EX-99.2 4 ef20017992_ex99-2.htm EXHIBIT 99.2

Exhibit 99.2
CONTENTS

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

SINQIA S.A. UNAUDITED CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  | Note |  |  |  | 06.30.2023 |  |  |  | 12.31.2022 |
ASSETS |  |  |  |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 5.a | ) |  |  | 119,806 |  |  |  | 37,941 |
Short-term investments |  |  | 5.b | ) |  |  | 98,420 |  |  |  | 151,766 |
Trade receivables |  |  | 6 |  |  |  | 56,250 |  |  |  | 40,881 |
Prepaid expenses |  |  |  |  |  |  | 3,398 |  |  |  | 1,761 |
Recoverable taxes and contributions |  |  | 7 |  |  |  | 6,871 |  |  |  | 15,840 |
Other receivables |  |  |  |  |  |  | 5,549 |  |  |  | 2,861 |
Total current assets |  |  |  |  |  |  | 290,294 |  |  |  | 251,050 |
Noncurrent assets |  |  |  |  |  |  |  |  |  |  |  |
Recoverable taxes and contributions |  |  | 7 |  |  |  | 3,396 |  |  |  | 1,321 |
Financial assets |  |  | 5.c | ) |  |  | 93,586 |  |  |  | 99,267 |
Escrow deposits |  |  | 15 |  |  |  | 126 |  |  |  | 197 |
Deferred income tax and social contribution |  |  | 21.b | ) |  |  | 83,532 |  |  |  | 78,625 |
Property and equipment |  |  | 9 |  |  |  | 45,348 |  |  |  | 46,740 |
Intangible assets |  |  | 10 |  |  |  | 1,088,372 |  |  |  | 1,078,113 |
Total noncurrent assets |  |  |  |  |  |  | 1,314,360 |  |  |  | 1,304,263 |
TOTAL ASSETS |  |  |  |  |  |  | 1,604,654 |  |  |  | 1,555,313 |

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.
5

SINQIA S.A. UNAUDITED CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  | Note |  |  |  | 06.30.2023 |  |  |  | 12.31.2022 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |
Debentures |  |  | 11 |  |  |  | 37,114 |  |  |  | 74,500 |
Leases |  |  | 23 |  |  |  | 28,959 |  |  |  | 24,334 |
Suppliers and service providers |  |  |  |  |  |  | 9,743 |  |  |  | 4,724 |
Advances from customers |  |  |  |  |  |  | 10,971 |  |  |  | 19,363 |
Payroll and related taxes |  |  | 12 |  |  |  | 51,514 |  |  |  | 62,234 |
Profit for distribution |  |  | 16.2.b | ) |  |  | 5,658 |  |  |  | 7,720 |
Taxes payable |  |  | 13 |  |  |  | 9,438 |  |  |  | 6,115 |
Payables for investment acquisition |  |  | 14 |  |  |  | 47,577 |  |  |  | 79,101 |
Other payables |  |  |  |  |  |  | 340 |  |  |  | 491 |
Total current liabilities |  |  |  |  |  |  | 201,314 |  |  |  | 278,582 |
NONCURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Debentures |  |  | 11 |  |  |  | 323,567 |  |  |  | 162,156 |
Leases |  |  | 23 |  |  |  | 39,764 |  |  |  | 47,439 |
Taxes payable |  |  | 13 |  |  |  | 205 |  |  |  | - |
Provision for legal claims |  |  | 15 |  |  |  | 130,319 |  |  |  | 139,866 |
Advances from customers |  |  |  |  |  |  | - |  |  |  | 2,990 |
Payables for investment acquisition |  |  | 14 |  |  |  | 75,317 |  |  |  | 111,637 |
Put option on non-controlling interests |  |  | 24 |  |  |  | 166,247 |  |  |  | 142,270 |
Total noncurrent liabilities |  |  |  |  |  |  | 735,419 |  |  |  | 606,358 |
EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Capital |  |  | 16.1 |  |  |  | 813,303 |  |  |  | 813,303 |
Treasury shares |  |  | 16.4 |  |  |  | (56,488 | ) |  |  | (58,174 | )
Share issuance costs |  |  | 16.5 |  |  |  | (48,890 | ) |  |  | (48,890 | )
Transactions with non-controlling shareholders |  |  |  |  |  |  | (136,292 | ) |  |  | (126,810 | )
Capital reserve |  |  | 16.3 |  |  |  | 11,778 |  |  |  | 11,867 |
Earnings reserves |  |  | 16.2 |  |  |  | 59,010 |  |  |  | 59,010 |
Loss for the period |  |  |  |  |  |  | (2,672 | ) |  |  | - |
Total owners’ equity |  |  |  |  |  |  | 639,749 |  |  |  | 650,306 |
Non-controlling interests |  |  |  |  |  |  | 28,172 |  |  |  | 20,067 |
Total equity |  |  |  |  |  |  | 667,921 |  |  |  | 670,373 |
TOTAL LIABILITIES AND EQUITY |  |  |  |  |  |  | 1,604,654 |  |  |  | 1,555,313 |

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.
6

SINQIA S.A. UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais – R$, except basic/diluted earnings per share)

|  | Note |  |  |  | 06.30.2023 |  |  |  | 06.30.2022 |
NET REVENUE |  |  | 17 |  |  |  | 330,835 |  |  |  | 290,678 |
Cost of services |  |  | 18 |  |  |  | (199,355 | ) |  |  | (169,002 | )
GROSS PROFIT |  |  |  |  |  |  | 131,480 |  |  |  | 121,676 |
General, administrative and selling expenses |  |  | 19 |  |  |  | (98,741 | ) |  |  | (87,245 | )
OPERATING INCOME BEFORE FINANCIAL INCOME (EXPENSE) |  |  |  |  |  |  | 32,739 |  |  |  | 34,431 |
Financial income (expense), net |  |  | 20 |  |  |  | (29,624 | ) |  |  | (26,244 | )
PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION |  |  |  |  |  |  | 3,115 |  |  |  | 8,187 |
INCOME TAX AND SOCIAL CONTRIBUTION |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 21.a | ) |  |  | (7,593 | ) |  |  | (11,919 | )
Deferred |  |  | 21.a | ) |  |  | 5,069 |  |  |  | 6,799 |
NET PROFIT FOR THE PERIOD |  |  |  |  |  |  | 591 |  |  |  | 3,067 |
ATTRIBUTABLE TO: |  |  |  |  |  |  |  |  |  |  |  |
Company’s owners |  |  |  |  |  |  | (2,672 | ) |  |  | 2,998 |
Non-controlling interests |  |  |  |  |  |  | 3,263 |  |  |  | 69 |
EARNINGS (LOSS) PER SHARE (in reais – R$) |  |  |  |  |  |  |  |  |  |  |  |
Basic earnings (loss) per share |  |  | 22 |  |  |  | (0.031 | ) |  |  | 0.035 |
Diluted earnings (loss) per share |  |  | 22 |  |  |  | (0.031 | ) |  |  | 0.035 |

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.
7

SINQIA S.A. UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais – R$, except basic/diluted earnings per share)

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
NET PROFIT FOR THE PERIOD |  |  | 591 |  |  |  | 3,067 |
Other comprehensive income |  |  | - |  |  |  | - |
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |  |  | 591 |  |  |  | 3,067 |
ATTRIBUTABLE TO: |  |  |  |  |  |  |  |
Owners of the Company |  |  | (2,672 | ) |  |  | 2,998 |
Non-controlling shareholders |  |  | 3,263 |  |  |  | 69 |

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.
8

SINQIA S.A. UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  | Earnings reserves |

|  | Note |  |  | Capital |  |  | Capital reserve |  |  | Treasury shares |  |  | Share issuance costs |  |  | Transactions with non- controlling shareholders |  |  | Legal reserve |  |  | Earnings retention |  |  | Retained earnings |  |  | Equity |  |  | Non- controlling interests |  |  | Equity |
Balances as at December 31, 2021 |  |  |  |  |  | 813,303 |  |  |  | 12,227 |  |  |  | (40,896 | ) |  |  | (48,890 | ) |  |  | (61,208 | ) |  |  | 3,542 |  |  |  | 43,373 |  |  |  | - |  |  |  | 721,451 |  |  |  | 19,081 |  |  |  | 740,532 |
Net profit for the period |  |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,998 |  |  |  | 2,998 |  |  |  | 69 |  |  |  | 3,067 |
Put option on non-controlling interests |  |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (65,602 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (65,602 | ) |  |  | - |  |  |  | (65,602 | )
Acquisition of non-controlling interests |  |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,667 |  |  |  | 7,667 |
Purchase of treasury shares |  |  | 16 |  |  |  | - |  |  |  | - |  |  |  | (14,589 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (14,589 | ) |  |  | - |  |  |  | (14,589 | )
Share-based compensation |  |  | 16 |  |  |  | - |  |  |  | 450 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 450 |  |  |  | - |  |  |  | 450 |
Stock option exercise |  |  |  |  |  |  | - |  |  |  | (351 | ) |  |  | 499 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 148 |  |  |  | - |  |  |  | 148 |
Balances as at June 30, 2022 |  |  |  |  |  |  | 813,303 |  |  |  | 12,326 |  |  |  | (54,986 | ) |  |  | (48,890 | ) |  |  | (126,810 | ) |  |  | 3,542 |  |  |  | 43,373 |  |  |  | 2,998 |  |  |  | 644,856 |  |  |  | 26,817 |  |  |  | 671,673 |

