What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2023-03-01 compared with 2022-03-01 · 216 added, 238 removed, 529 unchanged (46% of the section changed)

4 unchanged sentences

respectively.

Prior to the consummation of the Transactions (as herein defined), our Class A common stock and our

Warrants were listed on the Nasdaq Capital Market under the symbols “CPAA”

Prior to the consummation of the Transactions (as herein defined), our Class A common stock and our Warrants were listed on the Nasdaq Capital Market under the symbols “CPAA”

and “CPAAW,”

3 unchanged sentences

We have not paid any cash dividends on our Class A common stock to date.

We may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay cash dividends for the foreseeable future.

We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay cash dividends for the foreseeable future.

Any decision to declare and pay dividends in the future will be made at the discretion of the Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Board may deem relevant.

In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur.

In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our

subsidiaries incur.

We do not anticipate declaring any cash dividends to holders of the Class A common stock in the foreseeable future.

10 unchanged sentences

The timing and amount of any share repurchase is subject to prevailing market conditions, relevant securities laws and other considerations, and we are under no obligation to repurchase any specific number of shares.

During the year ended December 31, 2022, we did not utilize the 2021 Share Repurchase Program.

There remains $87.4 million of share repurchase availability under the 2021 Share Repurchase Program as of December 31, 2022.

The following tables sets forth repurchases of our Class A common stock during the fourth quarter of 2021:

Total number of shares purchased

Average price paid per share

Total number of shares purchased as part of publicly announced program

Approximate dollar value of shares that may yet to be purchased under the program

(in thousands)

November 15, 2021 to November 30, 2021 (1)

December 1, 2021 to December 31, 2021 (1)

(1) Open market and privately negotiated purchases

Recent Sales of Unregistered Equity Securities

6 unchanged sentences

Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

in Part II, Item 7 of our Form 10-K/A for the fiscal year ended December 31, 2020 filed with the SEC on May 17, 2021.

in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 1, 2022.

Executive Overview

10 unchanged sentences

Through our marketing segment, which generated approximately 38.1% of our total revenues in the year ended December 31, 2022, we help brands and retailers reach consumers through two main categories within the marketing segment.

The first and largest is our retail experiential business, also known as in-store sampling or demonstrations, where we create and manage highly customized large scale sampling programs (both in-store and online) for leading retailers.

The second business is our collection of specialized agency businesses, in which we provide private label services to retailers and develop granular marketing programs for brands and retailers through our shopper, consumer and digital marketing agencies.

The first and largest category is our retail experiential business, also known as in-store sampling or demonstrations, where we manage highly customized large-scale sampling programs (both in-store and online) for leading retailers.

The second category is our collection of specialized agency services, in which we provide private label services to retailers and develop granular marketing programs for brands and retailers through our shopper, consumer and digital marketing agencies.

Items Affecting Comparability of Financial Results

Impairment of goodwill and indefinite-lived assets

Our 2022 results of operations reflect goodwill impairment losses of $1,367.5 million and indefinite-lived intangible asset impairment losses of $205.0 million.

See “—Critical Accounting Policies and Estimates”

and Note 3, Goodwill and Intangible Assets , in Item 8, Financial Statements and Supplementary Data , for additional information on these impairment losses.

Impacts of the COVID-19 Pandemic

The COVID-19 pandemic has had, and is likely to continue to have, a severe and unprecedented impact on the world.

Measures to prevent its spread, including government-imposed restrictions on large gatherings, closures of face-to-face events, “shelter in place”

health orders and travel restrictions have had a significant effect on certain of our business operations.

In response to these business disruptions, we have taken several actions including reducing certain of our discretionary expenditures, eliminating non-essential travel, terminating or amending certain office leases, furloughing, instituting pay reductions and deferrals and terminating some of our employees, particularly with respect to COVID-19 impacted operations.

These measures to prevent the spread of COVID-19 have adversely impacted certain areas of our business operations, including our in-store sampling, foodservice and international businesses.

Most notably, we temporarily suspended all in-store sampling in all U.S.

locations starting in March and April of 2020 as well as in certain international locations.

While the restrictions relating to in-store sampling services materially and adversely affected our results of operations during the year ended December 31, 2021, and 2020, we have re-opened in-store sampling activities in certain retailers in certain geographies on a prudent, phased basis, and we have been successful in growing other adjacent services in our experiential marketing business such as online grocery pick-up sampling and virtual product demonstrations, both of which have seen increased adoption and demand.

Additionally, our international business continues to show recovery in 2021 since the pandemic started and compared to prior year.

During the years ended December 31, 2021 and 2020, our operations experienced a favorable increase in volume and demand in our headquarter sales and private label services due to the large increase in consumer purchases at retail to support incremental at-home consumption.

Additionally, our e-commerce services have benefited due to the increase in consumer purchasing with online retailers.

We expect the ultimate significance of the impact of the pandemic on our financial condition, results of operations and cash flows will be dictated by the length of time that such circumstances continue and any future restrictions imposed on our business and operations, which will depend on the currently unknowable extent and duration of the COVID-19 pandemic, any new variants and the nature and effectiveness of governmental, commercial and personal actions taken in response, along with the effectiveness of ongoing vaccination and other mitigation efforts to limit the magnitude of infections and hospitalizations across the United States and globally.

Beginning in March 2020 and continuing through the first quarter of 2021, our services experienced the effects from reductions in client spending due to the economic impact of the COVID-19 pandemic.

While mixed by services and geography, the spending reductions impacted all of our services and markets.

Globally, the most impacted services were our experiential services, which began to improve in April 2021, and experienced continued revenue recovery in 2022.

Our financial performance for the year ended December 31, 2022 as compared to the year ended December 31, 2021 includes:

Revenues increased by $446.6 million, or 14.2%, to $3.6 billion;

Operating income increased by $163.0 million, or 243.3%, to $230.0 million;

Net income increased by $232.6 million, or 132.9%, to $57.5 million;

Adjusted Net Income increased by $40.8 million, or 22.3%, to $223.8 million;

Adjusted EBITDA increased by $34.0 million, or 7.0%, to $521.2 million.

In November 2021, we commenced a stock repurchase program, and returned $12.6 million to our stockholders through share repurchases.

In October 2021, we amended our Term Loan Facility, which, among other things, should result in reducing the interest expense on our existing debt outstanding on our Term Loan facility by $9.9 million per year.

We completed six business acquisitions during the year ended December 31, 2021, consisting of five sales agencies, which have been incorporated into our sales segment and a marketing agency, which has been incorporated into our marketing segment.

Revenues increased by $447.4 million, or 12.4%, to $4,049.7 million;

Operating loss increased by $1,669.5 million to $1,439.4 million;

Net loss increased by $1,434.8 million to $1,377.3 million;

Adjusted Net Income decreased by $17.2 million, or 7.7%, to $206.6 million;

Adjusted EBITDA decreased by $85.2 million, or 16.3%, to $436.0 million.

We completed four business acquisitions during the year ended December 31, 2022.

The aggregate purchase price for these acquisitions was $75.5 million, of which $74.2 million were paid in cash, $0.5 million in contingent consideration, and $0.8 million in holdbacks.

Factors Affecting Our Business and Financial Reporting

There are a number of factors, in addition to the impact of the ongoing COVID-19 pandemic, that affect the performance of our business and the comparability of our results from period to period including:

There are a number of factors, in addition to the impact of the ongoing COVID-19 pandemic and inflationary pressures, that affect the performance of our business and the comparability of our results from period to period including:

Organic Growth.

Part of our strategy is to generate organic growth by expanding our existing client relationships, continuing to win new clients, pursuing channel expansion and new industry opportunities, enhancing our digital technology solutions, developing our international platform, delivering operational efficiencies and expanding into

logical adjacencies.

We believe that by pursuing these organic growth opportunities we will be able to continue to enhance our value proposition to our clients and thereby grow our business.

Acquisitions.

We have grown and expect to continue to grow our business in part by acquiring quality businesses, both domestic and international.

Excluding the Daymon Acquisition, we have completed 70 acquisitions from January 2014 to February 28, 2022, ranging in purchase prices from approximately $0.3 million to $98.5 million.

We have grown our business in part by acquiring quality businesses, both domestic and international.

Excluding the 2017 acquisition of Daymon Worldwide Inc., we have completed 73 acquisitions from January 2014 to February 28, 2023, ranging in purchase prices from approximately $0.3 million to $98.5 million.

Many of our acquisition agreements include contingent consideration arrangements, which are described below.

7 unchanged sentences

We review and assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from our initial estimates.

Changes in the estimated fair value of contingent consideration liabilities related to the time component of the present value calculation are reported in “Interest expense, net.”

Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in “Selling, general and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Depreciation and Amortization.

As a result of the acquisition of our business by Topco on July 25, 2014 (the “2014 Topco Acquisition”), we acquired significant intangible assets, the value of which is amortized, on a straight-line basis, over 15 years from the date of the 2014 Topco Acquisition, unless determined to be indefinite-lived.

The amortization of such intangible assets recorded in our consolidated financial statements has a significant impact on our operating income (loss) and net loss.

The amortization of such intangible assets recorded in our consolidated financial statements has a significant impact on our operating (loss) income and net loss.

Our historical acquisitions have increased, and future acquisitions likely will increase, our intangible assets.

We do not believe the amortization expense associated with the intangibles created from our purchase accounting adjustments reflect a material economic cost to our business.

Unlike depreciation expense which has an economic cost reflected by the fact that we must re-invest in property and equipment to maintain the asset base delivering our results of operations, we do not have any capital re-investment requirements associated with the acquired intangibles, such as client relationships and trade names, that comprise the majority of the finite-lived intangibles that create our amortization expense.

We do not believe the amortization expense associated with the intangible assets created from our purchase accounting adjustments reflect a material economic cost to our business.

Unlike depreciation expense which has an economic cost reflected by the fact that we must re-invest in property and equipment to maintain the asset base delivering our results of operations, we do not have any capital re-investment requirements associated with the acquired intangible assets, such as client relationships and trade names, that comprise the majority of the finite-lived intangible assets that create our amortization expense.

We recognized $1,275.7 million and $91.8 million impairment charges in the sales and marketing reporting units, respectively, for the year ended December 31, 2022.

We recognized non-cash intangible asset impairment charges of $146.0 million and $59.0 million related to our indefinite-lived sales and

marketing trade names, respectively, during the year ended December 31, 2022.

The impairment charge has been reflected in “Impairment of goodwill and indefinite-lived assets”

in our Consolidated Statements of Comprehensive (Loss) Income.

Foreign Exchange Fluctuations.

11 unchanged sentences

We recognize the incentive portion of revenues under these arrangements when the related services are transferred to the customer.

engagements or experiences we refer to as events), commissions or on a cost- plus basis, in each case, related to services including experiential marketing, shopper and consumer marketing services, private label development or our digital, social and media services.

Given our acquisition strategy, we analyze our financial performance, in part, by measuring revenue growth in two ways—revenue growth attributable to organic activities and revenue growth attributable to acquisitions, which we refer to as organic revenues and acquired revenues, respectively.

Marketing segment revenues are primarily recognized in the form of a fee-for-service (including retainer fees, fees charged to clients based on hours incurred, project-based fees or fees for executing in-person consumer engagements or experiences, which engagements or experiences we refer to as events), commissions or on a cost- plus basis, in each case, related to services including experiential marketing, shopper and consumer marketing services, private label development or our digital, social and media services.

We analyze our financial performance, in part, by measuring revenue growth in two ways—revenue growth attributable to organic activities and revenue growth attributable to acquisitions, which we refer to as organic revenues and acquired revenues, respectively.

We define organic revenues as any revenues that are not acquired revenues.

8 unchanged sentences

When we divest a business, we consider the revenues that the divested business generated in the 12 months prior to its divestiture to be subtracted from acquired revenues for the 12 months following its divestiture.

For example, if we completed a divestiture on July 1, 2021 for a business, we would consider the amount of revenues from the divested business from July 1, 2020 to June 30, 2021 to be subtracted from acquired revenues during the period from July 1, 2021 to June 30, 2022.

For example, if we completed a

divestiture on July 1, 2021 for a business, we would consider the amount of revenues from the divested business from July 1, 2020 to June 30, 2021 to be subtracted from acquired revenues during the period from July 1, 2021 to June 30, 2022.

We measure organic revenue growth and acquired revenue growth by comparing the organic revenues or acquired revenues, respectively, period over period, net of any divestitures.

5 unchanged sentences

Selling, general and administrative expenses consist primarily of salaries, payroll taxes and benefits for corporate personnel.

Other overhead costs include information technology, occupancy costs for corporate personnel, professional services fees, including accounting and legal services, and other general corporate expenses.

Other overhead costs include information technology, professional services fees, including accounting and legal services, and other general corporate expenses.

We also incur expenses operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and professional services.

Additionally, included in selling, general and administrative expenses are costs associated with the changes in fair value of the contingent consideration of acquisitions and other acquisition-related costs.

Acquisition-related costs are comprised of fees related to change of equity ownership, transaction costs, professional fees, due diligence and integration activities.

We also incurred additional expenses as a result of operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting

obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and professional services.

Impairment of goodwill and indefinite-lived assets

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired in an acquisition.

We test for impairment of goodwill at the reporting unit level.

We generally combine components that have similar economic characteristics, nature of services, types of client, distribution methods and regulatory environment.

We have two reporting units, sales and marketing, which are also our operating segments.

We test our goodwill for impairment at the beginning of the fourth quarter of a given fiscal year, and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

Other Expenses

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability represents a non-cash (income) expense resulting from a fair value adjustment to warrant liability from the private placement warrants that is based on the input assumptions used in the Black-Scholes option pricing model including our Class A common stock price at the end of the reporting period, the implied volatility or other inputs to the model and the number of private placement warrants outstanding which may vary from period to period.

Change in fair value of warrant liability represents a non-cash (income) expense resulting from a fair value adjustment to warrant liability with respect to the private placement warrants.

Based on the availability of sufficient observable information, we determine the fair value of the liability classified private placement warrants by approximating the value with the price of the public warrants at the respective period end, which is inherently less subjective and judgmental given it is based on observable inputs.

Previously, the fair value of the warrant liability was based on the input assumptions used in the Black-Scholes option pricing model, including our stock price at the end of the reporting period, the implied volatility or other inputs to the model and the number of private placement warrants outstanding, which may vary from period to period.

We believe these amounts are not correlated to future business operations.

16 unchanged sentences

—Liquidity and Capital Resources.

Prior to the consummation of the Transactions (including our entry into the Senior Secured Credit Facilities (as defined below)), our principal sources of liquidity have been cash flows from operations, borrowings under our then-revolving credit facility and other debt.

Following the Transactions, our principal sources of liquidity are cash flows from operations, borrowings under the Revolving Credit Facility (as defined below), and other debt.

Our principal sources of liquidity are cash flows from operations, borrowings under the Revolving Credit Facility (as defined below), and other debt.

Our principal uses of cash are operating expenses, working capital requirements, acquisitions and repayment of debt.

1 unchanged sentence

Adjusted Net Income is a non-GAAP financial measure.

Adjusted Net Income means net loss before (i) impairment of goodwill and indefinite-lived assets, (ii) amortization of intangible assets, (iii) equity based compensation of Topco and Advantage Sponsors’

management fee, (iv) changes in fair value of warrant liability, (v) fair value adjustments of contingent consideration related to

acquisitions, (vi) acquisition-related expenses, (vii) costs associated with COVID-19, net of benefits received, (viii) EBITDA for economic interests in investments, (ix) restructuring expenses, (x) litigation expenses, (xi) Recovery from Take 5, (xii) deferred financing fees, (xiii) costs associated with the Take 5 Matter, (xiv) other adjustments that management believes are helpful in evaluating our operating performance, and (xv) related tax adjustments.

Adjusted Net Income means net loss before (i) impairment of goodwill and indefinite-lived assets, (ii) amortization of intangible assets, (iii) equity-based compensation of Karman Topco L.P., (iv) changes in fair value of warrant liability, (v) fair value adjustments of contingent consideration related to acquisitions, (vi) acquisition-related expenses, (vii) costs associated with COVID-19, net of benefits received, (viii) net income attributable to noncontrolling interest, (ix) restructuring expenses, (x) litigation expenses, (xi) Recovery from Take 5, (xii) deferred financing fees, (xiii) costs associated with the Take 5 Matter, (xiv) other adjustments that management believes are helpful in evaluating our operating performance, and (xv) related tax adjustments.

We present Adjusted Net Income because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period.

2 unchanged sentences

Adjusted EBITDA and Adjusted EBITDA by segment are supplemental non-GAAP financial measures of our operating performance.

Adjusted EBITDA means net loss before (i) interest expense, net, (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) equity based compensation of Topco and Advantage Sponsors’

management fee, (vii) changes in fair value of warrant liability, (viii) fair value adjustments of contingent consideration related to acquisitions, (ix) acquisition-related expenses, (x) costs associated with COVID-19, net of benefits received, (xi) EBITDA for economic interests in investments, (xii) restructuring expenses, (xiii) litigation expenses, (xiv) Recovery from Take 5, (xv) costs associated with the Take 5 Matter and (xvi) other adjustments that management believes are helpful in evaluating our operating performance.

