What changed in this filing

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Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 349 added, 371 removed, 591 unchanged (55% of the section changed)

2 unchanged sentences

(in thousands, except share amounts)

September 30,

Cash and cash equivalents

7 unchanged sentences

Right-of-use assets

Contingent payments to customers

Deferred tax assets, net

7 unchanged sentences

Contingent consideration

Accrued contingent liabilities

Deferred revenues

2 unchanged sentences

Total liabilities

COMMITMENTS AND CONTINGENCIES (NOTE 14)

STOCKHOLDERS' EQUITY:

1 unchanged sentence

510,000,000 shares authorized;

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

44,026,736 issued and 43,088,962 outstanding as of March 31, 2023, and 43,303,040 issued and 42,365,266 outstanding as of December 31, 2022, respectively

Class B common stock, $ 0.001 par value;

180,000,000 shares authorized;

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

72,955,140 shares issued and 72,831,689 shares outstanding as of March 31, 2023, and 73,131,826 shares issued and 73,008,374 shares outstanding as of December 31, 2022, respectively

Treasury stock

1 unchanged sentence

Accumulated deficit

Noncontrolling interest

Total stockholders' equity

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)

(Unaudited, in thousands except per share amounts)

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Management and advisory fees

11 unchanged sentences

OTHER (EXPENSE)/INCOME

Interest expense implied on notes payable to sellers

Interest expense, net

Total other (expense)

Net income before income taxes

Income tax expense

preferred dividends attributable to redeemable

noncontrolling interest

Net (loss)/income before income taxes

Income tax benefit/(expense)

net income attributable to noncontrolling interest in P10 Intermediate

NET INCOME ATTRIBUTABLE TO P10

5 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)

Common Stock - Class A

Common Stock - Class B

Treasury stock

Stockholders'

Paid-in-capital

Balance at December 31, 2020

Stock-based compensation

Net income attributable to P10

Balance at March 31, 2021

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

(Unaudited, in thousands)

Common Stock - Class A

1 unchanged sentence

Treasury stock

Non Controlling

Stockholders'

7 unchanged sentences

Balance at March 31, 2022

Stock-based compensation

Net income attributable to P10

Exchange of Class B common stock for Class A common stock

Dividends declared

Dividends paid

Balance at June 30, 2022

Balance at December 31, 2022

Stock-based compensation

Net income attributable to P10

Net loss attributable to P10 and net income attributable to non controlling interest

Exchange of Class B common stock for Class A common stock

Issuance of restricted stock awards

Exercise of stock options (net of tax)

Distributions to non-controlling interests

Issuance of restricted stock units

Exercise of stock options

Repurchase of common stock for employee tax witholding

Stock repurchase

Accrual for excise tax associated with stock repurchases

Dividends declared

Dividends paid

Balance at September 30, 2022

The Notes to Consolidated Financial Statements

are an integral part of these statements.

Balance at March 31, 2023

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

Deferred tax expense

Deferred tax expense (benefit)

Amortization of contingent payment to customers

Remeasurement of contingent consideration

14 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions, net of cash acquired

Purchase of intangible assets

Note receivable

Draw on note receivable

Proceeds from note receivable

Investments in unconsolidated subsidiaries

Proceeds from investments in unconsolidated subsidiaries

Software capitalization

Post-closing payments related to acquisitions

Purchases of property and equipment

Net cash (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

CASH FLOWS (USED IN) FINANCING ACTIVITIES

Borrowings on debt obligations

1 unchanged sentence

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

Payments of contingent consideration

Cash settlement of stock options

Repurchase of Class B common stock

Payment of contingent consideration

Dividends paid

Debt issuance costs

Net cash (used in) 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

Net cash paid for income taxes

Net cash paid (received) for income taxes

NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES

2 unchanged sentences

Additions to property and equipment

Additions to accrued compensation and benefits

Accrual for settlement of stock options

Additions to contingent consideration

Dividends declared

4 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, and its consolidated subsidiaries 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.

The number of shares have been retrospectively adjusted within these financial statements to reflect this stock split.

The reorganization was considered a transaction between entities under common control.

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.

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

4 unchanged sentences

The direct and indirect subsidiaries of the Company include P10 Holdings, P10 Intermediate Holdings, LLC (“P10 Intermediate”), which owns the subsidiaries P10 RCP Holdco, LLC (“Holdco”), Five Points Capital, Inc.

(“Five Points”), TrueBridge Capital Partners, LLC (“TrueBridge”), Enhanced Capital Group, LLC (“ECG”), Bonaccord Capital Advisors, LLC ("Bonaccord"), Hark Capital Advisors, LLC ("Hark") and P10 Advisors, LLC ("P10 Advisors").