|  | Earnings reserves |

|  | Note |  |  | Capital |  |  | Capital reserve |  |  | Treasury shares |  |  | Share issuance costs |  |  | Transactions with non- controlling shareholders |  |  | Legal reserve |  |  | Earnings retention |  |  | Loss for the year |  |  | Equity |  |  | Non- controlling interests |  |  | Equity |
Balances as at December 31, 2022 |  |  |  |  |  | 813,303 |  |  |  | 11,867 |  |  |  | (58,174 | ) |  |  | (48,890 | ) |  |  | (126,810 | ) |  |  | 4,381 |  |  |  | 54,629 |  |  |  | - |  |  |  | 650,306 |  |  |  | 20,067 |  |  |  | 670,373 |
Net profit (loss) for the period |  |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,672 | ) |  |  | (2,672 | ) |  |  | 3,263 |  |  |  | 591 |
Put option on non-controlling interests |  |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (9,482 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (9,482 | ) |  |  | - |  |  |  | (9,482 | )
Acquisition of non-controlling interests |  |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,842 |  |  |  | 4,842 |
Share-based compensation |  |  | 16 |  |  |  | - |  |  |  | 589 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 589 |  |  |  | - |  |  |  | 589 |
Stock option exercise |  |  |  |  |  |  | - |  |  |  | (678 | ) |  |  | 1,686 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,008 |  |  |  | - |  |  |  | 1,008 |
Balances as at June 30, 2023 |  |  |  |  |  |  | 813,303 |  |  |  | 11,778 |  |  |  | (56,488 | ) |  |  | (48,890 | ) |  |  | (136,292 | ) |  |  | 4,381 |  |  |  | 54,629 |  |  |  | (2,672 | ) |  |  | 639,749 |  |  |  | 28,172 |  |  |  | 667,921 |

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.
9

SINQIA S.A. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |  |  |  |  |  |
Net profit for the period |  |  | 591 |  |  |  | 3,067 |
Adjustments to reconcile profit for the period: |  |  |  |  |  |  |  |
Share-based compensation plan |  |  | 589 |  |  |  | 350 |
Depreciation and amortization |  |  | 47,933 |  |  |  | 39,654 |
Income from short-term investments |  |  | (7,675 | ) |  |  | - |
Recognition (reversal) of allowance for doubtful debts |  |  | 1,221 |  |  |  | (282 | )
Provision (reversal of provision) for legal claims |  |  | (12,074 | ) |  |  | (1,788 | )
Interest and inflation adjustment to lawsuits |  |  | 574 |  |  |  | 603 |
Accrued bonuses and profit sharing |  |  | 8,115 |  |  |  | 9,417 |
Interest and PVA incurred |  |  | 38,866 |  |  |  | 34,283 |
Measurement of call and put options |  |  | (2,029 | ) |  |  | (1,585 | )
Deferred income tax and social contribution |  |  | (5,069 | ) |  |  | (6,799 | )
Provision for current income tax and social contribution |  |  | 7,593 |  |  |  | 11,919 |
Changes in operating assets and liabilities |  |  |  |  |  |  |  |
Trade receivables |  |  | (15,950 | ) |  |  | (1,691 | )
Escrow deposits |  |  | 71 |  |  |  | - |
Recoverable taxes and contributions |  |  | 5,160 |  |  |  | (4,390 | )
Other receivables |  |  | (4,275 | ) |  |  | (8,104 | )
Suppliers and service providers |  |  | 4,835 |  |  |  | 2,587 |
Payroll and related taxes |  |  | (17,962 | ) |  |  | (6,526 | )
Taxes payable |  |  | 3,364 |  |  |  | (393 | )
Legal claims paid |  |  | (1,044 | ) |  |  | (1,242 | )
Advances from customers |  |  | (11,382 | ) |  |  | (49 | )
CASH GENERATED BY OPERATIONS |  |  | 41,452 |  |  |  | 61,588 |
Income tax and social contribution paid |  |  | (5,697 | ) |  |  | (11,788 | )
Interest paid |  |  | (26,635 | ) |  |  | (17,092 | )
NET CASH GENERATED BY OPERATIONS |  |  | 9,120 |  |  |  | 40,151 |

10

SINQIA S.A. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |  |  |  |  |  |
Purchase of property and equipment and intangible assets |  |  | (18,652 | ) |  |  | (8,955 | )
Acquisition of companies, net of cash acquired |  |  | (17,058 | ) |  |  | (438,637 | )
Short-term investments |  |  | 61,021 |  |  |  | 481,631 |
Payables for investment acquisition |  |  | - |  |  |  | (25,876 | )
Financial assets - securities |  |  | 11,589 |  |  |  | (14,695 | )
NET CASH GENERATED BY (USED IN) INVESTING ACTIVITIES |  |  | 36,900 |  |  |  | (6,532 | )
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |  |  |  |  |  |
Amortization of debentures |  |  | (125,659 | ) |  |  | (5,773 | )
Payment of leases |  |  | (11,776 | ) |  |  | (9,044 | )
Debentures issued |  |  | 250,000 |  |  |  | - |
Purchase of treasury shares |  |  | - |  |  |  | (14,589 | )
Payment of dividends |  |  | (3,231 | ) |  |  | (6,470 | )
Payables for investment acquisition |  |  | (73,489 | ) |  |  | - |
NET CASH USED IN FINANCING ACTIVITIES |  |  | 35,845 |  |  |  | (35,876 | )
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |  |  | 81,865 |  |  |  | (2,257 | )
Cash and cash equivalents at the beginning of the period |  |  | 37,941 |  |  |  | 24,192 |
Cash and cash equivalents at the end of the period |  |  | 119,806 |  |  |  | 21,935 |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |  |  | 81,865 |  |  |  | (2,257 | )

The accompanying notes are an integral part of these unaudited consolidated interim financial statements.
11

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

1 | GENERAL INFORMATION

1.1 | Operations

Sinqia S.A. (“Company”) is a publicly-held company, with head office at Rua Bela Cintra, 755 - 7º andar, in the City of São Paulo, State of São Paulo, whose shares are traded in the “Novo Mercado” segment of B3 – Brasil, Bolsa, Balcão.
The Company was established in 1996 and is primarily engaged in the provision of technology for the financial sector.
The Company is the Parent of Sinqia Tecnologia Ltda., Torq Inovação Digital Ltda., Homie do Brasil Informática Ltda, Rosk Software S.A., and indirect Parent of Lote45 Participações S.A. and Compliasset Software e Soluções Digitais S.A., which are engaged in providing supplementary services in connection with the Company’s operations.
These unaudited interim financial statements were approved and authorized for disclosure by the Board of Directors on September 11, 2023.

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

The consolidated interim financial statements have been prepared and are presented in accordance with IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board (“IASB”). The consolidated interim financial statements should be read together with the consolidated financial statements for the year ended December 31, 2022 (hereinafter referred to as “financial statements for December 31, 2022”).
There were no changes to the significant accounting policies in relation to those described in note 27 to the financial statements for the year ended December 31, 2022.
The consolidated financial statements have been prepared on the historical cost basis, except for the measurement of certain assets and liabilities such as those arising from financial instruments, which are measured at fair value.
The preparation of interim financial statements requires Management to use certain critical accounting estimates and exercise judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment and complexity, as well as those where assumptions and estimates are significant to the interim financial statements, are disclosed in note 2.
At the date of approval of the interim financial statements, Management reasonably expects that the Company has appropriate resources to continue as a going concern in the foreseeable future. Therefore, it continues to adopt the going concern basis of accounting in preparing the financial statements.
Management asserts that all relevant information for the consolidated interim financial statements, and only this information, is being disclosed and corresponds to the information used in managing the Company.
12

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

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

1.3 | Consolidation

The Company consolidates all entities over which it exercises control, i.e., when it is exposed, or has rights, to variable returns arising from its involvement with the investee and has the ability to steer the investee’s relevant activities.
The equity interests in the subsidiaries, which are all domiciled in Brazil, are shown below:

Direct subsidiaries | 12.31.2022 |  | 12.31.2021 |  | Core business
Sinqia Tecnologia Ltda. | 100% |  | 100% |  | Mainly engaged in the licensing, support and maintenance of standardized applications. It also develops new solutions, customizations and provides specialized IT consulting.
Torq Inovação Digital Ltda. | 100% |  | 100% |  | CVC’s (Corporate Venture Capital) arm of the operation, engaged in strengthening the company’s innovation and accelerated growth strategy through indirect investments in the fintech ecosystem.
Homie do Brasil Informática Ltda. | 60% |  | 60% |  | Engaged in developing e-signature solutions, in batch or not, with a series of companies and powers of authority.
Rosk Software S.A. | - |  | 51% |  | Mainly engaged in the management of the post-credit flow and digital debt renegotiation.

Indirect subsidiaries | 12.31.2022 |  | 12.31.2021 |  | Core business
Lote45 Participações. | 52% |  | - |  | Engaged in managing risks for asset managers.
Compliasset Software e Soluções Digitais S.A. | 60% |  | - |  | Engaged in managing regulatory compliance programs within the SaaS model.

2 | CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Accounting estimates and judgments are continually assessed and are based on past experience and other factors, including expectations of future events that are considered to be reasonable under the circumstances. In the quarter ended June 30, 2023, there were no changes in estimates and assumptions that would pose a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities for the current year, in relation to those detailed in the annual financial statements.
13

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

2.1 | Critical accounting estimates and assumptions

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

2.2 | Critical judgments in applying accounting policies

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

2.3 | New standards, amendments, and interpretations of technical pronouncements

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

3 | FINANCIAL RISK MANAGEMENT

3.1 | Financial risk factors

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

3.2 | Capital management

The Company’s capital management aims at ensuring a strong credit rating with the institutions and an optimal capital ratio, in order to support the Company’s business and maximize the value to shareholders.
The Company controls its capital structure by making adjustments and conforming to the current economic conditions. To maintain this structure adjusted, the Company may pay dividends, return capital to shareholders, raise new borrowings, issue promissory notes and enter into derivative transactions.

