Alithya Group inc. — Interim / Quarterly Report 2021

Feb 11, 2021

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Interim Condensed Consolidated Financial Statements of Alithya Group inc.

For the three and nine months ended December 31, 2020 and 2019

(unaudited)

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TABLE OF CONTENTS

	Page
Interim Consolidated Statements of Operations	3
Interim Consolidated Statements of Financial Position	4
Interim Consolidated Statements of Changes in Shareholders’ Equity	5
Interim Consolidated Statements of Comprehensive Loss	6
Interim Consolidated Statements of Cash Flows	7
Notes to Interim Condensed Consolidated Financial Statements for the three and nine months ended
December 31, 2020 and 2019
1. Governing statutes and nature of operations	8
2. Summary of significant accounting policies	8
3. Leases	10
4. Long-term debt	12
5. Share capital	13
6. Earnings per share	16
7. Additional information on consolidated loss	17
8. Financial expenses	17
9. Supplementary cash flow information	18
10. Segment and geographical information	18

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of Canadian dollars, except per share data) (unaudited) Revenues Cost of revenues Gross margin Operating expenses Selling, general and administrative expenses Business acquisitions and integration costs Depreciation Amortization of intangibles Foreign exchange loss (gain) Operating loss Financial expenses Gain on recovery of note receivable Gain on sale of subsidiary Loss before income taxes Income tax expense (recovery) Current Deferred Net loss Basic and diluted loss per share	Notes 7 7 8 6	For the three months ended December 31, 2020 2019 $ $ 70,606 66,245 50,178 46,084 20,428 20,161 20,421 17,745 500 1,374 900 878 2,703 2,716 47 30 24,571 22,743 (4,143) (2,582) 870 608 — — — (681) (5,013) (2,509) (185) (78) (35) (616) (220) (694) (4,793) (1,815) (0.08) (0.03)	For the nine months ended December 31,
		2020 $ 70,606 50,178 20,428 20,421 500 900 2,703 47 24,571 (4,143) 870 — — (5,013) (185) (35) (220) (4,793) (0.08)	2020 2019 $ $ 209,672 205,826 150,109 143,805 59,563 62,021 59,983 55,248 1,603 3,464 2,709 2,474 9,249 7,798 399 (3) 73,943 68,981 (14,380) (6,960) 2,425 1,679 (660) — — (681) (16,145) (7,958) 1,050 (58) (2,382) (2,208) (1,332) (2,266) (14,813) (5,692) (0.25) (0.10)

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

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at (in thousands of Canadian dollars) (unaudited) Assets Current assets Cash Accounts receivable and other receivables Income taxes receivable Unbilled revenue Tax credits receivable Prepaids Non-current assets Restricted cash Income taxes receivable Tax credits receivable Property and equipment Right-of-use assets Intangibles Deferred tax assets Goodwill Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued liabilities Deferred revenue Current portion of lease liabilities Current portion of long-term debt Non-current liabilities Long-term debt Lease liabilities Deferred tax liabilities Shareholders' equity Share capital Deficit Accumulated other comprehensive income Contributed surplus		December 31, March 31, 2020 2020 $ $ 9,429 8,810 57,853 67,662 1,186 2,154 12,072 8,015 5,849 5,889 4,917 3,195 91,306 95,725 3,228 2,212 — 136 6,169 7,015 8,684 7,172 12,462 11,492 39,463 51,804 6,398 4,652 73,468 77,608 241,178 257,816 44,283 50,327 11,777 9,602 1,577 1,559 280 1,143 57,917 62,631 54,462 52,086 15,269 11,673 3,334 4,057 130,982 130,447 195,967 195,335 (93,665) (78,780) 409 6,123 7,485 4,691 110,196 127,369 241,178 257,816
	Notes 3 3 4 4 3 5

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

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the nine months ended December 31,

(in thousands of Canadian dollars, except share data) (unaudited)

