6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2023

Commission File Number: 001-41175

Sangoma Technologies Corporation

(Exact name of Registrant as specified in its charter)

N/A

(Translation of registrant's name into English)

100 Renfrew Drive

Suite 100

Markham, Ontario, Canada L3R 9R6

(905) 474-1990

(Address and telephone number of registrant’s principal executive offices)

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

INCORPORATION BY REFERENCE

Exhibits 99.1 and 99.2 of this Form 6-K is incorporated by reference as an additional exhibit to the registrant's Registration Statements on Form F-10 (File No. 333-261071) and Form F-3 (File No. 333-270918).

DOCUMENTS INCLUDED AS PART OF THIS REPORT

Exhibit
99.1	Unaudited Condensed Consolidated InterimFinancial Statements of the Registrant for thethree and nine month periods ended March 31, 2023 and 2022
99.2	Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Registrant for thethree and nine month periodsendedMarch 31, 2023 and 2022
99.3	Press Release datedMay 11, 2023, titled “Sangoma AnnouncesThird QuarterFiscal2023Results”
99.4	Form 52-109F2 Certificate of Interim Filings by CEO (pursuant to Canadian regulations)
99.5	Form 52-109F2 Certificate of Interim Filings by CFO (pursuant to Canadian regulations)

SIGNATURES

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

	Sangoma Technologies Corporation
Date: May 11, 2023	By:	/s/ Larry Stock
		Name: Larry Stock
		Title: Chief Financial Officer

Document

SANGOMA TECHNOLOGIES CORPORATION

Condensed consolidated interim financial statements for the

three and nine month periods ended March 31, 2023 and 2022

(Unaudited in thousands of US dollars)

100 Renfrew Drive, Suite 100,

Markham, Ontario,

Canada L3R 9R6

Sangoma Technologies Corporation

March 31, 2023 and 2022

Table of contents

Condensed consolidated interim statements of financial position	3
Condensed consolidated interim statements of income (loss) and comprehensive income (loss)	4
Condensed consolidated interim statements of changes in shareholders’ equity	5
Condensed consolidated interim statements of cash flows	6
Notes to the condensed consolidated interim financial statements	7-28
Sangoma Technologies Corporation
---
Condensed consolidated interim statements of financial position
As at March 31, 2023, and June 30, 2022
(Unaudited in thousands of US dollars, except per share data)				March 31	June 30
---	---	---	---
	Note	2023	2022
		$	$
Assets
Current assets
Cash and cash equivalents	4	8,008	12,702
Trade and other receivables	4, 20	22,836	23,943
Inventories	6	18,653	17,426
Income tax receivable		1,165	—
Contract assets		1,576	1,225
Derivative assets	15	1,067	648
Other current assets		4,319	4,364
		57,624	60,308
Non-current assets
Property and equipment	7	9,540	10,274
Right-of-use assets	8	14,064	16,974
Intangible assets	9	165,642	191,369
Development costs	10	6,004	2,861
Deferred income tax assets		2,943	2,762
Goodwill	12	210,009	210,009
Contract assets		3,109	2,567
Derivative assets	15	677	700
Other non-current assets		653	709
		470,265	498,533
Liabilities
Current liabilities
Accounts payable and accrued liabilities	4	23,537	28,568
Provisions	13	246	200
Sales tax payable		5,193	5,895
Income tax payable		—	1,885
Consideration payable	14	9,418	8,986
Operating facility and loans	15	17,700	17,700
Contract liabilities	16	10,574	11,580
Lease obligations on right-of-use assets	8	2,912	3,592
		69,580	78,406
Long term liabilities
Consideration payable	14	—	3,782
Operating facility and loans	15	78,950	86,925
Contract liabilities	16	3,772	3,487
Non-current lease obligations on right-of-use assets	8	12,291	14,397
Deferred income tax liabilities		15,542	16,657
Other non-current liabilities		951	1,071
		181,086	204,725
Shareholders’ equity
Share capital		241,577	203,032
Shares to be issued		138,347	179,132
Contributed surplus		17,770	15,055
Accumulated other comprehensive income		1,131	839
Accumulated deficit		(109,646)	(104,250)
		289,179	293,808
		470,265	498,533		Subsequent events (Note 21)
---	---	---
Approved by the Board
(Signed)	Al Guarino	Director
(Signed)	Allan Brett	Director

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

Sangoma Technologies Corporation
Condensed consolidated interim statements of loss and comprehensive loss
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)
		Three month periods ended		Nine month periods ended
---	---	---	---	---	---
		March 31		March 31
	Note	2023	2022	2023	2022
			(Note 2)		(Note 2)
Revenue	19	62,764	53,366	188,850	158,051
Cost of sales		18,340	16,165	58,300	45,624
Gross profit		44,424	37,201	130,550	112,427
Expenses
Sales and marketing		14,990	12,122	46,251	37,424
Research and development		9,497	8,238	28,153	24,357
General and administration		18,947	19,751	57,758	55,166
Foreign currency exchange (gain) loss		(66)	26	(130)	111
Interest expense (net)	4,8,14,15	1,666	474	4,876	1,727
Business acquisition costs	20	—	3,121	—	3,121
Restructuring and business integration costs		2,188	—	2,595	836
Exchange listing expense		—	—	—	1,051
Gain on change in fair value of consideration payable	14	(1,854)	(1,312)	(3,785)	(1,208)
Loss before income tax		(944)	(5,219)	(5,168)	(10,158)
Provision for income taxes
Current	11	730	983	1,515	1,791
Deferred	11	(989)	553	(1,287)	(416)
Net loss		(685)	(6,755)	(5,396)	(11,533)
Other comprehensive (loss) income
Items to be reclassified to net (loss) income
Change in fair value of interest rate swaps, net of tax	15	(357)	899	292	1,050
Comprehensive loss		(1,042)	(5,856)	(5,104)	(10,483)
Loss per share
Basic	17(iii)
Diluted	17(iii)
Weighted average number of shares outstanding
Basic	17(iii)	31,114,541	31,806,844	31,866,365	31,749,708
Diluted	17(iii)	31,114,541	31,806,844	31,866,365	31,749,708

All values are in US Dollars.

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

Sangoma Technologies Corporation
Condensed consolidated interim statements of changes in shareholders' equity
For the nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)			Note	Number of common shares	Share capital	Shares to be issued	Contributed surplus	Accumulated other comprehensive (loss) earnings	Retained earnings (accumulated deficit)	Total shareholders' equity
---	---	---	---	---	---	---	---	---
			$	$	$	$	$	$
Balance, July 1, 2021		19,021,642	172,462	192,102	5,393	(333)	6,530	376,154
Net income (loss)		—	—	—	—	—	(11,533)	(11,533)
Change in fair value of interest rate swaps, net of tax	15	—	—	—	—	1,050	—	1,050
Common shares issued through business combination	17(i), 20	1,494,536	16,682	—	—	—	—	16,682
Deferred tax benefit on share issuance costs	11	—	138	—	—	—	—	138
Common shares issued for options exercised	17(i)	49,014	634	—	(214)	—	—	420
Rounding of fractional shares after share consideration		(28)	—	—	—	—	—	—
Share-based compensation expense	17(ii)	—	—	—	8,988	—	—	8,988
Balance, March 31, 2022		20,565,164	189,916	192,102	14,167	717	(5,003)	391,899
Balance, July 1, 2022		21,439,632	203,032	179,132	15,055	839	(104,250)	293,808
Net loss		—	—	—	—	—	(5,396)	(5,396)
Change in fair value of interest rate swaps, net of tax	15	—	—	—	—	292	—	292
Common shares issued as installment for shares to be issued	17(i)	2,695,601	40,785	(40,785)	—	—	—	—
Common shares issued for options exercised	17(i)	11,024	67	—	(23)	—	—	44
Common shares purchased and cancelled	17(i)	(108,622)	(605)	—	—	—	—	(605)
Common shares returned from escrow	4	(142,124)	(1,702)	—	—	—	—	(1,702)
Share-based compensation expense	17(ii)	—	—	—	2,738	—	—	2,738
Balance, March 31, 2023		23,895,511	241,577	138,347	17,770	1,131	(109,646)	289,179

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

Sangoma Technologies Corporation
Condensed consolidated interim statements of cash flows
For the nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)				Nine month periods ended
---	---	---	---
		March 31
	Note		2023	2022
Operating activities			$	$
Net loss			(5,396)	(11,533)
Adjustments for:
Depreciation of property and equipment	7		3,634	1,464
Depreciation of right-of-use assets	8		2,917	2,237
Amortization of intangible assets	9		25,727	22,936
Amortization of development costs	10		1,812	859
Income tax expense	11		228	1,375
Income tax paid			(3,984)	(2,211)
Share-based compensation expense	17(ii)		2,738	8,988
Interest on obligation on right-of-use assets	8		367	304
Unrealized foreign exchange loss (gain)			161	(269)
Accretion expense	14		435	—
Gain on lease modification	8		(36)	(105)
Loss disposal of property and equipment	7		307	196
Gain on change in fair value of consideration payable	14		(3,785)	(1,208)
Changes in working capital
Trade receivables			(946)	(1,676)
Inventories			(1,227)	(3,959)
Contract assets			(893)	(1,771)
Other assets			101	(751)
Sales tax payable			(702)	(652)
Accounts payable and accrued liabilities			(5,031)	(770)
Provisions			46	(164)
Other non current liabilities			(120)	—
Contract liabilities			(721)	(1,780)
Net cash provided by operating activities			15,632	11,510
Investing activities
Purchase of property and equipment	7		(3,207)	(1,123)
Development costs	10		(5,450)	(1,673)
Business combinations, net of cash and cash equivalents acquired	20		—	(46,708)
Net cash flows used in investing activities			(8,657)	(49,504)
Financing activities
Proceeds from operating facility and loan	15		5,300	45,000
Repayments of operating facility and loan	15		(13,275)	(10,914)
Repayment of right-of-use lease obligation	8		(3,133)	(2,369)
Common shares purchased and cancelled	17(i)		(605)	—
Issuance of common shares for stock options exercised	17(i)		44	420
Net cash flows provided by (used in) financing activities			(11,669)	32,137
Increase (decrease) in cash and cash equivalents			(4,694)	(5,857)
Cash and cash equivalents, beginning of the period			12,702	22,096
Cash and cash equivalents, end of the period			8,008	16,239

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

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

1.    General information

Founded in 1984, Sangoma Technologies Corporation (“Sangoma” or the “Company”) is publicly traded on the Toronto Stock Exchange (TSX: STC) and NASDAQ (NASDAQ: SANG). The Company’s shares were traded on the TSX Venture Exchange under the symbol STC until November 1, 2021, at which point the Company’s shares commenced trading on the TSX. In conjunction with listing on the TSX, the Company’s shares were delisted from the TSX Venture Exchange. The Company’s shares commenced trading on NASDAQ on December 16, 2021. The Company was incorporated in Canada, its legal name is Sangoma Technologies Corporation and its primary operating subsidiaries for fiscal 2023 are Sangoma Technologies Inc., Sangoma US Inc., VoIP Supply LLC, Digium Inc., VoIP Innovations LLC, Star2Star Communications LLC, and NetFortris Corporation.

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

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

2.    Significant accounting policies

Statement of compliance and basis of presentation

These interim financial statements for the three and nine month periods ended March 31, 2023 and 2022 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”).

These interim financial statements do not include all of the disclosures required by International Financial Reporting Standards (“IFRS”) for annual consolidated financial statements and accordingly should be read in conjunction with the Company’s audited consolidated financial statements for the year ended June 30, 2022 (“annual financial statements”) prepared in accordance with IFRS as issued by the IASB.

During the fourth quarter ended June 30, 2022, the Company identified an inconsistency in its treatment of certain revenues being recorded gross versus net. As a result, the Company corrected the presentation of revenue in its annual consolidated financial statements for the year ended June 30, 2022. As indicated in our management discussion & analysis for the fourth quarter ended June 30, 2022 (the “Fiscal 2022 MD&A”), the impacts of these changes to each quarter of fiscal 2022 were not material. In these unaudited condensed consolidated interim financial statements, the comparative periods have been reclassified for these changes. As a result, revenue, gross margin and sales and marketing expense have been reduced by $1,760 and $3,790 in the three and nine month periods ended March 31, 2022 as compared to amounts previously reported. The impact of this change had no impact on net loss or cash flow from operations for the comparative periods.

