What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 209 added, 161 removed, 753 unchanged (33% of the section changed)

2 unchanged sentences

(in thousands, except share amounts)

September 30,

Cash and cash equivalents

12 unchanged sentences

Accrued expenses

Accrued compensation and benefits

Due to related parties

9 unchanged sentences

510,000,000 shares authorized;

37,307,745 issued and 37,307,745 outstanding as of June 30, 2022, and 34,464,920 issued and 34,464,920 outstanding as of December 31, 2021, respectively

41,390,836 issued and 41,102,331 outstanding as of September 30, 2022, and 34,464,920 issued and 34,464,920 outstanding as of December 31, 2021, respectively

Class B common stock, $ 0.001 par value;

180,000,000 shares authorized;

79,885,002 shares issued and 79,761,550 shares outstanding as of June 30, 2022, and 82,851,279 shares issued and 82,727,827 shares outstanding as of December 31, 2021, respectively

76,266,513 shares issued and 76,143,061 shares outstanding as of September 30, 2022, and 82,851,279 shares issued and 82,727,827 shares outstanding as of December 31, 2021, respectively

Treasury stock

8 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Management and advisory fees

41 unchanged sentences

Balance at June 30, 2021

Stock-based compensation

Net income attributable to P10

Balance at September 30, 2021

Common Stock - Class A

16 unchanged sentences

Balance at June 30, 2022

Stock-based compensation

Net income attributable to P10

Exchange of Class B common stock for Class A common stock

Issuance of restricted stock awards

Issuance of restricted stock units

Exercise of stock options

Stock repurchase

Dividends declared

Dividends paid

Balance at September 30, 2022

The Notes to Consolidated Financial Statements

2 unchanged sentences

(in thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

Stock-based compensation

Non-cash incentive compensation

Depreciation expense

12 unchanged sentences

Accrued expenses

Accrued compensation and benefits

Due to related parties

4 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions, net of cash acquired

Purchase of intangible assets

Note receivable

3 unchanged sentences

Software capitalization

Post-closing payments for Enhanced working capital

Post-closing payments related to acquisitions

Purchases of property and equipment

3 unchanged sentences

Repayments on debt obligations

Repurchase of Class A common stock for employee tax withholding

Payments to settle exercise of employee stock options

Repurchase of Class A common stock

Payment of preferred stock dividends

3 unchanged sentences

Debt issuance costs

Net cash used in financing activities

Net cash (used in) provided by financing activities

Net change in cash, cash equivalents and restricted cash

5 unchanged sentences

(in thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

4 unchanged sentences

Additions to lease liabilities

Additions to capex for leasehold improvements

Additions to property and equipment

Dividends declared

65 unchanged sentences

All intercompany transactions and balances have been eliminated upon consolidation.

The results for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.

The results for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.

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

31 unchanged sentences

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

As of June 30, 2022, and December 31, 2021, cash equivalents include money market funds of $ 7.5 million and $ 10.7 million, respectively, which approximates fair value.

As of September 30, 2022, and December 31, 2021, cash equivalents include money market funds of $ 2.1 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 June 30, 2022 and December 31, 2021 was primarily cash that is restricted due to certain deposits being held by the Company for its customers.

Restricted cash as of September 30, 2022 and December 31, 2021 was primarily cash that is restricted due to certain deposits being held by the Company for its 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 June 30, 2022 and December 31, 2021.

accordingly, no allowance for doubtful accounts has been established as of September 30, 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 reimbursable expenses.

Additionally, fees owed to the Company for the advisory agreement entered into upon the closing of the acquisitions of ECG and ECP ("Advisory Agreement") where ECG provides advisory services to Enhanced PC are reflected in due from related parties on the Consolidated Balance Sheets.

Additionally, fees owed to the Company for the advisory agreement entered into upon the closing of the acquisitions of ECG and ECP ("Advisory Agreement") where ECG provides advisory services to Enhanced Permanent Capital, LLC ("Enhanced PC") are reflected in due from related parties on the Consolidated Balance Sheets.

