April 2023

DATAWALK CAPITAL GROUP

SUMMARY OF THE CONSOLIDATED

ANNUAL FINANCIAL STATEMENTS

for the year ended 31

st

December 2022

THE EXECUTIVE BOARD`S LETTER

2022 was a challenging year for our company. We faced key limiters to our growth, primarily related to the

full lifecycle of the pre- and post-sales delivery process to enable us to leverage external resources (partners). As the

Here are some promising data points:

We manage our finances to be able to focus 100% on business growth in 2023, pushing out any potential fundraising

and not engaging in discussions about any acquisition offers we are receiving. We will be in a much better position

to work on these topics once we return to the growth trajectory that our product-market fit and the opportunity size

enable.

Yours faithfully,

Paweł Wieczyński, CEO

Sales funnel methodology and definitions of the stages of the sales process. Quantifiers of our Sales Funnel.

Stages of the Sales:

in substantive discussions. For example: a pilot implementation may take place during this phase.

individual stages of implementation.

The categorization of a potential customer as a Qualified Lead (Stage 4) occurs only when the customer confirms

the readiness to purchase and has an approved budget and a project team to execute the selection process and the

will to continue discussions with us.

of term licenses and maintenance agreements, to better reflect anticipated revenue.

The overall growth of the funnel is expected to accelerate once we significantly increase our reference pool

(especially in North America) and sometime after we increase the sales team staffing.

Sales cycles counted from qualification of the lead can range on average from 18 months for the commercial sector

to 30 months in the public sector, but off course there are examples that are shorter or longer.

Given the “New Vendor” market position of the DataWalk Group, only a portion of leads will be converted into

contracts, especially in North America where we have fewer production customers to date than we have in Poland

remaining part of the sales funnel, which contains leads that are earlier in the sales process. The values of individual

Leads are calculated on the basis of the estimated size of the sales opportunity.

The sales funnel in Poland started being built in late 2015, results began to materialize with the acquisition of the

first few contracts including TUiR Warta (2017) and the Ministry of Finance (2018). After these successful

implementations resulted in very positive customer testimonials, we started to see more opportunities in the EMEA

region. The sales funnel in the Americas started being built in the second quarter of 2019 with the hiring of the first

two sales teams and although it is less mature in terms of time, it will address a much larger available market. The

key aspects affecting commercial processes in North America relate to the acquisition of the first references among

customers such as the intelligence and 6 US ministries (including the Department of Defense and the Department of

The table of contents

SELECTED CONSOLIDATED FINANCIAL DATA OF THE DATAWALK CAPITAL GROUP ........................ 6

Consolidated Statement of Changes in Equity (in thousands of PLN) ................................................................. 14

Consolidated Cash Flow Statement (in thousands of PLN) ................................................................................. 16

SUMMARY AND ANALYSIS OF THE FINANCIAL RESULTS OF THE DATAWALK CAPITAL GROUP FOR

2022 ......................................................................................................................................................................... 18

DATAWALK GROUP'S CASH-SETTLED INCENTIVE PROGRAM ................................................................. 26

DATAWALK GROUP'S EQUITY-SETTLED INCENTIVE PROGRAM ............................................................ 32

IMPAIRMENT TESTS ............................................................................................................................................ 38

IMPACT OF THE COVID-19 EPIDEMIC ON THE GROUP'S OPERATIONS .................................................... 41

IMPACT OF THE POLITICAL AND ECONOMIC SITUATION IN UKRAINE .................................................. 41

MAJOR EVENTS THAT HAVE AN IMPACT ON THE DATAWALK GROUP'S RESULTS IN THE

Applied EUR / PLN rates:

DATAWALK CAPITAL GROUP

SUMMARY OF THE CONSOLIDATED

ANNUAL FINANCIAL STATEMENTS

for the year ended 31

December 2022

SUMMARY AND ANALYSIS OF THE FINANCIAL RESULTS OF THE DATAWALK

CAPITAL GROUP FOR 2022

Commentary on the financial results of the DataWalk Group

The Group is at an intense growth stage, and the incurred investments in development are yielding further results in

the conversion of projects from the sales funnel to revenue. In 2022, the DataWalk Group's revenue value amounted

to PLN 33,350 thousand, 8% higher than in the corresponding period of 2021. It is important to note that Q2, 2022

alone, was the best quarter from revenue standpoint (PLN 13,979 thousand) in the Group's history.

Nevertheless, in 2022, we demonstrated our solution's significant benefits to customers, resulting in positive reviews

on the Gartner platform, public testimonials and a substantial award from a major customer. It proves that our

technology and product capabilities are very valuable, but we are limited in our ability to reach the market.

