Exhibit 99.1

Sinqia S.A.

Audited Consolidated

Financial Statements and

Independent Auditor’s Report

CONTENTS

Independent Auditor’s Report	3

Consolidated Financial Statements

Balance Sheet	5
Statements of Income	8
Statements of Comprehensive Income	9
Statement of Changes in Equity	10
Statements of Cash Flows	11
Notes to the Financial Statements	13

INDEPENDENT AUDITOR’S REPORT

To the Shareholders, Board of Directors and Management of

Sinqia S.A. and Subsidiaries

Opinion

We have audited the consolidated financial statements of Sinqia S.A. and subsidiaries (the “Company”), which comprise the consolidated balance sheet as of December 31, 2022, and the related consolidated statements of income, of comprehensive income, of changes in equity and of cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards - IFRS as issued by the International Accounting Standards Board - IASB.

Basis for opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the financial statements” section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other matter

The accompanying balance sheet of the Company as of December 31, 2021 and the related statements of income, of comprehensive income, of changes in equity and of cash flows for the year then ended were not audited, reviewed, or compiled by us, and, accordingly, we do not express an opinion or any other form of assurance on them.

Responsibilities of Management for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS as issued by the IASB, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, Management is responsible for assessing the Company’s ability to continue as a going concern at least, but not limited to, twelve months from the end of the reporting period, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

•	Exercise professional judgment and maintain professional skepticism throughout the audit.

•

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

•	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

•	Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by Management, as well as evaluate the overall presentation of the financial statements.

•	Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ DELOITTE TOUCHE TOHMATSU

Auditores Independentes Ltda.

São Paulo, Brazil

September 11, 2023

SINQIA S.A.

CONSOLIDATED BALANCE SHEET

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	Note			12.31.2022		12.31.2021
ASSETS					(unaudited)
Current assets
Cash and cash equivalents		5.a		37,941		24,192
Short-term investments		5.b	)	151,766		537,000
Trade receivables		6		40,881		34,510
Prepaid expenses				1,761		3,452
Recoverable taxes and contributions		7		15,840		7,261
Other receivables				2,861		2,552

Total current assets				251,050		608,967

Noncurrent assets
Recoverable taxes and contributions		7		1,321		3,765
Financial assets		5.c	)	99,267		80,701
Escrow deposits		15		197		174
Deferred income tax and social contribution		21.b	)	78,625		47,596
Property and equipment		9		46,740		47,831
Intangible assets		10		1,078,113		488,883

Total noncurrent assets				1,304,263		668,950

TOTAL ASSETS				1,555,313		1,277,917

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

SINQIA S.A.

CONSOLIDATED BALANCE SHEET

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	Note			12.31.2022		12.31.2021
LIABILITIES					(unaudited)
CURRENT LIABILITIES
Debentures		11		74,500		27,300
Leases		23		24,334		16,660
Suppliers and service providers				4,724		2,323
Advances from customers				19,363		10,110
Payroll and related taxes		12		62,234		41,230
Profit for distribution		16.2.b	)	7,720		6,471
Taxes payable		13		6,115		3,993
Payables for investment acquisition		14		79,101		22,294
Other payables				491		-

Total current liabilities				278,582		130,381

NONCURRENT LIABILITIES
Debentures		11		162,156		146,339
Leases		23		47,439		62,810
Provision for legal claims		15		139,866		63,945
Advances from customers				2,990		-
Payables for investment acquisition		14		111,637		71,524
Put option on non-controlling interests		24		142,270		62,386

Total noncurrent liabilities				606,358		407,004

SINQIA S.A.

CONSOLIDATED BALANCE SHEET

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	Note		12.31.2022			12.31.2021
					(unaudited)
EQUITY
Capital		16.1	813,303			813,303
Treasury shares		16.4	(58,174	)		(40,896	)
Share issuance costs		16.5	(48,890	)		(48,890	)
Transactions with non-controlling shareholders			(126,810	)		(61,208	)
Capital reserve		16.3	11,867			12,227
Earnings reserves		16.2	59,010			46,915

Total owners’ equity			650,306			721,451

Non-controlling interests			20,067			19,081

Total equity			670,373			740,532

TOTAL LIABILITIES AND EQUITY			1,555,313			1,277,917

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

SINQIA S.A.

CONSOLIDATED STATEMENT OF INCOME

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$, except basic/diluted earnings per share)

	Note			12.31.2022			12.31.2021
						(unaudited)

NET REVENUE		17		616,472			352,596

Cost of services		18		(353,524	)		(217,831	)

GROSS PROFIT				262,948			134,765

General, administrative and selling expenses		19		(201,847	)		(114,759	)

OPERATING INCOME BEFORE FINANCIAL INCOME (EXPENSE)				61,101			20,006

Financial income (expense), net		20		(27,968	)		2,653

PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION				33,133			22,659

INCOME TAX AND SOCIAL CONTRIBUTION
Current		21.a	)	(26,375	)		(21,850	)
Deferred		21.a	)	10,798			19,404

NET PROFIT FOR THE YEAR				17,556			20,213
ATTRIBUTABLE TO:
Company’s owners				16,785			20,179
Non-controlling interests				771			34
EARNINGS PER SHARE (in reais - R$)
Basic earnings per share		22		0.198			0.266
Diluted earnings per share		22		0.196			0.264

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

SINQIA S.A.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	12.31.2022		12.31.2021
		(unaudited)

NET PROFIT FOR THE YEAR	17,556		20,213

Other comprehensive income	-		-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR	17,556		20,213

ATTRIBUTABLE TO:
Owners of the Company	16,785		20,179
Non-controlling shareholders	771		34

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

SINQIA S.A

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

															Earnings reserve
	Capital		Capital reserve			Treasury shares			Share issuance costs			Transactions with non- controlling shareholders			Legal reserve		Earnings retention		Profit for the year			Equity			Non- controlling interests			Consolidated equity
Balances as at December 31, 2020 (unaudited)		413,261		15,497			(1,689	)		(23,915	)		-			2,533		29,841		-			435,528			-			435,528
Net profit for the year (unaudited)		-		-			-			-			-			-		-		20,179			20,179			34			20,213
Put option on non-controlling interests (unaudited)		-		-			-			-			(61,208	)		-		-		-			(61,208	)		-			(61,208	)
Acquisition of non-controlling interests (unaudited)		-		-			-			-			-			-		-		-			-			19,047			19,047
Capital increase (note 16.1) (unaudited)		400,042		-			-			-			-			-		-		-			400,042			-			400,042
Share-based compensation (note 16) (unaudited)		-		331			-			-			-			-		-		-			331			-			331
Stock option exercise (unaudited)		-		(1,043	)		1,746			-			-			-		-		-			703			-			703
Recognition of legal reserve (note 16) (unaudited)		-		-			-			-			-			1,009		-		(1,009	)		-			-			-
Recognition of earnings reserve (unaudited)		-		-			-			-			-			-		13,532		(13,532	)		-			-			-
Distribution of profit (note 16) (unaudited)		-		-			-			-			-			-		-		(5,638	)		(5,638	)		-			(5,638	)
Share issuance costs (unaudited)		-		-			-			(24,975	)		-			-		-		-			(24,975	)		-			(24,975	)
Purchase of treasury shares (note 16) (unaudited)		-		-			(99,620	)		-			-			-		-		-			(99,620	)		-			(99,620	)
Shares delivered on acquisition of companies (note 16) (unaudited)		-		(2,558	)		58,667			-			-			-		-		-			56,109			-			56,109
Balances as at December 31, 2021 (unaudited)		813,303		12,227			(40,896	)		(48,890	)		(61,208	)		3,542		43,373		-			721,451			19,081			740,532
Net profit for the year		-		-			-			-			-			-		-		16,785			16,785			771			17,556
Put option on non-controlling interests		-		-			-			-			(65,602	)		-		-		-			(65,602	)		-			(65,602	)
Acquisition of non-controlling interests		-		-			-			-			-			-		-		-			-			9,565			9,565
Share-based compensation (note 16)		-		878			-			-			-			-		-		-			878			-			878
Stock option exercise		-		(1,238	)		4,380			-			-			-		-		-			3,142			-			3,142
Recognition of legal reserve (note 16)		-		-			-			-			-			839		-		(839	)		-			-			-
Recognition of earnings reserve		-		-			-			-			-			-		11,256		(11,256	)		-			-			-
Distribution of profit (note 16)		-		-			-			-			-			-		-		(4,690	)		(4,690	)		(9,350	)		(14,040	)
Purchase of treasury shares (note 16)		-		-			(21,658	)		-			-			-		-		-			(21,658	)		-			(21,658	)
Balances as at December 31, 2022		813,303		11,867			(58,174	)		(48,890	)		(126,810	)		4,381		54,629		-			650,306			20,067			670,373

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

SINQIA S.A.

STATEMENT OF CASH FLOWS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	12.31.2022			12.31.2021
			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES

Net profit for the year	17,556			20,213
Adjustments for:
Share-based compensation plan	878			331
Depreciation and amortization	95,129			49,175
Gain on write-off/disposal of property and equipment	6			10
Allowance for doubtful debts	(144	)		2,165
Provision (reversal of provision) for legal claims	(2,358	)		(4,549	)
Accrued bonuses and profit sharing	24,106			8,117
Interest and PVA incurred	51,352			21,457
Measurement of call and put options	(2,710	)		-
Current and deferred income tax and social contribution	15,577			2,446


Changes in operating assets and liabilities
Trade receivables	4,417			(13,178	)
Escrow deposits	(23	)		65
Recoverable taxes and contributions	(4,379	)		(2,784	)
Other receivables	(25	)		(10,032	)
Suppliers and service providers	1,861			(1,057	)
Payroll and related taxes	(6,826	)		7,342
Taxes payable	(1,983	)		(2,476	)
Legal claims paid	(2,364	)		(1,669	)
Advances from customers	4,111			327

CASH GENERATED BY OPERATIONS	198,247			75,903

Income tax and social contribution paid	(26,844	)		(14,846	)
Interest paid	(41,441	)		(10,942	)

NET CASH GENERATED BY OPERATIONS	125,896			50,115

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment and intangible assets	(23,002	)		(16,462	)
Acquisition of companies, net of cash acquired	(437,647	)		(103,202	)
Redemption of (investment in) short-term investments	385,234			(537,000	)
Payables for investment acquisition	-			(15,351	)
Investments in securities	(13,172	)		(64,900	)

NET CASH USED IN INVESTING ACTIVITIES	(88,587	)		(736,915	)

SINQIA S.A.

STATEMENT OF CASH FLOWS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

CASH FLOWS FROM FINANCING ACTIVITIES

	12.31.2022			12.31.2021
			(unaudited)

Repayment of borrowings and financing	(37,558	)		(13,737	)
Payment of leases	(19,326	)		(12,804	)
Borrowings and financing raised	100,990			144,472
Purchase of treasury shares	(21,658	)		(99,620	)
Payables for investment acquisition	(33,217	)		-
Dividends paid	(12,791	)		(1,385	)
Capital increase	-			400,042
Share issuance costs	-			(27,039	)


NET CASH GENERATED BY (USED IN) FINANCING ACTIVITIES	(23,560	)		389,929

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	13,749			(296,871	)

Cash and cash equivalents at the beginning of the year	24,192			321,063
Cash and cash equivalents at the end of the year	37,941			24,192

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	13,749			(296,871	)

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

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

1	GENERAL INFORMATION

1.1	Operations

Sinqia S.A. (“Company”) is a publicly-held company, with head office at Rua Bela Cintra, 755 - 7º andar, in the City of São Paulo, State of São Paulo, whose shares are traded in the “Novo Mercado” segment of B3 – Brasil, Bolsa, Balcão.

The Company was established in 1996 and is primarily engaged in the provision of technology for the financial sector.

The Company is the Parent of Sinqia Tecnologia Ltda., Torq Inovação Digital Ltda., Homie do Brasil Informática Ltda, Rosk Software S.A., and indirect Parent of Lote45 Participações S.A.

These financial statements were approved and authorized for disclosure by the Board of Directors on September 4, 2023.

1.2	Basis of preparation and statement of compliance

The Company’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

The financial statements have been prepared on the historical cost basis, unless otherwise stated. The significant accounting policies adopted in the preparation of the financial statements are presented in the respective notes to the financial statements.

At the date of approval of the financial statements, Management reasonably expects that the Company has appropriate resources to continue as a going concern in the foreseeable future. Therefore, it continues to adopt the going concern basis of accounting in preparing the financial statements.

Management asserts that all relevant information for the consolidated financial statements, and only this information, is being disclosed and corresponds to the information used in managing the Company.

The financial statements are expressed in thousands of reais (R$), rounded to the nearest thousand, unless otherwise stated.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

1.3	Consolidation

The Company consolidates all entities over which it exercises control, i.e., when it is exposed, or has rights, to variable returns arising from its involvement with the investee and has the ability to steer the investee’s relevant activities.

The equity interests in the subsidiaries, which are all domiciled in Brazil, are shown below:

Direct subsidiaries	12.31.2022	12.31.2021	Core business

Sinqia Tecnologia Ltda.	100%	100%	Mainly engaged in the licensing, support and maintenance of standardized applications. It also develops new solutions, customizations and provides specialized IT consulting.
Torq Inovação Digital Ltda.	100%	100%	CVC’s (Corporate Venture Capital) arm of the operation, engaged in strengthening the company’s innovation and accelerated growth strategy through indirect investments in the fintech ecosystem.
Homie do Brasil Informática Ltda.	60%	60%	Engaged in developing e-signature solutions, in batch or not, with a series of companies and powers of authority.
Rosk Software S.A.	-	51%	Mainly engaged in the management of the post-credit flow and digital debt renegotiation.

Indirect subsidiaries	12.31.2022	12.31.2021	Core business

Lote45 Participações.	52%	-	Engaged in managing risks for asset managers.

On October 1, 2021, Sinqia Administração Previdenciária Ltda., Dendron Tecnologia S.A., Senior Solution Seviços em Informática Ltda., and Simply Sistemas S.A. were merged into Sinqia S.A.

On September 30, 2022, Sinqia Seguridade Ltda was merged into Sinqia Tecnologia Ltda.

On December 31, 2022, Newcon Software S.A. and Newcon Tecnologia e Serviços Ltda. were merged into Sinqia Tecnologia Ltda.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

1.4	New standards, amendments and interpretations

In preparing these financial statements, the Company’s Management considered, when applicable, the new revisions and interpretations of the IFRSs below, issued by the IASB, which are mandatorily effective for accounting periods beginning on or after January 1, 2022.

Standard	Description	Effective date and transitional provision

IFRS 17 – Insurance Contracts and Amendments to IFRS 17 – Insurance Contracts	IFRS 17 supersedes IFRS 4 - Insurance Contracts and establishes, among others, the requirements to be applied by issuers of insurance and reinsurance contracts in the standard scope, and for reinsurance contracts maintained, upon recognition, measurement, presentation and disclosure related to insurance and reinsurance contracts.	January 1, 2023, retrospective application with specific rules.

Disclosure of Accounting Policies – Amendments to IAS 1 and Practice Statement 2	In replacement of the requirement for disclosure of significant accounting policies, the amendments to IAS 1 - Presentation of Financial Statements establish that accounting policies must be disclosed when they are material. The amendment provides for guidance to determine such materiality, among other matters.	January 1, 2023, prospective application for the amendments to IAS 1.

Definition of Accounting Estimates – Amendments to IAS 8	Pursuant to the amendments to IAS 8, the definition of “change in accounting estimate” ceases to exist. As a replacement, a definition for the term “accounting estimates” was established: monetary amounts in the financial statements that are subject to measurement uncertainty.	January 1, 2023, prospective application.

Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction – Amendments to IAS 12	The amendments narrowed the scope of the recognition exemption for deferred tax assets and deferred tax liabilities in paragraphs 15 and 24 of IAS 12 – Income Taxes so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.	January 1, 2023, retrospective application with specific rules.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Pronouncement	Description	Effective date and transitional provision

Lease Liability in a Sale and Leaseback - Amendments to IFRS 16	Adds requirements that specify that the seller-lessee must subsequently measure the lease liability arising from the asset transfer – which fulfills the requirements of IFRS 15 to be accounted for as sale and leaseback so that it is not recognized as gain or loss relating to the right of use retained in the transaction.	January 1, 2024, retrospective application.

Classification of Liabilities as Current or Non-current / Non-current Liabilities with Covenants Amendments to IAS 1	The amendments establish that the liability must be classified as current when the entity has no right at the end of the reporting period to defer settlement of the liability during at least twelve months after the reporting period. The amendments determine that the classification of a liability is not affected by the probability of exercising the right to defer settlement of the liability, among other provisions. Also, pursuant to the amendments, only covenants which compliance is mandatory before or at the end of the reporting period must affect the classification of a liability as current or noncurrent. Additional disclosures are also required by the amendments, including information on noncurrent liabilities with covenants.	January 1, 2024, retrospective application.

As regards standards effective beginning January 1, 2023, according to the assessments, the Company estimates that there are no material impacts upon initial application on its consolidated financial statements.

With respect to the standards that will come into effect beginning January 1, 2024, the Company is assessing the effects arising from the initial application on its consolidated financial statements.

2	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

2.1	Critical accounting estimates and assumptions

Based on assumptions, the Company and its subsidiaries make forward-looking estimates. By definition, the resulting accounting estimates will seldom correspond to the respective actual results. The estimates and assumptions that pose a significant risk and would probably result in a material adjustment to the carrying amounts of assets and liabilities for the next fiscal year are as follows:

Goodwill impairment test

The Company and its subsidiaries test goodwill for impairment on annual basis, in accordance with the accounting policy set out in note 27. The recoverable amount of the Cash-Generating Unit (CGU) was determined based on the calculation of the value in use, based on estimates.

The amount of the impairment loss is measured as the difference between the carrying amount of the assets and the present value of the estimated future cash flows discounted at the interest rate corresponding to the capital cost. The carrying amount of the asset is reduced and the loss amount is recognized in the statement of income.

All cash flow projections and discount rate were estimated on nominal basis. The main assumptions used to estimate the value in use are as follows:

✔

Revenues – revenues were projected between 2023 and 2032 considering the customer base growth (organic growth only);

✔

Operating costs and expenses – costs and expenses were projected in line with the Company's historical performance as well as with the historical revenue growth and efficiency gain;

✔

Capital investments – investments in capital goods were estimated considering the current IT infrastructure necessary to enable the offer of services, based on the Company’s history and projected growth;

✔

The estimated future cash flows were discounted at a discount rate of 13.53% p.a. in 2022 (12.28% p.a. in 2021);

✔

Perpetuity – growth in perpetuity was estimated at 2%, based on the long-term GDP obtained in the Focus report of the Central Bank of Brazil.

The key assumptions were based on the Company’s past performance and reasonable and reliable macroeconomics assumptions, based on financial market projections, documented and approved by the Company’s Management.

Income tax, social contribution and other taxes

The Company and its subsidiaries recognize deferred assets based on the differences between the carrying amount recognized in the financial statements and the tax basis of assets and liabilities using the effective rates. The Company and its subsidiaries also recognize provisions as a result of circumstances where it is probable that additional tax amounts will be due. When the result of these matters is different from the amounts initially estimated and recorded, these differences affect current and deferred tax assets and liabilities in the year in which the final amount is determined.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

The Company regularly reviews the recoverability of deferred tax assets, considering the historical income and the projected future taxable income, according to a technical feasibility study.

Revenue recognition

The Company mainly recognizes revenue from software licensing, which comprises licensing fee, revenue from product maintenance and support services, customization, consulting and permanent advisory services.

Revenue is recognized to the extent the Company satisfies its performance obligations, upon transfer of the service agreed with the customer. A service is considered to be transferred when the customer obtains its control. For long-term contracts, the Company obtains formal evidence of the service acceptance by the customer.

Revenue related to software license is recognized after the software is made available to the customer, when its amount can be measured reliably (according to the terms and conditions of the contract); and it is probable that the future economic benefits will flow to the Company.

Revenue from customization and consulting services is recognized as services are provided, according to the respective contracts. Those cases where the service was provided but not yet billed are recorded as unbilled services in line item “Trade receivables” in current assets.

Service revenue is recognized in profit or loss as services are provided. Revenue is not recognized when there is significant uncertainty as to its realization.

Put option on non-controlling interests

Put options on non-controlling interests are recorded based on the gross obligation amount of the expected future exercise price discounted at present value (“redemption amount”) on the acquisition date and subsequently remeasured with impacts on profit or loss.

Revenue and future projected EBITIDA margin periodically reviewed are used to calculate the options, applying the EV/Net Revenue multiples set forth in a contract.

The key assumptions were based on the acquiree’s past performance and reasonable and reliable macroeconomics assumptions, in accordance with financial market projections.

3	FINANCIAL RISK MANAGEMENT

3.1	Financial risk factors

The Company has a financial department in charge of risk management, relying on the oversight of the Board of Directors, which is responsible for defining the policy, controlling the risks and managing financial instruments through control systems, which establish interest limits and define the allocation of resources with the financial institutions. The positions of all financial instruments, as well as the results obtained in relation to the proposed objectives, are presented and assessed on a monthly basis by the finance department and subject to the analysis of the Company’s Board of Directors.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Liquidity risk

The liquidity risk arises from the possibility of the Company and its subsidiaries not having sufficient funds to fulfill their commitments and settlement terms of their rights and obligations.

The Company’s and its subsidiaries’ liquidity and cash flow control is monitored daily by the Company’s management areas, so as to ensure that the operational generation of cash and previous funding, if necessary, are sufficient to maintain their scheduled commitments, not causing liquidity risks for the Company and its subsidiaries.

The Company manages the liquidity risk by maintaining appropriate reserves, bank credit lines and credit lines to raise borrowings it considers appropriate, through the continuous monitoring of projected and actual cash flows, and the combination of the maturity profiles of financial assets and financial liabilities.

Contractual maturity is based on the most recent date in which the Company and its subsidiaries must settle the related obligations:

Type	One year		Two years		Three years		Four years and thereafter		Total (i)
Debentures		74,500		64,050		61,959		36,147		236,656
Leases		24,334		21,360		13,970		12,109		71,773
Payables for investment acquisition		79,101		45,030		29,624		36,983		190,738
Put option on non-controlling interests		-		-		17,982		124,288		142,270
		153,601		109,080		109,565		197,418		569,664

(i)

Refers to the book balances as at December 31, 2022.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Credit risk

The Company has a major credit risk concentration, which includes cash, banks, short-term investments and trade receivables. To ensure the security and diversification of these risks, we adopt objective criteria by maintaining current accounts and short-term investments in prime financial institutions only, with concentration below 35% per counterparty, thus mitigating the risk.

The difficulty in collecting the amounts for services provided to customers and sales of licenses is an important aspect to be considered. To minimize this credit risk, we implemented a strict control over the customer base and active default management, supported by clear service provision and license sales policies. Historically, the low default rate is immaterial, and there is no concentration of transactions with customers.

Also, the amount of the estimated loss on doubtful debts is reviewed and adjusted at the end of each year, reflecting the changes in the credit risk since the initial recognition of the respective financial instruments. This adjustment process ensures an accurate and up-to-date assessment of the Company’s credit risks.

Market risk

Interest and inflation rate risk: The interest rate risk arises from portion of the debt pegged to the CDI rate and short-term investments pegged to the CDI rate, which can adversely affect finance costs or finance income in case of unfavorable changes in interest and inflation rates.

Sensitivity analysis

The main risk linked to the Company’s operations is related to the fluctuation of the Interbank Deposit Certificate (CDI) rate for borrowings and financing.

The Company’s financial instruments are represented by cash and cash equivalents, securities and financial assets, trade receivables, trade payables, borrowings, financing and put options on non-controlling interests, and are stated at cost, plus income earned or charges incurred, which approximate their market values as at December 31, 2022 and 2021.

The main risks linked to short-term investments arises from fluctuations in the yield rates of the assets, such as investments in Bank Deposit Certificate (CDB) and repurchase transactions, subject to equivalent average interest rate ranging from 85.10% to 103.50% of the CDI rate.

Financing refers to debentures issued in 2019 and 2021. Under these conditions, the amount recorded is the closest to the market value of these financial instruments.

Three different scenarios were defined to verify the sensitivity of the index applied on the short-term investments to which the Company was exposed as at December 31, 2022. As at December 31, 2022, we prepared a projection of scenarios based on the annual average CDI rate to calculate our finance income in a scenario of decrease in the CDI rate by 25% (scenario 2) and 50% (scenario 3).

The “gross finance income” was calculated for each scenario, without taking into consideration taxes on income from short-term investments. The portfolio base date used was December 31, 2022, projecting indices for one year and verifying the CDI rate sensitivity in each scenario.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Transaction	12.31.2022	Risk	Scenario 1			Scenario 2
Short-term investments	187,564	CDI		9.34	%		6.23	%
Equivalent average CDI rate (85% and 103%)		101% CDI		9.43	%		6.29	%
Finance income				15,061			10,041

The Company is a party to borrowing and financing agreements, with covenants applicable to these transactions, related to the compliance with economic and financial ratios, cash generation and others. These covenants were complied with and do not limit the normal course of the operations.

Most of our debt derives from debentures held by the Company, adjusted for inflation by the CDI rate plus a fixed annual rate. As at December 31, 2022, we prepared a projection of scenarios based on the annual average CDI rate to calculate our finance costs in a scenario of increase in the CDI rate by 25% (scenario 1) and 50% (scenario 2).

Transaction	12.31.2022	Risk	Scenario 1			Scenario 2
Debentures	236,656	CDI		15.57	%		18.68	%
Equivalent average interest rate (14.70%)		CDI+2.25%		18.38	%		22.05	%
Finance costs				37,544			45,053

3.2	Capital management

The Company’s capital management aims at ensuring a strong credit rating with the institutions and an optimal capital ratio, in order to support the Company’s business and maximize the value to shareholders.