These amounts are expected to be fully collectible.

Note Receivable

Note receivable is equal to contractual amounts owed from a signed, secured promissory note with Bonaccord.

Note receivable is mostly related to contractual amounts owed from a signed, secured promissory note with BCP Partners Holdings, LP ("BCP").

In addition to contractual amounts, borrowers are obligated to pay interest on outstanding amounts.

The Company considers the note receivable to be fully collectible;

accordingly, no allowance for doubtful accounts has been established as of June 30, 2022 or December 31, 2021 .

accordingly, no allowance for doubtful accounts has been established as of September 30, 2022 or December 31, 2021 .

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

41 unchanged sentences

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 June 30, 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 June 30, 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.

As of September 30, 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 September 30, 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.

10 unchanged sentences

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 June 30, 2022 and December 31, 2021, contingent consideration recorded relates to the acquisitions of Hark and Bonaccord on the Consolidated Balance Sheets.

As of September 30, 2022 and December 31, 2021, contingent consideration recorded relates to the acquisitions of Hark and Bonaccord on the Consolidated Balance Sheets.

Debt Issuance Costs

7 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 June 30, 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:

As of September 30, 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.

69 unchanged sentences

The Company includes the results of operations of acquired businesses beginning on the respective acquisition dates.

In accordance with ASC 805, the Company allocates the purchase price of an acquired business to its identifiable assets and liabilities based on the estimated fair values using the acquisition method.

The excess of the purchase price over the amount

In accordance with ASC 805, the Company allocates the purchase price of an acquired business to its identifiable assets and

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

allocated to the assets and liabilities, if any, is recorded as goodwill.

liabilities based on the estimated fair values using the acquisition method.

The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill.

The excess value of the net identifiable assets and liabilities acquired over the purchase price of an acquired business is recorded as a bargain purchase gain.

40 unchanged sentences

Total purchase consideration

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").

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

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

5 unchanged sentences

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

As of June 30, 2022 , the estimated fair value of the remaining contingent consideration totaled $ 19.1 million, with the increase since acquisition driven primarily by changes in the Company's borrowing rate due to the debt refinancing.

As of September 30, 2022, the estimated fair value of the remaining contingent consideration totaled $ 19.3 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 June 30, 2022, certain performance metrics have been met however, no units have been allocated to specific employees.

Therefore, no expense has been recorded in the Consolidated Statements of Operations.

In connection with the acquisition, the Company incurred a total of $ 0.7 million of acquisition-related expenses.

Of the total acquisition-related expenses, $ 0.2 million and $ 0.2 million were recorded during the three and six months ended June 30, 2022 and $ 0 and $ 0 for the three and six months ended June 30, 2021, respectively.

Of the total acquisition-rel ated expenses, $ 0 and $ 0.2 million wer e recorded during the three and nine months ended September 30, 2022, respectively, and $ 0.3 million and $ 0.3 million for t he three and nine months ended September 30, 2021, respectively.

These costs are included in professional fees on the Consolidated Statements 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.

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

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:

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

Prepaid expenses and other assets

6 unchanged sentences

Net assets acquired

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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

Value of management and advisory contracts

9 unchanged sentences

Hark is engaged in the business of making loans to portfolio companies that are owned or controlled by financial sponsors, such as private equity funds or venture capital funds, and which do not meet traditional direct lending underwriting criteria, but where the repayment of the loan by the portfolio company is guaranteed by its financial sponsor.

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

T he 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 June 30, 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

8 unchanged sentences

The technology will be amortized on a straight-line basis.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Pro-forma Financial Information

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 Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Net income attributable to P10

3 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Management and advisory fees

6 unchanged sentences

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

Within 60 days following the final closing of the next fund, Bonaccord Fund II ("Fund II"), the third-party has the opportunity to acquire, at the price at the time of the original acquisition, equity interests in Bonaccord based on the amount of

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

commitment made.

For each $ 5.0 million, up to a maximum of $ 250.0 million in irrevocable capital commitments to Fund II, the third-party can acquire 10 basis points up to a maximum of 5 % equity.

