sylogist™

SYLOGIST LTD.

Consolidated Financial Statements

For the years ended December 31, 2024 and 2023

Empowering the Good you Do

Management's report

The consolidated financial statements of the Company included here within as well as all the information presented in this Annual Report are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements have been prepared by management in accordance with IFRS Accounting Standards. The consolidated financial statements include amounts based on the use of best estimates and judgements. Management has established these amounts in a reasonable manner in order to ensure that the consolidated financial statements are fairly presented in all material respects. The Company maintains control systems over internal accounting and administration. The objective of these systems is to provide a reasonable assurance that the financial information is pertinent, reliable and accurate, and that the Company's assets are properly accounted for and safeguarded.

The Board of Directors is entrusted with ensuring that management assumes its responsibilities regarding the presentation of financial information and is ultimately responsible for the examination and approval of the financial statements. However, it is mainly through its Audit Committee, whose members are external directors, that the Board discharges this responsibility. This committee meets periodically with management and the external auditors to discuss the internal controls exercised over the process of presentation of the financial information, auditing issues and questions on the presentation of financial information, in order to assure itself that each party properly fulfills its function and also to examine the consolidated financial statements and the external auditors' report.

The consolidated financial statements have been audited on behalf of the shareholders by the external auditors, KPMG LLP, for the fiscal years ended December 31, 2024, and 2023. The auditors have free and full access to internal records, to management and to the Audit Committee.

"William C. Wood"

William C. Wood, President and CEO

"Sujeet Kini"

Sujeet Kini, CFO

KPMG

KPMG LLP
205 5th Avenue SW
Suite 3100
Calgary AB T2P 4B9
Tel 403-691-8000
Fax 403-691-8008
www.kpmg.ca

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Sylogist Ltd.

Opinion

We have audited the consolidated financial statements of Sylogist Ltd. (the "Entity"), which comprise:

the consolidated statements of financial position as at December 31, 2024 and December 31, 2023
the consolidated statements of comprehensive income for the years then ended
the consolidated statements of changes in shareholders' equity for the years then ended
the consolidated statements of cash flows for the years then ended
and notes to the consolidated financial statements, including a summary of material accounting policy information

(Hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2024 and December 31, 2023, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section of our auditor's report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

KPMG

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to be communicated in our auditor's report.

Evaluation of the goodwill impairment test for the SylogistSolutions CGU

Description of the matter

We draw attention to Notes 2(d), 3(e) and 8 to the financial statements. The Entity reported goodwill of $27,378 thousand, of which $5,392 thousand relates to the SylogistSolutions cash generating unit. Goodwill is subject to impairment testing at least annually, or more frequently if indicators of impairment exist. The Entity tests goodwill for impairment by estimating the recoverable amount of the cash-generating unit (CGU) to which the goodwill belongs based on the higher of fair value less costs to sell and value in use. The recoverable amount is determined based on value in use, which is estimated using a discounted cash flow model, calculating the present value of future post-tax cash flows with a post-tax risk adjusted discount rate. In determining the value in use, the Entity's significant assumptions include forecasted revenue, gross margins, and post-tax risk adjusted discount rate.

Why the matter is a key audit matter

We identified the evaluation of the goodwill impairment test for the SylogistSolutions CGU as a key audit matter. Significant auditor judgment was required to evaluate certain assumptions used in the discounted cash flow model, specifically forecasted revenue, gross margins, and the post-tax risk adjusted discount rate. Minor changes in the significant assumptions had a significant effect on the estimated recoverable amount of the CGU, indicating a significant risk of material misstatement. The audit effort associated with the valuation also required the use of professionals with specialized skills and knowledge.

How the matter was addressed in the audit

The following are the primary procedures we performed to address this key audit matter:

We evaluated the Entity's ability to accurately forecast cash flows by comparing historical forecasts to actual results.

We evaluated changes in conditions and events impacting the cash flows to assess the appropriateness of the Entity's assumptions of forecasted revenue and gross margins.

KPMG

We involved valuation professionals with specialized skills and knowledge, who assisted in:

Assessing the appropriateness of the overall methodology applied in determining the recoverable amount of the CGU; and
Evaluating the appropriateness of the Company's estimate of the post-tax discount rate by comparing it to publicly available market data.

Determination of distinct performance obligations and the standalone selling price of these performance obligations for customer contracts with a software license and/or project services

Description of the matter

We draw attention to Notes 2(d), 3(a) and 16 to the financial statements. The Entity reported revenue of $65,599 thousand, a portion of which relates to software licenses and professional services in the contract.

The Entity enters into contracts with customers that often include promises to deliver multiple products and services, such as SaaS, maintenance and support, project services and/or hardware. Determining whether such bundled products and services are considered i) distinct performance obligations that should be separately recognized or ii) non-distinct and therefore should be combined with another good or service and recognized as a combined unit of accounting may require significant judgment. The determination of the standalone selling prices (SSP) for distinct performance obligations can also require judgment and estimates. The SSP for a performance obligation in a contract with customers is an estimate of the price that would be charged if the distinct good or service was sold separately in similar circumstances and to similar customers.

Why the matter is a key audit matter

We identified the determination of distinct performance obligations and the SSP of these performance obligations for customer contracts with a software license and/or project services as a key audit matter. Significant auditor judgment was required to evaluate the determination of performance obligations and the SSP.

How the matter was addressed in the audit

The primary procedures we performed to address this key audit matter included the following:

We evaluated the identified distinct performance obligations for a selection of contracts entered into during the year based on the terms of the contract and practices observed in the industry.

We evaluated the determined allocation of SSP based on current pricing patterns in relevant customer contracts, historical analysis of contract pricing completed by the Entity and pricing observed in the industry.

KPMG

Other Information

Management is responsible for the other information. Other information comprises:

the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditor’s report.

We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

KPMG

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

KPMG

Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for our audit opinion.
Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditor's report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this auditor's report is Reinier Deurwaarder.

KPMG LLP

Chartered Professional Accountants

Calgary, Canada

March 12, 2025

Sylogist Ltd.

Consolidated Statements of Financial Position
(In thousands of Canadian dollars)

	Note	December 31, 2024	December 31, 2023
Assets			Adjusted, Note 2(e)
Current assets
Cash and cash equivalents	$	13,264	$ 11,608
Trade and other receivables	5	10,612	10,443
Prepaid expenses and other current assets	6	3,792	4,268
Total current assets		27,668	26,319
Non-current assets
Property, equipment, and right-of-use assets		512	1,395
Intangible assets	7	42,358	42,701
Goodwill	8	27,378	26,161
Total non-current assets		70,248	70,257
Total assets	$	97,916	$ 96,576
Liabilities
Current liabilities
Trade and other payables	10	$ 7,404	$ 4,828
Credit facility	11	—	17,210
Deferred revenue – short term	12	23,026	21,581
Acquisition liabilities	4(a)	2,473	2,428
Share based units	15(b)	1,393	—
Total current liabilities		34,296	46,047
Non-current liabilities
Deferred tax	9	3,291	7,598
Deferred revenue – long term	12	2,037	2,678
Share based units	15(b)	1,365	2,237
Credit facility	11	19,152	—
Other payables		190	419
Total non-current liabilities		26,035	12,932
Total liabilities	$	60,331	$ 58,979
Equity
Share capital	$	81,248	$ 81,041
Contributed surplus		5,692	5,764
Foreign currency translation reserve		3,912	1,537
Deficit		(53,267)	(50,745)
Total equity attributable to the owners of the Company		37,585	37,597
Total liabilities and equity	$	97,916	$ 96,576

The accompanying notes are an integral part of these audited consolidated financial statements. Approved on behalf of the Board of Directors by:

"Errol Olsen" Director

"Barry Foster" Director

Sylogist Ltd.

