What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-13 compared with 2021-11-22 · 328 added, 534 removed, 539 unchanged (62% of the section changed)

2 unchanged sentences

(in thousands, except share amounts)

September 30,

Cash and cash equivalents

20 unchanged sentences

COMMITMENTS AND CONTINGENCIES (NOTE 14)

REDEEMABLE NONCONTROLLING INTEREST

STOCKHOLDERS' EQUITY:

Common stock - $ 0.001 par value;

110,000,000 and 110,000,000 shares

authorized, respectively;

62,587,823 and 62,587,823 issued, respectively;

62,464,371 and 62,464,371 outstanding, respectively

Class A common stock, $ 0.001 par value;

510,000,000 shares authorized;

35,686,073 issued and 35,686,073 outstanding as of March 31, 2022, and 34,464,920 issued and 34,464,920 outstanding December 31, 2021, respectively

Class B common stock, $ 0.001 par value;

180,000,000 shares authorized;

81,630,126 shares issued and 81,506,674 shares outstanding as of March 31, 2022, 82,851,279 shares issued and 82,727,827 shares outstanding as of December 31, 2021, respectively

Treasury stock

3 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

The Notes to Consolidated Financial Statements

are an integral part of these statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

Consolidated Statements of Operations

(in thousands, except per share amounts)

For the Three Months Ended

For the Nine Months Ended

September 30,

(Unaudited, in thousands except per share amounts)

For the Three Months

Ended March 31,

Management and advisory fees

5 unchanged sentences

General, administrative and other

Contingent consideration expense

Amortization of intangibles

Strategic alliance expense

Total operating expenses

3 unchanged sentences

Interest expense, net

Other income/(expense)

Total other (expense)

Net income/(loss) before income taxes

Income tax (expense)/benefit

Net income before income taxes

Income tax expense

preferred dividends attributable to redeemable

noncontrolling interest

NET INCOME/(LOSS) ATTRIBUTABLE TO P10

NET INCOME ATTRIBUTABLE TO P10

Earnings per share

3 unchanged sentences

Weighted average shares outstanding, diluted

The Notes to Consolidated Financial Statements

are an integral part of these statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

Consolidated Statements of Changes in Stockholders’

(in thousands)

(Unaudited, in thousands)

Common Stock - Class A

Common Stock - Class B

Treasury stock

5 unchanged sentences

Balance at March 31, 2021

Stock-based compensation

Net income attributable to P10

Balance at June 30, 2020

Stock-based compensation

Net (loss) attributable to P10

Balance at September 30, 2020

Common Stock - Class A

Common Stock - Class B

Treasury stock

3 unchanged sentences

Stock-based compensation

Deferred offering costs

Net income attributable to P10

Exchange of Class B common stock for Class A common stock

Settlement of stock options

Balance at March 31, 2022

Stock-based compensation

Net income attributable to P10

Balance at June 30, 2021

Stock-based compensation

Net income attributable to P10

Balance at September 30, 2021

The Notes to Consolidated Financial Statements

are an integral part of these statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

Consolidated Statements of Cash Flows

(in thousands)

For the Nine Months Ended

September 30,

(Unaudited, in thousands)

For the Three Months

Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

Stock-based compensation

Non-cash incentive compensation

Depreciation expense

2 unchanged sentences

Income from unconsolidated subsidiaries

Expense/(benefit) for deferred tax

Deferred tax expense

Remeasurement of contingent consideration

Post close purchase price adjustment

Change in operating assets and liabilities:

11 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions, net of cash acquired

Payments of contingent consideration

Purchase of intangible assets

Note receivable

Proceeds from note receivable

Investments in unconsolidated subsidiaries

Proceeds from investments in unconsolidated subsidiaries

Post-closing payments related to acquisitions

Software capitalization

Post-closing payments for Enhanced working capital

Purchases of property and equipment

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of redeemable noncontrolling interests

Borrowings on debt obligations

Repayments on debt obligations

Payment of preferred stock dividends

Payments of contingent consideration

Debt issuance costs

Net cash provided by financing activities

Net cash used in financing activities

Net change in cash, cash equivalents and restricted cash

1 unchanged sentence

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of

The Notes to Consolidated Financial Statements

are an integral part of these statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

Consolidated Statements of Cash Flows

(in thousands)

For the Nine Months Ended

September 30,

(Unaudited, in thousands)

For the Three Months

Ended March 31,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest

Cash paid for income taxes

NON-CASH OPERATING ACTIVITIES

Net cash (received)/paid for income taxes

NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES

Additions to right-of-use assets

Additions to lease liabilities

Accrual for settlement of stock options

Additions to contingent consideration

RECONCILIATION OF CASH, CASH EQUIVALENTS AND

3 unchanged sentences

Total cash, cash equivalents and restricted cash

The Notes to Consolidated Financial Statements

are an integral part of these statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

Notes to Consolidated Financial Statements

5 unchanged sentences

In connection with the reorganization, P10, Inc.

("P10") became the parent company and all of the existing equity of P10 Holdings and its consolidated subsidiaries, including the convertible preferred units of P10 Intermediate, as defined below, were converted into common stock of P10.

("P10") became the parent company and all of the existing equity of P10 Holdings, which is a wholly owned subsidiary of P10 including the convertible preferred units of P10 Intermediate, as defined below, were converted into common stock of P10.

The offering and reorganization included a reverse stock split of P10 Holdings common stock on a 0.7-for-1 basis pursuant to which every outstanding share of common stock decreased to 0.7 shares.

2 unchanged sentences

As a result, the consolidated financial statements for periods prior to the reorganization and IPO are the consolidated financial statements of P10 Holdings as the predecessor to P10 for accounting and reporting purposes.

and its consolidated subsidiaries (the “Company”) operate as a multi-asset class private market solutions provider in the alternative asset management industry.

Following the reorganization and IPO, P10 has two classes of common stock, Class A common stock and Class B common stock.

Each share of Class B common stock is entitled to ten votes while each share of Class A common stock is entitled to one vote.

P10 and its consolidated subsidiaries (the “Company”) operate as a multi-asset class private market solutions provider in the alternative asset management industry.

Our mission is to provide our investors differentiated access to a broad set of solutions and investment vehicles across a multitude of asset classes and geographies.

2 unchanged sentences

(“Five Points”), TrueBridge Capital Partners, LLC (“TrueBridge”), Enhanced Capital Group, LLC (“ECG”), Bonaccord Capital Advisors, LLC ("Bonaccord") and Hark Capital Advisors, LLC ("Hark").

Holdco is the entity holding the acquisition financing debt and owns the subsidiaries RCP Advisors 2, LLC (“RCP 2”) and RCP Advisors 3, LLC (“RCP 3”).

See Note 10 for further information on the acquisition financing debt.

Prior to November 19, 2016, P10, formerly Active Power, Inc.

11 unchanged sentences

Our headquarters is in Dallas, Texas.

On October 5, 2017, we closed on the acquisition of RCP 2 and entered into a purchase agreement to acquire RCP 3 in January 2018.

On October 5, 2017, we closed on the acquisition of RCP Advisors 2, LLC ("RCP 2") and entered into a purchase agreement to acquire RCP Advisors 3, LLC ("RCP 3") in January 2018.

On January 3, 2018, we closed on the acquisition of RCP 3.

3 unchanged sentences

lower middle market.

See Note 3 for additional information on the acquisition.

Five Points is a registered investment advisor with the United States Securities and Exchange Commission.

1 unchanged sentence

TrueBridge is an investment firm focused on investing in venture capital through fund-of-funds, co-investments, and separate accounts.

See Note 3 for additional information on the acquisition.

TrueBridge is a registered investment advisor with the United States Securities and Exchange Commission.

4 unchanged sentences

manages equity and debt investments in impact initiatives across North America, targeting underserved areas and other socially responsible end markets including renewable energy, historic building renovations, and affordable housing.

See Note 3 for additional information on the acquisitions.

ECP is a registered investment advisor with the United States Securities and Exchange Commission.

10 unchanged sentences

All intercompany transactions and balances have been eliminated upon consolidation.

The results for the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year ended December 31, 2021.

The results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year ended December 31, 2022.

Certain entities in which the Company holds an interest are investment companies that follow specialized accounting rules under U.S.

9 unchanged sentences

To determine a VIE's primary beneficiary, we perform a qualitative assessment to determine which party, if any, has the power to direct activities of the VIE and the obligation to absorb losses and/or receive its benefits.

This assessment involves identifying the activities that most significantly impact the VIE's economic performance and determine whether we, or another party, has the power to direct those activities.

This assessment involves identifying the activities that most significantly impact the VIE's economic performance and determining whether we, or another party, has the power to direct those activities.

When evaluating whether we are the primary beneficiary of a VIE, we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties.

1 unchanged sentence

The Company has determined that certain of its subsidiaries are VIEs, and that the Company is the primary beneficiary of the entities, because it has the power to direct activities of the entities that most significantly impact the VIE’s economic performance and has a controlling financial interest in each entity.

Accordingly, the Company consolidates these entities, which includes P10 Intermediate, Holdco, RCP 2, RCP 3, TrueBridge, Bonaccord, and Hark.

The assets and liabilities of the consolidated VIEs are presented gross in the Consolidated Balance Sheets.

The assets of our consolidated VIE’s are owned by

Accordingly, the Company consolidates these entities, which includes Holdco, RCP 2, RCP 3, TrueBridge, Bonaccord, and Hark.

The assets and liabilities of the consolidated VIEs are presented on a gross basis in the Consolidated Balance Sheets.

As a result of the reorganization, it was determined that

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

those entities and not generally available to satisfy P10's obligations, and the liabilities of our consolidated VIE’s are obligations of those entities and their creditors do not generally have recourse to the assets of P10.

P10 Intermediate no longer qualifies as a VIE, but would still be consolidated under the voting interest model.

This change has been retrospectively adjusted.

See Note 7 for more information on both consolidated and unconsolidated VIEs.

1 unchanged sentence

Under the voting interest model, the Company consolidates those entities it controls through a majority voting interest or other means.

Five Points and ECG are concluded to be consolidated subsidiaries of P10 Intermediate under the voting interest model.

P10 Holdings, P10 Intermediate, Five Points and ECG are concluded to be consolidated subsidiaries of P10 under the voting interest model.

Reclassifications

Certain reclassifications have been made within the Consolidated Financial Statements to conform prior periods with current period presentation.

Certain reclassifications have been made within the Consolidated Financial Statements to conform prior periods with the current period presentation.

Use of Estimates

4 unchanged sentences

The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents.

As of September 30, 2021, and December 31, 2020, cash equivalents include money market funds of $ 7.8 million and $ 2.8 million, respectively, which approximates fair value.

As of March 31, 2022, and December 31, 2021, cash equivalents include money market funds of $ 7.4 million and $ 10.7 million, respectively, which approximates fair value.

The Company maintains its cash balances at various financial institutions, which may periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limits.

1 unchanged sentence

Restricted Cash

Restricted cash as of September 30, 2021 and December 31, 2020 was primarily cash that is restricted due to certain deposits being held for its customers.

Restricted cash as of March 31, 2022 and December 31, 2021 was primarily cash that is restricted due to certain deposits being held for customers.