Adjusted EBITDA means net (loss) income before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) equity-based compensation of Karman Topco L.P., (vii) changes in fair value of warrant liability, (viii) stock-based compensation expense (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition-related expenses, (xi) costs associated with COVID-19, net of benefits received, (xii) EBITDA for economic interests in investments, (xiii) restructuring expenses, (xiv) litigation expenses, (xv) Recovery from Take 5, (xvi) costs associated with the Take 5 Matter and (xvii) other adjustments that management believes are helpful in evaluating our operating performance.

We present Adjusted EBITDA and Adjusted EBITDA by segment because they are key operating measures used by us to assess our financial performance.

These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain noncash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance.

These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain non-cash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance.

We evaluate these measures in conjunction with our results according to GAAP because we believe they provide a more complete understanding of factors and trends affecting our business than GAAP measures alone.

1 unchanged sentence

Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for net loss, for our most directly comparable measure presented on a GAAP basis.

For a reconciliation of Adjusted EBITDA to net income (loss) and Adjusted EBITDA by segment to operating income (loss), see “

For a reconciliation of Adjusted EBITDA to net (loss) income and Adjusted EBITDA by segment to operating (loss) income, see “

—Non-GAAP Financial Measures.

3 unchanged sentences

In July 2019, as a result of our investigation, we terminated all operations of Take 5, including the use of its associated trade names and the offering of its services to its clients and offered refunds to Take 5 clients of collected revenues attributable to Take 5 since our acquisition of Take 5.

I n May 2020, we received $7.7 million from our representation and warranty insurance policy related to the acquisition of Take 5 for claims related to the Take 5 Matter, the maximum aggregate recovery under the policy.

In May 2020, we received $7.7 million from our representation and warranty insurance policy related to the acquisition of Take 5 for claims related to the Take 5 Matter, the maximum aggregate recovery under the policy.

For the years ended December 31, 2022, 2021 and 2020, we incurred $2.5 million, $4.9 million, and $3.6 million, respectively, of costs associated with the investigation and remediation activities in connection with the Take 5 Matter, primarily professional fees and other related costs.

For the year ended December 31, 2019, we incurred $8.6 million of operating expenses associated with the Take 5 business, which we believe do not reflect the ongoing operating performance of our business.

These costs were recorded in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss) for such years.

in the Consolidated Statements of Operations and Comprehensive (Loss) Income for such years.

Restructuring Charges

Restructuring charges include severance plans designed to integrate and reduce costs intended to further improve efficiencies in operational activities and align cost structures consistent with revenue levels associated with business changes.

In response to the COVID-19 pandemic, we commenced a plan involving terminating certain employees, particularly with respect to COVID-19 impacted operations.

In addition, we established a global work from home policy.

A significant portion of our office-based workforce temporarily transitioned to working from home and we commenced a plan to strategically exit certain offices since 2020.

Refer to Note 8—

Leases , for additional information.

During the year ended December 31, 2019, we incurred restructuring expenses associated

with a restructuring program designed to achieve cost savings through transaction synergies in connection with the Daymon Acquisition.

We recorded severance expenses of $3.2 million, $1.0 million, and $4.6 million included in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2021, 2020, and 2019, respectively.

in the Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2022, 2021, and 2020, respectively.

Results of Operations for the Years Ended December 31, 2022 and 2021

3 unchanged sentences

Selling, general, and administrative expenses

Recovery from Take 5

Impairment of goodwill and indefinite-lived assets

Depreciation and amortization

Total expenses

Operating income

Other expenses:

Operating (loss) income

Other (income) expenses:

Change in fair value of warrant liability

1 unchanged sentence

Total other expenses

Income (loss) before income taxes

Provision for (benefit from) income taxes

Net income (loss)

(Loss) income before income taxes

(Benefit from) provision for income taxes

Net (loss) income

Other Financial Data

10 unchanged sentences

The sales segment revenues increased $183.1 million, of which $118.4 million were revenues from acquired businesses during the year ended December 31, 2022 as compared to the year ended December 31, 2021.

Excluding revenues from acquired businesses, the segment experienced an increase of $188.9 million in organic revenues primarily due to growth in our retail services that benefited from several new clients, expansion in our e-commerce services, and our European businesses which experienced recoveries from reductions in services as a result of the COVID-19 pandemic.

Excluding revenues from acquired businesses and unfavorable foreign exchange rates of $50.2 million, the segment experienced an increase of $114.9 million in organic revenues primarily due to growth in our retail merchandising services and our European joint venture which experienced continued recoveries from a temporary reduction in services as a result of the COVID-19 pandemic, partially offset by a decrease in our third party reselling services and to a lesser extent foodservice.

The marketing segment revenues increased $264.3 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021, which includes revenues of $33.3 million from acquired businesses.

Excluding revenues from acquired businesses, the segment experienced an increase of $167.1 million in organic revenues primarily due to an increase in our in-store product demonstration and sampling services which continue to recover from the temporary suspensions as a result of the COVID-19 pandemic and growth in our digital marketing services.

Excluding revenues from acquired businesses and unfavorable foreign exchange rates of $19.3 million, the segment experienced an increase of $250.8 million in organic revenues.

The increase in revenues was primarily due to an increase in our in-store product demonstration and sampling services which continue to recover from the temporary suspensions as a result of the COVID-19 pandemic, partially offset by a decrease in certain of our client media spend.

Cost of Revenues

Cost of revenues as a percentage of revenues for the year ended December 31, 2022 was 86.3%, as compared to 82.3% for the year ended December 31, 2021.

The increase as a percentage of revenues was largely attributable to the change in the revenue mix of our services as a result of recoveries from the COVID-19 pandemic and investment to stand up associates on behalf of clients to restart services that were dormant during COVID-19.

The increase as a percentage of revenues was largely attributable to the change in the revenue mix of our services as a result of recoveries from the COVID-19 pandemic and acquired businesses and inflationary cost pressures in recruiting, wage, and employee benefit expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses as a percentage of revenues for the year ended December 31, 2021 was 4.7%, as compared to 9.7% for the year ended December 31, 2020.

The decrease as a percentage of revenues for the year ended December 31, 2021 was primarily attributable to $35.5 million decrease in equity-based compensation expense associated with our Common Series D Units and $71.3 million decrease in non-cash compensation expense previously recognized in connection with the Common Series C Units and C-2 Units as a result of the consummation of the Transactions, partially offset by $34.6 million of new stock-based compensation expense during the year ended December 31, 2021.

Further contributing to the decrease in Selling, general and administrative expenses was $36.2 million decrease of transaction bonuses paid shortly following the completion of the Transactions during the year ended December 31, 2020, $27.3 million decrease in restructuring charges primarily associated with terminating certain office leases.

Selling, general and administrative expenses as a percentage of revenues for the year ended December 31, 2022 and 2021 were 4.7%, which is consistent year over year.

Impairment of Goodwill and Indefinite-lived Assets

We recognized a $1,367.5 million non-cash goodwill impairment charge and a $205.0 million non-cash intangible asset impairment charge during the year ended December 31, 2022.

The impairment charges were due to the confluence of sustained decline in our share price, challenges in the labor market and continued inflationary pressures, and an increase to the discount rate as a result of the recent increases in interest rates in the macroeconomic environment.

Depreciation and Amortization Expense

Depreciation and amortization expense was $240.0 million for the year ended December 31, 2021 as compared to $238.6 million, which is consistent year over year.

Operating Income

Depreciation and amortization expense was $233.1 million for the year ended December 31, 2022 as compared to $240.0 million, which was primarily due to a decrease in software amortization expenses.

Operating (Loss) Income

Year Ended December 31,

(amounts in thousands)

Total operating income

In the sa les and marketing segments, the increases in operating income during the year ended December 31, 2021 were primarily attributable to growth in revenues together with the decrease in Selling, general and administrative expenses as described above.

Total operating (loss) income

The decrease in operating income was primarily attributable to the non-cash goodwill and non-cash intangible asset impairment charges and the increase in cost of revenues, partially offset by the growth in revenues, as described above.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability represents $1.0 million of non-cash loss resulting from a fair value adjustment to warrant liability for the private placement warrants for the year ended December 31, 2021.

Fair value adjustments are based on the input assumptions used in the Black-Scholes option pricing model including our Class A common stock price at the end of the reporting period, the implied volatility or other inputs to the model and the number of private placement warrants outstanding which may vary from period to period.