Consolidated Statements of Comprehensive Income
(In thousands of Canadian dollars, except share and per share amounts)

	Note	Years ended December 31,
		2024	2023
Revenue:
SaaS subscriptions	$	29,408	$ 26,112
Maintenance and support		13,945	14,111
Project services		20,719	22,051
Hardware and other		1,527	3,240
Total revenue	16	65,599	65,514
Cost of revenue		27,053	25,983
Gross profit		38,546	39,531
Expenses:
General and administrative		11,124	12,036
Sales and marketing		6,956	6,040
Research and development		4,302	4,194
Amortization and depreciation		10,606	10,144
Equity based compensation	13(d)	2,295	1,435
Interest expense, net		1,522	1,925
Foreign exchange loss		14	99
Acquisition and restructuring costs	4(e)	2,930	2,114
Total expenses		39,749	37,987
Gain on sale of building	4(c)	130	—
(Loss) profit before income taxes		(1,073)	1,544
Current income tax		4,343	3,029
Deferred income tax		(4,689)	(2,585)
	9(b)	(346)	444
Net (loss) profit	$	(727)	$ 1,100
Other comprehensive income:
Exchange differences on translation of foreign operations		2,375	(644)
Comprehensive income	$	1,648	$ 456
Basic and diluted (loss) earnings per common share	13(f)	$ (0.03)	$ 0.05

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

Sylogist Ltd.

Consolidated Statements of Changes in Shareholders' Equity
(In thousands of Canadian dollars)

	Share capital
	Note	Number	Amount	Contributed surplus	Foreign currency translation reserve	Deficit	Total
Balance as of December 31, 2022		23,829,777	$ 82,227	$ 5,467	$ 2,181	$(49,970)	$ 39,905
Net Profit			—	—	—	1,100	1,100
Other comprehensive income:
Exchange differences on translation of foreign operations			—	—	(644)	—	(644)
Total comprehensive income			—	—	(644)	1,100	456
Payment of dividends	13(b)		—	—	—	(943)	(943)
Repurchase of common shares	13(c)	(343,600)	(1,186)	—	—	(932)	(2,118)
Share based compensation-RSUs			—	4	—	—	4
Stock based compensation			—	293	—	—	293
Balance as of December 31, 2023		23,486,177	$ 81,041	$ 5,764	$ 1,537	$(50,745)	$ 37,597
Net loss			—	—	—	(727)	(727)
Other comprehensive income:
Exchange differences on translation of foreign operations			—	—	2,375	—	2,375
Total comprehensive income			—	—	2,375	(727)	1,648
Payment of dividends	13(b)		—	—	—	(937)	(937)
Repurchase of common shares	13(c)	(154,200)	(532)	—	—	(858)	(1,390)
Exercise of options	13(d)	60,000	739	(109)	—	—	630
Share based compensation-RSUs			—	16	—	—	16
Stock based compensation			—	21	—	—	21
Balance as of December 31, 2024		23,391,977	$ 81,248	$ 5,692	$ 3,912	$(53,267)	$ 37,585

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

Sylogist Ltd.

(In thousands of Canadian dollars)

Consolidated Statements of Cash Flows

	Note	Years ended December 31,
		2024	2023
Operating Activities
Net (loss) profit	$	(727) $	1,100
Adjustments for:
Amortization and depreciation		10,606	10,144
Equity based compensation	13(d)	2,295	1,435
Interest on lease obligations		28	43
Gain on sale of building		(130)	—
Cash taxes paid		(3,622)	(4,075)
Cash from operating activities before change in non-cash working capital		8,450	8,647
Changes in non-cash operating assets and liabilities
Trade and other receivables		(521)	(1,035)
Prepaid expenses and other current assets		161	(748)
Trade and other payables		5,596	5,572
Deferred revenue	12	1,340	569
Acquisition liabilities	4(e)	1,906	1,692
Deferred tax		(4,698)	(2,516)
Net cash provided by operating activities		12,234	12,181
Cash flows from investing activities:
Additions to property and equipment		(65)	(150)
Additions to intangible assets from purchases		(164)	(521)
Additions to intangible assets from capitalized development		(5,456)	(4,511)
Acquisition related earnout paid		(1,862)	(404)
Cash paid for the acquisition of Time Clock Now	4(b)	(2,235)	—
Cash received at the disposition of the Managed IT Services division	4(d)	90	—
Cash received from sale of building	4(c)	783	—
Net cash used in investing activities	$	(8,909) $	(5,586)
Cash flows from financing activities:
Credit facility	11	1,820	(4,000)
Interest paid on financing		(1,479)	(1,847)
Repayments of lease obligations		(346)	(407)
Payment of dividends	13(b)	(937)	(943)
Exercise of options		630	—
Repurchase of common shares	13(c)	(1,390)	(2,118)
Net cash used in financing activities	$	(1,702) $	(9,315)
Increase (decrease) in cash and cash equivalents		1,623	(2,720)
Effect of currency translation adjustment on cash and cash equivalents		33	(216)
Cash and cash equivalents, beginning of the period		11,608	14,544
Cash and cash equivalents, end of the period	$	13,264	$ 11,608

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

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

1. Nature of operations

Sylogist Ltd. (the "Company" or "Sylogist") (TSX: SYZ.TO) is a software company that provides mission-critical software-as-a-service ("SaaS") solutions to over two thousand public sector customers globally across the government, nonprofit, and education segments.

The Company was incorporated under the Business Corporations Act (Alberta) on March 1, 1993, and wholly owns, directly or indirectly, the following subsidiary corporations: Sylogist USA, Inc., SylogistServices, Inc., Sylogist (UK) Limited, SylogistMission, Inc., SylogistGov, Inc., and SylogistEd, Inc.

Sylogist is headquartered in Calgary, Alberta, Canada, with regional offices in Barrie, Ontario, Canada; Littleton, Colorado; and Shawnee, Oklahoma in the United States of America. The Company's registered office is located at Brookfield Place, Suite 2700, 225 6 Avenue S.W., Calgary, Alberta, Canada, T2P 1N2.

These audited consolidated financial statements were approved and authorized for issuance by the Board of Directors on March 13, 2025.

2. Consolidated financial statements

(a) Statement of presentation

These consolidated financial statements present the annual financial position of the Company, and its subsidiaries prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

If necessary, certain prior period amounts have been adjusted to conform to the current presentation period.

(b) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, which is based on the fair value of the consideration paid or received at the time of the transaction.