Accounts Receivable and Due from Related Parties

1 unchanged sentence

The Company considers accounts receivable to be fully collectible;

accordingly, no allowance for doubtful accounts has been established as of September 30, 2021 and December 31, 2020.

accordingly, no allowance for doubtful accounts has been established as of March 31, 2022 and December 31, 2021.

If accounts are subsequently determined to be uncollectible, they will be expensed in the period that determination is made.

Due from related parties represents receivables from the Funds for management fees earned but not yet received, reimbursable expenses from the Funds and notes receivable due from affiliates.

Due from related parties represents receivables from the Funds for management fees earned but not yet received and reimbursable expenses from the Funds.

These amounts are expected to be fully collectible.

3 unchanged sentences

The Company considers the note receivable to be fully collectible;

accordingly, no allowance for doubtful accounts has been established as of September 30, 2021 and December 31, 2020 .

accordingly, no allowance for doubtful accounts has been established as of March 31, 2022 or as of December 31, 2021.

If accounts are subsequently determined to be uncollectible, they will be expensed in the period that determination is made.

See Note 6 for further discussion surrounding the note receivable.

Notes to Consolidated Financial Statements

28 unchanged sentences

Absent an implicit interest rate in the lease, the Company uses its incremental borrowing rate, adjusted for the effects of collateralization, based on the information available at commencement in determining the present value of lease payments.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options.

The Company’s lease terms may include options to extend or terminate the lease, and the Company would account for this when it is reasonably certain that the Company will exercise those options.

Lease expense is recognized on a straight-line basis over the lease term.

2 unchanged sentences

Instead, the Company recognizes short-term lease payments as an expense on a straight-line basis over the lease term.

A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

When determining whether

A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

a lease qualifies as a short-term lease, the Company evaluates the lease term and the purchase option in the same manner as all other leases.

not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

When determining whether a lease qualifies as a short-term lease, the Company evaluates the lease term and the purchase option in the same manner as all other leases.

Goodwill and Intangible Assets

Goodwill is initially measured as the excess of the cost of the acquired business over the sum of the amounts assigned to identifiable assets acquired, less the liabilities assumed.

As of September 30, 2021, goodwill recorded on our Consolidated Balance Sheets relates to the acquisitions of RCP 2, RCP 3, Five Points, TrueBridge, Enhanced, Bonaccord, and Hark.

As of September 30, 2021, the intangible assets are comprised of indefinite-lived intangible assets and finite-lived intangible assets related to the acquisitions of RCP 2, RCP 3, Five Points, TrueBridge, Enhanced, Bonaccord and Hark.

As of March 31, 2022, goodwill recorded on our Consolidated Balance Sheets relates to the acquisitions of RCP 2, RCP 3, Five Points, TrueBridge, Enhanced, Bonaccord, and Hark.

As of March 31, 2022, the intangible assets are comprised of indefinite-lived intangible assets and finite-lived intangible assets related to the acquisitions of RCP 2, RCP 3, Five Points, TrueBridge, Enhanced, Bonaccord and Hark.

Indefinite-lived intangible assets and goodwill are not amortized.

6 unchanged sentences

The reporting unit is the reporting level for testing the impairment of goodwill.

If it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying value, then the difference is recorded as an impairment (not to exceed the carrying amount of goodwill).

At September 30, 2021, the Company determined that there was no impairment to goodwill.

If it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying value, then the Company will determine the fair value of the reporting unit and record an impairment charge for the difference between fair value and carrying value (not to exceed the carrying amount of goodwill).

Contingent Consideration

Contingent consideration is initially measured at fair value on the date of the acquisition.

The liabilities are remeasured at fair value on each reporting date, with changes in the fair value reflected in other income on our Consolidated Statements of Operations.

As of September 30, 2021, contingent consideration recorded relates to the acquisition of Hark and Bonaccord.

The liabilities are remeasured at fair value on each reporting date, with changes in the fair value reflected in operating expenses on our Consolidated Statements of Operations.

As of March 31, 2022, contingent consideration recorded relates to the acquisitions of Hark and Bonaccord on the Consolidated Balance Sheets.

The contingent consideration recorded as of March 31, 2021 on the Consolidated Balance Sheets relates to the TrueBridge acquisition.

Debt Issuance Costs

Costs incurred which are directly related to the issuance of debt are deferred and amortized on a straight-line basis over the terms of the underlying obligation, which approximates the effective interest method, and are presented as a reduction to the carrying value of the associated debt on our Consolidated Balance Sheets.

Costs incurred which are directly related to the issuance of debt are deferred and amortized using the effective interest method and are presented as a reduction to the carrying value of the associated debt on our Consolidated Balance Sheets.

As these costs are amortized, they are included in interest expense, net within our Consolidated Statements of Operations.

Redeemable Noncontrolling Interest

Redeemable noncontrolling interest represents third party and related party interests in the Company's consolidated subsidiary, P10 Intermediate.

This interest is redeemable at the option of the investors and therefore is not treated as permanent equity.

Redeemable noncontrolling interest is presented at the greater of its carrying amount or redemption value at each reporting date in the Company’s Consolidated Balance Sheets.

Any changes in redemption value are recorded to retained earnings, or in the absence of retained earnings, additional paid-in capital.

See Note 16 for additional information.

Treasury Stock

6 unchanged sentences

We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB.

As of September 30, 2021 and December 31, 2020, we used the following valuation techniques to measure fair value for assets and there were no changes to these methodologies during the periods presented:

As of March 31, 2022 and December 31, 2021, we used the following valuation techniques to measure fair value for assets and there were no changes to these methodologies during the periods presented:

Level 1—Assets were valued using the closing price reported in the active market in which the individual security was traded.

2 unchanged sentences

The carrying values of financial instruments comprising cash and cash equivalents, prepaid assets, accounts payable, accounts receivable and due from related parties approximate fair values due to the short-term maturities of these instruments.

The fair value of the credit and guarantee facility approximates the carrying value based on the interest rates which approximate current market rates.

The carrying values of the seller notes payable and tax amortization benefits approximate fair value.

As of September 30, 2021 , the Company has a contingent consideration liability related to the acquisitions of Hark and Bonaccord that is measured at fair value.

The Company measures these liabilities on a recurring basis.

The fair value of the credit facilities approximate carrying value based on the interest rates which approximate current market rates.

The Company has a contingent consideration liability related to the acquisitions of Hark and Bonaccord that is measured at fair value and is remeasured on a recurring basis.

See Note 11 for additional information.

Revenue Recognition

Revenue is recognized when, or as, the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services.

While the determination of who is the customer in a contractual arrangement will be made on a contract-by-contract basis, the customer will generally be the investment fund for the Company’s significant management and advisory contracts.

While the determination of who the customer is in a contractual arrangement will be made on a contract-by-contract basis, the customer will generally be the investment fund for the Company’s significant management and advisory contracts.

Management and Advisory Fees

13 unchanged sentences

If subscriptions or fees have been paid in advance, these fees are recorded as deferred revenue on our Consolidated Balance Sheets.

Referral fee revenue is recognized upon closing of certain opportunities.

Referral fee revenue is recognized upon the closing of certain opportunities.

Notes to Consolidated Financial Statements

1 unchanged sentence

Current income tax expense represents our estimated taxes to be paid or refunded for the current period.

In accordance with ASC 740, Income Taxes (“ASC 740”), we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards.

In accordance with ASC 740, Income Taxes , we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse.

4 unchanged sentences

Earnings Per Share

Basic earnings per share (“EPS”) is calculated by dividing net income attributable to common stockholders by the weighted-average number of common shares.

Basic earnings per share (“EPS”) is calculated by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Diluted EPS includes the determinants of basic EPS and common stock equivalents outstanding during the period adjusted to give effect to potentially dilutive securities.

See Note 17 for additional information.

The numerator in the computation of diluted EPS is impacted by the redeemable convertible preferred shares issued by P10 Intermediate since these preferred shares are convertible into common shares of P10 Intermediate.

Prior to the IPO, redeemable noncontrolling interests represented third party and related party interests in the Company's consolidated subsidiary, P10 Intermediate.

Prior to the conversion of the redeemable convertible preferred shares issued by P10 Intermediate to class B shares, the numerator in the computation of diluted EPS was impacted by the redeemable convertible preferred shares.

Under the if converted method, diluted EPS reflects a reduction in earnings that P10 would recognize by owning a smaller percentage of P10 Intermediate when the preferred shares are assumed to be converted.

The denominator in the computation of diluted EPS is impacted by additional common shares that would have been outstanding if dilutive potential shares of common stock had been issued.

Potential shares of common stock that may be issued by the Company include shares of common stock that may be issued upon exercise of outstanding stock options.

Potential shares of common stock that may be issued by the Company include shares of common stock that may be issued upon exercise of outstanding stock options and restricted stock units that have been issued, but not vested.

Under the treasury stock method, the unexercised options are assumed to be exercised at the beginning of the period or at issuance, if later.

1 unchanged sentence

Stock-Based Compensation Expense

Stock-based compensation relates to grants for shares of P10 awarded to our employees.

Stock-based compensation cost is estimated at the grant date based on the fair-value of the award, which is determined using the Black Scholes option valuation model and is recognized as expense ratably over the requisite service period of the award, generally five years .

The share price used in the Black Scholes model is based on the trading price of our shares on the OTC Market.

Stock-based compensation relates to grants for shares of P10 awarded to our employees through stock options as well as RSUs awarded to employees and RSAs issued to non-employee directors as compensation for service on the Company's board.

RSUs and RSAs stock compensation expense are recorded ratably over the vesting period at the fair market value on the grant date.

Stock option compensation cost is estimated at the grant date based on the fair-value of the award, which is determined using the Black Scholes option valuation model and is recognized as an expense ratably over the requisite service period of the award, generally five years .

The share price used in the Black Scholes model is based on the trading price of our shares on the public markets.

Expected life is based on the vesting period and expiration date of the option.

6 unchanged sentences

According to ASC 280, Disclosures about Segments of an Enterprise and Related Information , operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker(s) in deciding how to allocate resources and in assessing performance.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Business Acquisitions

3 unchanged sentences

In addition, all the inputs and processes that a seller uses in operating a set of assets and activities are not required if market participants can acquire the set of assets and activities and continue to produce outputs.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

addition, the Company also performs a screen test to determine when a set of assets and activities is not a business.

In addition, the Company also performs a screen test to determine when a set of assets and activities is not a business.

The screen requires that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of assets is not a business.

10 unchanged sentences

The contingent consideration included in the purchase price is measured at fair value on the date of the acquisition.

The liabilities are remeasured at fair value on each reporting date, with changes in the fair value reflected in general, administrative and other on our Consolidated Statements of Operations.

The liabilities are remeasured at fair value on each reporting date, with changes in the fair value reflected in operating expenses on our Consolidated Statements of Operations.

For business acquisitions, the Company recognizes the fair value of goodwill and other acquired intangible assets, and estimated contingent consideration at the acquisition date as part of purchase price.

2 unchanged sentences

The Company adopted ASU No.

2017-04, Intangibles—Goodwill and Other (“ASC 350”) Simplifying the Test for Goodwill Impairment on January 1, 2020.