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

designed, manufactured, sold, and serviced flywheel-based uninterruptible power supply products and serviced modular infrastructure solutions.

Prior to November 19, 2016, P10, formerly Active Power, Inc., designed, manufactured, sold, and serviced flywheel-based uninterruptible power supply products and serviced modular infrastructure solutions.

On November 19, 2016, we completed the sale of substantially all our assets and liabilities and operations to Langley Holdings plc, a United Kingdom public limited company.

3 unchanged sentences

For the period from December 2016 through September 2017, our business primarily consisted of cash, certain retained intellectual property assets and our net operating losses (“NOLs”) and other tax benefits.

On March 22, 2017, we filed for re-organization under Chapter 11 of the Federal Bankruptcy Code, using a prepackaged plan of reorganization.

On March 22, 2017, we filed for reorganization under Chapter 11 of the Federal Bankruptcy Code, using a prepackaged plan of reorganization.

The Company emerged from bankruptcy on May 3, 2017.

13 unchanged sentences

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

On December 14, 2020, the Company completed the acquisition of 100% of the equity interest in ECG, and a noncontrolling interest in Enhanced Capital Partners, LLC (“ECP”) (collectively, “Enhanced”).

On December 14, 2020, the Company completed the acquisition of 100 % of the equity interest in ECG, and a noncontrolling interest in Enhanced Capital Partners, LLC (“ECP”, and collectively with ECG, “Enhanced”).

Enhanced undertakes and 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.

5 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.

See Note 3 for additional information on these acquisitions.

In June 2022, we formed P10 Advisors, a fully consolidated subsidiary, to manage investment opportunities that are sourced across the P10 platform but do not fit within an existing investment mandate.

In June 2022, the Company formed P10 Advisors, a fully consolidated subsidiary, to manage investment opportunities that are sourced across the P10 platform but do not fit within an existing investment mandate.

On October 13, 2022, the Company completed the acquisition of all of the issued and outstanding membership interests of WTI.

WTI provides senior secured financing to early-stage and emerging stage life sciences and technology companies.

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

Simultaneously with the acquisition of WTI, the Company completed a restructuring of P10 Intermediate and subsidiaries to LLC entities that are considered disregarded entities for federal income tax purposes.

This allowed the WTI sellers to obtain a partnership interest in P10 Intermediate and all of its subsidiaries.

As a result of the acquisition, the WTI sellers obtained 3,916,666 membership units of P10 Intermediate, which can be exchanged into 3,916,666 shares of P10 Class A common stock, following applicable restrictive periods.

The results of WTI’s operations have been included in the consolidated financial statements effective October 13, 2022.

The Company reports noncontrolling interest related to the partnership interests which are owned by the WTI sellers.

This is recorded as noncontrolling interest on the Consolidated Balance Sheets.

Noncontrolling interest is allocated a share of income or loss in the respective consolidated subsidiaries in proportion to their relative ownership interest.

Additionally, the Company makes periodic distributions to the WTI sellers for tax related and other agreed upon expenses as disclosed in the fifth amended and restated limited liability agreement of P10 Intermediate Holdings LLC.

Significant Accounting Policies

5 unchanged sentences

All intercompany transactions and balances have been eliminated upon consolidation.

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.

GAAP and reflect their investments at estimated fair value.

The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year ended December 31, 2023.

Certain entities in which the Company holds an interest are investment companies that follow FASB Accounting Standards Codification Topic 946, Financial Services - Investment Companies and reflect their investments at estimated fair value.

Accordingly, the carrying value of the Company’s equity method investments in such entities retains the specialized accounting treatment.

4 unchanged sentences

(a) direct or indirect ability to make decisions, (b) obligation to absorb expected losses or (c) right to receive expected residual returns.

A VIE must be evaluated quantitatively and qualitatively to determine the primary beneficiary, which is the reporting entity that has (a) the power to direct activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

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 Holdco, RCP 2, RCP 3, TrueBridge, Bonaccord, and Hark.

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

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 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.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model.

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

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

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

Reclassifications

6 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, 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.

The Company believes it is not exposed to any significant credit risk on cash.

As of March 31, 2023, and December 31, 2022, cash equivalents include money market funds of $ 5.0 million and $ 7.8 million, respectively, which approximates fair value.

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

The Company's credit risk in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit.

Management monitors the financial institutions credit worthiness in conjunction with balances on deposit to minimize risk.

The Company from time to time may have amounts on deposit in excess of the insured limits.

Restricted Cash

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.

Restricted cash as of March 31, 2023 and December 31, 2022 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, 2022 and December 31, 2021.

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

accordingly, no allowance for doubtful accounts has been established as of March 31, 2023 and December 31, 2022.

If accounts are subsequently determined to be uncollectible, they will be expensed

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

in the period that determination is made.