(c) Functional currency

The consolidated financial statements are presented in Canadian dollars, which is the functional currency of Sylogist. The functional currency of its subsidiaries, SylogistServices, Inc., SylogistMission, Inc., SylogistGov, Inc. and SylogistEd, Inc., has been determined to be the United States dollar, and the functional currency of Sylogist (UK) Limited has been determined to be the British Pound.

(d) Use of estimates, judgments, and assumptions

The preparation of financial statements requires management to make estimated and use judgment regarding the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. By their nature, estimates are subject to measurement uncertainty and changes in such estimates in future periods could require a material change in the financial statements. Accordingly, actual results may differ from the estimated amounts as future confirming events occur. Significant estimates and judgments made by management in the preparation of these consolidated financial statements are as follows:

Contracts with multiple products or services – contracts with customers can include promises to deliver multiple products, such as SaaS subscriptions, and project services. Determining whether such multiple products and services are considered i) distinct performance obligations that should be separately recognized or ii) non-distinct and therefore should be combined with another good or service and recognized as a combined unit of accounting may require significant judgment. The determination of the standalone selling prices ("SSP") for distinct performance obligations can also require judgment and estimates, as the SSP is an estimate of the price that would be charged if the distinct good or service was sold separately in similar circumstances and to similar customers. This allocation

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

affects the amount and timing of revenue recognized for each performance obligation. If the Company does not have an observable SSP for a particular product or service, then the SSP for that particular good or service is estimated using reasonably available information and maximizing observable inputs with approaches including historical pricing, cost plus a margin, adjusted market assessment, and the residual approach. In general, SSP is established based on observable prices for the same or similar services when sold separately.

The Company also applies estimates when calculating project services revenue from certain consulting contracts as it relates to the remaining labor hours required to complete the contract. Estimates are continually and routinely revised as new information becomes available. In assessing revenue recognition, judgment is also used in assessing the ability to collect the corresponding account receivable.

Impairment testing - The carrying amounts of non-financial assets are subject to impairment testing if events or changes in circumstances indicate that the assets might be impaired, or for cash generating units ("CGUs") including goodwill, at least annually. When an impairment test is performed, the recoverable amount of the asset or CGU is estimated in order to determine the extent of the impairment loss, if any. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax risk adjusted discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. As a result, any impairment losses are a result of management's best estimates of expected revenues, expenses, other cash flows and the discount rate used at a specific point in time. These estimates are subject to measurement uncertainty as they are dependent on factors outside management's control. In addition, by their nature, impairment tests involve a significant degree of judgement as expectations concerning future cash flows and the selection of appropriate market inputs are subject to considerable risks and uncertainties.

Capitalization of development costs – development costs are recognized in intangible assets when the costs can be measured reliably, the product is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the product. Evaluating if expenditures incurred meet these criteria requires significant judgment from management.

Deferred income taxes – contain assumptions and estimates about the amount, utilization and timing of realization and/or settlement of temporary differences as well as the future tax rates that will apply to those differences. Changes in those assumptions and estimates may have a significant impact on the amounts recorded for deferred tax assets and liabilities and could result in amounts different from those initially recorded. Management closely monitors current and potential changes to tax law and bases its estimates on the best available information at each reporting date.

(e) Adjustment to comparative balance sheet

An adjustment was made for an immaterial error in the classification of deferred revenue in the balance sheet at December 31, 2023, which resulted in a reduction of Deferred Revenue – short term by $2,678 from $24,259 to $21,581 and an offsetting increase in Deferred Revenue – long term for the same amount from $0 to $2,678. There is no impact resulting from this reclassification on the Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows.

Material accounting policies

The material accounting policies used in the preparation of these consolidated financial statements are described below:

(a) Revenue

Revenue is recognized upon transfer of control of products or services to customers at an amount that reflects the consideration the Company expects to receive in exchange for the products or services.

Contracts with multiple products or services

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

Typically, the Company enters contracts that contain multiple products and services such as SaaS, maintenance and support, project services, and/or hardware. The Company evaluates these contracts to determine the appropriate unit of accounting (performance obligation) for revenue recognition purposes based on whether the product or service is distinct from some or all the other products or services in the contract. A product or service is distinct if the customer can benefit from it on its own or together with other readily available resources and Sylogist's promise to transfer the good or service is separately identifiable from other promises in the contractual arrangement with the customer. When a contract consists of more than one performance obligation, revenue is allocated to each based on their estimated SSP. We generally determine stand-alone selling prices based on the observable prices for non-bundled service offers with the same range of services, adjusted for market conditions, and other factors, as appropriate.

Revenues generated by the Company include the following:

SaaS Subscriptions

The Company generates revenue from SaaS arrangements, which allows customers to access and use the Company's software without taking possession of the software. These arrangements are provided on a subscription basis. Revenue from the SaaS arrangements is recognized ratably over the term of the subscription.

Maintenance and support

Maintenance and support services provided to customers on legacy perpetual software licenses are recognized ratably over the term of the maintenance and support services agreement.

Project services

Project services are provided for implementation services, consulting services, and training. Project services are typically billed on a time and material basis and revenue is recognized over time as the services are performed. For project services contracts billed on a fixed price basis, revenue is recognized over time based on the proportion of services performed and completed.

Hardware

Hardware revenue is recognized as per shipping terms or when the Company has completed its contractual obligations and when control of the hardware has been transferred under the terms of an enforceable contract.

Deferred revenue, and deposits and retainers

Deferred revenue represents amounts billed, primarily for SaaS subscriptions, maintenance, and support, but not yet earned. Amounts billed for project services in accordance with customer contracts, but not yet earned, are recorded, and presented as part of deposits and retainers within deferred revenue.

(b) Financial instruments

Financial assets and liabilities are recognized when the Company becomes party to the contractual provisions of the instrument.

The Company's financial assets and liabilities are initially recognized at fair value plus any directly attributable transaction cost and are subsequently measured at amortized cost using the effective interest rate method less any provision for impairment.

Financial liabilities are classified as current liabilities when payment is due within a year; otherwise, they are classified as non-current liabilities.

Share capital:

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

(c) Property and equipment

Property and equipment are amortized on a straight-line basis at rates designed to apportion the cost of the assets over their estimated useful lives as follows:

Computer hardware	36 months
Furniture and equipment	36 months
Leasehold improvements	over the life of the lease
Computer equipment under finance lease	over the life of the lease
Buildings	25 years

(d) Intangible assets

Development costs of new software products are capitalized if they can be measured reliably, the product is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the product. Otherwise, development costs are expensed as incurred. Expenditures capitalized include direct labour and overhead costs that are directly attributable to preparing the asset for its intended use.

Intangible assets are amortized on a straight-line basis over their expected period of benefit as follows:

Customer relationships	5 to 10 years
Software codes	2 to 10 years
Software licenses/rights/brand/patents	1 to 10 years
Non-compete agreements	over the life of the agreement

Subsequent to initial measurement, deferred development costs are stated at cost less accumulated amortization and accumulated impairment losses.

(e) Impairment of tangible and intangible assets and goodwill

At the end of each reporting period, management assesses the carrying amounts of its tangible and intangible assets for both external and internal indications of impairment. Indications of impairment include an ongoing lack of profitability and significant changes in technology.