The adoption of this new guidance did not have a material impact on our Consolidated Financial Statements and related disclosures.

The Company adopted ASU No.

2018-13, Fair Value Measurement (“ASC 820”):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement on January 1, 2020.

The adoption of this new guidance did not have a material impact on our Consolidated Financial Statements and related disclosures.

The Company adopted ASU No.

2018-07, Compensation—Stock Compensation ("Topic 718"):

Improvements to Nonemployee Share-Based Payment Accounting , on December 15, 2018.

This guidance was related to the restricted stock awards granted to our board members as compensation for their participation on our board in the third quarter of 2021.

The adoption of this new guidance did not have a material impact on our Consolidated Financial Statements and related disclosures.

The Company adopted ASU No.

2019-12, Income Taxes ("Topic 740") :

Disclosure Framework - Simplifying the Accounting for Income Taxes , in January 1, 2021, which simplified the accounting for income taxes by removing certain exceptions to the general principles of Topic 740 and clarifying and amending existing guidance.

Disclosure Framework - Simplifying the Accounting for Income Taxes , on January 1, 2021, which simplified the accounting for income taxes by removing certain exceptions to the general principles of Topic 740 and clarifying and amending existing guidance.

The adoption of this standard did not have a material impact on our financial statements.

5 unchanged sentences

The guidance must be applied using the modified retrospective adoption method on January 1, 2023, with early adoption permitted.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Five Points Capital

On April 1, 2020 , we completed the acquisition of 100 % of the capital stock of Five Points, an independent private equity manager focused exclusively on the U.S.

lower middle market.

The transaction was accounted for as a business combination under the acquisition method of accounting pursuant to ASC 805.

The following is a summary of consideration paid:

Preferred stock

Total purchase consideration

Consideration paid in the transaction consisted of both cash and equity.

See Note 16 for additional information on the preferred stock issued in the connection with the acquisition of Five Points.

In connection with the acquisition, the Company incurred a total of $ 2.3 million of acquisition-related expenses.

Of the total acquisition-related expenses, $ 0 and $ 0 million were recorded during the nine and three months ended September 30, 2021 and $ 1.1 and $ 0 million were recorded during the nine and three month ended September 30, 2020, respectively.

These costs are included in professional fees on our Consolidated Statements of Operations.

The following table presents the fair value of the net assets acquired as of the acquisition date:

Cash and cash equivalents

Accounts receivable

Due from related parties

Prepaid expenses and other

Property and equipment

Right-of-use assets

Intangible assets

Total assets acquired

Accounts payable

Accrued expenses

Long-term lease obligation

Deferred tax liability

Total liabilities assumed

Net identifiable assets acquired

Net assets acquired

The following table presents the fair value of identifiable intangible assets acquired:

Value of management contracts

Value of trade name

Total identifiable intangible assets

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The goodwill recorded as part of the acquisition includes benefits that management believes will result from the acquisition, including expanding the Company’s product offering into private credit.

The goodwill is no t expected to be deductible for tax purposes.

Acquisition of TrueBridge Capital

On October 2, 2020 , the Company completed the acquisition of 100 % of the issued and outstanding membership interests of TrueBridge for a total consideration of $ 189.1 million, which includes cash, contingent consideration and preferred stock of P10 Intermediate.

TrueBridge is a leading venture capital firm that invests in both venture funds and directly in select venture-backed companies.

The transaction was accounted for as a business combination under the acquisition method of accounting pursuant to ASC 805.

The following is a summary of consideration paid:

Contingent consideration

Preferred stock

Total purchase consideration

A net cash amount of $ 89.5 million was financed through an amendment to the existing term loan under the credit and guarantee facility with HPS Investment Partners, LLC (“HPS”), an unrelated party.

The additional draw has the same terms as the existing Facility including the maturity date.

See Note 16 for additional information on the preferred stock issued in the connection with the acquisition of TrueBridge.

Included in total consideration is $ 572 thousand of contingent consideration, representing the fair value of expected future payments on the date of the acquisition.

The amount ultimately owed to the sellers is based on achieving specific fundraising targets, and all amounts under this arrangement were paid by October 2021.

As of September 30, 2021 , the fair value of the remaining contingent consideration totaled $ 209 thousand.

For the nine months ended September 30, 2021 , a total of $ 518 thousand was paid to the sellers of Truebridge and $ 134 thousand in expense was recognized in other income on the Consolidated Statements of Operations for the change in estimated value of the contingent consideration.

In connection with the acquisition, the Company incurred a total of $ 1.7 million of acquisition-related expenses.

Of the total acquisition-related expenses, $ 0 and $ 0 were recorded during the nine and three months ended September 30, 2021 and $ 1.6 and $ 1.2 million were recorded during the nine and three months ended September 30, 2020, respectively.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The following table presents the fair value of the net assets acquired as of the acquisition date:

Cash and cash equivalents

Accounts receivable

Due from related parties

Prepaid expenses and other

Property and equipment

Right-of-use assets

Intangible assets

Total assets acquired

Accounts payable

Accrued expenses

Deferred revenues

Long-term lease obligation

Deferred tax liability

Total liabilities assumed

Net identifiable assets acquired

Net assets acquired

The following table presents the fair value of identifiable intangible assets acquired:

Value of management contracts

Value of trade name

Value of technology

Total identifiable intangible assets

The goodwill recorded as part of the acquisition includes the expected benefits that management believes will result from the acquisition, including the Company’s build out of its investment product offering.

Approximately $ 73.7 million of goodwill is expected to be deductible for tax purposes.

Acquisition of Enhanced

On December 14, 2020 , the Company completed the acquisition of 100 % of the equity interest in ECG and a non-controlling interest in ECP’s outstanding equity, comprised of a 49% voting interest and a 50% economic interest, for total consideration of $ 111.0 million.

The consideration included cash, estimated working capital adjustments and preferred stock of P10 Intermediate.

ECG is an alternative asset manager and provider of tax credit transaction and consulting services focused on underserved areas and other socially responsible end markets such as renewable energy (impact investing).

The alternative asset management business includes providing management, transaction, and consulting services to various entities which have historically been wholly owned by subsidiaries and affiliates of ECG.

ECP’s primary business is to participate in various state sponsored premium tax credit investment programs through debt, equity, and equity-related investments.

The acquisition of ECG was accounted for as a business combination under the acquisition method of accounting pursuant to ASC 805, while ECP is reported as an unconsolidated investee of P10 and accounted for under the equity method of accounting.

Upon the completion of the acquisitions, certain agreements contemplated in the Securities Purchase Agreement became effective immediately upon the closing of the acquisitions.

The allocation of the consideration paid for the assets acquired and

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

liabilities assumed takes into consideration the fact that these agreements occurred contemporaneously with the closing of the acquisitions.

Prior to and through the date of the acquisition by the Company, ECG had certain consolidated subsidiaries and funds whose primary activities consisted of issuing qualified debt or equity instruments to tax credit investors in order to make investments in qualified businesses, which are referred to as the “Permanent Capital Subsidiaries.”

Pursuant to a Reorganization Agreement, upon the closing of P10’s acquisition of ECG, the Permanent Capital Subsidiaries were contributed by ECG to Enhanced Permanent Capital, LLC (“Enhanced PC”), a newly formed entity.

In exchange for this contribution of the Permanent Capital Subsidiaries, ECG obtained a non-controlling equity interest in Enhanced PC.

The ownership in Enhanced PC was evaluated by management, and it was determined to be a variable interest.

However, ECG was concluded to not be the primary beneficiary of Enhanced PC and, accordingly, Enhanced PC is not consolidated by ECG.

Rather, the interest in Enhanced PC is reflected as an equity method investment by ECG.

In addition to the Reorganization Agreement, see Note 11 for information on the Advisory Agreement and Administrative Services Agreement.

The acquisition of the equity interests in ECG and ECP were negotiated simultaneously for a single purchase price.

The following tables illustrate the consideration paid for Enhanced, and the allocation of the purchase price to the acquired assets and assumed liabilities.

Estimated post-closing working capital adjustment

Preferred stock

Total purchase consideration

A total of $ 66.6 million of the cash consideration was financed through an amendment to the existing term loan under the Facility with HPS.

The additional draw has the same terms as the existing Facility, including the maturity date.

See Note 16 for additional information on the preferred stock issued in the connection with the acquisition of Enhanced.

In connection with the acquisition, the Company incurred a total of $ 3.7 million of acquisition-related expenses.

Of the total acquisition-related expenses, $ 77 thousand and $ 0 were recorded during the nine and three months ended September 30, 2021 and $ 0 and $ 0 million were recorded during the nine and three months ended September 30, 2020, respectively.

These costs are included in professional fees on our Consolidated Statements of Operations.

The acquisition date fair values of certain assets and liabilities, including intangible assets acquired and related weighted average expected lives and deferred income taxes, are provisional and subject to revision within one year of the acquisition date.

As such, our estimates of fair values are pending finalization, which may result in adjustments to goodwill.

On October 28, 2021, the FASB issued ASU 2021-08, which amends ASC 805 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.”

Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date.

The guidance is effective for fiscal years beginning after December 15, 2022.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The following table presents the provisional fair value of the net assets acquired as of the acquisition date:

Cash and cash equivalents

Restricted cash

Accounts receivable

Due from related parties

Prepaid expenses and other assets

Investment in unconsolidated subsidiaries

Intangible assets

Total assets acquired

Accrued expenses

Other liabilities

Deferred revenues

Due to related parties

Debt obligations

Deferred tax liability

Total liabilities assumed

Net identifiable assets acquired

Net assets acquired

The following table presents the provisional fair value of identifiable intangible assets acquired:

Value of management and advisory contracts

Value of trade name

Total identifiable intangible assets

Approximately $ 18.7 million of goodwill is expected to be deductible for tax purposes.

Acquisition of Bonaccord

On September 30, 2021 , the Company completed the purchase of Bonaccord for total consideration of $ 56.4 million, which includes cash and contingent consideration.

Bonaccord is engaged in the business of acquiring minority interests in alternative asset mangement companies focused on private market strategies which may include private equity, private client, real estate, and real asset strategies.

Bonaccord is engaged in the business of acquiring minority interests in alternative asset management companies focused on private market strategies which may include private equity, private client, real estate, and real asset strategies.

The acquisition was accounted for as a business combination under the acquisition method of accounting pursuant to ASC 805.

2 unchanged sentences

Total purchase consideration

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

A total of $ 35.0 million of the cash consideration was financed through an amendment to the existing term loan under the facility with HPS.

The additional draw has the same terms as the existing Facility, including the maturity date.

A total of $ 35.0 million of the cash consideration was financed through an amendment to the term loan under the Facility with HPS Investment Partners, LLC ("HPS").

The additional draw had the same terms as the existing Facility, including the maturity date.

Included in total consideration is $ 17.4 million of contingent consideration, representing the fair value of expected future payments on the date of the acquisition.

The amount ultimately owed to the sellers is based on achieving specific revenue related targets, and all amounts under this arrangement are expected to be paid by October 2027.

Total payment ranges from $ 0 to $ 20.0 million.

The fair value is based on the scenario based method.

The amount ultimately owed to the sellers is based on achieving specific fundraising targets and any amounts paid to the sellers will be paid by October 2027, at which point the contingent consideration expires.

