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Item 9A. Controls and Procedures

2023-06-06 compared with 2022-03-31 · 614 added, 1238 removed, 175 unchanged (91% of the section changed)

Controls and Procedures Evaluation of Disclosure Controls and Procedures

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms.

Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021.

Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and

procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective, due to the material weakness in our internal control over financial reporting related to the Company’s accounting for complex financial instruments.

As a result, we performed additional analysis as deemed necessary to ensure that our consolidated financial statements were prepared in accordance with GAAP.

Accordingly, management believes that the consolidated financial statements included in this Annual Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.

Management has identified a material weakness in internal controls related to the accounting for complex financial instruments, corporate governance, and controls over information technology.

While we have processes to identify and appropriately apply applicable accounting requirements, we plan to continue to enhance our system of evaluating and implementing the accounting standards that apply to our consolidated financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications.

We also have plans in place to hire additional personnel to help mitigate risks over information technology and segregation of duties within corporate governance.

The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

Trebia identified material weaknesses in internal controls related to the accounting for complex financial instruments.

This material weakness resulted in a material misstatement of the Trebia Warrant liabilities, change in the fair value of the Trebia Warrant liabilities, Forward Purchase Agreement liabilities, change in the fair value of the Forward Purchase Agreement liabilities, classification of Redeemable Shares of Class A common stock issued in connection with Trebia’s initial public offering, additional paid-in-capital, accumulated deficit, Earnings Per Share, and related financial disclosures as of December 31, 2020 and for the period from February 11, 2020 (inception) through December 31, 2020, as of September 30, 2020 and for three month period ended September 30, 2020 and for the period from February 11, 2020 (inception) through September 30, 2020, as of June 30, 2020 and for three month period ended June 30, 2020 and for the period from February 11, 2020 (inception) through June 30, 2020, as of March 31, 2021 and for three month period ended March 31, 2021.

Management’s Annual Report on Internal Controls Over Financial Reporting

As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP.

Our internal control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting at December 31, 2021.

In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on our assessments and those criteria, management determined that we did not maintain effective internal control over financial reporting as of December 31, 2021.

Management has implemented remediation steps to improve our internal control over financial reporting.

Specifically, we expanded and improved our review process for complex securities and related accounting standards.

We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting

applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.

Pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer ( “ CEO ” ) and Chief Financial Officer ( “ CFO ” ), the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act as of the end of the period covered by this report.

Based on that evaluation, our CEO and CFO concluded that, as of December 31, 2022, due to the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed in the reports required to be filed or submitted under the Securities Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act.

Management, including our CEO and CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, 2022.

In making this assessment, management used the criteria described in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

Based on this assessment, management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2022 because of the material weaknesses described below.

We have identified material weaknesses in our internal control over financial reporting as of December 31, 2022.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified were as follows:

• We did not design and maintain an effective control environment commensurate with our financial reporting requirements.

Specifically, we lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately.

Additionally, the limited personnel resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions.

• We did not design and maintain effective controls in response to the risks of material misstatement.

Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting.

These material weaknesses contributed to the following additional material weaknesses:

• We did not design and maintain effective controls to timely analyze and record the financial statement effects from acquisitions.

Specifically, we did not design and maintain effective controls over the (i) application of U.S.

GAAP to such transactions, including accounting for post-combination compensation arrangements, (ii) review of the inputs and assumptions used in the measurement of assets acquired and liabilities assumed, including discounted cash flow analysis to value acquired intangible assets at an appropriate level of precision, (iii) the tax impacts of acquisitions to the financial statements, and (iv)

conforming of U.S.

GAAP and accounting policies of acquired entities to that of the Company.

In addition, we did not design and maintain effective controls relating to the oversight and ongoing recording of the financial statement results of the acquired businesses.

• We did not design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over the preparation and review of business performance reviews, account reconciliations and journal entries, and (ii) maintaining appropriate segregation of duties.

Additionally, we did not design and maintain controls over the classification and presentation of accounts and disclosures in the consolidated financial statements, including the statement of cash flows.

• We did not design and maintain effective controls over the completeness and accuracy of accrued liabilities, stock-based compensation and equity transactions.

• We did not design and maintain effective controls over the accuracy and valuation of goodwill, including the allocation of goodwill to reporting units and the identification and measurement of goodwill impairment.

These material weaknesses resulted in the restatement of the Company's condensed consolidated financial statements:

as of March 31, 2022 and for the predecessor period from January 1, 2022 to January 26, 2022 and for the successor period from January 27, 2022 to March 31, 2022;

as of June 30, 2022 and for the predecessor period from January 1, 2022 to January 26, 2022 and for the successor periods for the three months ended June 30, 2022 and from January 27, 2022 to June 30, 2022;

and as of September 30, 2022 and for the predecessor period from January 1, 2022 to January 26, 2022 and for the successor periods for the three months ended September 30, 2022 and from January 27, 2022 to September 30, 2022.