Goodwill is subject to impairment testing at least annually, or more frequently if indicators of impairment exist. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit ("CGU") to which the asset or goodwill belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax risk adjusted discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognized immediately in earnings. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized in prior years. Impairment losses relating to goodwill cannot be reserved in future periods.

(f) Goodwill

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

Goodwill is the amount that results when the fair value of consideration transferred for an acquired business exceeds the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. When the Company enters into a business combination, the acquisition method of accounting is used. Goodwill is assigned, as of the date of the business combination, to cash-generating units that are expected to benefit from the business combination. Each CGU represents the lowest level at which goodwill is monitored for internal management purposes, and it is never larger than an operating segment. Goodwill is stated at cost less accumulated impairment losses. Goodwill is not amortized but is subject to impairment testing. When the excess of the consideration transferred less the assets and liabilities acquired is negative, a bargain purchase gain is recognized immediately in earnings.

On disposal of a subsidiary, the amount of goodwill attributable to the subsidiary is included in the determination of the gain or loss recognized on disposal.

(g) Income tax

Income tax expense is comprised of current and deferred tax. Income tax expense is recognized in the consolidated statements of profit and comprehensive income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted substantively at the reporting date, and any adjustment to tax payable in respect of previous periods. Deferred tax is recognized on the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, they relate to income taxes levied by the same tax authority on the same taxable entity, and there exists the legal ability to settle current tax liabilities and assets on a net basis.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(h) Share-based compensation

The Company has established a share-based compensation plan comprised of a Stock Option Plan, Phantom Interest Award Units ("PIAUs") and a Share Unit Plan. Participation in either of these plans is at the board's discretion.

The grant value of units issued under the Stock Option Plan is generally established by using the Black-Scholes method of valuation. Under this method, the compensation cost attributed to stock options granted are measured at the fair value at the grant date and expensed over the vesting period with a corresponding increase to contributed surplus. Upon the settlement of the stock options, the previously recognized value in contributed surplus is recorded as an increase to share capital.

The PIAUs entitle the awardee to a cash payment after a specified number of years of service or when a payment event occurs, whichever is first. A portion of PIAUs vest at the grant date with the remaining balance vesting in equal installments on each anniversary after the grant date over the specified number of years. The amount of cash payment for each on vested PIAUs shall be equal to the value of a Company common shares as of the payment date plus any dividends accrued on vested common shares.

The Share Unit Plan authorizes the Company to grant restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs") to directors, officers, and employees.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

These share units are recorded at fair value each period. RSUs generally vest annually over four years. All vested RSUs are required to be settled in cash or common shares, at the board of directors' discretion, prior to December 31 each year. Additional RSUs are credited to the employees' accounts when cash dividends are paid to the common shareholders of the Company. Such an amount of additional RSUs is determined by dividing the dividends which would have been paid on the RSUs had they been common shares of the Company. DSUs are to be settled in cash no later than December 31st of the calendar year following the calendar year in which the non-officer director ceases to be a director of the Company. Additional DSUs are credited to the directors' accounts when cash dividends are paid to the common shareholders of the Company. Such amount of additional DSUs is determined by dividing the dividends which would have been paid on the DSUs had they been common shares of the Company by the volume weighted average trading price of the Company's shares over the 5-day trading period immediately preceding the date the dividends are paid.

(i) Earnings per share

Basic earnings per share are calculated by dividing the profit for the year attributable to the common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share amounts are calculated based on the treasury stock method, which assumes that any proceeds obtained on the exercise of the "in the money" stock options would be used to purchase common shares at the average market price for the period.

New standards and interpretations not yet adopted by the Company

The IASB has issued IFRS 18 Presentation and Disclosure in Financial Statements which includes requirements for the presentation and disclosure of information in general purpose financial statements to help ensure they provide relevant information that faithfully represents an entity's assets, liabilities, equity, income, and expenses. The new IFRS 18 standard is effective for annual periods beginning on or after January 1, 2027. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

Business acquisitions, Restructurings and Divestitures

(a) On October 6, 2021, Sylogist completed the acquisition of all the outstanding shares of Mission CRM Ltd. ("Mission CRM"), for $2,974 including working capital adjustments, plus an earnout tied to agreed-upon revenue targets over the next three years ending September 30, 2024. Payments pursuant to the earnout were settled in cash annually. The earnout is treated as employment remuneration and is expensed in the consolidated statements of comprehensive income as part of Acquisition and Restructuring Costs. During the year ended December 31, 2024, the Company recorded $1,906 (December 31, 2023 - $2,096), in earn out consideration in its consolidated statements of comprehensive income. For the year ended December 31, 2024, the Company has recorded in the consolidated statement of financial position a cumulative amount of $2,473 for the third and final year of the earnout, bringing the total cumulative purchase price consideration paid for Mission CRM to $7,834. The amount of $2,473 relating to the third and final year was paid on January 2, 2025.

(b) On February 23, 2024, Sylogist completed the asset acquisition of Time Clock Now for cash consideration of USD $1,650 ($2,235) inclusive of a holdback of USD $400 ($539) The Asset included within the Company's "Time and Talent Suite" offering which is a comprehensive SaaS solution for streamlining time tracking and scheduling. The USD $400 holdback was paid in August 2024.

(c) On June 27, 2024, Sylogist completed the sale of a building for cash consideration of $783. This building was originally acquired in 2021, as part of the Municipal Accounting Systems Inc. acquisition. The cash consideration for the sale was received on July 1, 2024. The transactions resulted in a gain of $130.

(d) On June 28, 2024, Sylogist completed the sale of its Managed IT Services division for consideration of up to $300 based on future performance conditions. The purchase price includes an earnout over a period of three years subject to the business' ongoing performance. Total revenues included in the consolidated statement of

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

comprehensive income for the period January 1, 2024, to June 28, 2024, related to the Managed IT Services division were $1,104 (December 31, 2023 - $2,278).

(e) Acquisition and restructuring costs are summarized as follows:

	Years ended December 31,
	2024	2023
Earnout Accrual - Mission CRM	$ 1,906	$ 2,096
Legal fees	173	18
Post acquisition integration costs	290	—
Loss on Divestiture of Managed IT Services	57	—
Severance	504	—
Acquisition and restructuring costs	$ 2,930	$ 2,114

5. Trade and other receivables

	December 31, 2024	December 31, 2023
Trade receivables, gross	$ 9,833	$ 9,769
Allowance for doubtful accounts	(148)	(252)
Trade receivables, net	9,685	9,517
Other receivables(1)	927	926
Trade and other receivables	$ 10,612	$ 10,443

(1) Other receivables consist primarily of unbilled receivables.

Due to their short-term nature, the net carrying value of trade receivables approximates fair value, see Note 19(b).