Total contingent consideration payments will not exceed $ 20.0 million.

The fair value was derived from an analysis of the option pricing model and the scenario based model.

The assumptions used in the analysis are inherently subjective;

therefore, the ultimate amount of the liability may differ materially from the current estimate.

As of September 30, 2021 , the estimated fair value of the remaining contingent consideration totaled $ 17.0 million.

A total of $ 0 was paid to the sellers of Bonaccord and $ 0 in expense was recognized in other income on the Consolidated Statements of Operations for the change in estimated value of the contingent consideration.

As of March 31, 2022 , the estimated fair value of the remaining contingent consideration totaled $ 19.2 million, with the increase since acquisition driven primarily by changes in the Company's borrowing rate due to the debt refinancing.

See Note 11 for more details.

At the time of the acquisition, the Company entered into a Notice of Restricted Stock Units with certain employees of Bonaccord, for 1,113,637 Restricted Stock Units ("Bonaccord Units"), to be allocated and granted to employees at a later date for meeting certain performance metrics.

The Bonaccord Units may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by any grantee until it has become vested.

As of March 31, 2022, no Bonaccord Units have been allocated to specific employees or vested and no expense has been recorded in the Consolidated Statements of Operations.

The Bonaccord Units will be allocated to specific employees as the performance metrics are met.

In connection with the acquisition, the Company incurred a total of $ 0.5 million of acquisition-related expenses.

Of the total acquisition-related expenses, $ 1.9 million and $ 1.9 were recorded during the nine months and three months ended September 30, 2021 and $ 0 and $ 0 million were recorded for the nine and three months ended September 30, 2020, respectively.

Of these costs, $ 1.6 millions relates to a one time bonus to employees associated with the acquisition, which is included in compensation and benefits on the consolidates statements of operations.

The remaining costs are included in professional fees on the Consolidated Statement of Operations.

Total acquisition-related expenses were $ 0 and $ 0 for the three months ended March 31, 2022 and March 31, 2021, respectively.

These costs are included in professional fees on the Consolidated Statement of Operations.

The acquisition date fair value of certain assets and liabilities, including intangible assets acquired and related weighted average expected lives are provisional and subject to revision within one year of the acquisition date.

1 unchanged sentence

The following table presents the provisional fair value of the net assets acquired as of the acquisition date:

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Prepaid expenses and other assets

10 unchanged sentences

Total identifiable intangible assets

In connection with the acquisition, Bonaccord entered a Strategic Alliance Agreement ("SAA"), providing a third-party the right to receive 15 % of the net management fee earnings, which includes the management fees minus applicable expenses, for Bonaccord Fund I ("Fund I"), paid quarterly.

Within 60 days following the final closing of the next fund, Bonaccord Fund II ("Fund II"), the third-party has the opportunity to acquire equity interests in Bonaccord based on the amount of commitment made to subsequent Funds II and III that ranges from 0.1 %- 9.9 % of equity in Bonaccord.

If within 60 days of the final closing

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

of Funds II and III, the third-party has not met specific equity commitments in the SAA, Bonaccord may elect to repurchase the equity interests at fair market value.

In addition to this SAA, there is another agreement with a third-party, similar to a placement fee arrangement, whereby they will receive 5 % of net management fee revenues for Fund I.

In connection with the acquisition, Bonaccord assumed a Strategic Alliance Agreement ("SAA"), providing a third-party the right to receive 15 % of the net management fee earnings, which includes the management fees minus applicable expenses, for Bonaccord Fund I ("Fund I"), paid quarterly, in exchange for funding certain amounts of capital commitments to the fund.

See Note 5 for more information.

1 unchanged sentence

Acquisition of Hark

On September 30, 2021 , the Company completed the purchases of Hark for total consideration of $ 7.2 million, which includes $ 5.0 million of cash and $ 2.2 million of estimated contingent consideration.

On September 30, 2021 , the Company completed the purchase of Hark for total consideration of $ 7.2 million, which includes $ 5.0 million of cash and $ 2.2 million of estimated contingent consideration, with the fair value based on the scenario based method.

The acquisition was accounted for as a business combination under the acquisition method of accounting pursuant to ASC 805.

1 unchanged sentence

T he provisional fair value consisted of $ 2.5 million in net assets and $ 4.7 million in goodwill.

The total contingent consideration payment will not exceed $ 5.4 million.

At the time of the acquisition, the Company entered into a Notice of Restricted Stock Units with an employee, which grants 95,455 Restricted Stock Units ("Hark Units") for meeting a certain performance metric.

The Hark Units may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by any grantee until they have become vested.

As of March 31, 2022, no Hark Units have vested and no expense has been recorded in the Consolidated Statements of Operations as we have not determined that the achievement of the performance metric is probable.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Identifiable Intangible Assets

9 unchanged sentences

Pro-forma Financial Information

The following unaudited pro forma condensed consolidated results of operations of the Company assumes the acquisitions of Five Points, TrueBridge, Enhanced, and Bonaccord were completed on January 1, 2020:

For the Nine Months Ended

September 30,

Prior Year Acquisition:

The following unaudited pro forma condensed consolidated results of operations of the Company assumes the acquisition of Bonaccord was completed on January 1, 2021:

For the Three Months

Ended March 31,

Net income attributable to P10

Pro-forma adjustments include revenue and net income (loss) of the acquired business for each period.

Other pro forma adjustments include intangible amortization expense and interest expense based on debt issued or repaid in connection with the acquisitions as if the acquisitions were completed on January 1, 2020 .

The pro forma adjustments also give effect to the reorganization of Enhanced and formation of Enhanced Permanent Capital, as well as the impacts of the advisory services agreement as further described at Note 11.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Other pro forma adjustments include intangible amortization expense and interest expense based on debt issued in connection with the acquisition as if the acquisition were completed on January 1, 2021.

The following presents revenues disaggregated by product offering:

For the Three Months Ended

For the Nine Months Ended

September 30,

For the Three Months

Ended March 31,

Management and advisory fees

Subscriptions

Consulting agreements and referral fees

Other revenue

Total revenues

Strategic Alliance Expense

In connection with the Bonaccord acquisition, Bonaccord assumed a SAA.

This SAA provides the third-party the right to receive 15 % of the net management fee earnings, which includes the management fees minus applicable expenses, for Fund I, paid quarterly, in exchange for funding certain amounts of capital commitments to the fund.

Net management fee earnings the third-party has the right to receive is based on the total capital committed.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

If within 60 days of the final closing of Funds II and III, the third-party has not met specific equity commitments in the SAA, Bonaccord may elect to repurchase the equity interests at fair market value.

In addition to this SAA, Bonaccord entered into another agreement with a third-party, similar to a placement fee arrangement, whereby the third party will receive 5 % of net management fee revenues for Fund I.

This expense is reported on the Consolidated Statements of Operations as strategic alliance expense in operating expenses.

For the three months ended March 31, 2022, the strategic alliance expense reported was $ 0.2 million.

In the three months ended March 31, 2021, there was no strategic alliance expense.

Note Receivable

The Company's note receivable consists of an Advance Agreement and Secured Promissory Note that was executed on September 30, 2021 between the Company and BCP Partners Holdings, LP ("BCP") to lend funds to cover their GP commitments.

This agreement provides for a note to BCP for $ 5.0 million, of which $ 2.3 million was drawn as of September 30, 2021 with a maturity date of September 30, 2031 .

The note will earn interest at the greater of (i) the applicable federal rate that must be charged to avoid imputation of interest under Section 1274(d) of the code and (ii) 5.5 %.

Interest will be paid on December 31st of each year commencing December 31, 2021.

Principal payments will be made periodically from mandatory payments from available cash flows at BCP.

As of September 30, 2021 and December 31, 2020, the balance was $ 2.3 million and $ 0 , respectively.

The Company recognized interest revenue of $ 0 and $ 0 million for the nine and three months ended September 30, 2021 and 2020, respectively.

This agreement provides for a note to BCP for $ 5.0 million, of which $ 2.8 million was drawn as of March 31, 2022 with a maturity date of September 30, 2031 .

The note will earn interest at the greater of (i) the applicable federal rate that must be charged to avoid imputation of interest under Section 1274(d) of the U.S.

Internal Revenue Code and (ii) 5.5 %.

Interest will be paid on December 31st of each year commencing December 31, 2021, with any unpaid accrued interest being capitalized and added to the outstanding principal balance.

There was no cash paid for interest as of December 31, 2021.

Principal payments will be made periodically as mandatorily required payments from available cash flows at BCP.

As of March 31, 2022 and December 31, 2021, the outstanding balance was $ 2.8 million and $ 2.6 million, respectively.

The Company recognized interest income of $ 0.1 million and $ 0 for the three months ended March 31, 2022 and March 31, 2021, respectively.

This is presented in other revenue on the Consolidated Statement of Operations.

Variable Interest Entities

1 unchanged sentence

The Company consolidates certain VIEs for which it is the primary beneficiary.

VIEs consist of certain operating entities not wholly owned by the Company and include P10 Intermediate, Holdco, RCP 2, RCP 3, TrueBridge, Hark and Bonaccord.

VIEs consist of certain operating entities not wholly owned by the Company and include Holdco, RCP 2, RCP 3, TrueBridge, Hark and Bonaccord.

See Note 2 for more information on the Company ’s accounting policies related to the consolidation of VIEs.

The assets of the consolidated VIEs totaled $ 418.3 million and $ 361.7 million as of September 30, 2021 and December 31, 2020 , respectively.

The liabilities of the consolidated VIEs totaled $ 325.9 million and $ 287.1 million as of September 30, 2021 and December 31, 2020, respectively.

The assets of the consolidated VIEs totaled $ 398.6 million and $ 413.2 million as of March 31, 2022 and December 31, 2021 , respectively.

The liabilities of the consolidated VIEs totaled $ 47.2 million and $ 53.6 million a s of March 31, 2022 and December 31, 2021, respectively.

The assets of our consolidated VIE’s are owned by those entities and not generally available to satisfy P10’s obligations, and the liabilities of our consolidated VIE’s are obligations of those entities and their creditors do not generally have recourse to the assets of P10.

1 unchanged sentence

Through its subsidiary, ECG, the Company holds variable interests in the form of direct equity interests in certain VIEs that are not consolidated because the Company is not the primary beneficiary.

The Company's maximum exposure to loss is limited to the potential loos of assets recognized by the Company relating to these unconsolidated entities.

The Company's maximum exposure to loss is limited to the potential loss of assets recognized by the Company relating to these unconsolidated entities.

Investment in Unconsolidated Subsidiaries

The Company’s investment in unconsolidated subsidiaries consist of equity method investments primarily related to ECG’s tax credit finance and asset management activities.

As of September 30, 2021 , investment in unconsolidated subsidiaries totaled $ 2.0 million, of which $ 1.4 million related to ECG’s asset management businesses and $ 0.6 million related to ECG’s tax credit finance businesses.

As of March 31, 2022 , investment in unconsolidated subsidiaries totaled $ 2.0 million, of which $ 0.2 million related to ECG’s tax credit finance businesses and $ 1.8 million related to ECG’s asset management businesses.