Management fees are collected on a quarterly basis.

Certain subsidiaries management fee contracts are collected at the beginning of the quarter, while others are collected in arrears.

The management fees reflected in accounts receivable at period end are those that are collected in arrears.

Due from related parties represents receivables from the Funds for reimbursable expenses.

5 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, 2022 or December 31, 2021 .

no allowance for doubtful accounts has been established as of March 31, 2023 and December 31, 2022.

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Investment in Unconsolidated Subsidiaries

20 unchanged sentences

Fair value is based on the best information available, including prices for similar assets and estimated discounted cash flows.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The Company recognizes a lease liability and right-of-use asset in our Consolidated Balance Sheets for contracts that it determines are leases or contain a lease.

4 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.

3 unchanged sentences

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

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.

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.

Revenue Share and Repurchase Arrangement

The Company recognizes an accrued contingent liability and contingent payments to customers asset in our Consolidated Balance Sheets for an agreement between ECG and a third party.

The agreement requires ECG to share in certain revenues earned with the third party and also includes an option for the third party to sell back the revenue share to ECG at a set multiple.

Additionally, ECG holds the option to buy back 50% of the revenue share at a set multiple.

The options to repurchase the revenue share are not exercisable until July of 2025.

The Company believes it is probable that the third party will exercise its option to sell back the revenue share and has recognized a liability on the Consolidated Balance Sheets.

The Company has also recognized a contingent payment to customers associated with the agreement and will amortize the asset against revenue over the the contractual term of the management contract.

The amortization is reported in management and advisory fees on the Consolidated Statements of Operations.

The Company will reassess at each reporting period.

Refer to Note 14 for further information .

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, 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.

As of March 31, 2023, goodwill recorded on our Consolidated Balance Sheets relates to the acquisitions of RCP 2, RCP 3, Five Points, TrueBridge, Enhanced, Bonaccord, Hark, and WTI.

As of March 31, 2023, 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, Hark, and WTI.

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).

If it is determined that it is more likely than not that a reporting unit’s fair value is less

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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

1 unchanged sentence

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

As of March 31, 2023, contingent consideration recorded relates to the acquisitions of Hark and Bonaccord on the Consolidated Balance Sheets.

Accrued Compensation and Benefits

Accrued compensation and benefits consists of employee salaries, bonuses, benefits, and acquisition-related earnouts (contingent on employment) that has not yet been paid.

The acquisition-related earnout contingent on employment is a product of the acquisition of WTI.

The sellers and eligible employees of WTI are eligible to earn up to $ 70.0 million contingent upon meeting certain EBITDA related hurdles and continued employment.

Upon the achievement of $ 20.0 million, $ 22.5 million, and $ 25.0 million of EBITDA, $ 35.0 million, $ 17.5 million, and $ 17.5 million are earned, respectively.

The earnout period is eligible through December 31, 2027 with the potential to extend an additional two years.

Refer to Note 14 for further information.

Debt Issuance Costs

1 unchanged sentence

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

Noncontrolling Interest

Noncontrolling interest ("NCI") reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by the Company.

Noncontrolling interest is presented as a separate component in our consolidated statements of income to clearly distinguish between our interests and the economic interest of third parties in those entities.

Net income attributable to P10, as reported in the Consolidated Statements of Income, is presented net of the portion of net income attributable to holders of non-controlling interest.

NCI is allocated a share of income or loss in the respective consolidated subsidiaries in proportion to their relative ownership interest.

Treasury Stock

4 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, 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 March 31, 2023 and December 31, 2022, 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.

4 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 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.

2 unchanged sentences

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

2 unchanged sentences

Management and advisory fees received in advance reflects the amount of fees that have been received prior to the period the fees are earned.

These fees are recorded as deferred revenue on the Consolidated Balance Sheets.

These fees are recorded as deferred revenues on the Consolidated Balance Sheets.

For asset management and advisory services, the Company typically satisfies its performance obligations over time as the services are rendered, since the customers simultaneously receive and consume the benefits provided as the Company performs the service.

2 unchanged sentences

Additionally, the management fee may step down for certain funds depending on the contractual arrangement.

Certain management fees are also calculated on capital deployed.

Advisory services are generally based upon fixed amounts and billed quarterly.

1 unchanged sentence

Other Revenue

Other revenue on our Consolidated Statements of Operations primarily consists of subscriptions, consulting agreements and referral fees.

Other revenue on our Consolidated Statements of Operations primarily consists of subscriptions, consulting agreements, interest income, and referral fees.

The subscription and consulting agreements typically have renewable one-year lives, and revenue is recognized ratably over the current term of the subscription or the agreement.

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

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

Referral fee revenue is recognized upon closing of certain opportunities.

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.