3.3 | Fair value estimate

There were no changes to the fair value measurement criteria or techniques applicable to assets and liabilities, including as regards the classification of financial instruments, in relation to those disclosed in the financial statements for December 31, 2022.
14

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

3.4 | Offset of financial instruments

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

4 | SEGMENT REPORTING

The Company’s entities are engaged in the supply of goods and provision of information technology services, in addition to consulting services, for the financial sector. Even though the goods are provided to several segments inside the financial institutions, they are not controlled and managed by Management as independent segments, and the Company’s results of operations are controlled, monitored and assessed on an integrated basis.
Therefore, due to Management’s joint control and management approach, it is possible to conclude that the Company operates effectively in one single segment, despite providing its goods and services to several sectors inside the financial institutions.

5 | CASH AND CASH EQUIVALENTS

a) Cash and cash equivalents

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Banks |  |  | 3,655 |  |  |  | 2,143 |
Highly liquid fixed-income securities in local currency (i) |  |  | 116,151 |  |  |  | 35,798 |
|  |  | 119,806 |  |  |  | 37,941 |

b) Short-term investments

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Fixed-income securities in local currency (i) |  |  | 84,624 |  |  |  | 151,766 |
Guarantee amounts (ii) |  |  | 13,796 |  |  |  | - |
|  |  | 98,420 |  |  |  | 151,766 |

15

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

c) Financial assets

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Guarantee amounts (ii) |  |  | 25,500 |  |  |  | 38,563 |
Investments in private entities (iii) |  |  | 46,929 |  |  |  | 44,828 |
Derivative financial instruments (iv) |  |  | 21,157 |  |  |  | 15,876 |
|  |  | 93,586 |  |  |  | 99,267 |

(i) The amounts correspond to cash intended for investing activities, including future business combinations. The Company has financial investment policies establishing that investments are concentrated on low-risk securities and are substantially remunerated based on the percentage fluctuation of the Interbank Deposit Certificate (CDI) rate. Therefore, they refer to investments in fixed-income investment funds, repurchase agreements and Bank Deposit Certificates (CDBs), yielding interest rate ranging from 85% to 103% of the CDI rate as at December 31, 2022 and with immediate liquidity, that is, without grace period for redemptions.
(ii) The guarantee amounts correspond mainly to investments in fixed-income investment funds, yielding equivalent average interest rate ranging from 106.59% to 115.20% of the CDI rate, maintained as guarantee for the payables for investment acquisition and debentures.
(iii) The amounts correspond to the fair value of investments in preferred shares issued by Celcoin Pagamentos S.A., Equity Funds and loans convertible into shares.
(iv) The amounts refer to call options on non-controlling interests in subsidiaries Homie do Brasil Informática Ltda., Rosk Software S.A., Lote45 Participações S.A. and Compliasset Software e Soluções Digitais S.A.

6 | TRADE RECEIVABLES

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Billed amounts |  |  | 42,437 |  |  |  | 34,449 |
Unbilled services (i) |  |  | 16,129 |  |  |  | 7,511 |
Estimated losses on doubtful debts |  |  | (2,316 | ) |  |  | (1,079 | )
|  |  | 56,250 |  |  |  | 40,881 |

(i) The amount of unbilled services refers to the revenue from services actually provided to customers but which have not been billed up to the reporting date.
16

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

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

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Balance at the beginning of the period |  |  | (1,079 | ) |  |  | (2,578 | )
Additions due to business acquisition (i) |  |  | (25 | ) |  |  | - |
Additions |  |  | (1,271 | ) |  |  | (589 | )
Reversals |  |  | 50 |  |  |  | 584 |
Actual losses |  |  | 9 |  |  |  | 872 |
Balance at the end of the period |  |  | (2,316 | ) |  |  | (1,711 | )

(i) Refers to the acquisition of Compliasset Software e Soluções Digitais S.A. on March 7, 2023.
The aging list of receivables is broken down as follows:

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Unbilled services |  |  | 16,129 |  |  |  | 7,511 |
Current |  |  | 36,313 |  |  |  | 29,869 |
Past-due: |  |  |  |  |  |  |  |
Up to 90 days |  |  | 3,790 |  |  |  | 3,481 |
From 91 to 180 days |  |  | 1,228 |  |  |  | 248 |
From 181 to 270 days |  |  | 70 |  |  |  | 33 |
From 271 to 360 days |  |  | 175 |  |  |  | 20 |
Over 360 days |  |  | 861 |  |  |  | 798 |
|  |  | 58,566 |  |  |  | 41,960 |

7 | RECOVERABLE TAXES AND CONTRIBUTIONS

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Withholding income tax (IRRF) and income tax and social contribution (IRPJ/CSLL) for offset (i) |  |  | 10,218 |  |  |  | 17,046 |
Withholding taxes on revenue (PIS and COFINS) and social contribution (CS) |  |  | 26 |  |  |  | 47 |
Other |  |  | 23 |  |  |  | 68 |
|  |  | 10,267 |  |  |  | 17,161 |
Current |  |  | 6,871 |  |  |  | 15,840 |
Noncurrent |  |  | 3,396 |  |  |  | 1,321 |

(i) Refers to the withholding income tax and prepaid income tax and social contribution.
17

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

8 | RELATED PARTIES

a) | Information on related parties

The Company has a related-party transaction policy, which is reviewed and approved by the Board of Directors, as set forth in the Company’s bylaws.
The transactions between the Group companies refer to the sharing of expenses, mainly administrative, and are carried out based on agreements entered into among the parties. There are no intragroup transactions involving the purchase and sale of goods and services.

b) | Management compensation

The Company has no additional post-employment obligation and does not offer other long-term benefits, such as leave of absence and other benefits for length of service. The Company also does not offer other severance benefits to its Senior Management, other than those prescribed by the Brazilian labor laws.
Short-term benefits
The Annual Shareholders’ Meeting set management’s annual overall compensation for FY2023, limited to the amount of R$22,778 thousand (R$13,003 thousand for FY2022).
Short-term compensation includes wages, payroll taxes, benefits and variable bonus, summarized as follows:

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Payroll and related taxes |  |  | 5,217 |  |  |  | 2,620 |
Benefits |  |  | 748 |  |  |  | 212 |
Variable bonus and share-based payment |  |  | 4,811 |  |  |  | 1,753 |
|  |  | 10,776 |  |  |  | 4,585 |

c) | Stock Option Plan

The Stock Option Plan (“Plan”) provides for the granting of call options of the Company’s common shares (“Options”). The purpose of the Plan is to (a) attract, retain and engage key professionals for the Company’s management (“Beneficiaries”), (b) align the Beneficiaries’ interests with those of the Company and its shareholders in a long-term perspective and (c) encourage the Beneficiaries to contribute to the Company’s good performance.
Number of shares included in the Plan: The options granted under the Plan, including those already exercised or not, and without considering those cancelled due to dismissal, death, permanent disability or retirement, can confer rights on common shares representing up to 3% of the Company’s capital on the Plan approval date.
Option exercise: The options granted can be exercised provided that the terms and conditions set out in this Plan and by the Board of Directors, in addition to the terms and conditions set out in the respective Option Agreements, are fulfilled. The Beneficiary can exercise all or part of the exercisable Options, it being, therefore, established that the Beneficiary must exercise at least 25% of the exercisable Options held by it on each partial exercise of the Options. The exercise of part of the Options by the Beneficiary will not impair the exercise of the other Options held.
18

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

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

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

19

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

9 | PROPERTY AND EQUIPMENT

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

| 06.30.2023 | 12.31.2022 |

|  | Useful life |  |  |  |  |  | Accumulated |  |  |  |  |  |  |
|  | (years) |  |  | Cost |  |  | depreciation |  |  | Net |  |  | Net |
Facilities and improvements |  |  | 9 – 10 |  |  |  | 9,617 |  |  |  | (6,297 | ) |  |  | 3,320 |  |  |  | 3,553 |
Electric devices and materials |  |  | 9 – 12 |  |  |  | 730 |  |  |  | (491 | ) |  |  | 239 |  |  |  | 271 |
Furniture and fixtures |  |  | 9 – 12 |  |  |  | 3,481 |  |  |  | (2,304 | ) |  |  | 1,177 |  |  |  | 1,476 |
Right-of-use asset |  |  | 2 – 10 |  |  |  | 39,721 |  |  |  | (14,509 | ) |  |  | 25,212 |  |  |  | 26,565 |
Computers and peripherals |  |  | 4 – 5 |  |  |  | 25,246 |  |  |  | (12,640 | ) |  |  | 12,606 |  |  |  | 11,990 |
Vehicles |  |  | 5 |  |  |  | 265 |  |  |  | (91 | ) |  |  | 174 |  |  |  | 205 |
Buildings |  |  | 25 |  |  |  | 2,798 |  |  |  | (178 | ) |  |  | 2,620 |  |  |  | 2,680 |
|  |  |  |  |  |  | 81,858 |  |  |  | (36,510 | ) |  |  | 45,348 |  |  |  | 46,740 |