As of December 31, 2021 , investment in unconsolidated subsidiaries totaled $ 1.8 million, of which $ 1.6 million related to ECG’s asset management businesses and $ 0.2 million related to ECG’s tax credit finance businesses.

3 unchanged sentences

ECG manages some of its alternative asset management funds through various unconsolidated subsidiaries and records these investments under the equity method of accounting.

ECG recorded its share of income in the amount of $ 0.8 and $ 0.3 million for the nine and three months ended September 30, 2021 and $ 0 and $ 0 million for the nine and three months ended September 30, 2020 , respectively.

For the nine and three months ended September 30, 2021, ECG made $ 0 and $ 0 capital contributions and received distributions of $ 1.4 and $ 0.1 million.

ECG recorded its share of income in the amount of $ 0.3 million for the three months ended March 31, 2022 and $ 0.2 million for the three months ended March 31, 2021.

For the three months ended March 31, 2022, ECG made $ 0 capital contributions and received distributions of $ 0.1 million.

Tax Credit Finance

1 unchanged sentence

Some of these subsidiaries own nominal interests, typically under 1.0%, in various VIEs and record these investments under the measurement alternative described in Note 2 above.

For the nine and three months ended September 30, 2021, ECG made $ 2.6 and $ 0 million of capital contributions and received distributions of $ 2.2 and $ 0 million.

For the three months ended March 31, 2022, EC G made $ 0 of capital contributions and received distributions of $ 0 .

Property and Equipment

Property and equipment consist of the following:

September 30,

As of March 31,

As of December 31,

Computers and purchased software

4 unchanged sentences

Goodwill and Intangibles

Changes in goodwill for the nine months ended September 30, 2021 is as follows:

Changes in goodwill for the three months ended March 31, 2022 are as follows:

Balance at December 31, 2021

1 unchanged sentence

Increase from acquisitions

Balance at September 30, 2021

Balance at March 31, 2022

Intangibles consists of the following:

As of September 30, 2021

As of March 31, 2022

Gross Carrying

15 unchanged sentences

Total intangible assets

Management and advisory contracts and finite lived trade names are amortized over 7 - 16 years and are being amortized in line with pattern in which the economic benefits arise.

Management and advisory contracts and finite lived trade names are amortized over 7 - 16 years and are being amortized in line with pattern in which the economic benefits are expected to arise.

Technology is amortized on a straight-line basis over 4 years.

2 unchanged sentences

Total amortization

During the nine months ended September 30, 2021, we identified adjustments related to the timing of amortization of certain finite lived intangible assets.

The table above has been adjusted to reflect those timing differences.

There was no impact to the Consolidated Statement of Operations nor the Consolidated Balance Sheets as the adjustments related to amounts scheduled to be expensed subsequent to December 31, 2020 .

We do not believe the impact of the adjustments is material to our consolidated financial statements for any previously issued financial statements taken as a whole, and any impact to our expected net income for future periods has been adjusted for in the table above.

Fair Value Measurements

The Company measures certain liabilities at fair value on a recurring basis.

The following tables provide details regarding the classification of these liabilities within the fair value hierarchy as of the dates presented:

As of March 31, 2022

Contingent consideration obligation

Total liabilities

As of December 31, 2021

Contingent consideration obligation

Total liabilities

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the periods ended March 31, 2022 and December 31, 2021.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The changes in the fair value of Level III financial instruments are set forth below:

Contingent Consideration Liability

For the Three Months Ended March 31,

For the Year Ended December 31,

Balance, beginning of year:

Change in fair value

Balance, end of period:

The fair value of the contingent consideration liability represents the fair value of future payments upon satisfaction performance targets.

The assumptions used in the analysis are inherently subjective;

therefore, the ultimate amount of the contingent consideration liability primarily relate to the expected future payments of obligations with a discount rate applied.

The contingent consideration liability is included in contingent consideration on the Consolidated Balance Sheets.

Changes in the fair value of the liability are included in contingent consideration expense on the Consolidated Statements of Operations.

Debt Obligations

Debt obligations consists of the following:

September 30,

Gross revolving credit facility state tax credits

1 unchanged sentence

Revolving credit facility state tax credits, net

Gross notes payable to sellers

Less debt discount

Notes payable to sellers, net

Gross credit and guaranty facility

Revolver facility

Debt issuance costs

Credit and guaranty facility, net

Revolver facility, net

Debt issuance costs

Term loan, net

Total debt obligations

On December 22, 2021, the Company extinguished its debt outstanding with HPS, as described below in the Credit and Guaranty Facility section and simultaneously entered into a new credit agreement with JP Morgan Chase Bank, N.A.

("JP Morgan") in order to gain more favorable interest terms.

The Company used the proceeds from the new credit agreement with JP Morgan not only to repay the outstanding balance with HPS but also to repay the notes payable to sellers as described below in the Notes Payable to Sellers section.

Revolving Credit Facility State Tax Credits

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Enhanced State Tax Credit Fund III, LLC, a subsidiary of ECG, has a $ 10 million revolving credit facility with a regional financial institution restricted solely for the purchase of allocable state tax credits from various state tax credit incentive programs.

Enhanced State Tax Credit Fund III, LLC, a subsidiary of ECG, has a $ 10 million revolving credit facility with a regional financial institution the funds from which can be used solely for the purchase of allocable state tax credits from various state tax credit incentive programs.

The facility bears interest at 0.25 % above the Prime Rate and matures on June 15, 2022 .

As of September 30, 2021 and December 31, 2020 , the credit facility had an outstanding balance of $ 0 and $ 1.5 million, respectively, and is reported net of unamortized debt issuance costs on our Consolidated Balance Sheets.

As of September 30, 2021 and December 31, 2020 , the Company’s investment in allocable state tax credits was $ 0 and $ 1.5 million.

As of March 31, 2022 and December 31, 2021 , the credit facility had an outstanding balance of $ 0.0 million and $ 0.0 million, respectively, and is reported net of unamortized debt issuance costs on our Consolidated Balance Sheets.

As of March 31, 2022 and December 31, 2021 , the Company’s investment in allocable state tax credits was $ 0 and $ 0 .

For the three months ended March 31, 2022 and 2021 $ 0 and $ 0 interest expense was incurred, respectively.

Notes Payable to Sellers

On October 5, 2017, the Company issued Secured Promissory Notes Payable (“2017 Seller Notes”) in the amount of $ 81.3 million to the owners of RCP 2 in connection with the acquisition of that entity.

The 2017 Seller Notes mature on January 15, 2025 .

The 2017 Seller Notes are non-interest bearing and will be paid using cash generated from the business operations and borrowings under the Credit and Guaranty Facility (“Facility”) described below.

The 2017 Seller Notes were recorded at their discounted fair value in the amount of $ 78.7 million.

Non-cash interest expense was recorded on a periodic basis increasing the 2017 Seller Notes to their gross value.

As of September 30, 2021 and December 31, 2020 , the gross value of the 2017 Seller Notes was $ 6.4 million.

The 2017 Seller Notes were set to mature on January 15, 2025 .

On December 23, 2021, the Company used the proceeds from the new credit agreement with JP Morgan to repay the outstanding balance of the 2017 Sellers Notes.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

On January 3, 2018, the Company issued Secured Promissory Notes Payable (“2018 Seller Notes”) in the amount of $ 22.1 million to the owners of RCP 3 in connection with the acquisition of that entity.

The 2018 Seller Notes mature on January 15, 2025 .

The 2018 Seller Notes are non-interest bearing and will be paid using cash generated from the business operations and borrowings under the Facility described below.

The 2018 Seller Notes were recorded at their discounted fair value in the amount of $ 21.2 million.

Noncash interest expense was recorded on a periodic basis increasing the 2018 Seller Notes to their gross value.

As of September 30, 2021 and December 31, 2020 , the gross value of the 2018 Seller Notes was $ 3.0 million.

The 2018 Seller Notes were set to mature on January 15, 2025 .

On December 23, 2021, the Company used the proceeds from the new credit agreement with JP Morgan to repay the outstanding balance of the 2018 Sellers Notes.

On January 3, 2018, the Company issued tax amortization benefits in the amount of $ 48.4 million (“TAB Payments”) to the owners of RCP 3 in connection with the acquisition of that entity.

The TAB Payments are non-interest bearing and will be paid in equal annual installments beginning April 15, 2023 .

The TAB Payments mature on April 15, 2037 .

The TAB Payments were recorded at their discounted fair value in the amount of $ 28.9 million.

Non-cash interest expense is recorded on a periodic basis increasing the TAB Payments to their gross value.

On April 1, 2020, the holders of the TAB Payments contributed $ 16.8 million of their TAB Payments to P10 Intermediate in exchange for receiving 3.3 million shares of Series C preferred stock.

The discounted fair value of the TAB Payments received was $ 10.0 million on the date of the Five Points acquisition, April 1, 2020.

See Note 16 for additional information.

As of September 30, 2021 and December 31, 2020 , the gross value of the 2018 TAB Payments was $ 31.7 million.

During the nine and three months ended September 30, 2021, we recorded $ 0.7 and $ 0.3 million and for the nine and three months ended September 30, 2020 , we recorded $ 0.8 million and $ 0.2 million in interest expense related to the TAB Payments, respectively.

The TAB Payments were set to mature on April 15, 2037 .

On December 23, 2021, the Company used the proceeds from the new credit agreement with JP Morgan to repay the outstanding balance of the TAB Payments.

The 2017 Seller Notes, the 2018 Seller Notes and the TAB Payments are collectively referred to as “Notes Payable to Sellers”

on our Consolidated Financial Statements.

Noncash interest expense was recorded on a periodic basis for the Notes Payable to Sellers.

During the three months ended March 31, 2022 and March 31, 2021, we recorded combined interest expense on the 2018 Seller Notes and 2017 Seller Notes in the amount of $ 0 , $ 0.2 million, respectively.

During the three months ended March 31, 2022, we recorded $ 0 in interest expense related to the TAB Payments.

For the three months ended March 31, 2021 , we recorded $ 0.2 million on the TAB Payments.

Credit and Guaranty Facility

The Company’s subsidiary, Holdco, entered into the Facility with HPS as administrative agent and collateral agent on October 7, 2017.

The Company’s subsidiary, Holdco, entered into the Credit and Guaranty Facility (the "Facility") with HPS as administrative agent and collateral agent on October 7, 2017.

The Facility initially provided for a $ 130.0 million senior secured credit facility in order to refinance the existing debt obligations of RCP Advisors and provide for the financing to repay the Seller Notes due resulting from the acquisition of RCP Advisors.

3 unchanged sentences

On October 2, 2020 and December 14, 2020, in connection with the acquisitions of TrueBridge and Enhanced, the term loan under the Facility was amended adding an additional $ 91.4 million and $ 68.0 million to the Facility, respectively.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

On September 30, 2021, in connection with the acquisition of Bonaccord, the term loan under the Facility was amended adding an additional $ 35.0 million to the Facility.

Interest is calculated upon each tranche at LIBOR for either one, two, three, or six months, as selected by Holdco, plus an applicable margin of 6.00 % per annum.

To date, Holdco has chosen three-month and six-month LIBOR at the time of each draw and each subsequent repricing at the end of the chosen LIBOR period.