The condensed consolidated interim financial statements were authorized for issue by the Board of Directors on May 11, 2023.

3.    Significant accounting judgements, estimates and uncertainties

These unaudited condensed consolidated interim financial statements were prepared using the same basis of presentation, accounting policies and methods of computation as those of the audited consolidated financial statements for the year ended June 30, 2022. They were prepared using the same critical estimates and judgments in

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

applying the accounting policies as those of the audited consolidated financial statements for the year ended June 30, 2022, except for the following which are new in 2022.

On December 13, 2022, the Company adopted the Omnibus Equity Incentive Plan (the “Plan”). Under the Plan, the Company may grant participants Options, Performance Share Units (PSUs), Restricted Share Units (RSUs) and Deferred Share Units (DSUs). The PSUs, RSUs and DSUs are redeemable either for one common share or for an amount in cash equal to the fair market value of one common share (at the option of the Company and as set out in the participant’s equity award agreement). All PSUs, RSUs and DSUs are accounted for as equity-settled awards.

DSUs generally vest immediately and become redeemable once a director no one longer serves on the board of the Company. RSUs vest over a three-year period after the date of grant. The expense is measured based on the fair value of the awards at the grant date.

PSUs vest in full at the end of a three-year period and the final amount is based 50% on market-based performance targets being met and 50% on non-market-based performance targets, with the conversion ratio for vested PSUs being from 0% to 150%. The expense related to the PSUs is measured (i) based on the fair value of the awards at the grant date using the Monte Carlo simulation, with respect to the 50% based on the market-based performance targets, and (ii) based on the fair value of the awards at the grant date using the volume weighted average trading price per share on the TSX during the immediately preceding five trading days.

The preparation of the interim financial statements requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and reported assets, liabilities, revenue and expenses, consistent with those described in the Company’s annual financial statements and as described in these interim financial statements. Estimates and underlying assumptions are reviewed on an ongoing basis. Estimates are based on historical experience and other assumptions that are considered reasonable in the circumstances. The actual amount or values may vary in certain instances from the assumptions and estimates made. Changes will be recorded, with the corresponding effect on profit or loss, when, and if, better information is obtained.

4.    Financial instruments

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

Cash and cash equivalents are comprised of:

	March 31	June 30
	2023	2022
	$	$
Cash at bank and on hand	8,008	12,702

Cash includes demand deposits with financial institutions and cash equivalents consist of short-term, highly liquid investments purchased with original maturities of three months or less. As at March 31, 2023 and June 30, 2022 the Company had no cash equivalents.

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

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)
		Three month periods ended		Nine month periods ended
---	---	---	---	---	---
		March 31		March 31
	Note	2023	2022	2023	2022
		$	$	$	$
Interest income		(4)	(37)	(34)	(38)
Interest expense	15	1,470	424	4,108	1,461
Accretion expense	8, 14	200	87	802	304
Interest expense (net)		1,666	474	4,876	1,727

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

Credit risk

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

		March 31	June 30
	Note	2023	2022
		$	$
Trade receivables		16,991	16,045
Receivable related to working capital adjustment	20	5,845	7,898
Trade and other receivables		22,836	23,943

During the period ended March 31, 2023, the parties finalized the working capital provision in respect of the acquisition of NetFortris and the company received $2,053 from the escrow account, consisting of $351 in cash and $1,702 in the form of 142,124 common shares. The remaining balance of $5,845 as at March 31, 2023 relates to certain indemnification assets recorded in respect of liabilities assumed on the acquisition of Netfortris (June 30, 2022 - $7,898)

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

	March 31	June 30
	2023	2022
	$	$
Trade receivables aging:
0-30 days	13,074	12,809
31-90 days	2,426	2,541
Greater than 90 days	3,804	2,976
	19,304	18,326
Expected credit loss provision	(2,313)	(2,281)
	16,991	16,045
Sangoma Technologies Corporation
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Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

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

	March 31	June 30
	2023	2022
	$	$
Expected credit loss provision:
Expected credit loss provision, beginning balance	(2,281)	(1,096)
Net change in expected credit loss provision during the period	(32)	(1,185)
Expected credit loss provision, ending balance	(2,313)	(2,281)

The Company applies the simplified approach to provide for expected credit losses as prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables and contract assets. The expected

credit loss provision is based on the Company’s historical collections and loss experience and incorporates forward-looking factors, where appropriate.

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

Liquidity risk

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

The Company holds sufficient cash and cash equivalents and working capital, maintained through stringent cash flow management, to ensure sufficient liquidity is maintained. The following are the undiscounted contractual maturities of significant financial liabilities of the Company as at March 31, 2023:

	within 12 months	12-24 months	24-36 months	>36 months	Total
	$	$	$	$	$
Accounts payable and accrued liabilities	23,537	—	—	—	23,537
Sales tax payable	5,193	—	—	—	5,193
Consideration payable	9,418	—	—	—	9,418
Operating facility and loans	17,700	17,700	23,500	37,750	96,650
Lease obligations on right of use assets	3,311	3,095	2,508	7,908	16,822
Other non-current liabilities	—	—	—	951	951
	59,159	20,795	26,008	46,609	152,571

Foreign currency risk

A portion of the Company’s transactions occur in a foreign currency (Canadian Dollars (CAD), Euros (EUR), and Great British Pounds (GBP), Hong Kong Dollars (HKD), Indian Rupees (INR), Philippine Peso (PHP), Australian Dollar (AUD), and Columbia Peso (COP) , therefore, the Company is exposed to foreign currency risk at the end of the reporting period through its foreign denominated cash, trade receivables, contract assets, accounts payable and accrued liabilities, and operating facility and loans. As at March 31, 2023, a 10% depreciation or appreciation of the

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

CAD, EUR, GBP, HKD, INR, PHP, AUD and COP currencies against the U.S. dollar would have resulted in an approximate $81 (June 30, 2022 - $59) increase or decrease, respectively, in total comprehensive loss.

Interest rate risk

The Company’s exposure to interest rate fluctuations is with its credit facility (Note 15) which bears interest at a floating rate. As at March 31, 2023, a change in the interest rate of 1% per annum would have an impact of approximately $487 (March 31, 2022 - $764) per annum in finance costs. The Company also entered an interest rate swap arrangement for its loan facility (Note 15) to manage the exposure to changes in SOFR-rate based interest rate. The fair value of the interest rate swaps was estimated based on the present value of projected future cash flows using the SOFR forward rate curve. The model used to value the interest rate swaps included inputs of readily observable market data, a Level 2 input. As described in detail in Note 15, the fair value of the interest rate swaps was a current asset of $1,067 and non-current asset of $677 on March 31, 2023 (June 30, 2022 - current asset of $648 and non-current asset of $700).

5.    Capital management

The Company’s objectives in managing capital are to safeguard the Company’s assets, to ensure sufficient liquidity to sustain the future development of the business via advancement of its significant research and development efforts, to conservatively manage financial risk and to maximize investor, creditor, and market confidence. The Company considers its capital structure to include its shareholders’ equity and operating facilities and loans. Working capital is optimized via stringent cash flow policies surrounding disbursement, foreign currency exchange and investment decision-making. There have been no changes in the Company’s approach to capital management during the period and apart from the financial covenants as discussed in Note 15, the Company is not subject to any other capital requirements imposed by external parties.

6.    Inventories

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

	March 31	June 30
	2023	2022
	$	$
Finished goods	14,297	13,190
Parts	5,330	5,155
	19,627	18,345
Provision for obsolescence	(974)	(919)
Net inventory carrying value	18,653	17,426
Sangoma Technologies Corporation
---
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

7.    Property and equipment

		Office furniture		Stockroom
		and computer	Software and	and production	Tradeshow	Leasehold
	Note	equipment	books	equipment	equipment	improvements	Total
Cost		$	$	$	$	$	$
Balance at July 1, 2021		3,329	417	6,255	47	348	10,396
Additions through business combinations	20	540	2	3,619	—	11	4,172
Additions		893	41	808	—	126	1,868
Disposals		(25)	(2)	(231)	—	(10)	(268)
Balance at June 30, 2022		4,737	458	10,451	47	475	16,168
Additions		732	—	2,475	—	—	3,207
Disposals		(92)	—	(220)	—	—	(312)
Balance at March 31, 2023		5,377	458	12,706	47	475	19,063
Accumulated depreciation
Balance at July 1, 2021		1,371	314	872	41	146	2,744
Depreciation expense		1,081	99	1,888	6	78	3,152
Disposals		—	—	(1)	—	(1)	(2)
Balance at June 30, 2022		2,452	413	2,759	47	223	5,894
Depreciation expense		785	16	2,785	—	48	3,634
Disposals		—	—	(5)	—	—	(5)
Balance at March 31, 2023		3,237	429	5,539	47	271	9,523
Net book value as at:
Balance at June 30, 2022		2,285	45	7,692	—	252	10,274
Balance at March 31, 2023		2,140	29	7,167	—	204	9,540

For the three and nine month periods ended March 31, 2023, depreciation expenses of $235 and $759 (three and nine month periods ended March 31, 2022- $242 and $738) were recorded in general and administration expense in the condensed consolidated interim statements of loss and comprehensive loss. Depreciation expenses in the amounts of $900 and $2,875 were included in cost of sales for the three and nine month periods ended March 31, 2023 (three and nine month periods ended March 31, 2022 - $238 and $726).

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

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

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

	Note	Right-of-use assets
		$
Present value of leases
Balance as at July 1, 2021		17,955
Additions		5,536
Addition through business combination	20	3,277
Terminations		(1,536)
Adjustments due to lease modification		(2,002)
Balance at June 30, 2022		23,230
Additions		41
Terminations		(789)
Balance at March 31, 2023		22,482
Accumulated depreciation and repayments
Balance as at July 1, 2021		4,425
Depreciation expense		3,308
Terminations		(1,477)
Balance at June 30, 2022		6,256
Depreciation expense		2,917
Terminations		(755)
Balance at March 31, 2023		8,418
Net book value as at:
June 30, 2022		16,974
March 31, 2023		14,064
Sangoma Technologies Corporation
---
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)			Note	Lease Obligations
---	---	---
		$
Present value of leases
Balance as at July 1, 2021		14,243
Additions		5,535
Addition through business combination	20	3,277
Adjustments due to lease modification		(2,107)
Repayments		(3,407)
Accretion expense		442
Terminations		6
Balance at June 30, 2022		17,989
Additions		41
Adjustments due to lease modification		(36)
Repayments		(3,133)
Accretion expense		367
Effects of movements on exchange rates		(25)
Balance at March 31, 2023		15,203
Lease Obligations - Current		2,912
Lease Obligations - Non-current		12,291
		15,203
Sangoma Technologies Corporation
---
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

9.    Intangible assets

					Other
		Purchased	Customer		purchased
	Note	technology	relationships	Brand	intangibles	Total
		$	$	$	$	$
Cost
Balance at July 1, 2021		95,323	112,256	6,787	2,748	217,114
Business combinations	20	14,800	14,200	—	—	29,000
Balance at June 30, 2022		110,123	126,456	6,787	2,748	246,114
Balance at March 31, 2023		110,123	126,456	6,787	2,748	246,114
Accumulated amortization
Balance at July 1, 2021		7,809	11,336	2,135	1,856	23,136
Amortization expense		16,097	14,128	685	699	31,609
Balance at June 30, 2022		23,906	25,464	2,820	2,555	54,745
Amortization expense		13,355	11,655	608	109	25,727
Balance at March 31, 2023		37,261	37,119	3,428	2,664	80,472
Net book value as at:
Balance at June 30, 2022		86,217	100,992	3,967	193	191,369
Balance at March 31, 2023		72,862	89,337	3,359	84	165,642

Amortization expense is included in general and administration expense in the condensed consolidated interim statements of loss and comprehensive loss. For the three and nine month periods ended March 31, 2023, amortization expenses were $8,572 and $25,727 (three and nine month periods ended March 31, 2022 - $7,638 and $22,936).