These material weaknesses also resulted in immaterial misstatements to substantially all of the S1 Holdco, LLC accounts, which were recorded prior to the issuance of the consolidated financial statements as of December 31, 2021, 2020, 2019 and 2018 and for the years then ended;

as of March 31, 2021 and 2020 and for the three-month periods then ended;

as of June 30, 2021 and 2020 and for the six-month periods then ended;

and as of September 30, 2021 and 2020 and for the nine-month periods then ended.

• We did not design and maintain effective controls over the accounting for complex financial instruments, including the impact of these instruments on earnings per share.

This material weakness also resulted in a material misstatement of the Trebia warrant liabilities, change in the fair value of the Trebia warrant liabilities, forward purchase agreement liabilities, change in the fair value of the forward purchase agreement liabilities, classification of redeemable shares of Class A common stock issued in connection with Trebia’s initial public offering, additional paid-in-capital, accumulated deficit, earnings per share, and related financial disclosures of Trebia Acquisition Corp.

as of December 31, 2020 and for the period from February 11, 2020 (inception) through December 31, 2020, as of September 30, 2020 and for three month period ended September 30, 2020 and for the period from February 11, 2020 (inception) through September 30, 2020, as of June 30, 2020 and for three month period ended June 30, 2020 and for the period from February 11, 2020 (inception) through June 30, 2020, as of March 31, 2021 and for three month period ended March 31, 2021.

This material weakness also resulted in material adjustments relating to the Trebia forward purchase agreement liabilities and repurchases of common stock impacting the accumulated deficit and additional paid-in capital in the opening balance sheet as of January 27, 2022 and the earnings per share computations for the quarter ended June 30, 2022 of the Company.

Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

• We did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements.

Specifically, we did not design and maintain:

program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately;

user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate Company personnel;

computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored;

testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements.

These IT deficiencies did not result in a material misstatement to the financial statements;

however, the deficiencies, when aggregated, could impact the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected.

Accordingly, we have determined these IT deficiencies in the aggregate constitute a material weakness.

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm due to a transition period established by SEC rules and regulations for newly public companies.

We are not required to have, or to engage our independent registered public accounting firm to perform, an audit of the effectiveness of our internal controls over financial reporting for as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act.

Remediation plan for the material weaknesses

We are in the process of, and we are focused on, designing and implementing effective measures to improve our internal control over financial reporting and remediate the material weaknesses.

Our remediation efforts to address the identified material weaknesses are ongoing.

Our efforts include a number of actions:

• Hiring additional senior level accounting personnel with applicable technical accounting knowledge, training and experience in accounting matters, supplemented by third-party resources;

• Designing and implementing controls to formalize roles and review responsibilities to align with our team’s skills and experience and designing and implementing controls over segregation of duties;

• Engaging an accounting advisory firm to assist with the documentation, evaluation, remediation and testing of our internal control over financial reporting based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission;

• Engaging third-party experts to assist with the preparation of technical accounting analyses and valuations associated with business combinations;

• Designing and implementing controls related to accounting for acquisitions and other technical accounting and financial reporting matters, including controls over the preparation and review of accounting memoranda addressing these matters, valuations and key assumptions utilized in the valuations, tax impacts, and ongoing recording of the financial statement results of the acquired businesses;

• Designing and implementing formal accounting policies, procedures and controls supporting our period-end financial reporting process, including controls over the preparation and review of account reconciliations and journal entries, business performance reviews, foreign exchange gains/losses for intercompany transactions, and classification and presentation of accounts and disclosures, including the statement of cash flows;

• Designing and implementing controls over the completeness and accuracy of accrued liabilities, stock-based compensation and equity transactions;

• Designing and implementing controls related to accounting for complex financial instruments, including the earnings per share impacts;

• Designing and implementing controls over the accuracy and valuation of goodwill, including the allocation of goodwill to reporting units and the identification and measurement of goodwill impairment;

• Implementing an enhanced enterprise resource planning software for automation and enforcing segregation of duties across the organization;

• Designing and implementing IT general controls, including controls over change management, the review and update of user access rights and privileges, controls over batch jobs and data backups, and program development approvals and testing.

While we believe that these efforts will improve our internal control over financial reporting, remediation of the material weaknesses will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles.