20

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  | Facilities and improvements |  |  | Electric devices and materials |  |  | Furniture and fixtures |  |  | Right-of-use asset |  |  | Computers and peripherals |  |  | Vehicles |  |  | Buildings |  |  | Total |
Balances as at December 31, 2021 |  |  | 5,561 |  |  |  | 329 |  |  |  | 1,807 |  |  |  | 28,384 |  |  |  | 11,750 |  |  |  | - |  |  |  | - |  |  |  | 47,831 |
Additions |  |  | 1,044 |  |  |  | 5 |  |  |  | 350 |  |  |  | - |  |  |  | 4,805 |  |  |  | - |  |  |  | - |  |  |  | 6,204 |
Additions relating to IFRS 16 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,517 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,517 |
Additions due to business acquisition |  |  | 170 |  |  |  | 74 |  |  |  | 540 |  |  |  | - |  |  |  | 368 |  |  |  | 268 |  |  |  | 2,849 |  |  |  | 4,269 |
Write-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (6 | ) |  |  | - |  |  |  | - |  |  |  | (6 | )
Depreciation |  |  | (3,222 | ) |  |  | (137 | ) |  |  | (1,221 | ) |  |  | (5,336 | ) |  |  | (4,927 | ) |  |  | (63 | ) |  |  | (169 | ) |  |  | (15,075 | )
Balances as at December 31, 2022 |  |  | 3,553 |  |  |  | 271 |  |  |  | 1,476 |  |  |  | 26,565 |  |  |  | 11,990 |  |  |  | 205 |  |  |  | 2,680 |  |  |  | 46,740 |
Additions |  |  | 8 |  |  |  | - |  |  |  | 34 |  |  |  | - |  |  |  | 2,695 |  |  |  | - |  |  |  | - |  |  |  | 2,737 |
Additions relating to IFRS 16 (i) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,443 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,443 |
Additions due to business acquisition (ii) |  |  | 62 |  |  |  | - |  |  |  | 19 |  |  |  | 85 |  |  |  | 28 |  |  |  | - |  |  |  | - |  |  |  | 194 |
Depreciation |  |  | (303 | ) |  |  | (32 | ) |  |  | (352 | ) |  |  | (2,881 | ) |  |  | (2,107 | ) |  |  | (31 | ) |  |  | (60 | ) |  |  | (5,766 | )
Balances as at June 30, 2023 |  |  | 3,320 |  |  |  | 239 |  |  |  | 1,177 |  |  |  | 25,212 |  |  |  | 12,606 |  |  |  | 174 |  |  |  | 2,620 |  |  |  | 45,348 |

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

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

21

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

10 | INTANGIBLE ASSETS

| 06.30.2023 | 12.31.2022 |

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

22

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  | Goodwill on acquisition of subsidiaries (i) |  |  | Software licenses |  |  | Trademarks and patents |  |  | Software acquired |  |  | Customer portfolio |  |  | Non-compete agreement |  |  | Development of new products |  |  | Right-of-use assets |  |  | Total |
Balances as at December 31, 2021 |  |  | 285,286 |  |  |  | 5,054 |  |  |  | 19,729 |  |  |  | 38,648 |  |  |  | 89,844 |  |  |  | 1,916 |  |  |  | - |  |  |  | 48,406 |  |  |  | 488,883 |
Additions |  |  | - |  |  |  | 12,536 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,262 |  |  |  | - |  |  |  | 16,798 |
Additions – right of use |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8,323 |  |  |  | 8,323 |
Additions due to business acquisition |  |  | 345,310 |  |  |  | 2,876 |  |  |  | 39,610 |  |  |  | 39,607 |  |  |  | 216,757 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 644,160 |
Amortization |  |  | - |  |  |  | (11,478 | ) |  |  | (8,295 | ) |  |  | (13,103 | ) |  |  | (30,298 | ) |  |  | (795 | ) |  |  | - |  |  |  | (16,082 | ) |  |  | (80,051 | )
Balances as at December 31, 2022 |  |  | 630,596 |  |  |  | 8,988 |  |  |  | 51,044 |  |  |  | 65,152 |  |  |  | 276,303 |  |  |  | 1,121 |  |  |  | 4,262 |  |  |  | 40,647 |  |  |  | 1,078,113 |
Additions |  |  | - |  |  |  | 10,541 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,372 |  |  |  | - |  |  |  | 15,913 |
Additions – right of use (ii) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8,993 |  |  |  | 8,993 |
Additions due to business acquisition (iii) |  |  | 14,432 |  |  |  | - |  |  |  | 1,527 |  |  |  | 6,204 |  |  |  | 7,321 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 29,484 |
Write-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,964 | ) |  |  | (1,964 | )
Amortization |  |  | - |  |  |  | (7,489 | ) |  |  | (4,098 | ) |  |  | (7,059 | ) |  |  | (14,123 | ) |  |  | (398 | ) |  |  | - |  |  |  | (9,000 | ) |  |  | (42,167 | )
Balances as at June 30, 2023 |  |  | 645,028 |  |  |  | 12,040 |  |  |  | 48,473 |  |  |  | 64,297 |  |  |  | 269,501 |  |  |  | 723 |  |  |  | 9,634 |  |  |  | 38,676 |  |  |  | 1,088,372 |

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

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

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

23

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

11 | DEBENTURES

| Charges |  | Maturity |  |  | 06.30.2023 |  |  |  | 12.31.2022 |
1st issuance of debentures (i) | CDI+1.50% |  | 02/22/2024 |  |  | - |  |  |  | 14,634 |
2nd issuance of debentures (ii) | CDI+2.30% |  | 07/15/2026 |  |  | 113,450 |  |  |  | 222,022 |
3rd issuance of debentures (ii) | CDI+2.30% |  | 06/27/2028 |  |  | 247,231 |  |  |  | - |
Total |  |  |  |  |  | 360,681 |  |  |  | 236,656 |
Current |  |  |  |  |  | 37,114 |  |  |  | 74,500 |
Noncurrent |  |  |  |  |  | 323,567 |  |  |  | 162,156 |

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

| (ii) | The second issuance of simple, non-convertible debentures is guaranteed by credit rights from the current accounts linked to the transaction and the funds deposited in these accounts, arising from the agreements entered into between the Company and its customers. A portion of such issuance balance was paid in June 2023.

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

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

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Balance at the beginning of the period |  |  | 236,656 |  |  |  | 173,639 |
Borrowings |  |  | 250,000 |  |  |  | - |
Interest incurred |  |  | 17,407 |  |  |  | 11,619 |
Interest paid |  |  | (17,723 | ) |  |  | (11,603 | )
Amortization |  |  | (125,659 | ) |  |  | (5,773 | )
Balance at the end of the period |  |  | 360,681 |  |  |  | 167,882 |

24

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

The expected payment of debentures is as follows:

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
2023 |  |  | 19,163 |  |  |  | 21,509 |
2024 |  |  | 67,152 |  |  |  | 49,305 |
2025 |  |  | 98,403 |  |  |  | 38,855 |
2026 |  |  | 83,178 |  |  |  | 36,764 |
2027 |  |  | 61,856 |  |  |  | 21,449 |
2028 |  |  | 30,929 |  |  |  | - |
|  |  | 360,681 |  |  |  | 167,882 |

(a) | Covenants

Debentures are subject to financial covenants that must be determined as at December 31. In 2022, the net debt-to-Ebitda ratio must be lower than or equal to 3, and from 2023 to 2028 the net debt-to-Ebitda ratio must be lower than or equal to 2.75.
The gross debt corresponds to the sum of short- and long-term debentures, plus (i) discounted securities with recourse and factoring, (ii) leases, except if the lease derives from operating property rental agreements and server use agreements, (iii) non-convertible fixed-income securities from public or private issuance, at the local or international markets, (iv) liabilities arising from derivative financial instruments, (v) acquirees’ financial debts, provided that the share is higher than 50% of the acquiree’s capital, not yet consolidated, (vi) debts and convertible securities, and (vii) borrowings net of loans, duly represented in the Issuer’s consolidated balance sheet, in line item “Debentures” in the consolidated quarterly financial information or consolidated annual financial statements.
Net debt means the aggregate of gross debt net of cash, demand deposits, cash invested in financial assets with the expected generation of value over time available in less than 360 days.
Non-financial covenants include accelerated maturity clauses as a result of events not restricted to the financial scope, according to common market practices.
25

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

12 | PAYROLL AND RELATED TAXES

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Social Security Tax (INSS) and Severance Pay Fund (FGTS) payable |  |  | 8,320 |  |  |  | 10,172 |
13th salary |  |  | 3,004 |  |  |  | - |
Withholding income tax (IRRF) on wages |  |  | 5,629 |  |  |  | 7,256 |
Vacation pay |  |  | 30,077 |  |  |  | 26,655 |
Bonus, commission, and profit sharing (i) |  |  | 2,777 |  |  |  | 17,320 |
Other |  |  | 1,707 |  |  |  | 831 |
|  |  | 51,514 |  |  |  | 62,234 |

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

13 | TAXES PAYABLE

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Income tax (IR) and social contribution (CS) payable |  |  | 5,124 |  |  |  | 3,252 |
Service tax (ISS) payable |  |  | 2,235 |  |  |  | 1,907 |
Taxes on revenue (PIS/COFINS) payable |  |  | 1,826 |  |  |  | 769 |
Other taxes payable |  |  | 458 |  |  |  | 187 |
|  |  | 9,643 |  |  |  | 6,115 |
Current |  |  | 9,438 |  |  |  | 6,115 |
Noncurrent |  |  | 205 |  |  |  | - |

26

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

14 | PAYABLES FOR INVESTMENT ACQUISITION

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

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Acquisition: |  |  |  |  |  |  |  |
Atena |  |  | 3,243 |  |  |  | 4,082 |
ADSPrev |  |  | 530 |  |  |  | 1,070 |
SoftPar |  |  | 3,083 |  |  |  | 6,230 |
Stock&Info |  |  | 1,037 |  |  |  | 965 |
Tree Solution |  |  | 3,389 |  |  |  | 3,203 |
Fromtis |  |  | 3,244 |  |  |  | 7,516 |
ISP |  |  | 32,880 |  |  |  | 42,372 |
Dendron |  |  | 1,800 |  |  |  | 3,568 |
Simply |  |  | 2,200 |  |  |  | 4,361 |
Lote45 |  |  | - |  |  |  | 26,833 |
Mercer |  |  | 4,559 |  |  |  | 7,316 |
Newcon |  |  | 61,428 |  |  |  | 83,222 |
Compliasset |  |  | 5,401 |  |  |  | - |
|  |  | 122,894 |  |  |  | 190,738 |
Current |  |  | 47,577 |  |  |  | 79,101 |
Noncurrent |  |  | 75,317 |  |  |  | 111,637 |