The Company considers in the net debt structure: borrowings and payables for investment acquisition, less cash and cash equivalents.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

As at December 31, 2022, the Company’s capital position was as follows:

	12.31.2022			12.31.2021
			(unaudited)

Total debentures (note 11)	236,656			173,639
Payables for investment acquisition (note 14)	190,738			93,818
Cash and cash equivalents (note 5.a)	(37,941	)		(24,192	)
Short-term investments (note 5.b)	(151,766	)		(537,000	)

Net debt (net cash)	237,687			(293,735	)

Put option on non-controlling interests (note 24)	142,270			62,386

Net debt + put option on non-controlling interests	379,957			(231,349	)

Total equity	650,306			721,451

3.3	Fair value estimate

The Company classifies its financial instruments measured at fair value, according to the following valuation technique hierarchy:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs, other than prices negotiated in active markets included within Level 1, which are observable for the asset or liability, either directly or indirectly;

Level 3 – use of data with significant effect on the fair value recorded and that is not based on observable market inputs.

The table below shows the Company’s assets and liabilities measured at fair value:

	Level 1		Level 2		Level 3		Total balance

Assets
Fixed-income securities in local currency		187,564		-		-		187,564
Securities		38,563		44,828		-		83,391
Derivative financial instruments		-		15,876		-		15,876

Total assets		226,127		60,704		-		286,831

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

3.4	Offset of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to set off the amounts recognized and the intent to either settle them on a net basis, or to realize the asset and settle the liability simultaneously.

Financial instruments by category

	Fair value through other comprehensive income		Fair value through profit or loss		Amortized cost		Total

December 31, 2022
Assets, as per the balance sheet
Trade receivables		-		-		40,881		40,881
Cash and banks		-		-		2,143		2,143
Fixed-income securities in local currency		-		187,564		-		187,564
Securities		-		83,391		-		83,391
Derivative financial instruments		-		15,876		-		15,876

		-		286,831		44,103		330,934

	Fair value through other comprehensive income		Fair value through profit or loss		Amortized cost		Total

December 31, 2022
Liabilities, as per the balance sheet
Borrowings and financing		-		-		236,656		236,656
Payables for investment acquisition		-		-		190,738		190,738
Trade payables		-		-		4,724		4,724
Put option on non-controlling interests		-		-		142,270		142,270

		-		-		574,388		574,388

The Company measures ‘Put option on non-controlling interests’ based on the gross obligation amount of the expected future exercise price discounted at present value (“redemption amount”).

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

4	SEGMENT REPORTING

The Company’s entities are engaged in the supply of goods and provision of information technology services, in addition to consulting services, for the financial sector. Even though the goods are provided to several segments inside the financial institutions, they are not controlled and managed by Management as independent segments, and the Company’s results of operations are controlled, monitored and assessed on an integrated basis.

Therefore, due to Management’s joint control and management approach, it is possible to conclude that the Company operates effectively in one single segment, despite providing its goods and services to several sectors inside the financial institutions.

5	CASH AND CASH EQUIVALENTS

a) Cash and cash equivalents

	12.31.2022		12.31.2021
		(unaudited)

Banks	2,143		5,135
Highly liquid fixed-income securities in local currency (i)	35,798		19,057

	37,941		24,192

b) Short-term investments

	12.31.2022		12.31.2021
		(unaudited)

Fixed-income securities in local currency (i)	151,766		537,000

	151,766		537,000

(i)

The Company has financial investment policies establishing that investments are concentrated on low-risk securities and are substantially remunerated based on the percentage fluctuation of the Interbank Deposit Certificate (CDI) rate. Therefore, they refer to investments in fixed-income investment funds and Bank Deposit Certificates (CDBs), yielding equivalent average interest rate ranging from 85.10% to 103.50% of the CDI rate as at December 31, 2022 (95.10% to 112.57% of the CDI rate as at December 31, 2021) and with immediate liquidity, that is, without grace period for redemptions.

c) Financial assets

	12.31.2022		12.31.2021
		(unaudited)

Guarantee amounts (i)	38,563		32,069
Investments in private entities (ii)	44,828		38,150
Derivative financial instruments (iii)	15,876		10,482

	99,267		80,701

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

(i)

The guarantee amounts correspond mainly to investments in fixed-income investment funds, yielding equivalent average interest rate ranging from 106.59% to 115.20% of the CDI rate, maintained as guarantee for the payables for investment acquisition and debentures.

(ii)

The amounts correspond to the fair value of investments in preferred shares issued by Celcoin Pagamentos S.A., Equity Funds and loans convertible into shares.

(iii)

The amounts refer to call options on non-controlling interests in subsidiaries Homie do Brasil Informática Ltda., Rosk Software S.A. and Lote45 Participações S.A.

6	TRADE RECEIVABLES

	12.31.2022			12.31.2021
			(unaudited)

Billed amounts	34,449			30,672
Unbilled services (i)	7,511			6,416
(-) Estimated losses on doubtful debts	(1,079	)		(2,578	)

	40,881			34,510

(i) The amount of unbilled services refers to the revenue from services actually provided to customers but which have not been billed up to the reporting date.

The variations in estimated losses on doubtful debts are broken down as follows:

	12.31.2022			12.31.2021
			(unaudited)
Balances as at December 31, 2021 and 2020	(2,578	)		(685	)

Additions due to business acquisition (i)	-			(543	)
Additions	(1,053	)		(3,204	)
Effective losses	1,355			815
Reversals	1,197			1,039

Balances as at December 31, 2022 and 2021	(1,079	)		(2,578	)

(i) The balance refers to the acquisition and merger of Itaú Administração Previdenciária Ltda.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

The aging list of receivables is broken down as follows:

	12.31.2022		12.31.2021
		(unaudited)

Unbilled services	7,511		6,416
Current	29,869		23,626
Past due - from 1 to 90 days	3,481		3,838
Past due - from 91 to 180 days	248		966
Past due - from 181 to 270 days	33		473
Past due - from 271 to 360 days	20		677
Past due - over 360 days	798		1,092
	41,960		37,088

7	RECOVERABLE TAXES AND CONTRIBUTIONS

	12.31.2022		12.31.2021
		(unaudited)

Withholding income tax (IRRF) and income tax and social contribution (IRPJ/CSLL) for offset (i)	17,046		10,935
Withholding taxes on revenue (PIS and COFINS) and social contribution (CS)	47		36
Other	68		55

Total	17,161		11,026

Current	15,840		7,261
Noncurrent	1,321		3,765

(i) Refers to the withholding income tax and prepaid income tax and social contribution.

8	RELATED PARTIES

Information on related parties

The Company has a related-party transaction policy, which is reviewed and approved by the Board of Directors, as set forth in the Company’s bylaws.

The transactions between the Group companies refer to the sharing of expenses, mainly administrative, and are carried out based on agreements entered into among the parties. There are no intragroup transactions involving the purchase and sale of goods and services.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Management compensation

The Company has no additional post-employment obligation and does not offer other long-term benefits, such as leave of absence and other benefits for length of service. The Company also does not offer other severance benefits to its Senior Management, other than those prescribed by the Brazilian labor laws.

Short-term benefits

Short-term benefits include wages, fees, payroll taxes, benefits and variable bonus. Expenditures on compensation payable to the Company’s and its subsidiaries’ main executives and officers are summarized below:

	12.31.2022		12.31.2021
		(unaudited)

Wages, fees and related taxes	6,173		4,550
Benefits	747		324
Variable bonus and share-based payment	3,658		1,237
	10,578		6,111

Share-based compensation plan

The purpose of the Share-based Compensation Plan (“Plan”) is to offer to the Company’s main executives the opportunity of multiplying the amount of their annual financial bonus (“Annual Bonus”), through the granting of additional funds (“Bonus”) by the Company, which must be used by the eligible executive (“Beneficiary”) to acquire the Company’s shares (“Shares”). The Plan establishes that the Bonus amount will be calculated based on a multiplier, applied on the Annual Bonus, which is granted by the Company under the Profit Sharing Program (“PPLR”).

The Annual Bonus will be used as a basis for the application of the multiplier for purposes of determination of the Bonus under the Plan. The multiplier ranges from 50% to 80% depending on the task performed at the Company.

The number of shares to be acquired by each beneficiary will be calculated based on their average market value in a given period.

Of the total number of shares acquired, the beneficiary will hold (Vesting) 40% of the total 12 months after the acquisition, 30% of the total 24 months after the acquisition and the remaining 30% of the total 36 months after the acquisition. The acquisition date will be considered as the date on which the Company receives the sales amount from the beneficiary and executes the share purchase agreement.

The number of shares available for exercise under this plan was 56,773 shares, which has expired on March 31, 2023.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Stock Option or Share Subscription Plan

The Stock Option or Share Subscription Plan (“Plan”) provides for the granting of call options or subscription of the Company’s common shares (“Options”). The purpose of the Plan is to (a) attract, retain and engage key professionals for the Company’s management (“Beneficiaries”), (b) align the Beneficiaries’ interests with those of the Company and its shareholders in a long-term perspective and (c) encourage the Beneficiaries to contribute to the Company’s good performance.

Number of shares included in the Plan: The options granted under the Plan, including those already exercised or not, and without considering those cancelled due to dismissal, death, permanent disability or retirement, can confer rights on common shares representing up to 3% of the Company’s capital on the Plan approval date.

Option exercise: The options granted can be exercised provided that the terms and conditions set out in this Plan and by the Board of Directors, in addition to the terms and conditions set out in the respective Option Agreements, are fulfilled. The Beneficiary can exercise all or part of the exercisable Options, it being, therefore, established that the Beneficiary must exercise at least 25% of the exercisable Options held by it on each partial exercise of the Options. The exercise of part of the Options by the Beneficiary will not impair the exercise of the other Options held.

The Company recognizes in profit or loss, during the period services are provided, the grace period and the cost on the compensation payable to the beneficiaries based on the fair value of the options on the grant date, using the Black-Scholes model to determine the fair value of the options. In the year ended December 31, 2022, R$760 was recorded in line item “Stock Options”. The Company will settle this share-based compensation plan by delivering its own shares, which will be held in treasury until the actual exercise of the shares by the beneficiaries.

The main events related to the effective plans, the variables used in calculations and results are as follows:

Grants							Fair value assumptions
Date	Number of		Exercise price		Fair value of		Volatility			Risk-free rate			Maturity period
Date	options/shares		in reais		the shares in reais		Volatility			Risk-free rate			Maturity period
08/01/2018		177,716		7.12		5.94		35.18	%		6.50	%	5 years
09/30/2019		98,646		22.08		18.70		47.82	%		9.75	%	4 years
03/31/2021		200,424		17.24		25.50		48.26	%		6.00	%	4 years
05/31/2021		86,382		29.56		22.46		47.82	%		7.00	%	4 years
09/02/2021		70,044		30.03		23.10		47.82	%		7.00	%	4 years
04/30/2022		273,008		14.90		19.08		47.82	%		9.38	%	4 years

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

9	PROPERTY AND EQUIPMENT

The Company’s and its subsidiaries’ property and equipment are stated at acquisition cost and the depreciation of assets is calculated on a straight-line basis and takes into consideration the estimated economic useful life of the assets. The details on the Company’s property and equipment are shown in the tables below:

								12.31.2022		12.31.2021
	Useful life				Accumulated
	(years)		Cost		depreciation			Net		Net
										(unaudited)

Facilities and improvements		9 – 10		10,866		(7,313	)		3,553		5,561
Electric devices and materials		9 – 12		2,276		(2,005	)		271		328
Furniture and fixtures		9 – 12		6,029		(4,553	)		1,476		1,806
Right-of-use asset		2 – 10		38,207		(11,642	)		26,565		28,384
Computers and peripherals		4 – 5		27,750		(15,760	)		11,990		11,752
Vehicles		5		380		(175	)		205		-
Buildings		25		3,900		(1,220	)		2,680		-

				89,408		(42,668	)		46,740		47,831

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	Facilities and improvements			Electric devices and materials			Furniture and fixtures			Right-of-use asset			Computers and peripherals			Vehicles			Total
Balances as at December 31, 2020 (unaudited)		6,701			451			2,057			22,235			6,670			24			38,138
Additions		98			2			99			-			7,381			-			7,580
Additions relating to IFRS 16 (i)		-			-			-			13,096			-			-			13,096
Additions due to business acquisition		-			198			135			-			192			-			525
Write-offs		-			-			-			-			(10	)		-			(10	)
Depreciation		(1,238	)		(322	)		(484	)		(6,947	)		(2,483	)		(24	)		(11,498	)
Balances as at December 31, 2021 (unaudited)		5,561			329			1,807			28,384			11,750			-			47,831

	Facilities and improvements			Electric devices and materials			Furniture and fixtures			Right-of-use asset			Computers and peripherals			Vehicles			Buildings			Total
Balances as at December 31, 2021 (unaudited)		5,561			329			1,807			28,384			11,750			-			-			47,831
Additions		1,044			5			350			-			4,805			-			-			6,204
Additions relating to IFRS IFRS16 (i)		-			-			-			3,517			-			-			-			3,517
Additions due to business acquisition (ii)		170			74			540			-			368			268			2,849			4,269
Write-offs		-			-			-			-			(6	)		-			-			(6	)
Depreciation		(3,222	)		(137	)		(1,221	)		(5,336	)		(4,927	)		(63	)		(169	)		(15,075	)
Balances as at December 31, 2022		3,553			271			1,476			26,565			11,990			205			2,680			46,740

(i) The additions relating to IFRS16 consist of the recognition of the right of use of new property lease contracts.

(ii) Increase in assets arising from the business combination of Newcon Software S.A., Sinqia Seguridade Ltda. and Lote45 Participações S.A.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

10	INTANGIBLE ASSETS

									12.31.2022		12.31.2021
	Useful life (years)		Cost		Accumulated amortization and/or impairment (i)			Net		Net
										(unaudited)

Goodwill on acquisition of subsidiaries		-		633,456		(2,860	)		630,596		285,286
Software licenses		1-5		40,829		(31,841	)		8,988		5,054
Trademarks and patents		5-10		61,909		(10,865	)		51,044		19,729
Software acquired		5		100,644		(35,492	)		65,152		38,648
Customer portfolio		10		331,428		(55,125	)		276,303		89,844
Non-compete agreement		5		9,068		(7,947	)		1,121		1,916
Development of new products		5		10,563		(6,301	)		4,262		-
Right of use - servers		1-3		64,057		(23,410	)		40,647		48,406
				1,251,954		(173,841	)		1,078,113		488,883

(i)

The main assumptions used in the impairment test of the goodwill on acquisition of subsidiaries were disclosed in note 2. Impairment losses were neither recognized nor reversed in the years ended December 31, 2022 and 2021.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	Goodwill on acquisition of subsidiaries (i)		Software licenses			Trademarks and patents			Software acquired			Customer portfolio			Non-compete agreement			Development of new products		Right-of-use assets			Total
Balances as at December 31, 2021 (unaudited)		285,286		5,054			19,729			38,648			89,844			1,916			-		48,406			488,883
Additions		-		12,536			-			-			-			-			4,262		-			16,798
Additions due to business acquisition (ii)		345,310		2,876			39,610			39,607			216,757			-			-		-			644,160
Additions – right of use (iii)		-		-			-			-			-			-			-		8,323			8,323
Amortization		-		(11,478	)		(8,295	)		(13,103	)		(30,298	)		(795	)		-		(16,082	)		(80,051	)
Balances as at December 31, 2022		630,596		8,988			51,044			65,152			276,303			1,121			4,262		40,647			1,078,113

The variations in intangible assets are as follows:

	Goodwill on acquisition of subsidiaries (i)			Software licenses			Trademarks and patents			Software acquired			Customer portfolio			Non-compete agreement			Development of new products			Right-of- use assets			Total
Balances as at December 31, 2020 (unaudited)		134,902			4,238			5,210			12,714			47,757			2,877			1,210			13,802			222,710
Additions		-			8,882			-			-			-			-			-			-			8,882
Additions due to business acquisition		150,427			-			15,176			34,319			52,242			-			-			-			252,164
Additions – right of use		-			-			-			-			-			-			-			42,802			42,802
Transfer		(43	)		36			-			-			7			-			-			-			-
Amortization		-			(8,102	)		(657	)		(8,385	)		(10,162	)		(961	)		(1,210	)		(8,198	)		(37,675	)
Balances as at December 31, 2021 (unaudited)		285,286			5,054			19,729			38,648			89,844			1,916			-			48,406			488,883

(i) The total goodwill balance is allocated to the Company’s sole cash-generating unit.

(ii) Increase in assets arising from the business combination of Newcon Software S.A., Sinqia Seguridade Ltda. and Lote45 Participações S.A.

(iii) The additions relating to IFRS16 consist of the recognition of the right of use of new cloud server lease contracts.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

11	DEBENTURES

	Charges	Maturity	12.31.2022		12.31.2021
				(unaudited)

1^st issuance of debentures (i)	CDI+1.50%	02/22/2024	14,634		27,161
2^nd issuance of debentures (ii)	CDI+2.30%	07/15/2026	222,022		146,478

Total			236,656		173,639

Current			74,500		27,300
Noncurrent			162,156		146,339

(i)

The first issuance of simple, non-convertible debentures is guaranteed by credit rights arising from receivables. Also, the Company is required to keep the amount of R$3,000 deposited, which was recorded in line item “Securities”, in noncurrent assets.

(ii)

The second issuance of simple, non-convertible debentures is guaranteed by credit rights from the current accounts linked to the transaction and the funds deposited in these accounts, arising from the agreements entered into between the Company and its customers.

The variations in borrowings and financing are as follows:

	12.31.2022			12.31.2021
			(unaudited)

Balance at the beginning of the year	173,639			39,645
Borrowings	100,990			144,472
Interest incurred	31,420			7,874
Interest paid	(31,835	)		(4,615	)
Repayment	(37,558	)		(13,737	)

Balance at the end of the year	236,656			173,639

The expected payment of the Company’s borrowings and financing is as follows:

	12.31.2022		12.31.2021
		(unaudited)

2022	-		27,300
2023	74,500		49,290
2024	64,050		38,845
2025	61,959		36,756
2026	36,147		21,448

	236,656		173,639

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Covenants

Debentures are subject to financial covenants that must be determined as at December 31. As at December 31, 2022, the net debt-to-Ebitda ratio must be lower than or equal to 3, and from 2023 to 2026 the net debt-to-Ebitda ratio must be lower than or equal to 2.75.

The gross debt with banks corresponds to the sum of short- and long-term borrowings and financing, plus (i) discounted securities with recourse and factoring, (ii) leases, except if the lease derives from operating property rental agreements and server use agreements, (iii) non-convertible fixed-income securities from public or private issuance, at the local or international markets, (iv) liabilities arising from derivative financial instruments, (v) acquirees’ financial debts, provided that the share is higher than 50% of the acquiree’s capital, not yet consolidated, (vi) debts and convertible securities, and (vii) borrowings net of loans, duly represented in the Issuer’s consolidated balance sheet, in line item “Borrowings and financing” in the consolidated quarterly financial information or consolidated annual financial statements.

Non-financial covenants include accelerated maturity clauses as a result of events not restricted to the financial scope, according to common market practices.

As at December 31, 2022, the Company met the covenants.

12	PAYROLL AND RELATED TAXES

	12.31.2022		12.31.2021
		(unaudited)

Social Security Tax (INSS) and Severance Pay Fund (FGTS) payable	10,172		6,466
Withholding income tax (IRRF) on wages	7,256		5,306
Vacation pay	26,655		20,958
Bonus, commission and profit sharing (i)	17,320		8,001
Other	831		499

	62,234		41,230

(i)

The accrued bonuses and profit sharing are recorded on a monthly basis, and depend on the attainment of corporate and employees’ individual goals. These amounts are paid in April of the subsequent year.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

13	TAXES PAYABLE

	12.31.2022		12.31.2021
		(unaudited)

Income tax (IR) and social contribution (CS) payable	3,252		1,550
Service tax (ISS) payable	1,907		1,365
Taxes on revenue (PIS/COFINS) payable	769		779
Other taxes payable	187		299
Total	6,115		3,993

14	PAYABLES FOR INVESTMENT ACQUISITION

Refer to installments payable for acquisition of investments made by the Company and its subsidiaries, negotiated for installment payment, and for agreements not subject to indexed market interest rates, they are adjusted to present value (using an average rate ranging between 4.5% and 11.0%, reflecting the third-party capital rate for the acquisition period). The respective amounts are recorded in current and noncurrent liabilities as follows:

	12.31.2022		12.31.2021
		(unaudited)

Acquisition:
Atena	4,082		4,727
ADSPrev	1,070		1,481
SoftPar	6,230		7,589
Stock&Info	965		236
Tree Solution	3,203		5,444
Fromtis	7,516		11,794
ISP	42,372		50,775
Dendron	3,568		5,294
Simply	4,361		6,478
Lote45	26,833		-
Mercer	7,316		-
Newcon	83,222		-
Total	190,738		93,818

Current	79,101		22,294
Noncurrent	111,637		71,524

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

The variations in payables for investment acquisition are as follows:

	12.31.2022			12.31.2021
			(unaudited)

Balance at the beginning of the year	93,818			43,761
Interest incurred	10,903			7,569
Addition due to business acquisition	120,864			60,379
Interest paid	(1,630	)		(2,540	)
Amortization	(33,217	)		(15,351	)

Balance at the end of the year	190,738			93,818

The expected payment of payables for investment acquisition is broken down as follows:

	12.31.2022		12.31.2021
		(unaudited)

2022	-		22,294
2023	79,101		24,488
2024	45,030		22,013
2025	29,624		12,625
2026	23,860		12,398
2027	13,123		-

	190,738		93,818

15	PROVISION FOR LEGAL CLAIMS

In the normal course of its activities, the Company is a party to tax, civil and labor lawsuits. Management, supported by the opinion of its legal counsel, assesses the expected outcome of ongoing lawsuits and determines the need to recognize a provision based on the best estimate of the disbursement required to settle the present obligation on the balance sheet date.

The table below shows the position of the provisions for probable losses as at December 31, 2022 and 2021:

	12.31.2022		12.31.2021
		(unaudited)

Civil	11,784		10,025
Labor	46,982		28,345
Tax	81,100		25,575

	139,866		63,945

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

The variations in the provision for legal claims are as follows:

	12.31.2022			12.31.2021
			(unaudited)
Balance at the beginning of the year	63,945			42,402

Additions (i)	14,204			1,499
Additions due to business acquisition (ii)	79,548			29,574
Reversals	(16,560	)		(6,048	)
Interest incurred	1,094			(1,783	)
Payments	(2,365	)		(1,699	)

Balance at the end of the year	139,866			63,945

(i) Additions include new lawsuits and changes in amounts of lawsuits already recorded.

(ii) Refers to amounts of tax, civil and labor lawsuits, arising from the acquisition of Newcon Software S.A., Sinqia Seguridade Ltda. and Lote45 Participações S.A.

The Company is a party to labor and tax lawsuits whose risk of loss is classified as possible, based on the opinion of the Company’s legal counsel and Management, and for which no provision was recognized. As at December 31, 2022, the adjusted value of the matter in controversy, related to these lawsuits, is R$35,082 (R$30,281 as at December 31, 2021). Also, as at December 31, 2022, the Company has escrow deposits amounting to R$197 (R$174 as at December 31, 2021).

Labor

Labor lawsuits discuss overtime, health hazard and/or hazardous duty premiums, wage parity, vacation, pain and suffering arising from accident-related lawsuits, occupational disease, subsidiary liability involving service providers, etc.

Tax

Tax lawsuits refer to legal claims involving municipal and federal taxes, in particular requests for offset and/or refund not approved, in addition to tax risks identified in acquisition processes.

Civil

Civil lawsuits refer mainly to lawsuits filed under the allegation of certain problems in the provision of services offered and refund of amounts.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

EQUITY

16.1

Capital

The Board of Directors approved the Company’s capital increase at the meeting held on August 26, 2021, within the authorized capital limit, pursuant to Art. 5 of the Bylaws, in the amount of R$400,042, upon the issuance of 17,393,160 common shares.

The Company’s capital amounts to R$813,303 and is currently represented by 87,941,972 registered common shares, without par value. The holders of common shares have the right to one vote per share at the meetings of the Company’s shareholders.

The table below shows the number of shares held by shareholders holding 5% or more of the Company’s common shares, in addition to treasury shares.

				12.31.2022					12.31.2021
Shareholders	Shares		%			Shares		%
						(unaudited)
HIX Investimentos Ltda.		9,588,025		10.90	%		6,295,047		7.16	%
Antonio Luciano de Camargo Filho		6,483,752		7.37	%		6,078,979		6.91	%
Bernardo Francisco Pereira Gomes		5,689,450		6.47	%		5,970,180		6.79	%
SFA Investimentos Ltda.		5,404,400		6.15	%		5,739,900		6.53	%
SK Tarpon		4,405,877		5.01	%		-		-
Treasury shares		3,362,360		3.82	%		2,191,561		2.49	%
Other shareholders ⁽ⁱ⁾		53,008,108		60.28	%		61,666,305		70.12	%
Total		87,941,972		100.0	%		87,941,972		100.0	%

(i) Substantially refer to free float.

16.2	Earnings reserve

The earnings retention reserve is comprised of the legal reserve and the earnings retention reserve arising from the allocations of capital budgets approved at the Annual General Meetings.

a)	Legal reserve

As at December 31, 2022, the legal reserve was recognized in the amount of R$839. As at December 31, 2021, the legal reserve was recognized in the amount of R$1,009.

b)	Dividends and interest on capital

As at December 31, 2022, dividends were distributed in the amount of R$4,690. As at December 31, 2021, dividends were distributed in the amount of R$5,638. The mandatory minimum dividend corresponds to 25% of the adjusted profit.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	12.31.2022		12.31.2021
		(unaudited)
Calculation basis – interest on capital/dividend	16,785		20,179
Legal reserve (5%)	839		1,009
Minimum dividend basis	15,946		19,170
Interest on capital (25%)	3,986		4,793
Additional interest on capital	704		846
Distributable dividends	4,690		5,638
Earnings per share	0.055		0.074

16.3	Capital reserve

As at December 31, 2022 and 2021, the balances of capital reserves consist of the effects from the share-based compensation plan and changes in the purchase and sales prices of treasury shares.

A variation in the amount of R$878 was recognized in 2022 (R$331 in 2021) referring to the share-based compensation plans. There was a variation in the amount of R$1,238 in 2022 (R$3,601 in 2021) in the capital reserve relating to the difference between the purchase price and the sales price of treasury shares upon acquisition and compensation plan.

16.4	Treasury shares

At the meeting held on March 10, 2021, the Board of Directors authorized the acquisition of up to 5,241,054 shares, representing 8.9% of the outstanding shares, through the launching of the Sixth Share Repurchase Program.

In 2021 shares were acquired for the amount of R$99,777 and a portion of these shares was delivered for the amount of R$56,109 upon payment for the new acquirees Simply Sistemas S.A., Dendron Tecnologia S.A., Homie do Brasil Informática Ltda. and Rosk Software S.A.

In 2022 shares were acquired for the amount of R$21,658 and shares were sold for the amount of R$4,380, resulting in a balance of treasury shares in the amount of R$58,174 (R$40,896 in 2021).

16.5	Share issuance costs

Share issuance costs reflect the changes in equity arising from the issuance of new shares. In 2021 costs in the amount of R$24,975 were recorded, relating to the Company’s capital increase, within the authorized capital limit, pursuant to Art. 5 of the Bylaws.

16.6	Non-controlling interests

Non-controlling interests refer to the interest held by the shareholders of Homie do Brasil Informática Ltda., Rosk Software S.A. and Lote45 Participações Ltda, which together correspond to the amount of R$20,067 in 2022 (R$19,081 in 2021).

16.7	Transactions with non-controlling shareholders

Transactions with non-controlling shareholders refer to put options for the sale of the remaining portions to the non-controlling shareholders. The put option was recorded at the gross price of the expected future exercise price, discounted at present value. The option exercise price will be measured based on the revenue multiple, which will be determined by the EBITDA margin on a future date; this amount corresponds to the amount of R$126,810 in 2022 (R$61,208 in 2021).

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

17	NET OPERATING REVENUE

	12.31.2022		12.31.2021
		(unaudited)

Software	522,479		275,650
Services	93,993		76,946
Net operating revenue	616,472		352,596

The average rate of taxes on sales in the period was 9.45% for the Consolidated (10.91% as at December 31, 2021), including taxes on revenue (PIS/PASEP and COFINS), Service Tax (ISSQN) and Social Security Contribution (INSS).

18	COSTS OF SERVICES

	12.31.2022		12.31.2021
		(unaudited)

Outside services	39,499		24,261
Personnel, payroll taxes and benefits	274,727		180,834
Depreciation and amortization	11,982		5,641
Other costs	27,316		7,095
	353,524		217,831

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

19	GENERAL, ADMINISTRATIVE AND SELLING EXPENSES

	12.31.2022			12.31.2021
			(unaudited)

Outside services	7,180			11,272
Personnel, payroll taxes and benefits	69,354			37,377
Commissions	4,510			3,499
Rents, insurance, common area maintenance fees and other	2,980			2,736
Increase in accrued bonuses and profit sharing	24,106			8,117
Reversal of provision for legal claims	(2,356	)		(4,549	)
Increase in estimated losses on doubtful debts	(144	)		2,165
Consultants, lawyers and auditors	2,615			2,465
Depreciation and amortization	83,147			43,534
Other expenses	10,455			8,142
	201,847			114,758

20	FINANCIAL INCOME (EXPENSE)

	12.31.2022			12.31.2021
			(unaudited)

Financial income:
Income from short-term investments	20,081			17,092
Fair value adjustment to financial instruments	3,008			7,844
Interest receivable	1,266			-
Other finance income	-			269
	24,355			25,205

Financial expenses:
Interest on investment acquisition	(10,903	)		(7,569)
Interest on borrowings	(31,417	)		(7,874	)
Interest on leases	(7,936	)		(4,231	)
Present value adjustment to call/put option	(298	)		-
Interest and inflation adjustment to lawsuits	(1,094	)		(1,783	)
Other finance costs	(675	)		(1,095	)
	(52,323	)		(22,552	)
	(27,968	)		2,653

21	PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION

Current income tax and social contribution were computed based on effective tax rates and deferred income tax and social contribution are calculated on temporary differences and tax loss carryforwards.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Reconciliation of income tax and social contribution (expense) income

The following amounts of current and deferred income tax and social contribution were recognized in profit or loss for the periods:

	12.31.2022			12.31.2021
			(unaudited)

Profit before taxes	33,133			22,659

Expense at the combined statutory rate (34%)	(11,265	)		(7,703	)

Adjustments to the effective rate:

Deemed income in subsidiaries (i)	416			3,928
Non-deductible bonus	(5,709	)		(2,351	)
Interest on capital	1,917			470
“Lei do bem” and credits recognized	1,644			2,559
Other permanent differences (ii)	(2,580	)		651

Credit (expense) at the effective rate	(15,577	)		(2,446	)

Current income tax and social contribution	(26,375	)		(21,850	)
Deferred income tax and social contribution	10,798			19,404

(i)

Difference relating to Group companies that elect to calculate income tax and social contribution under the deemed income regime.

(ii)

Line item “Other permanent differences” consists mainly of non-deductible expenses, differences in tax rates and the Workers’ Meal Program (PAT).

Deferred income tax and social contribution - assets

Deferred income tax and social contribution are broken down as follows:

	12.31.2022			12.31.2021
			(unaudited)

Noncurrent assets
Tax loss carryforwards	49,070			41,339
Allowance for doubtful debts	367			877
Accrued profit sharing	443			365
Provisions for legal claims and other obligations	42,081			17,594
Amortization of tax goodwill in business combinations	(12,575	)		(17,089	)
Other provisions	1,424			450
Change in the fair value of financial assets	(3,736	)		(2,667	)
Leases	1,551			6,727

	78,625			47,596

Deferred income tax and social contribution were recognized based on studies prepared by Management on the generation of taxable income that allow the full realization of these amounts in the following years, in addition to the expected realization of deductible or taxable temporary differences, as shown below:

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	12.31.2022			12.31.2021
			(unaudited)

2022	-			3,380
2023	5,382			5,382
2024	7,779			7,779
2025	9,316			9,316
2026	11,370			11,370
2027	9,445			9,445
2028	10,519			10,607
2029	18,686			7,158
2030	18,703			-

Total deferred tax assets	91,200			64,437

Goodwill tax benefit	(12,575	)		(16,841	)

Deferred tax assets, net	78,625			47,596

22	EARNINGS PER SHARE

Basic earnings per share are calculated by dividing profit for the year, attributable to the holders of common shares, by the weighted average number of common shares outstanding during the year.

Diluted earnings per share are calculated by dividing profit for the year, attributable to the holders of common shares, by the weighted average number of common shares outstanding during the year, plus the weighted average number of common shares that would be issued upon conversion of all potential diluted common shares into common shares.

The tables below show profit or loss and share data used to calculate basic and diluted earnings per share:

	12.31.2022		12.31.2021
		(unaudited)
Basic earnings per share
Numerator
Profit for the year attributable to the Company’s shareholders	16,785		20,179
Denominator
Weighted average number of outstanding common shares	84,838,175		75,889,647

Basic earnings per share (in reais)	0.198		0.266

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

	12.31.2022		12.31.2021
		(unaudited)
Diluted earnings per share
Numerator
Profit for the year attributable to the Company’s shareholders	16,785		20,179
Denominator
Weighted average number of outstanding common shares	84,838,175		75,889,647
Potential increase in common shares due to the stock option and restricted share plan	906,220		434,913

Diluted earnings per share (in reais)	0.196		0.264

LEASES

Lease liabilities were recognized as prescribed by accounting standard IFRS 16 in connection with the recognition of future payment liability and right of use of leased assets for all contracts within the scope of the standard. For current leases, the average discount rate of 7.38% was used.

	Final maturity	12.31.2022		12.31.2021
			(unaudited)

Belo Horizonte office	12/31/2028	5,761		5,246
São Paulo office	07/01/2028	22,535		24,193
Curitiba office	08/31/2023	617		505
Oracle do Brasil (servers)	12/31/2022	-		229
Solo Network (servers)	07/30/2025	40,759		46,612
Claranet (servers)	09/30/2026	2,101		2,685

Total		71,773		79,470

Current		24,334		16,660
Noncurrent		47,439		62,810

The variations in leases are as follows:

	12.31.2022			12.31.2021
			(unaudited)

Balance at the beginning of the year	79,470			38,800
Additions	11,670			53,030
Interest incurred	7,935			4,231
Interest paid	(7,976	)		(3,787	)
Amortization	(19,326	)		(12,804	)

Balance at the end of the year	71,773			79,470

(i)

The amount refers to the transfer of the Parent’s lease contracts to subsidiary Senior Solution Consultoria em Informática Ltda.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

24	PUT OPTION ON NON-CONTROLLING INTERESTS

As part of the business combination where the acquiree’s capital was partially acquired, the Company issued a put option for sale of the remaining portion to the non-controlling shareholders. The put option was recorded based on the expected future exercise price, discounted at present value. The option exercise price will be measured based on the revenue multiple, which will be determined by the EBITDA margin on a future date.

Currently, the following options were issued.


	Exercise date	12.31.2022		12.31.2021
			(unaudited)

Homie do Brasil Informática Ltda.	07/31/2025	17,982		13,315
Rosk Software S.A.	04/30/2025 and 04/30/2026	32,799		49,071
Lote45 Participações S.A.	04/30/2027	91,489		-

Total		142,270		62,386

25	NON-CASH TRANSACTIONS

The investing and financing transactions not involving the use of cash or cash equivalents are not included in the statement of cash flows. The Company carried out the following non-cash investing and financing activities:

	12.31.2022			12.31.2021
			(unaudited)

Recognition of lease assets/liabilities	11,670			53,030
Portion retained in the payment for investment acquisition	-			(60,379	)
Business combination	(178,579	)		233,826

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

26	BUSINESS COMBINATION

A business combination is a transaction or another event through which an acquirer obtains control of one or more businesses, regardless of the legal form of the transaction. The acquisition method is applied for transactions where control is obtained. Business combinations of entities under common control are accounted for at cost. Under the acquisition method, the identifiable assets acquired and liabilities assumed are measured at their fair value, with limited exceptions.

During 2022, three entities were acquired: (i) Newcon Software S.A., (ii) Mercer Seguridade Ltda., and (iii) Lote45 Participações Ltda. The goodwill recognized on these acquisitions, in the amount of R$341,854, corresponds to the amount of future economic benefits (goodwill) arising from the synergies resulting from acquisitions carried out, which are aligned with the Company’s strategy of increasing its market share in the Consortium (Newcon), Pension Plan (Mercer) and Funds (Lote45) segments.

Homie do Brasil Informática Ltda.

On April 8, 2021, the Company completed the acquisition of a 60% stake in Homie do Brasil Informática Ltda. (“Fepweb”), through its subsidiary Sinqia Tecnologia, where it undertakes to acquire, with the option to acquire another 40% in 2025, upon exercise of options. The transaction involved the amount of R$23,400 payable at sight in cash, R$15,868 payable at sight in shares and a transferred consideration adjustment of R$1,285 on the acquisition date. Additionally, the transaction provides for the Company’s purchase and seller’s sale of the remaining portion, based on the exercise price linked to Fepweb’s net revenue and EBITDA margin for 2024.

Fepweb, headquartered in São Paulo, was established in 2006 to offer to the market solutions with high levels of security, capable of serving the most complex economic sectors. With the mission of offering excellence in terms of IT solutions and creating value for its customers, in 2011, the company launched its powerful software platform (FEPWebTM) which, in one single package, ensures to customers higher productivity and process efficiency, with total legal security and validity.

a.1) Fair value on the acquisition date of the consideration transferred:

Cash disbursed			22,023
Paid in shares			15,868
Price adjustment as per contract			1,285
Total consideration transferred			39,176

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

a.2) Goodwill arising on the acquisition of equity interests:

Total consideration transferred	39,176

(-) Fair value of the main assets acquired:
Software	(10,127	)
Customer portfolio	(17,053	)

(+) Fair value of the main liabilities assumed:
Contingencies	4,218

(-) Total of identifiable net assets at fair value on the acquisition date	233

(-) Total amount of non-controlling interests	(9,277	)

Goodwill on expected future earnings arising on acquisition	25,258

Goodwill expected to be deductible for tax purposes	24,244

The contingent liability of R$4,218 was recognized in view of labor and social security risks in the amount of R$2,590 and tax risks in the amount of R$1,628, referring to the contingency period. As at December 31, 2022, there was no change in the amounts recognized since the acquisition date for the liability or in the expected amount ranges or also in the assumptions used for estimation.

a.3) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	04/08/2021			04/08/2021
Current assets			Current liabilities

Cash and cash equivalents		308	Suppliers and service providers		59
Trade receivables		534	Taxes payable		336
Recoverable taxes		4	Payroll and related taxes		582
Other assets		255	Other liabilities		28

Total current assets		1,101	Total current liabilities		1,005

Noncurrent assets			Noncurrent liabilities

Property and equipment		138	Provision for legal claims		4,218
Intangible assets		27,180

Total noncurrent assets		27,318	Total noncurrent liabilities		4,218

			Total equity		23,196

Total assets		28,419	Total liabilities		28,419

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Rosk Software S.A. (“QuiteJá”)

On October 22, 2021, the Company completed the acquisition of 51% stake in Rosk Software S.A. (“QuiteJá”), through Parent Sinqia S.A. The transaction closing was formalized on October 28, 2021, after fulfilling all conditions precedent. The total transaction price initially set forth in the agreement was R$38,250, consisting of: (i) R$19,296 as initial consideration disbursed; (ii) R$17,516 payable in shares and a transferred consideration adjustment of R$1,438 on the acquisition date. Additionally, the transaction provides for the Company’s purchase and seller’s sale of the remaining portion, based on the exercise price linked to Quite Já’s net revenue and EBITDA margin. Each option is entitled to acquire 24.5% of the capital but options have different dates, one being linked to the net revenue and EBITDA margin for 2024 and another linked to that for 2025.

b.1) Fair value on the acquisition date of the consideration transferred:

Cash disbursed			19,296
Paid in shares			17,516
Price adjustment as per contract			1,438
Total consideration transferred			38,250

b.2) Goodwill arising on the acquisition of equity interests:

Total consideration transferred	30,152

(-) Fair value of the main assets acquired:
Software	(9,071	)
Customer portfolio	(2,951	)
Trademark	(15,176	)

(+) Fair value of the main liabilities assumed:
Contingencies	7,980

(-) Total of identifiable net assets at fair value on the acquisition date	(2,719	)

(-) Total amount of non-controlling interests	(10,751	)

Goodwill on expected future earnings arising on acquisition	18,966

Goodwill expected to be deductible for tax purposes	24,209

The contingent liability of R$7,980 was recognized in view of labor and social security risks in the amount of R$5,839 and tax risks in the amount of R$2,141, referring to the contingency period. As at December 31, 2022, there was no change in the amounts recognized since the acquisition date for the liability or in the expected amount ranges or also in the assumptions used for estimation.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

b.3) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	10/22/2021			10/22/2021
Current assets			Current liabilities

Cash and cash equivalents		2,679	Suppliers and service providers		1
Trade receivables		540	Taxes payable		132
Recoverable taxes		67	Payroll and related taxes		707
Prepaid expenses		19

Total current assets		3,305	Total current liabilities		840

Noncurrent assets			Noncurrent liabilities

Property and equipment		253	Provision for legal claims		7,980
Intangible assets		27,198

Total noncurrent assets		27,451	Total noncurrent liabilities		7,980

			Total equity		21,936

Total assets		30,756	Total liabilities		30,756

Newcon Software S.A.

On January 6, 2022, the Company completed the acquisition of a 100% stake in Newcon Software S.A., through its subsidiary Sinqia Tecnologia. The transaction involved the initial amount of R$338,872, disbursed on the acquisition date, and the total amount of R$82,500 payable in five annual installments, of which two installments of R$18,750, one of R$15,000 and two of R$11,250, and another two additional installments of R$3,750, payable in June 2022 and January 2023. Accordingly, considering the adjusted amount payable at sight and the amount payable in installments and additional installments, the total transaction price is R$421,372.

Newcon was established in 2002 and is one of the main providers of technology for the Brazilian financial system, specialized in software used by consortium managers connected to the main financial conglomerates and carmakers, in addition to the independent ones.

Sinqia Tecnologia conducts operations in the consortium market, and, upon consummation of the transaction, its objectives are to: (i) strengthen its position as leading technology provider for the financial system, with a broad product portfolio and a robust customer base; and (ii) expand the growth paths for digital solutions, accelerating the penetration of digital onboarding solutions, digital signature and digital collection in the consortium market.

In the consolidated financial statements for the year ended December 31, 2022, Newcon reported net revenue of R$93,681 and profit of R$26,293, considering the period after the abovementioned acquisition date.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

c.1) Fair value on the acquisition date of the consideration transferred:

Cash disbursed			338,872
Payment in installments			82,500
Total consideration transferred			421,372

ACQUIREE’S BALANCE SHEET

	01/06/2022			01/06/2022
Current assets			Current liabilities

Cash and cash equivalents		3,590	Borrowings and financing		4,066
Trade receivables		2,708	Advances from customers		4,715
Recoverable taxes		758	Trade payables		66
Advances to employees		118	Taxes payable		2,773
Advances to suppliers		79	Payroll and related taxes		2,957
Prepaid expenses		7	Payables		107
Other assets		2,251

Total current assets		9,511	Total current liabilities		14,684

Noncurrent assets			Noncurrent liabilities

Property and equipment		3,788	Provision for legal claims		63,340
Intangible assets		242,212
Deferred income tax on contingencies		21,536

Total noncurrent assets		267,536	Total noncurrent liabilities		63,340

			Total equity		199,023

Total assets		277,047	Total liabilities		277,047

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

c.3) Goodwill on acquisition

Total consideration transferred	421,372

(-) Fair value of the main assets acquired:
Software	(16,730	)
Customer portfolio	(195,893	)
Trademark	(26,765	)
Deferred tax assets	(21,536	)

(+) Fair value of the main liabilities assumed:
Contingencies	63,340

(-) Total identifiable net assets at fair value on the acquisition date	1,439

Goodwill on expected future earnings arising on acquisition	222,349

Goodwill expected to be deductible for tax purposes	181,986

The contingent liability of R$63,340 was recognized in view of labor risks in the amount of R$11,777 and tax risks in the amount of R$51,563, referring to the contingency period. As at December 31, 2022, there was no change in the amounts recognized since the acquisition date for the liability or in the expected amount ranges or also in the assumptions used for estimation.

The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets	Amount		Useful life	Amortization method

Software		16,730	10 years	Straight-line
Customer portfolio		195,893	15 years	Straight-line
Trademark		26,765	8 years	Straight-line

Mercer Seguridade Ltda.

On July 26, 2021, the parties entered into the share purchase and sale agreement and other covenants, whereby Sinqia Tecnologia acquired 100% of the shares representing the Company’s capital. On February 1, 2022, the Company completed the acquisition of a 100% stake in Mercer Seguridade Ltda., through its subsidiary Sinqia Tecnologia. The transaction involved: (i) the initial amount of R$25,754, disbursed on the acquisition date; (ii) five annual installments of R$1,400, totaling R$7,000; and (iii) a price adjustment as per contract of R$5,298, adjusted by the CDI rate. Accordingly, considering the payments at sight, in installments and adjustments, the final transaction price is R$38,052.

Mercer Seguridade provides services to closed-end supplementary private pension entities, in the participant service, accounting, treasury, risk and social security areas.

Sinqia Tecnologia conducts operations in the private pension market, and, upon consummation of the transaction, its objectives are to: (i) strengthen Sinqia’s position as leading technology provider for the financial system, with a broad product portfolio and a robust customer base; and (ii) reinforce Sinqia’s installed participant base of the closed-end private pension sector.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

In the consolidated financial statements for the year ended December 31, 2022, Mercer reported net revenue of R$25,603 and profit of R$10,118, considering the period after the abovementioned acquisition date.

d.1) Fair value on the acquisition date of the consideration transferred:

Cash disbursed			25,754
Payment in installments			7,000
Price adjustment as per contract			5,120
Total consideration transferred			37,874

d.2) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	02/01/2022			02/01/2022
Current assets			Current liabilities

Cash and cash equivalents		344	Suppliers and service providers		1
Trade receivables		3,475	Advances from customers		374
			Taxes payable		587
			Payroll and related taxes		2,247

Total current assets		3,819	Total current liabilities		3,209

Noncurrent assets			Noncurrent liabilities

Deferred income tax		837
Intangible assets		24,750	Contingencies		2,462

Total noncurrent assets		25,587	Total noncurrent liabilities		2,462

			Total equity		23,735

Total assets		29,406	Total liabilities		29,406

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

d.3) Goodwill on acquisition

Total consideration transferred	37,874

(-) Fair value of the main assets acquired:
Software	(11,617	)
Customer portfolio	(13,133	)
Deferred tax assets	(837	)

(+) Fair value of the main liabilities assumed:
Contingencies	2,462
Payroll and related taxes	2,246

(-) Total identifiable net assets at fair value on the acquisition date	2,857

Goodwill on expected future earnings arising on acquisition	14,138

Goodwill expected to be deductible for tax purposes	13,123

The contingent liability of R$2,462 was recognized in view of labor risks in the amount of R$328 and tax risks in the amount of R$2,134. As at December 31, 2022, there was no change in the amounts recognized since the acquisition date for the liability or in the expected amount ranges or also in the assumptions used for estimation.

The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets	Useful life	Amortization method

Software	12.5 years	Straight-line
Customer portfolio	13 years	Straight-line

Lote45 Participações S.A.

On January 18, 2022, the Company completed the acquisition of a 52% stake in Lote45 Participações Ltda., through its subsidiary Sinqia Tecnologia. The total transaction price initially set forth was R$79,773, consisting of: (i) cash payment of R$76,773; (ii) R$3,000 payable through subscription of shares; and (iii) additional amount payable in 2023, contingent on the net revenue for 2022, estimated at R$24,805 on the acquisition date. Additionally, the transaction provides for the purchase and sale of the remaining portion, based on the exercise price linked to Lote45’s net revenue and EBITDA margin for 2026.

Lote45 was established in 2006 and is specialized in enterprise risk management software used by more than 100 customers in the investment fund industry, mainly family offices and asset managers.

Sinqia Tecnologia conducts operations in the investment fund market, and, upon consummation of the transaction, its objectives are to: (i) strengthen its position as leading technology provider for the financial system, with a broad product portfolio and a robust customer base; and (ii) establish a complete and integrated suite for all investment fund industry players (administrators, custodians, distributors and managers, etc.).

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

In the consolidated financial statements for the year ended December 31, 2022, Lote45 reported net revenue of R$38,414 and profit of R$11,991, considering the period after the abovementioned acquisition date.

e.1) Fair value on the acquisition date of the consideration transferred:

Cash disbursed			91,371
Increase in variable price			24,805
Total consideration transferred			116,176

e.2) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	01/18/2022			01/18/2022
Current assets			Current liabilities

Cash and cash equivalents		2,818	Suppliers and service providers		167
Trade receivables		1,471	Advances from customers		53
Recoverable taxes		7	Taxes payable		745
Advances to employees		21	Payroll and related taxes		1,662
Advances to suppliers		1	Payables		375
Prepaid expenses		13
Other assets		342

Total current assets		4,673	Total current liabilities		3,002

Noncurrent assets			Noncurrent liabilities

Property and equipment		479
Intangible assets		31,855	Contingencies		13,728
			Other payables		315

Total noncurrent assets		32,334	Total noncurrent liabilities		14,043

			Total equity		19,962

Total assets		37,007	Total liabilities		37,007

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

e.3) Goodwill arising on the acquisition of equity interests:

Total consideration transferred	116,176

(-) Fair value of the main assets acquired:
Software	(11,279	)
Trademark	(12,845	)
Customer portfolio	(7,732	)

(+) Fair value of the main liabilities assumed:
Contingencies	13,728

(-) Total identifiable net assets at fair value on the acquisition date	1,853

(-) Total amount of non-controlling interests	(9,600	)

Goodwill on expected future earnings arising on acquisition	105,795

Goodwill expected to be deductible for tax purposes	88,022

The contingent liability of R$13,728 was recognized in view of labor and social security risks in the amount of R$8,043, tax risks in the amount of R$5,721 and other risk exposures in the amount of R$258, referring to the contingency period. As at December 31, 2022, there was no change in the amounts recognized since the acquisition date for the liability or in the expected amount ranges or also in the assumptions used for estimation.

The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets	Useful life	Amortization method

Software	7.5 years	Straight-line
Trademark	6.7 years	Straight-line
Customer portfolio	2.1 years	Straight-line

27	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in preparing these financial statements are defined below. These policies were consistently applied for the reporting periods, except if otherwise stated.

27.1	CONSOLIDATION

Subsidiaries are all entities over which the Company holds control. Sinqia S.A. controls an entity when it is exposed or has rights to variable returns arising from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated when control is transferred to the Company. Consolidation is discontinued from the date on which the Company ceases to hold control.

Identifiable assets acquired and contingent liabilities assumed for the acquisition of subsidiaries in a business combination are initially measured at their fair values on the acquisition date.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

The Company recognizes the interest in the acquiree, both at its fair value and at the proportional share of the interest in the acquiree’s net assets. Interests are measured at each acquisition carried out. Acquisition-related costs are recorded in profit or loss for the year, as incurred.

Intragroup transactions, balances and unrealized gains are eliminated. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the transferred asset. The accounting policies of subsidiaries are changed, when necessary, so as to ensure consistency with the policies adopted by Sinqia S.A.

27.2	FOREIGN CURRENCY TRANSLATION

Items included in the financial statements of each one of the Group companies are measured using the currency of the main economic environment in which the company operates (“functional currency”). The financial statements are presented in reais (R$), which is the Company's functional and presentation currency.

27.3	PRESENT VALUE ADJUSTMENT

Long-term and short-term monetary assets and liabilities are adjusted to present value when the effect is considered material in relation to the financial statements taken as a whole. The present value adjustment is calculated considering the contractual cash flows and the explicit, and in certain cases, implicit interest rates of the respective assets and liabilities. Accordingly, the interest embedded in revenues, expenses and costs associated with these assets and liabilities is discounted for its recognition on accrual basis. Subsequently, this interest is transferred to finance costs and finance income in profit or loss, using the effective interest rate method in relation to the contractual cash flows. The implicit interest rates applied were determined based on assumptions and are considered accounting estimates.

The main line items subject to present value adjustments are: leases, payables for investment acquisition (both in the short and long-term) and put option on non-controlling interests.

27.4	CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash, banks, other highly liquid short-term investments, with insignificant risk of change in value and readily convertible into a known amount of cash.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

27.5	FINANCIAL INSTRUMENTS

27.5.1

CLASSIFICATION

Financial instruments are classified into the following categories: (i) amortized cost, (ii) fair value through profit or loss and (iii) fair value through comprehensive income.

Financial assets are reported as current assets, except for those with maturity exceeding 12 months after the balance sheet date.

27.5.2

RECOGNITION AND MEASUREMENT

Purchases and sales of financial assets are recognized on the trade date. Investments are initially recognized at fair value plus transaction costs for all financial assets not classified at fair value through profit or loss. Financial assets at fair value through profit or loss are initially recognized at fair value, and transaction costs are charged against the statement of income. Financial assets are derecognized when the rights to receive cash flows have expired or have been transferred; in the latter case, provided that the Company has significantly transferred all risks and rewards of ownership. Financial assets measured at fair value through profit or loss are subsequently recorded at fair value and assets measured at amortized cost are recorded using the effective interest method.

Dividends from financial assets measured at fair value through profit or loss, such as shares, are recognized in the statement of income as part of other income, when the Company’s right to receive the dividends is established.

27.5.3

OFFSET OF FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are offset and the net amount is recorded in the balance sheet when there is a legally enforceable right to set off recognized amounts and the intent to either settle them on a net basis, or to realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.

27.5.4

IMPAIRMENT OF FINANCIAL ASSETS

The Company assesses if there is objective evidence that a financial asset or a group of financial assets might be impaired at the balance sheet date. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event") and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The amount of the impairment loss is measured as the difference between the carrying amount of the assets and the present value of the estimated future cash flows, discounted at the original effective interest rate of the financial assets. The carrying amount of the asset is reduced and the loss amount is recognized in the statement of income. If a held-to-maturity asset is subject to a variable interest rate, the discount rate for measuring an impairment loss is the current effective interest rate determined pursuant to the agreement. As a practical expedient, the Company can measure impairment based on the fair value of an instrument using an observable market price.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the reversal of such previously recognized impairment loss will be recognized in the statement of income.

27.6	FINANCIAL INSTRUMENTS

The Company maintains in financial assets, short-term investments held as guarantee, investments in preferred shares of Celcoin Pagamentos S.A., equity investment funds, loans convertible into shares and call options on non-controlling interests in subsidiaries.

Financial assets are measured at fair value on the agreement date and are subsequently remeasured at their fair value, with the changes in fair value recorded in profit or loss.

27.7	TRADE RECEIVABLES

Trade receivables correspond to amounts receivable for software licenses, IT and consulting services provided in the ordinary course of the Company’s activities. If the collection term is equivalent to one year or less, trade receivables are classified in current assets. Otherwise, they are classified in noncurrent assets.

Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less the allowance for doubtful debts.

The amount of the allowance corresponds to the difference between the carrying amount and the recoverable amount. The Company monthly conducts an individual analysis of the outstanding invoices to calculate the recoverable amount.

The Company and its subsidiaries adopt an allowance model that takes into account the collection terms. The Company seeks to constantly improve its analyses and projection methods to minimize the impacts arising from possible default and ensure the business financial soundness.

27.8	INTANGIBLE ASSETS

Refers to trademarks and patents, software acquired, costs and expenses on new product development (software), including goodwill, customer portfolio and other intangible assets arising from business acquisitions. Separately acquired intangible assets are carried at cost upon initial recognition and, subsequently, deducted from the accumulated amortization and impairment losses, when applicable. Goodwill arising on investment acquisition is not amortized but is annually tested for impairment.

The useful life of intangible assets is either finite or indefinite.

Intangible assets with finite useful life are amortized over their economic useful life and tested for impairment whenever there is any indication that the asset might be impaired. The amortization year and method of an intangible asset with finite useful life are revised at least at the end of each reporting period. Changes in the useful life or in the pattern of consumption of expected future benefits are accounted for through the change in the amortization year or method, as applicable, and are treated as changes in accounting estimates.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Intangible assets with indefinite useful life are not amortized but are annually tested for impairment. The assessment of indefinite useful life is revised at the end of each year to determine whether this assessment continues to be justifiable. Otherwise, the change in the useful life from indefinite to finite is made on a prospective basis.

Gains and losses arising from the derecognition of an intangible asset are measured as the difference between the net sales proceed and the asset carrying amount and are recognized in the statement of income in the year the asset is derecognized.

Goodwill

Goodwill is determined upon acquisition of capital subscription in another company, represented at the acquisition cost of the investment that exceeds the book value, calculated based on the percentage rate of acquisition or subscription over the entity’s equity amount measured at the fair value (market value) of all assets and liabilities. In determining the equity amount, the existence, if any, of unrecorded assets at fair value is individualized and can also be negotiated individually.

Software

Software development or maintenance costs are expensed when incurred. Expenses directly associated to exclusive, identifiable software, controlled by the Company, which will probably generate economic benefits greater than the costs for more than one year, are recognized as intangible assets. Direct costs include the compensation payable to the software development team members and the appropriate portion of the related general expenses.

Software development costs recognized as assets are amortized on a straight-line basis over their useful lives, at the rates mentioned in note 10.

c)	Customer portfolio

Customer portfolios, acquired in a business combination, are recognized at fair value on the acquisition date. Contractual relationships with customers have finite useful life and are accounted for at cost less accumulated amortization. Amortization is calculated on a straight-line basis over the estimated life of the relationship with the customer.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

d)	Trademarks and licenses

Separately acquired trademarks and licenses are initially stated at historical cost. Trademarks and licenses acquired in a business combination are recognized at fair value on the acquisition date. Subsequently, trademarks and licenses with finite useful life are accounted for at cost less accumulated amortization. Amortization is calculated on a straight-line basis to allocate the cost of trademarks and licenses over their estimated useful life.

27.9	PROPERTY AND EQUIPMENT

Stated at historical acquisition, formation or development cost, less accumulated depreciation. Depreciation is calculated on a straight-line basis at the rates mentioned in note 9. Property and equipment are recorded gross of State VAT (“ICMS”) and taxes on revenue (“PIS” and COFINS”) credits as the Company does not utilize these taxes as tax credits.

Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated to the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced items or parts is written off. All other repair and maintenance costs are recorded as a balancing item to profit or loss, when incurred.

The residual values and useful life of the assets are reviewed and adjusted, if necessary, at the end of each reporting period.

The carrying amount of an asset is immediately written down to its recoverable amount if the carrying amount of the asset is higher than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and recorded in “Other operating income (expenses), net” in the statement of income.

27.10

IMPAIRMENT OF NON-FINANCIAL ASSETS

Management annually reviews the carrying amount of non-financial assets to assess events or changes in economic, operating or technological circumstances that might indicate an impairment of non-financial assets. Whenever such evidence is identified and the net carrying amount exceeds the recoverable amount, an allowance for impairment is recognized, adjusting the net carrying amount to the recoverable amount.

The recoverable amount of an asset or certain cash-generating unit is defined as the higher of the value in use and the net sales amount.

In estimating the value in use of the asset, the estimated future cash flows are discounted to their present value, using a discount rate that reflects the weighted average cost of capital for the industry in which the cash-generating unit operates.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

27.11

TRADE PAYABLES

Trade payables are obligations to pay for goods or services acquired from suppliers in the normal course of business, classified as current liabilities if payment is due within one year (or in the regular operating course of business, even if longer). Otherwise, payables are recorded as noncurrent liabilities.

The amounts are initially recognized at fair value and, subsequently, measured at amortized cost using the effective interest method. In practice, they are usually recognized at the corresponding invoice amount.

27.12

DEBENTURES

Debentures are initially recognized at fair value, net of transaction costs, and are subsequently stated at amortized cost. Any difference between the amounts raised (net of transaction costs) and the total amount payable is recognized in the statement of income during the period borrowings remain outstanding, using the effective interest method.

Debentures are classified as current liabilities unless the Company has an unconditional right to defer the liability settlement for at least 12 months after the balance sheet date.

27.13

PROVISIONS

Provisions for legal claims (labor, civil and tax) are recognized when: (i) the Company has a present or constructive obligation as a result of past events; (ii) it is probable that an outflow of funds will be required to settle the obligation; and (iii) the amount can be reliably estimated. The provisions for restructuring include fines for termination of lease contracts and severance payments.

In case of a series of similar obligations, the likelihood of settling them is determined taking into consideration the class of obligations as a whole. A provision is recognized even if the likelihood of settlement related to any individual item included in the same class of obligations is small.

Provisions are measured at the present value of the expenditures necessary to settle the obligation, using a pretax rate that reflects the current market assessments of the time value of money and the specific risks of the obligation. The increase in the obligation as a result of the time elapsed is recognized as finance costs.

27.14

CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION

Income tax and social contribution expenses represent the aggregate of current and deferred taxes. Taxes on income are recognized in profit or loss for the year, except when they relate to items that are recognized directly in equity or in comprehensive income. In this case, the tax is also recognized in equity or comprehensive income.

Current and deferred income tax and social contribution charges are calculated based on the tax laws enacted or substantially enacted at the end of the reporting period. Management periodically assesses the positions assumed by the Company in the income tax returns with respect to situations in which the applicable tax regulation gives rise to interpretations.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Deferred income tax and social contribution are recognized using the liability method on temporary differences arising from differences between the tax basis of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax and social contribution are not recognized if arising from the initial recognition of an asset or a liability in a transaction other than a business combination which, at the transaction date, does not affect accounting profit or loss or taxable income (tax loss).

Deferred income tax and social contribution assets are recognized only to the extent that it is probable that future taxable income will be available against which temporary differences can be utilized.

Deferred income tax assets and liabilities are presented at the net amount in the balance sheet when there is a legally enforceable right and the intention to offset them upon the calculation of current taxes, generally when related to the same legal entity and the same tax authority.

27.15

EMPLOYEE BENEFITS

a)	Share-based compensation

Under IFRS 2 – Share-based Payment, the premium on these shares, calculated on the grant date, is recognized as expense as a balancing item to equity, during the grace period as services are provided.

b)	Profit sharing

The Company recognizes a liability and profit sharing expense in profit or loss on accrual basis, pursuant to the Company’s compensation policy.

27.16

PUT OPTIONS ON NON-CONTROLLING INTERESTS

The put options are measured based on the expected future exercise price, discounted at present value. The option exercise price will be measured based on the revenue multiple, which will be determined by the EBITDA margin on a future date, pursuant to an agreement.

27.17

CAPITAL

Shares are classified in equity. Incremental costs directly attributable to the issuance of new shares or options are stated in equity as a deduction of the amount raised, net of taxes.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

27.18

REVENUE FROM CONTRACTS WITH CUSTOMERS

The service contract with customers is defined as an agreement between two or more parties that creates rights and obligations payable, which can be written, verbal or implicit.

Revenue from services provided to customers is measured at an amount that reflects the consideration the entity expects to receive in exchange for goods or services.

27.19

DISTRIBUTION OF DIVIDENDS AND INTEREST ON CAPITAL

The distribution of dividends and interest on capital to the Company’s shareholders is recognized as a liability in the Company’s financial statements when approved at the General Meeting, as set forth in the Company’s bylaws, or if authorized by the Board of Directors.

27.20

LEASES

At the commencement of a lease, the Company recognizes lease liabilities measured at the present value of the payments to be made over the lease term and right-of-use assets representing the right to use of the underlying assets.

The right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted by any new remeasurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the assets' estimated useful life and are subject to impairment.

The Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. Lease payments include fixed payments, less any lease incentives receivable, variable lease payments that depend on an index or rate, and amounts expected to be paid under residual value guarantees.

In determining the present value of lease payments, the Company uses its incremental borrowing rate at the commencement date as the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of the lease liability is increased to reflect the increase in interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., changes in future payments resulting from a change in an index or rate used to determine these lease payments) or a change in the assessment of a call option on the underlying asset.

27.21

EARNINGS PER SHARE

Basic earnings per share are calculated by dividing profit for the year attributable to the holders of the Parent’s common shares, by the weighted average number of common shares outstanding during the year.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Diluted earnings per share are calculated by dividing profit for the year, attributable to the holders of the Parent’s common shares, by the weighted average number of common shares outstanding during the year, plus the weighted average number of common shares that would be issued upon conversion of all potential diluted common shares into common shares.

28	EVENTS AFTER THE REPORTING PERIOD

Acquisition of Compliasset Software e Soluções Digitais S.A.

On March 7, 2023, the Company completed the acquisition of a 60% stake in Compliasset Software e Soluções Digitais S.A., through its subsidiary Sinqia Tecnologia Ltda. The transaction involved (i) initial amount of R$17,700 payable at sight, (ii) retained portion of R$300 payable within 150 days after the acquisition date, and (iii) variable portion contingent on the net revenue for the period from August 1, 2023 to July 31, 2024. Additionally, the transaction provides for the purchase and sale of the remaining portion in 2026 and exercise price linked to Compliasset’s net revenue and adjusted EBITDA margin for 2025.

Compliasset was established in 2016 in reliance upon the legal expertise of one of its founders in relation to the compliance for the capital market. It has more than 230 customers in the capital market and offers an IT solution that supports compliance and privacy programs in a holistic manner. After some time, it has expanded its activities to other markets, such as the Closed-end Supplementary Private Pension Entities, building a strong partnership with the Brazilian Association of Closed-end Supplementary Private Pension Entities (Abrapp).

The goodwill of R$14,431, arising on the difference between the amount paid and the acquiree’s equity, was evaluated by an independent valuation company and corresponds to the amount of the future economic benefits (goodwill) arising from the synergies that are expected to obtain upon the acquisition carried out. The acquisition expands even further the offer of Sinqia’s solutions and reinforces the Company’s strategy of building a complete ecosystem to serve the financial system. With the inclusion of Compliasset in its portfolio, Sinqia expands its position as one-stop-shop for the customers, bringing one more Software as a Service (SaaS), Plug & Play solution, available in the Cloud focused on Regulatory Compliance Management.

In the consolidated interim information for the quarter ended June 30, 2023, Compliasset reported net revenue of R$2,273 and profit of R$673, considering the period after the abovementioned acquisition date.

The Company hired a third-party appraiser to conduct fair value measurement studies on the main assets acquired and liabilities assumed; as Sinqia holds less than 100% interest in the acquiree, the fair value of the non-controlling interests was determined by applying the effective percentage rate of the non-controlling interests on the subsidiaries’ equity at fair value.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

a) Fair value on the acquisition date of the consideration transferred:

	60	%
Cash disbursed	16,448
Price adjustment as per contract	300
Increase in variable price (Earn Out)	4,917
Total consideration transferred	21,665

b) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	03/07/2023			03/07/2023
Current assets			Current liabilities

Cash and cash equivalents		2	Suppliers and service providers		33
Short-term investments		640	Taxes payable		164
Trade receivables		628	Payroll and related taxes		135
Recoverable taxes		-	Dividends		1,168
Advances to suppliers		102
Prepaid expenses		24

Total current assets		1,396	Total current liabilities		1,500

Noncurrent assets			Noncurrent liabilities

Trade receivables		12	Leases		100
Property and equipment		194	Contingencies		2,997
Intangible assets		15,052

Total noncurrent assets		15,258	Total noncurrent liabilities		3,097

			Total equity		12,057

Total assets		16,654	Total liabilities		16,654

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

c) Goodwill arising on the acquisition of equity interests

Total consideration transferred			21,665

(-) Fair value of the main assets acquired:
Software			6,204
Trademark			1,527
Customer portfolio			7,321

(+) Fair value of the main liabilities assumed:
Contingencies			2,997

(-) Total identifiable net assets at fair value on the acquisition date			1

(+) Total amount of non-controlling interests			4,823

Goodwill on expected future earnings arising on acquisition			14,432

Goodwill expected to be deductible for tax purposes			13,886

The contingent liability of R$2,997 was recognized in view of labor and social security risks in the amount of R$1,891 and tax risks in the amount of R$1,106, referring to the contingency period. As at June 30, 2023, R$166 relating to tax risks was written off due to the statute of limitations but there was no change in the expected amount ranges or also in the assumptions used for estimation.

The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets	Useful life	Amortization method

Software	5 years	Straight-line
Trademark	9.8 years	Straight-line
Customer portfolio	14.6 years	Straight-line

Also, the Company states that the assets and liabilities recognized at fair value arising from business combinations disclosed in 2022 were not subject to changes.

3^rd issuance of debentures

On June 14, 2023, the Company discloses, in conformity with the applicable law, that its Board of Directors has approved the 3^rd issuance of simple, non-convertible, unsecured debentures, with real and additional fidejussory guarantee, in one single series, in the total amount of R$250,000,000.00, with par value of R$1,000.00 each, on the issuance date (“Debentures” and “Issuance”, respectively).

Debentures will mature within five years counted from the issuance date, will not be adjusted for inflation and will be entitled to receive compensatory interest based on the CDI rate, plus a fixed surcharge of 2.30% p.a.

The net proceeds from the Offering will be mainly used to refinance liabilities and strengthen the Company’s cash, which can include, without limitation, the use for acquisition of interests in companies considered as strategic.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Optional acquisition of debentures

On June 26, 2023, the Company’s Board of Directors approved the optional acquisition of all simple, non-convertible debentures, with real and fidejussory guarantee of the Company’s 1^st issuance, issued on February 21, 2019 (“1^st Issuance Debentures”), and 100,000 simple, non-convertible, unsecured debentures, in one single series, with real and fidejussory guarantee of the Company’s 2^nd issuance, issued on July 15, 2021 (“2^nd Issuance Debentures”, together with the 1^st Issuance Debentures, the “Debentures”) (“Optional Acquisition”).

Payment of interest on capital

On July 20, 2023, the Board of Directors approved the advance of the payment date of the interest on capital for FY2022 to July 31, 2023.

The distribution of interest on capital was approved at the Annual General Meeting (“AGM”) held on April 27, 2023, in the amount of R$4,690,007.39, corresponding to R$0.055404594 per share issued by the Company (without considering treasury shares), subject to withholding income tax at the rate of 15%.

The individuals registered as the Company’s shareholders on May 5, 2023, will be entitled to receive interest on capital and payment will be made in local currency, in one single installment, on July 31, 2023.

Business combination

On July 20, 2023, the Company discloses that it has entered into, after approval by its Board of Directors, the Merger Agreement and Other Covenants (“Merger Agreement”) with Evertec, Inc., a company listed on the New York Stock Exchange (NYSE), with head office in Puerto Rico (“Evertec Inc.”), and with Evertec Brasil Informática S.A., a privately-held company established in Brazil, enrolled with CNPJ under No. 06.187.556/0001-15, with head office in the City of São Paulo (“Evertec BR” and, together with Evertec Inc., “Evertec”), whereby the terms and conditions of a business combination between the Company and Evertec BR were agreed, through the merger of the Company’s shares (“Transaction”).

The Company’s Board of Directors was advised by and received a fairness opinion from Banco BTG Pactual S.A. about the reasonableness of the exchange ratio and the Transaction financial terms and concluded that the respective terms and conditions are fair and equitable for all Company’s shareholders.

Transaction structure

As set forth in the Merger Agreement, the parties agreed that the integration of the Company’s and Evertec BR’s activities will be implemented through (i) the merger of all shares issued by the Company into Evertec BR (“Merger of Shares”), upon assignment to the Company’s shareholders of mandatorily redeemable Class A and Class B preferred shares issued by Evertec BR; and (ii) the redemption of all these new redeemable preferred shares of Evertec BR (“Redemption of Shares”), upon payment of the amount in cash and delivery of Level I BDRs accepted for trading at B3, whose underlying assets will be Class A shares issued by Evertec Inc. (“BDR”) traded at the NYSE.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

The Merger of Shares will be carried out based on the following exchange ratio: for each share issued by the Company (i) one mandatorily redeemable Class A preferred share issued by Evertec BR; and (ii) mandatorily redeemable Class B preferred share issued by Evertec BR, will be assigned.

The Redemption of Shares will be carried out based on the following: (a) each Class A preferred share issued by Evertec BR will be redeemed upon Transaction closing at the amount of R$24.47; and (b) each Class B preferred share issued by Evertec BR will be redeemed upon Transaction closing through the delivery of BDRs backed by 0,014354 shares issued by Evertec Inc., whose amount on this date corresponds to R$2.72. The positive variation of the SELIC rate calculated on the base amount of R$27.50 will be added to the redemption amount of Class A preferred shares issued by Evertec BR, between this date and the Transaction consummation date, it being understood that the adjustment amount cannot exceed R$1.00 per Class A preferred share, except in those cases set forth in the Merger Agreement. Additionally, Evertec will apply its best effort to promote a repurchase program for BDRs accepted for trading at B3 after the Transaction closing.

Transaction conditions precedent

The Transaction closing is subject to the fulfillment of conditions precedent usual for this type of transaction, including (i) the approval, by the Company’s shareholders, (a) of the Merger of Shares, pursuant to article 252 of the Brazilian Corporate Law, including the respective protocol; and (b) the consent provided for in article 46, sole paragraph of the “Novo Mercado” Regulation; (ii) the obtainment of waiver from the holders (a) of the 2^nd issuance of simple, non-convertible, unsecured debentures, with real and additional fidejussory guarantee, in one single series and (b) of the 3^rd issuance of simple, non-convertible, unsecured debentures, with real and additional fidejussory guarantee, in one single series; and (iii) the registration of the Level I BDRs by Evertec Inc. with the CVM for trading at B3.

Exclusivity

Pursuant to the Merger Agreement, the Company assumed an exclusivity commitment to Evertec to consummate the Transaction, which failure to comply by the Company will give rise to a fine in the amount corresponding to 5% of the Transaction amount. In case of non-approval of the Transaction by the Company’s shareholders, the exclusivity period ends with no fine or penalty for the Company. Right of recourse – The Company informs that the Merger of Shares will give rise to the right of recourse for the Company’s dissenting shareholders. The details on the exercise of the right of recourse, including the reimbursement amount, will be timely disclosed to the market.

Other commitments

Within the scope of the Transaction, the holders of the Company’s shares representing more than 40% of the total voting shares entered into certain Voting Agreements, which establish these shareholders’ obligation to vote favorably to the Transaction approval at the Company’s general meeting. Also, during the term of the Voting Agreements, these shareholders agreed not to sell or otherwise dispose of their Company’s shares until the Company’s general meeting.

SINQIA S.A.

NOTES TO THE FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2022 AND 2021

(In thousands of Brazilian reais – R$)

Interest on capital declared at the Annual General Meeting

The payment of interest on capital declared at the Company’s Annual General Meeting, which was scheduled to be made between August 31, 2023, and the end of the FY2023, will be anticipated and paid up to July 31, 2023. A Notice to the Shareholders on the payment of interest on capital will be disclosed on a timely basis.

Next stages

After the preparation of the valuation report and proforma financial statements, in accordance with CVM Resolution 78/22, the Company’s Board of Directors will approve the execution of the share merger agreement. It will also provide details and recommendations to the shareholders regarding this transaction. On the same date, the Company’s Supervisory Board will issue its opinion on the transaction. The general shareholders’ meeting will be called soon to make decisions on the transaction.

On August 14, 2023, Sinqia announced that, upon approval by the Board of Directors and issuance of favorable opinion by the Supervisory Board, it has entered into the "Protocol and Justification of Merger of Shares Issued by Sinqia S.A. into Evertec Brasil Informática S.A." with Evertec Brasil Informática S.A. This Protocol defines the terms and conditions of the merger of the Company’s shares into Evertec BR, as part of the business combination transaction described in the agreement entered into between the companies on July 20, 2023.

Due to this agreement, the Company’s Extraordinary General Meeting was called to be held on September 14, 2023. The meeting will decide on matters such as the Protocol and merger of the shares, including the delivery of preferred shares and other amounts as part of the transaction. It will also decide whether Evertec BR will be discharged from joining the “Novo Mercado” segment of B3 S.A. - Brasil, Bolsa, Balcão. Also, the meeting will discuss the termination of Sinqia’s Stock Plan after the delivery of the shares to the beneficiaries.

Exhibit 99.2

CONTENTS

Unaudited Consolidated Interim Financial Statements

Unaudited Balance Sheet	5
Unaudited Statements of Income for the Period	7
Unaudited Statements of Comprehensive Income	8
Unaudited Statement of Changes in Equity	9
Unaudited Statements of Cash Flows	10
Notes to the Unaudited Consolidated Interim Financial Statements	12

SINQIA S.A.

UNAUDITED CONSOLIDATED BALANCE SHEET

AS AT JUNE 30, 2023

(In thousands of Brazilian reais - R$)

	Note			06.30.2023	12.31.2022
ASSETS
Current assets
Cash and cash equivalents		5.a	)	119,806	37,941
Short-term investments		5.b	)	98,420	151,766
Trade receivables		6		56,250	40,881
Prepaid expenses				3,398	1,761
Recoverable taxes and contributions		7		6,871	15,840
Other receivables				5,549	2,861

Total current assets				290,294	251,050

Noncurrent assets
Recoverable taxes and contributions		7		3,396	1,321
Financial assets		5.c	)	93,586	99,267
Escrow deposits		15		126	197
Deferred income tax and social contribution		21.b	)	83,532	78,625
Property and equipment		9		45,348	46,740
Intangible assets		10		1,088,372	1,078,113

Total noncurrent assets				1,314,360	1,304,263

TOTAL ASSETS				1,604,654	1,555,313

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

SINQIA S.A.

UNAUDITED CONSOLIDATED BALANCE SHEET

AS AT JUNE 30, 2023

(In thousands of Brazilian reais - R$)

	Note			06.30.2023		12.31.2022
LIABILITIES
CURRENT LIABILITIES
Debentures		11		37,114		74,500
Leases		23		28,959		24,334
Suppliers and service providers				9,743		4,724
Advances from customers				10,971		19,363
Payroll and related taxes		12		51,514		62,234
Profit for distribution		16.2.b	)	5,658		7,720
Taxes payable		13		9,438		6,115
Payables for investment acquisition		14		47,577		79,101
Other payables				340		491

Total current liabilities				201,314		278,582

NONCURRENT LIABILITIES
Debentures		11		323,567		162,156
Leases		23		39,764		47,439
Taxes payable		13		205		-
Provision for legal claims		15		130,319		139,866
Advances from customers				-		2,990
Payables for investment acquisition		14		75,317		111,637
Put option on non-controlling interests		24		166,247		142,270

Total noncurrent liabilities				735,419		606,358

EQUITY
Capital		16.1		813,303		813,303
Treasury shares		16.4		(56,488	)	(58,174	)
Share issuance costs		16.5		(48,890	)	(48,890	)
Transactions with non-controlling shareholders				(136,292	)	(126,810	)
Capital reserve		16.3		11,778		11,867
Earnings reserves		16.2		59,010		59,010
Loss for the period				(2,672	)	-

Total owners’ equity				639,749		650,306

Non-controlling interests				28,172		20,067

Total equity				667,921		670,373

TOTAL LIABILITIES AND EQUITY				1,604,654		1,555,313

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

SINQIA S.A.

UNAUDITED CONSOLIDATED STATEMENT OF INCOME

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais – R$, except basic/diluted earnings per share)

	Note			06.30.2023		06.30.2022

NET REVENUE		17		330,835		290,678

Cost of services		18		(199,355	)	(169,002	)

GROSS PROFIT				131,480		121,676

General, administrative and selling expenses		19		(98,741	)	(87,245	)

OPERATING INCOME BEFORE FINANCIAL INCOME (EXPENSE)				32,739		34,431

Financial income (expense), net		20		(29,624	)	(26,244	)

PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION				3,115		8,187

INCOME TAX AND SOCIAL CONTRIBUTION
Current		21.a	)	(7,593	)	(11,919	)
Deferred		21.a	)	5,069		6,799

NET PROFIT FOR THE PERIOD				591		3,067
ATTRIBUTABLE TO:
Company’s owners				(2,672	)	2,998
Non-controlling interests				3,263		69
EARNINGS (LOSS) PER SHARE (in reais – R$)
Basic earnings (loss) per share		22		(0.031	)	0.035
Diluted earnings (loss) per share		22		(0.031	)	0.035

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

SINQIA S.A.

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais – R$, except basic/diluted earnings per share)

	06.30.2023		06.30.2022

NET PROFIT FOR THE PERIOD	591		3,067

Other comprehensive income	-		-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	591		3,067

ATTRIBUTABLE TO:
Owners of the Company	(2,672	)	2,998
Non-controlling shareholders	3,263		69

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

SINQIA S.A.

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

Earnings reserves

	Note		Capital		Capital reserve			Treasury shares			Share issuance costs			Transactions with non- controlling shareholders			Legal reserve		Earnings retention		Retained earnings		Equity			Non- controlling interests		Equity
Balances as at December 31, 2021				813,303		12,227			(40,896	)		(48,890	)		(61,208	)		3,542		43,373		-		721,451			19,081		740,532

Net profit for the period				-		-			-			-			-			-		-		2,998		2,998			69		3,067
Put option on non-controlling interests				-		-			-			-			(65,602	)		-		-		-		(65,602	)		-		(65,602	)
Acquisition of non-controlling interests				-		-			-			-			-			-		-		-		-			7,667		7,667
Purchase of treasury shares		16		-		-			(14,589	)		-			-			-		-		-		(14,589	)		-		(14,589	)
Share-based compensation		16		-		450			-			-			-			-		-		-		450			-		450
Stock option exercise				-		(351	)		499			-			-			-		-		-		148			-		148
Balances as at June 30, 2022				813,303		12,326			(54,986	)		(48,890	)		(126,810	)		3,542		43,373		2,998		644,856			26,817		671,673

Earnings reserves

	Note		Capital		Capital reserve			Treasury shares			Share issuance costs			Transactions with non- controlling shareholders			Legal reserve		Earnings retention		Loss for the year			Equity			Non- controlling interests		Equity
Balances as at December 31, 2022				813,303		11,867			(58,174	)		(48,890	)		(126,810	)		4,381		54,629		-			650,306			20,067		670,373

Net profit (loss) for the period				-		-			-			-			-			-		-		(2,672	)		(2,672	)		3,263		591
Put option on non-controlling interests				-		-			-			-			(9,482	)		-		-		-			(9,482	)		-		(9,482	)
Acquisition of non-controlling interests				-		-			-			-			-			-		-		-			-			4,842		4,842
Share-based compensation		16		-		589			-			-			-			-		-		-			589			-		589
Stock option exercise				-		(678	)		1,686			-			-			-		-		-			1,008			-		1,008
Balances as at June 30, 2023				813,303		11,778			(56,488	)		(48,890	)		(136,292	)		4,381		54,629		(2,672	)		639,749			28,172		667,921

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

SINQIA S.A.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

	06.30.2023		06.30.2022

CASH FLOWS FROM OPERATING ACTIVITIES

Net profit for the period	591		3,067
Adjustments to reconcile profit for the period:
Share-based compensation plan	589		350
Depreciation and amortization	47,933		39,654
Income from short-term investments	(7,675	)	-
Recognition (reversal) of allowance for doubtful debts	1,221		(282	)
Provision (reversal of provision) for legal claims	(12,074	)	(1,788	)
Interest and inflation adjustment to lawsuits	574		603
Accrued bonuses and profit sharing	8,115		9,417
Interest and PVA incurred	38,866		34,283
Measurement of call and put options	(2,029	)	(1,585	)
Deferred income tax and social contribution	(5,069	)	(6,799	)
Provision for current income tax and social contribution	7,593		11,919

Changes in operating assets and liabilities
Trade receivables	(15,950	)	(1,691	)
Escrow deposits	71		-
Recoverable taxes and contributions	5,160		(4,390	)
Other receivables	(4,275	)	(8,104	)
Suppliers and service providers	4,835		2,587
Payroll and related taxes	(17,962	)	(6,526	)
Taxes payable	3,364		(393	)
Legal claims paid	(1,044	)	(1,242	)
Advances from customers	(11,382	)	(49	)

CASH GENERATED BY OPERATIONS	41,452		61,588

Income tax and social contribution paid	(5,697	)	(11,788	)
Interest paid	(26,635	)	(17,092	)

NET CASH GENERATED BY OPERATIONS	9,120		40,151

SINQIA S.A.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

	06.30.2023		06.30.2022

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment and intangible assets	(18,652	)	(8,955	)
Acquisition of companies, net of cash acquired	(17,058	)	(438,637	)
Short-term investments	61,021		481,631
Payables for investment acquisition	-		(25,876	)
Financial assets - securities	11,589		(14,695	)

NET CASH GENERATED BY (USED IN) INVESTING ACTIVITIES	36,900		(6,532	)

CASH FLOWS FROM FINANCING ACTIVITIES

Amortization of debentures	(125,659	)	(5,773	)
Payment of leases	(11,776	)	(9,044	)
Debentures issued	250,000		-
Purchase of treasury shares	-		(14,589	)
Payment of dividends	(3,231	)	(6,470	)
Payables for investment acquisition	(73,489	)	-

NET CASH USED IN FINANCING ACTIVITIES	35,845		(35,876	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	81,865		(2,257	)

Cash and cash equivalents at the beginning of the period	37,941		24,192
Cash and cash equivalents at the end of the period	119,806		21,935

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	81,865		(2,257	)

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

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

1	GENERAL INFORMATION

1.1	Operations

The Company was established in 1996 and is primarily engaged in the provision of technology for the financial sector.

The Company is the Parent of Sinqia Tecnologia Ltda., Torq Inovação Digital Ltda., Homie do Brasil Informática Ltda, Rosk Software S.A., and indirect Parent of Lote45 Participações S.A. and Compliasset Software e Soluções Digitais S.A., which are engaged in providing supplementary services in connection with the Company’s operations.

These unaudited interim financial statements were approved and authorized for disclosure by the Board of Directors on September 11, 2023.

1.2	Basis of preparation, presentation of interim financial statements, and summary of significant accounting policies

The consolidated interim financial statements have been prepared and are presented in accordance with IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board (“IASB”). The consolidated interim financial statements should be read together with the consolidated financial statements for the year ended December 31, 2022 (hereinafter referred to as “financial statements for December 31, 2022”).

There were no changes to the significant accounting policies in relation to those described in note 27 to the financial statements for the year ended December 31, 2022.

The consolidated financial statements have been prepared on the historical cost basis, except for the measurement of certain assets and liabilities such as those arising from financial instruments, which are measured at fair value.

The preparation of interim financial statements requires Management to use certain critical accounting estimates and exercise judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment and complexity, as well as those where assumptions and estimates are significant to the interim financial statements, are disclosed in note 2.

At the date of approval of the interim financial statements, Management reasonably expects that the Company has appropriate resources to continue as a going concern in the foreseeable future. Therefore, it continues to adopt the going concern basis of accounting in preparing the financial statements.

Management asserts that all relevant information for the consolidated interim financial statements, and only this information, is being disclosed and corresponds to the information used in managing the Company.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

The unaudited interim financial statements are expressed in thousands of reais (R$), rounded to the nearest thousand, unless otherwise stated.

1.3	Consolidation

The equity interests in the subsidiaries, which are all domiciled in Brazil, are shown below:

Direct subsidiaries	12.31.2022	12.31.2021	Core business

Sinqia Tecnologia Ltda.	100%	100%	Mainly engaged in the licensing, support and maintenance of standardized applications. It also develops new solutions, customizations and provides specialized IT consulting.
Torq Inovação Digital Ltda.	100%	100%	CVC’s (Corporate Venture Capital) arm of the operation, engaged in strengthening the company’s innovation and accelerated growth strategy through indirect investments in the fintech ecosystem.
Homie do Brasil Informática Ltda.	60%	60%	Engaged in developing e-signature solutions, in batch or not, with a series of companies and powers of authority.
Rosk Software S.A.	-	51%	Mainly engaged in the management of the post-credit flow and digital debt renegotiation.

Indirect subsidiaries	12.31.2022	12.31.2021	Core business

Lote45 Participações.	52%	-	Engaged in managing risks for asset managers.
Compliasset Software e Soluções Digitais S.A.	60%	-	Engaged in managing regulatory compliance programs within the SaaS model.

2	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Accounting estimates and judgments are continually assessed and are based on past experience and other factors, including expectations of future events that are considered to be reasonable under the circumstances. In the quarter ended June 30, 2023, there were no changes in estimates and assumptions that would pose a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities for the current year, in relation to those detailed in the annual financial statements.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

2.1	Critical accounting estimates and assumptions

There were no changes to the critical accounting estimates and assumptions in relation to those described in note 27 to the consolidated financial statements for December 31, 2022.

2.2	Critical judgments in applying accounting policies

There were no changes to the critical judgments exercised in applying accounting policies in relation to those described in note 27 to the consolidated financial statements for December 31, 2022.

2.3	New standards, amendments, and interpretations of technical pronouncements

The Company’s Management assessed the new standards, amendments and existing interpretations upon the first-time adoption on January 1, 2023, and concluded that there is no material impact on the Company’s consolidated interim financial statements.

3	FINANCIAL RISK MANAGEMENT

3.1	Financial risk factors

There were no changes to the financial risk factors and the policy for the management of such risks in relation to those described in the consolidated financial statements for December 31, 2022, issued on September 11, 2023.

3.2	Capital management

The Company controls its capital structure by making adjustments and conforming to the current economic conditions. To maintain this structure adjusted, the Company may pay dividends, return capital to shareholders, raise new borrowings, issue promissory notes and enter into derivative transactions.

3.3	Fair value estimate

There were no changes to the fair value measurement criteria or techniques applicable to assets and liabilities, including as regards the classification of financial instruments, in relation to those disclosed in the financial statements for December 31, 2022.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

3.4	Offset of financial instruments

Financial assets and financial liabilities are offset (with the same counterparty) and the net amount is reported in the balance sheet when there is a legally enforceable right to set off the amounts recognized and the intent to either settle them on a net basis, or to realize the asset and settle the liability simultaneously.

4	SEGMENT REPORTING

5	CASH AND CASH EQUIVALENTS

a) Cash and cash equivalents

	06.30.2023	12.31.2022

Banks	3,655	2,143
Highly liquid fixed-income securities in local currency (i)	116,151	35,798

	119,806	37,941

b) Short-term investments

	06.30.2023	12.31.2022

Fixed-income securities in local currency (i)	84,624	151,766
Guarantee amounts (ii)	13,796	-

	98,420	151,766

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

c) Financial assets

	06.30.2023	12.31.2022

Guarantee amounts (ii)	25,500	38,563
Investments in private entities (iii)	46,929	44,828
Derivative financial instruments (iv)	21,157	15,876

	93,586	99,267

(i) The amounts correspond to cash intended for investing activities, including future business combinations. The Company has financial investment policies establishing that investments are concentrated on low-risk securities and are substantially remunerated based on the percentage fluctuation of the Interbank Deposit Certificate (CDI) rate. Therefore, they refer to investments in fixed-income investment funds, repurchase agreements and Bank Deposit Certificates (CDBs), yielding interest rate ranging from 85% to 103% of the CDI rate as at December 31, 2022 and with immediate liquidity, that is, without grace period for redemptions.

(ii) The guarantee amounts correspond mainly to investments in fixed-income investment funds, yielding equivalent average interest rate ranging from 106.59% to 115.20% of the CDI rate, maintained as guarantee for the payables for investment acquisition and debentures.

(iii) The amounts correspond to the fair value of investments in preferred shares issued by Celcoin Pagamentos S.A., Equity Funds and loans convertible into shares.

(iv) The amounts refer to call options on non-controlling interests in subsidiaries Homie do Brasil Informática Ltda., Rosk Software S.A., Lote45 Participações S.A. and Compliasset Software e Soluções Digitais S.A.

6	TRADE RECEIVABLES

	06.30.2023		12.31.2022

Billed amounts	42,437		34,449
Unbilled services (i)	16,129		7,511
Estimated losses on doubtful debts	(2,316	)	(1,079	)

	56,250		40,881

(i) The amount of unbilled services refers to the revenue from services actually provided to customers but which have not been billed up to the reporting date.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

(ii) The variations in estimated losses on doubtful debts are broken down as follows:

	06.30.2023		06.30.2022

Balance at the beginning of the period	(1,079	)	(2,578	)
Additions due to business acquisition (i)	(25	)	-
Additions	(1,271	)	(589	)
Reversals	50		584
Actual losses	9		872

Balance at the end of the period	(2,316	)	(1,711	)

(i) Refers to the acquisition of Compliasset Software e Soluções Digitais S.A. on March 7, 2023.

The aging list of receivables is broken down as follows:

	06.30.2023	12.31.2022

Unbilled services	16,129	7,511
Current	36,313	29,869
Past-due:
Up to 90 days	3,790	3,481
From 91 to 180 days	1,228	248
From 181 to 270 days	70	33
From 271 to 360 days	175	20
Over 360 days	861	798

	58,566	41,960

7	RECOVERABLE TAXES AND CONTRIBUTIONS

	06.30.2023	12.31.2022

Withholding income tax (IRRF) and income tax and social contribution (IRPJ/CSLL) for offset (i)	10,218	17,046
Withholding taxes on revenue (PIS and COFINS) and social contribution (CS)	26	47
Other	23	68

	10,267	17,161

Current	6,871	15,840
Noncurrent	3,396	1,321

(i) Refers to the withholding income tax and prepaid income tax and social contribution.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

8	RELATED PARTIES

a)	Information on related parties

The Company has a related-party transaction policy, which is reviewed and approved by the Board of Directors, as set forth in the Company’s bylaws.

b)	Management compensation

Short-term benefits

The Annual Shareholders’ Meeting set management’s annual overall compensation for FY2023, limited to the amount of R$22,778 thousand (R$13,003 thousand for FY2022).

Short-term compensation includes wages, payroll taxes, benefits and variable bonus, summarized as follows:

	06.30.2023	06.30.2022

Payroll and related taxes	5,217	2,620
Benefits	748	212
Variable bonus and share-based payment	4,811	1,753
	10,776	4,585

c)	Stock Option Plan

The Stock Option Plan (“Plan”) provides for the granting of call options of the Company’s common shares (“Options”). The purpose of the Plan is to (a) attract, retain and engage key professionals for the Company’s management (“Beneficiaries”), (b) align the Beneficiaries’ interests with those of the Company and its shareholders in a long-term perspective and (c) encourage the Beneficiaries to contribute to the Company’s good performance.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

The Company recognizes in profit or loss, during the period services are provided, the grace period and the cost on the compensation payable to the beneficiaries based on the fair value of the options on the grant date, using the Black-Scholes model to determine the fair value of the options. In the period ended June 30, 2023, R$589 was recorded in line item “Stock Options”. The Company will settle this share-based compensation plan by delivering its own shares, which will be held in treasury until the actual exercise of the shares by the beneficiaries.

The main events related to the effective plans, the variables used in calculations and results are as follows:

Grants							Fair value assumptions
Date	Number of stock options		Exercise price in reais		Fair value of the shares in reais		Volatility			Risk-free rate			Maturity period
09/30/2019		98,646		22.08		18.70		47.82	%		9.75	%	4 years
03/31/2021		200,424		17.24		25.50		48.26	%		6.00	%	4 years
05/31/2021		86,382		29.56		22.46		47.82	%		7.00	%	4 years
09/02/2021		70,044		30.03		23.10		47.82	%		7.00	%	4 years
04/30/2022		273,008		14.90		19.08		47.82	%		9.38	%	4 years
04/20/2023		641,069		9.10		18.79		45.09	%		9.78	%	4 years

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

9	PROPERTY AND EQUIPMENT

The Company’s property and equipment are stated at acquisition cost and the depreciation of assets is calculated on a straight-line basis and takes into consideration the estimated economic useful life of the assets. The details on the Company’s property and equipment are shown in the tables below:

06.30.2023

12.31.2022

	Useful life				Accumulated
	(years)		Cost		depreciation			Net		Net

Facilities and improvements		9 – 10		9,617		(6,297	)		3,320		3,553
Electric devices and materials		9 – 12		730		(491	)		239		271
Furniture and fixtures		9 – 12		3,481		(2,304	)		1,177		1,476
Right-of-use asset		2 – 10		39,721		(14,509	)		25,212		26,565
Computers and peripherals		4 – 5		25,246		(12,640	)		12,606		11,990
Vehicles		5		265		(91	)		174		205
Buildings		25		2,798		(178	)		2,620		2,680

				81,858		(36,510	)		45,348		46,740

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

	Facilities and improvements			Electric devices and materials			Furniture and fixtures			Right-of-use asset			Computers and peripherals			Vehicles			Buildings			Total

Balances as at December 31, 2021		5,561			329			1,807			28,384			11,750			-			-			47,831

Additions		1,044			5			350			-			4,805			-			-			6,204
Additions relating to IFRS 16		-			-			-			3,517			-			-			-			3,517
Additions due to business acquisition		170			74			540			-			368			268			2,849			4,269
Write-offs		-			-			-			-			(6	)		-			-			(6	)
Depreciation		(3,222	)		(137	)		(1,221	)		(5,336	)		(4,927	)		(63	)		(169	)		(15,075	)

Balances as at December 31, 2022		3,553			271			1,476			26,565			11,990			205			2,680			46,740

Additions		8			-			34			-			2,695			-			-			2,737
Additions relating to IFRS 16 (i)		-			-			-			1,443			-			-			-			1,443
Additions due to business acquisition (ii)		62			-			19			85			28			-			-			194
Depreciation		(303	)		(32	)		(352	)		(2,881	)		(2,107	)		(31	)		(60	)		(5,766	)
Balances as at June 30, 2023		3,320			239			1,177			25,212			12,606			174			2,620			45,348

(i)

The additions relating to IFRS 16 consist of the recognition of the right of use of new property lease contracts.

(ii)

In 2022, it refers to assets derived from the business combination of Newcon Software Ltda., Sinqia Seguridade Ltda. and Lote45 Participações S.A. and, in 2023, from the business combination of Compliasset Software e Soluções Digitais S.A.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

10	INTANGIBLE ASSETS

06.30.2023

12.31.2022

	Useful life (years)		Cost		Accumulated amortization and impairment			Net		Net

Goodwill on acquisition of subsidiaries		-		647,888		(2,860	)		645,028		630,596
Software licenses		1-5		40,412		(28,372	)		12,040		8,988
Trademarks and patents		5-10		62,822		(14,349	)		48,473		51,044
Software acquired		5		106,848		(42,551	)		64,297		65,152
Customer portfolio		10		338,749		(69,248	)		269,501		276,303
Non-compete agreement		5		4,036		(3,313	)		723		1,121
Development of new products		5		9,634		-			9,634		4,262
Right of use - servers		1-3		70,369		(31,693	)		38,676		40,647
				1,280,758		(192,386	)		1,088,372		1,078,113

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

	Goodwill on acquisition of subsidiaries (i)		Software licenses			Trademarks and patents			Software acquired			Customer portfolio			Non-compete agreement			Development of new products		Right-of-use assets			Total

Balances as at December 31, 2021		285,286		5,054			19,729			38,648			89,844			1,916			-		48,406			488,883

Additions		-		12,536			-			-			-			-			4,262		-			16,798
Additions – right of use		-		-			-			-			-			-			-		8,323			8,323
Additions due to business acquisition		345,310		2,876			39,610			39,607			216,757			-			-		-			644,160
Amortization		-		(11,478	)		(8,295	)		(13,103	)		(30,298	)		(795	)		-		(16,082	)		(80,051	)

Balances as at December 31, 2022		630,596		8,988			51,044			65,152			276,303			1,121			4,262		40,647			1,078,113

Additions		-		10,541			-			-			-			-			5,372		-			15,913
Additions – right of use (ii)		-		-			-			-			-			-			-		8,993			8,993
Additions due to business acquisition (iii)		14,432		-			1,527			6,204			7,321			-			-		-			29,484
Write-offs		-		-			-			-			-			-			-		(1,964	)		(1,964	)
Amortization		-		(7,489	)		(4,098	)		(7,059	)		(14,123	)		(398	)		-		(9,000	)		(42,167	)

Balances as at June 30, 2023		645,028		12,040			48,473			64,297			269,501			723			9,634		38,676			1,088,372

(i)

The total goodwill balance is allocated to the Company’s sole cash-generating unit.

(ii)

The additions relating to IFRS 16 consist of the recognition of the right of use of new server lease contracts.

(iii)

Refers to assets derived from the business combination of Compliasset Software e Soluções Digitais S.A.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

11	DEBENTURES

	Charges	Maturity	06.30.2023	12.31.2022

1^st issuance of debentures (i)	CDI+1.50%	02/22/2024	-	14,634
2^nd issuance of debentures (ii)	CDI+2.30%	07/15/2026	113,450	222,022
3^rd issuance of debentures (ii)	CDI+2.30%	06/27/2028	247,231	-

Total			360,681	236,656

Current			37,114	74,500
Noncurrent			323,567	162,156

(i)

The first issuance of simple, non-convertible debentures is guaranteed by credit rights arising from receivables. The remaining balance of such issuance was settled in June 2023.

(ii)

(iii)

The third issuance of simple, non-convertible debentures is guaranteed by credit rights from the current accounts linked to the transaction and the funds deposited in these accounts, arising from the agreements entered into between the Company and its customers.

The variations in debentures are as follows:

	06.30.2023		06.30.2022

Balance at the beginning of the period	236,656		173,639
Borrowings	250,000		-
Interest incurred	17,407		11,619
Interest paid	(17,723	)	(11,603	)
Amortization	(125,659	)	(5,773	)

Balance at the end of the period	360,681		167,882

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

The expected payment of debentures is as follows:

	06.30.2023	06.30.2022

2023	19,163	21,509
2024	67,152	49,305
2025	98,403	38,855
2026	83,178	36,764
2027	61,856	21,449
2028	30,929	-

	360,681	167,882

(a)

Covenants

Debentures are subject to financial covenants that must be determined as at December 31. In 2022, the net debt-to-Ebitda ratio must be lower than or equal to 3, and from 2023 to 2028 the net debt-to-Ebitda ratio must be lower than or equal to 2.75.

The gross debt corresponds to the sum of short- and long-term debentures, plus (i) discounted securities with recourse and factoring, (ii) leases, except if the lease derives from operating property rental agreements and server use agreements, (iii) non-convertible fixed-income securities from public or private issuance, at the local or international markets, (iv) liabilities arising from derivative financial instruments, (v) acquirees’ financial debts, provided that the share is higher than 50% of the acquiree’s capital, not yet consolidated, (vi) debts and convertible securities, and (vii) borrowings net of loans, duly represented in the Issuer’s consolidated balance sheet, in line item “Debentures” in the consolidated quarterly financial information or consolidated annual financial statements.

Net debt means the aggregate of gross debt net of cash, demand deposits, cash invested in financial assets with the expected generation of value over time available in less than 360 days.

Non-financial covenants include accelerated maturity clauses as a result of events not restricted to the financial scope, according to common market practices.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

12	PAYROLL AND RELATED TAXES

	06.30.2023	12.31.2022

Social Security Tax (INSS) and Severance Pay Fund (FGTS) payable	8,320	10,172
13^th salary	3,004	-
Withholding income tax (IRRF) on wages	5,629	7,256
Vacation pay	30,077	26,655
Bonus, commission, and profit sharing (i)	2,777	17,320
Other	1,707	831

	51,514	62,234

(i)

The accrued bonuses and profit sharing are recorded on a monthly basis and depend on the attainment of corporate and employees’ individual goals. These amounts are paid in March and/or April of the subsequent year.