Therefore, these material weaknesses have not been remediated as of December 31, 2022.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes to our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended December 31, 2022 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

On June 1, 2023, the Company further modified the 2023 Award of the Protected Incentive Plan, deferring the last quarterly cash installment of $10,000 such that $5,000 was due on May 30, 2023, $5,000 is due on July 1, 2023, and providing additional cash bonus payments of up to $10,000, $6,000 due on October 1, 2023 (the "October Payment") and $1,000 due on the first of each month of November 2023 through February 2024 (together the "Remaining Payments").

All of the payments due under this modification are conditioned upon the members of the Protected senior management (i) entering into employment agreements that include certain protective covenants in favor of Protected and (ii) remaining employed by Protected (other than as a result of a termination without cause) through all applicable payment dates.

The October Payment and the Remaining Payments are conditioned upon the Protected business (x) not exceeding certain trailing three-month customer acquisition marketing spending caps or (y) achieving certain monthly (or trailing twelve-month) minimum EBITDA thresholds.

This summary is qualified in its entirety by reference to the full text of the First Amendment, which is filed as Exhibit 10.18 to this Annual Report on Form 10-K and is incorporated herein by reference.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

Our directors and executive officers are as follows:

Executive Officers

Michael Blend

Chief Executive Officer & Chairman

Brian Coppola

Chief Product Officer

Paul Filsinger

Tridivesh Kidambi

Chief Financial Officer

Jennifer Robinson

Chief Technology Officer

Elizabeth Sestanovich

Chief People Officer

Daniel Weinrot

General Counsel & Corporate Secretary

Non-Employee Directors

John Civantos

Dexter Fowler

Caroline Horn

Moujan Kazerani

Christopher Phillips

Jennifer Prince

Executive Officers

Michael Blend is System1’s co-founder and has served as System1’s chief executive officer since February 2021, and chairman of the board since 2013.

The following table and biographical information sets forth certain information the director nominees.

Such information is current as of April 20, 2023.

The information presented below for each director nominee includes the specific experience, qualifications, attributes and skills that led us to the conclusion that such director should be nominated to serve on our Board of Directors in light of our business.

Name Age Position Director Since

Michael Blend 55 Director 2013

John Civantos 55 Director 2022

75 Director 2022

Moujan Kazerani 47 Director 2022

Christopher Phillips 37 Director 2022

Dexter Fowler 37 Director 2022

Caroline Horn 53 Director 2022

Jennifer Prince 50 Director 2022

Michael Blend is System1’s co-founder and has served as System1’s chief executive officer since February 2021, and chairman of our Board of Directors since September 2013.

Prior to System1, Mr.

Blend was President/ COO of Leaf Group Ltd.

LEAF), which he joined when Leaf Group acquired his data company, Hotkeys in 2006.

Blend was President/COO of Leaf Group Ltd., which he joined when Leaf Group acquired his data company, Hotkeys, in 2006.

Prior to Hotkeys, Mr.

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Blend was the EY National Entrepreneur of the Year for Media, Entertainment & Communications in 2018, together with System1’s other co-founder, Charles Ursini.

Blend received his JD from

The University of Chicago, and holds a bachelor’s degree in mathematics from Duke University.

Blend received his JD from The University of Chicago, and holds a bachelor’s degree in mathematics from Duke University.

We believe Mr.

Blend is qualified to serve on the System1 Board because of his extensive business and leadership experience in the digital advertising and technology industries.

Brian Coppola has been System1’s chief product officer since June 2019, and previously served as System1’s vice president and then executive vice president of product since October 2015.

Prior to System1, Mr.

Coppola was the senior vice president of product at Amobee from 2013 to 2015, which he joined via SingTel’s acquisition of Adconion Direct in 2014.

Coppola holds a bachelor’s degree in finance from Loyola Marymount University.

Paul Filsinger has been System1’s president since April 2019, and previously served as System1’s senior vice president of media since April 2017.

Filsinger joined System1 through its acquisition of Qool Media in 2017, where he served as chief technology officer.

Prior to Qool Media, Mr.

Filsinger was president and founder of World Wide Interactive from 2008 until it was acquired by Qool Media in 2013, and chief technology officer of Geosign from 2001 to 2008.

Tridivesh Kidambi has been System1’s chief financial officer since 2016.

Prior to System1, Mr.

Kidambi was the executive vice president, finance & analytics of TV Time from October 2015 to 2016, chief financial officer of EZ Texting from 2014 to 2015, and vice president, finance at Leaf Group Ltd.

LEAF) from 2007 to 2014.

Kidambi currently serves on the board of directors of Protected.net.

Kidambi received his MBA from Claremont Graduate University’s Drucker School of Management, and holds a bachelor’s degree in economics and mathematics from Claremont McKenna College.