Balance as at March 31, 2020 Net loss Other comprehensive loss Total comprehensive loss Share-based compensation Share-based compensation on shares vested during the period, issued on business acquisitions Repurchase of equity interests issued on business acquisitions Issuance of Subordinate VotingShares from settlement of DSU Total contributions by,and distributions to,shareholders Balance as at December 31, 2020 Balance as at March 31, 2019 Net loss Other comprehensive loss Total comprehensive loss Share-based compensation Issuance of Subordinate Voting Shares from exercise of stock options Share-based compensation on shares vested during the period, issued on business acquisitions Issuance of Subordinate Voting Shares from settlement of DSU Acquisition of Matricis Informatique Inc. Acquisition of Alithya Travercent LLC Total contributions by,and distributions to,shareholders Balance as at December 31, 2019	Notes 5 5 5	Shares outstanding Number 58,073,517 — — — — 157,882 — 7,718 165,600 58,239,117 55,665,476 — — — — 30,151 — 5,514 473,646 1,274,510 1,783,821 57,449,297	Share capital $ 195,335 — — — — 600 — 32 632 195,967 186,861 — — — — 116 305 23 1,800 3,870 6,114 192,975	Deficit $ (78,780) (14,813) — (14,813) — — (72) — (72) (93,665) (39,113) (5,692) — (5,692) — — — — — — — (44,805)	Accumulated other comprehensive income(loss) $ 6,123 — (5,714) (5,714) — — — — — 409 1,469 — (2,488) (2,488) — — — — — — — (1,019)	Contributed surplus Total $ $ 4,691 127,369 — (14,813) — (5,714) — (20,527) 1,154 1,154 2,876 3,476 (1,204) (1,276) (32) — 2,794 3,354 7,485 110,196 2,239 151,456 — (5,692) — (2,488) — (8,180) 722 722 (21) 95 379 684 (23) — — 1,800 — 3,870 1,057 7,171 3,296 150,447

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

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands of Canadian dollars) (unaudited) Net loss Other comprehensive loss Items that may be classified subsequently to profit or loss Cumulative translation adjustment on consolidation of foreign subsidiaries Comprehensive loss	For the three months ended December 31, 2020 2019 $ $ (4,793) (1,815) (2,316) (1,649) (2,316) (1,649) (7,109) (3,464)	For the nine months ended December 31,
	2020 $ (4,793) (2,316) (2,316) (7,109)	2020 2019 $ $ (14,813) (5,692) (5,714) (2,488) (5,714) (2,488) (20,527) (8,180)

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

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

		For the three months ended December 31,	For the three months ended December 31,	For the nine months ended December 31,
(in thousands of Canadian dollars) (unaudited) Operating activities Net loss Items not affecting cash Depreciation and amortization Amortization of finance costs Share-based compensation Unrealized foreign exchange loss (gain) Foreign exchange gain on repayment of long-term debt Forgiveness of PPP loan Interest accretion on balances of purchase payable Loss on disposal of property and equipment Other Gain on sale of subsidiary Deferred taxes Changes in non-cash working capital items Net cash from operating activities Investing activities Additions to property and equipment, net of disposals Additions to intangibles Repurchase of equity interests issued on business acquisitions Restricted cash Short-term deposits Business acquisitions and divestiture, net of cash acquired Right-of-use assets Net cash used in investing activities Financing activities Increase in long-term debt, net of related transaction costs Repayment of long-term debt Repayment of lease liabilities Exercise of stock options Lease incentives Net cash from financing activities Effect of exchange rate changes Net change in cash Cash, beginning of period Cash, end of period Cash paid (included in cash flow used in operating activities) Interest paid Income taxes paid	Notes 8 4 8 9 5	2020	2019	2020 2019
		$ (4,793) 3,603 63 1,406 49 — (609) 208 — (5) — (35) 1,176	$ (1,815) 3,594 55 723 118 — — 71 — — (681) (616) 6,632	$ $ (14,813) (5,692) 11,958 10,272 179 183 4,629 1,406 (258) 107 (610) — (609) — 627 127 204 — (128) — — (681) (2,382) (2,208) 2,940 8,150
		5,856	9,896	16,550 17,356
		1,063	8,081	1,737 11,664
		(985) (160) (1,276) (5) — — —	(1,745) (47) — (12) (2) (7,386) —	(1,744) (2,857) (166) (47) (1,276) — (1,016) (35) — (6) — (7,386) — 222
		(2,426)	(9,192)	(4,202) (10,109)
		9,988 (7,470) (332) — —	19,808 (12,807) (372) — —	45,209 40,710 (41,990) (33,300) (886) (1,351) — 96 917 —
		2,186	6,629	3,250 6,155
		(65)	(314)	(166) (720)
		758 8,671	5,204 14,587	619 6,990 8,810 12,801
		9,429	19,791	9,429 19,791
		324 136	412 60	1,216 1,182 327 347