The variations in payables for investment acquisition are as follows:

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Balance at the beginning of the period |  |  | 190,738 |  |  |  | 93,818 |
Interest incurred |  |  | 5,951 |  |  |  | 4,060 |
Addition due to business acquisition (i) |  |  | 5,217 |  |  |  | 109,031 |
Interest paid |  |  | (5,523 | ) |  |  | (1,194 | )
Amortization |  |  | (73,489 | ) |  |  | (25,876 | )
Balance at the end of the period |  |  | 122,894 |  |  |  | 179,839 |

(i) Refers to amounts arising from the acquisition of Compliasset Software e Soluções Digitais S.A.
27

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
2022 |  |  | - |  |  |  | 5,071 |
2023 |  |  | 1,564 |  |  |  | 66,592 |
2024 |  |  | 53,521 |  |  |  | 43,712 |
2025 |  |  | 30,235 |  |  |  | 28,701 |
2026 |  |  | 24,436 |  |  |  | 23,134 |
2027 |  |  | 13,138 |  |  |  | 12,629 |
|  |  | 122,894 |  |  |  | 179,839 |

15 | PROVISION FOR LEGAL CLAIMS

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

|  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Civil |  |  | 10,785 |  |  |  | 11,784 |
Labor |  |  | 43,016 |  |  |  | 46,982 |
Tax |  |  | 76,518 |  |  |  | 81,100 |
|  |  | 130,319 |  |  |  | 139,866 |

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

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Balance at the beginning of the period |  |  | 139,866 |  |  |  | 58,347 |
Additions (i) |  |  | 1,185 |  |  |  | 1,954 |
Additions due to business acquisition (ii) |  |  | 2,997 |  |  |  | 72,942 |
Reversals |  |  | (13,259 | ) |  |  | (3,742 | )
Interest incurred |  |  | 574 |  |  |  | 603 |
Payments |  |  | (1,044 | ) |  |  | (1,242 | )
Balance at the end of the period |  |  | 130,319 |  |  |  | 128,862 |

(i) Additions include new lawsuits and changes in amounts of lawsuits already recorded.
(ii) Refers to amounts arising from the acquisition of Compliasset Software e Soluções Digitais S.A. on March 7, 2023, and acquisition of Newcon Software Ltda., Sinqia Seguridade Ltda. and Lote45 Participações S.A.
28

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

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

a) | Labor

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

b) | Tax

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

c) | Civil

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

16 | EQUITY

16.1 | Capital

The Board of Directors approved the Company’s capital increase at the meeting held on August 26, 2021, within the authorized capital limit, pursuant to Art. 5 of the Bylaws, in the amount of R$400,042, upon the issuance of 17,393,160 common shares.
The Company’s capital amounts to R$813,303 and is currently represented by 87,941,972 registered common shares, without par value. The holders of common shares have the right to one vote per share at the meetings of the Company’s shareholders.
The table below shows the number of shares held by shareholders holding 5% or more of the Company’s common shares, in addition to treasury shares.
29

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  |  |  |  |  | 06.30.2023 |  |  |  |  |  |  | 12.31.2022 |
Shareholders |  | Shares |  |  | % |  |  | Shares |  |  | % |
HIX Investimentos Ltda. |  |  | 10,688,562 |  |  |  | 12.15 | % |  |  | 9,588,025 |  |  |  | 10.90 | %
SK Tarpon |  |  | 6,874,500 |  |  |  | 7.82 | % |  |  | 4,405,877 |  |  |  | 5.01 | %
Antônio Luciano de Camargo Filho |  |  | 6,483,352 |  |  |  | 7.37 | % |  |  | 6,483,752 |  |  |  | 7.37 | %
Bernardo Francisco Pereira Gomes |  |  | 5,675,750 |  |  |  | 6.45 | % |  |  | 5,689,450 |  |  |  | 6.47 | %
Treasury shares |  |  | 3,262,377 |  |  |  | 3.71 | % |  |  | 3,362,360 |  |  |  | 3.82 | %
Other shareholders (i) |  |  | 54,957,431 |  |  |  | 62.50 | % |  |  | 58,412,508 |  |  |  | 66.43 | %
|  |  | 87,941,972 |  |  |  | 100.00 | % |  |  | 87,941,972 |  |  |  | 100.00 | %

(i) Substantially refer to free float.

16.2 | Earnings reserve

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

a) | Legal reserve

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

b) | Dividends and interest on capital

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

16.3 | Capital reserve

The balances of capital reserves primarily consist of the effects from the share-based compensation plan and changes in the purchase and sales prices of treasury shares.
A variation in the amount of R$589 was recognized in 2023 (R$878 in 2022) referring to the share-based compensation plans. There was a variation in the amount of (R$678) ((R$1,238) in 2022) in the capital reserve relating to the exercised shares not yet transferred to beneficiaries, less the difference between the purchase price and the sales price of treasury shares already transferred.
As at June 30, 2023, the balance is R$11,778.

16.4 | Treasury shares

In 2023, no shares were acquired (R$21,658 in 2022); however, the exercised shares were transferred under the Stock Option plan, for the amount of R$1,686 (R$4,380 in 2022), resulting in a balance of treasury shares in the amount of R$56,488 (R$58,174 as at December 31, 2022).
30

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

16.5 | Share issuance costs

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

16.6 | Non-controlling interests

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

17 | NET OPERATING REVENUE

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Software |  |  | 283,790 |  |  |  | 246,794 |
Services |  |  | 47,045 |  |  |  | 43,884 |
|  |  | 330,835 |  |  |  | 290,678 |

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

18 | COSTS OF SERVICES

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Outside services |  |  | 27,583 |  |  |  | 25,797 |
Personnel, payroll taxes and benefits |  |  | 161,147 |  |  |  | 136,149 |
Depreciation and amortization |  |  | 6,164 |  |  |  | 5,105 |
Other costs |  |  | 4,461 |  |  |  | 1,951 |
|  |  | 199,355 |  |  |  | 169,002 |

31

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

19 | GENERAL, ADMINISTRATIVE AND SELLING EXPENSES

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Outside services |  |  | 6,109 |  |  |  | 6,787 |
Personnel, payroll taxes, benefits and bonuses |  |  | 52,486 |  |  |  | 39,341 |
Commissions |  |  | 2,946 |  |  |  | 2,309 |
Rents, insurance, common area maintenance fees and other |  |  | 1,797 |  |  |  | 1,488 |
Increase in (reversal of) provision for legal claims |  |  | (12,074 | ) |  |  | 1,958 |
Increase in (reversal of) allowance for doubtful debts |  |  | 1,221 |  |  |  | (282 | )
Depreciation and amortization |  |  | 41,769 |  |  |  | 30,803 |
Other expenses |  |  | 4,487 |  |  |  | 4,841 |
|  |  | 98,741 |  |  |  | 87,245 |

20 | FINANCIAL INCOME (EXPENSE)

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Financial income: |  |  |  |  |  |  |  |
Income from short-term investments |  |  | 7,675 |  |  |  | 7,443 |
Fair value adjustment to financial instruments |  |  | 2,029 |  |  |  | - |
Other finance income |  |  | 1,017 |  |  |  | 144 |
|  |  | 10,721 |  |  |  | 7,587 |
Financial expenses: |  |  |  |  |  |  |  |
Interest on investment acquisition |  |  | (5,951 | ) |  |  | (4,060 | )
Interest on debentures |  |  | (17,407 | ) |  |  | (11,619 | )
Interest on leases |  |  | (3,639 | ) |  |  | (4,343 | )
Present value adjustment to call/put option |  |  | (11,869 | ) |  |  | (12,676 | )
Interest and inflation adjustment to lawsuits |  |  | (574 | ) |  |  | (603 | )
Other finance costs |  |  | (905 | ) |  |  | (530 | )
|  |  | (40,345 | ) |  |  | (33,831 | )
Financial income (expenses), net |  |  | (29,624 | ) |  |  | (26,244 | )

32

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

21 | PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION

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

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

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

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Profit before income tax and social contribution |  |  | 3,115 |  |  |  | 8,187 |
Statutory rate |  |  | 34 | % |  |  | 34 | %
Income tax and social contribution at the combined rate |  |  | (1,059 | ) |  |  | (2,784 | )
Adjustments to the effective rate: |  |  | - |  |  |  | - |
Bonus expenses |  |  | (2,779 | ) |  |  | (1,853 | )
Deemed income in subsidiaries (i) |  |  | 693 |  |  |  | 627 |
Other permanent differences |  |  | 621 |  |  |  | (1,110 | )
Income tax and social contribution expenses |  |  | (2,524 | ) |  |  | (5,120 | )
Income tax and social contribution: |  |  |  |  |  |  |  |
Current |  |  | (7,593 | ) |  |  | (11,919 | )
Deferred |  |  | 5,069 |  |  |  | 6,799 |

(i) Difference relating to Group companies that elect to calculate income tax and social contribution under the deemed income regime.
33

