Document:

Exhibit 4.4 

 

 

 

 

 

SANGOMA
TECHNOLOGIES CORPORATION

 

 

 

Condensed consolidated
interim financial statements for

 the three month periods ended September 30, 2021 and 2020

 

(Unaudited in U.S. Dollars)

 

100
Renfrew Drive, Suite 100,

Markham, Ontario,

Canada
L3R 9R6

 

     

     

    

 

Sangoma Technologies Corporation

September 30, 2021 and 2020

 

Table of contents

 

	Condensed consolidated interim statements of financial
    position	 	3
	 	 	 
	Condensed consolidated interim statements of income (loss)
    and comprehensive income (loss)	 	4
	 	 	 
	Condensed consolidated interim statements of changes in shareholders’
    equity	 	5
	 	 	 
	Condensed consolidated interim statements of cash flows	 	6
	 	 	 
	Notes to the condensed consolidated interim financial statements	 	7-28

 

    2

     

    

 

Sangoma
Technologies Corporation 

Condensed
consolidated interim statements of financial position

As at September 30, 2021 and June 30, 2021

(Unaudited in US dollars)

 

 

 

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

 

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

 

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

 

    3

     

    

 

Sangoma
Technologies Corporation 

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

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

(Unaudited in US dollars)

 

 

 

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

 

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

 

    4

     

    

 

Sangoma
Technologies Corporation 

Condensed
consolidated interim statements of changes in shareholders' equity

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

(Unaudited in US dollars)

 

 

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

 

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

 

    5

     

    

 

Sangoma
Technologies Corporation 

Condensed
consolidated interim statements of cash flows

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

(Unaudited
in us dollars)

 

 

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

 

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

 

    6

     

    

 

 

Sangoma
Technologies Corporation 

Notes
to the condensed consolidated interim financial statement

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

(Unaudited
in US dollars)

 

 

		1.	General
                                            information 

 

Founded
in 1984, Sangoma Technologies Corporation (“Sangoma” or the “Company”) is publicly traded on the Toronto
Stock Exchange (TSX: STC). The Company’s shares were traded on the TSX Venture Exchange under the symbol STC until November 1,
2021, at which point the Company’s shares commenced trading on the TSX. In conjunction with listing on the TSX, the
Company’s shares w ere delisted from the TSX Venture Exchange. The Company was incorporated in Canada, its legal name is
Sangoma Technologies Corporation and its primary operating subsidiaries for fiscal 2021 are Sangoma Technologies Inc., Sangoma US
Inc., VoIP Supply LLC, Digium Inc., VoIP Innovations LLC and Star2Star Communications LLC.

 

Sangoma
is a leading provider of hardware and software components that enable or enhance Internet Protocol Communications Systems for both
telecom and datacom applications. Enterprises, small to medium sized businesses (“SMBs”) and telecom operators in over
150 countries rely on Sangoma’s technology as part of their mission critical infrastructures. The product line includes data
and telecom boards for media and signal processing, as well as gateway appliances and software.

 

The
Company is domiciled in Ontario, Canada. The address of the Company’s registered office is 100 Renfrew Dr., Suite 100,
Markham, Ontario, L3R 9R6 and the Company operates in multiple jurisdictions.

 

		2.	Significant
                                            accounting policies 

 

Statement
of compliance and basis of presentation 

 

The
accompanying condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standards
(“IAS”) 34, Interim Financial Reporting. The condensed consolidated interim financial statements do not include al l the
information required for annual consolidated financial statements and should be read in conjunction with the Company’s audited
consolidated financial statements for the year ended June 30, 2021.

 

These
condensed consolidated interim financial statements were, at the recommendation of the audit committee, approved and authorized for issuance
by the Company’s Board of Directors on November 12, 2021.

 

These
condensed consolidated interim financial statements were prepared using the same basis of presentation, accounting policies and
methods of computation as those of the audited consolidated financial statements for the year ended June 30, 2021, except for the
change in presentation currency of the Company from Canadian dollar to US dollar described below:

 

Change
in presentation currency of the Company 

 

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

 

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

 

    7

     

    

 

Sangoma
Technologies Corporation 

Notes
to the condensed consolidated interim financial statements

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

(Unaudited
in US dollars)

 

 

		2.	Significant
                                            accounting policies (continued) 

 

Change
in presentation currency of the Company (continued) 

 

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

 

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

 

Share
consolidation (reverse stock split)

 

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

 

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

 

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

 

		3.	Significant
                                            accounting judgments, estimates and uncertainties 

 

Except
for the change in the Company’s presentation currency, these unaudited condensed consolidated interim financial statements
were prepared using the same basis of presentation, accounting policies and methods of computation as those of the audited
consolidated financial statements for the year ended June 30, 2021 and which are available at www.sedar.com. They were
prepared using the same critical estimates and judgments in applying the accounting policies as those of the audited consolidated
financial statements for the year ended June 30, 2021.

 

    8

     

    

 

Sangoma
Technologies Corporation 

Notes
to the condensed consolidated interim financial statements

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

(Unaudited
in US dollars)

 

 

		4.	Inventories
                                            

 

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

 

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

 

    9

     

    

 

Sangoma
Technologies Corporation 

Notes
to the condensed consolidated interim financial statements

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

(Unaudited
in US dollars)

 

 

	5.	Property and
    equipment	 	 	 	 	 	 

 

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

 

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

 

    10

     

    

 

Sangoma
Technologies Corporation 

Notes
to the condensed consolidated interim financial statements

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

(Unaudited
in US dollars)

 

 

	6.	 Intangible
    assets

 

	 	 	Copyright	 	 	Purchased	 	 	 	 	 	Customer	 	 	 	 	 	Other

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

 

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

 

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

 

    11

     

    

 

Sangoma
Technologies Corporation 

Notes
to the condensed consolidated interim financial statements

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

(Unaudited
in US dollars)

 

 

	7.	Development
    costs	 	 

 

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

 

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

 

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

 

		8.	Goodwill
                                            

 

The
carrying amount and movements of goodwill was as follows:

 

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

 

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

 

    12

     

    

 

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars) 

 

 

 

		9.	Operating facility and loan
                                            and derivative liability 

 

		(a)	Operating facility and loan
                                            

 

		(i)	The Company entered
                                            into a new loan facility with two banks and drew down the first tranche of $34,800,000 ($45,699,360
                                            CAD) on October 18, 2019. This loan facility was used to pay down and close all existing
                                            loans and to fund part of the purchase of VoIP Innovations LLC. Th is term facility is repayable
                                            over six years on a straight-line basis.

 

The interest rates charged are based
on Prime rate, US Base rate, London Inter -Bank Offered Rate (LIBOR) or Canadian Dollar Offered Rate (CDOR) plus the applicable margin.
Under the terms of these term facilities, the Company may convert the loans from variable to a fixed loan. The Company is required to
lock in the interest rate on one half of the term loan within three months of each draw down. On January 21, 2020, the Company converted
its US Base Rate loan to a one-month LIBOR loan plus the credit spread based on the syndicated loan agreement entered on October 18,
2019. Separately, as required under the agreement, the Company locked in half of the original loan amount by entering a 5-year interest
rate credit swap with the two banks for $8,700,000 each. The swaps together with protection against the 0% LIBOR floor have effectively
converted one half of the variable LIBOR rate to a fixed loan of approximately 4.2% for five years of the six-year remaining balance
on the loan. The repayment schedule for the loan has not been impacted by either of these changes. The balance outstanding against this
term loan facility as of September 30, 2021 is $23,200,000 (June 30, 2021 – $24,650,000). As at September 30, 2021, term loan facility
balance of $5,800,000 (June 30, 2021 - $5,800,000) is classified as current and $17,400,000 (June 30, 2021 - $18,850,000) as long-term
in the condensed consolidated interim statements of financial position.

 

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

 

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

 

		●	The provision
                                            for additional funding related to VoIP Innovations under the original agreement was no longer
                                            necessary and has been cancelled.

 

		●	The swingline facility was converted
                                            from CAD $2,000,000 to USD $1,500,000.

 

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

 

		●	The debt to equity
                                            ratio calculation now allows the Company to offset up to US $10,000,000 of unrestrained funds
                                            against the outstanding amount of the debt.

 

The interest rates charged continue
to be based on Prime rate, US Base rate, London Inter-Bank Offered Rate (LIBOR) or Canadian Dollar Offered Rate (CDOR) plus the applicable
margin. The incremental draw is repayable, on a straight-line basis, through quarterly payments of $2,187,500 and is due to mature on
October 18, 2024. As at September 30, 2021, $8,750,000 (June 30, 2021 - $8,750,000) of the incremental facility is classified as current
and $39,375,000 (June 30, 2021 – $41,562,500) is classified as long-term in the condensed consolidated interim statements of financial
position.