6. Prepaid expenses and other current assets

	December 31, 2024	December 31, 2023
Prepaid software royalties	$ 2,351	$ 2,757
Contract costs	666	254
Income tax receivable	—	412
Other prepaid expenses and other current assets	775	845
Total prepaid expenses and other current assets	$ 3,792	$ 4,268

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

Intangible assets

	Software licenses, rights, and patent	Customer relationships	Software codes	Non-compete agreements	Total
Cost
Balance at December 31, 2022	$ 4,796	47,768	$ 27,682	$ 11,255	$ 91,501
Additions	28	—	5,004	—	5,032
Foreign exchange	(16)	(663)	280	(169)	(568)
Balance at December 31, 2023	$ 4,808	$ 47,105	$ 32,966	$ 11,086	$ 95,965
Additions	6	—	5,614	—	5,620
Acquisitions Note 4 (b)	—	—	2,235	—	2,235
Disposals/ dispositions(1)	—	(13)	—	—	(13)
Foreign exchange	60	2,590	671	658	3,979
Balance at December 31, 2024	$ 4,874	$ 49,682	$ 41,486	$ 11,744	$ 107,786
Accumulated Amortization
Balance at December 31, 2022	$ 3,703	21,803	$ 14,684	$ 3,879	$ 44,069
Amortization	159	3,826	3,332	2,218	9,535
Foreign exchange	(8)	(228)	(38)	(66)	(340)
Balance at December 31, 2023	$ 3,854	$ 25,401	$ 17,978	$ 6,031	$ 53,264
Amortization	155	3,562	4,354	2,350	10,421
Foreign exchange	33	1,101	221	388	1,743
Balance at December 31, 2024	$ 4,042	$ 30,064	$ 22,553	$ 8,769	$ 65,428
Carrying Amount
Balance at December 31, 2023	$ 954	21,704	14,988	5,055	42,701
Balance at December 31, 2024	$ 832	19,618	18,933	2,975	42,358

(1) See Note 4 - Business acquisitions and divestitures for more information on the sale of the Managed IT Services division.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

8. Goodwill

The carrying amount of goodwill can be analyzed as follows:

	December 31, 2024	December 31, 2023
Gross carrying amount from:
SylogistMission	$ 3,392	$ 3,392
SylogistEd	14,966	13,809
SylogistGov	3,628	3,538
SylogistSolutions(1)	5,392	5,422
Total goodwill	$ 27,378	$ 26,161

(1) See Note 4 - Business acquisitions and divestitures for more information on the sale of the Managed IT Services division. The sale of the Managed IT Services division resulted in a reduction in goodwill of $30.

The Company performed its annual impairment test as of December 31, 2024. For the purpose of annual impairment testing, all goodwill was allocated to the CGU which is expected to benefit from the synergies of the business combinations from which goodwill arose.

The recoverable amount of each CGU was determined based on value in use, which is estimated using a discounted cash flow model, calculating the present value of future post-tax cash flows with a post-tax risk adjusted discount rate. The post-tax cash flows covering the forecasted future period are based on a financial budget and forecasts approved by management, using an expected average growth rate specific to each CGU and post-tax risk adjusted discount rates between 16.4% and 20.1%. Other significant assumptions include forecasted revenue and gross margins, which are determined by past experience within the markets that the Company operates in. As of December 31, 2024, the recoverable amount of each CGU exceeds its carrying value. If future results, in particular future revenues, were to be significantly different from management's best estimates based on key assumptions, the Company could potentially experience future impairment charges in respect of its goodwill.

Management identified that a reasonably possible change in revenue or gross margins would result in the SylogistSolutions, CGU's carrying amount exceeding its value in use. An 8% reduction in forecasted revenues or a reduction of 5% of the forecasted gross margin would result in the SylogistSolutions, CGU's value in use being equal to its carrying amount, when all other assumptions are held constant.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

9. Income tax

(a) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. The Company recognized deferred income tax assets on tax losses carried forward and other temporary differences to the extent that the realization of the related tax benefits through reversal of deferred tax liabilities, future taxable profit and tax planning strategies is probable. The components of the Company's deferred income tax assets and liabilities are as follows:

	As of December 31, 2023	Recognized in earnings	Other(1)	As of December 31, 2024
Property, equipment, and	$ (10,492)	$ 1,093	$ (480)	$ (9,879)
Capitalized development costs	—	1,153	44	1,197
Restricted interest	—	373	—	373
Non-capital losses	3,031	1,733	94	4,858
Unused tax losses not recognized	(1,080)	7	(77)	(1,150)
Other	943	330	37	1,310
	$ (7,598)	$ 4,689	$ (382)	$ (3,291)
	As of December 31, 2022	Recognized in earnings	Other(1)	As of December 31, 2023
---	---	---	---	---
Property, equipment, and	$ (12,086)	$ 1,451	$ 143	$ (10,492)
Non-capital losses	2,328	708	(5)	3,031
Unused tax losses not recognized	(1,080)	—	—	(1,080)
Other	724	426	(207)	943
	$ (10,114)	$ 2,585	$ (69)	$ (7,598)

(1) Other comprehensive income.

(b) The actual income tax provision differs from the expected amount calculated by applying the Canadian combined federal and blended provincial corporate income tax rate to profit before income taxes. The major components of these differences are explained as follows:

	Twelve months ended December 31,
	2024	2023
Profit (loss) before income tax	$ (1,073)	$ 1,544
Corporate income tax rate	25.2 %	24.1 %
Computed expected tax provision	(271)	373
Increase (decrease in income taxes resulting from:
Statutory and other rate differences	(204)	(371)
Stock option compensation expense	5	71
Change in unrecognized deferred tax assets	(9)	(35)
Change in estimates related to prior years	101	(31)
Other	32	437
Income tax expense	$ (346)	$ 444

In 2024, the Canadian combined federal and blended provincial corporate income tax rate was 25.2% (2023 – 24.1%).

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

The adjustment in respect of prior periods relates to events in the current year and reflects the effects of changes in rules, facts or other factors compared with those used in establishing the tax balance in prior periods.

The Canadian operations have non-capital losses of $13,861 (2023 - $7,227), which are available to reduce taxable income in future periods. The non-capital losses carried forward expire between 2038 and 2044.

The US operations have net operating losses available for carry-forward of $742 (2023 - $831), which are available to reduce taxable income in future periods subject to specific annual loss limitations with the maximum annual loss claim being $160 (US $111). The net operating losses carried forward expire at various dates up to 2031.

The UK operations have trading losses of $6,074 (2023 - $5,699), which are available to reduce taxable income in future periods. The trading losses carried forward do not expire but are subject to specific loss limitations. A deferred tax asset has not been recognized as it is uncertain whether taxable profits will be available against which the losses can be utilized.

Effective January 1, 2024, Canadian earnings are subject to new tax laws that limit the deductibility of interest and financing costs, resulting in interest available for carry-forward of $1,479 (2023 - $0) that is available to reduce taxable income in future periods. The restricted interest is available for carry-forward indefinitely.

Effective October 1, 2022, US earnings are subject to Section 174 of the U.S. Internal Revenue Code which limits the deductibility of research and development (R&D) expenses. Section 174 was adopted by the Company for tax purposes in 2024, including both 2023 and 2024 R&D expenditures, resulting in Section 174 related capitalized development costs of $4,679 (2023 - $0) being available to reduce taxable income in future periods. In addition, $356 (2023-$0) of R&D tax credits were recorded as a reduction to current tax expense.