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

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

1. GOVERNING STATUTES AND NATURE OF OPERATIONS

Alithya Group inc. (“Alithya” or the “Company”) (formerly 9374-8572 Québec Inc.) was incorporated on March 8, 2018 under the Business Corporations Act (Quebec). The Company was created for the purpose of the business combination between Alithya Canada Inc. (formerly Alithya Group Inc.), incorporated on April 2, 1992 under the Companies Act (Québec), now the Business Corporations Act (Québec), Alithya USA, Inc. (formerly Edgewater Technology, Inc.), a corporation governed under the laws of Delaware and previously listed on the NASDAQ Global Market and 9374-8572 Delaware Inc., a corporation governed under the laws of Delaware and a whollyowned subsidiary of the Company. As of the opening of markets, on November 2, 2018, the Company’s Class A subordinate voting shares (the “Subordinate Voting Shares”) commenced trading on the Toronto Stock Exchange (“TSX”) and on the NASDAQ Capital Market (“NASDAQ”) under the symbol “ALYA”.

The Company and its subsidiaries (the “Group”) are leaders in strategy and digital transformation. Alithya's integrated offering is based on four pillars of expertise: business strategy, application services, enterprise solutions and data and analytics. The Group deploys solutions, services, and skill sets to craft tools tailored to its client’s unique business needs in the financial services, manufacturing, renewable energy, telecommunications, transportation and logistics, professional services, healthcare, and government sectors.

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These interim condensed consolidated financial statements have been prepared in accordance with the accounting policies adopted in the most recent annual consolidated financial statements for the year ended March 31, 2020.

The accounting policies have been applied consistently by all Alithya entities.

BASIS OF PREPARATION

Statement of Compliance

The Company’s interim condensed consolidated financial statements are presented in Canadian dollars, which is also the parent company’s functional currency. They have been prepared in accordance with IAS 34 - Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with International Financial Reporting Standards ("IFRS"), and should be read in conjunction with the consolidated financial statements for the year ended March 31, 2020.

These interim condensed consolidated financial statements were approved and authorized for issue by the Board of Directors (the “Board”) on February 10, 2021.

Basis of Measurement and Comparative Figures

The interim condensed consolidated financial statements have been prepared on an accrual basis and under the historical cost basis except for certain assets and liabilities initially recognized in connection with business combinations, which are measured at fair value.

Certain figures have been reclassified to conform to the current year presentation.

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY

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

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

Assessment of COVID-19 impact

As a result of the continued and uncertain economic and business impact of the COVID-19 pandemic, the Group has reviewed its estimates, judgments and assumptions used in the preparation of its interim condensed consolidated financial statements, including the determination of whether indicators of impairment exist for its tangible and intangible assets, including goodwill, estimated losses on revenue from fixed-fee arrangement contracts, the credit risk of its counterparties, and the estimates and judgments used for the measurement of its deferred tax assets. The estimates, judgments and assumptions used were the same as those applied in the Group's last annual audited financial statements for the year ended March 31, 2020.