 

    13

     

    

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

 

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

 

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

 

Under its credit agreements with its
lenders, the Company must satisfy certain financial covenants, principally in respect of total funded debt to earnings before interest,
taxes and amortization (“EBITDA”), and debt service coverage ratio. As at September 30, 2021 and June 30, 2021, the Company
was in compliance with all covenants related to its credit agreements.

 

(b) Derivative liability

 

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

 

On January 21, 2020, the Company converted
its US Base Rate loan to a one -month LIBOR loan plus the credit spread based on the syndicated loan agreement entered into on October
18, 2019. Separately, as required under the agreement, the Company locked in half of the original loan amount by entering into a 5-year
interest rate credit swap with the two banks for $8,700,000 each to manage its exposure to changes in LIBOR-based interest rates. The
interest rate swap hedges the variable cash flows associated with the borrowings under the loan facility, effectively providing a fixed
rate of interest for five years of the six-year loan term.

 

The interest rate swap arrangement with
two banks became effective on January 31, 2020, with a maturity date of December 31, 2024. The notional amount of the swap agreement
at inception was $17 ,400,000 and decreases in line with the term of the loan facility. As of September 30, 2021, the notional amount
of the interest rate swap was $12,104,348 (June 30, 2021 – $12,860,870). The interest rate swap has a weighted average fixed rate
of 1.65% (June 30, 2021 – 1.65%) and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting.
As at September 30, 2021, the fair value of the interest rate swap liability was valued at $294,295 (June 30, 2021 - $333,315) and was
recorded as derivative liability in the condensed consolidated interim statements of financial position. For the three month period ended
September 30, 2021, the change in fair value of the interest rate swaps, net of tax, was a gain of $39,020 (three month period ended
September 30, 2020 – gain of $36,117) was recorded in other comprehensive income (loss) in the condensed consolidated interim statements
of income (loss) and comprehensive income (loss). The fair value of interest rate swap is determined based on the market conditions and
the terms of the interest rate swap agreement using the discounted cash flow methodology. Any differences between the hedged LIBOR rate
and the fixed rate are recorded as interest expense on the same period that the related interest is recorded for the loan facility based
on the LIBOR rate.

 

    14

     

    

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

 

10.       Income tax

 

The Company income tax expense is determined as follows:

 

	 	 	Three month periods

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

 

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

 

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

 

    15

     

    

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

 

		10.	Income tax (continued) 

 

Deferred tax assets and liabilities
have been offset where they relate to income taxes levied by the same taxation authority and the Company has the legal right and intent
to offset. The following table shows the movement in net deferred tax assets (liabilities):

 

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

 

Unrecognized deferred tax assets

 

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

 

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

 

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

 

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

 

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

 

    16

     

    

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

 

		10.	Income tax (continued) 

 

The income tax benefit of eligible
SR&ED costs incurred in prior years but not utilized have been taken into account in these condensed consolidated interim financial
statements.

 

		11.	Shareholders’ equity
                                            

 

		(i)	Share capital 

 

The Company’s authorized share
capital consists of an unlimited number of common shares without par value. As at September 30, 2021 and 2020, the Company’s issued
and outstanding common shares consist of the following:

 

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

 

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

 

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

 

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

 

    17

     

    

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

 

		11.	Shareholders’ equity
                                            (continued) 

 

		(ii)	Stock options 

 

During the year ended June 30, 2020, the shareholders of
the Company amended the stock option plan (the “plan”) for officers, employees and consultants of the Company. The
number of common shares that may be set aside for issuance under the plan (and under all other management stock option and employee
stock option plans) is limited to 10% of the outstanding common shares of the corporation provided that the Company complies with
the provisions of policies, rules and regulations of applicable securities legislation. The maximum number of common shares that may
be reserved for issuance to any one person under the plan is 5% of the common shares outstanding at the time of grant (calculated on
a non -diluted basis) less the number of common shares reserved for issuance to such person under any stock option to purchase
common shares granted as a compensation or incentive mechanism. Any common shares subject to a stock option, which for any reason
are terminated, cancelled, exercised, expired, or surrendered will be available for a subsequent grant under the plan, subject to
regulatory requirements.

 

The stock option
price of any common shares cannot be less than the closing price or the minimum price as determined by applicable regulatory authorities
of the relevant class or series of shares, on the day immediately preceding the day on which the stock option is granted. Stock options
granted under the plan may be exercised during a period not exceeding five years from the date of grant, subject to earl ier termination
on the termination of the optionee’s employment, on the optionee’s ceasing to be an employee, officer or director of the
Company or any of its subsidiaries, as applicable, or on the optionee’s retiring, becoming permanently disabled or dying, subject
to certain grace periods to allow the optionee or his or her personal representative time to exercise such stock options. The stock options
are non -transferable. The plan contains provisions for adjustment in the number of common shares issuable thereunder in the event of
the subdivision, consolidation, reclassification or change of the common shares, a merger, or other relevant changes in the Company’s
capitalization. The board of directors may, from time to time, amend or revise the terms of the plan or may terminate the plan at any
time.

 

The following table shows the movement in the stock option
plan:

 

	 	 	Number	 	 	Weighted	 
	Measurement date	 	of options	 	 	average
    price	 
	 	 	#	 	 	$	 
	Balance, June 30, 2020	 	 	642,600	 	 	 	8.13	 
	Exercised	 	 	(433	)	 	 	(1.94	)
	Expired	 	 	(3,429	)	 	 	(7.87	)
	Forfeited	 	 	(6,093	)	 	 	(6.09	)
	Balance, September 30,2020	 	 	632,645	 	 	 	8.13	 
	Balance, June 30, 2021	 	 	1,587,310	 	 	 	19.89	 
	Granted	 	 	285,714	 	 	 	18.62	 
	Expired	 	 	(60	)	 	 	6.37	 
	Forfeited	 	 	(84,069	)	 	 	19.12	 
	Balance, September 30, 2021	 	 	1,788,895	 	 	 	19.72	 

 

The Company uses the fair value method
to account for all share -based awards granted to employees, officers, and directors. The estimated fair value of stock options granted
is determined using the Black-Scholes option pricing model and is recorded as a charge to income over the vesting period of the stock
options, with a corresponding increase to contributed surplus. Stock options are granted at a price equal to or above the fair value
of the common shares on the day immediately preceding the date of the grant. The consideration received on the exercise of stock options
is added to stated capital at the time of exercise.

 

    18

     

    

 

 

Sangoma Technologies Corporation

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

		11.	Shareholders’ equity (continued) 

 

		(ii)	Stock options (continued) 

 

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

 

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

 

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

 

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

 

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

 

		(iii)	Earnings per share

 

Both the basic and diluted earnings
per share have been calculated using the net income attributable to the shareholders of the Company as the numerator.

 

    19

     

    

 

Sangoma Technologies Corporation

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

		11.	Shareholders’ equity (continued)

 

		(iii)	Earnings per share (continued)

 

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

 

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

 

		12.	Related parties 

 

The Company’s related parties
include key management personnel and directors. Unless otherwise stated, none of the transactions incorporated special terms and conditions
and no guarantees were given or received. Outstanding balances payable are usually settled in cash and relate to director fees.

 

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

 

		13.	Financial instruments 

 

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

 

Cash and cash equivalents are comprised of: 

 

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

 

Cash includes demand deposits with
financial institutions and cash equivalents consist of short-term, highly liquid investments purchased with original maturities of three
months or less. As at September 30, 2021 and June 30, 2021, the Company had no cash equivalents.

 

    20

     

    

 

Sangoma Technologies Corporation

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

		13.	Financial instruments (continued) 

 

Total interest income and interest
expense for financial assets or financial liabilities that are not at fair value through profit or loss can be summarized as follows:

 

	 	 	Three month periods 

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

 

The Company examines the various financial
instrument risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity
risk, foreign currency risk, interest rate risk and market risk.

 

Credit risk

 

Credit risk is the risk of financial
loss to the Company if a customer or counterparty to a financial instrument fails to meet its obligations. Where possible, the Company
uses an insurance policy with Export Development Canada (“EDC”) for its trade receivables to manage this risk and minimize
any exposure.

 

The Company’s maximum exposure to credit risk for
its trade receivables is summarized as follows with some of the over 90-day receivable not being covered by EDC:

 

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

 

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

 

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

 

    21

     

    

 

Sangoma Technologies Corporation

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

		13.	Financial instruments (continued) 

 

The
Company applies the simplified approach to provide for expected credit losses as prescribed by IFRS 9, which permits the use of the
lifetime expected loss provision for all trade receivables and contract assets. The expected credit loss provision is based on the
Company’s historical collections and loss experience and incorporates forward-looking factors, where appropriate. The
provision matrix below shows the expected credit loss rate for each aging category of trade receivables.