The maximum commitment requirement has been met as of June 30, 2022 with the first close of Fund II.

In addition, net management fee earnings would increase by the same percentage, retroactive to the date of the first close in Fund II.

The maximum commitment requirement has been met as of September 30, 2022.

The Company believes its probable that the third-party will exercise the option to acquire equity in Bonaccord and has begun to accrue an additional 5 % of net management fee earnings.

If executed, the purchase price shall be reduced by the amount of management fee distributions which the third-party would have been paid as of the initial closing of Fund II.

Similar terms apply for Fund III with the exception that the third-party can acquire 9.8 basis points for every $ 5.0 million committed up to 4.9 %.

This commitment has not yet been met as of June 30, 2022 as Fund III has not yet had its final close.

This commitment has not yet been met as of September 30, 2022 as Fund III has not yet had its final close.

If commitment conditions to funds subsequent to Funds II and III are not satisfied, then within 60 days of the final closing of such subsequent fund giving rise to the condition not being satisfied, the Company may elect to repurchase the equity granted to the third-party.

The repurchase shall be at the fair market value of such equity at that point in time.

For the three and six months ended June 30, 2022, the strategic alliance expense reported was $ 0.2 million and $ 0.3 million, respectively.

In the three and six months ended June 30, 2021, there was no strategic alliance expense.

The repurchase shall be at the fair market value of such equi ty at that point in time.

For the three and nine months ended September 30, 2022, the strategic alliance expense reported was $ 0.1 million and $ 0.4 million, res pectively.

In the three and nine months ended September 30, 2021, there was no strategic alliance expense.

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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 certain employees to be used to pay general partner commitments to certain funds managed by Bonaccord.

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

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 to lend funds to certain employees to be used to pay general partner commitments to certain funds managed by Bonaccord.

This agreement provides for a note to BCP for $ 5.0 million 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.

3 unchanged sentences

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

As of June 30, 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 $ 0.1 million for the three and six months ended June 30, 2022.

The Company recognized no interest income for the three and six months ended June 30, 2021, as the note did not yet exist.

As of September 30, 2022 and December 31, 2021, the outstanding balance was $ 4.0 million and $ 2.6 million, respectively.

The Company recognized interest income of $ 0.1 million and $ 0.1 million for the three and nine months ended September 30, 2022, respectively.

The Company recognized no interest income for the three and nine months ended September 30, 2021.

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

4 unchanged sentences

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 $ 400.6 million and $ 413.2 million as of June 30, 2022 and December 31, 2021 , respectively.

The liabilities of the consolidated VIEs totaled $ 48.5 million and $ 53.6 million as of June 30, 2022 and December 31, 2021, respectively.

The assets of the consolidated VIEs totale d $ 393.7 million and $ 413.2 million as of September 30, 2022 and December 31, 2021, respectively.

The liabilities of the consolidated VIEs totale d $ 51.6 million and $ 53.6 million as of September 30, 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.

4 unchanged sentences

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 June 30, 2022 , investment in unconsolidated subsidiaries totaled $ 2.3 million, of which $ 2.1 million related to ECG’s asset management businesses and $ 0.2 million related to ECG’s tax credit finance 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.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

As of September 30, 2022, investment in unconsolidated subsidiaries total ed $ 2.1 million, of which $ 1.9 million r elated to ECG’s asset management businesses an d $ 0.2 million r elated to ECG’s tax credit finance businesses.

As of December 31, 2021, investment in unconsolidated subsidiaries t otaled $ 1.8 million, of which $ 1.6 million related to ECG’s asset management businesses and $ 0.2 million relate d to ECG’s tax credit finance businesses.

Asset Management

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 million and $ 1.1 million for the three and six months ended June 30, 2022 and $ 0.3 million and $ 0.5 million for the three and six months ended June 30, 2021 , respectively.

For the three and six months ended June 30, 2022, ECG made $ 0 and $ 0 capital contributions and received distributions of $ 0.6 million and $ 0.7 million, respectively.

ECG recorded its share of income in the amount of $ 0.2 million and $ 1.3 million for the thr ee and nine months ended September 30, 202 2, respectively, and $ 0.3 million and $ 0.8 million f or the three and nine months ended September 30, 2021, respectively.

For the three and nine months ended September 30, 2022, ECG made $ 0 and $ 0 capital contributions and received distributions of $ 0.3 million and $ 1.0 million, resp ectively.

Tax Credit Finance

ECG provides a wide range of tax credit transactions and consulting services through various entities which are wholly owned subsidiaries of Enhanced Tax Credit Finance, LLC (“ETCF”), which is a wholly owned subsidiary of ECG.

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 three and six months ended June 30, 2022, ECG made $ 0 and $ 0 of capital contributions and received distributions of $ 0 and $ 0 , respectively.

Some of these subsidiaries own nominal interests, typically un der 1.0%, in various VIEs and record these investments under the

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

measurement alternative described in Note 2 above.

For the three and nine months ended September 30, 2022, ECG made $ 0 and $ 0 of capital contributions and received distributions of $ 0 and $ 0 , respectively.

Property and Equipment

Property and equipment consist of the following:

As of June 30,

As of September 30,

As of December 31,

5 unchanged sentences

Goodwill and Intangibles

Changes in goodwill for the six months ended June 30, 2022 is as follows:

Changes in goodwill for the nine months ended September 30, 2022 is as follows:

Balance at December 31, 2021

1 unchanged sentence

Increase from acquisitions

Balance at June 30, 2022

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Balance at September 30, 2022

Intangibles consists of the following:

As of June 30, 2022

As of September 30, 2022

Gross Carrying

5 unchanged sentences

Total intangible assets

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

As of December 31, 2021

11 unchanged sentences

Total amortization

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Fair Value Measurements

1 unchanged sentence

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

As of June 30, 2022

As of September 30, 2022

Contingent consideration obligation

3 unchanged sentences

Total liabilities

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the periods ended June 30, 2022 and December 31, 2021.

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the periods ended September 30, 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 Six Months Ended June 30,

For the Year Ended December 31,

For the Nine Months Ended September 30,

Balance, beginning of year:

6 unchanged sentences

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Debt Obligations

Debt obligations consists of the following:

September 30,

Gross revolving credit facility state tax credits

8 unchanged sentences

The table below summarizes the terms of the debt obligations.

June 30, 2022

September 30, 2022

Maturity Date

9 unchanged sentences

Revolving Credit Facility State Tax Credits

Enhanced State Tax Credit Fund III, LLC, a subsidiary of ECG, had 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.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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

The facility was not renewed upon maturity.

There was no outstanding balance nor any interest incurred as of June 30, 2022 and December 31, 2021 respectively.

There was no outstanding balance nor any interest incurred as of December 31, 2021.

Notes Payable to Sellers

7 unchanged sentences

The TAB Payments were set to mature on April 15, 2023 .

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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.

2 unchanged sentences

Non-cash interest expense was recorded on a periodic basis for the Notes payable to sellers.

During the three and six months ended June 30, 2022, we recorded $ 0 and $ 0 , respectively, and for the three and six months ended June 30, 2021 , we recorded $ 0.1 million and $ 0.4 million, respectively, in interest expense related to the TAB Payments.

During the three and nine months ended September 30, 2022, we recorded $ 0 and $ 0 , respectively, and for the three and nine months ended September 30, 2021 , we recorded $ 0.3 million and $ 0.7 million, resp ectively, in interest expense related to the TAB Payments.

Credit and Guaranty Facility

6 unchanged sentences

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.

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.

On October 28, 2021, a payment of $ 88.6 million was made on the Facility, 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 under the Facility 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.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Revolving Credit Facility and Term Loan

11 unchanged sentences

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 June 30, 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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

outstanding on the revolving credit facility.

As of June 30, 2022, the balance drawn on the revolving credit facility is $ 65.9 million and on the term loan, the balance is $ 125.0 million.

