What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-15 compared with 2022-11-14 · 162 added, 228 removed, 324 unchanged (55% of the section changed)

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Our historical results discussed below, and the way we evaluate our results, may differ significantly from the descriptions of our business and key metrics used elsewhere in this quarterly report on Form 10-Q due to the effects of acquisitions which occurred during the year ended December 31, 2022, but may not have had a material impact on our statements of operations due to the limited period of time which they were included in our consolidated results.

This quarterly report reflects the historical results of operations and financial position of P10 Holdings, our predecessor for accounting purposes, prior to the Reorganization and IPO.

The following discussion may contain forward-looking statements that reflects our plans, estimates and beliefs.

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As investors entrust us with additional capital, our relationships with our fund managers are strengthened, which drives additional investment opportunities, sources more data, enables portfolio optimization and enhances returns, and in turn attracts new investors.

During 2020, we completed several acquisitions to expand the private market solutions available to our investors.

On April 1, 2020, we completed our acquisition of Five Points to serve as our Private Credit solution (which also offers certain private equity solutions).

On October 2, 2020, we completed our acquisition of TrueBridge Capital Partners, LLC (TrueBridge) to serve as our Venture Capital solution.

On December 14, 2020, we completed our acquisition of 100% of the equity interest in Enhanced Capital Group, LLC (ECG) to serve as our Impact Investing solution.

These acquisitions were accounted for as business combinations, and these entities are reported as consolidated subsidiaries of P10.

Additionally, on December 14, 2020, we completed our acquisition of approximately 49% of the voting interests and 50% of the economic interests in ECP, which is a related party of ECG.

As we only acquired a non-controlling interest in ECP, it is reported as an equity method investment in accordance with ASC 323, Equity Method and Joint Ventures (“ASC 323").

On September 30, 2021, we completed the acquisitions of Hark Capital Advisors, LLC (Hark) and Bonaccord Capital Advisors, LLC (Bonaccord) to further expand on solutions available to our investors.

The effect of these acquisitions is reflected in our Consolidated Balance Sheet at December 31, 2021 and the Consolidated Statement of Operations from September 30, 2021 to December 31, 2021.

These acquisitions were accounted for as business combinations and are reported as consolidated subsidiaries of P10.

On October 20, 2021, P10 Holdings, in connection with its IPO, completed a reorganization and restructure.

In connection with the reorganization, P10 became the parent company and all of the existing equity of P10 Holdings, which is a wholly owned subsidiary of P10, and its consolidated subsidiaries, including the convertible preferred units of P10 Intermediate 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.

Net proceeds from the sale of our Class A common stock, after deducting underwriting discounts and commissions but before expenses was approximately $129.4 million.

Of the proceeds, $86.8 million was used to pay down outstanding term loan debt, $12.4 million was used to pay off Seller's Notes, $1.1 million was used to cash settle certain option awards, $1.0 million was used to fund the dividend on P10 Intermediate's preferred stock and $4.5 million was used to pay expenses incurred in connection with the offering.

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

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

On December 22, 2021, P10 entered into a $250 million credit agreement with a syndicate of banks, including JP Morgan Chase Bank and Texas Capital Bank as joint lead arrangers and bookrunners, which provided for the Term Loan in an aggregate principal amount of $125 million and Revolver Facility in an aggregate principal amount of $125 million with a four year term and an additional $125 million accordion feature, which the Company exercised in September 2022.

The variable interest rate is 210 basis points over SOFR.

Borrowings were used to pay down the outstanding balance under the previous credit facility with HPS and related transaction expenses, pay off Seller's Notes related to the RCP acquisition and to finance working capital needs and for general corporate purposes.

The outstanding balance as of September 30, 2022 was $174.9 million.

As of September 30, 2022, our private market solutions were comprised of the following:

On October 13, 2022, we completed the acquisition of WTI that again further expanded on solutions available to our investors by entering into the venture debt space.

The Company The effect of this acquisition is reflected in our Consolidated Balance Sheet at December 31, 2022 and Consolidated Statement of Operations beginning with the period from October 13, 2022 to December 31, 2022 and forward.

The acquisition was accounted for as a business combination and WTI is reported as a consolidated subsidiary of P10.

During 2022, the Board approved a program to repurchase up to $40.0 million of outstanding shares of our Class A and Class B common stock.

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

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

As of March 31, 2023, $21.1 million has been used to buy back shares under this program.

As of March 31, 2023, our private market solutions were comprised of the following:

Private Equity Solutions (PES) .

Under PES, we make direct and indirect investments in middle and lower- middle market private equity across North America.

PES also makes minority equity investments in a diversified portfolio of mid-sized managers across private equity, private credit and real assets.

PES also makes minority equity investments in a diversified portfolio of mid-sized managers across private equity, private credit, real estate and real assets.

The PES investment team, which is comprised of 41 investment professionals with an average of 24+ years of experience, has deep and long-standing investor and fund manager relationships in the middle and lower-middle market which it has cultivated over the past 20 years, including over 1,900+ investors, 260+ fund managers, 490+ private market funds and 2,000+ portfolio companies.

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We are further differentiated by the scale, depth, diversity and accuracy of our constantly expanding proprietary private markets database that contains comprehensive information on more than 4,900 investment firms, 9,800 funds, 44,000 individual transactions, 29,000 private companies and 276,000 financial metrics.

As of September 30, 2022, PES managed $10.6 billion of Fee Paying Assets Under Management ("FPAUM").