 

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

 

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

 

 

Substantially all of the Company’s
cash and cash equivalents are held with major Canadian or US financial institutions and thus the exposure to credit risk is considered
insignificant. Management actively monitors the Company’s exposure to credit risk under its financial instruments, including with
respect to trade receivables.

 

Liquidity risk

 

Liquidity risk is the risk that the
Company will not be able to meet its obligations associated with financial liabilities. The Company has a planning and budgeting process
in place by which it anticipates and determines the funds required to support its normal operating requirements. The Company coordinates
this planning and budgeting process with its financing activities through its capital management process.

 

The Company holds sufficient cash and
cash equivalents and working capital, maintained through stringent cash flow management, to ensure sufficient liquidity is maintained.
The following are the undiscounted contractual maturities of significant financial liabilities of the Company as at September 30, 2021:

 

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

 

    22

     

    

 

Sangoma Technologies Corporation

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

		13.	Financial instruments (continued) 

 

Foreign currency risk 

 

A portion of the Company’s
transactions occur in a foreign currency (Canadian dollars (CAD), Euros (EUR), and Great British Pounds (GBP)) and, therefore, the
Company is exposed to foreign currency risk at the end of the reporting period through its foreign denominated cash, trade
receivables, contract assets, accounts payable and accrued liabilities, and operating facility and loans. As at September 30, 2021,
a 10% depreciation or appreciation of the CAD, EUR, and GBP against the U.S. dollar would have resulted in an approximate $21,768
(September 30, 2020 - $110,303) increase or decrease, respectively, in total comprehensive income (loss).

 

Interest rate risk 

 

The Company’s exposure to
interest rate fluctuations is with its credit facility (Note 9) which bears interest at a floating rate. As at September 30, 2021, a
change in the interest rate of 1% per annum would have an impact of approximately $597,250 (September 30, 2020 - $145,000) per annum
in finance costs. The Company also entered an interest rate swap arrangement for its loan facility (Note 9) to manage the exposure
to changes in LIBOR-rate based interest rate. The fair value of the interest rate swaps was estimated based on the present value of
projected future cash flows using the LIBOR forward rate curve. The model used to value the interest rate swaps included inputs of
readily observable market data, a Level 2  input. As described in detail in Note 9, the fair value of the interest rate swaps
was a liability of $294,295 on September 30, 2021 (June 30, 2021 – $333,315).

 

		14.	Capital management 

 

The Company’s objectives in
managing capital are to safeguard the Company’s assets, to ensure sufficient liquidity to sustain the future development of
the business via advancement of its significant research and development efforts, to conservatively manage financial risk and to
maximize investor, creditor, and market confidence. The Company considers its capital structure to include its shareholders’
equity and operating facilities and loans. Working capital is optimized via stringent cash flow policies surrounding disbursement,
foreign currency exchange and investment decision -making. There have been no changes in the Company’s approach to capital
management during the period and apart from the financial covenants as discussed in Note 9, the Company is not subject to any other
capital requirements imposed by external parties.

 

		15.	Contract liabilities 

 

Contract liabilities, which includes
deferred revenues, represent the future performance obligations to customers in respect of services or customer activation fees for which
consideration has been received upfront and is recognized over the expected term of the customer relationship.

 

Contract liabilities as at September 30, 2021 and June 30, 2021 are below:

 

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

 

    23

     

    

 

Sangoma Technologies Corporation

Notes to the condensed consolidated interim financial statements

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

(Unaudited in US dollars)

 

 

		16.	Consideration payable 

 

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

 

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

 

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

 

The Company’s lease obligations
and right-of-use assets are presented below:

 

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

 

    24

     

    

 

 

 

 

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated
interim financial statements

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

(Unaudited in US dollars)

 

 

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

 

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

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

  

	18.	Provisions
                                            

 

	 	 	Warranty	 	 	Sales returns &

    allowances	 	 	Stock 

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

 

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

 

    25

     

    

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated
interim financial statements

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

(Unaudited in US dollars)

 

 

	19.	Segment
                                            disclosures 

 

	 	The Company operates in one operating segment; development, manufacturing, distribution and support of
voice and data connectivity components for software-based communication applications. The majority of the Company’s assets
are located in Canada and the United States of America (“USA”). The Company sells into three major geographic centers: USA,
Canada and other foreign countries. The Company has determined that it has a single reportable segment as the Company’s decision
makers review information on a consolidated basis.

 

	 	Revenues for group of similar products and services can be summarized for the three month periods ended
September 30, 2021 and 2020 as follows:

 

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

 

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

 

	 	 	Three month periods

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

 

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

 

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

 

    26

     

    

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated
interim financial statements

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

(Unaudited in US dollars)

 

 

	20.	Business
                                            combinations 

 

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

 

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

 

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

 

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

 

    27

     

    

 

Sangoma Technologies Corporation 

Notes to the condensed consolidated
interim financial statements

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

(Unaudited in US dollars)

 

 

	20.	Business combinations (continued)

 

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

 

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

  

	21.	Government
                                            assistance 

 

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

 

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

 

	22. 	Subsequent events

 

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

 

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

 

	23.	Authorization
                                            of the condensed consolidated interim financial statements 

 

	 	The condensed consolidated interim financial statements were authorized for issuance by the Board of Directors
on November 12, 2021.

  

    28Exhibit 4.5

 

SANGOMA TECHNOLOGIES
CORPORATION

 

MANAGEMENT
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2021

 

November 12, 2021

 

INTRODUCTION

 

The
Management Discussion and Analysis (“MD&A”) provides a detailed analysis of the financial condition and results of operations
of Sangoma Technologies Corporation (hereinafter referred to as “Sangoma” or the “Company”). The MD&A compares
the financial results for the fiscal first quarter of 2022 with those of the same period in the previous year. Please note that Sangoma
changed its presentation currency on July 1, 2021 and so, unless otherwise noted, all amounts shown are in United States dollars.
Also, the Company undertook a 7:1 share consolidation on November 2, 2021, and the share count, option count, exercise prices
and earnings per share reflect this share consolidation for all periods reported. This MD&A should be read in conjunction with Sangoma’s
audited annual consolidated financial statements and related notes for the year ended June 30, 2021 (“Financial Statements”)
and Sangoma’s unaudited condensed consolidated interim financial statements and related notes for the three months ended September 30,
2021, both of which are available at www.sedar.com.

 

BASIS OF PRESENTATION

 

The Company reports in accordance with International
Financial Reporting Standards (“IFRS”).

 

NON-IFRS MEASURES

 

This MD&A contains references to certain non-IFRS
financial measures such as Adjusted Operating Income, Adjusted EBITDA and Adjusted Cash Flow. Non-IFRS financial measures are used by
management to evaluate the performance of the Company and do not have any meaning prescribed by IFRS and therefore may not be comparable
to similar measures presented by other reporting issuers. Non-IFRS financial measures used herein have been applied on a consistent basis.
 “Adjusted Operating Income (Loss)” is the same as the IFRS income before interest, income taxes, gain on change in fair value
of consideration payable, business acquisition and business integration costs. “Adjusted EBITDA” means earnings before interest,
income taxes, depreciation (including for right-of-use assets), amortization, share-based compensation, change in fair value of consideration
payable, business acquisition costs and business integration costs. Adjusted EBITDA is a measure used by many investors to compare issuers.
 “Adjusted Cash Flow” means cash flow from operations as defined by IFRS less interest income and the capitalized development
costs that Sangoma amortized during the period, plus interest expense, business acquisition costs and business integration costs. We believe
that Adjusted Operating Income, Adjusted EBITDA and Adjusted Cash Flow are useful supplemental information as they provide an indication
of the results generated by the Company's main business activities before taking into consideration how they are financed, taxed, depreciated
or amortized. Investors are cautioned that non-IFRS financial measures, such as those presented herein, should not be construed as an
alternative to net income or cash flow determined in accordance with IFRS.

 

    i

     

    

 

FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements,
including statements regarding the future success of our business, development strategies and future opportunities.

 

Forward-looking statements include, but are not
limited to, statements concerning estimates of expected expenditures (including in respect of IT and security enhancements being implemented
in response to the cyber attack), statements relating to expected future production and cash flows, statements relating to the ongoing
investigation into and actions being undertaken in response to the cyber attack and the anticipated impact on our business, and other
statements which are not historical facts. When used in this document, the words such as "could", "plan", "estimate",
 "expect", "intend", "may", "potential", "should" and similar expressions indicate forward-looking
statements.

 

Although Sangoma
believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties
and no assurance can be given that actual results will be consistent with these forward-looking statements. Forward-looking statements
are based on the opinions and estimates of management at the date that the statements are made, and are subject to a variety of risks
and uncertainties and other factors that could cause actual events or results to differ materially from those projected in forward-looking
statements.