Valuation allowances are recorded to reduce deferred tax assets to the amount we believe is more likely than not to be realized.

Uncertain tax positions are recognized only when we believe it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position.

We recognize interest and penalties, if any, related to uncertain tax positions in income tax expense.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

We recognize interest and penalties, if any, related to uncertain tax positions in income tax expense.

We file various federal and state and local tax returns based on federal and state local consolidation and stand-alone tax rules as applicable.

3 unchanged sentences

See Note 17 for additional information.

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 as well as the vesting of restricted stock units.

Also included in the diluted EPS denominator are the units of P10 Intermediate owned by the sellers of WTI, assuming the option to exchange the units for shares of Class A common stock of the Company is exercised in full.

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

2 unchanged sentences

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 .

Stock compensation expense for RSAs and certain RSUs, where vesting occurs after a service period is recorded ratably over the vesting period at the fair market value on the grant date.

Certain acquisition-related RSUs vest after meeting certain performance metrics.

For these, the Company uses the tranche method for RSU's deemed probable of vesting.

The Company evaluates the probability of vesting at each reporting period.

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.

Refer to Note 16 for further discussion.

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 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.

3 unchanged sentences

Treasury yield in effect at the time of grant.

The dividend yield is based on a $ 0.03 per share quarterly dividend.

Forfeitures are recognized as they occur .

Segment Reporting

The Company operates as an integrated private markets solution provider and a single operating segment.

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.

The Company operates our business as a single operating segment, which is how our chief operating decision makers (our Co-Chief Executive Officers) evaluate financial performance and make decisions regarding the allocation of resources.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Business Acquisitions

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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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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

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

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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.

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Recent Accounting Pronouncements

The Company adopted ASU No.

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

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.

Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

Pronouncements Recently Adopted

Effective January 1, 2023, the Company adopted ASU No.

2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13").

ASU 2016-13 provides amendments to ASC 326, Financial Instruments - Credit Losses , which replaces the incurred loss impairment model with a current expected credit loss (“CECL”) model.

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

We are evaluating the effects of these amendments on our financial reporting.

The adoption of ASU 2016-13 did not have a material impact on the Company's Consolidated Financial Statements.

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.”

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

We are evaluating the effects of these amendments on our financial reporting.

The Company adopted this guidance on January 1, 2023.

The guidance had no effect on the consolidated financial statements but will be considered for future acquisitions.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Pronouncements Not Yet Adopted

On June 30, 2022, the FASB issued ASU No.

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We are evaluating the effects of these amendments on our financial reporting.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

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 management companies focused on private market strategies which may include private equity, private client, real estate, and real asset strategies.

Acquisition of WTI

On October 13, 2022 , the Company completed the acquisition of all of the issued and outstanding membership interests of WTI for a total consideration of $ 146.0 million 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 Class A common stock, subject to certain conditions pursuant to the Exchange Agreement entered into on August 25, 2022.

The acquisition 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

Fair value of equity consideration

Total purchase consideration

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.

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 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, 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.

The Company exercised the accordion feature on the Credit Facility to complete the acquisition of WTI.

The $ 125 million available on the accordion was split into $ 87.5 million of term loan and $ 37.5 million of revolver.

The Company drew the $ 87.5 million of term loan and $ 6.0 million of the available revolver to complete the acquisition and financed the remainder with cash on hand.

In connection with the acquisition, the Company incurred a total of $ 3.2 million of acquisition-related expenses.

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

Total acquisition-related expenses were $ 0 and $ 0 for the three months ended March 31, 2023 and March 31, 2022, respectively.

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.

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

Cash and cash equivalents

Accounts receivable

Right-of-use assets

Prepaid expenses and other assets

Investment in partnership

Intangible assets

Property and equipment

Intangible assets, net

Total assets acquired

Accrued expenses

Accounts payable and accrued expenses

Lease liabilities

Total liabilities assumed

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(Unaudited, dollar amounts stated in thousands)

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

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

Value of management and advisory contracts

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Total identifiable intangible assets

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") and any subsequent fund, paid quarterly, in exchange for funding certain amounts of capital commitments to the fund.

See Note 5 for more information.

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 $ 87.9 million of goodwill is expected to be deductible for tax purposes.

Acquisition of Hark

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.

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 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.

To the extent there are payments on EBITDA-related earnouts as discsused in Note 14, those amounts would be amortizable for tax purposes at such time.

Identifiable Intangible Assets

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Significant inputs to the valuation model include estimates of existing and future revenue, estimated royalty rate, economic life and a discount rate based on a weighted average cost of capital.

The fair value of technology acquired was estimated using the relief from royalty method.

Significant inputs to the valuation model include a royalty rate, an estimated life and a discount rate.

The management and advisory contracts, trade names and the acquired technology all have a finite useful life.