Based on the period of time the public warrants have now been trading, it is also an appropriate method to determine the fair value of the liability classified private placement warrants by approximating the value with the share price of the public warrants at the respective period end, which is inherently less subjective and judgmental given it is based on observable inputs.

The Company determined the valuation as of December 31, 2021 taking into consideration that both methods did not result in a materially different valuation.

Change in fair value of warrant liability represents $21.2 million of non-cash gain resulting from a fair value adjustment to warrant liability for the private placement warrants for the year ended December 31, 2022.

Interest Expense, Net

Interest expense, net decreased $33.5 million, or 24.3%, to $104.5 million for the year ended December 31, 2022, from $137.9 million for the year ended December 31, 2021.

The decrease in interest expense, net was primarily due to the decrease in total debt as a result of the Transactions.

Provision for (benefit from) Income Taxes

Provision for income taxes was $33.6 million for the year ended December 31, 2021 as compared to a benefit from income taxes of $5.3 million for the year ended December 31, 2020.

The fluctuation was primarily attributable to the pre-tax income versus pre-tax loss for the year ended December 31, 2021 and December 31, 2020, respectively.

In addition, the variance is explained by the remeasurement of deferred tax liabilities in U.S.

state jurisdictions due to income tax rate and apportionment changes and equity-based compensation for the year ended December 31, 2021.

Net Income (Loss)

Net Income was $57.5 million for the year ended December 31, 2021, compared to net loss of $175.1 million for the year ended December 31, 2020.

The increase in net income was primarily driven by the increase in operating income, and the decrease in interest expense as a result of the consummation of the Transactions, as well as the decrease in the fair value adjustment to the warrant liability, partially offset by an increase in the provision for (benefit from) income taxes as described above.

The decrease in interest expense, net was primarily due to the increase in fair value changes in derivatives instruments, partially offset by the increased interest rates.

(Benefit from) Provision for Income Taxes

Benefit from income taxes was $145.3 million for the year ended December 31, 2022 as compared to a provision for income taxes of $33.6 million for the year ended December 31, 2021.

The fluctuation was primarily attributable to the pre-tax loss versus pre-tax income for the year ended December 31, 2022 and 2021, respectively.

In addition, the variance is explained by the non-cash goodwill impairment charge in the current year and the remeasurement of deferred tax liabilities in US state jurisdictions due to income tax rate and apportionment changes for the year ended December 31, 2022.

Net (Loss) Income

Net loss was $1,377.3 million for the year ended December 31, 2022, compared to net income of $57.5 million for the year ended December 31, 2021.

The increase in net loss was driven by the increase in operating loss primarily due to the non-cash goodwill and non-cash intangible asset impairment charges and the increase in cost of revenues, partially offset by the growth in revenues, the decrease in interest expense, as well as the decrease in the fair value adjustment to the warrant liability as described above.

Adjusted Net Income

The increase in Adjusted Net Income for the year ended December 31, 2021 was attributable to the decrease in interest expense as a result of the consummation of the Transactions and change in fair value of warrant liability partially offset by recovery from the Take 5 Matter and the increase in provision for (benefit from) income taxes as described above.

The decrease in Adjusted Net Income for the year ended December 31, 2022 was attributable to the decrease in Adjusted EBITDA as described below, partially offset by the decrease in interest expense.

For a reconciliation of Adjusted Net Income to Net loss, see “

4 unchanged sentences

Total Adjusted EBITDA

Adjusted EBITDA increased $34.0 million, or 7.0% to $521.2 million for the year ended December 31, 2021, from $487.2 million for the year ended December 31, 2020.

The increase in Adjusted EBITDA was primarily attributable to growth in revenues as described above and the decrease in performance based compensation expenses partially offset by investments in building back our workforce impacted by the COVID-19 pandemic and the increased cost of revenues associated with our revenue mix.

Adjusted EBITDA decreased $85.2 million, or 16.3% to $436.0 million for the year ended December 31, 2022, from $521.2 million for the year ended December 31, 2021.

In the sales segment, the decrease in Adjusted EBITDA during the year ended December 31, 2022 was primarily attributable to a shift in revenue mix, inflationary pressures in recruiting, wage, and employee benefit expenses.

In the marketing segment, the decrease in Adjusted EBITDA during the year ended December 31, 2022 was primarily attributable to the increase in cost of revenues as described above, partially offset by the growth in revenues.

For a reconciliation of Adjusted EBITDA to net income (loss), see “—Non-GAAP Financial Measures .”

1 unchanged sentence

Adjusted Net Income is a non-GAAP financial measure.

Adjusted Net Income means net income (loss) before (i) amortization of intangible assets, (ii) equity based compensation of Topco and Advantage Sponsors’

management fee, (iii) changes in fair value of warrant liability, (iv) fair value adjustments of contingent consideration related to acquisitions, (v) acquisition-related expenses, (vi) costs associated with COVID-19, net of benefits received, (vii) EBITDA for economic interests in investments, (viii) restructuring expenses, (ix) litigation expenses, (x) Recovery from Take 5, (xi) deferred financing fees, (xii) costs associated with the Take 5 Matter, (xiii) other adjustments that management believes are helpful in evaluating our operating performance, and (xiv) related tax adjustments.

Adjusted Net Income means net (loss) income before (i) amortization of intangible assets, (ii) impairment of goodwill and indefinite-lived assets (iii) equity-based compensation of Karman Topco L.P., (iv) changes in fair value of warrant liability, (v) fair value adjustments of contingent consideration related to acquisitions, (vi) acquisition-related expenses, (vii) costs associated with COVID-19, net of benefits received, (viii) net income attributable to noncontrolling interest, (ix) restructuring expenses, (x) litigation expenses, (xi) Recovery from Take 5, (xii) deferred financing fees, (xiii) costs associated with the Take 5 Matter, (xiv) other adjustments that management believes are helpful in evaluating our operating performance, and (xv) related tax adjustments.

Adjusted Net Income should not be considered as an alternative for our Net income (loss), our most directly comparable measure presented on a GAAP basis.

A reconciliation of Adjusted Net Income to Net income (loss) is provided in the following table:

Adjusted Net Income should not be considered as an alternative for our net (loss) income, our most directly comparable measure presented on a GAAP basis.

A reconciliation of Adjusted Net Income to Net (loss) income is provided in the following table:

Year Ended December 31,

(in thousands)

Net income (loss)

Net (loss) income

Net income attributable to noncontrolling interest

Equity based compensation of Topco and Advantage Sponsors’

management fee (a)

Impairment of goodwill and indefinite-lived assets

Equity-based compensation of Karman Topco L.P.

Change in fair value of warrant liability

Fair value adjustments related to contingent consideration related to acquisitions (c)

Fair value adjustments related to contingent consideration

related to acquisitions (c)

Acquisition-related expenses (d)

9 unchanged sentences

Adjusted EBITDA and Adjusted EBITDA by segment are supplemental non-GAAP financial measures of our operating performance.

Adjusted EBITDA means net income (loss) before (i) interest expense, net, (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) amortization of intangible assets, (v) equity based compensation of Topco and Advantage Sponsors’

management fee, (vi) changes in fair value of warrant liability, (vii) stock based compensation expense (viii) fair value adjustments of contingent consideration related to acquisitions, (ix) acquisition-related expenses, (x) costs associated with COVID-19, net of benefits received, (xi) EBITDA for economic interests in investments, (xii) restructuring expenses, (xiii) litigation expenses, (xiv) Recovery from Take 5, (xv) costs associated with the Take 5 Matter and (xvi) other adjustments that management believes are helpful in evaluating our operating performance.

Adjusted EBITDA means net (loss) income before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) amortization of intangible assets, (v) impairment of goodwill and indefinite-lived assets (vi) equity-based compensation of Karman Topco L.P., (vii) changes in fair value of warrant liability, (viii) stock based compensation expense (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition-related expenses, (xi) costs associated with COVID-19, net of benefits received, (xii) EBITDA for economic interests in investments, (xiii) restructuring expenses, (xiv) litigation expenses, (xv) Recovery from Take 5, (xvi) costs associated with the Take 5 Matter and (xvii) other adjustments that management believes are helpful in evaluating our operating performance.

We present Adjusted EBITDA and Adjusted EBITDA by segment because they are key operating measures used by us to assess our financial performance.

Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA.

Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for our Net income (loss), our most directly comparable measure presented on a GAAP basis.

A reconciliation of Adjusted EBITDA to Net income (loss) is provided in the following table:

Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for our net (loss) income, our most directly comparable measure presented on a GAAP basis.