Principal is contractually repaid at a rate of 0.75 % of the original tranche draw per calendar quarter.

The maturity date of the Facility is October 7, 2022 .

Due to the maturity of the Facility being within one year of issuance, the Company assessed its ability to pay its obligations.

The Company believes it will be able to fulfill its obligations using cash on hand, cash from continuing operations, and a debt refinancing that the Company is currently negotiating.

The Facility contains affirmative and negative covenants typical of such financing transactions, and specific financial covenants which require Holdco to maintain a minimum leverage ratio, asset coverage ratio and a fixed charge ratio.

The Facility also contains restrictions regarding the creation of indebtedness, the occurrence of mergers or consolidations, the payment of dividends and other restrictions.

As of September 30, 2021 , Holdco was in compliance with all the financial covenants required under the Facility.

The outstanding balance of the Facility was $ 286.8 million and $ 261.7 million as of September 30, 2021 and December 31, 2020, respectively, and is reported net of unamortized debt issuance costs on our Consolidated Balance Sheets.

Phase-Out of LIBOR

In July 2017, the UK's Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR as a benchmark by the end of 2021.

At the present time, our Facility has a term that extends beyond 2021.

The Facility provides for a mechanism to amend the underlying agreements to reflect the establishment of an alternate rate of interest.

However, we have not yet pursued any amendment or other contractual alternative to our Facility to address this matter.

We are currently evaluating the potential impact of the eventual replacement of the LIBOR interest rate.

Future principal maturities of debt as of September 30, 2021 are as follows:

Remainder of 2021

Debt Issuance Costs

Debt issuance costs are offset against the Revolving Credit Facility State Tax Credits and the Credit and Guaranty Facility.

Unamortized debt issuance costs for the Credit and Guaranty Facility as of September 30, 2021 and December 31, 2020 were $ 3.8 million and $ 5.0 million, respectively.

Unamortized debt issuance costs for the Revolving Credit Facility State Tax Credits as of September 30, 2021 and December 31, 2020 were $ 12 thousand and $ 25 thousand, respectively.

Amortization expense related to debt issuance costs totaled $ 2.1 and $ 0.7 million for the nine and three months ended September 30, 2021 and $ 0.5 and $ 0.1 million for the nine and three months ended September 30, 2020, respectively, and are included within interest expense, net on the accompanying Consolidated Statements of Operations.

During the nine months ended September 30, 2021 and September 30, 2020 , we recorded $ 0.9 million and $ 0.5 in debt issuance costs, respectively, which is included in debt obligations on the consolidated balance sheets.

On October 28, 2021, a payment of $ 88.6 million was made, which included an optional repayment of $ 86.8 million, required prepayment penalty of $ 1.2 million, and an accrued interest payment of $ 0.6 million.

On December 22, 2021, the remaining principal balance of $ 200 million was repaid using the proceeds of the new credit facility with JP Morgan.

In accordance with the Facility, the Company also paid the remaining accrued interest balance of $ 2.1 million and an early extinguishment fee of $ 3.7 million.

Revolving Credit Facility and Term Loan

On December 22, 2021, the Company entered into a new credit agreement (the "Credit Agreement") with JPMorgan, in its capacity as administrative agent and collateral agent, and Texas Capital Bank, as joint lead arrangers and joint bookrunners, and the other loan parties party thereto.

The Credit Agreement consists of two facilities.

The first is a revolving credit facility with an available balance of $ 125 million (the "Revolver Facility").

The second is a term loan for $ 125 million (the "Term Loan").

In addition to the Term Loan and Revolver Facility, the Credit Agreement also includes a $ 125 million accordion feature.

Both facilities are "Term SOFR Loans" meaning loans bearing interest based upon the "Adjusted Term SOFR Rate".

The Adjusted Term SOFR Rate is the Secured Overnight Financing Rate ("SOFR") at the date of election, plus 0.10 %.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Company can elect one or three months for the Revolver Facility and three or six months for the Term Loan.

The Company elected a six month SOFR rate at the time of draw for the term loan and a one month SOFR rate for the Revolver Facility at the time of draw.

Principal is contractually repaid at a rate of 1.25 % on the term loan quarterly effective March 31, 2023.

The Revolving Credit Facility has no contractual principal repayments until maturity, which is December 22, 2025 for both facilities.

The Credit Agreement contains affirmative and negative covenants typical of such financing transactions, and specific financial covenants which require P10 to maintain a minimum leverage ratio.

As of March 31, 2022, P10 was in compliance with its financial covenants required under the facility.

In February 2022, the Company repaid $ 25 million of the principal balance outstanding on the revolving credit facility.

As of March 31, 2022, the balance drawn on the revolving credit facility is $ 65.9 million and on the term loan, the balance is $ 125.0 million.

The balance as of December 31, 2021 was $ 90.9 million on the revolving credit facility and $ 125 million on the term loan.

For the three months ended March 31, 2022 and March 31, 2021, $ 0.9 million and $ 0 of interest expense was incurred, respectively.

Future principal maturities of debt as of March 31, 2022 are as follows:

Debt Issuance Costs

Debt issuance costs are offset against the Revolving Credit Facility State Tax Credits, the Credit and Guaranty Facility, and the Revolver Facility and Term Loan.

Unamortized debt issuance costs for the Credit and Guaranty Facility as of March 31, 2022 and December 31, 2021 were $ 0 and $ 0 , respectively.

Unamortized debt issuance costs for the Revolving Credit Facility State Tax Credits as of March 31, 2022 and December 31, 2021 were $4 thousand and $ 8 thousand, respectively.

Unamortized debt issuance costs for the Revolver Facility and Term Loan as of March 31, 2022 and December 31, 2021 were $ 3.2 million and $ 3.4 million, respectively.

Amortization expense related to debt issuance costs totaled $ 0.2 million for the three months ended March 31, 2022 and $ 0.7 million for the three months ended March 31, 2021.

This is reported in interest expense, net on the Consolidated Statements of Operations.

During the three months ended March 31, 2022 and March 31, 2021 , we recorded $ 8 thousand and $ 0.1 million in debt issuance costs, respectively, which is included in debt obligations on the Consolidated Balance Sheets.

Related Party Transactions

Effective May 1, 2018, P10 started paying a monthly services fee of $ 31.7 thousand for administration and consulting services along with a monthly fee of $ 18.8 thousand for certain reimbursable expenses to 210/P10 Acquisition Partners, LLC, which owns approximately 24.9 % of P10.

These services were terminated effective December 31, 2020 .

P10 paid $ 0 and $ 0.5 million for administrative and consulting services and reimbursable expenses respectively for the nine months ended September 30, 2021 and September 30, 2020.

Effective January 1, 2021, the Company entered into a sublease with 210 Capital, LLC, a related party, for office space serving as our corporate headquarters.

The monthly rent expense is $ 20.3 thousand, and the lease expires December 31, 2029 .

P10 has paid $ 0.2 million and $ 0 in rent to 210 Capital, LLC for the nine months ended September 30, 2021 and September 30, 2020, respectively.

On June 30, 2020, RCP 2 entered into an intercompany services agreement with Five Points whereby RCP 2 will provide certain accounting, human resources, back office, administrative functions and such other services to Five Points as mutually agreed upon from time to time.

In consideration for the services provided, Five Points shall pay RCP 2 a quarterly fee in the amount of $ 850 thousand.

As a result of the agreement, Five Points paid RCP 2 $ 2.6 million and $ 1.7 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

These amounts were eliminated in consolidation.

Effective April 1, 2020, P10 Intermediate pays a quarterly management fee of $ 250 thousand to Keystone Capital XXX, LLC, which is the holder of the Series B preferred shares issued by P10 Intermediate in connection with the acquisition of Five Points.

As a result of that agreement, P10 Intermediate paid $ 0.8 million and $ 0.5 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

See Note 16 below for additional information.

P10 has paid $ 0.1 million and $ 0.1 million in rent to 210 Capital, LLC for the three months ended March 31, 2022 and March 31, 2021, respectively.

Effective April 1, 2020, P10 Intermediate paid a quarterly management fee of $ 250 thousand to Keystone Capital XXX, LLC, which was the holder of the Series B preferred shares issued by P10 Intermediate in connection with the acquisition of Five Points.

As a result of that agreement, P10 Intermediate paid $ 0.1 million and $ 0.3 million for the three months ended March 31, 2022 and March 31, 2021, respectively.

This management fee was terminated effective October 20, 2021 when the Company's redeemable noncontrolling interest was converted to Class B shares in connection with the Company's IPO.

As described in Note 1, through its subsidiaries, the Company serves as the investment manager to the Funds.

Certain expenses incurred by the Funds are paid upfront and are reimbursed from the Funds as permissible per fund agreements.

As of September 30, 2021, the total accounts receivable from the Funds totaled $ 1.7 million , of which $ 0.7 million related to reimbursable expenses and $ 1.0 million related to fees earned but not yet received.

As of March 31, 2022, the total accounts receivable from the Funds totaled $ 3.1 million , of which $ 1.8 million related to

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

reimbursable expenses and $ 1.4 million related to fees earned but not yet received.

As of December 31, 2021 , the total accounts receivable from the Funds totaled $ 2.4 million, of which $ 1.6 million related to reimbursable expenses and $ 0.8 million related to fees earned but not yet received.

1 unchanged sentence

Upon the closing of the Company’s acquisition of ECG and ECP, the Advisory Agreement between ECG and Enhanced PC immediately became effective.

Under this agreement, ECG will provide advisory services to Enhanced PC related to the assets and operations of the permanent capital subsidiaries owned by Enhanced PC, as contributed by both ECG and ECP.

In exchange for those services, which commenced on January 1, 2021, ECG will receive advisory fees from Enhanced PC based on a declining fixed fee schedule totaling $ 76.0 million over 7 years .

Under this agreement, ECG provides advisory services to Enhanced PC related to the assets and operations of the permanent capital subsidiaries owned by Enhanced PC, as contributed by both ECG and ECP, and new projects undertaken by Enhanced PC.

In exchange for those services, which commenced on January 1, 2021, ECG receives advisory fees from Enhanced PC based on a declining fixed fee schedule, initially totaling $ 76.0 million over 7 years .

As a result of new projects during 2021, ECG will receive additional advisory fees from Enhanced PC totaling $ 1.6 million over 7 years , based on a declining fixed fee schedule.

This agreement is subject to customary termination provisions.

For the nine and three months ended September 30, 2021, advisory fees earned or recognized under this agreement were $ 14.3 and $ 4.8 million and were $ 0 and $ 0 million for the nine and three months ended September 30, 2020, respectively, and is reported in management and advisory fees on the Consolidated Statement of Operations.

For the three months ended March 31, 2022 and March 31, 2021, advisory fees earned or recognized under this agreement were $ 4.3 million and $ 4.8 million, respectively, and are reported in management and advisory fees on the Consolidated Statement of Operations.

As of March 31, 2022 and December 31, 2021, the receivable balance was $ 13.6 million and $ 9.5 million, respectively, and is included in due from related parties on the Consolidated Balance Sheets.

Upon the closing of the Company’s acquisition of ECG and ECP, the Administrative Services Agreement between ECG and Enhanced Capital Holdings, Inc.