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

b) | Deferred income tax and social contribution - assets

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

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Noncurrent assets |  |  |  |  |  |  |  |
Tax loss carryforwards |  |  | 64,874 |  |  |  | 47,688 |
Allowance for doubtful debts |  |  | 778 |  |  |  | 559 |
Accrued profit sharing |  |  | - |  |  |  | 294 |
Provisions for legal claims and other obligations |  |  | 35,198 |  |  |  | 41,470 |
Amortization of tax goodwill in business combinations |  |  | (23,893 | ) |  |  | (21,819 | )
Other provisions |  |  | (53 | ) |  |  | (186 | )
Change in the fair value of financial assets |  |  | 4,990 |  |  |  | 1,643 |
Leases |  |  | 1,638 |  |  |  | 9,545 |
|  |  | 83,532 |  |  |  | 79,194 |

22 | EARNINGS PER SHARE

Basic earnings (loss) per share are calculated by dividing profit for the period attributable to the holders of the Company’s common shares, by the weighted average number of common shares outstanding during the period.
Diluted earnings (loss) per share are calculated by dividing profit for the period, attributable to the holders of the Parent’s common shares, by the weighted average number of common shares outstanding during the period, plus the weighted average number of common shares that would be issued upon conversion of all potential diluted common shares into common shares.
The tables below show profit or loss and share data used to calculate basic and diluted earnings per share:
a) Basic earnings (loss) per share

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Net profit (loss) attributable to the Company’s owners |  |  | (2,672 | ) |  |  | 2,998 |
Weighted average number of outstanding common shares |  |  | 86,346,025 |  |  |  | 84,892,257 |
Basic earnings (loss) per share – R$ |  |  | (0.031 | ) |  |  | 0.035 |

34

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

b) Diluted earnings (loss) per share

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Net profit (loss) attributable to the Company’s owners |  |  | (2,672 | ) |  |  | 2,998 |
Weighted average number of outstanding common shares |  |  | 86,346,025 |  |  |  | 84,892,257 |
Potential increase in common shares due to the stock option and restricted share plan (*) |  |  | - |  |  |  | 906,220 |
Diluted earnings (loss) per share - R$ |  |  | (0.031 | ) |  |  | 0.035 |

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

23 | LEASES

Lease liabilities were recognized as prescribed by accounting standard IFRS 16 in connection with the recognition of future payment liability and right of use of leased assets for all contracts within the scope of the standard. For current leases, the average discount rate of 8.53% was used.

| Final maturity |  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Belo Horizonte office | 12/31/2028 |  |  | 5,658 |  |  |  | 5,761 |
São Paulo office | 07/01/2028 |  |  | 21,912 |  |  |  | 22,535 |
Curitiba office | 08/31/2023 |  |  | 158 |  |  |  | 617 |
Taubaté office | 04/01/2025 |  |  | 88 |  |  |  | - |
Oracle do Brasil (servers) | 12/31/2023 |  |  | 317 |  |  |  | - |
Solo Network (servers) | 07/31/2025 |  |  | 40,590 |  |  |  | 40,759 |
Claranet (servers) | 09/30/2026 |  |  | - |  |  |  | 2,101 |
Total |  |  |  | 68,723 |  |  |  | 71,773 |
Current |  |  |  | 28,959 |  |  |  | 24,334 |
Noncurrent |  |  |  | 39,764 |  |  |  | 47,439 |

35

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

The variations in leases are as follows:

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Balance at the beginning of the period |  |  | 71,773 |  |  |  | 79,470 |
Additions |  |  | 10,536 |  |  |  | 9,645 |
Interest incurred |  |  | 3,639 |  |  |  | 4,343 |
Interest paid |  |  | (3,389 | ) |  |  | (4,295 | )
Amortization |  |  | (11,776 | ) |  |  | (9,044 | )
Write-offs |  |  | (2,060 | ) |  |  | - |
Balance at the end of the period |  |  | 68,723 |  |  |  | 80,119 |

24 | PUT OPTION ON NON-CONTROLLING INTERESTS

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

| Exercise date |  |  | 06.30.2023 |  |  |  | 12.31.2022 |
Homie do Brasil Informática Ltda. | 07/31/2025 |  |  | 19,598 |  |  |  | 17,982 |
Rosk Software S.A. | 04/30/2025 and 04/30/2026 |  |  | 35,512 |  |  |  | 32,799 |
Lote45 Participações S.A. | 04/30/2027 |  |  | 98,400 |  |  |  | 91,489 |
Compliasset Software e Soluções Digitais S.A. | 09/30/2026 |  |  | 12,737 |  |  |  | - |
Total |  |  |  | 166,247 |  |  |  | 142,270 |

25 | NON-CASH TRANSACTIONS

The investing and financing transactions not involving the use of cash or cash equivalents are not included in the statement of cash flows. The Company carried out the following non-cash investing and financing activities:
36

SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

|  |  | 06.30.2023 |  |  |  | 06.30.2022 |
Recognition of lease assets/liabilities |  |  | 8,376 |  |  |  | 9,903 |
Portion retained in the payment for investment acquisition |  |  | 300 |  |  |  | 110,041 |
Business combination |  |  | (3,665 | ) |  |  | (309,877 | )

26 | BUSINESS COMBINATIONS

A business combination is a transaction or another event through which an acquirer obtains control of one or more businesses, regardless of the legal form of the transaction. The acquisition method is applied for transactions where control is obtained. Business combinations of entities under common control are accounted for at cost. Under the acquisition method, the identifiable assets acquired, and liabilities assumed are measured at their fair value, with limited exceptions.
During 2022, three entities were acquired: (i) Newcon Software S.A., (ii) Mercer Seguridade Ltda., and (iii) Lote45 Participações Ltda. The goodwill recognized on these acquisitions, in the amount of R$341,854, corresponds to the amount of future economic benefits (goodwill) arising from the synergies resulting from acquisitions carried out, which are aligned with the Company’s strategy of increasing its market share in the Consortium (Newcon), Pension Plan (Mercer) and Funds (Lote45) segments.
In 2023, Compliasset was acquired. The transaction involved the initial amount of R$17,700 payable at sight and (ii) the retained portion of R$300 that will be paid within 150 days from the acquisition date.

| a) | Newcon Software S.A.

On January 6, 2022, the Company completed the acquisition of a 100% stake in Newcon Software S.A., through its subsidiary Sinqia Tecnologia. The transaction involved the initial amount of R$338,872, disbursed on the acquisition date, and the total amount of R$82,500 payable in five annual installments, of which two installments of R$18,750, one of R$15,000 and two of R$11,250, and another two additional installments of R$3,750, payable in June 2022 and January 2023. Accordingly, considering the adjusted amount payable at sight and the amount payable in installments and additional installments, the total transaction price is R$421,372.
Newcon was established in 2002 and is one of the main providers of technology for the Brazilian financial system, specialized in software used by consortium managers connected to the main financial conglomerates and carmakers, in addition to the independent ones.
Sinqia Tecnologia conducts operations in the consortium market, and, upon consummation of the transaction, its objectives are to: (i) strengthen its position as leading technology provider for the financial system, with a broad product portfolio and a robust customer base; and (ii) expand the growth paths for digital solutions, accelerating the penetration of digital onboarding solutions, digital signature and digital collection in the consortium market.
In the consolidated financial statements for the year ended December 31, 2022, Newcon reported net revenue of R$93,681 and profit of R$26,293, considering the period after the abovementioned acquisition date.
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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

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

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

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

ACQUIREE’S BALANCE SHEET

|  | 01/06/2022 |  |  |  | 01/06/2022 |
Current assets |  |  |  | Current liabilities |  |  |
Cash and cash equivalents |  |  | 3,590 |  | Borrowings and financing |  |  | 4,066 |
Trade receivables |  |  | 2,708 |  | Advances from customers |  |  | 4,715 |
Recoverable taxes |  |  | 758 |  | Trade payables |  |  | 66 |
Advances to employees |  |  | 118 |  | Taxes payable |  |  | 2,773 |
Advances to suppliers |  |  | 79 |  | Payroll and related taxes |  |  | 2,957 |
Prepaid expenses |  |  | 7 |  | Payables |  |  | 107 |
Other assets |  |  | 2,251 |  |  |  |  |  |
Total current assets |  |  | 9,511 |  | Total current liabilities |  |  | 14,684 |
Noncurrent assets |  |  |  |  | Noncurrent liabilities |  |  |  |
Property and equipment |  |  | 3,788 |  | Provision for legal claims |  |  | 63,340 |
Intangible assets |  |  | 242,212 |  |  |  |  |  |
Deferred income tax on contingencies |  |  | 21,536 |  |  |  |  |  |
Total noncurrent assets |  |  | 267,536 |  | Total noncurrent liabilities |  |  | 63,340 |
|  |  |  |  | Total equity |  |  | 199,023 |
Total assets |  |  | 277,047 |  | Total liabilities |  |  | 277,047 |

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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

c.3) Goodwill on acquisition

Total consideration transferred |  |  | 421,372 |
(-) Fair value of the main assets acquired: |  |  |  |
Software |  |  | (16,730 | )
Customer portfolio |  |  | (195,893 | )
Trademark |  |  | (26,765 | )
Deferred tax assets |  |  | (21,536 | )
(+) Fair value of the main liabilities assumed: |  |  |  |
Contingencies |  |  | 63,340 |
(-) Total identifiable net assets at fair value on the acquisition date |  |  | 1,439 |
Goodwill on expected future earnings arising on acquisition |  |  | 222,349 |
Goodwill expected to be deductible for tax purposes |  |  | 181,986 |

The contingent liability of R$63,340 was recognized in view of labor risks in the amount of R$11,777 and tax risks in the amount of R$51,563, referring to the contingency period. As at December 31, 2022, there was no change in the amounts recognized since the acquisition date for the liability or in the expected amount ranges or also in the assumptions used for estimation.
The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets |  | Amount |  | Useful life |  | Amortization method
Software |  |  | 16,730 |  | 10 years |  | Straight-line
Customer portfolio |  |  | 195,893 |  | 15 years |  | Straight-line
Trademark |  |  | 26,765 |  | 8 years |  | Straight-line

| b) | Mercer Seguridade Ltda.