As the situation is evolving and the impact of the COVID-19 pandemic on the Group’s operations and financial conditions will be impacted by the duration of government-mandated measures and overall customer demand, revisions may be required in future periods to estimates and assumptions. Although management expects the COVID-19 pandemic related disruptions to continue beyond fiscal 2021, management believes that the Group’s long-term estimates and assumptions do not require further revisions, however management continues to monitor and evaluate the situation and its impact on the Group’s business.

FUTURE ACCOUNTING STANDARDS

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

New Standards and Interpretations Issued but Not Yet Effective

On January 23, 2020, the IASB issued amendments to IAS 1 - Presentation of Financial Statements, to clarify the classification of liabilities as current or non-current. In July 2020, the IASB issued final amendments to defer the effective date to annual periods beginning on or after January 1, 2023. Early adoption is permitted. For the purposes of non-current classification, the amendments removed the requirement for a right to defer settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must have substance and exist at the end of the reporting period. The amendments also clarify how a company classifies a liability that includes a counterparty conversion option. The amendments state that: settlement of a liability includes transferring a company’s own equity instruments to the counterparty; and when classifying liabilities as current or non-current, a company can ignore only those conversion options that are recognized as equity. Management is currently assessing, but has not yet determined, the impact of this new standard on the Group’s consolidated financial statements.

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

On May 14, 2020, the IASB published Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37), which specifies which costs a company includes when assessing whether a contract will be loss-making. The amendments are effective for annual periods beginning on or after January 1, 2022. Management is currently assessing, but has not yet determined, the impact on the Group’s consolidated financial statements.

On May 28, 2020, the IASB published COVID-19-Related Rent Concessions (Amendment to IFRS 16), which amends IFRS 16, Leases, to provide lessees with a practical expedient that relieves lessees from assessing whether a COVID-19-related rent concession is a lease modification. The amendments are effective for annual periods beginning on or after June 1, 2020 and will be applied retrospectively. Management has completed its analysis of the guidance and does not expect it to materially impact the Group’s consolidated financial statements.

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s consolidated financial statements.

3. LEASES

Right-of-use assets

The following right-of-use assets relate to right-of-use real estate:

As at	December 31, 2020 March 31, 2020 $ $ 11,492 6,509 2,570 7,262 — (381) (1,426) (2,090) 24 3 (198) 189 12,462 11,492
Beginning balance as at April 1, 2020 and 2019 Additions Terminations Depreciation Lease inducement allowance Exchange rate effect Ending balance

Lease liabilities

As at	December 31, 2020 March 31, 2020 $ $ 13,232 6,668 2,570 7,257 — (381) (104) — (1,331) (2,129) 2,243 1,249 445 375 (209) 193 16,846 13,232 1,577 1,559 15,269 11,673
Beginning balance as at April 1, 2020 and 2019 Additions Terminations Adjustment Lease payments Lease incentives Lease interest Exchange rate effect Ending balance Current portion

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

3. LEASES (CONT'D)

Contractual lease payments under the lease liabilities as at December 31, 2020 are as follows:

As at	December 31, 2020
Less than one year One to two years Two to five years More than five years Total undiscounted lease payments at period end	$
	2,191 2,308 6,682
	8,634
	19,815

Amounts recognized in net loss

As at	For the three months ended December 31, 2020 2019	For the three months ended December 31, 2020 2019	For the nine months ended December 31, 2020 2019
Interest on lease liabilities Expenses relating to short-term leases Variable lease payments	$ 155 — 573 728	$ 136 65 603 804	$ $ 445 278 — 105 1,981 1,429 2,426 1,812

Total cash outflow for leases for the three and nine months ended December 31, 2020 was $1,060,388 and $3,312,081, respectively, and $1,175,589 and $3,162,813 for the three and nine months ended December 31, 2019, respectively.