As of March 31, 2023, PES managed $11.4 billion of FPAUM.

Venture Capital Solutions (VCS).

Under VCS, we make investments in venture capital funds across North America and specialize in targeting high-performing, access-constrained opportunities.

The VCS investment team, which is comprised of 15 investment professionals with an average of 21+ years of experience, has deep and long-standing investor and fund manager relationships in the venture market which it has cultivated over the past 14+ years, including over 930+ investors, 60+ fund managers, 55 direct investments, 230+ private market funds and 6,500+ portfolio companies.

The VCS investment team, which is comprised of 11 investment professionals with an average of 22+ years of experience, has deep

and long-standing investor and fund manager relationships in the venture market which it has cultivated over the past 14+ years, including over 1,000+ investors, 75+ fund managers, 78 direct investments, 300+ private market funds and 12,000+ portfolio companies.

We have 19 active investment vehicles.

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In addition, since 2011, we have partnered with Forbes to publish the Midas List, a ranking of the top value-creating venture capitalists.

As of September 30, 2022, VCS managed $5.2 billion of FPAUM.

As of March 31, 2023, VCS managed $5.6 billion of FPAUM.

Impact Investing Solutions (IIS).

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We are differentiated in both the breadth of impact areas served, the type of capital deployed and the duration of our track record.

We have collectively deployed over $4.8 billion into 750+ projects, supporting 400+ businesses across 38 states since 2000.

We have collectively deployed over $5.6 billion into 850+ projects and businesses across 39 states since 1999.

We have invested $3.5 billion in Impact Assets across our Small Business Lending, Impact Real Estate and Climate Finance Strategies.

Investments in solar assets have generated over 781 million KWh of renewable energy over the lifetime of the portfolio.

As of September 30, 2022, IIS managed $1.8 billion of FPAUM .

Investments in solar assets have generated over 1.6 billion KWh of renewable energy from inception to December 31, 2022.

As of March 31, 2023, IIS managed $1.9 billion of FPAUM .

Private Credit Solutions (PCS).

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PCS also provides loans to mid-life, growth equity, venture and other funds backed by the unrealized investments at the fund level and provide financing for companies that would otherwise require equity.

The PCS investment team, which is comprised of 24 investment professionals with an average of 23+ years of experience, has deep and long-standing relationships in the private credit market which it has cultivated over the past 22 years, including 290+ investors across 9 active investment vehicles and 70+ portfolio companies with over $1.9+ billion capital deployed.

Our PCS is differentiated by our relationship-driven sourcing approach providing capital solutions for

growth-oriented companies.

The PCS investment team, which is comprised of 40 investment professionals with an average of 24+ years of experience, has deep and long-standing relationships in the private credit market which it has cultivated over the past 22 years, including 300+ investors across 11 active investment vehicles and 1,600+ portfolio companies with $9.8+ billion capital deployed.

Our PCS is differentiated by our relationship-driven sourcing approach providing capital solutions for growth-oriented companies.

We are further synergistically strengthened by our PES network of fund managers, characterized by more than 520 credit opportunities annually.

We currently maintain 50+ active sponsor relationships and have 45+ platform investments.

As of September 30, 2022, PCS managed $1.4 billion of FPAUM.

As of March 31, 2023, PCS managed approximately $2.7 billion of FPAUM.

Sources of Revenue

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Often, the fees are structured such that they step down, or decrease, over the life of the fund.

Our primary funds comprise approximately $11.5 billion of our FPAUM as of September 30, 2022.

Our primary funds comprise approximately $12.2 billion of our FPAUM as of March 31, 2023.

Direct and Co-Investment Funds.

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capital commitments, typically average ten to fifteen years, though they may vary by fund.

We offer direct and co-investment funds across our private equity, venture capital, impact investing and private credit solutions.

We offer direct and co-investment funds across our private equity, venture capital, impact investing and private credit

Often, the fees are structured such that they step down, or decrease, over the life of the fund.

Our direct investing platform comprises approximately $6.2 billion of our FPAUM as of September 30, 2022.

Our direct investing platform comprises approximately $7.8 billion of our FPAUM as of March 31, 2023.

Secondaries refer to investments in existing private markets funds through the acquisition of an existing interest in a private markets fund by one investor from another in a negotiated transaction.

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Often, the fees are structured such that they step down, or decrease, over the life of the fund.

Our secondary funds comprise approximately $1.4 billion of our FPAUM as of September 30, 2022.

Our secondary funds comprise approximately $1.6 billion of our FPAUM as of March 31, 2023.

Operating Segments

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Trends Affecting Our Business

Our business is affected by a variety of factors, including conditions in the financial markets and economic and political conditions in the North American markets in which we operate, as well as changes in global economic conditions and regulatory or other governmental policies or actions, which can materially affect the values of the funds our platforms manage, as well as our ability to effectively manage investments.

With interest rates continuing to rise and the global economy outlook remaining

uncertain, we continue to see investors turning towards alternative investments to achieve consistent and higher yields with our contractually guaranteed fee rate.

Our business is affected by a variety of factors, including conditions in the financial markets and economic and political conditions in the North American markets in which we operate, as well as changes in global economic conditions, and regulatory or other governmental policies or actions, which can materially affect the values of the funds our platforms manage, as well as our ability to effectively manage investments and attract capital.