Jennifer Robinson has been System1’s chief technology officer since May 2021.

Prior to System1, Ms.

Robinson was executive vice president, product & technology at Zefr, Inc., a contextual advertising company powered by patented machine learning technology since 2019, and chief technology officer at AwesomenessTV (now a ViacomCBS company) from 2015 to 2018.

Robinson received her MBA from NYU’s Stern School of Business, and holds a bachelor’s degree in computer science from The University of Chicago.

Beth Sestanovich has been System1’s chief people officer since June 2021, and previously served as System1’s chief operations officer since August 2016.

Prior to System1, Ms.

Sestanovich was the founding partner and principal of Summit Advisors, a management consulting and advisory firm, from 2014 to 2016, and the chief executive officer and group publisher of the LA Weekly & OC Weekly from 2002 to 2013.

Sestanovich also held senior management positions at Carsdirect.com and The Los Angeles Times from 1993 to 2002.

Sestanovich received her Master’s in psychology and organizational behavior from Pepperdine University, and holds a bachelor’s degree in psychology with a minor in economics from UCLA.

Daniel Weinrot has been System1’s general counsel since January 2018.

Prior to System1, Mr.

Weinrot was general counsel and deputy general counsel at Leaf Group Ltd.

LEAF and f/k/a Demand Media, Inc.

DMD), a diversified digital media and marketplaces company, from 2010 to 2018, and deputy general counsel at Las Vegas Sands Corp (NYSE:

LVS), a leading international developer of integrated casino resorts, from 2006 to 2010.

Weinrot started his career as a corporate associate at Latham & Watkins LLP in Los Angeles in 2000.

Weinrot received his J.D.

from The UCLA School of Law, and holds a bachelor’s degree in political economy from U.C.

Non-Employee Directors

John Civantos has been a member of our Board since February 2022.

Blend is qualified to serve on the System1 Board of Directors because of his extensive business and leadership experience in the digital advertising and technology industries.

John Civantos has been a member of our Board of Directors since February 2022.

Civantos has been a Senior Partner at Avance Investment Management since April 2022.

From August 2020 to March 2022, Mr.

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in International Affairs from the Johns Hopkins School of Advanced International Studies.

Foley, II is a co-founder of Trebia Acquisition Corporation and has served as the Chairman of Cannae since July 2017 as well as the Managing Member and Senior Managing Director of Trasimene Capital Management, LLC, an investment advisory firm, since November 2019.

Prior to Trasimene Capital he served as Executive Chairman at Black Knight, Inc., a technology and analytics services company for the mortgage and real estate industries, from January 2014 to December 2019.

Foley is a founder of Fidelity National Financial, Inc., and has served as the Chairman of the Board of Directors of Fidelity National Financial, Inc.

Foley has also served as the Chairman of Foley Trasimene Acquisition Corp.

I since May 2020, and before that as the Executive Chairman from March 2020 until May 2020.

Foley has also served as the Chairman of Foley Trasimene Acquisition Corp.

II since July 2020 and as a Director of Austerlitz Acquisition Corporation II since January 2021.

Foley also serves as the Chairman, Chief Executive Officer and President of Foley Family Wines Holdings, Inc., and also as Executive Chairman and Chief Executive Officer of Black Knight Sports and Entertainment LLC.

Foley has served as a member of the board of directors of numerous companies including Black Knight, as Chairman from December 2019 to June 2021 and subsequently as Chairman Emeritus;

FGL Holdings, Inc.

from April 2016 to June 2020 and Ceridian HCM Holding Inc.

from September 2013 to August 2019.

Foley also serves as the Chairman of The Dun & Bradstreet Corporation.

Foley received his MBA from Seattle University and his JD from the University of Washington.

Foley holds a bachelor’s degree in engineering from the United States Military Academy at West Point.

We believe Mr.

Foley is qualified to serve on the System1 Board because of his extensive leadership experience at public companies.

Dexter Fowler is an American professional baseball outfielder who has played in 14 Major League Baseball (MLB) seasons, most recently for the Los Angeles Angels since April 2021.

Prior to the Angels, Mr.

Fowler played for the St.

Louis Cardinals from April 2017 to October 2020, for the Chicago Cubs from April 2015 to October 2016 and before that for the Houston Astros from April 2014 to October 2014.

Fowler began his MLB career with the Colorado Rockies in 2004.

Fowler also represented the United States in the 2008 Summer Olympics, as a member of the United States national baseball team.

Fowler currently serves on the board of directors of Austerliz Acquisition Corporation I, a publicly traded special purpose acquisition company.