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

4. LONG-TERM DEBT

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

As at

December 31, March 31,

Senior secured revolving credit facility_(a) Balance of purchase payable with a nominal value of $3,100,000, non-interest bearing (5.8 % effective interest rate) payable April 3, 2022 Balance of purchase payable with a nominal value of $1,800,000, non-interest bearing (6.0 % effective interest rate), payable on October 1, 2022 Balance of purchase payable with a nominal value of $8,704,673 (US$6,825,000), non-interest bearing (6.0 % effective interest rate), payable on December 13, 2022 Balance of purchase payable with a nominal value of $3,258,750, non-interest bearing (5.7 % effective interest rate) payable on February 1, 2022 Unsecured promissory notes (US$5,825,000)(b) Deferral of employment tax payments (US$1,877,894)(c)_ Other Unamortized transaction costs (net of accumulated amortization of $413,753 and $234,858) Current portion of long-term debt

2020 2020 $ $ 29,477 37,615 2,960 2,877 1,626 1,556 7,769 8,232 3,069 2,944 7,428 — 2,395 — 280 347 (262) (342) 54,742 53,229 280 1,143 54,462 52,086

(a) The senior secured revolving credit facility (the "Credit facility") is available to a maximum amount of $60,000,000 and can be drawn in Canadian and the equivalent amount in U.S. dollars. It is available in prime rate advances, LIBOR advances, bankers’ acceptances and letters of credit up to $2,500,000.

The advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.00% to 1.50%, or bankers’ acceptances or LIBOR rates, plus an applicable margin ranging from 1.00% to 2.75%, as applicable for Canadian and U.S. advances, respectively. Until June 30, 2021, the applicable margin on the Canadian or U.S. advances and the bankers' acceptances and LIBOR advances is set at 1.50% and 2.75%, respectively. Thereafter, the applicable margin will be determined based on threshold limits for certain financial ratios.

As security for the Credit Facility, Alithya provided a first ranking hypothec on the universality of its assets excluding leased equipment and Investissement Quebec’s first ranking lien on tax credits receivable for the financing related to refundable tax credits, to a maximum of $7,500,000. Under the terms of the agreement, the Group is required to maintain certain financial covenants which are measured on a quarterly basis. A monthly minimum availability test is also applicable until March 31, 2021. The Credit Facility matures in 2022 and is renewable for additional one-year periods at the lender’s discretion.

The Group was in compliance with all of its financial covenants as at December 31, 2020 and March 31, 2020.

(b) As a result of the COVID-19 pandemic, on May 5, 2020, certain U.S. subsidiaries of the Company received funding under the Paycheck Protection Program ("PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") administered by the U.S. Small Business Administration ("SBA") and entered into unsecured promissory notes (the "Notes"). The Notes have a term of five years at an interest rate of 1% per annum, with a deferral of payments for the initial six months of the loan, with respect to any portion of the Notes which is not forgiven as described below.

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

4. LONG-TERM DEBT (CONT'D)

Under the terms of the CARES Act, PPP loan recipients can apply for forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to limitations and ongoing rule making by the SBA, based on the timely use of loan proceeds for payroll costs, including payments required to continue group health care benefits, and certain rent, utility, and mortgage interest costs and the maintenance of employee and compensation levels. While there is no assurance the Company will obtain forgiveness of the PPP loan in whole or in part, the Company has used the proceeds of the Notes for qualifying expenses.

The Company recorded full loan forgiveness, for one of the Group's U.S. subsidiaries, following confirmation of forgiveness, in the amount of US$475,000 ($608,728). The amount has been recorded as a reduction of cost of revenues and selling, general and administrative expenses in the amounts of $533,686 and $75,042, respectively. The remaining PPP loans are still under review for forgiveness.