Despite rising interest rates and the global economy outlook remaining uncertain, we continue to see investors turning towards alternative investments to achieve consistent and higher yields with our contractually guaranteed fee rate.

The continued growth of our business may be influenced by several factors, including the following market trends:

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We believe the continued move away from active public market strategies into passive strategies will support growth in private market solutions as investors seek higher risk-adjusted returns.

Additional trends driving investor demand are 1) increasing long-term investor allocations towards private market asset classes, 2) legislation that allows retirement plans to add private equity vehicles as an investment option, and 3) the adoption of Environmental, Social, and Corporate Governance (“ESG”) and impact investing by the institutional and high net worth investor community.

Additional trends driving investor demand are (a) increasing long-term investor allocations towards private market asset classes, (b) legislation that allows retirement plans to add private equity vehicles as an investment option, and (c) the adoption of Environmental, Social, and Corporate Governance (“ESG”) and impact investing by the institutional and high net worth investor community.

Favorable lower and lower-middle market dynamics, and data driven sourcing.

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In addition, our premier data and analytic capabilities, driven by our proprietary database, support our robust and disciplined sourcing criteria, which fuels our highly selective investment process.

Our database stores and organizes a universe of managers and opportunities with powerful tracking metrics that we believe drive optimal portfolio management and monitoring and enable a portfolio grading system, as well as repository of investment evaluation scorecards.

Our ability to maintain our data advantage is dependent on a number of factors, including our continued access to a broad set of private market information on an on-going basis.

Our database stores and organizes a universe of managers and opportunities with powerful tracking metrics that we believe drive optimal portfolio construction, management, and monitoring and enable a portfolio grading system, as well as repository of investment evaluation scorecards.

Our ability to maintain our data advantage is dependent on several factors, including our continued access to a broad set of private market information on an on-going basis.

Expanding asset class solutions, broaden geographic reach and grow private markets network effect.

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As investors increase their allocations to private markets investments, we believe the demand for asset class diversification will rise.

Furthermore, as part of this evolution we believe investors will seek out private market solutions providers with scale and an ability to deliver multiple asset classes and vehicle solutions to streamline relationships and pursue cost efficiency.

Furthermore, as part

of this evolution we believe investors will seek out private market solutions providers with scale and an ability to deliver multiple asset classes and vehicle solutions to streamline relationships and pursue cost efficiency.

Our scalable business model is well positioned to expand and grow our footprint as we develop our position within the private markets ecosystem to further leverage our synergistic solutions offering.

We currently have a leading presence in North America, but believe that expanding our investor presence into international markets can be a significant growth driver for our business as investors continue to seek geographically diverse private market exposure.

Further, expanding into additional asset class solutions will enable us to further enhance our integrated network effect across private markets by, among other benefits, fostering deeper manager relationships.

Further, expanding into additional asset class solutions can enable us to further enhance our integrated network effect across private markets by, among other benefits, fostering deeper manager relationships.

We believe that the growing number of private markets focused fund managers increases the operational burden on investors and will lead to a greater reliance on highly trusted advisors to help investors navigate the complexity associated with multi- asset class manager selection.

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Our ability to raise capital in order to fund acquisitions and strategic growth initiatives.

In addition to organic growth of our existing solutions and services, our growth will continue to depend, in part, on our ability to identify, evaluate and acquire high performing and high-quality asset management businesses in order to expand our team of asset managers and advisors, as well as expand the industries and end markets which we serve.

In addition to organic growth of our existing solutions and services, our growth will continue to depend, in part, on our ability to identify, evaluate and acquire high performing and high-quality asset management businesses to expand our team of asset managers and advisors, as well as expand the industries and end markets which we serve.

These acquisitions may require us to raise additional capital through debt financing or the issuance of equity securities.

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We intend to use these advantages afforded to us by our proprietary databases, analytical tools and deep industry knowledge to drive our performance, provide our clients with customized solutions across private markets asset classes and continue to differentiate our products and services from those of our competitors.

Our ability to maintain our data advantage is dependent on a number of factors, including our continued access to a broad set of private market information on an on-going basis, as well as our ability to maintain our investment scale, considering the evolving competitive landscape and potential industry consolidation.

Our ability to maintain our data advantage is dependent on several factors, including our continued access to a broad set of private market information on an on-going basis, as well as our ability to maintain our investment scale, considering the evolving competitive landscape and potential industry consolidation.

Consolidation of Manager relationships and flight to quality.

As global financial markets continue to remain uncertain and private markets investors evaluate their exposure and allocation to private markets, a trend of consolidating managers has emerged.

Our strategies, with long-track records of success, deep industry experience, well-established relationships, and high-quality investment opportunities, can benefit from a trend toward reducing the number of managers to which capital is allocated.

Furthermore, we believe that by offering investors access to access-constrained investment opportunities, investors may favor our strategies as they make decisions on market exposure and allocation levels.

Counter-cyclical strategies can thrive in a higher-rate environment.

Some strategies are counter-cyclical in nature and can take advantage of a higher rate environment.

Specifically, private credit products, including our NAV lending strategy, with floating rate terms, benefit from the current environment, with floating rates and longer duration.

The higher rate environment also benefits our venture debt strategy as rates float throughout the investment period.

Key Financial & Operating Metrics

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We earn management and advisory fees based on a percentage of investors’

capital commitments in our funds or deployed capital.

capital commitments to, in funds or deployed capital.