A reconciliation of Adjusted EBITDA to Net (loss) income is provided in the following table:

Year Ended December 31,

(in thousands)

Net income (loss)

Net (loss) income

Interest expense, net

Provision for (benefit from) income taxes

(Benefit from) provision for income taxes

Depreciation and amortization

Equity based compensation of Topco and Advantage Sponsors’

management fee (a)

Impairment of goodwill and indefinite-lived assets

Equity-based compensation of Karman Topco L.P.

Change in fair value of warrant liability

Stock-based compensation expense (b)

Fair value adjustments related to contingent consideration related to acquisitions (c)

Fair value adjustments related to contingent consideration

related to acquisitions (c)

Acquisition-related expenses (d)

6 unchanged sentences

Adjusted EBITDA

Financial information by segment, including a reconciliation of Adjusted EBITDA by segment to operating income (loss), the closest GAAP financial measure, is provided in the following table:

Financial information by segment, including a reconciliation of Adjusted EBITDA by segment to operating (loss) income, the closest GAAP financial measure, is provided in the following table:

Sales Segment

1 unchanged sentence

(in thousands)

Operating income

Operating (loss) income

Depreciation and amortization

Equity based compensation of Topco and Advantage Sponsors’

management fee (a)

Impairment of goodwill and indefinite-lived assets

Equity-based compensation of Karman Topco L.P.

Stock-based compensation expense (b)

Fair value adjustments related to contingent consideration related to acquisitions (c)

Fair value adjustments related to contingent consideration

related to acquisitions (c)

Acquisition-related expenses (d)

7 unchanged sentences

(in thousands)

Operating income

Operating (loss) income

Depreciation and amortization

Equity based compensation of Topco and Advantage Sponsors’

management fee (a)

Impairment of goodwill and indefinite-lived assets

Equity-based compensation of Karman Topco L.P.

Stock-based compensation expense (b)

Fair value adjustments related to contingent consideration related to acquisitions (c)

Fair value adjustments related to contingent consideration

related to acquisitions (c)

Acquisition-related expenses (d)

6 unchanged sentences

Marketing Segment Adjusted EBITDA

(a) Represents the management fees and reimbursements for expenses paid to certain of the Advantage Sponsors (as defined below) or certain of the management companies associated with it or its advisors pursuant to a management services agreement.

(a) Represents the management fees and reimbursements for expenses paid to certain of the Advantage Sponsors or certain of the management companies associated with it or its advisors pursuant to a management services agreement.

Also represents expenses related to (i) equity-based compensation expense associated with grants of Common Series D Units of Topco made to one of the Advantage Sponsors, (ii) equity-based compensation expense associated with the Common Series C Units of Topco as a result of the Transactions, (iii) compensation amounts associated with the Company’s Management Incentive Plan originally scheduled for potential payment March 2022 that were accelerated and terminated as part of the Transactions, and (iv) compensation amounts associated with the anniversary payments to Tanya Domier.

2 unchanged sentences

(b) Represents non-cash compensation expense related to PSUs, RSUs, and stock options under the 2020 Plan and the Advantage Solutions 2020 Employee Stock Purchase Plan.

(c) Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, excluding the present value accretion recorded in interest expense, net, for the applicable periods.

(c) Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, for the applicable periods.

See Note 6—

2 unchanged sentences

(e) Represents fees and costs associated with various internal reorganization activities among our consolidated entities.

(f) Represents legal settlements that are unusual or infrequent costs associated with our operating activities.

(f) Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities.

(g) Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions.

4 unchanged sentences

Debt of our audited consolidated financial statements for the year ended December 31, 2022.

(j) Represents $4.9 million, $3.6 million, and $7.7 million of costs associated with investigation and remediation activities related to the Take 5 Matter, primarily, professional fees and other related costs, respectively for the years ended December 31, 2021, 2020, and 2019, respectively.

Represents $8.6 million of operating expenses associated with the Take 5 business, which we believe do not reflect the ongoing operating performance of our business for the year ended December 31, 2019.

(j) Represents costs associated with investigation and remediation activities related to the Take 5 Matter, primarily, professional fees and other related costs, respectively for the years ended December 31, 2022, 2021, and 2020, respectively.

(k) Represents the tax provision or benefit associated with the adjustments above, taking into account the Company’s applicable tax rates, after excluding adjustments related to items that do not have a related tax impact.

1 unchanged sentence

Liquidity and Capital Resources

Prior to the Transactions, our principal sources of liquidity were cash flows from operations, borrowings under two credit facilities, including $2.5 billion under a first lien credit agreement and $760 million under a second lien credit agreement which were scheduled to mature in July 2021 and July 2022, respectively.

On October 28, 2020, in connection with the Transactions, we (i) repaid the outstanding debt under these two credit facilities and a separate accounts receivable securitization facility, (ii) entered into new credit facilities consisting of our $1.325 billion term loan credit facility and our $400.0 million revolving credit facility, (iii) borrowed $100.0 million under our revolving credit facility and (iv) issued $775.0 million of senior secured notes.

Following the Transactions, our principal sources of liquidity have been cash flows from operations, borrowings under our revolving credit facility, and other debt.

Our principal uses of cash are operating expenses, working capital requirements, acquisitions, and repayment of debt.

Our principal sources of liquidity were cash flows from operations, borrowings under the Revolving Credit Facility, and other debt.

Our principal uses of cash are operating expenses, working capital requirements, acquisitions, interest on debt and repayment of debt.

Share Repurchase Program

3 unchanged sentences

During the fourth quarter of 2021, we executed open market purchases of $12.6 million of our Class A common stock under the 2021 Share Repurchase Program.

During the year ended December 31, 2022, we did not utilize the 2021 Share Repurchase Program.

There remains $87.4 million of share repurchase availability under the 2021 Share Repurchase Program as of December 31, 2022.

8 unchanged sentences

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the year ended December 31, 2022, consisted of net loss of $1,377.3 million adjusted for certain non-cash items, including depreciation and amortization of $233.1 million, impairment of goodwill of $1,367.5 million, impairment of indefinite-lived intangible assets of $205.0 million, and effects of changes in working capital.

Net cash provided by operating activities during the year ended December 31, 2021, consisted of net income of $54.6 million adjusted for certain non-cash items, including depreciation and amortization of $240.0 million and effects of changes in working capital.

Net cash provided by operating activities for the year ended December 31, 2020 consisted of net loss of $175.1 million adjusted for certain non-cash items, including depreciation and amortization of $238.6 million and effects of changes in working capital.

The decrease in cash provided by operating activities during the year ended December 31, 2021 relative to the same period in 2020 was primarily due to the increased need for working capital due to growth in revenues which continue to recover from the COVID-19 pandemic, combined with the payment during the year ended December 31, 2021 of a portion of our deferred Social Security taxes.

The decrease in cash provided by operating activities during the year ended December 31, 2021 relative to the same period in 2020 was primarily due to the increased need for working capital due to growth in revenues which continue to recover from the COVID-19 pandemic, combined with the payment during the year ended December 31, 2022 of a portion of our deferred Social Security taxes from the Coronavirus Aid, Relief, and Economic Security Act in 2020.

Net Cash Used in Investing Activities

7 unchanged sentences

The portion of the cash payment up to the acquisition date fair value of the contingent consideration liability are classified as financing outflows, and amounts paid in excess of the acquisition date fair value of that liability are classified as operating outflows.

Cash flows used in financing activities during the twelve months ended December 31, 2022 were primarily related to payments of contingent consideration and holdback payments of $34.2 million, repayment of principal on our Term Loan Facility of $13.4 million, partially offset by $3.3 million related to our Employee Stock Purchase Plan and $5.2 million of contribution from noncontrolling interest.

Cash flows related to financing activities during the year ended December 31, 2021, were primarily related to borrowings of $61.6 million and repayment of $111.7 million on our revolving credit facility and $13.8 million related to payments of contingent consideration and holdback payments.

2 unchanged sentences

The loan bears an interest rate of 0.35% per annum with a maturity date in December 2036.

Cash flows related to financing activities during the year ended December 31, 2020, were primarily related to the proceeds from new borrowings associated with our term loan credit facility and issuance of our senior secured notes, the repayment of our prior credit agreements and principal payments on our long- term debt of $3.2 billion, and the proceeds from issuance of our Class A common stock of $929.2 million, net of fees, as a result of the consummation of the Transactions.

Business Combination with Conyers Park

On September 7, 2020, Advantage Solutions Inc., now known as ASI Intermediate Corp.

(“ASI”), entered into an agreement and plan of merger (as amended, modified, supplemented or waived, the “Merger Agreement”), with Conyers Park II Acquisition Corp., a Delaware corporation now known as Advantage Solutions Inc.