 

Readers are cautioned
not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon
which they are based will occur. By their nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts,
projections and other events contemplated by the forward-looking statements will not occur. Although Sangoma believes that the expectations
represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct
as these expectations are inherently subject to business, economic and competitive uncertainties and contingencies. Some of the risks
and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained herein
include, but are not limited to risks and uncertainties associated with the cost and integration of Star2Star, the impact of the continuing
COVID-19 pandemic, changes in exchange rate between the United States dollar and other currencies, changes in technology, changes in the
business climate, changes in the regulatory environment, the decline in the importance of the PSTN, new competitive pressures, the outcome
of our ongoing investigation into the cyber attack, costs related to our investigation and any resulting liabilities, our ability to recover
any proceeds under our insurance policies, costs related to and the effectiveness of our mitigation and remediation efforts, the impact
of global supply chain delays, the retention of key staff, the increase in cost of our components and materials and the impact of changes
to interest rates. See also “Guidance” below for more information on certain of these risks and uncertainties.

 

The forward-looking statements contained in this
management’s discussion and analysis are expressly qualified by this cautionary statement. Sangoma undertakes no obligation to update
forward-looking statements if circumstances or management's estimates or opinions should change except as required by law.

 

    ii

     

    

 

DESCRIPTION OF THE BUSINESS

 

General (also refer to the Glossary
of Terms at the end of this document)

 

Sangoma’s products and services are used
by leading companies throughout the world and in leading UC, PBX, IVR, contact center, carrier networks, and data communication applications
worldwide. Sangoma’s portfolio of products also enable service providers, carriers, enterprises, SMBs, and OEMs alike to leverage
their existing infrastructure for maximum financial return, while still delivering the most advanced applications and services from the
latest technologies available.

 

Sangoma’s Communications
as a Service (CaaS) Portfolio

 

Sangoma
Technologies is a trusted leader in delivering value-based Communications as a Service solutions for businesses of all sizes. The value-based
communications segment includes small businesses to large enterprises who are looking for all the advantages of cloud-based communications
at a fair price. Sangoma’s current Communications as a Service offerings are typically offered with monthly, yearly, or multi-year
contracts and include:

 

		·	Unified Communications as a Service (“UCaaS”)

 

		·	Trunking as a Service (“TaaS”)

 

		·	Contact Center as a Service (“CCaaS”)

 

		·	Communications Platform as a Service (“CPaaS”)

 

		·	Video Meetings as a Service (“MaaS”)

 

		·	Collaboration as a Service (“Collab aaS”)

 

		·	Desktop as a Service (“DaaS”)

 

		·	Access Control as a Service (“ACaaS”)

 

Unified Communications
as a Service (UCaaS)

 

Sangoma's UC solutions are business communication
systems (PBX’s with advanced UC features, such as presence/chat, conferencing, mobility, fax, and more) that can be deployed on-premise
or hosted in the Cloud, allowing businesses to select the best option for their needs. Unified Communication systems, because of their
mobility features such as having the business phone number ring on an app on your smartphone and/or desktop and instant messaging capability,
enable remote work and work from home much more efficiently. Sangoma’s UC solutions are deployed globally, with over 2 million licensed
seats of its commercial Unified Communication solutions. Sangoma’s Unified Communication solutions fully integrate with our phones,
soft clients, and network interoperability products to provide a fully interoperable solution from a single vendor.

 

Cloud-Based Business Phone Solution

 

Sangoma offers its customers full-scale
cloud-based Unified Communications solutions. With Sangoma, businesses can get contact center, mobility, softphone, call control,
and productivity features included for every user at a reasonable price. Sangoma’s hosted phone service delivers the customer
experience businesses demand at an affordable price point. Customers can also choose pre-provisioned phones that customers simply
plug into their network.

 

    iii

     

    

 

On-Premise Business Phone Solution

 

Sangoma also offers the more traditional on-premise
UC phone system, for businesses still wanting to deploy their business phone system on premise. Whether deployed on a dedicated appliance
or in the customer’s virtual environment, Sangoma provides the power and connectivity necessary.

 

		o	IP Deskphones, Headsets and UC Clients: Sangoma provides desktop and softphone collaboration clients
that integrate seamlessly with our UC solution offerings and deliver UC features (presence, contacts, chat, calling, audio and video conferencing, etc.)
from a single application, on any device, at any location.

 

		o	IP Deskphones: Sangoma offers a full line of phones that work with both our cloud and on-premise
systems, that are perfect for every user type, from casual to call center to managers and executives. Sangoma’s product line includes
entry-level, mid-range, and executive-level phones. All models include HD Voice and plug-and-play deployment. Sangoma’s range of
IP phones are customized to seamlessly integrate with all of our UC Systems and provide zero touch installation, simplified system management,
and instant access to a wide range of features.

 

		o	Headsets: Sangoma also offers headsets that either work in conjunction with the desktop phones
(by plugging into the phone) or work in conjunction to our desktop soft client (by plugging directly into the computer). These headsets
enable roaming of up to 325 feet from the phone or desk computer.

 

		o	UC Clients and Softphones: Unified Communication Clients (or softphones) are used to make or receive
phone calls with your business phone number and can be used as your main phone or as an extension of your desk phone. They are available
as an app on your smartphone or computer. These UC clients have enabled employees to work remote seamlessly by enabling phone calls to
customers and other employees as if they were in a physical office. Sangoma offers UC clients with all of our Unified Communication /
Business phone system product lines.

 

Trunking as
a Service (TaaS)

 

SIP trunks deliver Internet-based telephony services
to businesses using their existing internet connection, eliminating the need for separate traditional PSTN or digital telecom connections.
SIP trunking is fast becoming the technology of choice to interconnect an IP PBX system to a telephone company. The main drivers are cost
efficiencies (over fixed lines such as ISDN or analog lines from incumbent telcos) and end-to-end UC features/transparency. Cost efficiencies
are realized because SIP trunking uses already-available broadband connections at customer premises. Sangoma offers both retail and wholesale
SIP Trunking which allows our customers to choose the service that best meets their needs. Either service offers DIDs and number porting.

 

		o	Retail SIP Trunking

 

Retail SIP trunking offers predictable monthly
expenses with pricing based per trunk. SIPStation, Sangoma’s retail SIP trunking service, is seamlessly integrated into our various
UC platforms, making it easy to get up and running. It also includes an integrated fax service option, enabling a business to send and
receive faxes from a web interface or from a local fax machine. Typically, small to mid-sized businesses and enterprises would utilize
this type of service.

 

    iv

     

    

 

		o	Wholesale SIP Trunking

 

Sangoma’s wholesale SIP trunking offer is
now available following the acquisition of VoIP Innovations. Pricing for wholesale SIP trunking is usage-based but with a larger monthly
minimum commitment. This includes origination, termination, SMS/MMS, e911, and fraud mitigation. Typically, very large businesses or service
providers who resell SIP trunks would utilize this type of service.

 

		o	Fax as a Service

 

Faxing remains an important communications tool,
yet VoIP networks are sometimes unable to send faxes reliably because fax standards are based on very specific timing that can be interrupted
in VoIP systems, especially where there is substantial latency. Sangoma’s FoIP service, FaxStation, is a hosted service to remedy
this problem, available with our TaaS. It features a telecom appliance with up to four analog connections for fax machines and operates
in concert with Sangoma’s fax server data center to encrypt and package the fax communication to make it fail-safe. This is particularly
useful for small businesses that rely on fax communications but also for industries with challenging network conditions, such as mining,
oil rigs, and ship-to-shore over satellite.

 

Contact Center
as a Service (CCaaS)

 

Contact Center
as a Service (CCaaS) is our cloud-based contact center, or customer experience, offering. It provides robust contact center capabilities
running in various ways: either standalone, in conjunction with our other cloud services (such as UCaaS), or integrated “inside”
our UCaaS product in a simplified version. This latter solution is intended for ‘departmental’ type usage, by companies that
are not pure-play contact centers, but that might have a department such as customer service or technical support that operate inside
that company almost like a mini contact center.

 

Communications
Platform as a Service (CPaaS)

 

Communications
Platform as a Service (CPaaS) allows developers to easily build services and applications using real-time communication features, such
as voice, video, chat, and SMS, via the cloud. Our platform enables Sangoma, our integrator/developer partners, and advanced customers
to build new communications services based on voice, rest APIs, WebRTC, and SMS. When running an application on a CPaaS platform, performance
is critical. To ensure peak performance, Sangoma offers its own SIP trunking service, providing optimized connectivity in addition to
easy access to phone numbers. Sangoma also sells a series of ‘applications’ (or Apps) based upon our CPaaS product, that
customers can purchase.