10. Trade and other payables

Trade and other payables can be summarized as follows:

	December 31, 2024	December 31, 2023
Trade payables	$ 2,116	$ 1,931
Employee payable	2,693	1,628
Professional fees accrual	1,264	581
Income tax payable	460	—
Deferred bonus	209	—
Current lease obligations	156	289
Other taxes payable	151	286
Other payables	355	113
Total trade and other payables	$ 7,404	$ 4,828

11. Credit facility

On October 31, 2024, the Company renewed its agreement with its current lender, which can be used for general corporate purposes. The Company incurred $150 in costs upon renewal of the agreement, which is being amortized over the term of the agreement. The agreement includes a revolving credit facility of $50 million, with an additional $75 million optional accordion feature. The Company has the ability under the facility to borrow under the credit facility in Canadian and U.S. dollars. The renewed credit facility is committed for a three-year term and is renewable annually thereafter. Security under the agreement consists of a general security agreement over all assets of Sylogist and its material subsidiaries. The interest rate paid for Canadian dollar borrowings is based on the Canadian prime rate in effect from time to time during the interest period plus an applicable pricing rate. The interest rate paid for, U.S. dollar borrowings, is based on the U.S. base rate in effect from time to time during the interest period plus an applicable pricing rate. The credit facility is subject to quarterly financial covenants related to maintenance of maximum Funded

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

Debt to Earnings Before Interest, Tax, Depreciation, and Amortization ratio of 3.50:1.00 and a Fixed Charge Coverage ratio not to exceed 1.50:1.00 at each Quarter End.

On December 31, 2024, the Company has a total of $19,152 (December 31, 2023 - $17,210) outstanding under the Credit Facility of which $17,210 is in Canadian dollars, and the remainder is in USD.

On December 31, 2024, the Company was in compliance with all its covenants related to the credit facility.

12. Deferred revenue

Deferred revenue, deposits and retainers are summarized as follows:

	Deferred revenue	Deposits and retainers	Total
Balance at December 31, 2022	$ 22,215	$ 1,475	$ 23,690
Additions	36,959	3,740	40,699
Amortized	(36,268)	(3,862)	(40,130)
Balance at December 31, 2023	$ 22,906	$ 1,353	$ 24,259
Additions	43,458	2,936	46,394
Divested contracts(1)	(536)	—	(536)
Amortized	(42,276)	(2,778)	(45,054)
Balance at December 31, 2024	$ 23,552	$ 1,511	$ 25,063

(1) See Note 4 - Business acquisitions and divestitures for more information on the sale of the Managed IT Services division.

13. Share capital

(a) Authorized: Unlimited number of common shares
(b) Dividends

During the year ended December 31, 2024, the Company paid regular dividends to shareholders totaling $937, (December 31, 2023 - $943) at a dividend amount of $0.01 per share per quarter.

On November 21, 2023, the Company commenced a Normal Course Issuer Bid ("NCIB") to acquire up to 2,273,409 of its common shares over the ensuing 12-month period. The daily purchase limit under the NCIB was 7,377 common shares. On November 26, 2024, the Company renewed the NCIB to acquire up to 2,258,532 of its common shares over the ensuing 12-month period. The daily purchase limit under the NCIB is 9,361 common shares. The current NCIB terminates on the earlier of November 27, 2025, or when permitted purchases are completed.

During the year ended December 31, 2024, the Company repurchased 154,200 common shares at an average price of $8.99 for a total cost of $1,390 of which $858 was applied against deficit for the period ended December 31, 2024, and $532 was applied against share capital. During the year ended December 31, 2023, the Company repurchased 343,600 common shares at an average price of $6.16 for a total cost of $2,118 of which $932 was applied against deficit for the period ended December 31, 2023, and $1,186 was applied against share capital. All common shares purchased under the NCIB have been cancelled.

(d) Stock options

The Company has a stock option plan under which directors, officers, and employees of the Company and its subsidiaries are eligible to receive stock options. The aggregate number of common shares to be issued upon the exercise of all options granted under the plan, when combined with all other security-based compensation arrangements, shall not exceed 10% of the common shares issued by the Company, at the time the options were granted. Options granted under the plan generally have a term of five years, and vest at such times as determined

Sylogist Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2024 and 2023

(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

by the directors at the date of grant, which has generally been over three years. The exercise price of each option is determined by the directors at the market price at the date of grant. A summary of the status of the Company's stock option plan as of December 31, 2024, and changes during the period, is as follows:

	December 31, 2024		December 31, 2023
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
Outstanding, beginning of the period	1,195,000	$ 10.36	1,641,000	$ 10.94
Granted	—	—	150,000	5.87
Forfeited	(36,000)	11.98	(3,334)	10.30
Exercised	(60,000)	10.50	—	—
Expired	(79,000)	12.47	(592,666)	10.83
Outstanding, end of the period	1,020,000	$ 10.13	1,195,000	$ 10.36
Options vested, end of the period(1)	920,000	$ 10.60	936,000	$ 10.78

(1) Certain vested options are exercisable once specified share price conditions are met.

The stock-based compensation included in the consolidated statement of comprehensive income for the year ended December 31, 2024, was $2,295 (December 31, 2023 - $1,435).

(e) The following table summarizes information about stock options outstanding and exercisable as of December 31, 2024:

Exercise price	Number of options outstanding	Weighted-average remaining period until vesting	Number of options vested(1)	Weighted-average remaining contractual life post vesting
$ 10.30	615,000	—	615,000	0.9 years
11.78	225,000	—	225,000	1.1 years
15.64	30,000	—	30,000	1.2 years
5.87	150,000	1.3 years	50,000	3.3 years
	1,020,000	1.3 years	920,000	1.1 years

(1) Certain vested options are exercisable once specified share price conditions are met.

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2023:

Exercise price	Number of options outstanding	Weighted-average remaining period until vesting	Number of options vested(1)	Weighted-average remaining contractual life post vesting
$ 12.75	15,000	—	15,000	0.1 years
10.65	75,000	—	75,000	0.8 years
10.30	664,000	—	664,000	1.9 years
11.78	225,000	0.1 years	150,000	2.1 years
15.64	30,000	0.4 years	20,000	2.2 years
15.33	36,000	1.3 years	12,000	2.3 years
5.87	150,000	2.3 years	—	—
	1,195,000	0.3 years	936,000	1.7 years

(1) Certain vested options are exercisable once specified share price conditions are met.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

(f) The basic earnings per share is calculated based on the weighted-average number of common shares outstanding during the year ended December 31, 2024, 23,405,735 (December 31, 2023 – 23,646,913). During the year ended December 31, 2024, the diluted weighted average number of shares outstanding was calculated using the treasury method to be 23,471,428 (December 31, 2023 – 23,665,298). For the year ended December 31, 2024, 65,693 options were included in the computation of diluted earnings per share (December 31, 2023 – 18,385).

14. Deferred bonus payments

On December 15, 2021, and December 28, 2022, the Company awarded a performance bonus to an executive officer, a portion of which was elected to be deferred until employment ends.

The value of the deferred amount is indexed to the trading price of the common shares of Sylogist, and along with the fair value adjustment and dividend allocation, is included in the consolidated statements of comprehensive income, which was recorded in share-based compensation costs. Also see Note 18.