Management and advisory fees during the commitment period are charged on capital commitments and after the commitment period (or a defined anniversary of the fund’s initial closing) is reduced by a percentage of the management and advisory fees for the preceding years or charged on net invested capital or NAV, in selected cases.

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Referral fee revenue is recognized upon closing of opportunities where we have referred credit opportunities that do not match our investment criteria.

The Company recognizes an accrued contingent liability and contingent payments to customers 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 payments to customers asset associated with the agreement and will amortize the asset against revenue over the period the option is expected to be exercised.

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

Operating Expenses

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This structure differs from that of most of our competitors, which we believe better aligns the objectives of our stockholders, investors and investment professionals.

The result is the substantial majority of our compensation and benefit expense is predictable.

Professional fees primarily consist of legal, advisory, accounting and tax fees which may include services related to our strategic development opportunities such as due diligence performed in connection with potential acquisitions.

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Strategic alliance expense is included in operating expenses.

This expense is driven by a Strategic Alliance Agreement (SAA) that Bonaccord had entered into with an investor at the time Bonaccord was acquired in exchange for a portion of net management fee earnings and net distributable carried interest at the time of acquisition.

This expense is driven by the SAA that Bonaccord entered into with an investor at the time Bonaccord was acquired in exchange for a portion of net management fee earnings and net distributable carried interest at the time of acquisition.

Other Income (Expense)

Interest expense includes interest paid and accrued on our outstanding debt, along with the amortization of deferred financing costs, amortization of original issue discount and the write-off of deferred financing costs due to the repayment of previously outstanding debt.

Interest expense also includes the effects of the imputed interest on certain non-interest-bearing notes payable.

Income Tax Expense/Benefit

Income tax expense/benefit is comprised of current and deferred tax expense/benefit.

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

Interest expense includes interest paid and accrued on our outstanding debt, along with the amortization of deferred financing costs, amortization of original issue discount.

Income Tax Benefit (Expense)

Income tax benefit (expense) is comprised of current and deferred tax benefit (expense).

Current income tax benefit (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.

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Results of Operations

For the three and nine months ended September 30, 2022 and September 30, 2021.

For the three months ended March 31, 2023 and March 31, 2022.

For the Three Months Ended

For the Nine Months Ended

September 30,

(in thousands)

Management and advisory fees

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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

Three Months Ended September 30, 2022 and September 30, 2021

Our revenue is composed almost entirely of recurring management and advisory fees, with the vast majority of fees earned on committed capital that is typically subject to ten to fifteen year lock up agreements, therefore our average fee rates have remained stable at approximately 1% for the three months ended September 30, 2022 and September 30, 2021.

For the three months ended September 30, 2022 compared to the three months ended September 30, 2021, revenues increased $11.9 million or 31% due to higher management fees, primarily from the impact of organic 2022 growth.

Management fees increased $11.5 million, or 30%, to $49.5 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 due to organic growth efforts in 2022.

This growth is driven by increases in FPAUM, primarily from additional fund closings and capital raised.

Catch up fees during the third quarter of 2022 were $0.8 million associated with fund closings at TrueBridge and RCP.

Catch up fees were $1.7 million during the third quarter of 2021 also associated with Truebridge and RCP.

Other revenues, which represent ancillary elements of our business, increased by $0.3 million or 151% to $0.5 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 driven primarily by fund interest income, subscription revenues and ad hoc referral fees.

Nine Months Ended September 30, 2022 and September 30, 2021

Total revenues increased $35.1 million, or 33%, to $140.0 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, due to higher management and advisory fees, largely attributable to organic growth as well as the acquisitions of Hark and Bonaccord on September 30, 2021.

Management fees increased by $34.9 million, or 34%, to $139.0 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 due primarily to organic growth of FPAUM, which contributed $27.3 million to management fee and advisory revenues, in total.

Revenue also increased by $7.6 million due to the acquisitions of Hark and Bonaccord in September 2021.

Catch up fees for the nine months ended September 30, 2022 were $3.3 million associated with the fund closings at TrueBridge and RCP.

Catch up fees were $2.9 million during the nine months ended September 30, 2021 also associated with TrueBridge and RCP.

Other revenues increased by $0.2 million, or 21% to $1.1 million, from the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

This increase was primarily attributable to fund interest income.

Net (loss)/income before income taxes

Income tax benefit/(expense)

Three Months Ended March 31, 2023 and March 31, 2022

For the three months ended March 31, 2023 compared to the three months ended March 31, 2022, revenues increased by $14.0 million or 32% due to higher management fees from the impact of inorganic growth of $7.2 million driven by the acquisition of WTI and $7.0 million of organic growth across Bonaccord, ECG, RCP, and Truebridge.

Management and advisory fees increased by $13.6 million, or 32%, to $56.6 million for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 due to inorganic growth due to the acquisition of WTI which brought $7.2 million of revenue in the first quarter of 2023 and organic FPAUM growth at RCP, TrueBridge, and ECG were the primary drivers of the increase in management and advisory fees of $6.6 million.

Catch-up fees for the three months ended March 31, 2023 were $3.0 million associated with the fund closings at Bonaccord, TrueBridge and RCP.

Other revenues, which represent ancillary elements of our business, increased by $0.4 million or 162% to $0.7 million for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 driven primarily by an increase of $0.4 million of interest income in other revenue.