As of September 30, 2022, P10 was in compliance with its financial covenants required under the facility.

As of September 30, 2022, the balance drawn on the revolving credit facility is $ 49.9 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 and six months ended June 30, 2022 $ 1.3 million and $ 2.5 million of interest expense was incurred, respectively.

For the three and six months ended June 30, 2021, $ 0 and $ 0 of interest expense was incurred, respectively.

Future principal maturities of debt as of June 30, 2022 are as follows:

For the three and nine months ended September 30, 2022, $ 2.1 million and $ 4.6 million of interest expense was incurred, respectively.

In September 2022, the Company exercised the accordion feature on the Credit Agreement.

The principal was not drawn on the accordion until the fourth quarter of 2022, however, the Company incurred $ 1.4 million of debt issuance costs in September associated with the exercise.

Future principal maturities of debt as of September 30, 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 June 30, 2022 and December 31, 2021 were $ 0 and $ 0 , respectively.

Unamortized debt issuance costs for the Revolving Credit Facility State Tax Credits as of June 30, 2022 and December 31, 2021 were $ 0 and $ 8 thousand, respectively.

Unamortized debt issuance costs for the Revolver Facility and Term Loan as of June 30, 2022 and December 31, 2021 were $ 3.0 million and $ 3.4 million, respectively.

Unamortized debt issuance costs for the Credit and Guaranty Facility as of September 30, 2022 and December 31, 2021 were $ 0 and $ 0 , respectively.

Unamortized debt issuance costs for the Revolving Credit Facility State Tax Credits as of September 30, 2022 and December 31, 2021 were $ 0 and $ 8 thousand, respectively.

Unamortized debt issuance costs for the Revolver Facility and Term Loan as of September 30, 2022 and December 31, 2021 were $ 4.1 million and $ 3.4 million, respectively.

This is included in debt obligations on the consolidated balance sheets.

Amortization expense related to debt issuance costs totaled $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2022 and $ 0.7 million and $ 1.4 million for the three and six months ended June 30, 2021, respectively, and are included within interest expense, net on the accompanying Consolidated Statements of Operations.

During the six months ended June 30, 2022 and June 30, 2021 , we recorded $ 0.1 million and $ 0.1 million in debt issuance costs, respectively, which is included in debt obligations on the consolidated balance sheets.

Amortization expense related to debt issuance costs totaled $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2022, respectively, and $ 0.7 million and $ 2.1 million for the three and nine months ended September 30, 2021, respectively, and are included within interest expense, net on the accompanying Consolidated Statements of Operations.

During the nine months ended September 30, 2022 and September 30, 2021 , we recorded $ 1.4 million and $ 0.9 million in debt issuance costs, respectively, which is included in debt obligations on the consolidated balance sheets.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Related Party Transactions

1 unchanged sentence

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

P10 has paid $ 0.1 million and $ 0.1 million in rent to 210 Capital, LLC for the six months ended June 30, 2022 and June 30, 2021, respectively.

P10 has paid $ 0.2 million and $ 0.2 million in rent to 210 Capital, LLC for the nine months ended September 30, 2022 and September 30, 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 $ 0.5 million for the six months ended June 30, 2022 and June 30, 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 a result of that agreement, P10 Intermediate paid $ 0.1 million and $ 0.8 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.

This management fee was terminated effective October 20, 2021 when the Company's redeemable noncontrolling interest was converted to shares of Class B common stock 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 June 30, 2022, the total accounts receivable from the Funds totaled $ 5.2 million , of which $ 3.0 million related to reimbursable expenses and $ 2.2 million related to fees earned but not yet received.

As of September 30, 2022, the total accounts receivable from the Funds totaled $ 6.4 million , of which $ 4.2 million related to reimbursable expenses and $ 2.2 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.

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The management fees described here are included in accounts receivable on the Consolidated Balance Sheet and the reimbursable expenses are included in due from related parties on the Consolidated Balance Sheets.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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

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This agreement is subject to customary termination provisions.