(“ECH”), the entity which holds a controlling equity interest in ECP, immediately became effective.

Under this agreement, ECG will pay ECH for the use of their employees to provide services to Enhanced PC at the direction of ECG.

The Company recognized $ 6.1 and $ 0.9 million for the nine and three months ended September 30, 2021 and $ 0 and $ 0 for the nine and three months ended September 30, 2020, respectively, related to this agreement within compensation and benefits on our Consolidated Statements of Operations.

Upon the closing of Bonaccord on September 30, 2021, an Advance Agreement and Secured Promissory Note was signed with BCP, an entity that was formed by employees of the Company.

Under this agreement, ECG pays ECH for the use of their employees to provide services to Enhanced PC at the direction of ECG.

The Company recognized $ 2.2 million and $ 2.8 million for the three months ended March 31, 2022 and March 31, 2021, respectively, related to this agreement within compensation and benefits on our Consolidated Statements of Operations.

On September 10, 2021, Enhanced entered into a strategic partnership with Crossroads Systems, Inc, parent company of Capital Plus Financial ("CPF"), a leading certified development financial institution.

Under the terms of the agreement, Enhanced will originate and manage loans across its diverse lines of business including small business loans to women and minority owned businesses, and loans to renewable energy and community development projects.

The loans will be held by CPF and CPF will pay an advisory fee to Enhanced.

The Company recognized $ 0.4 million for the three months ended March 31, 2022, which is included in management and advisory fees on the Consolidated Statements of Operations.

No revenues were recognized for the three months ended March 31, 2021.

Upon the closing of the Bonaccord acquisition on September 30, 2021, an Advance Agreement and Secured Promissory Note was signed with BCP, an entity that was formed by employees of the Company.

For details, see Note 6.

The Company utilizes services from Altvia, a technology platform for private capital markets.

For the three months ended March 31, 2022 and March 31, 2021 the Company paid Altvia $ 0.1 million and $ 0.1 million respectively.

Commitments and Contingencies

Operating Leases

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The Company leases office space and various equipment under non-cancelable operating leases, with the longest lease expiring in 2032.

These lease agreements provide for various renewal options.

Rent expense for the various leased office space and equipment was approximately $ 1.6 and $ 0.5 million for the nine and three months ended September 30, 2021 and $ 0.9 and $ 0.3 million for the nine and three months ended September 30, 2020, respectively.

The following table presents information regarding the Company’s operating leases as of September 30, 2021:

Rent expense for the various leased office space and equipment was approximately $ 0.8 million for the three months ended March 31, 2022 and $ 0.5 million for the three months ended March 31, 2021.

The following table presents information regarding the Company’s operating leases as of March 31, 2022:

Operating lease right-of-use assets

3 unchanged sentences

Weighted-average discount rate

The future contractual lease payments as of September 30, 2021 are as follows:

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The future contractual lease payments as of March 31, 2022 are as follows:

Remainder of 2022

1 unchanged sentence

Less discount

Less construction allowance

Total lease liabilities

2 unchanged sentences

We evaluated all potentially significant litigation, government investigations, claims or assessments in which we are involved and do not believe that any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) a global pandemic, which has resulted in significant disruption and uncertainty in the global economic markets.

The extent of the operational and financial impact the COVID-19 pandemic may have on the Company has yet to be determined and is dependent on its duration and spread, any related operational restrictions and the overall economy.

Currently, we have activated our Business Continuity Plan, which assures the ability for all aspects of our business to continue operating without interruption.

COVID-19 has not negatively impacted our business in a material way and our business continuity plan is operating as planned with limited interruptions.

We are closely monitoring developments related to COVID-19 and assessing any negative impacts to our business.

It is possible that our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which could result in delayed or decreased management fees.

The Company calculates its tax provision using the estimated annual effective tax rate methodology.

1 unchanged sentence

To the extent that information is not available for the Company to fully determine the full year estimated impact of an item of income or tax adjustment, the Company calculates the tax impact of such item discretely.

Based on these methodologies, the Company’s effective income tax rate for the nine months ended September 30, 2021 was 25.41 %.

The effective tax rate differs from the statutory rate of 21 % primarily due to the release of valuation allowance, expiration of NOL, a partnership non-controlling interest, nonconsolidated subsidiaries, and state taxes.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Based on these methodologies, the Company’s effective income tax rate for the three months ended March 31, 2022 and 2021 was 25.82 % and 22.98 %, respectively.

The effective tax rate differs from the federal statutory rate of 21 % due primarily to state and local income taxes.

The Company records deferred tax assets and liabilities for the future tax benefit or expense that will result from differences between the carrying value of its assets for income tax purposes and for financial reporting purposes, as well as for operating loss and tax credit carryovers.

1 unchanged sentence

This level will be estimated based on a number of factors, especially the amount of net deferred tax assets of the Company that are actually expected to be realized, for tax purposes, in the foreseeable future.

As of September 30, 2021, the Company recorded a $ 12.9 million valuation allowance against deferred tax assets mostly related to partnership outside basis difference and note impairment.

The Company is subject to examination by the United States Internal Revenue Service as well as state, local and tax authorities.

As of March 31, 2022, the Company has recorded a $ 12.8 million valuation allowance against deferred tax assets.

There was no change to the valuation allowance during the period.

The Company monitors federal and state legislative activity and other developments that may impact our tax positions and their relation to the income tax provision.

Any impacts will be recorded in the period in which the legislation is enacted or new regulations are issued.

The Company is subject to examination by the United States Internal Revenue Service as well as state and local tax authorities.

The Company is not currently under audit.

In December 2019, the FASB issued ASU No.

2019-12 Income Taxes (Topic 740) - Disclosure Framework - Simplifying the Accounting for Income Taxes, which simplified the accounting for income taxes by removing certain exceptions to the general principles of Topic 740 and clarifying and amending existing guidance.

We adopted this new standard as of September 30, 2021.

The adoption of this standard did not have a material impact on our financial statements.

Stockholders' Equity

2 unchanged sentences

2021 Stock Incentive Plan (the "Plan"), which replaced the 2018 Incentive Plan, our previously existing equity compensation plan.

The Plan provides for the issuance of 1,000,000 shares available for grant, in addition to those approved in the 2018 Incentive Plan ("2018 Plan"), for a total of 10,000,000 shares.

Per the Plan, the Compensation Committee of the Board of Directors may issue equity-based awards including stock appreciation rights, restricted stock units and restricted stock awards.

Options previously granted under the 2018 Incentive Plan vest over a period of up to four years and five years , respectively.

The Plan provides for the issuance of 3,000,000 shares available for grant, in addition to those approved in the 2018 Incentive Plan ("2018 Plan"), for a total of 9,300,000 shares (previously unadjusted for the stock split of 12,000,000 ).

The Compensation Committee of the Board of Directors may issue equity-based awards including stock options, stock appreciation rights, restricted stock units and restricted stock awards.

Options previously granted under the 2018 Incentive Plan vest over a period of up to five years .

The term of each option is no more than ten years from the date of grant.

When the options are exercised, the Board of Directors has the option of issuing shares of common stock or paying a lump sum cash payment on the exercise date equal to the difference between the common stock’s fair market value on the exercise date and the option price.

When the options are exercised, the Board of Directors has the option of issuing shares of common stock or paying a lump sum cash payment on the exercise date equal to the

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

difference between the common stock’s fair market value on the exercise date and the option price.

All future awards will be granted under the Plan, and no additional awards will be granted under the 2018 Plan.

A summary of stock option activity for the nine months ended September 30, 2021 is as follows:

On March 15, 2022, the Board of Directors approved the settlement of 1.1 million options from a grantee with a fair market value option price of $ 11.83 , less a negotiated discount of 2.5 %, totaling $ 12.5 million.

This is presented in other liabilities on the Consolidated Balance Sheets.

A summary of stock option activity for the period ended March 31, 2022 is as follows:

Weighted Average

6 unchanged sentences

Expired/Forfeited

Outstanding as of September 30, 2021

Exercisable as of September 30, 2021

The weighted average assumptions used in calculating the fair value of stock options granted during the nine months ended September 30, 2021 and September 30, 2020 were as follows:

For the Nine Months Ended September 30,

Outstanding as of March 31, 2022

Exercisable as of March 31, 2022

The weighted average assumptions used in calculating the fair value of stock options granted during the three months ended March 31, 2022 and March 31, 2021 were as follows:

For the Three Months Ended March 31,

Expected life

2 unchanged sentences

Expected dividend yield

The Company has granted restricted stock awards ("RSAs") to certain employees.

Holders of RSAs have no voting rights and are not eligible to receive dividends or other distributions paid with respect to any RSAs that have not vested.

All of the shares currently vest one year from the grant date.

Weighted-Average Grant

Date Fair Value Per RSA

Outstanding as of December 31, 2021

Outstanding as of March 31, 2022

The Company has granted restricted stock units ("RSUs") to certain employees.

Holders of RSUs have no voting rights and are not eligible to receive dividends or other distributions paid with respect to any RSUs that have not vested.

All of the shares currently vest one year from the grant date.

Weighted-Average Grant

Date Fair Value Per RSU

Outstanding as of December 31, 2021

Outstanding as of March 31, 2022

Notes to Consolidated Financial Statements

1 unchanged sentence

Compensation expense equal to the grant date fair value is recognized for these awards over the vesting period and is included in compensation and benefits on our Consolidated Statements of Operations.

The stock-based compensation expense for the nine and three months ended September 30, 2021 was $ 1.5 and $ 0.5 million and for the nine and three months ended September 30, 2020 was $ 0.5 million and $ 0.2 million, respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of September 30, 2021 was $ 8.4 million and is expected to be recognized over a weighted average period of 3.06 years.

The stock-based compensation expense was $ 1.5 million and $ 0.4 million for the three months ended March 31, 2022 and March 31, 2021, respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of March 31, 2022 was $ 7.5 million and is expected to be recognized over a weighted average period of 3.05 years.

Any future forfeitures will impact this amount.

A summary of restricted stock activity for the nine months ended September 30, 2021 is presented below:

Weighted-Average Grant

Date Fair Value Per RSA

Outstanding as of December 31, 2020

Expired/Forfeited

Outstanding as of September 30, 2021

Earnings Per Share

3 unchanged sentences

Additionally, diluted EPS reflects the potential dilution that could occur if convertible preferred shares of P10 Intermediate were converted into common shares of P10 Intermediate.

This is only applicable for the three months ended March 31, 2021 as the preferred shares of P10 Intermediate converted to Class B common shares effective with the IPO.

The following table presents a reconciliation of the numerators and denominators used in the computation of basic and diluted EPS:

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

For the Three Months Ended

For the Nine Months Ended

September 30,

Numerator for basic calculation—Net income/(loss)

attributable to P10

Adjustment for:

Preferred dividends attributable to redeemable

noncontrolling interest

Proportionate share of subsidiary's earnings

attributable to subsidiary's convertible

preferred stock under assumed conversion

For the Three Months

Ended March 31,

Numerator for earnings per share

6 unchanged sentences

Earnings per share—diluted

The computations of diluted earnings per share excluded options to purchase 0.0 million and 2.9 million shares of common stock for the three and nine months ended September 30, 2021 and 0.0 million and 2.0 million shares for the three and nine months ended September 30, 2020 , respectively, because the options were anti-dilutive.

The computations of diluted earnings per share excluded 0.2 million options for the three months ended March 31, 2022 and 3.0 million options for the three months ended March 31, 2021, because the options and restricted stock units were anti-dilutive.

See Note 3 for more information related to the restricted stock units.

Redeemable Noncontrolling Interest

2 unchanged sentences

On October 2, 2020 and December 14, 2020, P10 Intermediate issued two additional series (D and E) in connection with the acquisitions of TrueBridge and Enhanced.

The preferred shares on an as-if-converted basis represent approximately 40.9 % of the aggregate issued and outstanding share capital of P10 Intermediate with P10 owning the remaining 59.1 % through its 100 % ownership of the outstanding common stock of P10 Intermediate.

The third-party ownership interest represents a noncontrolling interest in P10 Intermediate, which we have a controlling interest in.

There are common features among all three series of preferred shares, including:

The right to convert each share into a common share of P10 Intermediate ( 1 :1 ratio).

The right to require P10 Intermediate to purchase all shares from the preferred shareholder after the 3 rd anniversary of the Five Points acquisition close date unless the Company meets the acquisition threshold (as defined in P10 Intermediate’s Operating Agreement), at which point the right will be extended to the 5 th anniversary.

The shares are redeemable at fair market value.

P10 Intermediate has the right to exchange, immediately prior to a qualified public offer (as defined in P10 Intermediate’s Operating Agreement), each preferred share into an ordinary share of the new public entity at the then effective and applicable conversion price.

Each preferred share accrues dividends at the rate of 1 % of the issue price per annum.

In the event of any liquidation, dissolution or winding up of P10 Intermediate, the preferred shareholders have legal rights after the debt holders, but before the notes payable to sellers and common equity holders.

Except for certain additional rights granted to the Series B preferred shareholder, each preferred shareholder has a number of votes equal to the number of shares they hold.

The voting rights are identical to the common shareholders.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The following is a summary of each individual series and any additional features they have:

P10 Intermediate issued to the Five Points sellers 6,700,000 shares of Series A redeemable convertible preferred shares at a price of $ 3.00 per share for an aggregate issuance price of $ 20.1 million.

These shares were a part of the purchase consideration in the acquisition of Five Points described in Note 3.

P10 Intermediate issued to Keystone Capital XXX, LLC (“Keystone”) 10,000,000 shares of Series B redeemable convertible preferred shares at a price of $ 3.00 per share for an aggregate issuance price of $ 30.0 million.

The shares were issued in exchange for cash.

The cash received was used as part of the cash consideration in the acquisition of Five Points described in Note 3.

In addition to the rights listed above, the Series B preferred shares also feature a call option that gives the shareholder the ability to purchase up to an additional 5,000,000 Series B preferred shares at an exercise price of $ 3 per share;

provided the option may only be used for funding the cash purchase price of an acquisition and any related fees.

The option may only be exercised with respect to a definitive agreement related to an acquisition and the option expires on the second anniversary of the Five Points acquisition close date.

On October 2, 2020, in connection with the acquisition of TrueBridge, Keystone exercised its option purchasing 1,333,333 shares of Series B redeemable convertible preferred shares at a price of $ 3.00 per share for an aggregate issuance price of $ 4.0 million.

On December 14, 2020, in connection with the acquisition of Enhanced, Keystone exercised its option purchasing 3,333,334 shares of Series B redeemable convertible preferred shares at a price of $ 3.00 per share for an aggregate issuance price of $ 10.0 million.

The Series B preferred shareholder is also granted additional protective rights with respect to certain matters.

P10 Intermediate issued to the holders of the TAB Payments 3,337,470 shares of Series C redeemable convertible preferred shares at a price of $ 3.00 per share for an aggregate issuance price of $ 10.0 million.

The shares were issued in a non-cash exchange for a portion of the TAB Payments held.

The gross value of the TAB payments received was $ 16.8 million.

Additionally, P10 Intermediate issued to certain key members of Five Points management 333,333 shares of Series C redeemable convertible preferred shares at a price of $ 3.00 per share for an aggregate issuance price of $ 1.0 million.

The shares were issued in exchange for cash.

P10 Intermediate issued to the TrueBridge sellers 28,590,910 shares of Series D redeemable convertible preferred shares at a price of $ 3.30 per share for an aggregate issuance price of $ 94.4 million.

These shares were a part of the purchase consideration in the acquisition of TrueBridge described in Note 3.

Additionally, on December 14, 2020, P10 Intermediate issued to certain TrueBridge employees 285,714 shares of Series D redeemable convertible preferred shares at a price of $ 3.50 per share for an aggregate issuance price of $ 1.0 million.

The shares were issued in exchange for cash.

The Series D preferred shareholders are also granted additional protective rights with respect to certain matters.

The preferred shares on an as-if-converted basis represented approximately 40.9 % of the aggregate issued and outstanding share capital of P10 Intermediate with P10 owning the remaining 59.1 % through its 100 % ownership of the outstanding common stock of P10 Intermediate.

The third-party ownership interest represented a noncontrolling interest in P10 Intermediate, which the Company had a controlling interest in.

Dividends on the preferred shares were recognized as preferred dividends attributable to redeemable non-controlling interest in our Consolidated Statements of Operations.

In connection with the IPO on October 20, 2021, all preferred shares were contractually converted to Class B common shares.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

P10 Intermediate issued to the Enhanced sellers 7,686,925 shares of Series E redeemable convertible preferred shares at a price of $ 3.50 per share for an aggregate issuance price of $ 26.9 million.

These shares were a part of the purchase consideration in the acquisition of Enhanced described in Note 3.

Additionally, P10 Intermediate issued to certain key members of Enhanced management 100,714 shares of Series E redeemable convertible preferred shares at a price of $ 3.50 per share for an aggregate issuance price of $ 0.4 million.

The shares were issued in exchange for cash.

Since the preferred shares are redeemable at the option of the holder and the redemption is not solely in the control of the Company, the preferred shares are accounted for as a redeemable noncontrolling interest and classified within temporary equity in the Company’s Consolidated Balance Sheets.

The redeemable noncontrolling interest was initially measured at the fair value of the consideration paid.

Redemption was not deemed probable by the Company at September 30, 2021 and therefore no subsequent measurement or adjustment was deemed necessary.

Dividends on the preferred shares are recognized as preferred dividends attributable to redeemable non-controlling interest in our Consolidated Statements of Operations.

The table below presents the reconciliation of changes in redeemable noncontrolling interests:

Balance at December 31, 2020

Issuance of subsidiary preferred stock

Distribution of preferred dividends attributable to

redeemable non-controlling interest

Preferred dividends attributable to redeemable

noncontrolling interest

Balance at September 30, 2021

Cumulative dividends in arrears on the preferred stock were $ 1.5 million and $ 0.7 million as of September 30, 2021 and December 31, 2020 , respectively.

Subsequent Events

The Company has evaluated subsequent events through November 22, 2021, the date on which these financial statements were available to be issued.

There were no significant subsequent events other than the matters described below.

Reorganization

On October 20, 2021, in connection with the IPO, the Company completed a reorganization and restructure.

P10 adopted and filed an amended and restated certificate of incorporation to, among other things, provide for Class A common stock and Class B common stock.

All of the existing equity of P10 Holdings, Inc.

and its consolidated subsidiaries, including the convertible preferred units of P10 Intermediate, were converted into Class B common stock of P10 on a 1-for-1 basis, while P10 Holdings, Inc.

became a wholly owned subsidiary of P10.

Conversion of Redeemable Noncontrolling Interest

On October 20, 2021, in connection with the IPO and the reorganization, the redeemable noncontrolling interest was converted into Class B common stock of P10.

The conversion occurred immediately prior to the reorganization.

Initial Public Offering

On October 20, 2021, P10 announced the pricing of its initial public offering of 20,000,000 shares of its Class A common stock at a price to the public of $ 12.00 per share.

Of the offered shares, 11,500,000 shares of Class A common stock were being sold by P10 and 8,500,000 shares of Class B common stock were being sold by certain stockholders of P10.

Shares that were sold

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

by the stockholders were converted to Class A shares upon sale.

Trading began on the New York Stock Exchange on October 21, 2021, under the ticker symbol “PX”.

The offering closed on October 25, 2021 .

The proceeds to the Company from the IPO, before expenses, were approximately $ 138.0 million.

Proceeds were primarily used to repay debt obligations of the Company.

P10 also underwent a reverse stock split of P10's common stock on a 0.7-for-1 basis pursuant to which every outstanding share of common stock decreased to 0.7 shares.

The number of shares have been retrospectively adjusted within these consolidated financial statements.

The Company has reviewed the state and federal income tax impacts of the IPO transaction and related restructuring.

We have determined that these transactions do not result in a material change to our 2021 effective tax rate or our ability to fully utilize existing net operating losses that existed as of the date of the IPO.

As part of the reorganization, P10 assumed the employee benefit plan, incentive compensation plan, and other similar plans.

Additionally, the shares authorized under the Plan were increased from 1,000,000 to 3,000,000 .

Repayment of Debt Obligations

On October 28, 2021, the Company made a payment of $ 1.9 million for the 2017 Seller Notes, $ 0.9 million for the 2018 Seller Notes, and $ 9.6 million for the TAB payments.

On October 29, 2021, the Company made a payment for its Facility with HPS of $ 88.6 million, which included an optional repayment of $ 86.8 million, required prepayment of $ 1.2 million, and an interest payment of $ 0.6 million.

Option Exercise

On November 18, 2021, pursuant to the underwriting agreement, the underwriters elected to fully exercise their option to purchase an additional 3,000,000 shares of Class A common stock for $ 12.00 per share, less underwriting discounts and commissions.

These shares are being sold by certain stockholders of P10 and P10 will no t receive any proceeds from the sale of these shares of Class A common stock.

As further described in Note 16, on April 4, 2022, the Company made the cash payment to settle its liability with the grantee for their stock options.

The Board of Directors of the Company has declared a quarterly cash dividend of $ 0.03 per share of Class A and Class B common stock, payable on June 20, 2022, to the holders of record as of the close of business on May 31, 2022.

The Company announced that its Board of Directors has authorized a stock buyback program pursuant to which P10 may purchase up to $ 20 million of P10’s outstanding shares of Class A Common Stock, par value $ 0.001 per share.

P10 intends to fund the program through available cash balances and future operating cash flows.

These shares may be repurchased from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades, in accordance with Rule 10b5-1 trading plans and/or through other legally permissible means.

The timing and amount of any repurchases pursuant to the program will depend on various factors including, the market price of its Class A Common Stock, trading volume, ongoing assessment of P10’s working capital needs, general market conditions, and other factors.

The buyback program does not obligate P10 to acquire any particular amount of common stock and it may be terminated or amended by the Board of Directors at any time.

In accordance with ASC 855, Subsequent Events, the Company evaluated all material events or transactions that occurred after December 31, 2021, the Consolidated Balance Sheet date, through the date the Consolidated Financial Statements were issued, and determined there have been no additional events or transactions that would materially impact the Consolidated Financial Statements.

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-Q

Item 1. Financial Statements