For the Three Months Ended

For the Nine Months Ended

September 30,

OPERATING EXPENSES

(in thousands)

Compensation and benefits

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Operating Expenses

Three Months Ended September 30, 2022 and September 30, 2021

Total operating expenses increased by $12.7 million, or 47%, to $39.7 million, for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily driven by increases in compensation and benefits and general and administrative expenses associated with the growth of P10 since acquiring Hark and Bonaccord in September 2021 and D&O insurance driven by the IPO transaction at the end of 2021.

Compensation and benefits expense increased by $9.9 million, or 71%, to $24.0 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

Stock compensation accounts for $7.3 million of the $9.9 million increase.

This was driven by RSUs and stock options granted to employees during the fourth quarter of 2021 and the first and third quarter of 2022 as well as RSAs granted in late 2021 and the third quarter of 2022.

The Bonaccord and Hark Units discussed in Note 16 account for $4.5 million of the stock compensation expense.

There was a $1.1 million increase associated with the acquisitions of Hark and Bonaccord on the last day of the third quarter in 2021.

The final driver is a $1.5 million increase associated with an increase in headcount across all subsidiaries.

For the Three Months Ended March 31, 2023 and March 31, 2022

Total operating expenses increased by $20.7 million, or 65%, to $52.4 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

This increase was primarily due to increases in compensation and benefits as well as professional fees and amortization expense.

Compensation and benefits expense increased by $17.1 million, or 93%, to $35.6 million, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The increase was driven by a number of factors.

The acquisition of WTI added $3.2 million of compensation expense in the first quarter of 2023.

Stock compensation contributed to $5.6 million of the increase, of which $4.5 million relates to acquisition activity.

The earn out and bonus accruals associated with the acquisition of WTI as discussed in Note 14 in the footnotes to the consolidated financial statements contributed $6.4 million.

The final driver is a $1.9 million increase associated with an increase in headcount and associated benefits across all subsidiaries.

Professional fees increased by $1.2 million, or 47%, to $3.8 million.

This is primarily driven by differences in the acquisition structures that were completed in 2021 as compared to 2022.

General, administrative and other increased by $1.4 million, or 51% to $4.0 million and was primarily due to the increase of insurance expense as noted above in D&O insurance driven by the IPO transaction at the end of 2021.

This added an additional $0.7 million of expense compared to the third quarter of 2021.

The Company entered into two new leases since September 30, 2021 which added an additional $0.3 million of expense.

The remaining $0.4 million of additional general and administrative expense is derived from additional information technology expenses and increased travel since last year.

Amortization of intangibles decreased by $1.3 million, or 18% to $6.2 million, for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

The decrease is driven by an intangible asset that fully amortized in 2021 at RCP and less amortization at ECG in 2022 than in 2021 driven by unique syndication fee contracts.

This is offset by added intangible assets at Bonaccord and Hark following their acquisitions in September 2021.

Contingent consideration increased by $1.4 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

This increase is driven by the quarterly revaluations of Hark and Bonaccord contingent consideration, which was part of the acquisition in September 2021.

The SAA at Bonaccord added an additional $0.1 million of expense in the third quarter of 2022.

Refer to Note 5 for further discussion.

Nine Months Ended September 30, 2022 and September 30, 2021

Total operating expenses increased by $25.5 million, or 33%, to $102.4 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

This increase was primarily due to increases in compensation and benefits and general and administrative expenses and offset by a decrease in amortization expense of intangible assets.

This is primarily driven by increases in stock compensation associated with RSU, RSA and stock option grants at the end of 2021 and beginning of 2022 and the third quarter of 2022 as well as insurance expense associated with D&O insurance driven by the IPO transaction at the end of 2021.

The acquisitions of Hark and Bonaccord in September 2021 also contributed to these increases.

Compensation and benefits expense increased by $22.0 million, or 57%, to $60.3 million, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The acquisitions of Hark and Bonaccord made up $5.3 million of this increase.

Another $11.3 million consisted of stock compensation expense related to RSUs and stock options issued to employees during the fourth quarter of 2021 and the first and third quarters of 2022 as well as RSAs issued in late 2021 and the third quarter of 2022.

Of the $11.3 million of stock compensation expense, $4.5 million relates to the Bonaccord and Hark Units discussed in Note 16.

There was a $1.6 million increase associated with the build out of P10 back office to meet compliance needs of a public company.

An additional $2.1 million related to increases in headcount across all subsidiaries.

Finally, Five Points made a $1.7 million one-time payment to buyout the employment contracts for the prior partners during the first quarter of 2022.

Professional fees increased by $0.4 million, or 4%, to $9.4 million primarily due to differences in the acquisition structures that were completed in 2021 as compared to 2022.

General, administrative and other increased by $5.5 million, or 79% to $12.4 million.

The acquisitions of Hark and Bonaccord added an additional $2.3 million of expense for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

As previously mentioned, D&O insurance added an additional $1.9 million of expense related to the IPO transaction.

Additional office space in New York added $0.8 million of rent expense.

The additional $0.5 million of expense relates to increased costs associated with expanded headcount and increased travel expenses.

Amortization of intangibles decreased by $4.0 million, or 18%, to $18.5 million, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

The decrease is driven by a fully amortized intangible asset at RCP and less amortization at ECG in 2022 than in 2021 driven by unique syndication fee contracts.

This is offset by added intangible assets at Bonaccord and Hark following their acquisitions in September 2021.

Contingent consideration increased by $1.2 million to $1.4 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

This increase is driven by the quarterly revaluations of Hark and Bonaccord contingent consideration, which was part of the acquisition in September 2021.

The SAA at Bonaccord added an additional $0.4 million of expense in 2022.

Refer to Note 5 for further discussion.

The primary cost in professional fees for the three months ended March 31, 2023 and 2022 are tax fees associated with year end reporting and strategic planning.

General, administrative and other increased by $0.7 million, or 18%, to $4.9 million, due primarily to the acquisition of WTI.

Contingent consideration expense increased by $0.3 million, to $0.4 million, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

This was driven by remeasurement during the first quarter of 2023 of the contingent consideration payable in connection with the acquisitions of Hark and Bonaccord.

Amortization of intangibles increased by $1.1 million, or 17%, to $7.2 million, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

This is due to the acquisition of WTI.

Other Income (Expense)

Three Months Ended September 30, 2022 and September 30, 2021

Other expenses decreased $3.1 million, or 58%, to $2.2 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

This decrease was primarily due to a $2.9 million decrease in interest expense related to the extinguishment and replacement of the credit and guaranty facility with the revolver and term loan facility.

The credit and guaranty facility incurred interest at a rate of 7%.

This was replaced with the revolving credit facility and term loan which incurs interest at a base rate of 2.1% plus SOFR.

The decline in interest expense for the three months ended September 30 2022, as compared to the three months ended September 30, 2021 is a function both of lower interest rates as well as $111.9 million less in outstanding interest-bearing principal as of September 30, 2022.

The lower principal balance was a result of the paydown of debt with IPO proceeds and operating cash flow during the last year.

Nine Months Ended September 30, 2022 and September 30, 2021

Other expenses decreased by $11.7 million, or 75%, to $4.0 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

This decrease was primarily due to a $10.5 million decrease in interest expense related to the debt refinance mentioned in the above paragraph that took place in December 2021.

Other income increased by $0.5 million driven by ECG’s increased income from unconsolidated subsidiaries in the first nine months of 2021.

Income Tax/Benefit Expense

Three Months Ended September 30, 2022 and September 30, 2021

Income tax expense increased by $0.7 million to $2.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 due primarily to higher expected future net income during the 2022 period.

Nine Months Ended September 30, 2022 and September 30, 2021

Income tax expense increased by $5.9 million to $9.1 million for the nine months ended September 30, 2022 compared to an expense of $3.2 million for the nine months ended September 30, 2021.

The increase was primarily due to higher expected future net income during 2022.

The following table provides a period-to-period roll-forward of our fee earning AUM on a pro forma basis as if Hark and Bonaccord were acquired on January 1, 2021.

For the Three Months Ended March 31, 2023 and March 31, 2022

Other expenses increased by $4.0 million, or 379%, to $5.1 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

This increase was driven by a rise in interest expense of $3.7 million.

The increase in interest expense correlates to the increase in the principal balance outstanding of our Revolving Credit Facility and Term Loan of $96.8 million from the first quarter of 2022 to the first quarter of 2023 as well as rising interest rates.

This primarily relates to the acquisition of WTI.

Income Tax Expense/Benefit

For the Three Months Ended March 31, 2023 and March 31, 2022

Income tax benefit increased by $3.7 million to $1.0 million for the three months ended March 31, 2023 compared to an expense of $2.8 million for the three months ended March 31, 2022.

The increase was primarily due to a discrete item during 2023.

The following table provides a period-to-period roll-forward of our fee paying assets under management on a pro forma basis as if WTI was acquired on January 1, 2022.

For the Three Months Ended

For the Nine Months Ended

September 30,

(in millions)

Balance, Beginning of Period

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(3) Net asset value change consists primarily of the impact of market value appreciation (depreciation) from funds that earn fees on a net asset value basis.

The following table provides a period-to-period roll-forward of our fee-earning AUM on an actual basis.

The following table provides a period-to-period roll-forward of our fee paying assets under management on an actual basis.

For the Three Months Ended

For the Nine Months Ended

September 30,

(in millions)

Balance, Beginning of Period

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(3) Net asset value change consists primarily of the impact of market value appreciation (depreciation) from funds that earn fees on a net asset value basis.

FPAUM as of September 30, 2022

FPAUM increased $0.5 billion, or 2.7%, to $19.0 billion on a pro forma basis and actual basis for the three months ended September 30, 2022.

This increase is due primarily to an increase in capital raised from our private equity and venture capital solutions.

FPAUM increased $1.7 billion, or 9.8%, to $19.0 billion on a pro forma basis and $1.7 billion or 9.8% to $19.0 billion on an actual basis for the nine months ended September 30, 2022, due primarily to an increase in capital raised from our private equity and venture capital solutions.

FPAUM as of March 31, 2023

FPAUM increased by $0.4 billion, or 1.9%, to $21.6 billion on a pro forma basis and $0.4 billion, or 1.9%, to $21.6 billion on an actual basis for the three months ended March 31, 2023, due primarily to an increase in capital raised and deployed from our private equity and venture capital solutions and offset by expirations.

Our FPAUM growth and concentration across solutions and vehicles has been relatively consistent over time but can vary in particular periods due to the systematic fundraising cycles of new funds, which typically lasts 12-24 months.

We expect to continue to expand our fundraising efforts and grow FPAUM with the launch of new specialized investment vehicles and asset class solutions.