(“Conyers Park”), CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers Park (“Merger Sub”), and Topco.

In September 2020 and in connection with its entry into the Merger Agreement, Conyers Park entered into subscription agreements pursuant to which certain investors, including participating equityholders of Topco (the “Advantage Sponsors”), agreed to purchase Class A Common Stock of Conyers Park (“Common Stock”) at a purchase price of $10.00 per share (the “PIPE Investment”).

Pursuant to the terms of the Merger Agreement, on October 28, 2020 Merger Sub was merged with and into ASI with ASI being the surviving company in the merger (the “Merger”

On October 28, 2020, Conyers Park II Acquisition Corp.

(“Conyers Park”), a Delaware corporation, consummated a merger with ASI Intermediate Corp.

(“ASI”), formerly known as Advantage Solutions Inc., with ASI surviving the merger as a wholly owned subsidiary of Conyers Park (the “Merger”

and, together with the other transactions contemplated by the merger agreement, the “Transactions”).

On October 28, 2020, the PIPE Investment was consummated, and 85,540,000 shares of Common Stock were sold for aggregate gross proceeds of $855.4 million.

Of the 85,540,000 shares of Common Stock, the Advantage Sponsors acquired 34,410,000 shares of Common Stock, and other purchasers acquired 51,130,000 shares of Common Stock.

Holders of 32,114,818 shares of Common Stock sold in its initial public offering properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from Conyers Park’s initial public offering, calculated as of two business days prior to the consummation of the business combination, $10.06 per share, or $323.1 million in the aggregate (collectively, the “Redemptions”).

As a result of the Merger, among other things, pursuant to the Merger Agreement, Conyers Park issued to Topco, as sole stockholder of ASI prior to the Merger, aggregate consideration equal to (a) 203,750,000 shares of Common Stock, and (b) 5,000,000 shares of Common Stock that vested upon achievement of a market performance condition on January 15, 2021.

After giving effect to the Transactions, the Redemptions, and the consummation of the PIPE Investment, there were 313,425,182 shares of Common Stock issued and outstanding as of October 28, 2020, excluding the 5,000,000 shares of Common Stock subject to the market performance condition.

The Class A common stock and outstanding warrants of Conyers Park (renamed “Advantage Solutions Inc.”

following the Transactions) commenced trading on the Nasdaq Global Select Market under the symbols “ADV”

and “ADVWW”, respectively, on October 29, 2020.

As noted above, an aggregate of $323.1 million was paid from the Conyers Park’s trust account to holders in connection with the Redemption, and the remaining balance immediately prior to the closing of the Transactions of approximately $131.2 million remained in the trust account.

The remaining amount in the trust account was used to fund the Transactions, including the entry into the agreements governing material indebtedness.

In connection with the Merger, ASI repaid and terminated $3.3 billion of debt arrangements under its then existing credit facilities with incremental costs of $86.8 million.

This amount was repaid by ASI through a combination of (i) cash on hand, (ii) proceeds from certain private investments in Common Stock, (iii) the entry by Advantage Sales & Marketing Inc., a wholly owned subsidiary of ASI, into (a) a senior secured asset-based revolving credit facility, which permits borrowing in an aggregate principal amount of up to $400.0 million, subject to borrowing base capacity (as amended and/or restated from time to time, the “Revolving Credit Facility”), of which $100.0 million of principal amount was borrowed as of October 28, 2020, and (b) a secured first lien term loan credit facility in an aggregate principal amount of $1.325 billion (as amended and/or restated from time to time, the “Term Loan Facility”

and, together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”), and (iv) the issuance by Advantage Solutions FinCo LLC, a direct subsidiary of Advantage Sales & Marketing Inc., of $775.0 million aggregate principal amount of 6.50% Senior Secured Notes due 2028 (the “Notes”).

The Merger was accounted for as a reverse recapitalization in accordance with GAAP.

Under this method of accounting, Conyers Park was treated as the “acquired”

company for financial reporting purposes.

This determination was primarily based on Topco having a relative majority of the voting power of the combined entity, the operations of ASI prior to the Merger comprising the only ongoing operations of the combined entity, and senior management of ASI comprising the senior management of the combined

Accordingly, for accounting purposes, the financial statements of the combined entity represent a continuation of the financial statements of ASI with the acquisition being treated as the equivalent of ASI issuing stock for the net assets of Conyers Park, accompanied by a recapitalization.

The net assets of Conyers Park was stated at historical cost, with no goodwill or other intangible assets recorded.

On October 28, 2020, and in connection with the closing of the Transactions, Conyers Park changed its name to Advantage Solutions Inc.

Description of Credit Facilities

13 unchanged sentences

The applicable margins for the Revolving Credit Facility are 2.00%, 2.25% or 2.50%, with respect to Eurodollar rate borrowings and 1.00%, 1.25% or 1.50%, with respect to base rate borrowings, in each case depending on average excess availability under the Revolving Credit Facility.

The Borrower’s ability to draw under the Revolving Credit Facility or issue letters of credit thereunder will be conditioned upon, among other things, the Borrower’s delivery of prior written notice of a borrowing or issuance, as applicable, the Borrower’s ability to reaffirm the representations and warranties contained in the credit agreement governing the Revolving Credit Facility and the absence of any default or event of default thereunder.

contained in the credit agreement governing the Revolving Credit Facility and the absence of any default or event of default thereunder.

The Borrower’s obligations under the Revolving Credit Facility are guaranteed by Karman Intermediate Corp.

12 unchanged sentences

The Revolving Credit Facility provides that, upon the occurrence of certain events of default, the Borrower’s obligations thereunder may be accelerated and the lending commitments terminated.

Such events of default include payment defaults to the

lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, material pension-plan events, certain change of control events and other customary events of default.

On October 28, 2021, the Borrower and Holdings entered into the First Amendment to ABL Revolving Credit Agreement (the “ABL Amendment”), which amended the ABL Revolving Credit Agreement, dated October 28, 2020, by and among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent (the “Prior Revolving Credit Facility”).

Such events of default include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, material pension-plan events, certain change of control events and other customary events of default.

On October 28, 2021, the Borrower and Holdings entered into the First Amendment to ABL Revolving Credit Agreement (the “First Amendment”), which amended the ABL Revolving Credit Agreement, dated October 28, 2020, by and among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent (the “Prior Revolving Credit Facility”).

The ABL Amendment was entered into by the Borrower to amend certain terms and provisions, including (i) reducing the interest rate floor for Eurocurrency rate loans from 0.50% to 0.00% and base rate loans from 1.50% to 1.00%, and (ii) updating the provisions by which U.S.

Dollar LIBOR will eventually be replaced with S OFR or another interest rate benchmark to reflect the most recent standards and practices used in the industry.

Dollar LIBOR will eventually be replaced with SOFR or another interest rate benchmark to reflect the most recent standards and practices used in the industry.

On December 2, 2022, Borrower, Holdings and certain of the Borrower’s subsidiaries, entered into the Second Amendment to ABL Revolving Credit Agreement (the “Second Amendment”), which amends the Revolving Credit Agreement, by and among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent, and the other parties thereto.

The Second Amendment was entered into by the Borrower to amend certain terms and provisions of the Second Agreement, including, among other things:

(i) increasing the aggregate amount of maximum revolving commitments available from $400 million to $500 million;

(ii) replacing the Eurocurrency Rate interest rate metric with a metric based on Term SOFR (as defined in the Second Amendment), whereby applicable borrowings in United States dollars will bear interest at a floating rate based on Term SOFR plus an applicable margin;

(iii) reducing each applicable interest rate pricing tier based on the Average Historical Excess Availability (as defined therein) with respect to Term SOFR borrowings, Alternative Currency borrowings, base rate borrowings and Canadian Prime Rate borrowings, in each case for each pricing tier by 0.25% per annum;

and (iv) extending the scheduled maturity date of the borrowings to December 2, 2027.

Term Loan Facility

25 unchanged sentences

The Notes were resold to certain non-U.S.

persons pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), and to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act at a purchase price equal to 100% of their principal amount.

persons pursuant to Regulation S under the Securities Act , and to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act at a purchase price equal to 100% of their principal amount.

The terms of the Notes are governed by an Indenture, dated as of October 28, 2020 (the “Indenture”), among Finco, the Issuer, the guarantors named therein (the “Notes Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent.

3 unchanged sentences

The Notes are guaranteed by Holdings and each of the Issuer’s direct and indirect wholly owned material U.S.

subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions based on immateriality thresholders of aggregate assets and revenues of Canadian subsidiaries) that is a borrower or guarantor under the Term Loan Facility.

subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions

based on immateriality thresholders of aggregate assets and revenues of Canadian subsidiaries) that is a borrower or guarantor under the Term Loan Facility.