For the three and six months ended June 30, 2022, advisory fees earned or recognized under this agreement were $ 5.5 million and $ 11.1 million, respectively, and are reported in management and advisory fees on the Consolidated Statement of Operations.

For the three and six months ended June 30, 2021, advisory fees earned or recognized under this agreement were $ 4.75 million and $ 9.5 million, res pectively.

As of June 30, 2022 and December 31, 2021, the receivable balance was $ 18.1 million and $ 9.5 million, respectively, and is included in due from related parties on the Consolidated Balance Sheets.

For the three and nine months ended September 30, 2022, advisory fees earned or recognized under this agreement were $ 5.5 million and $ 16.6 million, respectively, and are reported in management and advisory fees on the Consolidated Statement of Operations.

For the three and nine months ended September 30, 2021, advisory fees earned or recognized under this agreement were $ 4.8 million and $ 14.3 million, respectively.

As of September 30, 2022 and December 31, 2021, the receivable balance was $ 23.0 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.

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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 $ 2.4 million and $ 4.6 million for the three and six months ended June 30, 2022 and $ 2.4 million and $ 5.2 million for the three and six months ended June 30, 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.

The Company recognized $ 3.3 million and $ 7.9 million for the three and nine months ended September 30, 2022, respectively, and $ 0.9 million and $ 6.1 million for the three and nine months ended September 30, 2021, respectively, related to this agreement within compensation and benefits on our Consolidated Statements of Operations.

On September 10, 2021, ECG entered into a strategic partnership with Crossroads Impact Corp.

("Crossroads"), 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 $ 0.6 million and $ 1.0 million for the three and six months ended June 30, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

No revenues were recognized for the three and six months ended June 30, 2021.

The Company recognized $ 1.2 million and $ 2.2 million for the three and nine months ended September 30, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

No revenues were recognized for the three and nine months ended September 30, 2021.

On July 6, 2022, Crossroads entered into a Common Stock Purchase Agreement (the “Commenda Purchase Agreement”) with P10 Commenda Impact Fund Onshore, LLC and P10 Commenda Impact Fund Offshore, LLC (together, the “Commenda Funds”).

Pursuant to the terms of the Commenda Purchase Agreement, on July 6, 2022, Crossroads issued 4,646,840 shares of Crossroads common stock to the Commenda Funds for $ 10.76 per shares, for an aggregate amount of approximately $ 50

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Pursuant to the terms of the Commenda Purchase Agreement, on August 1, 2022, Crossroads closed on the sale of an additional 1,394,052 shares of Crossroads common stock to the Commenda Funds at $ 10.76 per share.

P10 Advisors, LLC, an affiliate of the Company, is the investment advisor to the Commenda Funds.

Robert Alpert and C.

Clark Webb are directors of Crossroads.

The Company recognized $ 0.1 million and $ 0.1 million for the three and nine months ended September 30, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

No revenues were recognized for the three and nine months ended September 30, 2021.

On July 11, 2022, Crossroads entered into an Amended and Restated Advisory Agreement (the “Amended Advisory Agreement”) with ECG.

The Amended Advisory Agreement provides for ECG to receive a services fee of 1.5 % per year of the capital deployed by Crossroads under the Amended Advisory Agreement ( 0.375 % quarterly), and an incentive fee of 15 % over a 7 % hurdle rate.

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.

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These lease agreements provide for various renewal options.

Rent expense for the various leased office space and equipment was approximately $ 0.8 million and $ 1.6 million for the three and six months ended June 30, 2022 and $ 0.5 million and $ 1.1 million for the three and six months ended June 30, 2021, respectively.

The following table presents information regarding the Company’s operating leases as of June 30, 2022:

Rent expense for the various leased office space and equipment was approximate ly $ 0.8 million and $ 2.4 million f or the three and nine months ended September 30, 2022, and $ 0.5 million and $ 1.6 million f or the three and nine months ended September 30, 2021, respectively.

