclosure controls and procedures designed to provide reasonable assurance that the material information relating to the Company is made known to the Chief Executive Officer and Chief Financial Officer by others, particularly during the period in which annual and interim filings are prepared and that information required to be disclosed by the Company in its annual, interim filings or other reports filed or submitted by the Company under Canadian and U.S. securities laws is recorded, processed, summarized and reported within the time periods specified under those laws and the related rules. The effectiveness of these disclosure controls and procedures, as defined under National Instrument 52-109 – Issuers' annual and interim filings ("NI 52-109") adopted by Canadian securities regulators and in Rule 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended, was evaluated under the supervision of and with the participation of the Company's Chief Executive Officer and Chief Financial Officer as at the end of the Company's most recently completed financial year ended March 31, 2022. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as at March 31, 2022.

*Internal Control over Financial Reporting*

The Company has also established and maintains adequate internal control over financial reporting, as defined under NI 52-109 adopted by Canadian securities regulators and in Rule 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934, as amended. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer, and effected by management and other key employees, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB. The effectiveness of the Company's internal control over financial reporting

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 38

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![image_2.jpg](image_2.jpg)

was evaluated under the supervision of and with the participation of the Company's Chief Executive Officer and Chief Financial Officer as at the end of the Company's most recently completed financial year ended March 31, 2022 based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's internal control over financial reporting was effective as at March 31, 2022.

*Changes in Internal Control over Financial Reporting* 

There has been no change in the Company's internal control over financial reporting during the quarter ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

*Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control over Financial Reporting*

The Company's management recognizes that any disclosure controls and procedures and internal control over financial reporting, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Because of their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect all errors or misstatements on a timely basis.

*Limitations on Scope of design of Disclosure Controls and Procedures and Internal Control over Financial Reporting*

The Company's management has excluded from its assessment of the scope of the disclosure controls and procedures and internal control over financial reporting the controls, policies and procedures of Vitalyst, which was acquired on January 31, 2022, the operating results of which are included in the Q3 Financial Statements of the Company. The scope limitation is in accordance with NI 52-109 adopted by Canadian securities regulators and existing SEC guidance, which allow an issuer to limit its design of internal controls over financial reporting and disclosure controls and procedures to exclude the controls, policies and procedures of a company acquired not more than 365 days before the end of the financial period to which the certificate relates.

For the nine months ended December 31, 2022, Vitalyst contributed revenues of $23.3 million and generated a net income of $0.7 million. In addition, as at December 31, 2022, Vitalyst's current assets and current liabilities represented approximately 3.7% of consolidated current assets and 6.6% of consolidated current liabilities, respectively. Non-current assets, which exclude intangible assets and goodwill from the acquisition, and non-current liabilities represented approximately 0.2% of consolidated non-current assets and nil% of consolidated non-current liabilities, respectively. The amounts recognized for the assets acquired and liabilities assumed as at the date of the acquisition are described in Note 3 of the annual audited consolidated financial statements of the Company for the year ended March 31, 2022.

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya <br> For the three and nine months ended December 31, 2022 \| 39

## Exhibit 99.3

**FORM 52-109F2**

**CERTIFICATION OF INTERIM FILINGS**

**FULL CERTIFICATE**

I, Paul Raymond, President and Chief Executive Officer of Alithya Group inc., certify the following:

1.**Review:** I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Alithya Group inc. (the "issuer") for the interim period ended December 31, 2022.

2.**No misrepresentations:** Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.**Fair presentation:** Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.**Responsibility:** The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 *Certification of Disclosure in Issuers' Annual and Interim Filings*, for the issuer.

5.**Design:** Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

------

5.1**Control framework:** The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is that of the *Committee of Sponsoring Organizations of the Treadway Commission* (COSO 2013).

5.2N/A

5.3**Limitation on scope of design:** The issuer has disclosed in its interim MD&A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the fact that the issuer's other certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;N/A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;N/A; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;summary financial information about the proportionately consolidated entity, special purpose entity or business that the issuer acquired that has been proportionately consolidated or consolidated in the issuer's financial statements.

6.**Reporting changes in ICFR:** The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on October 1, 2022 and ended on December 31, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: February 14, 2023

*/s/ Paul Raymond*

___________________________

Paul Raymond

President and Chief Executive Officer

## Exhibit 99.4

**FORM 52-109F2**

**CERTIFICATION OF INTERIM FILINGS**

**FULL CERTIFICATE**

I, Claude Thibault, Chief Financial Officer of Alithya Group inc., certify the following:

1.**Review:** I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Alithya Group inc. (the "issuer") for the interim period ended December 31, 2022.

2.**No misrepresentations:** Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.**Fair presentation:** Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.**Responsibility:** The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 *Certification of Disclosure in Issuers' Annual and Interim Filings*, for the issuer.

5.**Design:** Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

------

5.1**Control framework:** The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is that of the *Committee of Sponsoring Organizations of the Treadway Commission* (COSO 2013).

5.2N/A

5.3**Limitation on scope of design:** The issuer has disclosed in its interim MD&A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the fact that the issuer's other certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;N/A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;N/A; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;summary financial information about the proportionately consolidated entity, special purpose entity or business that the issuer acquired that has been proportionately consolidated or consolidated in the issuer's financial statements.

6.**Reporting changes in ICFR:** The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on October 1, 2022 and ended on December 31, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: February 14, 2023

*/s/ Claude Thibault*

___________________________

Claude Thibault

Chief Financial Officer

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