 

Video Meetings
as a Service (MaaS)

 

Sangoma Meet is our video meetings, cloud-based
service accessible from any device, be it desktop or mobile. It enables file sharing on screen so collaboration with co-workers is enhanced,
integrates seamlessly with your calendar, and enables PSTN phone calls. Sangoma Meet is available in free and chargeable tiers.

 

    v

     

    

 

Collaboration
as a Service (Collab aaS)

 

Collaboration as
a Service (Collab aaS) is Sangoma’s cloud-based offering for enabling people to work together more productively. This service is
called TeamHub. It allows users to interact using any of various forms of communications, including chatting, calling, and video. TeamHub
integrates Sangoma’s softphone client software applications (desktop and mobile) and allows communications to start in one mode
(such as chat), and move through different modes very elegantly, in effect ‘upgrading’ that mode of communications to a voice
call in realtime, and/or upgrading that voice call to a video meeting

 

Desktop as a
Service (DaaS)

 

Sangoma’s
Desktop as a Service helps companies adapt to today’s modern, flexible, and remote workforce. It is the most secure method for
staff to access their tools and applications from any location to do their work, delivers simplified IT administration and cuts down
on the CapEx of deploying PCs. Sangoma is one of the only companies that can offer communications capability inside a DaaS product.

 

Access Control
as a Service (ACaaS)

 

At
Sangoma, this product offering is called SmartOffice Access. The SmartOffice product line is to be a family of IoT based services, and
it was launched first with Access Control. Access Control is a means of controlling access to one’s office or parts of an office,
and was traditionally done via the well known white ‘swipe cards’ or fobs. Sangoma is innovating in that space by eliminating
the need for such older technologies and extending our experience with mobile apps that so many of our customers and their employees
already get from us, as a Softphone. This new mobile allows one to open doors using your smartphone and the app from Sangoma, wirelessly
using IoT protocols. No more swipe cards no more readers, no more wiring behind the walls. This is one of Sangoma’s first forays
into cloud services that extend our CaaS suite beyond the strict definition of ‘communications’

 

Network
Interconnection Products

 

In addition to
the Communications as a Service (CaaS) offerings describe above, Sangoma also offers network interconnection products. These products
connect different types of networks together, such as VoIP networks to PSTN networks, or VoIP networks to mobile networks or different
types of VoIP networks.

 

Session Border
Controllers (SBCs)

 

Anytime two VoIP
networks interconnect, issues of security and interoperability arise. SBCs can manage these issues, including provider-to-provider connections,
provider-to-enterprise connections, and enterprise-to-enterprise connections. Sangoma’s SBCs are available as hardware appliances,
as software-only solutions running on a virtual machine in hosted environments, or as a hybrid of both. The hybrid solution is unique
to Sangoma and provides all the flexibility expected from virtual machine capability coupled with the scalability that is found in hardware-based
solutions. Sangoma’s SBCs have broad interoperability certifications.

 

    vi

     

    

 

VoIP Gateways

 

VoIP gateways are needed any time voice traffic
moves from a VoIP network to a traditional PSTN telephone network. As the traffic traverses these networks there are issues that need
to be resolved regarding both the media (the sound of the caller’s voice) and the signaling (the method used to control the media
traveling over that connection).

 

In a service provider or carrier network, much
larger gateways perform these same tasks. In addition, there are signaling protocols that are only used when carrier networks communicate
with other carrier networks that are not included in the enterprise product line.

 

All Sangoma’s gateways have broad interoperability
certifications.

 

PSTN Interface
and Media Processing Boards

 

Sangoma’s
complete line of boards connect and interface to the PSTN. Even though IP networks are growing and quickly becoming the standard, the
PSTN still exists and new communication solutions often need to connect to the PSTN. These boards are primarily used by communications
solution developers in PC/Server based telecommunications systems that connect to the PSTN. They perform a very similar task to VoIP
gateways, but are installed inside the server rather than being stand-alone devices. By providing customers with the option of using
a PSTN interface board or a VoIP gateway, Sangoma maximizes flexibility based on installation requirements, particularly when space and
power are at a premium. They may also be used in harsh conditions that require ruggedized servers.

 

Open-Source
Software Products

 

Asterisk and
FreePBX

 

Sangoma
is the primary developer and sponsor of the Asterisk project, the world’s most widely used open-source communications
software, and the FreePBX project, the world’s most widely used open-source PBX software. Together, Sangoma has 5 million users
of our open-source software, with an average of 50,000 new installs per month.

 

Sangoma also offers
revenue-generating products and services, beyond the open-source Asterisk or FreePBX software, to users of these open-source software
products. The types of products and services Sangoma offers includes software add-ons beyond what is offered in Asterisk or FreePBX, IP
phones, SIP trunking, cloud-based fax, training, technical support, maintenance, PSTN cards, VoIP gateways, session border controllers,
and commercial/hardened versions of the PBX/UC software they have downloaded.

 

    vii

     

    

 

OVERALL PERFORMANCE

 

Financial

 

Please note that these results are presented in
United States dollars for the first time, for this first quarter of fiscal 2022, and so all comparable numbers have been converted to
US dollars. Previously, Sangoma reported in Canadian dollars.

 

 

 

1
Adjusted operating income (loss) and Adjusted EBITDA are metrics used by the Company to monitor its performance and the definitions
may be found in the section non-IFRS measures above.

 

Sales for the first quarter of fiscal 2022 were
a record $52.48 million, twice that of the same quarter last year and 5% higher than in the last quarter of fiscal 2021.

 

Gross profit for the first quarter of fiscal 2022
was $37.85 million, delivering gross margin of 72% of sales, up by 6 points over the 66% in the same quarter last year.

 

Operating expenses were $38.71 million for the
first fiscal quarter of 2022, up 2% sequentially over the most recent fourth quarter of fiscal 2021. When compared to last year, operating
expenses are materially higher primarily because of the addition of the Star2Star teams and the non-cash intangible asset amortization
arising from the acquisition.

 

Adjusted EBITDA1 was $10.09 million
in the first quarter, more than twice that of last year, and at about 19% of revenue, is consistent with expectations for this point in
the fiscal year.

 

Net loss for the first quarter ended September 30,
2021 was $2.30 million, which includes the additional non-cash intangible asset amortization, together with $0.84 million of integration
expense which is expected to cover all such costs associated with the Star2Star acquisition.

 

Sangoma continues to maintain a healthy balance
sheet, finishing the quarter with a cash balance of $19.13 million on September 30, 2021 and remains comfortably within its debt
covenants. Adjusted Cash Flow from operations during the first quarter was $5.16 million, compared to $3.01 million in the same quarter
of fiscal 2021.

 

    viii

     

    

 

Operational

 

Sangoma
Technologies is a trusted leader in delivering cloud-based “Communications as a Service” (or CaaS) solutions for businesses
of all sizes. Customers include companies from small/medium businesses (SMB’s) right up to large enterprises who are
looking for all the advantages of cloud-based communications at a fair price. In addition to those cloud-based Services, Sangoma
also has a broad suite of Products to compliment its Services.

 

Enterprises, SMBs and carriers in more than 100
countries rely on Sangoma’s technology as part of their mission-critical infrastructures. Through a worldwide network of distribution
partners, Sangoma delivers high-quality services and products, some of which carry the industry’s first lifetime warranty.

 

Innovation

 

As a technology company, Sangoma is continuously
working on a large number of projects across its broad portfolio of existing products and services. While the Company has introduced several
new additions to its portfolio over the last few years, the majority of the Company’s investment in Research and Development (“R&D”)
is dedicated to sustaining, improving on and enhancing its broad portfolio of existing products and services. Sangoma believes that innovation
is essential to a technology company’s future. The Company also believes that R&D investment is necessary in order to address
the needs of the Company’s wide-ranging group of customers (which include business of all sizes including service providers, carriers,
enterprises, small and medium-sized businesses, and original equipment manufacturers) in more than 100 countries, to keep pace with technology
developments in the cloud communications industry, to meaningfully compete in that industry, and to achieve and maintain market acceptance.

 

The Company focuses on creating and introducing
products to the market as soon as commercially practical and, thereafter, focuses on enhancements to further improve its products. Such
product introductions enable the Company to validate product acceptance to some degree, and to get products to market efficiently to start
generating revenue. Furthermore, the Company focuses on keeping its product development costs for new projects under control in a number
of ways, including by reusing its existing code base where applicable and by leveraging open-source software.

 

Sangoma continues to invest in Research and Development
(“R&D”) to develop new products and to improve existing offerings with spending on R&D increasing each year. Sangoma
believes that product innovation is essential to a technology company’s future.

 

    ix

     

    

 

Sales and marketing

 

R&D is important, but without Sales and Marketing,
customers can be too unaware of the advancements that Sangoma has made in innovation. So Sangoma continues to increase its investment
in both Sales and in Marketing, to promote awareness of the Company, to communicate the critical shift from single products to full solutions
to cloud, and to drive customer acquisition.