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

10.    Development costs

Cost	$
Balance at July 1, 2021	3,360
Additions	3,237
Investment tax credits	(628)
Balance at June 30, 2022	5,969
Additions	5,450
Investment tax credits	(495)
Balance at March 31, 2023	10,924
Accumulated amortization
Balance at July 1, 2021	(1,827)
Amortization	(1,281)
Balance at June 30, 2022	(3,108)
Amortization	(1,812)
Balance at March 31, 2023	(4,920)
	March 31, 2023	June 30, 2022
---	---	---
	$	$
Net capitalized development costs	6,004	2,861

Each period, additions to development costs are recognized net of investment tax credits accrued. In addition to the above amortization, the Company has recognized $8,709 and $26,341 of engineering expenditures as expenses during the three and nine month periods ended March 31, 2023 (three and nine month periods ended March 31, 2022- $7,638 and $22,936).

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

11.    Income tax

The Company income tax expense is determined as follows:

	Three month periods ended		Nine month periods ended
	March 31		March 31
	2023	2022	2023	2022
Statutory income tax rate	26.15%	26.37%	26.15%	26.37%
			$	$
Loss before income tax	(944)	(5,219)	(5,168)	(10,158)
Expected income tax expense	(247)	(1,376)	(1,351)	(2,678)
Difference in foreign tax rates	2	13	(8)	23
Tax rate changes and other adjustments	—	9	—	9
Share based compensation	142	1,196	716	2,370
Other non deductible expenses	(29)	14	(62)	58
Changes in estimates	—	—	23	(23)
Scientific Research and Experimental Development (SR&ED)	20	—	56	—
Business acquisition costs	—	528	—	528
Gain on consideration payable	(486)	(323)	(992)	(297)
Stock options deduction revaluation adjustment	304	1,484	1,654	1,385
Earn-out amortization	22	—	114	—
Changes in tax benefits not recognized	13	(9)	78	—
Income tax expense	(259)	1,536	228	1,375
The Company’s income tax expense is allocated as follows:	$	$	$	$
Current tax expense	730	983	1,515	1,791
Deferred income tax expense	(989)	553	(1,287)	(416)
Income tax expense	(259)	1,536	228	1,375

12.    Goodwill

The carrying amount and movements of goodwill was as follows:

	Note
		$
Balance at July 1, 2021		267,398
Addition through business combinations	20	34,296
Goodwill Impairment		(91,685)
Balance at June 30, 2022		210,009
Balance at March 31, 2023		210,009

For the three and nine month periods ended March 31, 2023, there is no addition to goodwill. The company has evaluated for triggers of impairment at March 31, 2023 and has not identified any impairment.

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

13.    Provisions

		Sales returns	Stock
	Warranty	& allowances	rotation
	provision	provision	provision	Total
	$	$	$	$
Balance at July 1, 2021	241	175	26	442
Additional provision recognized	(168)	(48)	(26)	(242)
Balance at June 30, 2022	73	127	—	200
Additional provision recognized (reversed)	14	(86)	118	46
Balance at March 31, 2023	87	41	118	246

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

14.    Consideration payable

As described in the annual consolidated financial statements, additional consideration in the amount of $13,269 could be payable as part of the acquisition of Star2Star on March 31, 2021. The fair value of consideration payable as of March 31, 2023 in the amount of $3,918 (June 30, 2022 - $6,017) was determined using an effective tax rate of 26.22% (June 30, 2022 – 26.22%) and a discount rate of 4.9% (June 30, 2022 – 4.9%). The fair value of the consideration payable is dependent upon the Company’s share price, foreign exchange rates and Company’s ability to utilize the underlying tax losses as they become available in each reporting period.

During the three and nine month periods ended March 31, 2023, the Company made payments of $nil and $nil (three and nine month periods ended March 31, 2022 - $nil and $nil), recognized accretion expense of $59 and $177 (three and nine month periods ended March 31, 2022 - $nil and $nil), and recognized a gain on change in fair value of $345 and $2,276 (three and nine month periods ended March 31, 2022 - gain of $1,312 and $1,208), respectively.

As described in Note 20, additional consideration of up to $11,500 could be payable as part of the acquisition of NetFortris Corporation. The fair value of consideration payable as of March 31, 2023 in the amount of $5,500 (June 30, 2022 - $6,751) was determined using a discount rate of 13.0% (June 30, 2022 - 13.0%). The fair value of the consideration payable is dependent upon the Company’s ability to meet certain operating targets as specified in the acquisition agreement. The amount of $5,500 was paid as described in Note 21.

During the three and nine month periods ended March 31, 2023, the Company made payments of $nil and $nil (three and nine month periods ended March 31, 2022 - $nil and $nil), recognized accretion expense of $25 and $258 (three and nine month periods ended March 31, 2022 - $nil and $nil), and recognized a gain on change in fair value of $1,509 and $1,509 (three and nine month periods ended March 31, 2022 - $nil and $nil).

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

The fair value of consideration payable as at March 31, 2023 is summarized below:

	Note	$
Opening balance, July 1, 2021		9,102
Additions through business combination	20	6,543
Payments		(1,421)
Accretion value of earn out		798
Gain on change in fair value		(2,254)
Ending balance, June 30, 2022		12,768
Accretion value of earn out	4	435
Gain on change in fair value		(3,785)
Ending balance, March 31, 2023		9,418
Consideration payable - Current		9,418
Consideration payable - Non-current		—
		9,418

15.    Operating facility and loan and derivative assets and liabilities

(a)    Operating facility and loan

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

The interest rates charged are based on Prime rate, US Base rate, London Inter-Bank Offered Rate (LIBOR) or Canadian Dollar Offered Rate (CDOR) plus the applicable margin. Under the terms of these term facilities, the Company may convert the loans from variable to a fixed loan. The Company is required to lock in the interest rate on one half of the term loan within three months of each draw down. On January 21, 2020, the Company converted its US Base Rate loan to a one-month LIBOR loan plus the credit spread based on the syndicated loan agreement entered on October 18, 2019. Separately, as required under the agreement, the Company locked in half of the original loan amount by entering a 5-year interest rate credit swap with the two banks for $8,700 each. On March 28, 2022 the credit agreement was amended and the LIBOR rate was replaced with the Secured Overnight Financing Rate (SOFR) and as at March 31, 2023 all loans were converted to SOFR based loans. The repayment schedule for the loan has not been impacted by these changes. The balance outstanding against this term loan facility as of March 31, 2023 is $14,500 (June 30, 2022 - $18,850). As at March 31, 2023, term loan facility balance of $5,800 (June 30, 2022 - $5,800) is classified as current and $8,700 (June 30, 2022 - $13,050) as long-term in the condensed consolidated interim statements of financial position.

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

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

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

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

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

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

The interest rates charged continue to be based on Prime rate, US Base rate, London Inter-Bank Offered Rate (LIBOR) or Canadian Dollar Offered Rate (CDOR) plus the applicable margin until March 28, 2022 when the LIBOR rate was replaced with the Secured Overnight Financing Rate (SOFR) and as at March 31, 2023 all loans were converted to SOFR based loans. The incremental draw is repayable, on a straight-line basis, through quarterly payments of $2,188 and is due to mature on December 31, 2024. As at March 31, 2023, $8,750 (June 30, 2022 - $8,750) of the incremental facility is classified as current and $26,250 (June 30, 2022 - $32,812) is classified as long-term in the condensed consolidated interim statements of financial position.

(iii)On March 28, 2022, the Company amended its term loan facility with its lenders and drew down an additional $45,000 to fund part of the acquisition of NetFortris Corporation. At the time of the draw down of the additional amounts, the following amendments were made to the agreement: The interest rates charged is based on Prime Rate Loans, US Base Rate Loans, US Prime Rate Loans, Secured Overnight Financing Rate (SOFR) or Canadian Dollar Offered Rate (CDOR) plus the applicable margin. As at March 31, 2023 all loans were converted to SOFR based loans. The incremental draw is repayable, on a straight-line basis, through quarterly payments of $1,875 and is due to mature on March 28, 2027. On June 28, 2022, the Company amended its term loan facility with its lenders, the amended repayment for the first twelve quarterly payments of $788 and $2,963 thereafter. As at March 31, 2023, $3,150 (June 30, 2022 - $3,150) of the incremental facility is classified as current and $38,700 (June 30, 2022 - $41,063) is classified as long-term in the condensed condensed consolidated interim statements of financial position.

(iv)The Company also had revolving credit facilities which included a committed revolving credit facility for up to $6,000 and a committed swingline credit facility for up to $1,500 both of which may be used for general business purposes. As of March 31, 2023, the amount of $5,300 (June 30, 2022 - $nil) remains outstanding and is classified as long term in the condensed consolidated interim statements of financial position.

For the three and nine month periods ended March 31, 2023, the Company incurred interest costs to service the borrowing facilities in the amount of $1,470 and $4,108 (for the three and nine month periods ended March 31, 2022 - $424 and $1,461). During the nine month period ended March 31, 2023, the Company borrowed $5,300 (nine month period ended March 31, 2022 - $nil) in operating facility and loans and repaid $13,275 (nine month period ended March 31, 2022 - $(10,914)).

Under its credit agreements with its lenders, the Company must satisfy certain financial covenants, principally in respect of total funded debt to earnings before interest, taxes and amortization (“EBITDA”), and debt service coverage ratio. As at March 31, 2023, and June 30, 2022 the Company was in compliance with all covenants related to its credit agreements.

(b)    Derivative assets and liabilities

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

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

condensed consolidated interim statements of financial position and will be reclassified to earnings when the hedged item affects earnings.

On January 21, 2020, the Company converted its US Base Rate loan to a one-month LIBOR loan plus the credit spread based on the syndicated loan agreement entered into on October 18, 2019. Separately, as required under the agreement, the Company locked in half of the original loan amount by entering into a 5-year interest rate credit swap with the two banks for $8,700 each to manage its exposure to changes in LIBOR-based interest rates. As of March 31, 2023 this was converted to a SOFR. The interest rate swap hedges the variable cash flows associated with the borrowings under the loan facility, effectively providing a fixed rate of interest for five years of the six-year loan term.

The interest rate swap arrangement with two banks became effective on January 31, 2020, with a maturity date of December 31, 2024. The notional amount of the swap agreement at inception was $17,400 and decreases in line with the term of the loan facility. Effective March 31, 2022, Sangoma US Inc. entered into a fixed rate swap transaction worth $43,750 over a five year period and terminating on February 28, 2027. As of March 31, 2023, the notional amount of the interest rate swap was $42,565 (June 30, 2022 – $51,397). The interest rate swap has a weighted average fixed rate of 1.80% (June 30, 2022 – 1.65%) and have been designated as an effective cash flow hedge and therefore qualifies for hedge accounting.

As at March 31, 2023, the fair value of the interest rate swap assets were valued at $1,067 (June 31, 2022 - $648) and non-current $677 (June 30, 2022 – $700). The current and non-current derivative assets were recording in the condensed consolidated interim statements of financial position.

For the three and nine month periods ended March 31, 2023, the change in fair value of the interest rate swaps, net of tax, was a (loss) gain of $(357) and $292 (three and nine month periods ended March 31, 2022 – gain of $899 and $1,050) was recorded in other comprehensive income (loss) in the condensed consolidated interim statements of loss and comprehensive loss. The fair value of interest rate swap is determined based on the market conditions and the terms of the interest rate swap agreement using the discounted cash flow methodology. Any differences between the hedged SOFR rate and the fixed rate are recorded as interest expense on the same period that the related interest is recorded for the loan facility based on the SOFR rate.