Security and ranking

23 unchanged sentences

ability to pay dividends;

and consolidate, merge or sell all or

substantially all of the Issuer’s assets.

Most of these covenants will be suspended on the Notes so long as they have investment grade ratings from both Moody’s Investors Service, Inc.

and consolidate, merge or sell all or substantially all of the Issuer’s assets.

Most of these covenants will be suspended on the Notes when they have investment grade ratings from both Moody’s Investors Service, Inc.

and S&P Global Ratings and so long as no default or event of default under the Indenture has occurred and is continuing.

10 unchanged sentences

and lack of perfection of liens on a material portion of the collateral, in each case subject to applicable grace periods.

Prior Credit Agreements

In connection with the Transactions, our debt arrangements under our then first lien credit agreement, second lien credit agreement and an accounts receivable credit agreement were repaid and terminated with incremental costs of $86.8 million.

Future Cash Requirements

The following summarizes future cash requirements as of December 31, 2022:

(in thousands)

22 unchanged sentences

As of December 31, 2022 and 2021, $28.1 million and $40.0 million, respectively, of our cash and cash equivalents were held by foreign branches.

We assessed our determination as to our indefinite reinvestment intent for certain of our foreign subsidiaries and recorded a deferred tax liability of approximately $2.5 million of withholding tax as of December 31, 2021 for unremitted earnings in Canada

with respect to which we do not have an indefinite reinvestment assertion.

We assessed our determination as to our indefinite reinvestment intent for certain of our foreign subsidiaries and recorded a deferred tax liability of approximately $2.8 million of withholding tax as of December 31, 2022 for unremitted earnings in Canada with respect to which we do not have an indefinite reinvestment assertion.

We will continue to evaluate our cash needs, however we currently do not intend, nor do we foresee a need, to repatriate funds from the foreign subsidiaries except for Canada.

2 unchanged sentences

In addition, we expect existing domestic cash and cash flows from operations to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as debt repayment and capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.

If we should require more capital in the United States than is generated by our domestic operations, for example, to fund significant discretionary activities such as business acquisitions, we could elect to repatriate future earnings from foreign jurisdictions.

If we should require more capital in the United States than is generated by our domestic operations, for example, to fund significant discretionary activities such as business acquisitions or to settle debt, we could elect to repatriate future earnings from foreign jurisdictions.

These alternatives could result in higher income tax expense or increased interest expense.

23 unchanged sentences

Our accounting policy for revenue recognition has an impact on our reported results and relies on certain estimates that require judgments on the part of management.

We record an allowance as a reduction to revenue for differences between estimated revenues and the amounts

ultimately invoiced to our clients based on our historical experience and current trends.

We record an allowance as a reduction to revenue for differences between estimated revenues and the amounts ultimately invoiced to our clients based on our historical experience and current trends.

Cash collected in advance of services being performed is recorded as deferred revenues.

12 unchanged sentences

We record an adjustment to revenue for differences between estimated revenues and the amounts ultimately invoiced to the client.

Adjustments to revenue during the current period related to services transferred during prior periods were not significant for the year ended December 31, 2021.

Adjustments to revenue during the current period related to services transferred during prior periods were not material for the year ended December 31, 2022.

We have contracts that include fixed consideration such as a fee per project or a fixed monthly fee.

14 unchanged sentences

We test for impairment of goodwill at the reporting unit level.

We generally combine reporting units, which are a component of an operating segment when they have similar economic characteristics, nature of services, types of client, distribution methods and regulatory environment.

We generally combine components that have similar economic characteristics, nature of services, types of client, distribution methods and regulatory environment.

We have two reporting units, sales and marketing, which are also our operating segments.

1 unchanged sentence

We have the option to perform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before performing a quantitative impairment test.

If the qualitative assessment indicates it is not more likely than not that the fair value of a reporting unit, as determined applying the quantitative impairment test described below, is less than the carrying amount, then there is

no need to perform the quantitative impairment test.

Upon performing the quantitative impairment test, if the fair value of the reporting unit is less than its carrying amount, goodwill is impaired and the excess of the reporting unit’s carrying value over the fair value is recognized as an impairment loss;

To the extent that the qualitative approach indicates that it is more likely than not that the carrying amount is less than its fair value, we apply a quantitative approach.

When it is determined that a quantitative impairment test should be performed, if the fair value of the reporting unit is less than its carrying amount, goodwill is impaired and the excess of the reporting unit’s carrying value over the fair value is recognized as an impairment loss;

however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.

Our annual goodwill impairment assessment for the year ended December 31, 2021 was performed as of October 1, 2021.

Our annual goodwill impairment assessment for the year ended December 31, 2022 was performed effective as of October 1, 2022.

We utilize a combination of income and market approaches to estimate the fair value of our reporting units.

The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for, the reporting units’

revenue growth rates, earnings before interest, taxes, depreciation and amortization ("EBITDA") margins, terminal growth rates, and discount rates, all of which require significant management judgment.

These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy (described in “

Fair Value Measurements in Note 1, Organization and Significant Accounting Policies,”).

revenue growth rates, earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, terminal growth rates, discount rates, and incremental net working capital, all of which require significant management judgment.

The market approach applies market multiples derived from the historical earnings data of selected guideline publicly-traded companies to our reporting units’

businesses to yield a second assumed value of each reporting unit, which requires significant management judgement.

businesses to yield a second assumed value of each reporting unit, which requires significant management judgment.

The guideline companies are first screened by industry group and then further narrowed based on the reporting units’

business descriptions, markets served, competitors, EBITDA margins and revenue size.

Market multiples are then selected from within the range of these guideline companies multiples based on the subject reporting unit.

Market multiples are then selected from within the range of these guideline companies’

multiples based on the subject reporting unit.

We compare a weighted average of the output from the income and market approaches to the carrying value of each reporting unit.

We also compare the aggregate estimated fair value of our reporting units to the estimated value of our total market capitalization.

The assumptions in the income and market approach are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy (described in “

Fair Value Measurements in Note 1, Organization and Significant Accounting Policies,”).

We based our fair value estimates on assumptions we believe to be reasonable but which are unpredictable and inherently uncertain.

A change in these underlying assumptions would cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

Additionally, if actual results are not consistent with the estimates and assumptions or if there are significant changes to our planned strategy, it may cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

We compare a weighted average of the output from the income and market approaches to the carrying value of each reporting unit.

We also compare the aggregate estimated fair value of our reporting units to the estimated value of our total invested capital on a marketable basis.

Based on the results of our quantitative impairment test performed for our reporting units, we determined that our goodwill was not impaired for the year ended December 31, 2021.

The fair values of our reporting units significantly exceeded their respective carrying values, which we define as greater than 20%.

Management determined that no additional triggering events occurred that required us to perform an interim goodwill impairment test as of December 31, 2021.

In performing the quantitative impairment test for the year ended December 31, 2020 and 2019, we had also determined that our goodwill was not impaired.

The fair value of the sales reporting unit exceeded its carrying value by 8.3% and 3.5%, respectively.

The fair value of the marketing reporting unit significantly exceeded its carrying value.

Management determined that no additional triggering events occurred that required us to perform an interim goodwill impairment test as of December 31, 2020 and 2019.

Additionally, if actual results are not consistent with the estimates and

assumptions or if there are significant changes to our planned strategy, it may cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

Based on the results of our quantitative impairment test in the fourth quarter of 2022, our sales and marketing reporting units were written down to their respective fair values, resulting in zero excess fair value over their carrying values.

We recognized $1,275.7 million and $91.8 million impairment charges in the sales and marketing reporting units, respectively, for the year ended December 31, 2022, which has been reflected in “Impairment of goodwill and indefinite-lived assets”

in our Consolidated Statements of Comprehensive (Loss) Income.

While there was no single determinative event or factor, the consideration of the weight of evidence of several factors that culminated during the fourth quarter of 2022 led us to conclude that it was more likely than not that the fair value of the sales and marketing reporting units were below their carrying values.

These factors included:

(a) sustained decline in our share price;

(b) challenges in the labor market and continued inflationary pressures;

and (c) an increase to the discount rate as a result of the recent increases in the interest rates which adversely affected the results of quantitative impairment test.

The uncertainty and volatility in the economic environment which we operate could have an impact on our future growth and could result in future impairment charges.

There is no assurance that actual future earnings, cash flows or other assumptions for the reporting units will not significantly decline from these projections.