The management and advisory contracts and trade names have a finite useful life.

The carrying value of the management fund and advisory contracts and trade names will be amortized in line with the pattern in which the economic benefits arise and are reviewed at least annually for indicators of impairment in value that is other than temporary.

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 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 WTI was completed on January 1, 2022:

For the Three Months

Ended March 31,

Net income attributable to P10

Pro-forma adjustments include revenue and net income 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 acquisition as if the acquisition was completed on January 1, 2021.

Other pro forma adjustments include intangible amortization expense, interest expense based on debt issued in connection with the acquisition, and compensation expense contingent on EBITDA (as noted in Note 14) as if the acquisition were completed on January 1, 2022.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

The following presents revenues disaggregated by product offering:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Management and advisory fees

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Strategic Alliance Expense

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

In connection with the Bonaccord acquisition, Bonaccord entered into a Strategic Alliance Agreement ("SAA") with a third-party investor.

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 and subsequent funds, paid quarterly, in exchange for funding certain amounts of capital commitments to the fund.

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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 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.

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 in Bonaccord.

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.

The maximum commitment requirement has been met as of March 31, 2023.

The Company believes it's 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 September 30, 2022 as Fund III has not yet had its final close.

This commitment has not yet been met as of March 31, 2023 as Fund III has not yet started raising capital.

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 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.

For the three months ended March 31, 2023, the strategic alliance expense reported was $ 0.4 million .

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

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)

As of March 31, 2023, the associated liability is $ 0.2 million which is reported in accrued expenses on the Consolidated Balance Sheets.

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 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 .

This agreement provides for a note to BCP for $ 5.0 million, of which $ 4.4 million was drawn as of March 31, 2023 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.

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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 and the outstanding balance was capitalized to the note receivable.

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

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.

There was $ 0.1 million cash paid for interest as of December 31, 2022 and the $ 0.1 million was capitalized to the note receivable.

As of March 31, 2023, $ 0.1 million of interest was repaid.

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

As of March 31, 2023 and December 31, 2022, the balance was $ 4.4 million and $ 4.2 million, respectively.

The Company recognized interest income of $ 0.1 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Variable Interest Entities

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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 Holdco, RCP 2, RCP 3, TrueBridge, Hark and Bonaccord.

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

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

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 the consolidated VIEs totaled $ 500.2 million and $ 568.0 million as of March 31, 2023 and December 31, 2022 , respectively.

The liabilities of the consolidated VIEs totaled $ 79.3 million and $ 96.3 million a s of March 31, 2023 and December 31, 2022, 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.

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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, 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.

As of March 31, 2023 , investment in unconsolidated subsidiaries totaled $ 2.4 million, of which $ 0.2 million related to ECG’s tax credit finance businesses and $ 2.2 million related to ECG’s asset management businesses.

As of December 31, 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.

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 $ 0.2 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.

ECG recorded its share of income in the amount of $ 0.1 million for the three months ended March 31, 2023 and $ 0.3 million for the three months ended March 31, 2022.

For the three months ended March 31, 2023, ECG made $ 0 capital contributions and received distributions of $ 0 .

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

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 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.

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 months ended March 31, 2023 and 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:

As of September 30,

As of March 31,

As of December 31,

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Total property and equipment, net

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Goodwill and Intangibles

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

Changes in goodwill for the three months ended March 31, 2023 are as follows:

Balance at December 31, 2022

1 unchanged sentence

Increase from acquisitions

Balance at September 30, 2022

Balance at March 31, 2023

Intangibles consists of the following:

As of September 30, 2022

As of March 31, 2023

Gross Carrying

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Total intangible assets

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

As of December 31, 2022

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The amortization expense for each of the next five years and thereafter are as follows:

Remainder of 2022

Total amortization

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Fair Value Measurements

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

Earnouts associated with the acquisitions of Bonaccord and Hark

Included in total consideration of the acquisition of Bonaccord is an earnout payment not to exceed $ 20 million.

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 earnout expires.

As of March 31, 2023, $ 8.0 million has been paid in contingent consideration associated with the earnout.

Total expense recognized for the three months ended March 31, 2023 and March 31, 2022, respectively, was $ 0.3 million and $ 0.1 million, which is included in contingent consideration expense on the Satements of Operations.

The fair value of the contingent consideration is 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.

The most significant assumption used in the analysis is future fundraising projections.

The Company's contingent consideration is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judement or estimation.

As of March 31, 2023 , the estimated fair value of the remaining contingent consideration totaled $ 11.6 million.

Included in the total consideration of the acquisition of Hark is an earnout not to exceed $ 5.4 million.

As of March 31, 2023, the contingent consideration associated with the earnout totaled $ 5.4 million and is considered earned but has not yet been paid.

The Company expects this to be paid in 2023.

Total expense recognized for the three months ended March 31, 2023 and March 31, 2022, respectively, totaled $ 0.1 million and $ 0.1 million, which was included in contingent consideration expense on the Statements of Operations.

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

As of September 30, 2022

As of March 31, 2023

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 September 30, 2022 and December 31, 2021.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the periods ended March 31, 2023 and December 31, 2022.

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

Contingent Consideration Liability

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Balance, beginning of year:

1 unchanged sentence

Balance, end of period:

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

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

The assumptions used in the analysis are inherently subjective;

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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

Debt issuance costs

Revolving credit facility state tax credits, net

Revolver facility

4 unchanged sentences

Total debt obligations

The table below summarizes the terms of the debt obligations.

September 30, 2022

March 31, 2023

Maturity Date

5 unchanged sentences

Revolver Facility

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

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

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 December 31, 2021.

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 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.

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 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 were set to mature on April 15, 2023 .

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.

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

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

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.

The Facility provided for a $ 125 million five-year term, subject to certain EBITDA levels and conditions, and a $ 5 million one-year line of credit.

The line of credit was repaid and subsequently expired during 2018.

Holdco was permitted to draw up to $ 125 million in aggregate on the term loan in tranches through July 31, 2019 .

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.

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 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

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

In October 2022, the accordion feature was exercised with the acquisition of WTI at which point it was split into $ 87.5 million worth of term loan and $ 37.5 million of revolver.

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

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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 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.

As of March 31, 2023, P10 was in compliance with its financial covenants required under the facility.

As of March 31, 2023, the balance drawn on the revolving credit facility is $ 77.9 million and on the term loan, the balance is $ 209.8 million.

The balance as of December 31, 2022 was $ 80.9 million on the revolving credit facility and $ 212.5 million on the term loan.

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 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 $ 0.6 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.

For the three months ended March 31, 2023 and March 31, 2022, $ 4.8 million and $ 0.9 million of interest expense was incurred, respectively.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Future principal maturities of debt as of March 31, 2023 are as follows:

Debt Issuance Costs

Debt issuance costs are offset against the Revolver Facility and Term Loan.

Unamortized debt issuance costs for the Revolver Facility and Term Loan as of March 31, 2023 and December 31, 2022 were $ 3.8 million and $ 4.2 million, respectively.

Amortization expense related to debt issuance costs totaled $ 0.3 million for the three months ended March 31, 2023 and $ 0.2 million for the three months ended March 31, 2022.

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

During the three months ended March 31, 2023 and March 31, 2022 , we recorded $ 0 and $ 8 thousand in debt issuance costs, respectively, which is included in debt obligations on the Consolidated Balance Sheets.

Related Party Transactions

1 unchanged sentence

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

P10 has paid $ 0.2 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 $ 0.8 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.

In the fourth quarter of 2022, the Company sublet an additional amount of office space in the corporate headquarters.

This contributed an additional $ 3.4 thousand monthly.

P10 has paid $ 0.1 million and $ 0.1 million in rent to 210 Capital, LLC for the three months ended March 31, 2023 and March 31, 2022, respectively.

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, 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 March 31, 2023, the total accounts receivable from the Funds totaled $ 16.0 million , of which $ 5.5 million related to reimbursable expenses and $ 10.5 million related to fees earned but not yet received.

As of December 31, 2022 , 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.

In certain instances, the Company may incur expenses related to specific products that never materialize.

The costs are then removed from the balance sheet and expensed on the Consolidated Statement of Operations.

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.

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

1 unchanged sentence

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 $ 22.0 million over 7 years , based on a declining fixed fee schedule.

As a result of new projects during 2021 and 2022, ECG will receive additional advisory fees from Enhanced PC totaling $ 22.0 million over 7 years , based on a declining fixed fee schedule.

This agreement is subject to customary termination provisions.

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.

Since inception, $ 45.9 million of the total $ 98.0 million advisory fees have been recognized as revenue.

For the three months ended March 31, 2023 and March 31, 2022, advisory fees earned or recognized under this agreement were $ 4.9 million and $ 4.3 million, respectively, and is reported in management and advisory fees on the Consolidated Statements of Operations.

As of March 31, 2023 and December 31, 2022, the balance was $ 33.8 million and $ 28.5 million 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 $ 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 $ 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

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 $ 3.2 million and $ 2.2 million for the three months ended March 31, 2023 and March 31, 2022, respectively, related to this agreement within compensation and benefits on our Consolidated Statements of Operations.

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.

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

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

On July 6, 2022, Crossroads entered into the Advisory Agreement (the "Crossroads Advisory Agreement") with ECG.