 

Sales

 

Sangoma uses a dual sales path ‘go to market’
approach: direct sales to large customers and indirect distribution to other small and medium businesses (SMBs).

 

		o	Large Customers typically include ‘service providers’, OEM’s and larger enterprise
type businesses. This is the customer segment that we can sell to directly.

 

Service Providers is a broad category
of customers that included telcos, ISPs, ITSPs, wireless/mobile operators, MSPs, UCaaS operators, etc. These types of organizations
are potential customers for Sangoma.

 

OEM partners are companies that “design
in” Sangoma products as a component of their solutions. OEM customers tend to be committed participants in their given markets and
have longer-term focus. It is important to reach these potential customers in the early days of any project to secure ‘design wins’
and to have sales and marketing programs that will ensure close collaboration during product and sales development cycles.

 

Enterprise customers are the classic
 ‘larger’ companies who buy products or services for their own use. This type of customer has similar ‘use cases’
to a SMB type customer but is large enough that they prefer to do business directly with Sangoma, the Company wants a direct relationship
with them as well, and they are buying enough for Sangoma to cost effectively service them directly.

 

		o	SMB Customers: In other cases, the customer is commonly referred to as a Small-Medium Business.
Here, it is not usually cost-effective to travel to meet with such customers in a typical sales cycle. Sangoma then utilizes an indirect
distribution model to reach the full breadth of customers, using a network of ‘channel partners’. This indirect distribution
approach can often be based upon a two-tier Channel model:

 

The ‘upper tier’ of the
indirect model is typically made up of Distributors or Master Agents, who normally sell not to the end customer, but to the ‘second
tier’ of the channel. This upper tier of the channel tends to be larger organizations and cover broader geographic regions.

 

The ‘second tier’ of the
indirect model is normally made up of Resellers and Agents. Distributors typically sell to resellers, and Master Agents typically sell
to Agents. The Resellers and Agents then sell, install, and support end users. The second tier tend to be smaller organizations (though
not always) and are usually more ‘local’ in nature.

 

Sangoma has parts of its sales team
that focus on Direct customers, whereas the majority focuses on the Channel. In the channel, partners require frequent attention to keep
Sangoma ‘on their mind’ in a crowded product marketplace. Therefore, a portion of the Channel sales team services the distributors
and master agents as the upper tier of the channel, while a different part of the team focuses on the resellers/agents. Finally, Sangoma
has professional sales teams across all our key geographic regions as well.

 

    x

     

    

 

Marketing

 

Sangoma also continues to increase its efforts
in marketing. The Company has assembled corporate marketing programs with two key objectives in mind:

 

		o	to promote the Sangoma brand and positioning, which included conveying the message about the Company’s
full solutions and its Cloud-First approach.

 

		o	lead generation as one of the front-end steps in customer acquisition

 

Sangoma is now using various marketing techniques
typical of technology firms to accomplish those two objectives. This includes participation in tradeshows, speaking at selected industry
events, attending specialized seminars run by Sangoma’s distribution channel and other partners, investing in electronic marketing
strategies (e.g. web presence, social media and blogging, online advertising, search engine campaigns, etc.), conducting lead generation
campaigns via email/social media/etc., webinars, creating thought leadership pieces, PR, etc.

 

In addition to the overall corporate messaging,
in support of the above two objectives, Sangoma has developed a comprehensive set of channel promotion programs, aimed at the Company’s
indirect partners described above, both distributors/master agents as well as resellers/agents. The Company seeks to attract new channel
partners and to grow the business with existing partners. Sangoma has implemented several incentive programs to reward its channel partners
for performance and behaviours that Sangoma believes will grow revenues.

 

    xi

     

    

 

RESULTS OF OPERATIONS

 

SUMMARY OF RESULTS FOR THE FIRST QUARTER OF
FISCAL 2022

 

Sales

 

Sales for the first quarter of fiscal 2022 ended
September 30, 2021 were $52.48 million, double that of the $26.22 million in the comparable first quarter of fiscal 2021.

 

The increase primarily resulted from the Star2Star
acquisition contributing to sales this quarter, as well as our existing Services business continuing to grow and compound, together with
an uptick in Product sales this quarter. As a result, our Services revenue represented 70% of total sales this quarter, up from 56% in
the same quarter of the prior year, and consistent with our strategic objective.

 

Cost of sales and gross profit

 

The cost of sales for the quarter ended September 30,
2021 was $14.63 million compared to $8.91 million last year, driven primarily by the addition of the Star2Star business. In addition,
Sangoma’s COGS has been impacted by the COVID-19 related supply chain pressures, for both electronic components and for shipping.
In some cases, Sangoma has needed to order further ahead, pay more for electronic components, and to ship product by air versus by sea
(at higher cost). Nevertheless, Sangoma was able to fill most customer orders in the first quarter, and still meet our gross margin expectation,
despite these supply chain pressures.

 

Gross profit for the quarter ended September 30,
2021 was $37.85 million, more than double the $17.31 million realized in the quarter ended September 30, 2020. Gross margin for the
first quarter of fiscal 2022 was 72% of revenue, up 6% from the 66% in the same quarter last year. This is driven primarily by higher
margins from the recently acquired Star2Star revenues, the larger fraction of revenue coming from higher margin services year over year,
all partly offset by the supply chain pressures described above.

 

Operational expense

 

As permitted under IFRS, costs are allocated by
function except for the impact of foreign exchange, which can result in material swings between time periods.

 

Sales and marketing

 

Sales and marketing expense was $13.09 million
for the first quarter of fiscal 2022, significantly higher than the $3.83 million incurred in the same quarter of fiscal 2021. This was
primarily the result of the addition of the Star2Star sales team, the incremental marketing staff, the accompanying marketing program
spend, and the channel partner commissions. Sangoma is growing sales and marketing investment in absolute dollars, to help drive growth,
while controlling total operating expense as a percentage of revenue.

 

Research and development

 

A
portion of the Company’s R&D costs are capitalized each period and amortized on a straight-line basis over three years (see
the audited consolidated financial statements and related notes for the fiscal year ended June 30, 2021 available at www.sedar.com).
The engineering expenses incurred, and the development costs amortized during the first quarter of fiscal 2022 were $8.36 million or
approximately 16% of sales, higher than the $4.58 million in the same quarter last year, mostly as a result of the addition of Star2Star.
For the quarter ended September 30, 2021, the Company did not have any significant projects that have not yet generated revenue,
nor did it have any products or services that are not fully developed, and which are material to the Company.

 

    xii

     

    

 

General and administration

 

General and administration expenses were $17.27
million for the quarter ended September 30, 2021 compared to $6.37 million in the same period of fiscal 2021. The incremental spending
is driven primarily by the addition of the Star2Star team and the non-cash expense of the additional amortization of the intangible assets
acquired.

 

Foreign exchange

 

There were no material foreign exchange gains
or losses in the first quarter of either year.

 

Total expenses

 

Total operating expense for the first quarter
of fiscal 2022 was $38.71 million versus $14.77 million during the same period last year. The primary driver of the increase was the incremental
expense associated with the addition of the Star2Star business.

 

Adjusted Operating Income

 

Adjusted
Operating Income is defined as income before interest, income taxes, gain on change in fair value of consideration payable, business
acquisition and business integration costs. Adjusted Operating loss for the quarter ended September 30, 2021 was $0.85 million, compared
to the $2.55 million profit in the same period last year, again affected by the addition of Star2Star and the incremental amortization
of intangible assets.

 

Interest

 

Net
interest expense for the quarter ended September 30, 2021 was $0.66 million, higher than the $0.39 million in the same period
last year, because of the additional interest on the new debt from the acquisition of Star2Star.

 

Business acquisition and integration costs

 

During the quarter ended September 30, 2021,
the Company incurred acquisition-related integration costs of $0.84 million as part of the Integration of Star2Star into Sangoma. For
further information on the Star2Star transaction please refer to Note 20 a) of the September 30, 2021 unaudited condensed consolidated
interim financial statements filed on SEDAR.

 

Consideration payable

 

In the first quarter of fiscal 2022, the change
in the value of the consideration payable gave rise to a loss versus the amount existing on June 30, 2021 with an almost equivalent
offset included in deferred tax expense.

 

Net income (loss)

 

Net loss for the first quarter was $2.30 million
($0.073 loss per share fully diluted), compared to a net income of $1.58 million ($0.109 income per share fully diluted) for the equivalent
quarter ended September 30, 2020.

 

    xiii

     

    

 

 

Adjusted EBITDA

 

Sangoma defines Adjusted EBITDA to be
earnings before interest, taxes, depreciation, amortization, share-based compensation, gain on change in fair value of consideration
payable, business acquisition costs and business integration costs. For the first quarter of fiscal 2022, Adjusted EBITDA at $10.09
million, more than double the $4.95 million of the same quarter last year, primarily resulting from the addition of the Star2Star
business.