15. Share based payments

(a) Phantom interest award units

On November 9, 2020, the Company granted 100,000 Phantom Interest Award Units ("PIAUs") to an executive, which will entitle the awardee to a cash payment after five years of service or when a payment event occurs, whichever is first. The first 50,000 PIAUs are vested on the grant date and the remaining 50,000 PIAUs will vest in installments of 10,000 PIAUs on each of the first five anniversaries of the grant date if the executive has remained employed with Company through the anniversary date.

On January 18, 2021, the Company granted 50,000 PIAUs to another executive that will entitle the awardee to cash payment after five years of service or when a payment event occurs, whichever is first. 10,000 PIAUs vested on the grant date and the remaining 40,000 PIAUs will vest in installments of 10,000 PIAUs on each of the first four anniversaries of the grant date if the executive has remained employed with the Company through the anniversary date. The amount of cash payment for each vested PIAU shall be equal to the value of a Company common shares as of the payment date plus any dividends accrued on vested PIAUs.

The amount included in the share-based units liability relating to PIAUs is $1,393 as of December 31, 2024 ($1,144 on December 31, 2023). During the year ended December 31, 2024, an expense of $277 was included in the consolidated statements of comprehensive income (December 31, 2023 – $272).

(b) Deferred share unit

On March 30, 2022, the Company instituted a Share Unit Plan. Under the share unit plan, the Company is authorized to grant restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs"). The aggregate number of common shares issued under the Share Unit Plan shall not exceed, at any time, 5% of the total issued and outstanding Company common shares.

Under this plan, the Board of Directors granted DSUs to non-officer directors of the Company for services rendered. The DSUs are to be settled in cash no later than December 31st of the calendar year following the calendar year in which the non-officer director ceases to be a director of the Company. Additional DSUs are credited to the directors' accounts when cash dividends are paid to the common shareholders of the Company. Such an amount of additional DSUs is determined by dividing the dividends which would have been paid on the DSUs had they been common shares of the Company by the volume-weighted average trading price of the Company's shares over the five-day trading period immediately preceding the date the dividends are paid.

Upon redemption, and at each reporting date, the DSUs are valued on a per DSU basis at an amount equal to the volume weighted average trading price of the Company's shares over the immediately preceding five-day trading period. During the year ended December 31, 2024, 56,365 (December 31, 2023 – 79,023) DSUs were granted for a

Sylogist Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2024 and 2023

(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

total of 96,421 (December 31, 2023 – 115,852) DSUs outstanding. During the year ended December 31, 2024, $738 was paid to retiring directors. During the year ended December 31, 2024, $729 (December 31, 2023 - $637) was included in the consolidated statement of comprehensive income, and the liability on December 31, 2024, amounted to $855 (December 31, 2023 - $864).

Also under this plan, the Board of Directors granted RSUs to employees of the Company for services rendered. RSUs vest annually over four years. RSUs are to be settled in cash or common shares, at the board of directors' discretion, prior to December 31 each year. Additional RSUs are credited to the employees' accounts when cash dividends are paid to the common shareholders of the Company. Such an additional amount of RSUs is determined by dividing the dividends which would have been paid on the RSUs had they been common shares of the Company by the volume weighted average price of the Company's shares over the five-day trading period. In the fiscal year ended December 31, 2024, 16,010 RSUs were granted to employees, 78,809 RSUs vested, 11,024 RSUs forfeited, and 147,902 RSUs remained outstanding. During the year ended December 31, 2024, $1,254 (December 31, 2023 - $233) was included in the consolidated statement of comprehensive income, and the liability on December 31, 2024, amounted to $510 (December 31, 2023 - $229).

Share-based costs included in the consolidated statements of comprehensive income were:

	Years ended December 31,
	2024	2023
PIAUs	$ 277	$ 272
DSUs	729	637
RSUs	1,254	233
Deferred bonus	14	—
	$ 2,274	$ 1,142

Share-based units included in the consolidated statements of the financial position were:

	December 31, 2024	December 31, 2023
PIAUs	$ 1,393*	$ 1,144
DSUs	855	864
RSUs	510	229
	$ 2,758	$ 2,237

*Under current liabilities as at December 31, 2024.

16. Segmented information

Reporting segments are defined as components of the Company for which separate financial information is available, that is evaluated regularly by the chief operating decision maker in allocating resources and assessing performance. The chief operating decision maker of the Company is the President and Chief Executive Officer. Based on management's assessment the Company has determined that it has one reportable segment. This is based on its determination that the similarity in economic characteristics of the Company's operating segments, including the nature of products and services sold and the similarity of geographic markets operated in the various operating segments constitute a single reportable segment. The operating segments identified by management include the nonprofit ("SylogistMission"), education ("SylogistEd") and government ("SylogistGov") industry segments. In addition, any software solutions, and related services for customers outside these three segments is categorized as "SylogistSolutions." The Company generates revenues from three geographical areas USA, Canada, and UK and other.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

Revenue by operating segment

	Years ended December 31,
	2024	2023
SylogistMission	$ 26,831	$ 24,116
SylogistEd	17,555	16,103
SylogistGov	6,993	7,341
SylogistSolutions	14,220	17,954
	$ 65,599	$ 65,514

Revenue by geography

	Years ended December 31,
	2024	2023
USA	$ 44,066	$ 40,886
Canada	21,314	23,007
UK and other	219	1,621
	$ 65,599	$ 65,514
	December 31, 2024	December 31, 2023
Non-current assets
USA	$ 39,509	$ 40,313
Canada	30,738	29,944
UK and other	1	—
	$ 70,248	$ 70,257

17. Commitments and contingencies

(a) Commitments

Operating lease and service commitments

The Company has entered into various leases for its operating premises and service commitments. Future minimum annual payments under these commitments are as follows:

Contractual obligations	Total	Fiscal 2025	Fiscal 2026-2028
Lease obligations	$ 369	$ 172	$ 197
Other obligations	1,334	1,309	25
Total contractual obligations	$ 1,703	$ 1,481	$ 222

(b) Contingencies

Management is not currently aware of any claims or actions that would materially affect the Company's reported financial position or results from operations.

(c) Indemnifications

Under the terms of certain agreements and the Company's by-laws, the Company indemnifies individuals who have acted at the Company's request to be a director and/or officer of the Company, to the extent permitted by law, against any and all damages, liabilities, costs, charges or expenses suffered by or incurred by the individuals as a result of their service.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

18. Related party transactions

Key management includes the Board of Directors and members of the Executive Committee that report directly to the President and Chief Executive Officer of the Company. Directors and members of the Executive Committee, along with certain employees, also participate in the Company's stock option plan and share unit plan (Note 13(d) and 15(b)).

The compensation paid or payable to key management for employee services is as follows:

	Years ended December 31,
	2024	2023
Salaries and benefits, including bonus, deferred bonus, and directors' fees	$ 3,839	$ 3,870
Share based compensation	3,938	2,433
	$ 7,777	$ 6,303

19. Financial instruments

The Company's financial instruments consist of cash and cash equivalents, trade and other receivables, trade and other payables and the credit facility. The carrying values of the Company's financial instruments approximate their fair values due to the short-term nature of these instruments. The nature of these instruments and the Company's operations exposes the Company to interest rate, foreign currency, liquidity, and fair value risks. The Company manages its exposure to these risks by operating in a manner that minimizes its exposure to the extent practical. These risks are outlined more fully below.