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

In relation to the strategic partnership with Crossroads effective September 10, 2021 and the Crossroads Advisory Agreement, t he Company recognized $ 2.3 million and $ 0.4 million for the three months ended March 31, 2023 and March 31, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

On July 6, 2022, certain funds managed by the Company purchased 4,646,840 shares of Crossroads common stock at $ 10.76 per shares, for an aggregate amount of approximately $ 50 million.

On August 1, 2022, an additional purchase of 1,394,052 shares of Crossroads common stock at $ 10.76 per share occurred.

The Co-CEOs of the Company are directors of Crossroads .

The Company recognized $ 0.1 million of revenue for the three months ended March 31, 2023, 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, 2022.

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 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:

Rent expense for the various leased office space and equipment was approximately $ 0.8 million for the three months ended March 31, 2023 and $ 0.5 million for the three months ended March 31, 2022.

The following table presents information regarding the Company’s operating leases as of March 31, 2023:

Operating lease right-of-use assets

3 unchanged sentences

Weighted-average discount rate

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

Remainder of 2022

The future contractual lease payments as of March 31, 2023 are as follows:

Total undiscounted lease payments

Less discount

Less construction allowance

Less imputed interest

Total lease liabilities

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Earnout Payment

With the acquisition of WTI, an earnout payment of up to $ 70.0 million of cash and common stock may be earned upon meeting certain performance metrics.Upon the achievement of $ 20.0 million, $ 22.5 million, and $ 25.0 million of EBTIDA, $ 35.0 million, $ 17.5 million, and $ 17.5 million are earned, respectively.

Of the total amount, $ 50.0 million can be earned by the sellers and the remaining $ 20.0 million would be allocated to employees of the Company at the time the earnout is earned.

Payment to both sellers and employees is contingent on continued employment and, therefore, these earnout payments are recorded as compensation expense on the Consolidated Statements of Operations.

The Company will evaluate whether each earn-out hurdle is probable of occurring and recognize an expense over the period the hurdle is expected to be achieved.

As of March 31, 2023, the Company has determined that only the first two EBITDA hurdles are probable of being achieved.

Total payment will not exceed $ 70.0 million and any amounts paid will be paid by October 2027, at which point the earnout expires.

For the three months ended March 31, 2023 and March 31, 2022, $ 5.9 million and $ 0.0 were recognized, respectively.

As of March 31, 2023 and December 31, 2022, the balance was $ 11.1 million and $ 5.2 million, respectively, and is included in accrued compensation and benefits in the Consolidated Balance Sheets.

No payments have been made on the earnout.

Bonus Payment

In connection with the acquisition of WTI, certain employees entered into employment agreements.

As part of these employment agreements, certain employees may receive a one-time bonus payment if the employee is employed by the Company as of the fifth anniversary of the effective date and the trailing-twelve month EBITDA of WTI at that time is equal to or greater than $ 20.0 million.

Payment can be made in cash or stock of P10, provided that no more than $ 5.0 million will be payable in cash.

Total payment will not exceed $ 10.0 million and any amounts will be paid in October 2027, the fifth anniversary of the effective date.

For the three months ended March 31, 2023 and March 31, 2022, the Company recognized $ 0.5 million and $ 0.0 of expense, respectively, which is included in compensation and benefits on the Consolidated Statement of Operations.

As of March 31, 2023 and December 31, 2022, the balance was $ 0.9 million and $ 0.4 million, respectively, and is included in accrued compensation and benefits on the Consolidated Balance Sheets.

Revenue Share Arrangement

The Company recognizes an accrued contingent liabilities and contingent payments to customers asset in our Consolidated Balance Sheets for an agreement that exists between ECG and a third party.

The agreement requires ECG to share in certain revenues earned with the third party and also includes an option for the third party to sell back the revenue share to ECG at a set multiple.

The Company’s contingent liabilities and corresponding contingent payments to customers are recognized once determined to be probable and estimable.

The contingent payments to customers are amortized and recorded within management and advisory fees on the Consolidated Statements of Operations over the expected period before exercise of an option occurs.

As of March 31, 2023, the Company has determined that the put options are probable and have accrued estimated contingent liabilities and contingent payments to customers.

As of March 31, 2023 and December 31, 2022, the balance was $ 14.3 million and $ 14.3 million, respectively, and is included in accrued contingent liabilities on the Consolidated Balance Sheets.

The associated contingent payments to customers asset balance was $ 13.3 million and $ 13.6 million as of March 31, 2023 and December 31, 2022, respectively.

The Company recognized $ 0.4 million and $ 0.0 of amortization of contingent payments to customers for the three months ended March 31, 2023 and March 31, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

The Company will reassess each period and recognize all changes as if they occurred at inception and recognize changes in revenue.

Contingencies

6 unchanged sentences

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, 2022 was 25.90 %.