 

The derivation of Adjusted EBITDA for the quarter
is shown in the table below.

 

	 	 	Three months ended	 
	US$ Thousands	 	September 30, 2021	 	 	September 30, 2020	 
	Net income (loss)	 	 	(2,301	)	 	 	1,580	 
	Tax	 	 	(292	)	 	 	580	 
	Interest income	 	 	-	 	 	 	(1	)
	Interest expense	 	 	656	 	 	 	389	 
	Share-based compensation	 	 	2,119	 	 	 	154	 
	Depreciation of property and equipment	 	 	443	 	 	 	153	 
	Depreciation of right-of-use assets	 	 	730	 	 	 	626	 
	Amortization of intangibles	 	 	7,655	 	 	 	1,465	 
	Integration expense	 	 	836	 	 	 	-	 
	Change in fair value of consideration payable	 	 	247	 	 	 	-	 
	Adjusted EBITDA	 	 	10,093	 	 	 	4,946	 
	Percentage of revenue	 	 	19.2	%	 	 	18.9	%

 

The above table shows the reconciliation of net
income to Adjusted EBITDA which is a metric used by the Company to monitor its performance and the definition may be found in the section
non-IFRS measures above.

 

    xiv

     

    

 

QUARTERLY
RESULTS TRENDS

 

Sangoma’s quarterly revenue has now exceeded the same period
in the prior year for each of the last twenty-four quarters. Selected financial information over the prior 8 quarters, is shown in the
table below

 

Sales and Net Income by Quarter

 

	US$ thousands 
	 	Second 
 quarter 
2019-2020	 	 	Third 
 quarter 
 2019-2020	 	 	Fourth 
quarter 
2019-2020	 	 	First 
quarter 
2020- 2021	 	 	Second 
quarter 
 2020-2021	 	 	Third 
quarter 
2020-2021	 	 	Fourth 
quarter 
2020-2021	 	 	First 
quarter 
2021-2022	 
	Sales	 	$	24,459	 	 	$	26,998	 	 	$	25,133	 	 	$	26,223	 	 	$	27,087	 	 	$	27,952	 	 	$	50,121	 	 	$	52,479	 
	Gross Profit	 	$	16,153	 	 	$	17,449	 	 	$	16,341	 	 	$	17,315	 	 	$	17,930	 	 	$	18,315	 	 	$	35,885	 	 	$	37,853	 
	Expenses	 	$	14,523	 	 	$	14,942	 	 	$	14,171	 	 	$	14,767	 	 	$	15,131	 	 	$	15,755	 	 	$	37,778	 	 	$	38,707	 
	Adjusted operating income (loss)1	 	$	1,630	 	 	$	2,507	 	 	$	2,170	 	 	$	2,548	 	 	$	2,799	 	 	$	2,560	 	 	$	(1,893	)	 	$	(854	)
	Net income (loss)	 	$	(1,008	)	 	$	1,263	 	 	$	1,899	 	 	$	1,580	 	 	$	1,772	 	 	$	(1,779	)	 	$	(1,290	)	 	$	(2,301	)
	Net earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-diluted basis	 	$	(0.095	)	 	$	0.120	 	 	$	0.177	 	 	$	0.111	 	 	$	0.112	 	 	$	(0.112	)	 	$	(0.041	)	 	$	(0.073	)
	Fully diluted basis	 	$	(0.095	)	 	$	0.115	 	 	$	0.177	 	 	$	0.109	 	 	$	0.110	 	 	$	(0.112	)	 	$	(0.041	)	 	$	(0.073	)
	Adjusted EBITDA1	 	$	3,933	 	 	$	4,843	 	 	$	4,464	 	 	$	4,946	 	 	$	5,142	 	 	$	5,346	 	 	$	9,615	 	 	$	10,093	 

 

1 Adjusted
Operating income (loss) and Adjusted EBITDA are metrics used by the Company to monitor its performance and the definition may be found
in the section non-IFRS measures above.

 

LIQUIDITY

 

As of September 30, 2021, Sangoma had current
assets of $52.23 million, current liabilities of $53.15 million, and closed the first quarter with $19.13 million of cash.

 

Sangoma generated $5.16 million of Adjusted Cash
Flow from operations during the first fiscal quarter of 2022 ended September 30, 2021 compared to $3.01 million in the same quarter
last year.

 

	 	 	Three month periods ended	 
	 	 	September 30,	 
	$ Thousands	 	2021	 	 	2020	 
	Net cash flows from operating activities	 	 	4,008	 	 	 	2,982	 
	Less capitalization of development costs	 	 	(342	)	 	 	(363	)
	Interest earned	 	 	-	 	 	 	(1	)
	Interest expense	 	 	656	 	 	 	389	 
	Business integration costs	 	 	836	 	 	 	-	 
	Adjusted cash flow from operations	 	 	5,158	 	 	 	3,007	 

 

Accounts receivable of $14.07 million on September 30,
2021 were slightly lower than the 14.73 million on June 30, 2021.

 

Inventories
were $12.69 million on September 30, 2021, $0.87 million higher than as at June 30, 2021, reflecting the supply chain pressures
described earlier. Sangoma expects this elevated inventory level to continue for the next few quarters until the supply chain stabilizes.

 

    xv

     

    

 

Net cash flows used in investing activities were
$2.54 million during the quarter ended September 30, 2021 which was primarily the purchase of certain assets from M2 Telecom LLC.

 

There are no existing or anticipated defaults
or arrears on lease payments or interest payments and Sangoma is in full compliance with all debt covenants. Management of the Company
believes that the current working capital and expected funds generated from operations will be sufficient to meet the operating and planned
capital expenditures of the Company for the foreseeable future.

 

CAPITAL RESOURCES

 

There are no material
commitments for capital expenditures at this time.

 

CONTRACT
LIABILITIES

 

The following table shows the movement in Contract
Liabilities:

 

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

 

USE OF PROCEEDS
FROM EQUITY FINANCINGS

 

As of the date of this MD&A, there has not
been, and the Company does not anticipate, any changes to its previously made disclosure about the Company’s intended use of proceeds
from the Offerings.

 

	Offering	Previously Disclosed Proposed Use of Proceeds	Actual Use of Proceeds and Explanation of Variances
	
    Prospectus Supplement dated July 24, 2020 to the Short Form Base
    Shelf Prospectus Dated June 29, 2020

     
	 The Company intends to use net proceeds of the Offering for future acquisitions, with any unused net proceeds to be used for working capital and other general corporate purposes, including to reduce debt. The Company will have discretion in the actual application of Net Proceeds.    	Substantially all of the proceeds were used in the Company’s acquisition of StarBlue Inc. and its wholly-owned operating subsidiary Star2Star Communications, LLC completed on March 31, 2021.

 

    xvi

     

    

 

OFF-BALANCE SHEET ARRANGEMENTS

 

There are no off-balance
sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial
condition of Sangoma.

 

RELATED PARTY TRANSACTIONS

 

Except as disclosed
in the notes to the consolidated financial statements, the Company is not party to any material transactions with related parties.

 

PROPOSED
TRANSACTIONS

 

None.

 

FINANCIAL INSTRUMENTS AND OTHER
INSTRUMENTS

 

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

 

OUTSTANDING SHARE DATA

 

As of November 12,
2021, there were 19,021,614 issued and outstanding common shares of Sangoma, with a further 12,695,600 shares to be issued in accordance
with the terms of the StarBlue acquisition, and as of the same date there were outstanding options to acquire 1,788,895 common shares.
The share and options counts reflect the 7:1 share consolidation that came into effect on November 2, 2021. In accordance with the
International Financial Reporting Standards (“IFRS”), the change has been applied retrospectively.

 

SIGNIFICANT
EVENTS

 

COVID-19:

 

In December 2019, there was a global outbreak
of COVID-19 (coronavirus), which has had a significant impact on businesses through the restrictions put in place by the national, provincial
and municipal governments around the world regarding travel, business operations and isolation and quarantine orders. At the commencement
of the COVID-19 pandemic Sangoma was designated as an essential business in many of the jurisdictions in which it operates and continued
to receive factory shipments and make deliveries to customers around the world throughout fiscal years 2020 and 2021.

 

    xvii

     

    

 

As indicated in previous business updates,
there continues to be uncertainty regarding the full impact, duration and pace of recovery from the COVID-19 pandemic on
Sangoma’s operations and markets. In addition to the varying government responses in each of the countries that Sangoma
operates in, there have been global electronic component supply shortages with associated higher prices, longer lead times for the
supply of both components and finished goods, delays in and increased cost of shipping the company’s products to its
warehouses and customers. Sangoma has responded though seeking to lock in component supply for as far out as is possible but remains
dependent on these components being delivered in the agreed quantities and timelines. As a result Sangoma has needed to use more air
freight than it normally would to get products into its warehouses in order to meet customer demand.