16.    Contract liabilities

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

Contract liabilities as at March 31, 2023, and June 30, 2022 are below:

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)
	Note	$
---	---	---
Opening balance, July 1, 2021		15,754
Revenue deferred during the period		40,273
Deferred revenue recognized as revenue during the period		(42,625)
Additions through business combination	20	1,666
Ending balance, June 30, 2022		15,068
Revenue deferred during the period		20,887
Deferred revenue recognized as revenue during the period		(21,609)
Ending balance, March 31, 2023		14,346
Contract liabilities - Current		10,574
Contract liabilities - Non-current		3,772
		14,346
Sangoma Technologies Corporation
---
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

17.    Shareholders' equity

(i)Share capital

The Company’s authorized share capital consists of an unlimited number of common shares without par value. As at March 31, 2023 and 2022, the Company’s issued and outstanding common shares consist of the following:

		Three month periods ended		Nine month periods ended
		March 31		March 31
	Note	2023	2022	2023	2022
		#	#	#	#
Shares issued and outstanding:
Outstanding, beginning of the period		23,066,378	19,061,208	21,439,632	19,021,642
Shares issued for business combinations	20	—	1,494,536	—	1,494,536
Shares issued as installment for shares to be issued		857,143	—	2,695,601	—
Shares purchased and cancelled		(29,800)	—	(108,622)	—
Shares returned from escrow	4	—	—	(142,124)	—
Shares issued upon exercise of options		1,790	9,420	11,024	49,014
Rounding of fractional shares in 2021 after share consolidation		—	—	—	(28)
Outstanding, end of the period		23,895,511	20,565,164	23,895,511	20,565,164

On March 31, 2021, the Company acquired StarBlue Inc. and issued 3,018,685 common shares valued in the amount of $66,873 as part of the consideration, and 18,456 common shares valued in the amount of $330 as part of the acquisition costs. Under the terms of the agreement, a further 12,695,600 common shares valued in the amount of $192,102 are to be issued in installments commencing on April 1, 2022. As of March 31, 2023 , 3,552,743 common shares were issued to StarBlue sellers in accordance with the installment schedule defined in the share purchase agreement. Following this issuance 9,142,856 common shares remain to be issued and the remaining $138,347 discounted value of the common shares is recorded as shares to be issued in the condensed consolidated interim statements of changes in shareholders’ equity.

During the nine month period ended March 31, 2023, a total of 11,024 (March 31, 2022 – 49,014) options were exercised for cash consideration of $44 (March 31, 2022 - $420), and the Company recorded a charge of $23 (March 31, 2022 – $214) from contributed surplus to share capital.

In the fourth quarter of fiscal 2022, the Company announced its intention to make an Normal Course Issuer Bid (“NCIB”) with respect to its Shares. Pursuant to the NCIB, Sangoma may, during the 12-month period commencing June 23, 2022 and ending no later than June 22, 2023, purchase up to 1,071,981 shares, representing 5% of the total number of 21,439,632 Shares outstanding, through the facilities of the TSX, the Nasdaq Global Select Market or alternative Canadian trading systems. Under the term of the NCIB, during the nine month period ended March 31, 2023, the Company purchased a total of 103,122 common shares (March 31, 2022 - $nilnil) at an average price of $5.42 per share, for total consideration of $559. During the nine month period ended March 31, 2023 103,122 of those common shares were settled and cancelled along with 5,500 common shares that were purchased in the fourth fiscal quarter of 2022, and the company recorded a total reduction of $605 (March 31, 2022 - $nil) in share capital for the value of share repurchased.

(ii)    Share based payments

On December 13, 2022, the Corporation’s shareholders approved the Plan, which replaces the previous share option plan (the “Legacy Plan”). No further grants will be made under the Legacy Plan.

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)

For the three and nine month periods ended March 31, 2023, the Company recognized share-based compensation expense in the amount of $541 and $2,738 (three and nine month periods ended March 31, 2022 - $4,536 and $8,988).

Stock Options

Under the Plan (and previously under the Legacy Plan), employees are periodically granted share options to purchase common shares at prices not less than the market price of the common shares on the day prior to the date of grant or the volume weighted average trading price per share on the TSX during the five trading days immediately preceding the grant date. The fair value of each option grant is estimated at the date of grant using the Black-Scholes option pricing model. Expected volatility is determined by the amount the Corporation’s daily share price fluctuated over a period commensurate with the expected life of the options. During the nine month period ended March 31, 2023, the Corporation did not grant any options (March 31, 2022 – 55,000).

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

	Number	Weighted
Measurement date	of options	average price
	#	$
Balance, July 1, 2021	1,587,310	19.55
Granted	340,714	17.59
Exercised	(49,014)	(8.59)
Expired	(154,408)	(27.04)
Forfeited	(664,508)	(24.63)
Balance, March 31, 2022	1,060,094	15.15
Balance, July 1, 2022	1,207,908	14.02
Exercised	(11,024)	(3.97)
Expired	(100,517)	(14.16)
Forfeited	(273,932)	(16.37)
Balance, March 31, 2023	822,435	13.36

The key assumptions used to fair value the grants were as follows:

	March 31	March 31
	2023	2022
Share price	—	$17.59
Exercise price	—	$17.59
Expected volatility	—	59.75%
Expected option life	—	5 years
Risk-free interest rate	—	0.93%

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

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)				March 31, 2023			March 31, 2022
---	---	---	---	---	---	---
		Number of	Weighted		Number of	Weighted
	Number of	stock options	average	Number of	stock options	average
	stock options	outstanding and	remaining	stock options	outstanding	remaining
Exercise price	outstanding	exercisable	contractual life	outstanding	and exercisable	contractual life
$3.01 - $5.00	—	—	—	28,040	21,323	0.75
$5.01 - $7.00	67,338	57,054	0.74	103,210	65,644	1.74
$7.01-$9.00	226,500	—	4.25	—	—	—
$9.01 - $12.00	151,551	105,061	2.18	250,806	95,433	3.18
$12.01-$15.00	55,000	13,750	4.00	55,000	—	5.00
$15.01-$18.00	176,692	77,960	3.25	205,637	—	4.25
$18.01-$20.00	39,375	25,099	3.41	285,711	—	4.48
$20.01-$27.00	105,979	53,095	2.86	131,690	39,639	3.86
	822,435	332,019	3.13	1,060,094	222,039	3.71

The following table summarizes information about the DSUs, RSUs and PSUs granted and forfeited in the nine months ended March 31, 2023.

	DSU	PSU	RSU	Total
Awards outstanding July 1, 2022	—	—	—	—
Awards granted during the period	62,728	302,500	352,500	717,728
Awards forfeited during the period	—	(172,500)	(208,593)	(381,093)
Awards outstanding March 31, 2023	62,728	130,000	143,907	336,635

The fair value of each DSU is $3.51 per share.

The fair value of each RSU is $4.20 per share.

The fair value of each of the PSUs tied to non-market based performance targets is $4.20 per share. The fair value of each of the PSUs tied to market-based performance targets is $3.69 per share using the Monte Carlo simulation. The key assumptions used in the Monte Carlo simulation are:

	March 31, 2023		March 31, 2022
Share price	3.69		—
Expected volatility	60.00	%	—
Time to expiry	2.52 years		—
Risk-free interest rate	4.08	%	—

(iii)Loss per share

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

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)			Three month periods ended				Nine month periods ended
---	---	---	---	---	---	---	---	---
	March 31				March 31
	2023		2022		2023		2022
Number of shares:
Weighted average number of shares outstanding	21,971,685		19,111,244		22,723,509		19,054,108
Shares to be issued	9,142,856		12,695,600		9,142,856		12,695,600
Weighted average number of shares used in diluted earnings per share	31,114,541		31,806,844		31,866,365		31,749,708
Net loss for the period	$	(685)	$	(6,755)	$	(5,396)	$	(11,533)
Loss per share
Basic loss per share	$	(0.02)	$	(0.21)	$	(0.17)	$	(0.36)
Diluted loss per share	$	(0.02)	$	(0.21)	$	(0.17)	$	(0.36)

18.    Related parties

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

The Company had incurred no related party transactions and had no outstanding balance with related parties for the nine month periods ended March 31, 2023 and 2022.

19.    Segment disclosures

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

Revenues for group of similar products and services can be summarized for the three and nine month periods ended March 31, 2023 and 2022 as follows:

	Three month periods ended		Nine month periods ended
	March 31		March 31
	2023	2022	2023	2022
		(Note 2)		(Note 2)
	$	$	$	$
Products	12,221	16,427	40,552	48,515
Services	50,543	36,939	148,298	109,536
Total revenues	62,764	53,366	188,850	158,051

The sales in each of these geographic locations for the three and nine month periods ended March 31, 2023 and 2022 as follows:

Sangoma Technologies Corporation
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)			Three month periods ended		Nine month periods ended
---	---	---	---	---
	March 31		March 31
	2023	2022	2023	2022
		(Note 2)		(Note 2)
	$	$	$	$
USA	57,518	48,315	174,363	141,384
Canada	908	1,231	2,873	4,134
All other countries	4,338	3,820	11,614	12,533
Total revenues	62,764	53,366	188,850	158,051

The non-current assets, in US dollars, in each of the geographic locations as at March 31, 2023, and June 30, 2022 are below:

	March 31	June 30
	2023	2022
	$	$
Canada	6,451	7,000
USA	406,190	431,225
Total non-current assets	412,641	438,225

20.    Business combinations

On March 28, 2022, the Company acquired NetFortris Corporation. The Company paid an aggregate purchase price of $64,820, net of a net working capital adjustment of $(8,942), and comprised of $50,418 cash consideration, 1,494,536 common shares at a fair value of $16,801. The Company issued 1,494,536 common shares including 327,241 shares representing a holdback for indemnification purposes on closing of the acquisition. The Company estimates that a further payment of $6,543 will be paid as part of an earn out that is up to $11,500 if certain operating targets are met. The Company incurred estimated transaction costs in the amount of $2,939 which were expensed and included in the condensed consolidated interim statements of loss andcomprehensive loss for the three month period ended March 31, 2022. The acquisition has been accounted for using the acquisition method under IFRS 3, Business Combinations.

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

Consideration	$
Cash consideration on closing	43,868
Net working capital adjustment	(8,942)
Cash held in escrow for working capital	350
Cash held in escrow for telecom taxes	3,400
Cash held in escrow for indemnification	2,800
Additional consideration for earn out	6,543
Common shares issued on closing	13,122
Common shares reserved in escrow for indemnification	3,679
	64,820		Sangoma Technologies Corporation
---
Notes to the condensed consolidated interim financial statements
For the three and nine month periods ended March 31, 2023 and 2022
(Unaudited in thousands of US dollars, except per share data)
Purchase price allocation	$
---	---
Cash	1,706
Trade receivables	1,822
Inventories	416
Property and equipment	4,172
Right-of-use assets	3,277
Other current assets	796
Other non-current assets	370
Deferred income tax asset	11,091
Accounts payable and accrued liabilities	(9,442)
Sales tax payable	(5,506)
Contract liabilities	(1,666)
Lease obligations on right-of-use assets	(3,277)
Other non-current liabilities	(235)
Intangible assets	29,000
Goodwill	32,296
	64,820

21.    Subsequent events

NetFortris Earn-Out

Pursuant to the terms of the NetFortris Purchase Agreement, the NetFortris sellers were entitled to an earn-out payment for the first three quarters following the acquisition in the amount of $5,500. This earn-out was paid to the sellers on April 14, 2023. The Company has determined that this payment constitutes the entire earn-out payment owing to the NetFortris sellers pursuant to the NetFortris Purchase Agreement and as a result, no further earn-out payments are owing by the Company in connection with the NetFortris acquisition.

Second Amendment to the Second Amended and Restated Credit Agreement

On April 6, 2023 the Company entered into a second amendment to the Second Amended and Restated Credit Agreement to reflect certain administrative amendments and to amend the amount of the revolving credit facility from $6,000 to $20,000 and the amount of the swingline credit facility from $1,500 to $5,000. On April 23, 2023 the Company, drew down $8,600 from the revolving credit facility to fund the earn-out owing to the sellers pursuant to the stock purchase agreement dated March 28, 2022 (the “NetFortris Purchase Agreement”).

Acceleration of Quarterly Share Issuances

On March 27, 2023, the Company entered into an amendment to the stock purchase agreement dated January 28, 2021 in connection with the StarBlue acquisition, primarily to accelerate the remaining quarterly issuances of StarBlue shares. The remaining 9,142,856 common shares were issued to the StarBlue sellers on May 9, 2023. Following this issuance, the Company has no obligation to issue any additional shares in connection with the StarBlue acquisition.

22.    Authorization of the consolidated financial statements

The condensed consolidated interim financial statements were authorized for issuance by the Board of Directors on May 11, 2023.