The following table presents information regarding the Company’s operating leases as of September 30, 2022:

Operating lease right-of-use assets

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Weighted-average discount rate

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The future contractual lease payments as of June 30, 2022 are as follows:

The future contractual lease payments as of September 30, 2022 are as follows:

Remainder of 2022

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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.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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

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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 six months ended June 30, 2022 was 25.94 %.

Based on these methodologies, the Company’s effective income tax rate for the nine months ended September 30, 2022 was 25.90 %.

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

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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 June 30, 2022, the Company has recorded a $ 12.8 million valuation allowance against deferred tax assets, primarily related to a note impairment.

There was no change to the valuation allowance during the six months ended June 30, 2022.

As of September 30, 2022, the Company has recorded a $ 12.8 million valuation allowance against deferred tax assets, primarily related to a note impairment.

There was no change to the valuation allowance during the nine months ended September 30, 2022.

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.

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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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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

Terms of all future awards will be granted under the Plan, and no additional awards will be granted under the 2018 Plan.

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The 2018 Plan provided for an initial 6,300,000 shares (adjusted for the reverse stock split).

The Plan provided for the issuance of 3,000,000 shares available for grant, in addition to those approved in the 2018 Incentive Plan for a total of 9,300,000 shares.

On June 17, 2022 at the Annual Meeting of Stockholders, the shareholders authorized an additional 5,000,000 of shares from the Plan creating a total of 14,300,000 shares.

The Plan provided for the issuance of 3,000,000 shares available for grant, in addition to those approved in the 2018 Plan for a total of 9,300,000 shares.

On June 17, 2022, at the Annual Meeting of Stockholders, the shareholders authorized an additional 5,000,000 of shares from the Plan creating a total of 14,300,000 shares available for grant under the Plan and the 2018 Plan.

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 was paid on June 15, 2022.

A summary of stock option activity for the six months ended June 30, 2022 is as follows:

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

A summary of stock option activity for the nine months ended September 30, 2022 is as follows:

Weighted Average

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Expired/Forfeited

Outstanding as of June 30, 2022

Exercisable as of June 30, 2022

The weighted average assumptions used in calculating the fair value of stock options granted during the six months ended June 30, 2022 and June 30, 2021 were as follows:

For the Six Months Ended June 30,

Outstanding as of September 30, 2022

Exercisable as of September 30, 2022

The weighted average assumptions used in calculating the fair value of stock options granted during the nine months ended September 30, 2022 and September 30, 2021 were as follows:

For the Nine Months Ended September 30,

Expected life

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Outstanding as of December 31, 2021

Outstanding as of June 30, 2022

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Outstanding as of September 30, 2022

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

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

At the time of the Bonaccord acquisition, the Company entered into a Notice of Restricted Stock Units with certain employees of Bonaccord for grants of Restricted Stock Units ("Bonaccord Units") to be allocated 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.

On August 16, 2022, allocations were finalized and the Company and employees agreed to a value of $ 17.5 million worth of units that would vest at each future achievement of performance metrics.

As of September 30, 2022, certain performance metrics have been met and 294,820 units have been allocated to specific employees.

The Company deemed it probable that at least some of the remaining units would vest.

Unvested units are remeasured quarterly against performance metrics as a liability on the Consolidated Balance Sheets and expense is recognized over the expected vesting period.

An expense of $ 3.9 million has been recorded for the three and nine

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

months ended September 30, 2022 on the Consolidated Statements of Operations.

The unrecognized expense associated with the Bonaccord Units was $ 8.1 million as of September 30, 2022.

At the time of the Hark acquisition, the Company entered into a Notice of Restricted Stock Units with an employee, which grants 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 September 30, 2022, no Hark Units have vested but the Company believes it is probable that the RSUs will be earned.

An expense of $ 0.6 million has been recorded for the three and nine months ended September 30, 2022 on the Consolidated Statements of Operations.

Unvested units are recognized ratably as a liability on the Consolidated Balance Sheets and expense is recognized over the expected vesting period.

The unrecognized expense associated with the Hark Units was $ 0.9 million as of September 30, 2022.