13	TAXES PAYABLE

	06.30.2023	12.31.2022

Income tax (IR) and social contribution (CS) payable	5,124	3,252
Service tax (ISS) payable	2,235	1,907
Taxes on revenue (PIS/COFINS) payable	1,826	769
Other taxes payable	458	187

	9,643	6,115

Current	9,438	6,115
Noncurrent	205	-

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

14	PAYABLES FOR INVESTMENT ACQUISITION

	06.30.2023	12.31.2022

Acquisition:
Atena	3,243	4,082
ADSPrev	530	1,070
SoftPar	3,083	6,230
Stock&Info	1,037	965
Tree Solution	3,389	3,203
Fromtis	3,244	7,516
ISP	32,880	42,372
Dendron	1,800	3,568
Simply	2,200	4,361
Lote45	-	26,833
Mercer	4,559	7,316
Newcon	61,428	83,222
Compliasset	5,401	-

	122,894	190,738

Current	47,577	79,101
Noncurrent	75,317	111,637

The variations in payables for investment acquisition are as follows:

	06.30.2023		06.30.2022

Balance at the beginning of the period	190,738		93,818
Interest incurred	5,951		4,060
Addition due to business acquisition (i)	5,217		109,031
Interest paid	(5,523	)	(1,194	)
Amortization	(73,489	)	(25,876	)

Balance at the end of the period	122,894		179,839

(i) Refers to amounts arising from the acquisition of Compliasset Software e Soluções Digitais S.A.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

	06.30.2023	06.30.2022

2022	-	5,071
2023	1,564	66,592
2024	53,521	43,712
2025	30,235	28,701
2026	24,436	23,134
2027	13,138	12,629

	122,894	179,839

15	PROVISION FOR LEGAL CLAIMS

The table below shows the position of the provisions for legal claims:

	06.30.2023	12.31.2022

Civil	10,785	11,784
Labor	43,016	46,982
Tax	76,518	81,100

	130,319	139,866

The variations in the provision for legal claims are as follows:

	06.30.2023		06.30.2022

Balance at the beginning of the period	139,866		58,347
Additions (i)	1,185		1,954
Additions due to business acquisition (ii)	2,997		72,942
Reversals	(13,259	)	(3,742	)
Interest incurred	574		603
Payments	(1,044	)	(1,242	)

Balance at the end of the period	130,319		128,862

(i) Additions include new lawsuits and changes in amounts of lawsuits already recorded.

(ii) Refers to amounts arising from the acquisition of Compliasset Software e Soluções Digitais S.A. on March 7, 2023, and acquisition of Newcon Software Ltda., Sinqia Seguridade Ltda. and Lote45 Participações S.A.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

The Company and its subsidiaries are parties to labor and tax lawsuits whose risk of loss is classified as possible, based on the opinion of the Company’s legal counsel and Management, and for which no provision was recognized. As at June 30, 2023, the adjusted value of the matter in controversy, related to these lawsuits, is R$32,315 in Parent (R$33,030 as at December 31, 2022) and R$34,019 in Consolidated (R$35,082 as at December 31, 2022). Also, as at June 30, 2023, the Company has escrow deposits amounting to R$104 in Parent (R$187 as at December 31, 2022) and R$126 in Consolidated (R$197 as at December 31, 2022).

Labor

On an overall basis, labor lawsuits discuss overtime, health hazard and/or hazardous duty premiums, wage parity, vacation, pain and suffering arising from accident-related lawsuits, occupational disease, subsidiary liability involving service providers, etc.

Tax

Tax lawsuits refer to legal claims involving municipal and federal taxes, in particular requests for offset and/or refund not approved, in addition to tax risks identified in acquisition processes.

Civil

Civil lawsuits refer mainly to lawsuits filed under the allegation of certain problems in the provision of services offered and refund of amounts.

EQUITY

16.1

Capital

The table below shows the number of shares held by shareholders holding 5% or more of the Company’s common shares, in addition to treasury shares.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

				06.30.2023					12.31.2022
Shareholders	Shares		%			Shares		%

HIX Investimentos Ltda.		10,688,562		12.15	%		9,588,025		10.90	%
SK Tarpon		6,874,500		7.82	%		4,405,877		5.01	%
Antônio Luciano de Camargo Filho		6,483,352		7.37	%		6,483,752		7.37	%
Bernardo Francisco Pereira Gomes		5,675,750		6.45	%		5,689,450		6.47	%
Treasury shares		3,262,377		3.71	%		3,362,360		3.82	%
Other shareholders ⁽ⁱ⁾		54,957,431		62.50	%		58,412,508		66.43	%

		87,941,972		100.00	%		87,941,972		100.00	%

(i) Substantially refer to free float.

16.2	Earnings reserve

The earnings retention reserve is comprised of the legal reserve and the earnings retention reserve arising from the allocations of capital budgets approved at the Annual General Meetings.

a)	Legal reserve

As at December 31, 2022, the legal reserve was recognized in the amount of R$832. As for 2023, a legal reserve will be recognized as at December 31, 2023.

b)	Dividends and interest on capital

As at December 31, 2022, dividends were distributed in the amount of R$4,690. As for 2023, dividends will be calculated up to December 31, 2023.

16.3	Capital reserve

The balances of capital reserves primarily consist of the effects from the share-based compensation plan and changes in the purchase and sales prices of treasury shares.

A variation in the amount of R$589 was recognized in 2023 (R$878 in 2022) referring to the share-based compensation plans. There was a variation in the amount of (R$678) ((R$1,238) in 2022) in the capital reserve relating to the exercised shares not yet transferred to beneficiaries, less the difference between the purchase price and the sales price of treasury shares already transferred.

As at June 30, 2023, the balance is R$11,778.

16.4	Treasury shares

In 2023, no shares were acquired (R$21,658 in 2022); however, the exercised shares were transferred under the Stock Option plan, for the amount of R$1,686 (R$4,380 in 2022), resulting in a balance of treasury shares in the amount of R$56,488 (R$58,174 as at December 31, 2022).

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

16.5	Share issuance costs

16.6	Non-controlling interests

Non-controlling interests refer to the interest held by the shareholders of Homie do Brasil Informática Ltda., Rosk Software S.A., Lote45 Participações S.A. and Compliasset Software e Soluções Digitais S.A., which together correspond to the amount of R$28,172 in 2023 (R$20,067 in 2022).

17	NET OPERATING REVENUE

	06.30.2023	06.30.2022

Software	283,790	246,794
Services	47,045	43,884

	330,835	290,678

The average rate of taxes on sales in the period was 10.18% for the Consolidated (9.55% as at June 30, 2022), including taxes on revenue (PIS/PASEP and COFINS), Service Tax (ISSQN) and Social Security Contribution (INSS).

18	COSTS OF SERVICES

	06.30.2023	06.30.2022

Outside services	27,583	25,797
Personnel, payroll taxes and benefits	161,147	136,149
Depreciation and amortization	6,164	5,105
Other costs	4,461	1,951

	199,355	169,002

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

19	GENERAL, ADMINISTRATIVE AND SELLING EXPENSES

	06.30.2023		06.30.2022

Outside services	6,109		6,787
Personnel, payroll taxes, benefits and bonuses	52,486		39,341
Commissions	2,946		2,309
Rents, insurance, common area maintenance fees and other	1,797		1,488
Increase in (reversal of) provision for legal claims	(12,074	)	1,958
Increase in (reversal of) allowance for doubtful debts	1,221		(282	)
Depreciation and amortization	41,769		30,803
Other expenses	4,487		4,841

	98,741		87,245

20	FINANCIAL INCOME (EXPENSE)

	06.30.2023		06.30.2022

Financial income:
Income from short-term investments	7,675		7,443
Fair value adjustment to financial instruments	2,029		-
Other finance income	1,017		144
	10,721		7,587

Financial expenses:
Interest on investment acquisition	(5,951	)	(4,060	)
Interest on debentures	(17,407	)	(11,619	)
Interest on leases	(3,639	)	(4,343	)
Present value adjustment to call/put option	(11,869	)	(12,676	)
Interest and inflation adjustment to lawsuits	(574	)	(603	)
Other finance costs	(905	)	(530	)
	(40,345	)	(33,831	)

Financial income (expenses), net	(29,624	)	(26,244	)

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

21	PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION

a)	Reconciliation of income tax and social contribution (expense) income

The following amounts of current and deferred income tax and social contribution were recognized in profit or loss for the periods:

	06.30.2023		06.30.2022

Profit before income tax and social contribution	3,115		8,187
Statutory rate	34	%	34	%
Income tax and social contribution at the combined rate	(1,059	)	(2,784	)

Adjustments to the effective rate:	-		-
Bonus expenses	(2,779	)	(1,853	)
Deemed income in subsidiaries (i)	693		627
Other permanent differences	621		(1,110	)

Income tax and social contribution expenses	(2,524	)	(5,120	)

Income tax and social contribution:
Current	(7,593	)	(11,919	)
Deferred	5,069		6,799

(i) Difference relating to Group companies that elect to calculate income tax and social contribution under the deemed income regime.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

b)	Deferred income tax and social contribution - assets

Deferred income tax and social contribution are broken down as follows:

	06.30.2023		06.30.2022

Noncurrent assets
Tax loss carryforwards	64,874		47,688
Allowance for doubtful debts	778		559
Accrued profit sharing	-		294
Provisions for legal claims and other obligations	35,198		41,470
Amortization of tax goodwill in business combinations	(23,893	)	(21,819	)
Other provisions	(53	)	(186	)
Change in the fair value of financial assets	4,990		1,643
Leases	1,638		9,545

	83,532		79,194

22	EARNINGS PER SHARE

Basic earnings (loss) per share are calculated by dividing profit for the period attributable to the holders of the Company’s common shares, by the weighted average number of common shares outstanding during the period.

Diluted earnings (loss) per share are calculated by dividing profit for the period, attributable to the holders of the Parent’s common shares, by the weighted average number of common shares outstanding during the period, plus the weighted average number of common shares that would be issued upon conversion of all potential diluted common shares into common shares.

The tables below show profit or loss and share data used to calculate basic and diluted earnings per share:

a) Basic earnings (loss) per share

	06.30.2023		06.30.2022

Net profit (loss) attributable to the Company’s owners	(2,672	)	2,998
Weighted average number of outstanding common shares	86,346,025		84,892,257

Basic earnings (loss) per share – R$	(0.031	)	0.035

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

b) Diluted earnings (loss) per share

	06.30.2023		06.30.2022

Net profit (loss) attributable to the Company’s owners	(2,672	)	2,998
Weighted average number of outstanding common shares	86,346,025		84,892,257
Potential increase in common shares due to the stock option and restricted share plan (*)	-		906,220

Diluted earnings (loss) per share - R$	(0.031	)	0.035

(*) As the Company reported losses in the second quarter of 2023, the potential increase in common shares was not considered as the stock option and restricted share plan has a dilutive effect on earnings (loss) per share.

LEASES

	Final maturity	06.30.2023	12.31.2022

Belo Horizonte office	12/31/2028	5,658	5,761
São Paulo office	07/01/2028	21,912	22,535
Curitiba office	08/31/2023	158	617
Taubaté office	04/01/2025	88	-
Oracle do Brasil (servers)	12/31/2023	317	-
Solo Network (servers)	07/31/2025	40,590	40,759
Claranet (servers)	09/30/2026	-	2,101

Total		68,723	71,773

Current		28,959	24,334
Noncurrent		39,764	47,439

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

The variations in leases are as follows:

	06.30.2023		06.30.2022

Balance at the beginning of the period	71,773		79,470

Additions	10,536		9,645
Interest incurred	3,639		4,343
Interest paid	(3,389	)	(4,295	)
Amortization	(11,776	)	(9,044	)
Write-offs	(2,060	)	-

Balance at the end of the period	68,723		80,119

24	PUT OPTION ON NON-CONTROLLING INTERESTS

As part of the business combinations where the acquiree’s capital was partially acquired, the Company issued a put option for sale of the remaining portion to the non-controlling shareholders. The put option was recorded based on the expected future exercise price, discounted at present value. The option exercise price will be measured based on the revenue multiple, which will be determined by the EBITDA margin on a future date.

Currently, the following options were issued.

	Exercise date	06.30.2023	12.31.2022

Homie do Brasil Informática Ltda.	07/31/2025	19,598	17,982
Rosk Software S.A.	04/30/2025 and 04/30/2026	35,512	32,799
Lote45 Participações S.A.	04/30/2027	98,400	91,489
Compliasset Software e Soluções Digitais S.A.	09/30/2026	12,737	-

Total		166,247	142,270

25	NON-CASH TRANSACTIONS

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

	06.30.2023		06.30.2022

Recognition of lease assets/liabilities	8,376		9,903
Portion retained in the payment for investment acquisition	300		110,041
Business combination	(3,665	)	(309,877	)

26	BUSINESS COMBINATIONS

A business combination is a transaction or another event through which an acquirer obtains control of one or more businesses, regardless of the legal form of the transaction. The acquisition method is applied for transactions where control is obtained. Business combinations of entities under common control are accounted for at cost. Under the acquisition method, the identifiable assets acquired, and liabilities assumed are measured at their fair value, with limited exceptions.

In 2023, Compliasset was acquired. The transaction involved the initial amount of R$17,700 payable at sight and (ii) the retained portion of R$300 that will be paid within 150 days from the acquisition date.

Newcon Software S.A.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

c.1) Fair value on the acquisition date of the consideration transferred:

Cash disbursed			338,872
Payment in installments			82,500
Total consideration transferred			421,372

c.2) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	01/06/2022			01/06/2022
Current assets			Current liabilities

Cash and cash equivalents		3,590	Borrowings and financing		4,066
Trade receivables		2,708	Advances from customers		4,715
Recoverable taxes		758	Trade payables		66
Advances to employees		118	Taxes payable		2,773
Advances to suppliers		79	Payroll and related taxes		2,957
Prepaid expenses		7	Payables		107
Other assets		2,251

Total current assets		9,511	Total current liabilities		14,684

Noncurrent assets			Noncurrent liabilities

Property and equipment		3,788	Provision for legal claims		63,340
Intangible assets		242,212
Deferred income tax on contingencies		21,536

Total noncurrent assets		267,536	Total noncurrent liabilities		63,340

			Total equity		199,023

Total assets		277,047	Total liabilities		277,047

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

c.3) Goodwill on acquisition

Total consideration transferred	421,372

(-) Fair value of the main assets acquired:
Software	(16,730	)
Customer portfolio	(195,893	)
Trademark	(26,765	)
Deferred tax assets	(21,536	)

(+) Fair value of the main liabilities assumed:
Contingencies	63,340

(-) Total identifiable net assets at fair value on the acquisition date	1,439

Goodwill on expected future earnings arising on acquisition	222,349

Goodwill expected to be deductible for tax purposes	181,986

The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets	Amount		Useful life	Amortization method

Software		16,730	10 years	Straight-line
Customer portfolio		195,893	15 years	Straight-line
Trademark		26,765	8 years	Straight-line

Mercer Seguridade Ltda.

Mercer Seguridade provides services to closed-end supplementary private pension entities, in the participant service, accounting, treasury, risk and social security areas.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

d.1) Fair value on the acquisition date of the consideration transferred:

Cash disbursed			25,754
Payment in installments			7,000
Price adjustment as per contract			5,120
Total consideration transferred			37,874

d.2) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	02/01/2022			02/01/2022
Current assets			Current liabilities

Cash and cash equivalents		344	Suppliers and service providers		1
Trade receivables		3,475	Advances from customers		374
			Taxes payable		587
			Payroll and related taxes		2,247

Total current assets		3,819	Total current liabilities		3,209

Noncurrent assets			Noncurrent liabilities

Deferred income tax		837
Intangible assets		24,750	Contingencies		2,462

Total noncurrent assets		25,587	Total noncurrent liabilities		2,462

			Total equity		23,735

Total assets		29,406	Total liabilities		29,406

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

d.3) Goodwill on acquisition

Total consideration transferred	37,874

(-) Fair value of the main assets acquired:
Software	(11,617	)
Customer portfolio	(13,133	)
Deferred tax assets	(837	)

(+) Fair value of the main liabilities assumed:
Contingencies	2,462
Payroll and related taxes	2,246

(-)Total identifiable net assets at fair value on the acquisition date	2,857

Goodwill on expected future earnings arising on acquisition	14,138

Goodwill expected to be deductible for tax purposes	13,123

The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets	Useful life	Amortization method

Software	12.5 years	Straight-line
Customer portfolio	13 years	Straight-line

Lote45 Participações S.A.

Lote45 was established in 2006 and is specialized in enterprise risk management software used by more than 100 customers in the investment fund industry, mainly family offices and asset managers.

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

e.1) Fair value on the acquisition date of the consideration transferred:

Cash disbursed			91,371
Increase in variable price			24,805
Total consideration transferred			116,176

e.2) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	01/18/2022			01/18/2022
Current assets			Current liabilities

Cash and cash equivalents		2,818	Suppliers and service providers		167
Trade receivables		1,471	Advances from customers		53
Recoverable taxes		7	Taxes payable		745
Advances to employees		21	Payroll and related taxes		1,662
Advances to suppliers		1	Payables		375
Prepaid expenses		13
Other assets		342

Total current assets		4,673	Total current liabilities		3,002

Noncurrent assets			Noncurrent liabilities

Property and equipment		479
Intangible assets		31,855	Contingencies		13,728
			Other payables		315

Total noncurrent assets		32,334	Total noncurrent liabilities		14,043

			Total equity		19,962

Total assets		37,007	Total liabilities		37,007

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

e.3) Goodwill arising on the acquisition of equity interests:

Total consideration transferred	116,176

(-) Fair value of the main assets acquired:
Software	(11,279	)
Trademark	(12,845	)
Customer portfolio	(7,732	)

(+) Fair value of the main liabilities assumed:
Contingencies	13,728

(-) Total identifiable net assets at fair value on the acquisition date	1,853

(-) Total amount of non-controlling interests	(9,600	)

Goodwill on expected future earnings arising on acquisition	105,795

Goodwill expected to be deductible for tax purposes	88,022

The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets	Useful life	Amortization method

Software	7.5 years	Straight-line
Trademark	6.7 years	Straight-line
Customer portfolio	2.1 years	Straight-line

Compliasset

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

The acquisition is an integral part of Sinqia’s strategy towards expanding its portfolio of technology solutions for the financial system. Upon the acquisition of Compliasset, Sinqia’s portfolio now comprises a product for managing regulatory compliance programs, within SaaS model, which expands its customer portfolio.

a) Fair value on the acquisition date of the consideration transferred:

	60	%
Cash disbursed	16,448
Price adjustment as per contract	300
Increase in variable price (Earn Out)	4,917
Total consideration transferred	21,665

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

b) Assets and liabilities recognized at fair value on the acquisition date:

ACQUIREE’S BALANCE SHEET

	03/07/2023			03/07/2023
Current assets			Current liabilities

Cash and cash equivalents		2	Suppliers and service providers		33
Short-term investments		640	Taxes payable		164
Trade receivables		628	Payroll and related taxes		135
Recoverable taxes		-	Dividends		1,168
Advances to suppliers		102
Prepaid expenses		24

Total current assets		1,396	Total current liabilities		1,500

Noncurrent assets			Noncurrent liabilities

Trade receivables		12	Leases		100
Property and equipment		194	Contingencies		2,997
Intangible assets		15,052

Total noncurrent assets		15,258	Total noncurrent liabilities		3,097

			Total equity		12,057

Total assets		16,654	Total liabilities		16,654

c) Goodwill arising on the acquisition of equity interests

Total consideration transferred			21,665

(-) Fair value of the main assets acquired:
Software			6,204
Trademark			1,527
Customer portfolio			7,321

(+) Fair value of the main liabilities assumed:
Contingencies			2,997

(-) Total identifiable net assets at fair value on the acquisition date			1

(+) Total amount of non-controlling interests			4,823

Goodwill on expected future earnings arising on acquisition			14,432

Goodwill expected to be deductible for tax purposes			13,886

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets	Useful life	Amortization method

Software	5 years	Straight-line
Trademark	9.8 years	Straight-line
Customer portfolio	14.6 years	Straight-line

Also, the Company states that the assets and liabilities recognized at fair value arising from business combinations disclosed in 2022 were not subject to changes.

27	EVENTS AFTER THE REPORTING PERIOD

Payment of interest on capital

On July 20, 2023, the Board of Directors approved the advance of the payment date of the interest on capital for FY2022 to July 31, 2023.

Business combination

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

Transaction structure

Transaction conditions precedent

Exclusivity

SINQIA S.A.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023

(In thousands of Brazilian reais - R$)

Other commitments

Interest on capital declared at the Annual General Meeting

The payment of interest on capital declared at the Company’s Annual General Meeting, which was scheduled to be made between August 31, 2023 and the end of the FY2023, will be anticipated and paid up to July 31, 2023. A Notice to the Shareholders on the payment of interest on capital will be disclosed on a timely basis.

Next stages

On August 14, 2023, Sinqia announced that, upon approval by the Board of Directors and issuance of favorable opinion by the Supervisory Board, it has entered into the “Protocol and Justification of Merger of Shares Issued by Sinqia S.A. into Evertec Brasil Informática S.A.” with Evertec Brasil Informática S.A. This Protocol defines the terms and conditions of the merger of the Company’s shares into Evertec BR, as part of the business combination transaction described in the agreement entered into between the companies on July 20, 2023.

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On November 1, 2023 (the “Closing Date”), Evertec, Inc. (the “Company” or “Evertec”) completed its previously announced acquisition of Sinqia, S.A. (“Sinqia”). Pursuant to the terms of the Merger Agreement and Other Covenants, dated as of July 20, 2023 (the “Merger Agreement”), by and among Evertec Brasil Informática S.A, a wholly-owned subsidiary of Evertec (“Evertec BR”) and Sinqia, on the Closing Date, Sinqia merged with and into Evertec, and Sinqia continued as a wholly owned subsidiary of Evertec BR, as further described in Note 1, Description of the Acquisition and Basis of Presentation.

The unaudited pro forma condensed combined financial information was based on and should be read in conjunction with:

•

The accompanying notes to the unaudited pro forma condensed combined financial information;

•

Evertec’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2022, included in Evertec’s Annual Report on Form 10-K for the year ended December 31, 2022;

•

Evertec’s unaudited consolidated financial statements and related notes as of and for the nine months ended September 30, 2023, included in Evertec’s Quarterly Report on Form 10-Q for the period ended September 30, 2023;

•

Sinqia’s audited consolidated financial statements and related notes as of and for the fiscal year ended December 31, 2022, included in Sinqia’s Annual Report for the year ended December 31, 2022; and

•

Sinqia’s unaudited consolidated financial statements and related notes as of and for the nine months ended September 30, 2023, included in Sinqia’s Quarterly Report for the period ended September 30, 2023.

The unaudited pro forma condensed combined balance sheet as of September 30, 2023, gives effect to the acquisition as if it occurred or had become effective September 30, 2023. The unaudited pro forma condensed combined statements of income for the nine-month period ended September 30, 2023, and the year ended December 31, 2022, give the effect to the acquisition as if it occurred or had become effective on January 1, 2022. Further information is provided in Note 1 to this unaudited pro forma condensed combined pro forma financial information.

The following unaudited pro forma condensed combined financial information and related notes has been prepared in accordance with Article 11 of Regulation S-X as amended by the Final Rule, Release No. 33-10786, to give the effect to the following:

•

Application of the acquisition method of accounting under the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 805, Business Combinations (“ASC 805”) where certain assets and liabilities of Sinqia will be recorded by Evertec at their respective fair values as of the date the acquisition was completed;

•

Adjustments to conform the financial statement presentation of Sinqia to those of Evertec, based upon a preliminary assessment by Evertec;

•

Adjustments to reflect the following financing transactions and other adjustments:

additional Term A Loan commitments amounting to $60.0 million;

a new tranche of incremental Term B Loan commitments in the amount of $600.0 million;

•

Adjustments to reflect transaction costs in connection with the acquisition.

The pro forma adjustments are based upon currently available information and certain assumptions that Evertec’s management believes are reasonable. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial information. This unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only.