28

Document

Management discussion and analysis of financial

condition and results of operations for the

three and nine month periods ended March 31, 2023

TABLE OF CONTENTS

INTRODUCTION	3
OVERVIEW	5
RESULTS OF OPERATIONS	13
QUARTERLY RESULTS OF OPERATIONS	18
LIQUIDITY AND CAPITAL RESOURCES	19
CONTRACTUAL OBLIGATIONS	21
OFF-BALANCE SHEET ARRANGEMENTS	22
RELATED PARTY TRANSACTIONS	22
CRITICAL ACCOUNTING POLICIES AND ESTIMATES	22
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS	22
SIGNIFICANT EVENTS	23
OUTSTANDING SHARE INFORMATION	23
GUIDANCE	23
CONTROLS AND PROCEDURES	24
GLOSSARY OF TERMS	25

INTRODUCTION

As used in this Management Discussion and Analysis (“MD&A”), unless the context indicates or requires otherwise, all references to the “Company”, “Sangoma”, “we”, “us”, or “our” refer to Sangoma Technologies Corporation, together with our subsidiaries, on a consolidated basis as constituted on March 31, 2023. The MD&A compares the financial results for the three and nine month periods of 2023 with those of the same periods in the previous year. This MD&A should be read in conjunction with Sangoma’s audited annual consolidated financial statements and related notes for the year ended June 30, 2022 (“Financial Statements”), which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts are in thousands of United States dollars except where otherwise indicated.

Additional information about us, including copies of our continuous disclosure materials, is available on our website at www.sangoma.com, through the EDGAR website at www.sec.gov or through the SEDAR website at www.sedar.com.

This MD&A is dated as of May 11, 2023.

NON-IFRS MEASURES

This MD&A contains references to certain non-IFRS financial measures such as Adjusted EBITDA and Adjusted Cash Flow. Non-IFRS financial measures are used by management to evaluate the performance of the Company and do not have any meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other reporting issuers. Non-IFRS financial measures used herein have been applied on a consistent basis. “Adjusted EBITDA” means earnings before income taxes, interest expense (net), share-based compensation, depreciation (including for right-of-use assets), amortization, restructuring and business integration costs, exchange listing expense, business acquisition costs, goodwill impairment and change in fair value of consideration payable. Adjusted EBITDA is a measure used by many investors to compare issuers. “Adjusted Cash Flow” means net cash flows from operating activities as defined by IFRS less the capitalized development costs that Sangoma amortized during the period, plus interest expense (net), business acquisition costs paid, restructuring and business integration costs, and exchange listing expense. We believe that Adjusted EBITDA and Adjusted Cash Flow are useful supplemental information as they provide an indication of the results generated by the Company's main business activities before taking into consideration how they are financed, taxed, depreciated or amortized. Investors are cautioned that non-IFRS financial measures, such as those presented herein, should not be construed as an alternative to net income or cash flow determined in accordance with IFRS. The reconciliation of the closest IFRS measure to each non-IFRS measure is set out on pages 17, and 19 herein.

FORWARD-LOOKING STATEMENTS

This MD&A contains forward-looking statements, including statements regarding the expected fiscal 2023 financial results and the future success of our business, development strategies and future opportunities. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements include, but are not limited to, statements relating to management’s guidance on revenue and Adjusted EBITDA, statements

relating to expected inventory levels, statements relating to future lease and interest payments, statements relating to the impact of the continuing COVID-19 pandemic, statements concerning estimates of expected expenditures, statements relating to expected future production and cash flows, and other statements which are not historical facts. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar expressions indicate forward-looking statements.

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

Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other events contemplated by the forward-looking statements will not occur. Although Sangoma believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct as these expectations are inherently subject to business, economic and competitive uncertainties and contingencies. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained herein include, but are not limited to, risks and uncertainties associated with the integration of NetFortris Corporation (“NetFortris”), the remediation of material weakness identified in our internal control over financial reporting, the impact of the continuing COVID-19 pandemic, changes in exchange rate between the United States dollar and other currencies, expectations regarding the amount of frequency of impairment losses, including as a result of the write-down of intangible assets, including changes in technology, changes in the business climate, changes in the regulatory environment, the decline in the importance of the PSTN, new competitive pressures, the impact of global supply chain delays, the retention of key staff, the increase in cost and availability of our components and materials, the conflict in Ukraine, and the impact of changes to interest rates and the other risk factors described in our most recently filed Annual Information Form for the fiscal year ended June 30, 2022. See also “Guidance” and “Controls and Procedures” below for more information on certain of these risks and uncertainties.

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

OVERVIEW

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

Communications as a Service (CaaS) Portfolio

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

Unified Communications as a Service (“UCcaS”)

Trunking as a Service (“TaaS”)

Contact Center as a Service (“CCaaS”)

Communications Platform as a Service (“CPaaS”)

Video Meetings as a Service (“MaaS”)

Collaboration as a Service (“Collab aaS”)

Desktop as a Service (“DaaS”)

Unified Communications as a Service (UCaaS)

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

Cloud-Based Business Phone Solution

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

On-Premise Business Phone Solution

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

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

IP Deskphones: Sangoma offers a full line of phones that work with both our cloud and on-premise systems that are perfect for every user type, from casual to call center to managers and executives.

Sangoma’s product line includes entry-level, mid-range, and executive-level phones. All models include HD Voice and plug-and-play deployment. Sangoma’s range of IP phones are customized to seamlessly integrate with all of our UC Systems and provide zero touch installation, simplified system management, and instant access to a wide range of features.

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

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

Trunking as a Service (TaaS)

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

Retail SIP Trunking

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

Wholesale SIP Trunking

Sangoma’s wholesale SIP trunking offer is now available following the acquisition of VoIP Innovations. Pricing for wholesale SIP trunking is usage-based but with a larger monthly minimum commitment. This

includes origination, termination, SMS/MMS, e911, and fraud mitigation. Typically, very large businesses or service providers who resell SIP trunks would utilize this type of service.

Fax as a Service

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

Contact Center as a Service (CCaaS)

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

Communications Platform as a Service (CPaaS)

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

Video Meetings as a Service (MaaS)

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

Collaboration as a Service (Collab aaS)

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

that mode of communications to a voice call in real time, and/or upgrading that voice call to a video meeting.

Desktop as a Service (DaaS)

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

MSP Portfolio

Sangoma’s cloud-based Managed Service Provider (“MSP”) offerings deliver mission critical communication services that businesses need and complement our full line of Communications as a Service solutions. The MSP product line is built upon a tightly integrated, enterprise grade, and end-to-end managed network, which is all supported by an expert 24/7 network engineering team. The current MSP offering includes three primary services:

Managed Security: Sangoma provides a cloud-based service, sometimes called Unified Threat Management (“UTM”), whereby the customers network, including voice and data traffic, are secured by intrusion prevention and detection capabilities. The network security service helps protect customers against attacks and data losses from spam, viruses, ransomware, botnets, etc.

Managed SD-WAN: Sangoma offers a cloud-based software-defined approach to managing a customers wide area network. The SD-WAN service enables network redundancy through the ability to manage multiple internet connections from multiple providers, which is seen as one seamless connection for the customer. If one connection fails, the customer does not lose connectivity and has uninterrupted uptime. The service also provides traffic shaping whereby certain types of traffic can be given priority or forced in priority.

Managed Access: Sangoma also provides a robust broadband connectivity solution, including network monitoring, analytics, backup, and a fully PCI-compliant offering for payment card and credit card transactions. Additionally, our Managed Access solution integrates with Managed Security and Managed SD-WAN services, delivering unique capabilities such as secure, end-to-end peering connections to critical destinations (such as Public Cloud sites like AWS and Azure) and Quality of Service commitments.

Network Interconnection Products

In addition to the CaaS and MSP offerings described above, Sangoma also offers network interconnection products. These products connect different types of networks together, such as VoIP networks to PSTN networks, or VoIP networks to mobile networks or different types of VoIP networks.

Session Border Controllers (SBCs)

Anytime two VoIP networks interconnect, issues of security and interoperability arise. SBCs can manage these issues, including provider-to-provider connections, provider-to-enterprise connections, and

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

VoIP Gateways

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

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

All Sangoma’s gateways have broad interoperability certifications.

PSTN Interface and Media Processing Boards

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

Open-Source Software Products

Asterisk and FreePBX

Sangoma is the primary developer and sponsor of the Asterisk project, the world’s most widely used open-source communications software, and the FreePBX project, the world’s most widely used open-source PBX software.

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

OVERALL PERFORMANCE

Operational

Sangoma is a trusted leader in delivering cloud-based CaaS and MSP solutions for businesses of all sizes. Customers include companies from small/medium businesses (SMB’s) right up to large enterprises who are looking for all the advantages of cloud-based communications and managed network services at a fair price. In addition to those cloud-based Services, Sangoma also has a broad suite of Products to complement its Services.

Enterprises, SMBs and carriers in over 150 countries rely on Sangoma’s technology as part of their mission-critical infrastructures. Through a worldwide network of distribution partners, Sangoma delivers high-quality services and products, some of which carry the industry’s first lifetime warranty.

Sangoma has always been operated and managed as a single economic entity. There is one management team that directs the activities of all aspects of the Company and it is managed globally by our executive team. As a result, we believe that we have one reporting segment, being the consolidated Company. Over time, this may change as the Company grows and when this occurs, we will reflect the change in our reporting practice.

Revenue

Sangoma primarily generates revenue from Services and Products. Our Services revenue is generated primarily from customers entering recurring revenue agreements. Product revenues are comprised of the sale of products and services that generate non-recurring revenue.

Innovation

As a technology company, Sangoma is continuously working on a large number of projects across its broad portfolio of existing products and services. While the Company has introduced several new additions to its portfolio over the last few years, the majority of the Company’s investment in Research and Development (“R&D”) is dedicated to sustaining, improving on and enhancing its broad portfolio of existing products and services. Sangoma believes that innovation is essential to a technology company’s future. The Company also believes that R&D investment is necessary in order to address the needs of the Company’s wide-ranging group of customers (which include business of all sizes including service providers, enterprises, small-medium sized businesses, and original equipment manufacturers) in over 150 countries, to keep pace with technology developments in the cloud communications industry, to meaningfully compete in that industry, and to achieve and maintain market acceptance.

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

Sangoma continues to invest in R&D to develop new products and to improve existing offerings with spending on R&D increasing each year.

Sales and marketing

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

Sales

Sangoma uses a dual sales path ‘go to market’ approach: direct sales to some of our largest customers and indirect distribution to most of our other clients.

•Direct Sales is typically used for selling to ‘service providers’, OEMs and large enterprise type businesses.

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

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

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

•Indirect Sales: In most cases, Sangoma uses the indirect or channel model. We value the ‘multiplier effect’ of a channel model (i.e., one of our salespeople sells to dozens of partners who sell to hundreds/thousands of customers), the more ‘local nature’ of a channel partner who is often based quite near to their end customers, and the more cost-effective structure of indirect distribution in a typical sales cycle. In such cases, Sangoma utilizes this indirect distribution model to reach the full breadth of customers, often based upon a two-tier Channel model:

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

The ‘second tier’ of the indirect model is normally made up of Resellers and Agents. Distributors typically sell to resellers, and Master Agents typically sell to Agents. The Resellers and Agents then sell to end users (with some performing other ancillary services such as installation and/or support).

The second tier tend to be smaller organizations (though not always) and are usually more ‘local’ in nature.

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

Marketing

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

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

•leads generation as one of the front-end steps in customer acquisition.

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

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

RESULTS OF OPERATIONS

All amounts are in thousands of United States dollars except where otherwise indicated.