The following table illustrates the amount of goodwill allocated to each reporting unit as well as the deficit, if any, created between the fair value and the carrying value of each reporting unit that would occur given hypothetical reductions in their respective fair values under step one at October 1, 2022 (after current year impairment charges).

Reporting Unit

(in thousands)

The following table represents a sensitivity analysis on the loss on impairment of goodwill (under the income approach without consideration to the market approach) for the sales and marketing reporting units depicting the percent increase in the $1,275.7 million charge related to sales and $91.8 million charge related to marketing recorded had the fair value been estimated with a 0.5% increase in the discount rate used, a 1.0% decrease in the long-term growth rate and a 1.0% increase in the net working capital assumptions used at October 1, 2022.

% Increase in Impairment Charge

Assumption Change

Sales Reporting Unit

Marketing Reporting Unit

0.5% increase in discount rate

1.0% decrease in long-term growth rate

1.0% increase in incremental net working capital

In connection with our annual quantitative impairment test effective as of October 1, 2021 and 2020, we concluded that our goodwill was not impaired for the years ended December 31, 2021 and 2020.

The fair value of the sales reporting unit exceeded its carrying value by 23.8% for the year ended December 31, 2021, and exceeded its carrying value by 8.3% for the year ended December 31, 2020.

The fair value of the marketing reporting unit exceeded its carrying value by 41.6% for the year ended December 31, 2021, and exceeded its carrying value by 37.3% for the year ended December 31, 2020.

Indefinite-Lived Assets

5 unchanged sentences

These estimates and assumptions include revenue growth rates, terminal growth rates, discount rates and royalty rates.

which requires significant management judgement.

The assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.

which requires significant management judgment.

The assumptions are

based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.

We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain.

Actual future results may differ from the estimates.

In connection with our annual quantitative impairment test as of October 1, 2021, 2020, and 2019, we concluded that our indefinite-lived intangible assets were not impaired for the years ended December 31, 2021, 2020, and 2019.

The fair value of the indefinite-lived intangible assets related to sales trade names significantly exceeded its carrying value for the year ended December 31, 2021, and exceeded its carrying value by 13.3% and 8.3% for the years ended December 31, 2020 and 2019, respectively.

The fair value of the indefinite-lived intangible assets related to marketing trade names significantly exceeded its carrying value for the year ended December 31, 2021, and exceeded its carrying value by 8.4% and 10.0% for the years ended December 31, 2020 and 2019, respectively.

Management determined that no additional triggering events occurred that required us to perform an interim impairment test of indefinite-lived intangible assets as of December 31, 2021, 2020, and 2019.

Equity-Based Compensation

The annual indefinite-lived intangible asset impairment assessment was performed effective as of October 1, 2022.

Based on this assessment, we concluded the carrying value of the indefinite-lived trade names in the sales and marketing reporting units exceeded their estimated fair values.

As a result, we recognized non-cash intangible asset impairment charges of $146.0 million and $59.0 million related to our indefinite-lived sales and marketing trade names, respectively, during the year ended December 31, 2022, which has been reflected in “Impairment of goodwill and indefinite-lived assets”

in the Consolidated Statements of Comprehensive (Loss) Income.

While there was no single determinative event or factor, the factors that led to the impairment were the same circumstances outlined in the goodwill impairment discussion above.

The following table represents a sensitivity analysis on the indefinite-lived trade name intangible assets depicting the percent increase in the $146.0 million charge related to the indefinite-lived trade names and $59.0 million charge related to the indefinite-lived trade names recorded had the fair value been estimated with a 0.5% increase in the discount rate used and a 0.5% decrease in the royalty rate used at October 1, 2022.

% Increase in Impairment Charge

Assumption Change

Sales Tradename

Marketing Tradename

0.5% increase in discount rate

0.5% decrease in royalty rate

In connection with our annual quantitative impairment test effective as of October 1, 2021, and 2020, we concluded that our indefinite-lived intangible assets were not impaired for the years ended December 31, 2021, and 2020.

The fair value of the indefinite-lived intangible assets related to sales trade names exceeded its carrying value by 65.0% for the year ended December 31, 2021 and exceeded its carrying value by 13.3% for the year ended December 31, 2020.

The fair value of the indefinite-lived intangible assets related to marketing trade names exceeded its carrying value by 33.3% for the year ended December 31, 2021 and exceeded its carrying value by 8.4% for the year ended December 31, 2020.

Stock-Based Compensation

Performance restricted stock units (“PSUs”) are subject to the achievement of certain performance conditions based on the Company’s revenues and Adjusted EBITDA targets in the respective measurement period and the recipient’s continued service to the Company.

7 unchanged sentences

directors and employees in exchange for services provided to us.

Since we receive the benefit associated with such services the related expense is recorded within our Consolidated Statements of Operations and Comprehensive Income (Loss).

Since we receive the benefit associated with such services the related expense is recorded within our Consolidated Statements of Operations and Comprehensive (Loss) Income.

These profit interests are subject to certain vesting requirements including time and performance requirements based on specified annual targets substantially similar to Adjusted EBITDA thresholds.

6 unchanged sentences

Notwithstanding prior vesting, certain awards are subject to a requirement that the Advantage Sponsors receive a specific return on their equity investment, prior to the awards participating in any distribution whether in cash, property or securities of Topco.

Certain awards vest over the remaining initial four-year terms, subject to the employee’s continued employment.

Certain awards vest over the remaining initial four-year terms, subject to

the employee’s continued employment.

The limited partnership agreement also authorizes Topco to issue up to 35,000 Common Series C-2 Units to members of our management, which Common Series C-2 Units are subject to substantially similar vesting and forfeiture provisions as the Common Series C Units, including forfeiture upon certain terminations of employment of the applicable holders or a non-qualifying exit event.

Equity-based compensation of Karman Topco L.P.

The Company recognized a non-cash compensation gain of $2.9 million related to forfeitures and non-cash compensation expenses of $4.7 million for the years ended December 31, 2022 and 2021, respectively.

As a result of the Transactions, the Company recognized non-cash compensation expenses of $62.7 million in connection with the Common Series C Units and $13.3 million in connection with the Common Series C-2 Units for the year ended December 31, 2020.

Additional expenses of $5.7 million and $0.4 million are anticipated to occur, when the time-based options further vest in 2021 and 2022, respectively.

If the vesting exit event of the remaining 25% of the equity awards is deemed probable to occur, the Company would have recognized a compensation expense of $8.2 million and $0.1 million for the years ended December 31, 2020 and 2021, respectively.

No expense was recorded in the years ended December 31, 2019, or 2018 since a vesting exit event was not yet deemed probable of occurring.

Topco also issued time-vesting profit interests to entities affiliated with one of the Advantage Sponsors, from whom we received services.

These time-vesting profit interests vested on a monthly basis beginning on October 1, 2014 through September 1, 2019.

We record the compensation expense associated with the issuance of such awards for non-employees as we receive the benefit of the services being provided by the non-employees.

No expense was recorded for the remaining 25% of the equity awards in the years ended December 31, 2022, 2021, and 2020 since the vesting exit event was deemed not probable of occurring.

Topco is a private company with no active market for its equity securities.

18 unchanged sentences

Stock Based Compensation and Other Benefit Plans to our audited consolidated financial statements included elsewhere in this Annual Report for details regarding Topco’s and our equity-based compensation plans.

Warrant Liability

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board ASC 480, and ASC 815.

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our common stock and whether the warrant holders could potentially require “net cash settlement”

in a circumstance outside of our control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter.

Changes in the estimated fair value of the warrants are recognized in “Changes in fair value of warrant liability”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The fair value of the private placement warrants on the date of issuance and on each measurement date is estimated using a Black-Scholes option pricing model which includes inputs such as our stock price, exercise price per share, and the number of private placement warrants outstanding.

Assumptions used in the model are subjective and require significant judgment, and include implied volatility and the risk-free interest rate.

Based on the period of time the public warrants have been trading, we believe that it is also an appropriate method to determine the fair value of the liability classified private placement warrants by approximating the value with the share price of the public warrants at the respective period end, which is inherently less subjective and judgmental given it is based on observable inputs.

The Company determined the valuation as of December 31, 2021 taking into consideration that both methods did not result in a materially different valuation.

As of December 31, 2021 and 2020, 7,333,333 private placement warrants remained outstanding at a fair value of $22.2 million and $21.2 million, respectively.

The initial fair value of the private placement warrants on October 28, 2020 was $7.9 million with $0.9 million and $13.4 million of changes in the estimated fair value recorded for the year ended December 31, 2021 and 2020, respectively.

Recently Issued Accounting Pronouncements

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity