What changed in this filing

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Item 1. Financial Statements

2023-11-13 compared with 2023-08-14 · 335 added, 236 removed, 745 unchanged (43% of the section changed)

2 unchanged sentences

(in thousands, except share amounts)

As of June 30,

As of September 30,

Cash and cash equivalents

1 unchanged sentence

Accounts receivable

Note receivable

Notes receivable

Due from related parties

21 unchanged sentences

510,000,000 shares authorized;

44,761,247 issued and 43,823,473 outstanding as of June 30, 2023, and 43,303,040 issued and 42,365,266 outstanding as of December 31, 2022, respectively

45,869,964 issued and 44,932,190 outstanding as of September 30, 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;

72,505,177 shares issued and 72,381,726 shares outstanding as of June 30, 2023, and 73,131,826 shares issued and 73,008,374 shares outstanding as of December 31, 2022, respectively

71,467,190 shares issued and 71,343,739 shares outstanding as of September 30, 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

Noncontrolling interests

Total stockholders' equity

4 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Management and advisory fees

14 unchanged sentences

Total other (expense)

Net income before income taxes

Net (loss)/income before income taxes

Income tax expense

net income attributable to noncontrolling interest in P10 Intermediate

NET INCOME ATTRIBUTABLE TO P10

NET (LOSS)/INCOME

net (loss)/income attributable to noncontrolling interests in P10 Intermediate

NET (LOSS)/INCOME ATTRIBUTABLE TO P10

Earnings per share

Basic earnings per share

Diluted earnings per share

Basic (loss)/earnings per share

Diluted (loss)/earnings per share

Dividends paid per share

23 unchanged sentences

Balance at June 30, 2022

Stock-based compensation

Net income attributable to P10

Exchange of Class B common stock for Class A common stock

Issuance of restricted stock awards

Issuance of restricted stock units

Exercise of stock options

Stock repurchase

Dividends declared

Dividends paid

Balance at September 30, 2022

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

Common Stock - Class A

6 unchanged sentences

Stock-based compensation

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

Net income attributable to P10 and net income attributable to non controlling interests

Exchange of Class B common stock for Class A common stock

9 unchanged sentences

Stock-based compensation

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

Net income attributable to P10 and net income attributable to non controlling interests

Exchange of Class B common stock for Class A common stock

6 unchanged sentences

Balance at June 30, 2023

Stock-based compensation

Net loss attributable to P10 and net loss attributable to non controlling interests

Exchange of Class B common stock for Class A common stock

Distributions to non-controlling interests

Issuance of restricted stock awards

Exercise of stock options (net of tax)

Repurchase of common stock for employee tax witholding

Dividends paid

Balance at September 30, 2023

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

1 unchanged sentence

(Unaudited, in thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by operating

Net (loss)/income

Adjustments to reconcile net (loss)/income to net cash provided by operating

Stock-based compensation

2 unchanged sentences

Amortization of debt issuance costs and debt discount

Income from unconsolidated subsidiaries

Loss/(income) from unconsolidated subsidiaries

Deferred tax expense

12 unchanged sentences

Other liabilities

Contingent consideration

Deferred revenues

3 unchanged sentences

Purchase of intangible assets

Draw on note receivable

Proceeds from note receivable

Draw on notes receivable

Proceeds from notes receivable

Proceeds from investments in unconsolidated subsidiaries

6 unchanged sentences

Repurchase of Class A common stock for employee tax withholding

Payments to settle exercise of employee stock options

Repurchase of Class B common stock

Repurchase of Class A common stock

Payment of contingent consideration

10 unchanged sentences

(Unaudited, in thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

1 unchanged sentence

Net cash paid for income taxes

NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES

NON-CASH INVESTING AND FINANCING ACTIVITIES

Additions to right-of-use assets

1 unchanged sentence

Additions to property and equipment

Additions to accrued compensation and benefits

Additions to contingent consideration

7 unchanged sentences

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

Description of Business

38 unchanged sentences

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

On September 30, 2021, the Company completed acquisitions of Bonaccord and Hark.

9 unchanged sentences

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.

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

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

Noncontrolling interests 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 in accordance with the terms of the P10 Intermediate operating agreement.

6 unchanged sentences

All intercompany transactions and balances have been eliminated upon consolidation.

The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year ended December 31, 2023.

The results for the three and nine months ended September 30, 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.

7 unchanged sentences

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

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.

11 unchanged sentences

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

Reclassifications

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

Use of Estimates

4 unchanged sentences

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

As of June 30, 2023, and December 31, 2022, cash equivalents include money market funds of $ 5.8 million and $ 7.8 million, respectively, which approximates fair value.

As of September 30, 2023, and December 31, 2022, cash equivalents include money market funds of $ 7.8 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.

3 unchanged sentences

Restricted Cash

Restricted cash as of June 30, 2023 and December 31, 2022 was primarily cash that is restricted due to certain deposits being held for customers.

Restricted cash as of September 30, 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

Accounts receivable is equal to contractual amounts reduced for allowances, if applicable.

The Company considers accounts receivable to be fully collectible;

accordingly, no allowance for doubtful accounts has been established as of June 30, 2023 and December 31, 2022.

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

the period that determination is made.

The Company estimates that accounts receivable is fully collectible based on historical events, current conditions, and reasonable and supportable forecasts;

accordingly, no allowance for doubtful accounts has been established as of September 30, 2023 and December 31, 2022.

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

Management fees are collected on a quarterly basis.

1 unchanged sentence

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

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

1 unchanged sentence

These amounts are expected to be fully collectible.

Note Receivable

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

Notes Receivable

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

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

The Company considers the note receivable to be fully collectible;

no allowance for doubtful accounts has been established as of June 30, 2023 and December 31, 2022.

The Company estimates the notes receivable to be fully collectible based on historical events, current conditions, and reasonable and supportable forecasts;

no allowance has been established as of September 30, 2023 and December 31, 2022 .

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

22 unchanged sentences

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

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.

15 unchanged sentences

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 options to repurchase the revenue share are exercisable starting in July 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.

5 unchanged sentences

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

As of June 30, 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 June 30, 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.

As of September 30, 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 September 30, 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

If it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying value, then the Company will determine the fair value of the reporting unit and record an impairment charge

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

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).

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

for the difference between fair value and carrying value (not to exceed the carrying amount of goodwill).

The Company performed the annual impairment assessment as of September 30, 2023 noting that no goodwill impairment existed.

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 June 30, 2023 , contingent consideration recorded relates to the acquisitions of Hark and Bonaccord on the Consolidated Balance Sheets.

As of September 30, 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.

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

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

The sellers and certain 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.

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

Refer to Note 14 for further information.

2 unchanged sentences

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.

Noncontrolling Interests

Noncontrolling interests ("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 interests 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 (loss)/income attributable to P10, as reported in the Consolidated Statements of Income, is presented net of the portion of net (loss)/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.

5 unchanged sentences

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

As of June 30, 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:

As of September 30, 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.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

Level 2—Assets were valued using quoted prices in markets that are not active, broker dealer quotations, and other methods by which all significant inputs were observable at the measurement date.

11 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 revenues on the Consolidated Balance Sheets.

These fees are recorded as deferred revenues on the Consolidated Balance Sheets due to the performance obligation not being satisfied at the time of collection.

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.

7 unchanged sentences

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

Interest income is recognized from interest bearing bank accounts and revenue is recognized as it is earned.

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.

6 unchanged sentences

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

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.

1 unchanged sentence

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

Earnings Per Share

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

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

Earnings (Loss) Per Share

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

Diluted EPS includes the determinants of basic EPS and common stock equivalents outstanding during the period adjusted to give effect to potentially dilutive securities if the Company is in a net income position.

Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses.

See Note 17 for additional information.

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.

When the Company is in a net income position, 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 as well as the vesting of restricted stock units.

19 unchanged sentences

Segment Reporting

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.

According to ASC 280, Disclosures about Segments of an Enterprise and Related Information , operating segments are defined as components of an enterprise for which discrete 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 evaluate financial performance and make decisions regarding the allocation of resources.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

Business Acquisitions

34 unchanged sentences

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

Pronouncements Not Yet Adopted

13 unchanged sentences

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

Total acquisition-related expenses were $ 0 for the three and six months ended June 30, 2023 and $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 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:

Total acquisition-related expenses were $ 0 for the three and nine months ended September 30, 2023 and $ 1.4 million and $ 1.5 million for the three and nine months ended September 30, 2022, respectively.

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

Cash and cash equivalents

10 unchanged sentences

Net assets acquired

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

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

Value of management and advisory contracts

1 unchanged sentence

Total identifiable intangible assets

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

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 $ 87.3 million of goodwill is expected to be deductible for tax purposes.

Approximately $ 87.3 million of

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

goodwill is expected to be deductible for tax purposes.

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

9 unchanged sentences

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 Six Months

Ended June 30,

Net income attributable to P10

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

For the Nine Months

Ended September 30,

Net (loss)/income attributable to P10

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

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.

1 unchanged sentence

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Management and advisory fees

4 unchanged sentences

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

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.

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.

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

For the three and nine months ended September 30, 2023 , the strategic

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

alliance expense reported was $ 0.3 million and $ 1.1 million, respectively.

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

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

As of September 30, 2023 and December 31, 2022 , the associated liability is $ 0.3 million and $ 0.2 million, respectively, which is reported in accrued expenses on the Consolidated Balance Sheets.

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.

1 unchanged sentence

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 June 30, 2023 .

The Company believes it is 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 September 30, 2023 .

Fund II has not yet reached the final close, but the Company believes it is 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, which is included in the strategic alliance expense.

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

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

This commitment has not yet been met as of June 30, 2023 as Fund III has not yet started raising capital.

This commitment has not yet been met as of September 30, 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 equity at that point in time.

For the three and six months ended June 30, 2023 , the strategic alliance expense reported was $ 0.4 million and $ 0.8 million, respectively.

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

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

As of June 30, 2023 and December 31, 2022 the associated liability is $ 0.3 million and $ 0.2 million, respectively, 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, of which $ 4.4 million was drawn as of June 30, 2023 with a maturity date of September 30, 2031 .

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

Notes Receivable

The Company's notes 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, of which $ 4.4 million was drawn as of September 30, 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.

Internal Revenue Code and (ii) 5.5 %.

The stated interest rate is the effective rate.

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 $ 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 June 30, 2023 , $ 0.1 million of interest was paid.

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

As of June 30, 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 and six months ended June 30, 2023 , respectively, and $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2022 , respectively.

As of September 30, 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 $ 0.2 million for the three and nine months ended September 30, 2023 , respectively, and $ 0.1 million and $ 0.1 million for the three and nine months ended September 30, 2022 , respectively.

Variable Interest Entities

2 unchanged sentences

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 totaled $ 562.9 million and $ 568.0 million as of June 30, 2023 and December 31, 2022 , respectively.

The liabilities of the consolidated VIEs totaled $ 379.8 million and $ 96.3 million as of June 30, 2023 and December 31, 2022, respectively.

The assets of the consolidated VIEs totaled $ 553.5 million and $ 568.0 million as of September 30, 2023 and December 31, 2022 , respectively.

The liabilities of the consolidated VIEs totaled $ 377.5 million and $ 96.3 million as of September 30, 2023 and December 31, 2022, respectively.

The increase in VIE liabilities throughout 2023 is mainly attributable to debt obligations moving from P10, Inc.

to P10 Intermediate.

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.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

Unconsolidated VIEs

3 unchanged sentences

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

As of June 30, 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 September 30, 2023 , investment in unconsolidated subsidiaries totaled $ 1.6 million, of which $ 1.4 million related to ECG’s asset management businesses and $ 0.2 million related to ECG’s tax credit finance 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.

1 unchanged sentence

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 $ 0.4 million and $ 0.5 million for the three month and six months ended June 30, 2023 , respectively, and $ 0.8 million and $ 1.1 million for the three and six months ended June 30, 2022, respectively.

For the three and six months ended June 30, 2023, ECG made $ 0 capital contributions and received distributions of $ 0.4 million and $ 0.5 million, respectively.

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

ECG recorded its share of loss in the amount of $ 0.8 million and $ 0.2 million for the three and nine months ended September 30, 2023 , respectively, and recorded its share of income in the amount of $ 0.2 million and $ 1.3 million for the three and nine months ended September 30, 2022, respectively.

For the three and nine months ended September 30, 2023, ECG made $ 0 capital contributions and received distributions of $ 0 million and $ 0.5 million, respectively.

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

Tax Credit Finance

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

For the three and six months ended June 30, 2023 and June 30, 2022, EC G made $ 0 of capital contributions and received distributions of $ 0 .

For the three and nine months ended September 30, 2023 and September 30, 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 June 30,

As of September 30,

As of December 31,

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Goodwill and Intangibles

Changes in goodwill for the six months ended June 30, 2023 are as follows:

Changes in goodwill for the nine months ended September 30, 2023 are as follows:

Balance at December 31, 2022

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Increase from acquisitions

Balance at June 30, 2023

Balance at September 30, 2023

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

During the period, there was a revision to the provisional fair value of the WTI tradename as a result of obtaining new information that was available at acquisition.

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

During the period, there was a revision to the provisional fair value of the WTI tradename as a result of obtaining new information that was not available at acquisition.

This revision resulted in a purchase price adjustment.

1 unchanged sentence

Intangibles consists of the following:

As of June 30, 2023

As of September 30, 2023

Gross Carrying

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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 June 30, 2023 , $ 8.9 million has been paid in

The amount ultimately owed to the sellers is based on achieving specific fundraising targets and any amounts paid to the sellers

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

contingent consideration associated with the earnout.

Total expense recognized for the three and six months ended June 30, 2023 was $ 0.1 million and $ 0.5 million, r espectively.

Total expense recognized for the three and six months ended June 30, 2022 was $ 0 million and $ 0.1 million, respectively.

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

will be paid by October 2027, at which point the earnout expires.

Payments are made after each close.

As of September 30, 2023 , $ 9.7 million has been paid in total contingent consideration associated with the earnout.

It is highly probable that the remainder of the earnout will be acheived.

Total remeasurement expense recognized for the three and nine months ended September 30, 2023 was $ 0.1 million and $ 0.5 million, r espectively.

Total remeasurement expense recognized for the three and nine months ended September 30, 2022 was $ 0.2 million and $ 0.2 million, respectively.

This is included in contingent consideration expense on the Statements 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 June 30, 2023 , the estimated fair value of the remaining contingent consideration totaled $ 10.8 million.

Following June 30, 2023, the Company has paid $ 2.7 million towards the remaining contingent consideration.

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

As of September 30, 2023 , the estimated fair value of the remaining contingent consideration totaled $ 8.2 million.

Following September 30, 2023, the Company has paid $ 1.5 million towards the remaining contingent consideration.

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

Total expense recognized for the three and six months ended June 30, 2023 totaled $ 0 and $ 0.1 million, respectively.

Total gain recognized for the three and six months ended June 30, 2022 , respectively, totaled $ 0 million and $ 0.1 million, which was included in contingent consideration expense on the Statements of Operations.

As of June 30, 2023 , the contingent consideration associated with the earnout totaled $ 5.4 million and is considered earned but has not yet been paid.

Following June 30, 2023, this was paid in entirety.

Total remeasurement expense recognized for the three and nine months ended September 30, 2023 totaled $ 0 and $ 0.1 million, respectively.

Total remeasurement expense recognized for the three and nine months ended September 30, 2022 , respectively, totaled $ 1.2 million and $ 1.2 million, which was included in contingent consideration expense on the Statements of Operations.

The entirety of the Hark contingent consideration was paid during the quarter ended September 30, 2023.

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

As of June 30, 2023

As of September 30, 2023

Contingent consideration obligation

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Total liabilities

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the periods ended June 30, 2023 and December 31, 2022.

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

For the Nine Months Ended September 30,

Balance, beginning of year:

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Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

Debt Obligations

Debt obligations consists of the following:

September 30,

Revolver facility

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Total debt obligations

June 30, 2023

September 30, 2023

Principal Amount

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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 June 30, 2023, P10 was in compliance with its financial covenants required under the facility.

As of June 30, 2023 , the balance drawn on the revolving credit facility is $ 68.0 million and on the term loan, the balance is $ 207.2 million.

As of September 30, 2023, P10 was in compliance with its financial covenants required under the facility.

As of September 30, 2023 , the balance drawn on the revolving credit facility is $ 60.5 million and on the term loan, the balance is $ 204.5 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 six months ended June 30, 2023 , $ 5.0 million and $ 9.9 million of interest expense was incurred, respectively.

For the three and six months ended June 30, 2022 , $ 1.3 million and $ 2.5 million of interest expense was incurred, respectively.

Future principal maturities of debt as of June 30, 2023 are as follows:

For the three and nine months ended September 30, 2023 , $ 5.1 million and $ 15.0 million of interest expense was incurred, respectively.

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

Future principal maturities of debt as of September 30, 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 June 30, 2023 and December 31, 2022 were $ 3.5 million and $ 4.2 million, respectively.

Amortization expense related to debt issuance costs totaled $ 0.4 million and $ 0.7 million for the three and six months ended June 30, 2023 , respectively, and $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2022 , respectively.

Unamortized debt issuance costs for the Revolver Facility and Term Loan as of September 30, 2023 and December 31, 2022 were $ 3.1 million and $ 4.2 million, respectively.

Amortization expense related to debt issuance costs totaled $ 0.4 million and $ 1.1 million for the three and nine months ended September 30, 2023 , respectively, and $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2022 , respectively.

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

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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 and six months ended June 30, 2023 , respectively, and $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2022, respectively.

P10 has paid $ 0.1 million and $ 0.2 million in rent to 210 Capital, LLC for the three and nine months ended September 30, 2023 , respectively, and $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 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 June 30, 2023, the total accounts receivable from the Funds totaled $ 16.0 million , of which $ 3.5 million related to reimbursable expenses and $ 12.5 million related to fees earned but not yet received.

As of September 30, 2023, the total accounts receivable from the Funds totaled $ 16.8 million , of which $ 5.7 million related to reimbursable expenses and $ 11.1 million related to fees earned but not yet received.

As of December 31, 2022 , the total accounts receivable from the Funds totaled $ 16.8 million, of which $ 6.2 million related to reimbursable expenses and $ 10.6 million related to fees earned but not yet received.

Reimbursable expenses and fees earned but not yet received are included in due from related parties and accounts receivable on the Consolidated Balance Sheets, respectively.

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

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

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

As a result of new projects during 2021 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.

An additional advisory fee was agreed to in 2023 as a result of new projects, this fee totals $ 9.5 million over 7 years on a declining fixed fee schedule.

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,which totals $ 107.5 million over 7 years .

This agreement is subject to customary termination provisions.

Since inception, $ 56.7 million of the total $ 107.5 million advisory fees have been recognized as revenue.

Advisory fees earned or recognized under this agreement were $ 5.3 million and $ 10.2 million for the three and six months ended June 30, 2023 , respectively, and $ 5.5 million and $ 11.1 million for the three and six months ended June 30, 2022 , respectively, and is reported in management and advisory fees on the Consolidated Statements of Operations.

Advisory fees earned or recognized under this agreement were $ 5.3 million and $ 15.5 million for the three and nine months ended September 30, 2023 , respectively, and $ 5.5 million and $ 16.6 million for the three and nine months ended September 30, 2022 , respectively, and is reported in management and advisory fees on the Consolidated Statements of Operations.

The Company also incurs interest income on the balance outstanding.

Revenues from interest were $ 0.1 million and $ 0.3 million for the three and six months ended June 30, 2023, respectively, and $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2022, respectively, and is reported in management and advisory fees on the Consolidated Statement of Operations.

As of June 30, 2023 and December 31, 2022, the balance was $ 38.7 million and $ 28.5 million, respectively, and is included in due from related parties on the Consolidated Balance Sheets.

Revenues from interest were $ 0.2 million and $ 0.5 million for the three and nine months ended September 30, 2023, respectively, and $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2022, respectively, and is reported in management and advisory fees on the Consolidated Statement of Operations.

As of September 30, 2023 and December 31, 2022 , the balance was $ 44.0 million and $ 28.5 million, respectively, and is included in due from related parties on the Consolidated Balance Sheets.

Payment is expected to be collected as the permanent capital subsidiaries complete and liquidate projects covered under this agreement.

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

The Company recognized $ 3.0 million and $ 6.2 million for the three and six months ended June 30, 2023 , respectively, and $ 2.4 million and $ 4.6 million for the three and six months ended June 30, 2022, respectively, related to this agreement within compensation and benefits on our Consolidated Statements of Operations.

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

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

became effective.

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 $ 3.1 million and $ 9.3 million for the three and nine months ended September 30, 2023 , respectively, and $ 3.3 million and $ 7.9 million for the three and nine months ended September 30, 2022, respectively, related to this agreement within compensation and benefits on our Consolidated Statements of Operations.

As of September 30, 2023 and December 31, 2022 , the balance was $ 0.8 million and $ 2.2 million, respectively, and is included in due to related parties on the Consolidated Balance Sheets.

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.

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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 $ 2.6 million and $ 5.0 million for the three and six months ended June 30, 2023 , respectively, and $ 0.6 million and $ 1.0 million for the three and six months ended June 30, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

In relation to the strategic partnership with Crossroads effective September 10, 2021 and the Crossroads Advisory Agreement, t he Company recognized $ 1.6 million and $ 6.6 million for the three and nine months ended September 30, 2023 , respectively, and $ 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.

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.

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

The Company recognizes an annual fee of $ 20 thousand of which $ 5 thousand and $ 10 thousand has been recognized for the three and six months ended June 30, 2023, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

The Company recognized $ 20 thousand and $ 20 thousand for the three and six months ended June 30, 2022, respectively.

The Company recognizes an annual fee of $ 20 thousand of which $ 5 thousand and $ 15 thousand has been recognized for the three and nine months ended September 30, 2023, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

The Company recognized no revenue for the three and nine months ended September 30, 2022, respectively.

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.

4 unchanged sentences

These lease agreements provide for various renewal options.

Rent expense for the various leased office space and equipment was approximately $ 1.1 million and $ 1.9 million for the three and six months ended June 30, 2023 , respectively, and $ 0.8 million and $ 1.6 million for the three and six months ended June 30, 2022, respectively.

The following table presents information regarding the Company’s operating leases as of June 30, 2023:

Rent expense for the various leased office space and equipment was approximately $ 1.0 million and $ 2.9 million for the three and nine months ended September 30, 2023, respectively, and $ 0.8 million and $ 2.4 million for the three and nine months ended September 30, 2022, respectively.

The Company leases an insignificant amount of office equipment under a non-cancelable financing lease, with the lease expiring in 2028.

The finance lease right-of-use asset is included in Right-of-use assets and the finance lease liability is included in Lease Liabilities in the Consolidated Balance Sheet.

Amortization and Interest expense for the finance leased equipment is included in General,administrative and other in the Consolidated Statements of Operations.

The following table presents information regarding the Company’s operating leases as of September 30, 2023:

Operating lease right-of-use assets

Operating lease liabilities

Cash paid for lease liabilities

Cash paid for operating lease liabilities

Weighted-average remaining lease term (in years)

Weighted-average discount rate

The future contractual lease payments as of June 30, 2023 are as follows:

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

The future contractual lease payments as of September 30, 2023 are as follows:

Total undiscounted lease payments

Less imputed interest

Total lease liabilities

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

Total operating lease liabilities

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.

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 and benefits 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 June 30, 2023 , the Company has determined that only the first two EBITDA hurdles are probable of being achieved.

Payments will be made in cash, with the option to pay up to 50.0 % in units of P10 Intermediate, no later than 90 days following the last day of the calendar quarter in which a milestone payment is 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 and six months ended June 30, 2023 , $ 5.9 million and $ 11.8 million, respectively, was recognized and for the three and six months ended June 30, 2022 , $ 0 and $ 0 was recognized, respectively.

As of June 30, 2023 and December 31, 2022, the balance was $ 17.0 million and $ 5.2 million, respectively, and is included in accrued compensation and benefits in the Consolidated Balance Sheets.

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 September 30, 2023, the Company has determined that only the first two EBITDA hurdles are probable of being achieved.

For the three and nine months ended September 30, 2023 , $ 6.0 million and $ 17.9 million, respectively, was recognized and for the three and nine months ended September 30, 2022 , $ 0 and $ 0 was recognized, respectively.

As of September 30, 2023 and December 31, 2022, the balance was $ 23.1 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.

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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 and six months ended June 30, 2023 , $ 0.5 million and $ 1.0 million, respectively, of expense was recognized and for the three and six months ended June 30, 2022 , no expense was recognized.

For the three and nine months ended September 30, 2023 , $ 0.5 million and $ 1.5 million, respectively, of expense was recognized and for the three and nine months ended September 30, 2022 , no expense was recognized.

Recognized expense is included in compensation and benefits on the Consolidated Statement of Operations.

As of June 30, 2023 and December 31, 2022, the balance was $ 1.4 million and $ 0.4 million, respectively, and is included in accrued compensation and benefits on the Consolidated Balance Sheets.

As of September 30, 2023 and December 31, 2022, the balance was $ 1.9 million and $ 0.4 million, respectively, and is included in accrued compensation and benefits on the Consolidated Balance Sheets.

Revenue Share Arrangement

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The contingent payments to customers are amortized and recorded within management and advisory fees on the Consolidated Statements of Operations over the revenue share agreement.

As of June 30, 2023, the Company has determined that the put options are probable and have accrued estimated contingent liabilities and contingent payments to customers.

As of June 30, 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 $ 12.9 million and $ 13.6 million as of June 30, 2023 and December 31, 2022, respectively.

The Company recognized $ 0.6 million and $ 0.2 million of amortization of contingent payments to customers for the three and six months ended June 30, 2023 , respectively, and $ 0 and $ 0 of amortization of contingent payments to customers for the three and six months ended June 30, 2022, respectively, which is included in management and advisory fees on the Consolidated Statements of Operations.

As of September 30, 2023, the Company has determined that the put options are probable and have accrued estimated contingent liabilities and contingent payments to customers.

As of September 30, 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 $ 12.5 million and $ 13.6 million as of September 30, 2023 and December 31, 2022, respectively.

The Company recognized $ 0.4 million and $ 1.1 million of amortization of contingent payments to customers for the three and nine months ended September 30, 2023 , respectively, and $ 0 and $ 0 of

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

amortization of contingent payments to customers 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.

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

Executive Transition Agreement

As described in Note 18, subsequent to the end of the quarter, the Company's Co-CEOs transitioned into Board of Directors roles and were succeeded by a newly hired CEO.

Associated with their transition, the Co-CEOs received severance payments and accelerated bonus payments.

For the three and nine months ended September 30, 2023, the Company recognized $ 4.9 million of expense related to the executive transition agreement which is included in compensation and benefits in the Consolidated Statement of Operations.

Contingencies

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We do not believe that any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

Markets Tax Credit (NMTC) program, to which a subsidiary of Enhanced Capital, among others, was a party.

In 2021, the Civil Enforcement Division of the Oregon Department of Justice (Oregon DOJ) initiated an investigation of certain transactions involving the Oregon Low Income Community Jobs Initiative, also known as the Oregon New Markets Tax Credit (NMTC) program, to which a subsidiary of Enhanced Capital, among others, was a party.

The Oregon DOJ contends that the subsidiary of Enhanced Capital omitted from the NMTC application information regarding the application of leveraged financing in the transaction and the sources and uses of funds in the proposed transactions.

1 unchanged sentence

The Company continues to assert that it followed all program requirements and met all disclosure obligations.

The subsidiary of Enhanced Capital completed non-binding mediation in July 2023 and settlement discussions continue.

Based on our assessment of the current stage of this investigation and settlement, our financial results as of June 30, 2023, includes an immaterial accrual related thereto in accrued expenses on the Consolidated Balance Sheets and other (expense)/income on the Consolidated Statements of Operation.

The subsidiary of Enhanced Capital completed non-binding mediation in July 2023 and a settlement has been negotiated which is pending Board and Oregon DOJ approval.

The Company has agreed with the insurance carrier to contribute $ 1.5 million toward the settlement amount and is exploring additional recoveries.

Based on our assessment of the current stage of this investigation and settlement, our financial results for the three and nine months ended September 30, 2023, includes an accrual of the settlement amount of $ 2.6 million and $ 3.6 million, respectively, related thereto in accrued expenses on the Consolidated Balance Sheets and other (expense)/income on the Consolidated Statements of Operation.

Additionally, following an executed insurance recovery agreement, the Company has recorded a receivable of $ 1.5 million associated with the insurance recovery in accounts receivable on the Consolidated Balance Sheets and other (expense)/income on the Consolidated Statements of Operation.

At this time, we do not believe any outcome in this investigation will have a material adverse effect on our business, operating results, or financial position.

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

Based on these methodologies, the Company’s effective income tax rate was 59.62 % and 29.80 % for the three and six months ended June 30, 2023, respectively.

The effective tax rate differs from the federal statutory rate of 21 % due to executive compensation subject to 162(m) limitation, state taxes, and a discrete period recognition of windfall tax adjustments related to options exercised year-to-date.

The Company's effective income tax rate for the three and six months ended June 30, 20 22 was 26.11 % and 25.94 %, respectively.

Based on these methodologies, the Company’s effective income tax rate was ( 25.90 %) and ( 91.32 %) for the three and nine months ended September 30, 2023 , respectively.

The effective tax rate differs from the federal statutory rate of 21 % due to executive compensation subject to 162(m) limitation, state and local taxes, and a discrete period recognition of shortfall tax adjustments related to options exercised year-to-date.

The Company's effective income tax rate for the three and nine months ended September 30, 2022 was 25.77 % and 25.90 %, respectively.

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

2 unchanged sentences

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

As of June 30, 2023, the Company has recorded a $ 12.8 million valuation allowance against deferred tax assets, primarily related to a note impairment.

As of September 30, 2023 , the Company has recorded a $ 12.8 million

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

valuation allowance against deferred tax assets, primarily related to a note impairment.

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

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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.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

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 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 June 30, 2023, there are 3,965,756 shares available for grant.

A summary of stock option activity for the period ended June 30, 2023 is as follows:

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.

On December 9, 2022, a special meeting of stockholders was held to increase the number of shares issuable under the Plan by 4,000,000 shares, resulting in a total of 18,300,000 shares available for grant under the Plan and the 2018 Plan.

As of September 30, 2023, there are 4,016,477 shares available for grant.

A summary of stock option activity for the period ended September 30, 2023 is as follows:

Weighted Average

6 unchanged sentences

Expired/Forfeited

Outstanding as of June 30, 2023

Exercisable as of June 30, 2023

Outstanding as of September 30, 2023

Exercisable as of September 30, 2023

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

The stock-based compensation expense was $ 8.1 million and $ 15.2 million for the three and six months ended June 30, 2023 , respectively, and $ 2.7 million and $ 4.2 million for the three and six months ended June 30, 2022, respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of June 30, 2023 was $ 7.1 million and is expected to be recognized over a weighted average period of 3.39 years.

The stock-based compensation expense for stock options was $ 1.9 million and $ 5.3 million for the three and nine months ended September 30, 2023 ,

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

respectively, and $ 0.1 million and $ 2.4 million for the three and nine months ended September 30, 2022, respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of September 30, 2023 was $ 7.8 million and is expected to be recognized over a weighted average period of 3.18 years.

Any future forfeitures will impact this amount.

The weighted average assumptions used in calculating the fair value of stock options granted during the six months ended June 30, 2023 and June 30, 2022 were as follows:

For the Six Months Ended June 30,

The weighted average assumptions used in calculating the fair value of stock options granted during the nine months ended September 30, 2023 and September 30, 2022 were as follows:

For the Nine Months Ended September 30,

Expected life

8 unchanged sentences

Outstanding as of December 31, 2022

Outstanding as of June 30, 2023

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

Outstanding as of September 30, 2023

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

4 unchanged sentences

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 June 30, 2023 , certain performance metrics have been met and 348,931 units have been issued to specific employees.

As of September 30, 2023 , certain performance metrics have been met and specific employees have earned $ 7.8 million in value of which $ 6.6 million was issued in shares and $ 1.2 million was issued in cash.

The Company evaluates whether it is pro bable 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 $ 1.6 million and $ 5.2 million has been recorded for the three and six months ended June 30, 2023 , respectively, on the Consolidated Statements of Operations.

The unrecognized expense associated with the Bonaccord Units was $ 5.3 million as of June 30, 2023.

Future vested tranches will be settled in cash.

An expense of $ 0.4 million and $ 5.6 million has been recorded for the three and nine months ended September 30, 2023 , respectively, and $ 3.9 million for the three and nine months ended September 30, 2022 on the Consolidated Statements of Operations.

The unrecognized expense associated with the Bonaccord Units was $ 4.9 million as of September 30, 2023.

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 June 30, 2023 , all Hark Units have vested and been issued.

An expense of $ 0.3 million has been recorded for the three and six months ended June 30, 2023 on the Consolidated Statements of Operations.

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.

As of September 30, 2023 , all Hark Units have vested and been issued.

An expense of $ 0 and $ 0.3 million has been recorded for the three and nine months ended September 30, 2023 , respectively, and $ 0.6 million for the three and nine months ended September 30, 2022 on the Consolidated Statements of Operations.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

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 or vested and settled in cash.

Weighted-Average Grant

1 unchanged sentence

Outstanding as of December 31, 2022

Outstanding as of June 30, 2023

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts stated in thousands, except share and per share amounts)

Outstanding as of September 30, 2023

Earnings Per Share

The Company presents basic EPS and diluted EPS for our common stock.

Basic EPS excludes potential dilution and is computed by dividing net income by the weighted-average number of common shares outstanding for the period.

Basic EPS excludes potential dilution and is computed by dividing net (loss)/income by the weighted-average number of common shares outstanding for the period.

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

For the three and six months ended June 30, 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.

For the three and nine months ended September 30, 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.

Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses.

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

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Numerator for basic calculation—Net income

Ended September 30,

For the Nine Months

Ended September 30,

Numerator for basic calculation—Net (loss)/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

Net (loss)/income attributable to noncontrolling interests in P10 Intermediate

Numerator for (loss)/earnings per share

Numerator for (loss)/earnings per share assuming

Denominator for basic calculation—Weighted-

2 unchanged sentences

Weighted shares assumed upon exercise of stock

Denominator for earnings per share assuming dilution

Earnings per share—basic

Earnings per share—diluted

The computations of diluted earnings per share on a weighted average basis excluded 5.2 million and 4.0 million options for the three and six months ended June 30, 2023 , respectively, and 1.4 million and 1.0 million options for the three and six months ended June 30, 2022 , because the options were anti-dilutive.

Denominator for (loss)/earnings per share assuming dilution

(Loss)/earnings per share—basic

(Loss)/earnings per share—diluted

If the Company was in a net income position, the computations of diluted earnings per share on a weighted average basis would exclude 1.8 million and 3.2 million options for the three and nine months ended September 30, 2023 , respectively, because the options were anti-dilutive.

The computations of diluted earnings per share on a weighted average basis exclude 1.0 million and 1.0 million options for the three and nine months ended September 30, 2022 , respectively, because the options were anti-dilutive.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

Subsequent Events

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 September 20, 2023, to the holders of record as of the close of business on August 31, 2023.

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

The Board of the Company appointed Luke A.

Sarsfield III as Chief Executive Officer (“CEO”) of the Company, effective as of October 23, 2023.

In connection with his appointment as CEO, the Company entered into an employment agreement with Mr.

Sarsfield (the “Employment Agreement”) setting forth the terms of his employment and compensation.