SUMMARY

The following table outlines our unaudited condensed consolidated interim statements of loss and comprehensive loss for the periods indicated:

	Three month periods endedMarch 31				Nine month periods endedMarch 31
	2023	2022	Change	Change	2023	2022	Change	Change
				%				%
Revenue	62,764	53,366	9,398	18%	188,850	158,051	30,799	19%
Cost of sales	18,340	16,165	2,175	13%	58,300	45,624	12,676	28%
Gross profit	44,424	37,201	7,223	19%	130,550	112,427	18,123	16%
Expenses
Sales and marketing	14,990	12,122	2,868	24%	46,251	37,424	8,827	24%
Research and development	9,497	8,238	1,259	15%	28,153	24,357	3,796	16%
General and administration	18,947	19,751	(804)	(4)%	57,758	55,166	2,592	5%
Foreign currency exchange (gain) loss	(66)	26	(92)	(354)%	(130)	111	(241)	(217)%
Interest expense (net)	1,666	474	1,192	251%	4,876	1,727	3,149	182%
Business acquisition costs	—	3,121	(3,121)	(100)%	—	3,121	(3,121)	(100)%
Restructuring and business integration costs	2,188	—	2,188	100%	2,595	836	1,759	210%
Exchange listing expense	—	—	—	—%	—	1,051	(1,051)	(100)%
Gain on change in fair value of consideration payable	(1,854)	(1,312)	(542)	41%	(3,785)	(1,208)	(2,577)	213%
Loss before income tax	(944)	(5,219)	4,275	(82)%	(5,168)	(10,158)	4,990	(49)%
Provision for income taxes
Current	730	983	(253)	(26)%	1,515	1,791	(276)	(15)%
Deferred	(989)	553	(1,542)	(279)%	(1,287)	(416)	(871)	209%
Net loss	(685)	(6,755)	6,070	(90)%	(5,396)	(11,533)	6,137	(53)%
Other comprehensive income (loss)
Items to be reclassified to net income (loss)
Change in fair value of interest rate swaps, net of tax	(357)	899	(1,256)	(140)%	292	1,050	(758)	(72)%
Foreign currency translation gain	—	—	—	—%	—	—	—	—%
Comprehensive loss	(1,042)	(5,856)	4,814	(82)%	(5,104)	(10,483)	5,379	(51)%
Loss per share
Basic				(89)%				(52)%
Diluted				(89)%				(52)%
Weighted average shares outstanding (thousands)
Basic	31,115	31,807	(692)	(2)%	31,866	31,750	117	—%
Diluted	31,115	31,807	(692)	(2)%	31,866	31,750	117	—%

All values are in US Dollars.

REVIEW OF OPERATIONS

Revenue

	Three month periods ended<br><br>March 31				Nine month periods ended<br><br>March 31
	2023	2022	Change	Change	2023	2022	Change	Change
	$	$	$	%	$	$	$	%
Service revenues	50,543	36,939	13,604	37%	148,298	109,536	38,762	35%
Percent of total revenues	81%	69%	11%	16%	79%	69%	9%	13%
Product revenues	12,221	16,427	(4,206)	(26)%	40,552	48,515	(7,963)	(16)%
Percent of total revenues	19%	31%	(12)%	(39)%	21%	31%	(9)%	(30)%
Total revenues	62,764	53,366	9,398	18%	188,850	158,051	30,799	19%

The revenue increase in both periods primarily resulted from the NetFortris acquisition and our existing Services business continuing to grow and compound. As a result, our Services revenue represented 81% of total revenue this quarter, up from 69% in the same quarter of the prior year, and consistent with our strategic objective.

When compared sequentially, our revenue was up 1% from $62,035 in the second quarter of fiscal 2023. This increase is due to the growth in our Services sales, which is up 2.25% from the previous quarter and consistent with the 10% annualized growth rate in Services revenue we anticipated last quarter. The overall revenue increase is partially offset by a slight decrease in our Product sales as customers continue to be more sensitive to Capex purchases given current economic headwinds and the impact of a strong US dollar exchange rate on some international order flow.

Cost of revenue and gross profit

	Three month periods ended<br><br>March 31				Nine month periods ended<br><br>March 31
	2023	2022	Change	Change	2023	2022	Change	Change
	$	$	$	%	$	$	$	%
Cost of sales	18,340	16,165	2,175	13%	58,300	45,624	12,676	28%
Gross profit	44,424	37,201	7,223	19%	130,550	112,427	18,123	16%

The cost of sales for the three months ended March 31, 2023 increased by 13% to $18,340 compared to $16,165 in the equivalent period of the prior year, and increased by 28% to $58,300 for the nine months ended March 31, 2023 as compared to $45,624 in the equivalent period of the prior year. The period over period increase in cost of sales was driven primarily by the addition of the NetFortris business and by the continuing supply chain pressures. Sangoma’s cost of sales has been impacted by global supply chain disruptions, for both electronic components and for shipping. In some cases, Sangoma has needed to order further ahead, pay more for electronic components, and to ship product by air versus by sea (at higher cost). Nevertheless, Sangoma was able to fill most customer orders in the quarter, despite these supply chain pressures.

Gross profit for the three months ended March 31, 2023 was $44,424, up 19% from the $37,201 realized in the equivalent period of the prior year and was $130,550 for the nine months ended March 31, 2023, up 16% from the $112,427 realized in the equivalent period of the prior year. Gross margin for the third

quarter of fiscal 2023 was approximately 71% of revenue. This is up slightly from the same quarter last year partly because of a slight increase in sales of our higher margin cloud services. While gross margin will naturally fluctuate slightly from quarter to quarter, third quarter gross margin landed on the higher end of that expected range.

Expenses

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

	Three month periods ended<br><br>March 31				Nine month periods ended<br><br>March 31
	2023	2022	Change	Change	2023	2022	Change	Change
	$	$	$	%	$	$	$	%
Sales and marketing	14,990	12,122	2,868	24%	46,251	37,424	8,827	24%
Research and development	9,497	8,238	1,259	15%	28,153	24,357	3,796	16%
General and administration	18,947	19,751	(804)	(4)%	57,758	55,166	2,592	5%
Foreign currency exchange (gain) loss	(66)	26	(92)	(354)%	(130)	111	(241)	(217)%

Sales and marketing

Sales and marketing expense was $14,990 for the third quarter of fiscal 2023, an increase from the $12,122 incurred in the same quarter of fiscal 2022, but approximately the same as a percentage of revenue at 24%, compared to 23% last quarter. For the first three quarters of fiscal 2023, it was $46,251, an increase from the $37,424 in the equivalent period of the prior year. The increase over both periods was primarily the impact of the addition of the NetFortris sales and marketing expense.

Research and development

A portion of the Company’s R&D costs are capitalized each period and amortized on a straight-line basis over three years (see the audited consolidated financial statements and related notes for the fiscal year ended June 30, 2022, available at www.sedar.com and www.sec.gov).

The research and development expenses incurred, and the development costs amortized during the three and nine month periods ended March 31, 2023 were $9,497 and $28,153 respectively. This was higher than the $8,238 and $24,357 incurred in the equivalent periods of the prior year, mostly as a result of the addition of the NetFortris development team, but the same as a percentage of revenue at approximately 15%. For the quarter ended March 31, 2023, the Company did not have any significant projects that have not yet generated revenue, nor did it have any products or services that are not fully developed, and which are material to the Company.

General and administration

General and administration expenses were $18,947 for the three month period ended March 31, 2023 and $57,758 for the nine month period ended March 31, 2023, compared to $19,751 and $55,166 in the same periods of fiscal 2022. The increased spending over the nine month period is driven primarily by the addition of the NetFortris team and the non-cash expense of the additional amortization of the intangible assets acquired. The Company’s general and administration expenses decreased both as compared to the

same period last year and as a percentage of revenue from approximately 37% in the third quarter of fiscal 2022 to approximately 30% in the third quarter of fiscal 2023. This decrease is primarily the result of cost saving measures the Company has been undertaking in fiscal 2023, including a reduction of staff.

Foreign exchange

Foreign exchange gain for the three and nine month periods ended March 31, 2023 was $66 and $130, compared to a loss of $26 and $111 in the comparable periods of fiscal 2022.

	Three month periods ended<br><br>March 31				Nine month periods ended<br><br>March 31
	2023	2022	Change	Change	2023	2022	Change	Change
	$	$	$	%	$	$	$	%
Interest expense (net)	1,666	474	1,192	251%	4,876	1,727	3,149	182%
Business acquisition costs	—	3,121	(3,121)	(100)%	—	3,121	(3,121)	(100)%
Restructuring and business integration costs	2,188	—	2,188	100%	2,595	836	1,759	210%
Exchange listing expense	—	—	—	—%	—	1,051	(1,051)	(100)%
Gain on change in fair value of consideration payable	(1,854)	(1,312)	(542)	41%	(3,785)	(1,208)	(2,577)	213%

Interest expense (net)

Net interest expense for the quarter ended March 31, 2023 was $1,666, higher than the $474 in the same period last year, primarily due to the additional interest expense on the new debt from the acquisition of NetFortris, the non-cash accretion expense associated with the consideration payable and from the increases in prevailing interest rates.

Business acquisition costs

There were no business acquisition costs incurred in the quarter ended March 31, 2023. In the same period last year, Sangoma recorded business acquisition costs of $3,121

Restructuring and business integration costs

For the third quarter of fiscal year 2023, Sangoma recorded immaterial costs of $2,188 directly associated with a reduction of staff. There were no restructuring and integration costs in the same period of the prior year. The Company does not anticipate any material costs in the fourth quarter of fiscal year 2023.

Exchange listing expense

There were no exchange listing expense incurred for the nine months ended March 31, 2023. In the same period last year, Sangoma recorded exchange listing expense of $1,051.

Consideration payable

As part of the agreement for the purchase of Star2Star, Sangoma processes certain payroll transactions for Star2Star Holdings (“Holdings”) option holders each time an installment of the remaining share consideration is distributed. This gives rise to a tax deduction for Sangoma, the benefit of which is paid to Holdings when it is realized by Sangoma. To account for this, the estimated amount is calculated each quarter and recorded as a deferred tax asset, with the associated liability to Holdings recorded as consideration payable. The amount of the potential payment is tied to Sangoma’s share price, the US to Canadian dollar exchange rate and the current US tax rate. As this changes, the Company will update the potential payout. As of March 31, 2023, the changes in these factors gave rise to a decrease in the consideration payable as compared to the amount established at June 30, 2022. An equivalent offset is included in deferred tax expense. There is no cash exposure to Sangoma since the payment is only due when the tax benefit is actually realized, and the two balances will largely offset each other over time.

Net loss

Net loss for the third quarter was $685 ($0.02 loss per share fully diluted), compared to a net loss of $6,755 ($0.21 loss per share fully diluted) for the equivalent quarter of the prior year.

Adjusted EBITDA

The derivation of Adjusted EBITDA and the reconciliation of net income to Adjusted EBITDA for the comparable quarter and each fiscal year is shown in the table below.

	Three month periods ended<br><br>March 31				Nine month periods ended<br><br>March 31
	2023	2022	Change	Change	2023	2022	Change	Change
	$	$	$	%	$	$	$	%
Net loss	(685)	(6,755)	6,070	(90)%	(5,396)	(11,533)	6,137	(53)%
Tax	(259)	1,536	(1,795)	(117)%	228	1,375	(1,147)	(83)%
Interest expense (net)	1,666	474	1,192	251%	4,876	1,727	3,149	182%
Share-based compensation	541	4,536	(3,995)	(88)%	2,738	8,988	(6,250)	(70)%
Depreciation of property and equipment	1,135	480	655	136%	3,634	1,464	2,170	148%
Depreciation of right-of-use assets	939	751	188	25%	2,917	2,237	680	30%
Amortization of intangibles	8,572	7,638	934	12%	25,727	22,937	2,790	12%
Business acquisition costs	—	3,121	(3,121)	(100)%	—	3,121	(3,121)	(100)%
Restructuring and business integration costs	2,188	—	2,188	100%	2,595	836	1,759	210%
Exchange listing expense	—	—	—	—%	—	1,051	(1,051)	(100)%
Change in fair value of consideration payable	(1,854)	(1,312)	(542)	41%	(3,785)	(1,208)	(2,577)	213%
Adjusted EBITDA	12,243	10,469	1,774	17%	33,534	30,995	2,539	8%
Percentage of revenue	20%	20%	—	—	18%	20%	—	(2)%

For the three and nine month periods ended March 31, 2023, Adjusted EBITDA at $12,243 and $33,534, respectively, was up from $10,469 and $30,995 in the equivalent periods of the prior year, primarily resulting from the addition of NetFortris, the underlying growth in our Services business, and the cost restructuring as part of the integration of NetFortris.

QUARTERLY RESULTS OF OPERATIONS

Selected financial information over the prior eight quarters is shown in the table below.