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

The Company’s effective income tax rate for the three months ended March 31, 2023 was not meaningful due to the impact of a discrete item recognized in the tax rate for the period that related to windfall tax benefits associated with employee stock options exercised during the period.

Absent this discrete item, the Company’s effective tax rate would be 28.64 %.

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, 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.

As of March 31, 2023, 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.

2 unchanged sentences

The Company is not currently under audit.

Tax years 2019 - 2021 remain open under statute for IRS examination of federal income tax returns.

State statutes remain open for the 2018 - 2021 years, depending on jurisdiction.

Stockholders' Equity

3 unchanged sentences

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 Plan cliff vest over a period of four or five years .

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

Options previously granted under the 2018 Plan cliff vest over a period of four or five year s.

The term of each option is no more than ten year s 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.

3 unchanged sentences

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.

This was paid on April 4, 2022.

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

On October 21, 2022, a special meeting of stockholders was held to increase the number of shares issuable under the Plan by 4,000,000 shares.

As of March 31, 2023, there are 3,378,921 shares available for grant.

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:

A summary of stock option activity for the period ended March 31, 2023 is as follows:

Weighted Average

6 unchanged sentences

Expired/Forfeited

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,

Outstanding as of March 31, 2023

Exercisable as of March 31, 2023

The weighted average assumptions used in calculating the fair value of stock options granted during the three months ended March 31, 2023 and March 31, 2022 were as follows:

For the Three Months Ended March 31,

Expected life

8 unchanged sentences

Outstanding as of December 31, 2022

Outstanding as of September 30, 2022

Outstanding as of March 31, 2023

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.

All of the shares currently vest one year from the grant date excluding the restricted stock units at Hark and Bonaccord which are discussed in more detail below.

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

On August 16, 2022, allocations were finalized pursuant to which an aggregate a value of $ 17.5 million of units may vest at each future achievement of performance metrics .

As of March 31, 2023, certain performance metrics have been met and 345,765 units have been allocated and issued to specific employees.

The Company evaluates whether it is probable that the Bonaccord Units will vest and applies the tranche method to determine the amount of expense to recognized during the period.

An expense of $ 3.6 million has been recorded for the three months ended March 31, 2023 on the Consolidated Statements of Operations.

The unrecognized expense associated with the Bonaccord Units was $ 6.9 million as of March 31, 2023.

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.

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

As of March 31, 2023, no Hark Units have vested but the Company believes it is probable that the RSUs will be earned.

An expense of $ 0.3 million has been recorded for the three months ended March 31, 2023 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 Company expects the Hark Units to be issued in 2023.

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.

2 unchanged sentences

Outstanding as of December 31, 2022

Outstanding as of September 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 Statem ents of Operations.

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 .

Outstanding as of March 31, 2023

The stock-based compensation expense was $ 7.1 million and $ 1.5 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of March 31, 2023 was $ 7.0 million and is expected to be recognized over a weighted average period of 3.65 years.

Any future forfeitures will impact this amount.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands)

Earnings Per Share

2 unchanged sentences

Diluted EPS reflects the potential dilution that could occur if shares of common stock were issued pursuant to our stock-based compensation awards.

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 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)

For the three months ended March 31, 2023, diluted EPS reflects the potential dilution that could occur assuming that all units in P10 Intermediate that were granted as a result of the WTI acquisition are converted to shares of Class A common stock.

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 September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Numerator for basic calculation—Net income

attributable to P10

Adjustment for:

Net income attributable to noncontrolling interest in P10 Intermediate

Numerator for earnings per share

Numerator for earnings per share assuming

1 unchanged sentence

average shares

Weighted shares assumed upon exercise of partnership units

Weighted shares assumed upon exercise of stock

2 unchanged sentences

Earnings per share—diluted

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 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.

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.

The computations of diluted earnings per share excluded 5.1 million options for the three months ended March 31, 2023, and 0.2 million options for the three months ended March 31, 2022, because the options were anti-dilutive.

Subsequent Events

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.

On May 12, 2023, P10’s Co-CEO’s, Robert Alpert and Clark Webb, signed revised employment agreements as a result of the restructuring that occurred within P10 entities for the WTI acquisition.

The revised agreements are now with P10 Intermediate Holdings, LLC rather than P10 Holdings, Inc.

due to the restructuring.

Also, clarifications on compensation structure are included in the revised employment agreements, which specify non-cash stock-based compensation value of $ 5.9 million each for 2023 performance.

The Board of Directors of the Company has declared a quarterly cash dividend of $ 0.0325 per share of Class A and Class B common stock, payable on June 20, 2023, to the holders of record as of the close of business on May 30, 2023.

In accordance with ASC 855, Subsequent Events, the Company evaluated all material events or transactions that occurred after March 31, 2023, 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