The Group generated similar revenues in the Americas markets, reaching PLN 16,637 thousand in 2022, compared

to PLN 16,701 thousand in 2021. According to DataWalk Inc.'s analysis, the second and third quarters of 2022 were

the two best quarters in the company's history, followed by the fourth quarter of 2021. The U.S. team is steadily

building and strengthening DataWalk's position in America's market. While operations are still in the early stages

of market expansion, we see another period in which sales generate significant revenue for the Group. Given that

the U.S. market is a strategic market for the Group, it is noteworthy that 2022 was a period in which revenues from

the Americas region accounted for half of the Group's revenues. DataWalk Inc. acquired several more projects from

This expansion is essential for the Group as building and strengthening the Group's position in the international

market is one of the crucial elements of the Group's strategy, which is based on dynamic growth, diversification of

revenue sources, and geographic location. The largest share of EMEA and APAC revenues in 2022 went to the

government sector, which accounted for 72% of their value. In the comparable period, it was 88% of the revenue

value.

As of the balance sheet date, December 31, 2022, the deferred revenue amounts to PLN 3,710 thousand and represent

Group's obligation to provide customers with the contracted licenses or services and same time, represents the value

of revenue to be recognized in subsequent quarters in the amount resulting from the realization of these obligations.

These revenues mainly relate to delivering technical support services (the so-called "maintenance") for PLN 3,219

thousand and implementation services for PLN 370 thousand.

transactions. The purpose of the program is to attract and retain members of key personnel for both DataWalk S.A.

and its subsidiaries by creating additional market-attractive tools and identifying key personnel within the Group,

and its long-term goals, motivating them to pay special attention to the Group's long-term performance, maintain

the dynamic growth of its value, and connect the interests of these individuals to the interests of the Group, and

consequently, the interests of its shareholders. The goal of the Incentive Program is to link the long-term value of

the Company and its Group with the long-term goals of the key personnel.

As a result of the conclusion of agreements with participants of RSU-based program in the second quarter and as of

the balance sheet dated December 31, 2022, the Group estimated the value and recognized the cost and liability

arising from the ongoing program at a total amount of PLN 68,457 thousand, which accounted for 43% of the

Group's operating expenses in 2022 and 54% of EBITDA. The real value of the incentive program has yet to be

discovered. The value of the cash amounts payable under the incentive program depends, among other things, on

in the fourth quarter, as of the balance sheet date of December 31, 2022. The Group estimated the value and

recognized in the consolidated financial statements the cost and a corresponding increase in equity resulting from

the program at a total amount of PLN 28,882 thousand, which accounted for 18% of the Group's operating expenses

in 2022 and 23% of EBITDA. The “DATAWALK GROUP'S EQUITY-SETTLED INCENTIVE PROGRAM”

includes details of this program.

Another of the factors that had the most significant impact on the increase in the Group's operating expenses in the

period under review was the increase in the cost of salaries and external services related to the development and

growing scale of the Group's operations, both in the area of increasing the number of specialists in implementation,

programming and sales, as well as ongoing processes related to international commercialization.

Due to the fact that the revenue growth rate achieved in 2022 differed significantly from the assumptions used in the

The above operation is non-cash and does not affect the Company’s and the Group’s current financial situation.

The financial outlook for DataWalk Group and DataWalk S.A. for 2023

The management of the Group expects a continuous increase in the scale of its operations, which should result in

a strong double-digit increase in revenues year on year. Considering long, sometimes several years and very

complicated sales processes, the Group currently focuses on working only with top-tier clients and simultaneously

expanding go-to-market teams in America and Europe while placing great emphasis on increasing the efficiency of

pre-sales and post-sales processes. The Issuer is observing an incremental increase in demand for DataWalk

software, which is confirmed by the growing number of projects and its value in the Group's sales funnel.

Management believes that the high competition in the IT market for sourcing resources does not pose a significant

threat to the continued implementation of the development strategy but may nevertheless affect the Group's short-

from 2020. Analysts predict the market value will grow from $ 271.83 billion in 2022 to $ 655.53 billion in 2029,

thus achieving a CAGR of 13.4%

The global business analytics software market size was valued at $61.10 billion in 2020, and is projected to reach

$177.00 billion by 2030, growing at a CAGR of 11.2% from 2021 to 2030. Business analytics software aids in

interpreting and analyzing business data by allowing ongoing research and investigation of previous business

performance to gain actionable insights for business strategy. It helps discover patterns and linkages among data

streams and automates tasks and processes for real-time decision-making

DataWalk software perfectly meets the needs mentioned above that companies and institutions worldwide are facing,

1

https://www.fortunebusinessinsights.com/big-data-analytics-market-106179

2

The DataWalk Group financial results

The DataWalk Group's revenue in 2022 amounted to PLN 33,350 thousand, 8% higher than the revenue achieved

in 2021, which stood at PLN 30,780 thousand.

The table below presents selected consolidated financial data for 2022 and the comparable period of 2021.