(c) The CARES Act allows employers to defer the payments of the employer share of social security taxes during the period beginning on March 27, 2020 and ending on the earlier of December 31, 2020 or the date the Company receives a decision from the lender that the PPP loan is forgiven. The payment of the deferred social security taxes is due fifty percent on December 31, 2021 and the remaining amount on December 31, 2022.

5. SHARE CAPITAL

	Subordinate Voting Shares	Subordinate Voting Shares	Multiple Voting Shares
Beginning balance as at April 1, 2020 Share-based compensation on shares vested during the period, issued on business acquisitions Settlement of deferred share units As at December 31, 2020	Number of shares 50,904,533 157,882 7,718 51,070,133	$ 191,820 600 32 192,452	Number of shares $ 7,168,984 3,515 — — — — 7,168,984 3,515

During the nine months ended December 31, 2020, the following transactions occurred:

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

• As part of the Travercent Acquisition, the Company elected not to convert the first anniversary share consideration rights into Subordinate Voting Shares but rather to settle for total cash consideration of US $975,000 ($1,276,175). This resulted in a repurchase of a vested equity instrument, which has been recorded as a reduction of retained earnings and contributed surplus in the amounts of $72,237 and $1,203,938, respectively. The Company continues to account for the December 13, 2021 and 2022 anniversary share consideration rights as an equity instrument.

• 7,718 deferred share units ("DSU") were settled and 7,718 Subordinate Voting Shares were issued with an approximate value of $32,000, reclassified from contributed surplus.

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

5. SHARE CAPITAL (CONT'D)

Share purchase plan

Under the Company’s share purchase plan, the Group contributes an amount equal to a percentage of the employee’s basic contribution, depending on the position held by the employee. The employee may make additional contributions, for total employee contributions, including basic contributions, of up to 10% of the annual gross salary. However, the Group does not match contributions in the case of such additional contributions. The employee and the Group’s contributions are remitted to an independent administrative agent who purchases Subordinate Voting Shares on the open market on behalf of the employee through either the TSX or NASDAQ. The Group's contribution expense is recognized as share-based compensation.

Long-Term Incentive Plan (the “Plan”)

The Company operates a plan which provides for awards of stock options, restricted shares, restricted share units, performance share units, DSU, and share appreciation rights to eligible employees and directors of the Company and its subsidiaries, all of which once exercised or settled result in the issuance of Subordinate Voting Shares.

Stock options

Under the Company’s Plan, the Board may grant, at its discretion, stock options to purchase Subordinate Voting Shares to eligible employees and directors of the Company and its subsidiaries. The Board establishes the exercise price at the time the stock options are granted, where the exercise price must in all cases be not less than the greater of the closing price of such shares on the TSX and NASDAQ on the business day immediately prior to the grant date. Stock options vest, as set out in the applicable award agreement between the participant and the Company, which may include performance-based vesting conditions. Vesting is generally four years from the date of grant and the stock options may be exercised by the tenth anniversary of the grant date, except in the event of death, disability, retirement or termination of employment. The Plan provides that the aggregate number of Subordinate Voting Shares issuable pursuant to any type of awards under the Plan shall not exceed 10% of the aggregate number of Subordinate Voting Shares and Class B multiple voting shares (the "Multiple Voting Shares") issued and outstanding from time to time.

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

	Number of stock options Weighted average exerciseprice
Beginning balance as at April 1, 2020 Granted Forfeited Expired Ending balance as at December 31, 2020 Exercisable at period end	$ 3,172,289 3.72 755,000 2.26 (126,235) 4.98 (5,959) 3.44 3,795,095 3.39 1,845,358 3.25

Included in the 1,845,358 of stock options exercisable as at December 31, 2020, 963,160 stock options are available to purchase Multiple Voting Shares.

On June 23, 2020, Alithya issued 570,000 and 185,000 stock options, to purchase a total of 755,000 Subordinate Voting Shares at an exercise price of $2.26 and US$1.67, respectively.