The below table does not include Bonaccord or Hark Units that were issued outside of the Plan, that have not vested and are recorded as a liability.

Weighted-Average Grant

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Outstanding as of December 31, 2021

Outstanding as of June 30, 2022

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 three and six months ended June 30, 2022 was $ 2.7 million and $ 4.2 million and for the three and six months ended June 30, 2021 was $ 0.6 million and $ 1.0 million, respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of June 30, 2022 was $ 11.5 million and is expected to be recognized over a weighted average period of 2.8 years.

Outstanding as of September 30, 2022

The stock-based compensation expense for the three and nine months ended September 30, 2022 was $ 7.3 million and $ 11.5 million a nd for the three and nine months ended September 30, 2021 was $ 0.5 million and $ 1.5 million, r espectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of September 30, 2022 wa s $ 6.4 million a nd is expected to be recognized over a weighted average period of 2.6 years .

Any future forfeitures will impact this amount.

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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 and six months ended June 30, 2021 as the preferred shares of P10 Intermediate converted to Class B common shares effective with the IPO.

This is only applicable for the three and nine months ended September 30, 2021 as the preferred shares of P10 Intermediate converted to shares of Class B common stock effective with the IPO.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Numerator for earnings per share assuming

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Earnings per share—diluted

The computations of diluted earnings per share excluded options to purchase 1.4 million and 1.0 million shares of common stock for the three and six months ended June 30, 2022 and 2.9 million and 2.9 million shares for the three and six months ended June 30, 2021 , respectively, because the options were anti-dilutive.

The computations of diluted earnings per share excluded options to purcha se 1.0 million and 1.0 million s hares of common stock for the three and nine months ended September 30, 2022, respectively, a nd 0 and 2.9 million shares for the three and nine months ended September 30, 2021 , respectively, because the options were anti-dilutive.

Redeemable Noncontrolling Interest

In connection with the closing of the acquisition of Five Points on April 1, 2020, the Company formed a new subsidiary, P10 Intermediate, which was the acquiring entity of Five Points.

On April 1, 2020, P10 Intermediate issued three series (A, B

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

and C) of redeemable convertible preferred shares.

On April 1, 2020, P10 Intermediate issued three series (A, B and C) of redeemable convertible preferred shares.

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.

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Subsequent Events

On July 27, 2022, the Company paid down $ 12.0 million of the principal balance outstanding on the Revolver Facility reducing the outstanding balance from $ 65.9 million to $ 53.9 million.

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 September 20, 2022, to the holders of record as of the close of business on August 29, 2022.

In accordance with ASC 855, Subsequent Events, the Company evaluated all material events or transactions that occurred after June 30, 2022, 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.

On October 13, 2022, the Company completed the acquisition of all of the issued and outstanding membership interests of Westech Investment Advisors LLC ("WTI") for a purchase price consisting of $ 97.0 million in cash and earnout payments of up to an additional $ 70.0 million of cash and common stock and an aggregate of 3,916,666 membership units of P10 Intermediate which can be exchanged on a one-for-one basis into shares of P10 common stock, subject to certain conditions pursuant to the Exchange Agreement entered into on August 25, 2022.

The Company is in the process of completing its accounting for the transaction.

In connection with the acquisition of WTI, the Company granted 3,595,000 options under the 2021 Incentive Plan.

The options vest over five years and expire ten years from the grant date.

The Company drew on the accordion feature of the Credit Agreement in order to fund the cash portion of the purchase price of the WTI acquisition.

The $ 125.0 million accordion was exercised as $ 87.5 million of term loan and $ 37.5 million of revolver.

We drew $ 87.5 million of the term loan and $ 6.0 million of the revolver in cash to complete the WTI acquisition.

The Board of Directors of the Company has declared a quarterly dividend of $ 0.03 per share of Class A and Class B common stock, payable on December 20, 2022, to the holders of record as of the close of business on November 30, 2022.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

In accordance with ASC 855, Subsequent Events, the Company evaluated all material events or transactions that occurred after September 30, 2022, 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