FPAUM as of March 31, 2022

FPAUM increased by $0.3 billion, or 1.9%, to $17.6 billion on an actual basis and $0.3 billion, or 1.3%, to $19.3 billion on a pro forma basis for the three months ended March 31, 2022.

The increase is due primarily to an increase in capital raised and deployed from our private equity and venture capital solutions at RCP and TrueBridge which is offset by some expirations.

We expect to continue to expand our fundraising efforts and grow FPAUM with the launch of new specialized investment vehicles and asset class solutions.

Non-GAAP Financial Measures

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The cost of financing our business;

Acquisition-related expenses which reflects the actual costs incurred during the period for the acquisition of new businesses, which primarily consists of fees for professional services including legal, accounting, and advisory,

Registration-related expenses includes professional services associated with our prospectus process incurred during the period, and does not reflect expected regulatory, compliance, and other costs associated with those that were incurred subsequent to our Initial Public Offering, and

The effects of income taxes.

Adjusted Net Income in 2021 reflects the cash payments made for interest, which differs significantly from total interest expense that includes non-cash interest on the non-interest-bearing Seller Notes related to our acquisitions of RCP 2 and RCP 3 that existed.

Similarly, the cash income taxes paid during the 2022 and 2021 periods differ significantly from the net income tax expense, which is primarily comprised of deferred tax expense as described in the results of operations.

The cash income taxes paid during the periods differ significantly from the net income tax expense, which is primarily comprised of deferred tax expense as described in the results of operations.

For the Three

For the Nine Months

September 30,

(in thousands)

Add back (subtract):

Depreciation & amortization

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Non-cash stock based compensation

Non-cash stock based compensation - acquisitions

Earn out related compensation

Adjusted EBITDA

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Selected Statements of Financial Position

September 30,

(in thousands)

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Stockholders’

There was a decrease in cash from $40.9 million as of December 31, 2021 to $20.1 million as of September 30, 2022 due to the paydown of $41 million on the revolving credit facility principal balance through September 30, 2022 and a $3.5 million dividend payment in June and September 2022 offset by excess operating cash flows.

There was a decrease in goodwill and intangible assets of $18.4 million due to amortization of intangibles during the nine months ended September 30, 2022.

There was an increase in cash and cash equivalents of $6.4 million from December 31, 2022 to $25.1 million as of March 31, 2023 primarily due to timing of debt facility maturities and associated repayments.

There was a decrease in goodwill and intangible assets of $7.2 million due to amortization of intangibles during the three months ended March 31, 2023.

Remaining total assets increased in the same period by $9.1 million.

This was primarily driven by amounts due to related parties increased by $17.6 million due to the Advisory Agreement between ECG and Enhanced PC that is discussed in Note 13 of our consolidated financial statements.

The increase is driven by an increase in accounts

receivable from related parties which is entirely due to ECG's Advisory Agreement with Enhanced PC and Crossroads.

Debt obligations declined by $5.3 million which is driven by revolver activity during the period.

Historical Liquidity and Capital Resources

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There is also a $125 million accordion feature available in the credit agreement, which we exercised in September 2022.

The accordion was not drawn until October 2022, at which point it was divided to $87.5 million of term loan and $37.5 million of revolver.

Both facilities are Term SOFR Loans.

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

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

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

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

As of September 30, 2022, the Term Loan is incurring interest at a SOFR rate of 2.61%.

As of September 30, 2022, the Revolver Facility is split into three tranches.

The first tranche has a principal balance of $20.0 million and incurs interest at a SOFR rate of 2.91% for a three month period through November 2022.

The second tranche has a principal balance of $20.0 million and incurs interest at a SOFR rate of 3.64% for a three month period through December 2022.

The third tranche has a principal balance of $9.9 million and incurs interest at a SOFR rate of 3.13% for a one month period through October 2022.

As of March 31, 2023, the Term Loan with a balance of $209.8 million is incurring interest at a weighted average SOFR rate of 6.62%.

As of March 31, 2023, the Revolver Facility is split into eight tranches.

The total principal outstanding is $77.9 million and the average SOFR rate amongst the tranches is 6.20%.

The tranches are all incurring interest at a set rate for three month periods and are subsequently reset at the current SOFR rate.

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 of less than or equal to 3.50.

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.

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

For the three and nine months ended September 30, 2021, and $0 and $0 interest expense was incurred, respectively.

In September 2022, the Company exercised its option to the accordion feature of the Credit Agreement.

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 Company has incurred $5.2 million in interest expense for the three months ended March 31, 2023.

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

There were no draws made until the fourth quarter of 2022.

However, the Company incurred $1.4 million of up front fees during the third quarter of 2022 which are reflected as debt obligations on the Consolidated Balance Sheets.

In October 2022, in accordance with the acquisition discussed in the subsequent event footnote, the Company drew on the accordion feature of the Credit Agreement.

The $125 million accordion was exercised in $87.5 million of term loan and $6.0 million of revolver.

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

The following table reflects our cash flows for the nine months ended September 30, 2022 and 2021:

For the Nine Months

Ended September 30,

The Company incurred $1.4 million of up front fees during the exercise which are reflected as debt obligations on the Consolidated Balance Sheets.