	Fourth		First		Second		Third		Fourth		First		Second		Third
	quarter		quarter		quarter		quarter		quarter		quarter		quarter		quarter
	2021		2022		2022		2022		2022		2023		2023		2023
Sales	$	50,120	$	51,499	$	53,186	$	53,366	$	66,301	$	64,051	$	62,035	$	62,764
Gross Profit	$	35,880	$	36,873	$	38,353	$	37,201	$	44,461	$	43,337	$	42,789	$	44,424
Operating Expenses1	$	37,780	$	37,727	$	39,194	$	40,137	$	45,714	$	44,406	$	44,258	$	43,368
Net loss	$	(1,290)	$	(2,301)	$	(2,477)	$	(6,755)	$	(99,247)	$	(1,976)	$	(2,735)	$	(685)
Net loss per share
Non-diluted basis	$	(0.04)	$	(0.07)	$	(0.08)	$	(0.21)	$	(2.99)	$	(0.06)	$	(0.08)	$	(0.02)
Fully diluted basis	$	(0.04)	$	(0.07)	$	(0.08)	$	(0.21)	$	(2.99)	$	(0.06)	$	(0.08)	$	(0.02)
Adjusted EBITDA	$	9,780	$	10,093	$	10,433	$	10,469	$	11,130	$	10,741	$	10,550	$	12,243

1 Operating Expenses consist of sales and marketing, research and development, general and administration and foreign exchange (gain) loss.

Sales and Net Income by Quarter

Revenue over the comparative periods has been positively impacted by the acquisition of NetFortris in March 2022, the acquisition of Star2Star in March 2021, the organic growth within the existing Services business, as well as an uptick in some quarters for the Product business. As anticipated, to-date fiscal 2023 has seen a decline in the Product business, resulting in a slight decrease in revenue during the first three quarters, due to the reasons outlined earlier, namely customers continue to be more sensitive to Capex purchases (given current economic headwinds), to the supply chain conditions, and the impact of a strong US dollar exchange rate on some international order flow. While Product revenue continued to decline slightly in the third quarter, this decline was offset by the increase in Services revenue during the quarter.

In line with revenue, cost of sales, gross profit, operating expenses, and Adjusted EBITDA have all increased over the comparable periods. In addition, cost of goods continues to be impacted by the related global supply chain pressures, for both electronic components and for shipping. In some cases, Sangoma has needed to order further ahead, pay more for electronic components, and to ship product by air versus by sea at higher cost.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2023, Sangoma had current assets of $57,624 and current liabilities of $69,580, compared with $60,308 and $78,406 at June 30, 2022, respectively. The decrease in assets is primarily a result of the repayment of debt and certain tax payments which were made in the first three quarters, while the decrease in liabilities is primarily a result of the repayment of debt.

The Company closed the third quarter with $8,008 of cash compared to $12,702 at June 30, 2022. The Company used a portion of its cash to continue paying down the debt associated with its most recent acquisition, investment in capitalized development costs, and in the share buyback program under our normal course issuer bid (the “NCIB”).

Trade receivables of $16,991 on March 31, 2023, were slightly higher than the $16,045 on June 30, 2022, primarily as a result of the addition of NetFortris and from the growth in our business.

Inventories were $18,653 on March 31, 2023, $1,227 higher than the $17,426 at June 30, 2022, primarily reflecting the inventory build undertaken to contend with the supply chain pressures described earlier, in combination with softer Product sales in the first three quarters of fiscal 2023.

Sangoma generated $8,859 of Adjusted Cash Flow from operations during the third quarter of fiscal 2023, compared to $7,429 in the same quarter last year. For the nine month period, Sangoma generated $16,851, compared to $16,268 in the same period last year. The reconciliation of net cash flows from operating activities to Adjusted Cash Flow for the three and nine month periods ended March 31, 2023, and 2022 are shown in the table below.

	Three month periods ended<br><br>March 31				Nine month periods ended<br><br>March 31
	2023	2022	Change	Change	2023	2022	Change	Change
	$	$	$	%	$	$	$	%
Net cash flows from operating activities	7,008	4,858	2,150	44%	15,632	11,510	4,122	36%
Less capitalization of development costs	(1,803)	(937)	(866)	92%	(5,450)	(1,673)	(3,777)	226%
Interest expense	1,466	387	1,079	279%	4,074	1,423	2,651	186%
Business acquisition costs	—	3,121	(3,121)	(100)%	—	3,121	(3,121)	(100)%
Restructuring and business integration costs	2,188	—	2,188	100%	2,595	836	1,759	210%
Exchange listing expense	—	—	—	—%	—	1,051	(1,051)	(100)%
Adjusted cash flow from operations	8,859	7,429	1,430	19%	16,851	16,268	583	4%

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

Credit Facility

On October 18, 2019, the Company entered into a new credit agreement (the “Original Credit Agreement”) in favour of its subsidiaries, Sangoma Technologies Inc. and Sangoma US Inc. (the “Borrowers”) with inter alia The Toronto-Dominion Bank and The Bank of Montreal, as lenders (the “Lenders”). Under the terms of the Original Credit Agreement, the Lenders provided the Borrowers with a term loan facility to refinance the Company’s existing credit facilities and to fund part of the purchase of VI Acquisition.

On March 31, 2021, the Company entered into an amended and restated credit agreement (the “Amended and Restated Credit Agreement”) which amended and restated the Original Credit Agreement to allow the Company to fund part of the StarBlue Acquisition.

On March 28, 2022, the Company entered into the Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”) which amended and restated the Amended and Restated Credit Agreement to allow the Company to fund part of the NetFortris Acquisition. The Second Amended and Restated Credit Agreement is comprised of: (i) a $6,000 revolving credit facility, (ii) a $21,750 term credit facility, which was used to partially fund the VI Acquisition (iii) a $52,500 term credit facility, which was used to partially fund the StarBlue Acquisition, (iv) a $45,000 term credit facility, which was used to partially fund the NetFortris Acquisition (the “Term 3 Facility”), and (v) a $1,500 swingline credit facility.

On June 28, 2022, the Company entered into the first amendment to the Second Amended and Restated Credit Agreement to reflect certain administrative amendments and to amend the amount of the Term 3 Facility quarterly principal installments.

On October 19, 2022 and January 31, 2023 the Company drew down $3,000 and $2,300 from the revolving credit facility, respectively. As of March 31, 2023, these amounts remain outstanding.

On April 6, 2023 the Company entered into a second amendment to the Second Amended and Restated Credit Agreement to reflect certain administrative amendments and to amend the amount of the revolving credit facility from $6,000 to $20,000 and the amount of the swingline credit facility from $1,500 to $5,000.

On April 23, 2023 the Company, as was originally intended on closing of the NetFortris acquisition, drew down $8,600 from the revolving credit facility primarily to fund the earn-out owing to the sellers pursuant to the stock purchase agreement dated March 28, 2022 (the “NetFortris Purchase Agreement”).

Under its Second Amended and Restated Credit Agreement with its lenders, the Company must satisfy certain financial covenants, principally in respect of total funded debt to earnings before interest, taxes and amortization, and debt service coverage ratio. As at March 31, 2023, the Company was in compliance with all covenants related to its Credit Agreement.

CONTRACTUAL OBLIGATIONS

The following table shows the movement in contractual liabilities from July 1, 2022 to March 31, 2023:

	$
Opening balance, July 1, 2021	15,754
Revenue deferred during the period	40,273
Deferred revenue recognized as revenue during the period	(42,625)
Additions through business combination	1,666
Ending balance, June 30, 2022	15,068
Revenue deferred during the period	20,887
Deferred revenue recognized as revenue during the period	(21,609)
Ending balance, March 31, 2023	14,346
Contract liabilities - Current	10,574
Contract liabilities - Non-current	3,772
	14,346

Commitments

The table below outlines our contractual commitments as of March 31, 2023:

	within 12 months	12-24 months	24-36 months	>36 months	Total
	$	$	$	$	$
Accounts payable and accrued liabilities	23,537	—	—	—	23,537
Sales tax payable	5,193	—	—	—	5,193
Consideration payable	9,418	—	—	—	9,418
Operating facility and loans	17,700	17,700	23,500	37,750	96,650
Lease obligations on right of use assets	3,311	3,095	2,508	7,908	16,822
Other non-current liabilities	—	—	—	951	951
	59,159	20,795	26,008	46,609	152,571

OFF-BALANCE SHEET ARRANGEMENTS

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

RELATED PARTY TRANSACTIONS

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We review these estimates on an ongoing basis based on management’s best knowledge of current events and actions that we may undertake in the future. Actual results could differ from these estimates. All significant estimates and critical judgments, estimates, and assumptions are described in Note 3 of the Company’s Financial Statements.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The fair values of the cash and cash equivalents, trade and other receivables, contract assets, other current assets, accounts payable and accrued liabilities, approximate their carrying values due to the relatively short-term nature of these financial instruments or as these financial instruments are fair valued at each reporting period. The fair values of operating facility and loans approximate their carrying values due to variable interest loans or fixed rate loan, which represent market rate. Derivative assets and liabilities and consideration payable are recorded at fair value. Further details relating to our financial instruments, the risks associated with the financial instruments and how we manage those risks, are described in Note 4 of the Company’s Financial Statements.

SIGNIFICANT EVENTS

Normal Course Issuer Bid

In the fourth quarter of fiscal 2022, the Company announced its intention to make an NCIB with respect to its Shares. Pursuant to the NCIB, Sangoma may, during the 12-month period commencing June 23, 2022 and ending no later than June 22, 2023, purchase up to 1,071,981 Shares, representing 5% of the total number of 21,439,632 Shares outstanding, through the facilities of the TSX, the Nasdaq Global Select Market or alternative Canadian trading systems. Sangoma also entered into an automatic share purchase plan with a designated broker to allow for the purchase of Shares under the NCIB at times when the Company would ordinarily not be permitted to purchase Shares due to self-imposed blackout periods, insider trading rules or otherwise.

Under the term of the NCIB, during the nine month period ended March 31, 2023, the Company purchased a total of 103,122 common shares (March 31, 2022 - nil) at an average price of $5.42 per share, for total consideration of $559.

NetFortris Earn-Out

Pursuant to the terms of the NetFortris Purchase Agreement, the NetFortris sellers were entitled to an earn-out payment for the first three quarters following the acquisition in the amount of $5,500. This earn-out was paid to the sellers on April 14, 2023. The Company has determined that this payment constitutes the entire earn-out payment owing to the NetFortris sellers pursuant to the NetFortris Purchase Agreement and as a result, no further earn-out payments are owing by the Company in connection with the NetFortris acquisition.

Second Amendment to the Second Amended and Restated Credit Agreement

See “Credit Facility” above for details relating to the most recent amendment and drawdown details.

Acceleration of Quarterly Share Issuances

On March 27, 2023, the Company entered into an amendment to the stock purchase agreement dated January 28, 2021 in connection with the StarBlue acquisition, primarily to accelerate the remaining quarterly issuances of StarBlue shares. The remaining 9,142,856 common shares were issued to the StarBlue sellers on May 9, 2023. Following this issuance, the Company has no obligation to issue any additional shares in connection with the StarBlue acquisition.

OUTSTANDING SHARE INFORMATION

We are currently authorized to issue an unlimited number of common shares. As of the date hereof, 33,038,367 common shares and 792,739 stock options and 336,635 share units are issued and outstanding.

GUIDANCE

On September 26, 2022 and November 10, 2022 the Company provided guidance for fiscal 2023, which was subsequently revised on February 9, 2023, and reconfirmed on February 27, 2023. The Company is narrowing its guidance of revenue from $250- $260 million to $250 - $254 million and Adjusted EBITDA from $46 - $49 million to $46 - $48 million given the results for the first three quarters of fiscal 2023 and the current assumptions as described below.

The above outlook constitutes forward-looking information and is based on the Company’s assessment of many material assumptions, including:

•The Company’s ability to manage current supply chain constraints, including our ability to secure electronic components and parts, manufacturers being able to deliver ongoing quantities of finished products on schedule, no further material increases in cost for electronic components, and no significant delay or material increases in cost for shipping

•The revenue trends the Company experienced in fiscal year 2022 and fiscal 2023 to-date, the trends we expect going forward in fiscal 2023, and the impact of growing economic headwinds globally

•The continuing recovery of the global economy from the impact of COVID-19, including decreased government restrictions and increased customer demand, all of which would not be materially negatively affected by more recent macro factors such as inflation, interest rates, or recessions

•There being continuing growth in the global UCaaS and cloud communications markets more generally

•There being continuing demand and subscriber growth for our Services and continuing demand as anticipated for our Products

•The impact of changes in global exchange rates on the demand for the Company’s Products and Services

•The ability of the Company’s customers to continue their business operations without any material impact on their requirements for the Company’s Products and Services

•The Company’s forecasted revenue from its internal sales teams and via channel partners will meet current expectations, which is based on certain management assumptions, including continuing demand for the Company’s products and services, no material delays in receipt of products from its contract manufacturers, no further material increase to the Company’s manufacturing, labour or shipping costs

•There are no additional revenue reclassifications

•The Company is able to remediate the material weaknesses identified in its internal control over financial reporting

•That the Company is able to attract and retain the employees needed to maintain the current momentum

CONTROLS AND PROCEDURES

Management of the Company, under the supervision of the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) (as defined under applicable Canadian securities laws and by the United States Securities and Exchange Commission (“SEC”) in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for the company to ensure that (i) material information relating to the Company is made known to management by others, particularly during the period in which the annual and interim filings are being prepared; and (ii) information required to be disclosed by the Company in its

annual and interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time period specified in securities legislation.