On July 26, 2021, the parties entered into the share purchase and sale agreement and other covenants, whereby Sinqia Tecnologia acquired 100% of the shares representing the Company’s capital. On February 1, 2022, the Company completed the acquisition of a 100% stake in Mercer Seguridade Ltda., through its subsidiary Sinqia Tecnologia. The transaction involved: (i) the initial amount of R$25,754, disbursed on the acquisition date; (ii) five annual installments of R$1,400, totaling R$7,000; and (iii) a price adjustment as per contract of R$5,298, adjusted by the CDI rate. Accordingly, considering the payments at sight, in installments and adjustments, the final transaction price is R$38,052.
Mercer Seguridade provides services to closed-end supplementary private pension entities, in the participant service, accounting, treasury, risk and social security areas.
Sinqia Tecnologia conducts operations in the private pension market, and, upon consummation of the transaction, its objectives are to: (i) strengthen Sinqia’s position as leading technology provider for the financial system, with a broad product portfolio and a robust customer base; and (ii) reinforce Sinqia’s installed participant base of the closed-end private pension sector.
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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

In the consolidated financial statements for the year ended December 31, 2022, Mercer reported net revenue of R$25,603 and profit of R$10,118, considering the period after the abovementioned acquisition date.
d.1) Fair value on the acquisition date of the consideration transferred:

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

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

ACQUIREE’S BALANCE SHEET

|  | 02/01/2022 |  |  |  | 02/01/2022 |
Current assets |  |  |  | Current liabilities |  |  |
Cash and cash equivalents |  |  | 344 |  | Suppliers and service providers |  |  | 1 |
Trade receivables |  |  | 3,475 |  | Advances from customers |  |  | 374 |
|  |  |  |  | Taxes payable |  |  | 587 |
|  |  |  |  | Payroll and related taxes |  |  | 2,247 |
Total current assets |  |  | 3,819 |  | Total current liabilities |  |  | 3,209 |
Noncurrent assets |  |  |  |  | Noncurrent liabilities |  |  |  |
Deferred income tax |  |  | 837 |  |  |  |  |  |
Intangible assets |  |  | 24,750 |  | Contingencies |  |  | 2,462 |
Total noncurrent assets |  |  | 25,587 |  | Total noncurrent liabilities |  |  | 2,462 |
|  |  |  |  | Total equity |  |  | 23,735 |
Total assets |  |  | 29,406 |  | Total liabilities |  |  | 29,406 |

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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

d.3) Goodwill on acquisition

Total consideration transferred |  |  | 37,874 |
(-) Fair value of the main assets acquired: |  |  |  |
Software |  |  | (11,617 | )
Customer portfolio |  |  | (13,133 | )
Deferred tax assets |  |  | (837 | )
(+) Fair value of the main liabilities assumed: |  |  |  |
Contingencies |  |  | 2,462 |
Payroll and related taxes |  |  | 2,246 |
(-)Total identifiable net assets at fair value on the acquisition date |  |  | 2,857 |
Goodwill on expected future earnings arising on acquisition |  |  | 14,138 |
Goodwill expected to be deductible for tax purposes |  |  | 13,123 |

The contingent liability of R$2,462 was recognized in view of labor risks in the amount of R$328 and tax risks in the amount of R$2,134. As at December 31, 2022, there was no change in the amounts recognized since the acquisition date for the liability or in the expected amount ranges or also in the assumptions used for estimation.
The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets | Useful life | Amortization method
Software | 12.5 years | Straight-line
Customer portfolio | 13 years | Straight-line

| c) | Lote45 Participações S.A.

On January 18, 2022, the Company completed the acquisition of a 52% stake in Lote45 Participações Ltda., through its subsidiary Sinqia Tecnologia. The total transaction price initially set forth was R$79,773, consisting of: (i) cash payment of R$76,773; (ii) R$3,000 payable through subscription of shares; and (iii) additional amount payable in 2023, contingent on the net revenue for 2022, estimated at R$24,805 on the acquisition date. Additionally, the transaction provides for the purchase and sale of the remaining portion, based on the exercise price linked to Lote45’s net revenue and EBITDA margin for 2026.
Lote45 was established in 2006 and is specialized in enterprise risk management software used by more than 100 customers in the investment fund industry, mainly family offices and asset managers.
Sinqia Tecnologia conducts operations in the investment fund market, and, upon consummation of the transaction, its objectives are to: (i) strengthen its position as leading technology provider for the financial system, with a broad product portfolio and a robust customer base; and (ii) establish a complete and integrated suite for all investment fund industry players (administrators, custodians, distributors and managers, etc.).
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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

In the consolidated financial statements for the year ended December 31, 2022, Lote45 reported net revenue of R$38,414 and profit of R$11,991, considering the period after the abovementioned acquisition date.
e.1) Fair value on the acquisition date of the consideration transferred:

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

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

ACQUIREE’S BALANCE SHEET

|  | 01/18/2022 |  |  |  | 01/18/2022 |
Current assets |  |  |  | Current liabilities |  |  |
Cash and cash equivalents |  |  | 2,818 |  | Suppliers and service providers |  |  | 167 |
Trade receivables |  |  | 1,471 |  | Advances from customers |  |  | 53 |
Recoverable taxes |  |  | 7 |  | Taxes payable |  |  | 745 |
Advances to employees |  |  | 21 |  | Payroll and related taxes |  |  | 1,662 |
Advances to suppliers |  |  | 1 |  | Payables |  |  | 375 |
Prepaid expenses |  |  | 13 |  |  |  |  |  |
Other assets |  |  | 342 |  |  |  |  |  |
Total current assets |  |  | 4,673 |  | Total current liabilities |  |  | 3,002 |
Noncurrent assets |  |  |  |  | Noncurrent liabilities |  |  |  |
Property and equipment |  |  | 479 |  |  |  |  |  |
Intangible assets |  |  | 31,855 |  | Contingencies |  |  | 13,728 |
|  |  |  |  | Other payables |  |  | 315 |
Total noncurrent assets |  |  | 32,334 |  | Total noncurrent liabilities |  |  | 14,043 |
|  |  |  |  | Total equity |  |  | 19,962 |
Total assets |  |  | 37,007 |  | Total liabilities |  |  | 37,007 |

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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

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

Total consideration transferred |  |  | 116,176 |
(-) Fair value of the main assets acquired: |  |  |  |
Software |  |  | (11,279 | )
Trademark |  |  | (12,845 | )
Customer portfolio |  |  | (7,732 | )
(+) Fair value of the main liabilities assumed: |  |  |  |
Contingencies |  |  | 13,728 |
(-) Total identifiable net assets at fair value on the acquisition date |  |  | 1,853 |
(-) Total amount of non-controlling interests |  |  | (9,600 | )
Goodwill on expected future earnings arising on acquisition |  |  | 105,795 |
Goodwill expected to be deductible for tax purposes |  |  | 88,022 |

The contingent liability of R$13,728 was recognized in view of labor and social security risks in the amount of R$8,043, tax risks in the amount of R$5,721 and other risk exposures in the amount of R$258, referring to the contingency period. As at December 31, 2022, there was no change in the amounts recognized since the acquisition date for the liability or in the expected amount ranges or also in the assumptions used for estimation.
The table below shows the intangible assets acquired that were not initially recorded in the acquiree’s accounting records, as well as the estimated useful life and amortization method:

Intangible assets | Useful life | Amortization method
Software | 7.5 years | Straight-line
Trademark | 6.7 years | Straight-line
Customer portfolio | 2.1 years | Straight-line

| d) | Compliasset

On March 7, 2023, the Company completed the acquisition of a 60% stake in Compliasset Software e Soluções Digitais S.A., through its subsidiary Sinqia Tecnologia Ltda. The transaction involved (i) initial amount of R$17,700 payable at sight, (ii) retained portion of R$300 payable within 150 days after the acquisition date, and (iii) variable portion contingent on the net revenue for the period from August 1, 2023 to July 31, 2024. Additionally, the transaction provides for the purchase and sale of the remaining portion in 2026 and exercise price linked to Compliasset’s net revenue and adjusted EBITDA margin for 2025.
Compliasset was established in 2016 in reliance upon the legal expertise of one of its founders in relation to the compliance for the capital market. It has more than 230 customers in the capital market and offers an IT solution that supports compliance and privacy programs in a holistic manner. After some time, it has expanded its activities to other markets, such as the Closed-end Supplementary Private Pension Entities, building a strong partnership with the Brazilian Association of Closed-end Supplementary Private Pension Entities (Abrapp).
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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

The acquisition is an integral part of Sinqia’s strategy towards expanding its portfolio of technology solutions for the financial system. Upon the acquisition of Compliasset, Sinqia’s portfolio now comprises a product for managing regulatory compliance programs, within SaaS model, which expands its customer portfolio.
The goodwill of R$14,431, arising on the difference between the amount paid and the acquiree’s equity, was evaluated by an independent valuation company and corresponds to the amount of the future economic benefits (goodwill) arising from the synergies that are expected to obtain upon the acquisition carried out. The acquisition expands even further the offer of Sinqia’s solutions and reinforces the Company’s strategy of building a complete ecosystem to serve the financial system. With the inclusion of Compliasset in its portfolio, Sinqia expands its position as one-stop-shop for the customers, bringing one more Software as a Service (SaaS), Plug & Play solution, available in the Cloud focused on Regulatory Compliance Management.
In the consolidated interim information for the quarter ended June 30, 2023, Compliasset reported net revenue of R$2,273 and profit of R$673, considering the period after the abovementioned acquisition date.
The Company hired a third-party appraiser to conduct fair value measurement studies on the main assets acquired and liabilities assumed; as Sinqia holds less than 100% interest in the acquiree, the fair value of the non-controlling interests was determined by applying the effective percentage rate of the non-controlling interests on the subsidiaries’ equity at fair value.
a) Fair value on the acquisition date of the consideration transferred:

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

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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

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

ACQUIREE’S BALANCE SHEET

|  | 03/07/2023 |  |  |  | 03/07/2023 |
Current assets |  |  |  | Current liabilities |  |  |
Cash and cash equivalents |  |  | 2 |  | Suppliers and service providers |  |  | 33 |
Short-term investments |  |  | 640 |  | Taxes payable |  |  | 164 |
Trade receivables |  |  | 628 |  | Payroll and related taxes |  |  | 135 |
Recoverable taxes |  |  | - |  | Dividends |  |  | 1,168 |
Advances to suppliers |  |  | 102 |  |  |  |  |  |
Prepaid expenses |  |  | 24 |  |  |  |  |  |
Total current assets |  |  | 1,396 |  | Total current liabilities |  |  | 1,500 |
Noncurrent assets |  |  |  |  | Noncurrent liabilities |  |  |  |
Trade receivables |  |  | 12 |  | Leases |  |  | 100 |
Property and equipment |  |  | 194 |  | Contingencies |  |  | 2,997 |
Intangible assets |  |  | 15,052 |  |  |  |  |  |
Total noncurrent assets |  |  | 15,258 |  | Total noncurrent liabilities |  |  | 3,097 |
|  |  |  |  | Total equity |  |  | 12,057 |
Total assets |  |  | 16,654 |  | Total liabilities |  |  | 16,654 |

c) Goodwill arising on the acquisition of equity interests

Total consideration transferred |  |  | 21,665 |
(-) Fair value of the main assets acquired: |  |  |  |
Software |  |  | 6,204 |
Trademark |  |  | 1,527 |
Customer portfolio |  |  | 7,321 |
(+) Fair value of the main liabilities assumed: |  |  |  |
Contingencies |  |  | 2,997 |
(-) Total identifiable net assets at fair value on the acquisition date |  |  | 1 |
(+) Total amount of non-controlling interests |  |  | 4,823 |
Goodwill on expected future earnings arising on acquisition |  |  | 14,432 |
Goodwill expected to be deductible for tax purposes |  |  | 13,886 |

The contingent liability of R$2,997 was recognized in view of labor and social security risks in the amount of R$1,891 and tax risks in the amount of R$1,106, referring to the contingency period. As at June 30, 2023, R$166 relating to tax risks was written off due to the statute of limitations but there was no change in the expected amount ranges or also in the assumptions used for estimation.
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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

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

Intangible assets | Useful life | Amortization method
Software | 5 years | Straight-line
Trademark | 9.8 years | Straight-line
Customer portfolio | 14.6 years | Straight-line

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

27 | EVENTS AFTER THE REPORTING PERIOD

| a) | Payment of interest on capital

On July 20, 2023, the Board of Directors approved the advance of the payment date of the interest on capital for FY2022 to July 31, 2023.
The distribution of interest on capital was approved at the Annual General Meeting (“AGM”) held on April 27, 2023, in the amount of R$4,690,007.39, corresponding to R$0.055404594 per share issued by the Company (without considering treasury shares), subject to withholding income tax at the rate of 15%.
The individuals registered as the Company’s shareholders on May 5, 2023, will be entitled to receive interest on capital and payment will be made in local currency, in one single installment, on July 31, 2023.

| b) | Business combination

On July 20, 2023, the Company discloses that it has entered into, after approval by its Board of Directors, the Merger Agreement and Other Covenants (“Merger Agreement”) with Evertec, Inc., a company listed on the New York Stock Exchange (NYSE), with head office in Puerto Rico (“Evertec Inc.”), and with Evertec Brasil Informática S.A., a privately-held company established in Brazil, enrolled with CNPJ under No. 06.187.556/0001-15, with head office in the City of São Paulo (“Evertec BR” and, together with Evertec Inc., “Evertec”), whereby the terms and conditions of a business combination between the Company and Evertec BR were agreed, through the merger of the Company’s shares (“Transaction”).
The Company’s Board of Directors was advised by and received a fairness opinion from Banco BTG Pactual S.A. about the reasonableness of the exchange ratio and the Transaction financial terms and concluded that the respective terms and conditions are fair and equitable for all Company’s shareholders.
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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

Transaction structure
As set forth in the Merger Agreement, the parties agreed that the integration of the Company’s and Evertec BR’s activities will be implemented through (i) the merger of all shares issued by the Company into Evertec BR (“Merger of Shares”), upon assignment to the Company’s shareholders of mandatorily redeemable Class A and Class B preferred shares issued by Evertec BR; and (ii) the redemption of all these new redeemable preferred shares of Evertec BR (“Redemption of Shares”), upon payment of the amount in cash and delivery of Level I BDRs accepted for trading at B3, whose underlying assets will be Class A shares issued by Evertec Inc. (“BDR”) traded at the NYSE.
The Merger of Shares will be carried out based on the following exchange ratio: for each share issued by the Company (i) one mandatorily redeemable Class A preferred share issued by Evertec BR; and (ii) mandatorily redeemable Class B preferred share issued by Evertec BR, will be assigned.
The Redemption of Shares will be carried out based on the following: (a) each Class A preferred share issued by Evertec BR will be redeemed upon Transaction closing at the amount of R$24.47; and (b) each Class B preferred share issued by Evertec BR will be redeemed upon Transaction closing through the delivery of BDRs backed by 0,014354 shares issued by Evertec Inc., whose amount on this date corresponds to R$2.72. The positive variation of the SELIC rate calculated on the base amount of R$27.50 will be added to the redemption amount of Class A preferred shares issued by Evertec BR, between this date and the Transaction consummation date, it being understood that the adjustment amount cannot exceed R$1.00 per Class A preferred share, except in those cases set forth in the Merger Agreement. Additionally, Evertec will apply its best effort to promote a repurchase program for BDRs accepted for trading at B3 after the Transaction closing.
Transaction conditions precedent
The Transaction closing is subject to the fulfillment of conditions precedent usual for this type of transaction, including (i) the approval, by the Company’s shareholders, (a) of the Merger of Shares, pursuant to article 252 of the Brazilian Corporate Law, including the respective protocol; and (b) the consent provided for in article 46, sole paragraph of the “Novo Mercado” Regulation; (ii) the obtainment of waiver from the holders (a) of the 2nd issuance of simple, non-convertible, unsecured debentures, with real and additional fidejussory guarantee, in one single series and (b) of the 3rd issuance of simple, non-convertible, unsecured debentures, with real and additional fidejussory guarantee, in one single series; and (iii) the registration of the Level I BDRs by Evertec Inc. with the CVM for trading at B3.
Exclusivity
Pursuant to the Merger Agreement, the Company assumed an exclusivity commitment to Evertec to consummate the Transaction, which failure to comply by the Company will give rise to a fine in the amount corresponding to 5% of the Transaction amount. In case of non-approval of the Transaction by the Company’s shareholders, the exclusivity period ends with no fine or penalty for the Company. Right of recourse – The Company informs that the Merger of Shares will give rise to the right of recourse for the Company’s dissenting shareholders. The details on the exercise of the right of recourse, including the reimbursement amount, will be timely disclosed to the market.
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SINQIA S.A. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2023 (In thousands of Brazilian reais - R$)

Other commitments
Within the scope of the Transaction, the holders of the Company’s shares representing more than 40% of the total voting shares entered into certain Voting Agreements, which establish these shareholders’ obligation to vote favorably to the Transaction approval at the Company’s general meeting. Also, during the term of the Voting Agreements, these shareholders agreed not to sell or otherwise dispose of their Company’s shares until the Company’s general meeting.
Interest on capital declared at the Annual General Meeting
The payment of interest on capital declared at the Company’s Annual General Meeting, which was scheduled to be made between August 31, 2023 and the end of the FY2023, will be anticipated and paid up to July 31, 2023. A Notice to the Shareholders on the payment of interest on capital will be disclosed on a timely basis.
Next stages
After the preparation of the valuation report and proforma financial statements, in accordance with CVM Resolution 78/22, the Company’s Board of Directors will approve the execution of the share merger agreement. It will also provide details and recommendations to the shareholders regarding this transaction. On the same date, the Company’s Supervisory Board will issue its opinion on the transaction. The general shareholders’ meeting will be called soon to make decisions on the transaction.
On August 14, 2023, Sinqia announced that, upon approval by the Board of Directors and issuance of favorable opinion by the Supervisory Board, it has entered into the “Protocol and Justification of Merger of Shares Issued by Sinqia S.A. into Evertec Brasil Informática S.A.” with Evertec Brasil Informática S.A. This Protocol defines the terms and conditions of the merger of the Company’s shares into Evertec BR, as part of the business combination transaction described in the agreement entered into between the companies on July 20, 2023.
Due to this agreement, the Company’s Extraordinary General Meeting was called to be held on September 14, 2023. The meeting will decide on matters such as the Protocol and merger of the shares, including the delivery of preferred shares and other amounts as part of the transaction. It will also decide whether Evertec BR will be discharged from joining the “Novo Mercado” segment of B3 S.A. - Brasil, Bolsa, Balcão. Also, the meeting will discuss the termination of Sinqia’s Stock Plan after the delivery of the shares to the beneficiaries.
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