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

5. SHARE CAPITAL (CONT'D)

Deferred Share Units

Under the Plan, the Board, subject to the provisions of the Plan and such other terms and conditions, may grant DSU to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its subsidiaries. The DSU shall be settled on the date as set out in the applicable award agreement, between the participant and the Company, however not earlier than the participant’s termination date. If the agreement does not establish a settlement date then it shall be on the 90th day following the participant’s termination date for eligible Canadian participants and not earlier than on the date that is six months after the termination date for eligible U.S. participants.

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

	Number of DSU Weighted average exerciseprice
Beginning balance as at April 1, 2020 Granted Settled Ending balance as at December 31, 2020	$ 140,885 3.48 161,486 2.53 (7,718) 4.16 294,653 2.94

On June 30, 2020, 66,840 fully vested DSU, in aggregate, were granted to non-employee directors of the Company at a fair value of $2.10, per DSU, for an aggregate fair value of $140,364. The amounts have been recorded in share-based compensation expense.

On September 30, 2020, 46,405 fully vested DSU, in aggregate, were granted to non-employee directors of the Company at a fair value of $2.89, per DSU, for an aggregate fair value of $134,110. The amounts have been recorded in share-based compensation expense.

On December 31, 2020, 48,241 fully vested DSU, in aggregate, were granted to non-employee directors of the Company at a fair value of $2.78 per DSU, for an aggregate fair value of $134,110. The amounts have been recorded in share-based compensation expense.

Restricted Share Units ("RSU")

Under the Plan, the Board, subject to the provisions of the Plan and such other terms and conditions, may grant RSU to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its subsidiaries. The RSU shall vest on the third anniversary of the date of grant and will settle as soon as practicable following the expiry of the vesting period, unless otherwise specified by the Board at the time of grant.

On June 23, 2020, 181,498 RSU, in aggregate, vesting one year from the date of grant, were granted to employees of the Company subject to the terms set out in the award agreement at a fair value of $2.26, per RSU, for an aggregate fair value of $410,185. Share-based compensation expense for the three and nine months ended December 31, 2020 was $101,488 and $212,571, respectively.

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

5. SHARE CAPITAL (CONT'D)

Share-Based Compensation

The number of Alithya stock options granted to employees during the nine months ended December 31, 2020 and 2019, the related compensation expense recorded, and the assumptions used to determine share-based compensation expense, using the Black-Scholes stock option pricing model, were as follows:

Period ended	December 31,
Compensation expense related to the options granted Number of stock options granted Weighted average fair value of options granted Aggregate fair value of options granted Weighted average assumptions Share price Exercise price Risk-free interest rate Expected volatility* Dividend yield Expected option life (years) Vesting conditions – time (years)	2020 2019 106 238 755,000 970,500 $0.81 $1.13 609 1,096 $2.26 $3.63 $2.26 $3.63 0.46 % 1.79 % 35 % 30 % — — 6.6 5.7 3.2 2.7

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

6. EARNINGS PER SHARE

	For the three months ended December 31,	For the three months ended December 31,	For the nine months ended December 31,
Net loss Weighted average number of common shares outstanding Basic and diluted loss per share	2020 $ (4,793) 58,237,401 (0.08)	2019 $ (1,815) 56,414,324 (0.03)	2020 2019 $ $ (14,813) (5,692) 58,132,638 55,919,574 (0.25) (0.10)

The stock options mentioned in Note 5 were not included in the calculation of diluted earnings per share since the Company suffered losses and the inclusion of these stock options would have an antidilutive effect.

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

7. ADDITIONAL INFORMATION ON CONSOLIDATED LOSS

The following table provides additional information on the consolidated loss:

	For the three months ended December 31,	For the three months ended December 31,	For the nine months ended December 31,
Employee compensation costs Tax credits Selling expenses(1) General and administrative expenses(1) Depreciation of property and equipment Depreciation of right-of-use assets	2020 $ 51,672 (1,618) 11,237 9,184 445 455	2019 $ 45,758 (1,448) 9,891 7,854 305 573	2020 2019 $ $ 155,341 141,286 (4,865) (3,519) 34,875 30,222 25,108 25,026 1,283 849 1,426 1,625

(1) Including related employee compensation costs.