Management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer and oversight of the Board of Directors evaluated the effectiveness of our ICFR as of March 31, 2023 against the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon the evaluation, management has concluded that, because of the material weakness described in our management discussion & analysis for the year ended June 30, 2022 (the “Fiscal 2022 Annual MD&A”), as of such date, the Company’s disclosure controls and procedures were not effective.

Remediation of Material Weakness in ICFR

As previously described in our Fiscal 2022 Annual MD&A, management, has initiated remediation efforts to address the material weakness identified in its Fiscal 2022 Annual MD&A, as well as to foster improvement in the Company’s internal control and enhance the overall financial control environment.

While we believe that the efforts taken to date and those planned for remediation will improve the effectiveness of our internal control over financial reporting, the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

GLOSSARY OF TERMS

Analog

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

API

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

Codec

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

Digital telephony

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

DID

Direct Inward Dialing (“DID”) is a virtual phone number that uses the existing phone lines to route incoming calls. Callers can connect to a phone extension directly without an operator. This offers convenience for both employees and callers alike. DID offers a cost saving on its own and is less expensive when purchased with a SIP trunk.

Gateway

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

ISDN

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

IoT

Internet of Things (“IoT”) refers to a system of interrelated, internet-connected objects that are able to collect and transfer data over a wireless network without human intervention.

IP

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

ISP

Internet Service Provider

ITSP

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

IVR

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

Open Source

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

NetBorder

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

PBX

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

PSTN

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

SBC

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

SD-WAN

A Software-defined Wide Area Network (“SD-WAN”) uses software to control and manage connectivity across a customers wide area network. While traditional wide area networks rely on physical routers to connect remote users, this centralized software solution can help customers monitor their performance of the network and manage traffic.

Signalling

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

SIP

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

T1, E1

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

TDM

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

Unified Communications

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

VoIP

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

27

Document

NEWS RELEASE

SANGOMA ANNOUNCES THIRD QUARTER FISCAL 2023 RESULTS

Revenue increases 18% year-over-year and Services Revenue grows 37% from Q3 of last year

MARKHAM, ONTARIO, May 11, 2023 – Sangoma Technologies Corporation (TSX: STC; Nasdaq: SANG) (“Sangoma” or the “Company”), a trusted leader in delivering cloud-based Communications as a Service solutions for companies of all sizes, today announced its third quarter financial results and unaudited condensed consolidated interim financial statements for the third quarter ended March 31, 2023.

Revenue for the third quarter of fiscal 2023 was $62.76 million, an increase from the prior year of 18%.

US $000	Q3 FY2023	Q3 FY2022	Q2 FY2023
Sales	$62,764	53,366	62,035
Gross profit	$44,424	37,201	42,789
Operating expenses1	$43,368	40,137	44,258
Net loss	$(685)	(6,755)	(2,735)
Net loss per share (fully diluted)	$(0.02)	(0.21)	(0.08)
Adjusted EBITDA2	$12,243	10,469	10,550

All values are in US Dollars.

“Our third quarter brought significant changes to Sangoma. While change can be very difficult at times, I am proud of our team for remaining focused on delivering excellent results for our customers and shareholders," said Norm Worthington, Interim Executive Chairman. “It is an exciting time for Sangoma to continue to see our team's hard work drive our transition to a more SaaS focused business. In the third quarter our Services revenue increased by 2.25% sequentially from the prior quarter, again equivalent to an annualized organic growth rate of 10%. Services also represented 81% of our total sales this quarter, up from 80% last quarter and 69% in the same quarter of last year. And while our Services business continues to grow and compound, our Product revenue slightly declined this quarter as it remains impacted by macro conditions resulting in continued sensitivity to capex purchases. While our increase in revenue quarter over quarter was modest we delivered an Adjusted EBITDA2 for the quarter of over $12.24 million, representing about 20% of revenue and a 16% increase from last quarter."

Revenue for the fiscal third quarter was $62.76 million, up from $53.37 million in the third quarter last year by 18%, and up by approximately 1% from the immediately preceding second quarter of fiscal 2023. Services revenue increased sequentially by over $1 million or by 2.25% from the previous quarter, representing 81% of total sales. The growth in Services revenue is the second consecutive quarter supporting an annualized 10% organic growth rate, as was discussed in our second quarter results.

Gross profit for the quarter was $44.42 million, up from $37.20 million in the same period last year. Gross margin at 71% of revenue for the quarter was slightly above the 69% in the second quarter of fiscal 2023, due at least in part to increased sales of higher margin offerings such as cloud services. While gross margin will naturally fluctuate slightly from quarter to quarter, fiscal third quarter gross margin landed on the higher end of that expected range.

Operating Expenses1 were $43.37 million for the quarter compared to $40.14 million in the third quarter of fiscal year 2022. The year over year increase reflects the added costs associated with the NetFortris acquisition, a decrease of just under $1 million from the immediately prior quarter.

Adjusted EBITDA2 was $12.24 million in the third fiscal quarter of 2023, up from the $10.47 million for the same period of the prior year, and was approximately 20% of sales. The increase in Adjusted EBITDA2 in the third quarter also represents a 3% increase as a percentage of revenue when compared to our second quarter results.

Net loss for the third quarter was $0.69 million as compared to $6.76 million for the third quarter of fiscal 2022.

Sangoma continues to generate positive Adjusted Cash Flow2 and maintain a healthy balance sheet, finishing the quarter with a cash balance of $8.01 million on March 31, 2023 and remains comfortably within its debt covenants.

As previously disclosed in its press release of March 29, 2023, Sangoma filed a resale registration statement on Form F-3 (the "Resale Registration Statement") with the Securities and Exchange Commission (the "SEC") for the registration of 12,271,637 of its common shares previously issued or to be issued pursuant to the terms of that certain stock purchase agreement previously entered into by Sangoma in connection with the acquisition of StarBlue Inc. on March 31, 2021 (the "StarBlue Acquisition"). The Resale Registration Statement was declared effective by the SEC on April 12, 2023, and the remaining 9,142,856 common shares that were to be issued on a quarterly basis over the next three years pursuant to the StarBlue Acquisition were all issued on May 9, 2023.

Outlook for fiscal year 2023

Given the results for the first three quarters of fiscal 2023 and in light of the items below including global economics, the Company is narrowing its revenue guidance from $250- $260 million to $250 - $254 million and its Adjusted EBITDA2 guidance from $46 - $49 million to $46 - $48 million.

The above outlook and guidance constitute forward-looking information and are based on the Company’s assessment of many material assumptions, including:

•The Company’s ability to manage current supply chain constraints, including our ability to secure electronic components and parts, manufacturers being able to deliver ongoing quantities of finished products on schedule, no further material increases in cost for electronic components, and no significant delay or material increases in cost for shipping

•The revenue trends the Company experienced in fiscal year 2022 and fiscal 2023 to-date, the trends we expect going forward in fiscal 2023, and the impact of growing economic headwinds globally

•The continuing recovery of the global economy from the impact of COVID-19, including decreased government restrictions and increased customer demand, all of which would not be materially negatively affected by more recent macro factors such as inflation, interest rates, or recessions

•There being continuing growth in the global UCaaS and cloud communications markets more generally

•There being continuing demand and subscriber growth for our Services and continuing demand as anticipated for our Products

•The impact of changes in global exchange rates on the demand for the Company’s Products and Services

•The ability of the Company’s customers to continue their business operations without any material impact on their requirements for the Company’s Products and Services

•The Company’s forecasted revenue from its internal sales teams and via channel partners will meet expectations, which is based on certain management assumptions, including continuing demand for the Company’s products and services, no material delays in receipt of products from its contract manufacturers, no further material increase to the Company’s manufacturing, labour or shipping costs

•There are no additional revenue reclassifications

•The Company is able to remediate the material weaknesses identified in its internal control over financial reporting

•That the Company is able to attract and retain the employees needed to maintain the current momentum

Conference call

Sangoma will host a conference call on Thursday, May 11, 2023, at 5:30 pm ET to discuss these results. The dial-in number for the call is 1-800-319-4610 (International 1-604-638-5340). Participants are requested to dial in 5 minutes before the scheduled start time and ask to join the Sangoma call.

1 Operating Expenses consist of sales and marketing, research and development, general and administration and foreign exchange (gain) loss.

2 Adjusted EBITDA and Adjusted Cash Flow are non-IFRS financial measures used by the Company to monitor its performance and definitions of these terms along with reconciliation to the closest IFRS measure may be found in the accompanying MD&A on pages 17, and 19 posted today at www.sedar.com and www.sec.gov.

About Sangoma Technologies Corporation

Sangoma is a trusted leader in delivering value-based Communications as a Service (CaaS) solutions for businesses of all sizes. Sangoma simplifies communications by providing businesses with the industry’s most comprehensive suite of cloud-native communications solutions, which work together seamlessly to streamline business processes. Sangoma provides businesses with a complete solution, including cloud software, endpoints, and connectivity – all delivered and supported by Sangoma’s expert team. One provider and one contact ease vendor management and save time. For more information, visit www.sangoma.com.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements, including statements regarding the expected fiscal 2023 financial results and the future success of our business, development strategies and future opportunities.

Forward-looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements include, but are not limited to, statements relating to management’s guidance on revenue and Adjusted EBITDA, and other statements which are not historical facts. When used in this document, the words such as "could", "plan", "estimate", "expect", "intend", "may", "potential", "should" and similar expressions indicate forward-looking statements.

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

Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other events contemplated by the forward-looking statements will not occur. Although Sangoma believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct as these expectations are, therefore, inherently subject to business, economic and competitive uncertainties and contingencies. Some of the risks and other factors which could cause actual results to differ materially from those expressed or implied in the forward- looking statements contained in its management's discussion and analysis, annual information form and management information circular (each available on www.sedar.com and www.sec.gov) include, but are not limited to, risks and uncertainties associated with the integration of NetFortris, the remediation of material weaknesses, the impact of the continuing COVID-19 pandemic, changes

in exchange rate between the United States dollar and other currencies, expectations regarding the amount of frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill, delay in project deliveries, changes in technology, changes in the business climate, changes to macroeconomic conditions, including rising interest rates and the occurrence of (or fears of an impending) economic recession, risks related to the COVID-19 (coronavirus) pandemic, changes in the regulatory environment, the imposition of tariffs, the decline in the importance of the PSTN (as hereinafter defined), impairment of goodwill and new competitive pressures, and acts of terrorism and war, hostilities and conflicts, including, but not limited to, Russia’s invasion of Ukraine in February 2022. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Sangoma undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by law.

Sangoma Technologies Corporation

Larry Stock

Chief Financial Officer

investorrelations@sangoma.com

Document

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Norman Worthington, Interim Executive Chairman of Sangoma Technologies Corporation, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sangoma Technologies Corporation (the “issuer”) for the interim period ended March 31, 2023.

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

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

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

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

1.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

1.material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

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

2.    designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO 2013 Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the interim period:

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c) the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2023 and ended on March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 11, 2023

“Norman Worthington”____________________

Interim Executive Chairman

Document

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Larry Stock, Chief Financial Officer of Sangoma Technologies Corporation, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Sangoma Technologies Corporation (the “issuer”) for the interim period ended March 31, 2023.

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

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

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

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

1.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

1.material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

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

2.    designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO 2013 Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the interim period:

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c) the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2023 and ended on March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 11, 2023

"Larry Stock"
Chief Financial Officer