The initial term of the Employment Agreement is for a five-year period and will automatically renew for additional one-year periods unless either party delivers written notice of non-renewal at least 90 days prior to the expiration of the then-current term.

Pursuant to the Employment Agreement, Mr.

Sarsfield will be entitled to receive:

(i) an annual base salary of $ 1 million;

(ii) a target annual cash bonus of $ 1.5 million based on certain performance criteria and benchmarks to be set each year by the Board or the Compensation Committee thereof;

(iii) a target annual incentive bonus of $ 5 million based on certain performance criteria and benchmarks to be set each year by the Board or the Compensation Committee thereof, of which (a) 70 % will be awarded in the form of carried interest in certain investment vehicles controlled by the Company, (b) 20 % will be awarded in the form of restricted stock units granted under the Company’s 2021 Incentive Plan (the “Plan”), and (c) 10 % will be awarded in the form of stock options granted under the Plan;

(iv) an initial signing bonus of $ 1 million, which the Company intends to pay in the form of fully vested shares of common stock under the Plan in lieu of cash;

(v) an initial grant of restricted stock units with an aggregate value of $ 6 million, which will vest ratably over the first three anniversaries of the Effective Date;

(vi) reimbursement of up to $ 85,000 for legal expenses incurred in connection with the negotiation of the Employment Agreement;

and (vii) reimbursements for reasonable out-of-pocket expenses during the term of employment.

In addition, Mr.

Sarsfield will be entitled to receive up to $ 40 million in the aggregate of additional grants of restricted stock units, comprised of up to five grants of $ 8 million each, upon achieving certain stock price performance hurdles.

The Employment Agreement also provides that if the Company terminates the employment of Mr.

Sarsfield without cause, or if Mr.

Sarsfield resigns for good reason, then Mr.

Sarsfield will be entitled to receive, in addition to any accrued and unpaid benefits:

(i) a lump sum payment equal to one and one half (1.5) times his then-current base salary;

(ii) a lump sum payment equal to one and one half (1.5) times his then-current annual cash bonus;

and (iii) immediate vesting of any and all outstanding equity awards and all carried interests in certain investment vehicles controlled by the Company.

The foregoing severance payments would be conditioned upon Mr.

Sarsfield’s execution, non-revocation and delivery of a general release of the Company and its affiliates.

On October 20, 2023, the Company entered into an executive transition agreement with each of Mr.

Alpert and Mr.

Webb (each, a “Transition Agreement”).

Pursuant to the Transition Agreements, Mr.

Alpert and Mr.

Webb ceased to serve as Co-Chief Executive Officer, and Mr.

Alpert and Mr.

Webb were appointed as Executive Chairman and Executive Vice Chairman, respectively, for a one-year period.

Each Transition Agreement provides for certain transition and severance related payments.

Pursuant to his Transition Agreement, Mr.

Alpert will be entitled to receive a salary of $ 0.1 million and a transition award having an aggregate gross value of $ 0.1 million in the form of restricted stock units, which will vest on the first anniversary.

Pursuant to his Transition Agreement, Mr.

Webb will be entitled to receive a salary of $ 0.1 million and a transition award having an aggregate gross value of $ 4 million in the form of restricted stock units, which will be granted in four equal quarterly installments with the first grant occurring on the effective date, and each grant will vest on the first anniversary of the applicable grant date.

The Transition Agreements may be terminated by either party upon 90 days’

prior written notice.

Upon any such termination effective prior to the first anniversary, such executive will be entitled to receive:

(i) the accrued and unpaid portion of the transition salary;

and (ii) accelerated vesting of a portion of the transition restricted stock units, prorated based on the number of days employed during the transition period.

In addition, the Transition Agreements each provide that the cessation of their respective roles as Co-Chief Executive Officer was without cause under their existing amended and restated employment agreements with the Company, each dated May 12, 2023 (each, an “Existing Employment Agreement”).

Accordingly, Mr.

Alpert and Mr.

Webb will receive the following severance payments and benefits in accordance with their respective Transition Agreements:

(i) a cash transition severance payment of $ 1.2 million;

(ii) a severance payment having an aggregate gross value of $ 5.65 million, which is the equivalent of the remaining base salary and bonus under their respective Existing Employment Agreements, which payment shall consist of:

(a) a cash payment of $ 1.6 million;

(b) an award of $ 3.4 million, which the Company intends pay in the form of fully vested shares of common stock under the Plan in lieu of cash and (c) an award of stock options having an aggregate value of $ 650,000 , which are fully vested and;

and (iii) all unvested options, restricted stock units or other equity awards issued to such executive under the Plan and carried interests in certain investment vehicles controlled by the Company became fully vested and immediately exercisable.

On October 13, 2023, the Company extended notes to certain employees of Bonaccord to lend funds to be used to pay general partner commitments to certain funds managed by Bonaccord.

The notes provide $ 1.0 million cash to certain employees and is collateralized by employees' privately owned shares of the Company.

The term of the notes is five years , expiring on October 13, 2028 .

The notes will accrue interest at SOFR plus 2.10% and is payable annually in arrears.

Notes to Consolidated Financial Statements

(Unaudited, dollar amounts in tables stated in thousands, except share and per share amounts)

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 December 20, 2023, to the holders of record as of the close of business on November 30, 2023.

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