Certain subsidiaries within the Group have applied for COVID-19 financial relief in Canada under the Canada Emergency Wage Subsidy (“CEWS”) program. The CEWS program is a wage subsidy program launched by the Canadian federal government to qualifying employers to subsidize payroll costs during the COVID-19 pandemic. The qualified subsidy amounts received under the CEWS program are non-repayable. During the three and nine months ended December 31, 2020, the subsidiaries recorded subsidies of $484,298 and $2,504,002, respectively.

On October 14, 2020, the Canadian federal government adopted new rules under the CEWS program, including the extension to June 2021 among other important changes. Based on the new rules, certain subsidiaries within the Group may be eligible to receive further funding. Management continues to assess eligibility under these new rules. However, since those amounts will be determined based on actual future revenues, it is not yet possible to provide a reasonable estimate of their expected amount.

During the three and nine months ended December 31, 2020, Alithya France SAS (formerly Alithya Consulting SAS), a subsidiary located in France, received approximately €82,000 and €401,000 ($124,212 and $616,212), respectively, pursuant to the French government’s partial activity program. The program is subject to certain annual limits per employee.

8. FINANCIAL EXPENSES

The following table summarizes financial expenses:

	For the three months ended December 31,	For the three months ended December 31,	For the nine months ended December 31,
Interest on long-term debt Interest and financing charges Interest on lease liabilities Amortization of finance costs Interest accretion on balances of purchase payable Interest income	2020 $ 307 141 156 63 208 (5) 870	2019 $ 258 95 135 55 71 (6) 608	2020 2019 $ $ 864 881 329 245 445 277 179 183 627 127 (19) (34) 2,425 1,679

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 2020 AND 2019

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

9. SUPPLEMENTARY CASH FLOW INFORMATION

Net change in non-cash working capital items is as follows:

	For the three months ended December 31,	For the three months ended December 31,	For the nine months ended December 31,
Accounts receivable and other receivables Income taxes receivable Unbilled revenue Tax credits receivable Prepaids Accounts payable and accrued liabilities Deferred revenue	2020 $ 2,379 (100) (738) (1,287) (2,431) 1,573 1,780 1,176	2019 $ 4,587 (149) 1,469 (1,290) (90) 994 1,111 6,632	2020 2019 $ $ 6,684 11,526 910 (591) (4,214) (68) 893 366 (1,906) 76 (2,158) (4,723) 2,731 1,564 2,940 8,150

10. SEGMENT AND GEOGRAPHICAL INFORMATION

The Company has examined its activities and has determined, based on information received on a regular basis by the decision-makers, that it has a single reportable segment.

Revenues by geographic location

The following table presents total external revenues by geographic location:

	For the three months	ended December 31,	For the nine months	ended December 31,
Canada U.S. Europe	2020 $ % 40,029 56.7 27,598 39.1 2,979 4.2 70,606 100.0	2019 $ % 36,732 55.4 26,420 39.9 3,093 4.7 66,245 100.0	2020 $ % 117,335 56.0 84,953 40.5 7,384 3.5 209,672 100.0	2019
	$ 40,029 27,598 2,979 70,606	$ 36,732 26,420 3,093	$ 117,335 84,953 7,384 209,672	$ % 109,638 53.3 86,657 42.1 9,531 4.6 205,826 100.0
		66,245

Long-lived assets by geographic location

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

As at	December 31,	March 31,
Canada U.S. Europe	2020 $ % 64,141 47.8 68,728 51.3 1,208 0.9 134,077 100.0	2020
	$ 64,141 68,728 1,208 134,077	$ % 64,143 43.3 82,607 55.8 1,326 0.9 148,076 100.0

Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2020 and 2019

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