The unaudited pro forma condensed combined financial information includes various assumptions, including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed by Sinqia based on Evertec management’s best estimate of fair value. The final purchase price allocation may vary based on final valuations and analyses of the fair value of the acquired assets and assumed liabilities. The actual results of Sinqia for periods subsequent to September 30, 2023, may result in material differences to the pro forma results had they been prepared on the basis of subsequent periods. Accordingly, the pro forma adjustments are preliminary and have been made solely for illustrative purposes.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2023

($ in 000's)

	Evertec, Inc. Historical			Sinqia S.A. Historical Reclassed (Note 2)			U.S. GAAP Conversion and Accounting Policy Adjustments			(Note 2)	Transaction Accounting Adjustments			(Note 4)	Pro Forma Combined
Assets
Current Assets:
Cash and cash equivalents	$	177,821		$	43,985		$	-			$	135,812		(a) (e) (i)	$	357,618
Restricted cash		20,607			-			-				-				20,607
Accounts receivable, net		115,779			11,290			-				-				127,069
Settlement assets		34,771			-			-				-				34,771
Prepaid expenses and other assets		53,373			11,060			1,636		(c)		2,248		(j)		68,317
Total current assets	$	402,351		$	66,335		$	1,636			$	138,060			$	608,382
Debt securities available-for-sale, at fair value		2,079			-			-				-				2,079
Equity securities, at fair value		25,992			-			-				(25,992	)	(d)		-
Investment in equity investee		20,011			-			-				-				20,011
Other investments		-			8,868			-				-				8,868
Property and equipment, net		56,957			8,451			(4,721	)	(a)		-				60,687
Operating lease right-of-use asset		12,523			-			4,171		(a)		-				16,694
Goodwill		434,496			128,492			-				132,010		(c)		694,998
Other intangible assets, net		220,240			86,523			(10,483	)	(a) (c)		212,205		(b)		508,485
Deferred tax asset		18,280			23,515			-				832		(k)		42,627
Derivative asset		11,492			3,839			(3,839	)	(b)		-				11,492
Net investment in leases		-			-			-				-				-
Other long-term assets		17,039			762			-				-				17,801
Total assets	$	1,221,460		$	326,785		$	(13,236	)		$	457,115			$	1,992,124

Liabilities, redeemable non-controlling interests and stockholders’ equity
Current Liabilities:
Accrued liabilities		91,310			45,934			-				13,169		(e) (f)		150,413
Accounts payable		52,403			1,874			-				-				54,277
Contract liability		14,428			1,877			-				5,555		(j)		21,860
Income tax payable		958			1,683			-				(958	)	(k)		1,683
Current portion of long-term debt		20,750			10,415			-				(10,416	)	(e)		20,749
Short-term borrowings		6,000			-			-				-				6,000
Current portion of operating lease liability		5,979			5,754			(4,156	)	(a)		-				7,577
Settlement liabilities		27,684			-			-				-				27,684
Foreign currency swap liability		29,225			-			-				(29,225	)	(i)		-
Total current liabilities	$	248,737		$	67,537		$	(4,156	)		$	(21,875	)		$	290,243
Long-term debt		374,656			59,407			-				581,739		(e)		1,015,802
Deferred tax liability		10,828			5,891			-				(5,891	)	(k)		10,828
Contract liability - long term		34,062			-			-				-				34,062
Operating lease liability - long term		7,045			8,869			(5,872	)	(a)		-				10,042
Put option on non-controlling interest		-			34,334			(34,334	)	(b)		-				-
Other long-term liabilities		9,783			15,400			-				(455	)	(g)		24,728
Total liabilities	$	685,111		$	191,438		$	(44,362	)		$	553,518			$	1,385,705

Commitments and contingencies

Redeemable non-controlling interests		-			-			36,539		(b)		2,997		(h)		39,536

Stockholders’ Equity
Preferred stock, par value $0.01	$	-		$	-		$	-			$	-			$	-
Common stock, $0.01 par value		646			154,619			-				(116,722	)	(f)		38,543
Additional paid-in capital		4,403			6,432			-				(6,432	)	(f)		4,403
Transactions with non-controlling shareholders		-			(27,246	)		-				27,246		(f)		-
Accumulated earnings		530,714			(4,502	)		631		(a)		(3,492	)	(e) (f) (k)		523,351
Accumulated other comprehensive loss, net of tax		(3,352	)		-			-				-				(3,352	)
Total stockholders’ equity	$	532,411		$	129,303		$	631			$	(99,400	)		$	562,945
Non-controlling interest		3,938			6,044			(6,044	)	(b)		-				3,938
Total equity	$	536,349		$	135,347		$	(5,413	)		$	(99,400	)		$	566,883
Total liabilities, redeemable non-controlling interests and equity	$	1,221,460		$	326,785		$	(13,236	)		$	457,115			$	1,992,124

See the accompanying notes to the unaudited pro forma condensed combined financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

For The Nine Months Ended September 30, 2023

($ in 000’s, except share and per share data)

	Evertec, Inc. Historical			Sinqia, S.A. Historical Reclassed (Note 2)			U.S. GAAP Conversion and Accounting Policy Adjustments			(Note 2)	Transaction Accounting Adjustments			(Note 5)	Pro Forma Combined
Revenues	$	500,088		$	100,559		$	-			$	(2,234	)	(g)	$	598,413

Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization		238,149			56,737			2,224		(c)		-				297,110
Selling, general and administrative expenses		83,834			22,341			3,493		(a)		1,059		(b)		110,727
Depreciation and amortization		63,680			14,822			(5,190	)	(a) (c)		6,217		(a)		79,529
Total operating costs and expenses		385,663			93,900			527				7,276				487,366
Income from operations		114,425			6,659			(527	)			(9,510	)			111,047
Non-operating income (expenses)
Interest income		5,162			-			-				-				5,162
Interest expense		(16,992	)		(8,190	)		751		(a)		(39,605	)	(c)		(64,036	)
Loss on foreign currency remeasurement		(7,337	)		-			-				-				(7,337	)
Loss on foreign currency swap		(29,225	)		-			-				-				(29,225	)
Earnings of equity method investment		3,828			-			-				-				3,828
Other income (expenses), net		2,754			(1,535	)		3,571		(a) (b)		(104	)	(d)		4,686
Total non-operating (expenses) income		(41,810	)		(9,725	)		4,322				(39,709	)			(86,922	)
Income before income taxes		72,615			(3,066	)		3,795				(49,219	)			24,125
Income tax (benefit) expense		4,546			350			-				(14,987	)	(g) (i)		(10,091	)
Net income		68,069			(3,416	)		3,795				(34,232	)			34,216
Less: Net (loss) income attributable to non-controlling interest		(174	)		1,106			(1,106	)			-				(174	)
Less: Net income attributable to redeemable non-controlling interests		-			-			1,106		(b)		-				1,106
Net income attributable to common stockholders	$	68,243		$	(4,522	)	$	3,795			$	(34,232	)		$	33,284

Weighted averages shares outstanding – basic		64,886,551														66,051,143
Weighted averages shares outstanding – diluted		65,705,596														66,870,188
Net income per common share – basic attributable to common stockholders	$	1.05												(h)	$	0.50
Net income per common share – diluted attributable to common stockholders	$	1.04												(h)	$	0.50

See the accompanying notes to the unaudited pro forma condensed combined financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

For the Year Ended December 31, 2022

($ in 000’s, except share and per share data)

	Evertec, Inc. Historical			Sinqia, S.A. Historical Reclassed (Note 2)			U.S. GAAP Conversion and Accounting Policy Adjustments			(Note 2)	Transaction Accounting Adjustments			(Note 5)	Pro Forma Combined
Revenues	$	618,409		$	119,356		$	-			$	(2,717	)	(g)	$	735,048

Operating costs and expenses:
Cost of revenues, exclusive of depreciation and amortization		292,621			66,126			2,222		(c)		-				360,969
Selling, general and administrative expenses		89,770			22,982			3,494		(a)		14,487		(b)		130,733
Depreciation and amortization		78,618			18,418			(5,359	)	(a) (c)		9,542		(a)		101,219
Total operating costs and expenses		461,009			107,526			357				24,029				592,921
Income from operations		157,400			11,830			(357	)			(26,746	)			142,127
Non-operating income (expenses):
Interest income		3,121			245			-				-				3,366
Interest expense		(24,772	)		(8,406	)		778		(a)		(56,325	)	(c)		(88,725	)
Gain on sale of a business		135,642			-			-				-				135,642
(Loss) gain on foreign currency remeasurement		(7,645	)		-			-				-				(7,645	)
Earnings of equity method investment		2,968			-			-				-				2,968
Other income		1,138			2,746			58		(b)		4,949		(e) (f)		8,891
Total non-operating income (expenses)	$	110,452		$	(5,415	)	$	836			$	(51,376	)		$	54,497
Income before income taxes		267,852			6,415			479				(78,122	)			196,624
Income tax expense		28,983			3,015			-				(26,040	)	(g) (i)		5,958
Net income		238,869			3,400			479				(52,082	)			190,666
Less: Net (loss) income attributable to non-controlling interest		(140	)		150			(150	)			-				(140	)
Less: Net income attributable to redeemable non-controlling interests		-			-			150		(b)		-				150
Net income attributable to common stockholders	$	239,009		$	3,250		$	479			$	(52,082	)		$	190,656

Weighted average shares outstanding – basic		68,701,434														69,866,026
Weighted average shares outstanding – diluted		69,312,717														70,477,309
Net income per common share – basic attributable to common stockholders	$	3.48												(h)	$	2.73
Net income per common share – diluted attributable to common stockholders	$	3.45												(h)	$	2.71

See the accompanying notes to the unaudited pro forma condensed combined financial information.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1 – Description of the Acquisition and Basis of Presentation

The Acquisition

On July 20, 2023, Evertec, Inc. announced the acquisition of Sinqia through a merger agreement (the “Transaction”). Upon closing of the Transaction, each common share of Sinqia was exchanged for (a) one class A mandatorily redeemable preferred share issued by Evertec BR and (b) one class B mandatorily redeemable preferred share of Evertec BR (“Evertec BR Shares”). Immediately upon receipt of the Evertec BR Shares, each shareholder of Sinqia received (1) R$24.47 plus, a SELIC (Sistema Especial de Liquidação e Custodia – which is a weighted average interest rate collateralized by Brazilian federal government securities) adjustment of R$0.98, for a total of R$25.45 per share and (2) Brazilian Depository Receipts (“BDRs”) representing 0.014354 shares of Evertec common stock. Prior to the closing of the Transaction, the Company purchased 4.8 million shares of Sinqia in the open market for $26.5 million. The Company classified its investment in Sinqia as an equity investment under Accounting Standards Codification 321, Investments in Equity Securities (“ASC 321”), and recorded this investment at fair value in Equity Securities on the Company’s Balance Sheet. The acquisition was finalized with an aggregate purchase price of $474.2 million, consisting of $410.3 million in cash and 1.2 million in Evertec shares valued at $37.9 million final consideration transferred, and a fair value of $26.0 million in previously held interest in Sinqia shares.

Evertec obtained debt financing commitments to acquire Sinqia, and pay related fees and expenses. In connection with the closing of the Transaction, on October 30, 2023, Evertec entered into a first amendment to the existing credit agreement dated as of December 1, 2022. Under this amendment, existing lenders under the Term A Loan provided additional commitments amounting to $60.0 million and a syndicate of financial institutions and other lenders provided a new tranche of Term B Loan commitments in the amount of $600.0 million. The unaudited pro forma condensed combined financial information includes certain financing adjustments related to the issuances of these commitments. The interest rate on the additional Term A Loan is consistent with the existing credit agreement, while the interest rate on the new Term B Loan is based on SOFR plus 3.5% for SOFR loans and 2.5% for base rate loans. The proceeds of such financing have been used to finance part of the cash consideration paid to current shareholders of Sinqia as well as for repayment of Sinqia’s and its subsidiaries’ existing indebtedness and to settle transaction-related fees and expenses.

Basis of Presentation

The unaudited pro forma condensed combined financial information and related notes are prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses”. The unaudited pro forma condensed combined financial statements have been prepared by Evertec’s management for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations that would have been realized had the Transaction occurred on the dates indicated, nor are they meant to be indicative of any future consolidated financial position or future results of operations of the combined entity.

The unaudited pro forma financial information has been derived from the financial statements of Sinqia and Evertec after giving pro forma effect to the Transaction. Evertec historical financial statements were prepared in accordance with U.S. GAAP and utilizes a USD reporting currency. Sinqia’s financial statements are presented in accordance with International Financial Reporting Standards (“IFRS”) and utilizes Brazilian Real (“Reais”) as the reporting currency. As such, for the purpose of the unaudited pro forma condensed combined financial information, the historical financial information of Sinqia has been (i) translated from Reais to U.S. Dollars, (ii) converted from IFRS to U.S. GAAP and (iii) conformed to Evertec’s accounting policies. These conversion and adjustments are further described in Note 2. The conversion from IFRS to U.S. GAAP and accounting policy conformation was based on preliminary information available to Evertec at the time of preparation of this pro forma financial information. Evertec is currently in the process of evaluating Sinqia’s accounting policies, and as a result of that review, additional differences may be identified that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial information between the accounting policies.

The unaudited pro forma condensed combined balance sheet, as of September 30, 2023, the unaudited pro forma condensed combined statement of income for the nine months ended September 30, 2023, and the unaudited pro forma condensed combined statement of income for the year ended December 31, 2022, presented herein, are based on the historical financial statements of Evertec and Sinqia.

●

The unaudited pro forma condensed combined balance sheet as of September 30, 2023, is presented as if Evertec’s acquisition of Sinqia had occurred on September 30, 2023, and combines the historical balance sheet of Evertec as of September 30, 2023, with the historical balance sheet of Sinqia as of September 30, 2023.

●

The unaudited pro forma condensed combined statement of income for the nine months ended September 30, 2023, has been prepared as if the Transaction had occurred on January 1, 2022, and combines Evertec’s historical statement of income for the nine months ended September 30, 2023, with Sinqia’s historical statement of profit or loss for the nine months ended September 30, 2023.

●

The unaudited pro forma condensed combined statement of income for the year ended December 31, 2022, has been prepared as if the Transaction had occurred on January 1, 2022, and combines Evertec’s historical statement of income for the fiscal year ended December 31, 2022, with Sinqia’s historical statement of profit or loss for the fiscal year ended December 31, 2022.

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with Evertec as the accounting acquirer, using the fair value concepts defined in ASC Topic 820, Fair Value Measurement, and based on the historical financial statements of Evertec and Sinqia. Under ASC 805, generally all assets acquired, and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value, while transaction costs associated with the business combination are expensed as incurred. The excess of the aggregate of the consideration transferred, the fair value of any non-controlling interest in the acquiree, and the previously held equity interest in the acquiree over the acquisition date amounts of identifiable assets acquired and liabilities assumed, if any, is allocated to goodwill.

The valuations of the assets acquired and liabilities assumed are preliminary and have not yet been finalized as of the date of this filing. The purchase price allocations are preliminary and subject to change, including the valuation, intangibles, income taxes and goodwill, among other items. The final purchase price allocation may be materially different than the preliminary purchase price allocation presented in the unaudited pro forma combined financial information. Any changes in the fair values of the net assets or aggregate consideration transferred as compared with the information shown in the unaudited pro forma condensed combined financial information may change the amount of the total purchase price allocation to goodwill and other assets and liabilities and may impact the combined company’s balance sheet and statement of income. As a result of the foregoing, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dyssynergies, operating efficiencies, or cost savings that may result from the Transaction or any acquisition and integration costs that may be incurred. The pro forma adjustments represent management’s best estimates and are based upon currently available information and certain assumptions that Evertec believes are reasonable under the circumstances.

Note 2 – Foreign Currency Translation, Reclassification Adjustments and U.S. GAAP Conversion and Accounting Policy Adjustments

Foreign Currency Translation

The consolidated financial statements of Sinqia were prepared in accordance with IFRS and reported in Reais. The historical combined financial information of Sinqia has been translated into U.S. Dollars in the tables below. The amounts included in the table below may differ slightly from the historical financial statements of Sinqia due to rounding.

	USD/BRL
Spot rate as of September 30, 2023		0.1987
Average exchange rate for the nine months ended September 30, 2023		0.1996
Average exchange rate for the year ended December 31, 2022		0.1936

(in 000’s)	Sinqia, S.A. Historical As of September 30, 2023 (unaudited) (BRL)			Sinqia, S.A. Historical Translated As of September 30, 2023 (unaudited) (USD)
Assets
Current Assets:
Cash and cash equivalents	$	147,619		$	29,333
Short-term investments		84,651			16,821
Trade receivables		56,815			11,290
Prepaid expenses		3,370			670
Recoverable taxes and contributions		9,127			1,814
Other receivables		5,868			1,166
Total current assets	$	307,450		$	61,094
Recoverable taxes and contributions		3,712			738
Financial assets		90,326			17,948
Escrow deposits		122			24
Deferred income tax and social contribution		88,691			17,624
Property and equipment		42,528			8,451
Intangible assets		1,082,066			215,015
Total noncurrent assets		1,307,445			259,800
Total assets	$	1,614,895		$	320,894
Liabilities and stockholders’ equity
Current liabilities:
Debentures		52,416			10,415
Leases		28,959			5,754
Suppliers and service providers		8,425			1,674
Advances from customers		9,445			1,877
Payroll and related taxes		57,503			11,426
Profit for distribution		541			108
Taxes payable		8,468			1,683
Payables for investment acquisition		48,195			9,577
Other payables		456			92
Total current liabilities	$	214,408		$	42,606
Debentures		298,966			59,407
Leases		44,631			8,869
Taxes payable		237			47
Provision for legal claims		125,468			24,931
Payables for investment acquisition		77,266			15,353
Put option on non-controlling interest		172,788			34,334
Total liabilities	$	933,764		$	185,547
Capital		813,303			161,610
Treasury shares		(35,184	)		(6,991	)
Shares issuance costs		(48,890	)		(9,715	)
Transactions with non-controlling shareholders		(137,117	)		(27,246	)
Capital reserve		22,251			4,421
Earnings reserves		59,010			11,726
Loss for the period		(22,656	)		(4,502	)
Total controlling stockholders’ equity	$	650,717		$	129,303
Non-controlling interests		30,414			6,044
Total stockholders’ equity		681,131			135,347
Total liabilities and stockholders’ equity	$	1,614,895		$	320,894

(in 000’s) except per share data	Sinqia, S.A. Historical Nine Months Ended September 30, 2023 (unaudited) (BRL)			Sinqia, S.A. Historical Translated Nine Months Ended September 30, 2023 (unaudited) (USD)
Net Revenues	$	503,739		$	100,559
Cost of services		(293,693	)		(58,629	)
Gross profit		210,046			41,930
General, administrative and selling expenses		(176,688	)		(35,271	)
Operating income (loss) before financial income (costs)		33,358			6,659
Financial income (costs), net		(48,718	)		(9,725	)
Profit (Loss) before income tax and social contribution		(15,360	)		(3,066	)
Current income tax and social contribution		(11,983	)		(2,392	)
Deferred income tax and social contribution		10,228			2,042
Profit (loss) for the period	$	(17,115	)	$	(3,416	)
Attributable to:
Company’s owners		(22,656	)		(4,522	)
Non-controlling interest		5,541			1,106
Earnings per share attributed to Sinqia’s shareholders
Basic earnings (loss) per share	$	(0.268	)	$	(0.053	)
Diluted earnings (loss) per share	$	(0.268	)	$	(0.053	)

(in 000’s) except per share data	Sinqia, S.A. Historical Year Ended December 31, 2022 (BRL)			Sinqia, S.A. Historical Translated Year Ended December 31, 2022 (USD)
Net operating income	$	616,472		$	119,356
Cost of services provided		(353,524	)		(68,446	)
Gross profit		262,948			50,910
General, administrative and selling expenses		(201,847	)		(39,080	)
Equity pick-up		0			-
Operating profit before financial result		61,101			11,830
Financial income (expenses), net		(27,968	)		(5,415	)
Profit before tax		33,133			6,415
Current income tax and social contribution		(26,375	)		(5,106	)
Deferred income tax and social contribution		10,798			2,091
Net income for the year	$	17,556		$	3,400
Attributable to:
Equity holders of the parent		16,785			3,250
Non-controlling interest		771			150
Earnings per share attributed to Sinqia’s shareholders
Basic earnings per share	$	0.198		$	0.038
Diluted earnings per share	$	0.196		$	0.038

Reclassifications

Certain reclassification adjustments have been made to conform Sinqia’s financial statements presentation to that of Evertec’s financial statement as indicated below. The reclassification adjustments to conform Sinqia’s historical financial statement presentation to Evertec’s financial statement presentation are shown below and have no impact on net assets nor net income:

(in 000’s)	Sinqia, S.A. Historical Translated As of September 30, 2023 (unaudited) (USD)			Sinqia, S.A. Reclassification Adjustments (USD)			(Notes)	Sinqia, S.A. Historical Reclassed As of September 30, 2023 (unaudited) (USD)
Assets
Current Assets:
Cash and cash equivalents	$	29,333		$	14,652		(a)	$	43,985
Short-term investments		16,821			(16,821	)	(a)		-
Accounts receivable, net		-			11,290		(b)		11,290
Trade receivables		11,290			(11,290	)	(b)		-
Prepaid expenses and other assets		-			11,060		(a) (c) (d) (e) (f)		11,060
Recoverable taxes and contributions		1,814			(1,814	)	(e)		-
Prepaid expenses		670			(670	)	(c)		-
Other receivables		1,166			(1,166	)	(d)		-
Total current assets	$	61,094		$	5,241			$	66,335
Property and equipment, net		-			8,451		(i)		8,451
Property and equipment		8,451			(8,451	)	(i)		-
Goodwill		-			128,492		(j)		128,492
Other intangible assets, net		-			86,523		(j)		86,523
Intangible assets		215,015			(215,015	)	(j)		-
Deferred tax asset		-			23,515		(h)		23,515
Deferred income tax and social contribution		17,624			(17,624	)	(h)		-
Derivative asset		-			3,839		(f)		3,839
Other investments		-			8,868		(f)		8,868
Financial assets		17,948			(17,948	)	(f)		-
Other long-term assets		-			762		(g)		762
Recoverable taxes and contributions		738			(738	)	(g)		-
Escrow deposits		24			(24	)	(g)		-
Total assets	$	320,894		$	5,891			$	326,785

Liabilities and stockholders’ equity
Current Liabilities:
Accrued liabilities		-			45,934		(o) (r) (w)		45,934
Payroll and related taxes		11,426			(11,426	)	(o)		-
Payables for investment acquisition		9,577			(9,577	)	(r)		-
Provision for legal claims		24,931			(24,931	)	(w)		-
Accounts payable		-			1,874		(m) (p) (s)		1,874
Suppliers and service providers		1,674			(1,674	)	(m)		-
Profit for distribution		108			(108	)	(p)		-
Other payables		92			(92	)	(s)		-
Contract liability		-			1,877		(n)		1,877
Advances from customers		1,877			(1,877	)	(n)		-
Income tax payable		-			1,683		(q)		1,683
Taxes payable		1,683			(1,683	)	(q)		-
Current portion of long-term debt		-			10,415		(k)		10,415
Debentures		10,415			(10,415	)	(k)		-
Current portion of operating lease liability		-			5,754		(l)		5,754
Leases		5,754			(5,754	)	(l)		-
Total current liabilities	$	67,537		$	-			$	67,537
Long-term debt		-			59,407		(t)		59,407
Debentures		59,407			(59,407	)	(t)		-
Deferred tax liability		-			5,891		(h)		5,891
Operating lease liability – long term		-			8,869		(u)		8,869
Leases		8,869			(8,869	)	(u)		-
Put option on non-controlling interest		34,334			-				34,334
Other long-term liabilities		-			15,400		(v) (x)		15,400
Taxes payable		47			(47	)	(v)		-
Payables for investment acquisition		15,353			(15,353	)	(x)		-
Total liabilities	$	185,547		$	5,891			$	191,438

Commitments and contingencies

Stockholders’ Equity
Common stock		-			154,619		(y)		154,619
Capital		161,610			(161,610	)	(y)		-
Treasury shares		(6,991	)		6,991		(y)		-
Additional paid-in capital		-			6,432		(z)		6,432
Shares issuance costs		(9,715	)		9,715		(z)		-
Capital reserve		4,421			(4,421	)	(z)		-
Earnings reserves		11,726			(11,726	)	(z)		-
Transactions with non-controlling shareholders		(27,246	)		-				(27,246	)
Accumulated earnings		-			(4,502	)	(aa)		(4,502	)
Loss for the period		(4,502	)		4,502		(aa)		-
Total Evertec, Inc. stockholders’ equity	$	129,303		$	-			$	129,303
Non-controlling interest		6,044			-				6,044
Total equity	$	135,347		$	-			$	135,347
Total liabilities and equity	$	320,894		$	5,891			$	326,785

Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2023

(a)

Reclassification of Short-term investments to Cash and cash equivalents and Prepaid expenses and other assets.

(b)

Reclassification of Trade receivables to Accounts receivables, net.

(c)

Reclassification of Prepaid expenses to Prepaid expenses and other assets.

(d)

Reclassification of Other receivables to Prepaid expenses and other assets.

(e)

Reclassification of Recoverable taxes and contributions (current) to Prepaid expenses and other assets.

(f)

Reclassification of Financial assets to Prepaid expenses and other assets, Other investments and to Derivative asset.

(g)

Reclassification of Escrow deposits and Recoverable taxes and contributions (noncurrent) to Other long-term assets.

(h)

Reclassification of Deferred income tax and social contribution to Deferred tax asset and Deferred tax liability.

(i)

Reclassification of Property and equipment to Property and equipment, net.

(j)

Reclassification of Intangible assets to Other intangible assets, net and Goodwill.

(k)

Reclassification of Debentures (current) to Current portion of long-term debt.

(l)

Reclassification of Leases (current) to Current portion of operating lease liability.

(m)

Reclassification of Suppliers and service providers to Accounts payable.

(n)

Reclassification of Advances from customers to Contract liability.

(o)

Reclassification of Payroll and related taxes to Accrued liabilities.

(p)

Reclassification of Profit for distribution to Accounts payable.

(q)

Reclassification of Taxes payable (current) to Income tax payable.

(r)

Reclassification of Payables for investment acquisition (current) to Accrued liabilities.

(s)

Reclassification of Other payables to Accounts payable.

(t)

Reclassification of Debentures (noncurrent) to Long-term debt.

(u)

Reclassification of Leases (noncurrent) to Operating lease liability – long term.

(v)

Reclassification of Taxes payable (noncurrent) to Other long-term liabilities.

(w)

Reclassification of Provision for legal claims to Accrued liabilities.

(x)

Reclassification of Payables for investment acquisition (noncurrent) to Other long-term liabilities.

(y)

Reclassification of Capital and Treasury shares to Common stock

(z)

Reclassification of Shares issue costs, Capital reserve and Earnings reserves to Additional paid-in capital.

(aa)

Reclassification of Loss for the period to Accumulated earnings.

Unaudited Pro Forma Condensed Combined Statement of Income for the nine months ended September 30, 2023

(in 000’s)	Sinqia, S.A. Historical Translated (USD)			Sinqia, S.A. Reclassification Adjustments (USD)			(Notes)	Sinqia, S.A. Historical Reclassed (USD)
Revenues	$	-		$	100,559		(a)	$	100,559
Net revenue		100,559			(100,559	)	(a)		-
Operating costs and expenses:
Cost of revenues, exclusive of depreciation and amortization		-			(56,737	)	(b)		(56,737	)
Cost of services		(58,629	)		58,629		(b)		-
Selling, general and administrative expenses		-			(22,341	)	(c)		(22,341	)
Depreciation and amortization		-			(14,822	)	(b) (c)		(14,822	)
General, administrative and selling expenses		(35,271	)		35,271		(c)		-
Total operating costs and expenses		(93,900	)		-				(93,900	)
Income from operations		6,659			-				6,659
Non-operating income (expenses):
Interest expense		-			(8,190	)	(d)		(8,190	)
Other income (expense), net		-			(1,535	)	(d)		(1,535	)
Finance income (costs), net		(9,725	)		9,725		(d)		-
Total non-operating income (expenses)		(9,725	)		-				(9,725	)
Income (loss) before income taxes	$	(3,066	)	$	-			$	(3,066	)
Income tax (benefit) expense		-			(350	)	(e)		(350	)
Current income tax and social contribution		(2,392	)		2,392		(e)		-
Deferred income tax and social contribution		2,042			(2,042	)	(e)		-
Net income (loss)		(3,416	)		-				(3,416	)
Less: Net (loss) income attributable to non-controlling interest		1,106			-				1,106
Net income (loss) attributable to common stockholders	$	(4,522	)	$	-			$	(4,522	)

(a)

Reclassification of Net operating income to Revenues.

(b)

Reclassification of Cost of services to Cost of revenues, exclusive of depreciation and amortization and to Depreciation and amortization.

(c)

Reclassification of General, administrative and selling expenses to Selling, general and administrative expenses and to Depreciation and amortization.