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

The following table reflects our cash flows for the three months ended March 31, 2023 and 2022:

For the Three Months

Ended March 31,

(in thousands)

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Net cash (used in) investing activities

Net cash (used in) provided by financing activities

Net cash (used in) financing activities

Increase (decrease) in cash and cash equivalents and

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Operating Activities

Cash from operating activities increased $3.2 million or 8%, to $43.9 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The components of this net increase primarily consisted of a $15.8 million increase in net income and the following changes in operating assets and liabilities:

An increase of $17.4 million in due from related parties driven primarily by the receivable from the Advisory Agreement between ECG and ECP as further discussed in Note 13 of our Consolidated Financial Statements;

A decrease of $7.4 million in other liabilities primarily driven by timing of cash held for investment projects at Enhanced;

A decrease in accounts receivable of $2.3 million as a function of timing of collections primarily at Enhanced.

Three Months Ended March 31, 2023 and March 31, 2022

Cash from operating activities increased by $13.2 million, or 173%, to $20.8 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The components of this net increase primarily consisted of the following changes in operating assets and liabilities:

An increase in revenues of $14.0 million associated with the acquisition of WTI as well as additional fund closings;

A decrease of $0.9 million in the current quarter of cash received related to the Advisory Agreement at Enhanced compared to the first quarter in 2022.

Investing activities

The cash used in investing activities decreased by $45.3 million, or 97% to $1.6 million, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

This decrease in the cash used was due almost entirely to the acquisitions of Hark and Bonaccord in September 2021.

Three Months Ended March 31, 2023 and March 31, 2022

The cash used in investing activities increased by $0.3 million, or 65%, to ($0.7) million, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

This increase in cash used was due to additional property and equipment in the first quarter of 2023.

Financing Activities

We used a net $65.1 million of cash for the nine months ended September 30, 2022 for financing activities, as compared to cash provided by financing activities of $21.5 million for the nine months ended September 30, 2021 due primarily to the pay down of $41.0 million on the Revolving Facility during 2022.

We also settled 1.1 million stock 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 and paid a dividend to all stockholders totaling $3.5 million in June and September 2022.

Three Months Ended March 31, 2023 and March 31, 2022

We recorded a net $13.7 million for the three months ended March 31, 2023 for cash used in financing activities, as compared to cash used in financing activities of $25.7 million for the three months ended March 31, 2022.

The change is attributed to timing differences of revolver tranches subject to repayment.

Future Sources and Uses of Liquidity

We generate significant cash flows from operating activities.

We believe that we will be able to continue to meet our current and long-term liquidity and capital requirements through our cash flows from operating activities, existing cash and cash equivalents, and our external financing activities which may include refinancing of existing indebtedness or the pay down of debt using proceeds of equity offerings.

Off Balance Sheet Arrangements

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In the ordinary course of business, we enter contractual arrangements that require future cash payments.

The following table sets forth information regarding our anticipated future cash payments under our contractual obligations as of September 30, 2022:

The following table sets forth information regarding our anticipated future cash payments under our contractual obligations as of March 31, 2023:

(in thousands)

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2) Debt obligations presented in the table reflect scheduled principal payments related to the various debt instruments of the Company.

Critical Accounting Policies

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S.

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We believe the following critical accounting policies could potentially produce materially different results if we were to change the underlying assumptions, estimates, or judgements.

See Note 2, “Significant Accounting Policies”

for a summary of our significant accounting policies.

See Note 2 of our consolidated financial statements for a summary of our significant accounting policies.

Basis of Presentation

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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.

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.

See Note 7 for further information.

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.

See Note 7 of our consolidated financial statements for further information.

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

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

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

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.

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

See Note 7 of our consolidated financial statements for more information on both consolidated and unconsolidated VIEs.

Entities that do not qualify as VIEs are assessed for consolidation as voting interest entities 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.

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

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

Revenue Recognition of Management Fees and Management Fees Received in Advance

On January 1, 2019, the Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) using the modified retrospective method.

The adoption did not change the historical pattern of recognizing revenue for management fees.

Accordingly, the Company did not record a cumulative adjustment upon adoption.

Revenue is recognized when 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.

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

In accordance with Accounting Standards Codification (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, 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.

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Interest Rate Risk

As of September 30, 2022, we had $174.9 million in outstanding principal under our Term Loan and Revolving Credit Facility.

The annual interest rate on the Term Loan is based on SOFR, plus 0.10%, plus 2.00%.

On September 30, 2022, the interest rate on these borrowings was 2.10% + SOFR.

As of March 31, 2023, we had $209.8 million in outstanding principal in Term Loan under our Term Loan and Revolving Credit Facility.

The annual interest rate on the Term Loan is based on SOFR, subject to a floor of 0.10%, plus 2.00%.

On March 31, 2023, the interest rate on these borrowings was 2.1% + SOFR.

We estimate that a 100-basis point increase in the interest rate would result in an approximately $1.7 million increase in interest expense related to the loan over the next 12 months.

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In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets.

Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing disclosure controls and procedures, our management necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

The design of any disclosure controls and procedures also is based in part upon certain assumptions about likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.

Our management, under the supervision and with the participation of our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report.

Based on that evaluation, our Co-Chief Executive Officers and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to provide reasonable assurance that information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Legal Proceedings.

The information required with respect to this item can be found under “Contingencies”

in Note 14, Commitments and Contingencies, to our consolidated financial statements included elsewhere in this annual report, and such information is incorporated by reference into this Item 1.

Risk Factors.

There have been no material changes from the risk factors previously disclosed in “Risk Factors”

included in our annual report on Form 10-K for the year ended December 31, 2022.

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 2. Management’s Discussion and Analysis