 

Going
forward, the COVID-19 pandemic’s impact on the continuing recovery of the global economy; the Company’s manufacturing,
labour and shipping costs; global exchange rates; Company’s customers’ business operations; the availability and costs of
components required by the Corporation for the production of its products; the Company’s manufacturers and supply chain delivering
the required quantities of finished products on schedule; the continued ability for the Company’s operations employees to work at
the Company’s internal and outsourced facilities; and other employees being able to work from home as required without any material
impact on productivity remains uncertain.

 

The outbreak of the novel strain of coronavirus,
specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread
of the virus. Government Canada and the Bank of Canada have responded with significant monetary and fiscal interventions designed to stabilize
economic conditions as temporary measures and one of them is the Canada Emergency Wage Subsidy (CEWS). The CEWS program offers assistance
in the form of wage subsidy for qualifying businesses faced with specified levels of revenue decline, and the subsidy is targeted to either
retain workforce on payroll or to re-hire furloughed employees. The CEWS program is applicable from March 15 to December 19,
2020 for eligible entities that experienced a reduction in gross revenue for the period as determined by the program. The Company received
$nil under the CEWS for the three month period ended September 30, 2021 (three month period ended September 30, 2020 - $106,899
which was recorded as an offset against salaries and wages in operating expenses in the condensed consolidated interim statements of income
(loss) and comprehensive income (loss).

 

POST REPORTING EVENTS

 

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

 

On November 2,
2021 as previously authorized by its shareholders, the Company implemented a consolidation (reverse stock split) of its outstanding common
shares on the basis of one new common share for every seven previously outstanding common shares and this share consolidation is retrospectively
reflected in this MD&A and associated unaudited condensed consolidated interim financial statements and related notes for the three
months ended September 30, 2021. The Company’s common shares began trading on the TSX on a post-consolidation basis under
the Company’s existing trade symbol “STC” on November 8, 2021.

 

GUIDANCE

 

The Company has
not changed its guidance since September 29, 2021.

 

ADDITIONAL INFORMATION

 

Additional information
relating to the Company is filed on SEDAR at www.sedar.com.

 

    xviii

     

    

 

GLOSSARY OF TERMS

 

Analog 

Analog telephony is the telephone system that
dates back to the original experiments by Alexander Graham Bell. The voice signal is picked up by a microphone and transmitted to the
central office. Voice signals from the central office consist of voltages that drive a headset to produce sound. Analog means that the
voice pressure signals are represented by voltages levels on the line.

 

API

Application Program Interface: An API is a purpose-built
interface that allows fourth party software to interact with a particular application. A typical API is the user interface for Windows
that allow programmers to write programs for Windows that use all its built-in utilities. APIs do not depend on revealing source code,
in general. They are usually well documented and include sample programs that make development easy.

 

Codec

In the telephony context a codec is a mechanism
of digitally encoding voice. On the PSTN a voice channel takes up 64kbps in a codec standard called G.711. Cell phones use a codec called
GSM that compress the voice further so that a GSM call consumes about 24kbps. Other compressed codecs are used in VoIP to conserve bandwidth.
These include standards such as G.729, G.723. Most audio codecs are lossy, in that some of the voice quality is degraded by the compression.
On the other hand, as bandwidth becomes cheaper, VoIP allows one to use other codecs that in fact use more bandwidth than the PSTN, the
so-called broadband codecs that have DVD-like voice quality.

 

Digital telephony

In the modern PSTN only the “last mile”
line to the customer is still analog, all other internal parts of the network are digital. Digital in this case means that at the central
office the analog signal from the subscriber’s telephone is sampled digitally, converting the line voltages to a series of numbers
that can be easily transmitted error free over long distances. See T1, E1 below.

 

Gateway

In the telephony context this is typically a separate unit with
its own case and power supply that provides VoIP-to-PSTN services for a VoIP network. Almost all gateway devices use SIP interfaces to
the VoIP system over Ethernet and have analog or digital telephony interfaces that connect to the PSTN. VoIP gateways are available from
many manufacturers including Audiocodes, Cisco, Grandstream, Patton Electronics and many others.

 

ISDN

Integrated Services Digital Network (“ISDN”) is
a set of communications standards for simultaneous digital transmission of voice, video, data, and other network services over the traditional
circuits of the public switched telephone network. Of the many variations of ISDN, Sangoma supports BRI (Basic Rate Interface) which
is essentially an all-digital replacement for ordinary analog lines and PRI (Primary Rate Interface) which is used over T1 and E1 lines.
BRI is very popular outside of North America. PRI is used worldwide.

 

IP

The Internet Protocol (“IP”) is the primary protocol
in the internet layer of the Internet protocol suite, and delivers data packets from the source host to the destination host solely based
on the IP address.

 

ISP

Internet Service Provider

 

ITSP

Internet Telephony Service Provider who offer telecommunications
service including voice over internet type connections.

 

IVR

Interactive Voice Response: IVR systems use the phone to navigate
a menu, for example those used by banks to allow access to customer’s account information. IVR systems have typically been driven
by dial tones as the buttons on your phone are pressed, but increasingly they are using voice recognition for navigation.

 

    xix

     

    

 

Open Source

Open Source software is distributed free subject
to certain conditions. Open Source licenses usually stipulate that source code must always be distributed or made available, and any improvements
in the code have to be donated back to the community. It is possible to have dual licensing: Open Source to the community and also a closed,
commercial license of the same or similar software.

 

NetBorder

This is the trade name of a Sangoma SIP to PSTN gateway product.
It includes several other functions in addition to the PSTN gateway function. The mass marketed version is known as NetBorder Express
or NBE.

 

PBX

Private branch exchange. A PBX is a premised basis device to
deliver calls from the PSTN or VOIP network to phones in a single or multiple locations.

 

PSTN

Public Switched Telephone Network: This is the standard telephone
network that has been in operation for many decades. A telephone or FAX or PBX or other telephony device is generally connected to an
analog line at a wall plug, which is connected by “last mile” cabling to the central office. The analog signal from the device
is converted to a digital signal at the Telco central office and is multiplexed, 24 simultaneous voice channels per line (in North America)
onto a T1 for onward transmission. At the other end of the line the digital channel is reconverted to analog for transmission over the
 “last mile” to the receiving phone or other device.

 

SBC

A Session
Border Controller (“SBC”) is a device deployed in Voice over Internet Protocol (“VoIP”) networks to exert
control over the signaling and usually also the media streams involved in setting up, conducting, and tearing down telephone calls or
other interactive media communications. SBCs are deployed as demarcation points between enterprises and service providers and between
service provider networks.

 

Signalling

Call setup and tear down is remarkably complicated, involving
such things as responding to the different tones as well as generating them, caller identification and handling the different features
like hook-flash and voicemail properly. There are different signalling mechanisms for different types of circuits. Analog circuits use
tones such as out-of-order, busy, ringing as well as the dialling tones. T1 lines often use a data protocol called ISDN PRI, where packets
of control data are exchanged on a separate data channel. ISDN PRI is a simplification of the general signalling protocol used internally
by the telecommunications networks known as SS7. In all cases signalling has to be exactly compatible with what the Telco expects, so
interoperability and standards are important.

 

SIP

Session Initiation Protocol: SIP is the emerging standard signalling
protocol for VoIP, though it has much broader applications. SIP is responsible for setting up and teardown of two party and multiparty
calls, as well as a host of management features. To a great and increasing extent, VoIP calls are SIP based. The term SIP Trunk is used
to describe the provision of a SIP line to an end customer.

 

T1, E1

A T1 line is a circuit that carries 24 digital telephone calls
simultaneously. At higher densities, 28 T1s are aggregated into a T3 line carrying 672 calls. Larger offices can also connect to the
central office via T1 directly, so as to have only one circuit for up to 24 calls. T1 is standard in North America and Japan while E1
is the standard in the rest of the world. E1 carries 30 channels of digitized voice per line.

 

TDM

Time Division Multiplexing (“TDM”)
is used in circuit switched networks to increase the number of calls carried simultaneously on any one circuit and formed the basis for
the digital telephony networks.

 

Unified Communications

Unified communications is a concept in which voice,
email, messaging, video and any other type of communication are all considered forms of data that can be combined, manipulated and used
in intelligent applications in a seamless way.

 

VoIP

Voice over IP: The transfer of voice traffic over
the Internet Protocol. IP is used universally for all networking including local area networks and private networks, not just the Internet.
VoIP is not necessarily voice over the Internet, but voice over general data networks.

 

    xx

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