(a) Foreign currency rate risk management

Approximately 67% portion of the Company's revenue come from sales that are made to customers in the United States. Accordingly, the related financial assets and liabilities are subject to fluctuations in exchange rates. The Company does not have any exposure to highly inflationary foreign currencies.

As of December 31, 2024, the increase or decrease in profit before income tax for each 1% change in the value of the Canadian dollar against the US dollar amounts to approximately $68 (December 31, 2023 - $63).

(b) Credit risk

The Company is exposed to normal credit risk. As at December 31, 2024, approximately 44% of the Company's cash and cash equivalents are held at a Canadian chartered bank, and 56% is held with at a bank in the U.S.A. Concentration of credit risk is managed by the broadening of the Company's customer base. The allowance for doubtful accounts of $148 represents approximately 1.5% of the trade accounts receivable as of December 31, 2024 (December 31, 2023 – 2.6%).

Aging of trade accounts receivable

	December 31, 2024	December 31, 2023
1-30 days	$ 6,472	$ 5,561
31-90 days	1,017	1,650
91 + days	2,344	2,558
Total trade receivables	9,833	9,769
Allowance for doubtful accounts	(148)	(252)
Other receivables(1)	927	926
Trade and other receivables	$ 10,612	$ 10,443

(1) Other receivables consist primarily of unbilled receivables mainly from fixed fee government contracts.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

Allowance for doubtful accounts

	December 31, 2024		December 31, 2023
Balance, beginning of the period	$	(252) $	(14)
Allowance accreted net		104	(238)
Balance, end of the period	$	(148) $	(252)

Liquidity risk includes the risk that, as a result of operational liquidity requirements, the Company:

will not have sufficient funds to settle a transaction on the due date.
will be forced to sell financial assets at a value which is less than what they are worth; or
may be unable to settle or recover a financial asset at all.

(d) Interest rate risk

As of December 31, 2024, the increase or decrease in profit before income tax for each 1% change in interest rates on the Company cash, amounts to approximately $192 (December 31, 2023 - $172) per annum.

(e) Fair value of financial instruments

The Company has determined that the fair value of the financial instruments consisting of cash and cash equivalents, trade and other receivables, trade and other payables and credit facility are not materially different from the carrying values of such instruments reported on the consolidated statements of financial position due to their short-term nature.

The Company classifies the fair value of these financial instruments according to the following hierarchy based on the number of observable inputs used to value the instrument.

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1. Prices at Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace.

Level 3 – Valuations in this level are those with inputs for the asset or liability that are not based on observable market data.

(f) Capital risk management

The Company's objective, when managing capital, is to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders. Managed capital consists of the Company's current working capital (current assets less current liabilities), the credit facility and shareholders' equity. The Company's objective is met by retaining an adequate level of debt and equity to provide for the possibility that cash flows from assets will not be sufficient to meet future cash flow requirements. The Company is not subject to any externally imposed capital requirements.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

20. Subsequent events

On February 6, 2025, the Company's Board of Directors declared a quarterly dividend of $0.01 per share to be paid on March 12, 2025, to shareholders of record on February 28, 2025.

On February 12, 2025, the Company's Board of Directors announced that Mr. J. Kim Fennell joined the Company's Board of Directors. Mr. Fennell has over 35 years of experience working as an executive at several prominent US-based software companies. He has served as CEO at several companies, and currently works as a board director, angel investor, advisor, and as a venture partner at True North Fund – a growth stage venture capital fund in Canada. Additionally, on February 28, 2025, Mr. Taylor Gray retired from the Board.

Sylogist Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and as otherwise indicated)

HEAD OFFICE

Suite 401, 5920-1A Street S.W.,
Calgary, Alberta, Canada
T2H 0G3

Telephone: (403) 266-4808
Toll Free: 1-888-266-4808
Fax: (403) 233-0845
Website: www.Sylogist.com

DIRECTORS OF SYLOGIST

Barry Foster, Chair of the Board(1)(3)
Aziz Benmalek,(2)(3)(4)
Errol Olsen,(1)(2)
Andrea Ward,(1)(3)
Tracy Edkins,(2)(3)
J. Kim Fennell,(2)(3)(5)
William C. Wood

(1) member of Audit Committee
(2) member of Compensation Committee
(3) member of Nominating & Governance Committee
(4) member of the Board effective June 12, 2024
(5) member of the Board effective February 12, 2025

SHARE LISTING

TSX Exchange: SYZ.TO

SOLICITORS

Osler, Hoskin & Harcourt LLP
Brookfield Place, Suite 2700, 225 6 Avenue SW
Calgary, Alberta
T2P 1N2

BANK

Royal Bank of Canada
407-8th Ave S.W., 9th floor,
Calgary, Alberta
T2P 1E5

TRANSFER AGENT

Computershare Investor Services
Suite 600, 530 Eighth Avenue SW
Calgary, Alberta
T2P 3S8

AUDITOR

KPMG LLP
3100, 205-5th Avenue SW
Calgary, Alberta
T2P 4B9

sylogist

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Sylogist Ltd. — Audit Report / Information 2024

44632_rns_2025-03-13_8ec61497-80a9-426f-9b82-5ceadae50942.pdf

SYLOGIST LTD.

Management's report

INDEPENDENT AUDITOR'S REPORT

Opinion

Basis for Opinion

Key Audit Matters

Evaluation of the goodwill impairment test for the SylogistSolutions CGU

Description of the matter

Why the matter is a key audit matter

How the matter was addressed in the audit

Determination of distinct performance obligations and the standalone selling price of these performance obligations for customer contracts with a software license and/or project services

Description of the matter

Why the matter is a key audit matter

How the matter was addressed in the audit

Other Information

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Auditor’s Responsibilities for the Audit of the Financial Statements

1. Nature of operations

2. Consolidated financial statements

(a) Statement of presentation

(b) Basis of measurement

(c) Functional currency

(d) Use of estimates, judgments, and assumptions

SaaS Subscriptions

Maintenance and support

Project services

Hardware

Deferred revenue, and deposits and retainers

(b) Financial instruments

Share capital:

(c) Property and equipment

(d) Intangible assets

(e) Impairment of tangible and intangible assets and goodwill

(f) Goodwill

(g) Income tax

(h) Share-based compensation

5. Trade and other receivables

6. Prepaid expenses and other current assets

8. Goodwill

9. Income tax

10. Trade and other payables

11. Credit facility

12. Deferred revenue

13. Share capital

14. Deferred bonus payments

15. Share based payments

(a) Phantom interest award units

(b) Deferred share unit

16. Segmented information

17. Commitments and contingencies

(a) Commitments

(b) Contingencies

(c) Indemnifications

18. Related party transactions

19. Financial instruments

(a) Foreign currency rate risk management

(b) Credit risk

Aging of trade accounts receivable

20. Subsequent events

HEAD OFFICE

DIRECTORS OF SYLOGIST

SHARE LISTING

SOLICITORS

BANK

TRANSFER AGENT

AUDITOR

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Sylogist Ltd. Audit Report / Information 2024