(d)

Reclassification of Financial income (costs), net to Interest expense and Other income, net.

(e)

Reclassification of Current income tax and social contribution and Deferred income tax and social contribution to Income tax expense.

Unaudited Pro Forma Condensed Combined Statement of Income for the year ended December 31, 2022

(in 000’s)	Sinqia, S.A. Historical Translated (USD)			Sinqia, S.A. Reclassification Adjustments (USD)			(Notes)	Sinqia, S.A. Historical Reclassed (USD)
Revenues	$	-		$	119,356		(a)	$	119,356
Net operating income		119,356			(119,356	)	(a)		-
Operating costs and expenses:
Cost of revenues, exclusive of depreciation and amortization		-			(66,126	)	(b)		(66,126	)
Cost of services provided		(68,446	)		68,446		(b)		-
Selling, general and administrative expenses		-			(22,982	)	(c)		(22,982	)
Depreciation and amortization		-			(18,418	)	(b) (c)		(18,418	)
General, administrative and selling expenses		(39,080	)		39,080		(c)		-
Total operating costs and expenses		(107,526	)		-				(107,526	)
Income from operations		11,830			-				11,830
Non-operating income (expenses):
Interest income		-			245		(d)		245
Interest expense		-			(8,406	)	(d)		(8,406	)
Other income		-			2,746		(d)		2,746
Finance income (expenses), net		(5,415	)		5,415		(d)		-
Total non-operating income (expenses)		(5,415	)		-				(5,415	)
Income before income taxes	$	6,415		$	-			$	6,415
Income tax expense		-			(3,015	)	(e)		(3,015	)
Current income tax and social contribution		(5,106	)		5,106		(e)		-
Deferred income tax and social contribution		2,091			(2,091	)	(e)		-
Net income		3,400			-				3,400
Less: Net (loss) income attributable to non-controlling interest		150			-				150
Net income attributable to common stockholders	$	3,250		$	-			$	3,250

(a)

Reclassification of Net operating income to Revenues.

(b)

Reclassification of Cost of services provided to Cost of revenues, exclusive of depreciation and amortization and to Depreciation and amortization.

(c)

Reclassification of General, administrative and selling expenses to Selling, general and administrative expenses and to Depreciation and amortization.

(d)

Reclassification of Financial income (expenses), net to Interest income, Interest expense and Other income.

(e)

Reclassification of Current income tax and social contribution and Deferred income tax and social contribution to Income tax expense.

U.S. GAAP Conversion

Evertec’s management performed a preliminary analysis of Sinqia’s historical financial information to identify differences between IFRS to U.S. GAAP. As a result of that preliminary review, Evertec’s management identified differences in the classification of leasing contracts and non-controlling interests.

As a result of the difference in classification of leasing contracts, an adjustment was recorded to the unaudited pro forma condensed combined balance sheet. For assets, there was a decrease of $8.8 million in Other intangible assets, net, and a decrease of $4.7 million in Property and equipment, net. Conversely, Operating lease right-of-use asset increased by $4.2 million. For liabilities, there was a total decrease of $10.0 million in the combined amount of the Current portion of operating lease liability and Operating lease liability – long term. In addition, there was also an increase of $0.6 million in Accumulated earnings. Further, historical amortization expense related to the intangible asset was removed, and the creation of operating lease expense was recorded within Selling, general, and administrative expenses.

As a result of the difference in the classification of non-controlling interests, an adjustment was recorded to the unaudited pro forma combined balance sheet. Previously, Sinqia historically classified its non-controlling interest call option as a derivative asset, Put option on non-controlling interest as a financial liability and Non-controlling interests as equity. Under IFRS puttable instruments were classified as financial liabilities because the issuer does not have the unconditional right to avoid delivering cash or other financial right; however, these items are classified as mezzanine equity in accordance with ASC 480.

When Evertec’s management completes a final review of Sinqia’s historical financial information, additional differences may be identified that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial information.

(a)

Reflects the IFRS to U.S. GAAP adjustment to convert Sinqia’s finance lease under IFRS 16 to an operating lease under ASC 842.

The following table reflects the impact of these adjustments included in the U.S. GAAP Conversion and Accounting Policy Adjustments column in the accompanying unaudited pro forma condensed combined balance sheet as of September 30, 2023, are as follows:

(in 000’s)	Amount
Pro forma IFRS to U.S. GAAP adjustments:
Elimination of Sinqia’s historical finance lease under IFRS 16 within Property and equipment	$	(4,721	)
Reclassification of finance leases to Operating lease right-of-use asset	$	4,171
Elimination of finance leases to Current portion of operating lease liability	$	4,156
Elimination of finance leases to Operating lease liability – long term	$	5,872

The following table reflects the impact of these adjustments included in the U.S. GAAP Conversion and Accounting Policy Adjustments column in the accompanying unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2023, and fiscal year ended December 31, 2022, are as follows:

(in 000’s)	For the Nine Months Ended September 30, 2023			For the Year Ended December 31, 2022
Pro forma IFRS to U.S. GAAP adjustments:
Record reduction in interest expense	$	(751	)	$	(778	)
Record reduction in amortization expense	$	(2,966	)	$	(3,137	)
Record lease remeasurement within Other income, net.	$	104		$	-
Record an increase in selling, general and administrative expenses related to the IFRS to US GAAP conversion on leases	$	3,493		$	3,494

(b)

Reflects the IFRS to U.S. GAAP adjustment to convert Sinqia’s Derivative asset of non-controlling interest call option, Put option on non-controlling interest and Non-controlling interests to mezzanine equity under ASC 480.

(in 000’s)	Amount
Pro forma IFRS to U.S. GAAP adjustments:
Elimination of Sinqia’s historical Derivative asset of non-controlling interest call option within noncurrent assets	$	(3,839	)
Elimination of Sinqia’s historical Put option on non-controlling interest within noncurrent liabilities	$	(34,334	)
Elimination of Sinqia’s historical Non-controlling interest within equity	$	(6,044	)
Net reclassification to Redeemable non-controlling interests within mezzanine equity	$	36,539

The following table reflects the impact of these adjustments included in the U.S. GAAP Conversion and Accounting Policy Adjustments column in the accompanying unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2023, and fiscal year ended December 31, 2022, are as follows:

(in 000’s)	For the Nine Months Ended September 30, 2023			For the Year Ended December 31, 2022
Pro forma IFRS to U.S. GAAP adjustments:
Remove historical profit and loss on the call and put options.on non-controlling interests in Other income, net	$	3,675		$	(58	)
Elimination of Net (loss) income attributable to non-controlling interest	$	(1,106	)	$	(150	)
Reclassification to Net (loss) income attributable to redeemable non-controlling interests	$	1,106		$	150

Accounting Policy Adjustments

(c) During the preparation of the unaudited pro forma condensed combined financial information, Evertec’s management performed an initial review of Sinqia’s accounting policies to determine if differences in accounting policies require reclassifications or adjustment. As a result of the preliminary review, the Company determined that $1.6 million of intangible assets should be reclassified to prepaid expenses, with an associated reclassification of $2.2 million for the nine months ended September 30, 2023, and $2.2 million for the year ended December 31, 2022, from Depreciation and amortization to Cost of revenues, exclusive of depreciation and amortization shown below.

When Evertec’s management completes a final review of Sinqia’s historical financial information, additional differences may be identified that, when conformed could have a material impact on the unaudited pro forma condensed combined financial information,

Note 3 – Preliminary Purchase Price Allocation

Aggregate Consideration Transferred

The following table summarizes the aggregate consideration transferred for the acquisition with reference to Evertec’s share price of $32.38 on November 1, 2023:

(in 000’s)	Amount
Cash paid for outstanding Sinqia Common stock (i)	$	410,302
Shares of Evertec Common stock issued to Sinqia stockholders (ii)		37,897
Fair value of previously held interest in Sinqia (iii)		25,992
Aggregate consideration transferred	$	474,191

The aggregate consideration transferred is based on 81.1 million shares of outstanding Common stock of Sinqia being exchanged and the $5.06 per share cash portion of the consideration transferred.

ii)

Value of shares of Evertec Common stock issued is based on 81.1 million shares of outstanding Common stock and 1.2 million shares of Evertec Common stock being issued at a closing share price of $32.38 on November 1, 2023.

iii)

Amount represents the fair value of Sinqia’s shares at acquisition date of $5.45 per share multiplied by the 4.8 million shares previously held by the Company.

Aggregate Consideration Transferred Allocation

The assumed accounting for the Transaction, including the aggregate consideration transferred, is based on provisional amounts, and the associated acquisition accounting is not final. At the time of this filing, the Company has not finalized the detailed valuation related to the fair values of identifiable assets acquired and liabilities assumed. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities was based upon the preliminary estimate of fair values. For the preliminary estimate of fair values of assets acquired and liabilities assumed of Sinqia, Evertec used publicly available benchmarking information as well as a variety of other assumptions, including market participant assumptions. Evertec is expected to use widely accepted income-based, market-based, and cost-based valuation approaches upon finalization of purchase accounting for the Transaction. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information. The unaudited pro forma adjustments are based upon available information and certain assumptions that Evertec believes are reasonable under the circumstances. The purchase price allocation set forth herein is preliminary and will be revised as additional information becomes available during the measurement period, which could be up to twelve months from the Closing Date. Any such revisions or changes may be material.

The total estimated purchase consideration as calculated in the table above is allocated to the tangible and intangible assets acquired and liabilities assumed of Sinqia based on their estimated fair values as if the Transaction had been completed on September 30, 2023, which is the assumed acquisition date for purposes of the unaudited pro forma condensed combined balance sheet. Goodwill represents the excess of acquisition consideration over the fair value of the underlying net assets acquired. In accordance with ASC 350, Goodwill and Other, goodwill is not amortized, but instead is reviewed for impairment at least annually, absent any indicators of impairment. Goodwill and Intangibles Assets recorded in the Transaction were recognized as deductible for tax purposes in this pro forma financial information, while all relevant requirements of Brazilian tax authorities have not been satisfied at the time of this filing, including certain structuring reorganizations such as a merger of companies, these reorganization steps are anticipated to be completed subsequent to the closing.

The following table summarizes the aggregate consideration transferred allocation, as if the Transaction had been completed on September 30, 2023:

Aggregate Consideration Transferred Allocation (in 000’s)	Amount
Aggregate consideration transferred	$	474,191
Assets acquired:
Current Assets:
Cash and cash equivalents	$	43,985
Accounts receivable, net		11,290
Prepaid expenses and other assets		14,944
Total current assets	$	70,219
Other investments		8,868
Property and equipment, net		3,730
Operating lease right-of-use asset		4,171
Other intangible assets, net (i)		288,245
Deferred tax asset (ii)		23,515
Other long-term assets		762
Total assets acquired	$	399,510
Liabilities assumed:
Current liabilities:
Accrued liabilities		(45,934	)
Accounts payable		(1,874	)
Contract liability		(7,432	)
Income tax payable		(1,683	)
Current portion of long-term debt		(10,415	)
Current portion of operating lease liability		(1,598	)
Total current liabilities	$	(68,936	)
Long-term debt		(59,407	)
Operating lease liability - long term		(2,997	)
Other long-term liabilities		(14,945	)
Total liabilities assumed	$	(146,285	)
Redeemable non-controlling interests		(39,536	)
Net assets acquired	$	213,689
Goodwill	$	260,502

Preliminary identifiable Intangible assets in the unaudited pro forma condensed combined financial information consists of the following:

(in 000's)	Preliminary Fair Value		Estimated Useful Life (years)
Preliminary fair value of Intangible assets acquired:
Trademarks	$	47,925		10
Customer relationships		156,650		18.167
Software		83,579		10
Non-compete		91		5
Intangible assets acquired	$	288,245

The fair value of customer relationships was estimated using the multi-period excess earnings method. The excess earnings methodology is an income approach methodology that estimates the projected cash flows of the business attributable to the customer relationships considering the effect of the company’s attrition rates, net of charges for the use of other identifiable assets of the business including working capital, fixed assets and other intangible assets. The identification and valuation of intangible assets is preliminary and is subject to measurement period adjustments.

The fair values of intellectual property intangible assets (i.e. trademarks and software) were valued using the relief-from-royalty method, which presumes the owner of the asset avoids hypothetical royalty payments that would need to be made for the use of the asset if the asset was not owned.

The fair value of the non-compete agreement refers to the preexisting intangible asset related to previous transactions of Sinqia. The book value was deemed to approximate fair value. Additionally, Evertec has entered in a non-compete agreement with key executives of Sinqia, nevertheless this component was not considered within the context of the business combination, resulting in a liability recognized in Evertec’s balance sheet.

ii)

Deferred tax assets were derived based on incremental differences in the book and tax basis created from the preliminary purchase allocation.

Note 4 – Transaction Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet

Adjustments included in the transaction accounting adjustments column in the accompanying unaudited pro forma condensed combined balance sheet as of September 30, 2023, are as follows:

(a) Reflects adjustment to Cash and cash equivalents.

(in 000's)	Amount
Pro forma transaction accounting adjustments:
Cash paid to settle foreign currency hedge (i)	$	(24,065	)
Settlement of Sinqia debt (ii)		(70,967	)
Cash paid for business combination (iii)		(410,302	)
Cash from debt financing, net of debt issuance costs (iv)		641,146
Net pro forma transaction accounting adjustment to Cash and cash equivalents	$	135,812

i) The cash paid to settle the foreign currency swap. On July 24, 2023, the Company entered into a foreign currency swap designed to fix the purchase price associated with the Transaction. The Company recorded the hedge in Foreign currency swap liability on its Balance Sheet as of September 30, 2023. Concurrently with the Transaction, the hedge was settled by the Company, resulting in cash payment. Please see Adjustment (k) in the Unaudited Pro Forma Condensed Combined Statements of Income below for further information.

ii) The cash paid by Evertec to settle Sinqia’s outstanding debt of $69.8 million.

iii) The cash portion of consideration transferred.

iv) The fees paid by Evertec related to the financing arrangements, including additional borrowing of Term A Loan and new financing of Term B Loan.

(b) Reflects the preliminary acquisition accounting adjustment for intangibles based on the acquisition method of accounting. Refer to Note 3 above for additional information on the acquired Intangible assets expected to be recognized.

(in 000’s)	Amount
Pro forma transaction accounting adjustments:
Elimination of Sinqia’s historical net book value of Intangible assets	$	(76,040	)
Preliminary fair value of acquired intangibles		288,245
Net pro forma transaction accounting adjustment to Intangible assets, net	$	212,205

(c) Preliminary goodwill adjustment of $132.0 million which represents the elimination of historical goodwill and the recording of the excess of the estimated aggregate consideration, non-controlling interest, and previously held equity interest transferred over the preliminary fair value of the underlying assets acquired and liabilities assumed.

(in 000's)	Amount
Pro forma transaction accounting adjustments:
Elimination of Sinqia’s historical Goodwill	$	(128,492	)
Goodwill per purchase price allocation (Note 3)		260,502
Net pro forma transaction accounting adjustment to Goodwill	$	132,010

(d) Reflects an adjustment of $26.0 million to Equity securities, at fair value for the removal of Evertec’s historical investment in Sinqia.

(e) Reflects the settlement of Sinqia’s existing indebtedness, the Term A Loan additional borrowing and Term B Loan issuance, net of unamortized debt issuance costs and original issue discount, to fund a portion of the Transaction. The adjustment to Current and Long-term debt is comprised of the following items:

(in 000's)	Current portion of long-term debt			Long-term debt			Total
Pro forma transaction accounting adjustments:
Settlement of Sinqia’s Long-term debt	$	(10,416	)	$	(59,407	)	$	(69,823	)
Term A Loan		-			60,000			60,000
Debt issuance costs related to Term A Loan		-			(240	)		(240	)
Term B Loan		-			600,000			600,000
Debt issuance costs related to Term B Loan		-			(18,614	)		(18,614	)
Net pro forma transaction accounting adjustments to Current portion of long-term debt and Long-term debt	$	(10,416	)	$	581,739		$	571,323

(f) Reflects the adjustments to Stockholders’ equity.

(in 000's)	Common stock			Additional paid-in capital			Transactions with non- controlling shareholders		Accumulated earnings
Pro forma transaction accounting adjustments:
Elimination of Sinqia’s historical equity	$	(154,619	)	$	(6,432	)	$	27,246	$	3,871
Shares of Evertec Common stock issued to Sinqia stockholders		37,897			-			-		-
Settlement of Sinqia debt (i)		-			-			-		(1,407	)
Estimated transaction costs (ii)		-			-			-		(12,906	)
Foreign currency hedge (iii)		-			-			-		5,160
Reduction in Income tax payable and establishment of Deferred tax asset		-			-			-		1,790
Net pro forma transaction accounting adjustments to equity	$	(116,722	)	$	(6,432	)	$	27,246	$	(3,492	)

Reflects the payment of the early settlement fee and accelerated amortization of debt issuance costs.

ii)

These costs consist of financial advisory, legal advisory, accounting, and consulting costs.

iii)

Reflects the adjustment recorded upon settlement of the foreign currency economic hedge entered into by the Company to fix the purchase price associated with the Transaction.

(g) Reflects the preliminary purchase accounting adjustment for Investment acquisition liabilities, as estimated using a Monte Carlo simulation. A Monte Carlo simulation involves assigning multiple values to the base case projected cash flows by applying a volatility factor to the cash flows based on market inputs and company specific transactions to achieve multiple results and then average the results obtain an estimate. Multiple scenarios were modeled under the simulation to estimate the payment(s) in connection with the contractual formula and discounted at a rate of 15.9% to estimate the fair value of the obligation.

(in 000's)	Amount
Pro forma transaction accounting adjustments:
Elimination of Sinqia’s historical net book value of Payables for investment acquisition, noncurrent	$	(15,353	)
Preliminary fair value of acquired Payables for investment acquisition, noncurrent		14,898
Net pro forma transaction accounting adjustments to Other long-term liabilities	$	(455	)

(h) Reflects the preliminary acquisition accounting adjustment for Redeemable non-controlling interests.

The fair value of the Redeemable non-controlling interests was estimated using a combination of Monte Carlo simulation and market approach (multiple method). A Monte Carlo simulation involves assigning multiple values to the base case projected cash flows by applying a volatility factor to the cash flows based on market inputs and company specific transactions to achieve multiple results and then average the results obtain an estimate. Multiple scenarios were modeled under the simulation to estimate the payment(s) in connection with the contractual formula and discounted at a range of rates between 15.8 – 16.3% based on a sample of peer companies to estimate the fair value of the obligation. The market approach involves considering the updated business plan and discount rates of the corresponding companies. The discount rates used under the market approach ranged from 0 % - 29.9 %.

(in 000's)	Amount
Pro forma transaction accounting adjustments:
Elimination of Sinqia’s historical net book value of Redeemable non-controlling interests	$	(36,539	)
Preliminary fair value of acquired Redeemable non-controlling interests		39,536
Net pro forma transaction accounting adjustments to Redeemable non-controlling interests	$	2,997

(i) Represents an adjustment of $29.2 million to Foreign currency swap liability to settle the previously entered into foreign currency economic hedge that was entered into by the Company to fix the purchase price associated with the Transaction.

(j) Represents an adjustment of $5.6 million to Contract liability to conform Sinqia’s acquired revenue contracts as if the Company had entered into the original contract at the same date and on the same terms as Sinqia in accordance with ASU 2021-08 as well as an adjustment of $2.2 million to Prepaid expenses and other assets to record the associated tax impact.

(k) Represents the reversal of the previously recognized $5.9 million Deferred tax liability and an adjustment to Deferred tax asset of $0.8 million associated with the incremental differences in the book and tax basis created from the preliminary purchase allocation, primarily resulting from the increase in goodwill. These adjustments were based on the applicable statutory tax rate with the respective estimated purchase price allocation. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-merger activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the pro forma financial information are estimated, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the Transaction. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities.

Note 5 – Transaction Adjustments to the Unaudited Condensed Combined Statements of Income

Adjustments included in the transaction accounting adjustments column in the accompanying unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2023, and fiscal year ended December 31, 2022 are as follows:

(a) Reflects the adjustments to Depreciation and amortization including the amortization of the estimated fair value of Intangibles.

(in 000's)	For the Nine Months Ended September 30, 2023			For the Year Ended December 31, 2022
Pro forma transaction accounting adjustments:
Removal of historical Sinqia amortization of Intangible assets	$	(10,113	)	$	(12,231	)
Amortization of Intangible assets		16,330			21,773
Net pro forma transaction accounting adjustment to Depreciation and amortization	$	6,217		$	9,542

(b) Reflects the adjustments to Selling, general and administrative expenses (“SG&A”) including stock-based compensation expense for new awards granted to Sinqia employees for retention purposes and the estimated transaction costs expensed.

(in 000's)	For the Nine Months Ended September 30, 2023		For the Year Ended December 31, 2022
Pro forma transaction accounting adjustments:
Record stock-based compensation expense for new awards	$	1,059	$	1,581
Expected transaction expenses (i)		-		12,906
Net pro forma transaction accounting adjustment to SG&A	$	1,059	$	14,487

Represents additional transaction costs to be incurred by Evertec subsequent to September 30, 2023. These costs will not affect Evertec’s condensed combined statements of income beyond twelve months after the acquisition date.

(c) Reflects the transaction accounting adjustments to Interest expense related to the debt financing and amortization of debt issuance costs:

(in 000's)	For the Nine Months Ended September 30, 2023			For the Year Ended December 31, 2022
Pro forma transaction accounting adjustments:
Remove historical Sinqia Interest expense on long-term debt (i)	$	(6,305	)	$	(4,968	)
Incremental expenses from an increase in Term A Loan leverage ratio (ii)		3,107			1,512
Term A Loan (ii), (iii)		2,949			4,140
Term B Loan (ii), (iii)		39,854			55,641
Net pro forma transaction accounting adjustments to Interest expense	$	39,605		$	56,325

This pro forma transaction accounting adjustment reflects the removal of accrued historical Interest expense associated with Sinqia’s existing indebtedness.

ii)

The introduction of the new financing increased the overall leverage ratio for the Company, which therefore requires the Company to incur a higher interest cost on their existing debt. Consequently, interest expense rose by 0.75%, resulting in a $1.5 million increase for the year ending December 31, 2022. Furthermore, it increased by 1.00%, leading to a $3.1 million increase for the nine months ending September 30, 2023.

iii)

The new Interest expense on transaction adjustments included in the unaudited pro forma condensed combined statements of income reflect the Interest expense and amortization of debt issuance costs associated with new debt of Term B Loan and additional borrowing of Term A Loan. Interest was recognized for Term A Loan and Term B Loan using the effective interest method with the rate equal to 6.94% for Term A Loan, and 9.16% for Term B Loan. The costs incurred to secure the debt are amortized on a straight-line basis.

iv)

A sensitivity analysis on Interest expense for the year ended December 31, 2022, and the nine months ended September 30, 2023 has been performed to assess the effect of a 0.125% change of the interest on the debt financing. The interest rate on the additional Term A Loan is consistent with the existing credit agreement, while the interest rate on the new Term B Loan is based on SOFR plus 3.5% for SOFR loans and 2.5% for base rate loans. The following table shows the change in the Interest expense for the debt financing transaction described above:

(in 000's)	For the Nine Months Ended September 30, 2023		For the Year Ended December 31, 2022
Interest expense assuming:
Increase of 0.125%	$	44,179	$	61,621
Decrease of 0.125%	$	42,797	$	59,714

(d) To remove the historical unrealized gain previously recognized for Evertec’s historical investment in Sinqia.

(e) To record the gain on the remeasurement of the previously held equity investment.

(f) Reflects an adjustment recorded upon settlement of the foreign currency economic hedge entered into by the Company to fix the purchase price associated with the Transaction.

(g) Represents an adjustment to conform Sinqia’s acquired revenue contracts as if the Company had entered into the original contract at the same date and on the same terms as Sinqia in accordance with ASU 2021-08.

(h) The pro forma basic and diluted weighted average shares outstanding are a combination of historic weighted average shares of Evertec Common stock and issuances of shares in connection with the Transaction. The pro forma basic and diluted earnings per share are as follows:

(in 000's)	For the Nine Months Ended September 30, 2023		For the Year Ended December 31, 2022
Numerator:
Pro forma combined Net income (loss) attributable to common stockholders for earnings per share	$	33,284	$	190,656

Denominator – basic:
Historical Evertec weighted average shares outstanding		64,886,551		68,701,434
Issuance of shares to Sinqia common stockholders		1,164,592		1,164,592
Pro forma weighted average shares outstanding - basic		66,051,143		69,866,026

Pro forma net income per share - basic	$	0.50	$	2.73

Denominator – diluted weighted average shares:
Historical Evertec weighted average shares outstanding		65,705,596		69,312,717
Issuance of shares to Sinqia common stockholders		1,164,592		1,164,592
Pro Forma weighted average shares outstanding – diluted		66,870,188		70,477,309

Pro forma net income per share - diluted	$	0.50	$	2.71

(i) To record the income tax impact of the pro forma adjustments utilizing the Brazil and Puerto Rico statutory income tax rates in effect of 34% and 37.5%, respectively, for the year ended December 31, 2022, and for the nine months ended September 30, 2023. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-merger activities, including cash needs, the geographical mix of income, and changes in tax law. Given that the tax rates used for the pro forma financial information are estimated, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the Transaction. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities.

Puerto Rico		66-0783622
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

Cupey Center Building, Road 176, Kilometer 1.3,
San Juan, Puerto Rico		00926
(Address of principal executive offices)		(Zip Code)

Title of Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	EVTC	NYSE

	EVERTEC, Inc.
	(Registrant)

Date: January 12, 2024	By:	/s/ Joaquin A. Castrillo-Salgado
		Name: Joaquin A. Castrillo-Salgado

		Title: Chief Financial Officer

Number	Exhibit
99.1	Audited consolidated financial statements of Sinqia, S.A. as of and for the year ended December 31, 2022.
99.2	Unaudited consolidated condensed financial statements of Sinqia, S.A. as of and for the six-month period ended June 30, 2023.
99.3	Unaudited pro forma condensed combined financial information of Evertec, Inc as of and for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022
23.1	Consent of Deloitte Touche Tohmatsu Auditores Independentes Ltda., Independent Auditors
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).