Civantos is qualified to serve on the System1 Board of Directors because of his extensive financial experience.

has been a member of our Board of Directors since January 2022.

Martire has served as the Executive Chairman of NCR Corporation since May 2018.

Previously, Mr.

Martire served as Executive Chairman of FIS from January 2017 to May 2018, Executive Chairman of FIS from January 2015 to Decemebr 2016, and chairman of the board and Chief Executive Officer of FIS from April 2012 to January 2016.

Martire joined FIS as President and Chief Executive Officer after its acquisition of Metavante in October 2009, where he had served as chairman of the board and Chief Executive Officer since January 2003.

Martire served as

President and Chief Operating Officer of Call Solutions, Inc.

from 2001 to 2003 and president and Chief Operating Officer, Financial Institution Systems and Services Group of Fiserv from 1991 to 2001.

He has also served on the boards of Cannae Holdings, Inc.

since November 2017 and Foley Trasimene since May 2020.

Martire received a master's degree in finance from the University of New Haven and a bachelor's degree in economics from Sacred Heart University.

Martire was nominated for appointment to the Board as one of Cannae Holdings’ two permitted designees to serve on the Company’s Board pursuant to the Shareholders Agreement, dated as of January 27, 2022 (the “Shareholders Agreement”), by and among the (it) Company, (ii) Trasimene Trebia, L.P.

and BGPT Trebia LP (the “Trebia Sponsors"), (iii) Cannae Holdings, Inc.

(“Cannae Holdings” and, together with the Trebia Sponsors, the “Trebia Investors”), (iv) Michael Blend, (v) Chuck Ursini, (vi) Nick Baker and (vii) Just Develop It Ltd.

(“JDI” and, together with Messrs.

Blend, Ursini and Baker, the “Founder Shareholders”).

We believe Mr.

Fowler is qualified to serve on the System1 Board because of his professional experience and experience in serving public company boards of directors.

Caroline Horn has been a Partner of Andresseen Horowitz since April 2012 where she provides strategic advice to portfolio founders and CEOs on how to assess, hire, develop and retain the best executive talent.

Additionally, Ms.

Horn has served as an advisor at Strava since April 2014 where she provides strategic advice on hiring and people related issues.

Previously, Ms.

Horn served as an Executive Recruiting Manager and Executive Recruiter for Global Leadership for Google, Inc.

GOOGL) from September 2004 to April 2012.

Horn holds a bachelor’s degree in Anthropology from Dartmouth College.

We believe Ms.

Horn is qualified to serve on the System1 Board because of her leadership experience and expertise in company scaling and technology sectors.

Moujan Kazerani has been a Founding Partner of Stibel Investments since co-founding it in December 2010, and Bryant Stibel since co-founding it in November 2013.

Martire is qualified to serve on the System1 Board because of his extensive leadership experience at public companies.

Moujan Kazerani has been a member of our Board of Directors since January 2022.

She has been a Founding Partner of Stibel Investments since co-founding it in December 2010, and Bryant Stibel since co-founding it in November 2013.

Previously, Ms.

Kazerani served as General Counsel, Chief Compliance Officer & Head of HR and Culture at Dun & Bradstreet Credibility Corporation and later as Leader of Global Corporate Strategy for D&B (NYSE:

DNB) from September 2010 to July 2017.

Kazerani served as General Counsel, Chief Compliance Officer & Head of HR and Culture at Dun & Bradstreet Credibility Corporation and later as Leader of Global Corporate Strategy for D&B from September 2010 to July 2017.

Prior to D&B, Ms.

Kazerani served as General Counsel & Secretary at Zag.com which launched and merged with TrueCar, Inc.

TRUE) from November 2006 to September 2010 and advised on the company’s compensation and audit committees of the board.

from November 2006 to September 2010 and advised on the company’s compensation and audit committees of the board.

Kazerani started her career as a corporate associate at Gibson, Dunn & Crutcher LLP.

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Kazerani is qualified to serve on the System1 Board because of her substantial operational and executive experience.

is a co-founder of Trebia Acquisition Corp.

and has served as a director since February 2020.

He has served as a director of Foley Trasimene since May 2020.

In addition, he has served as a director of Cannae since November 2017.

Martire has served as the Executive Chairman of NCR Corporation (NYSE:

NCR) since May 2018.

Martire served as Chairman of FIS from January 2017 until May 2018.

Martire served as Executive Chairman of FIS from January 2017 until May 2018, and as Executive Chairman of FIS from January 2015 through December 2016.

Martire served as Chairman of the Board and Chief Executive Officer of FIS from April 2012 until January 2016.

Martire joined FIS and President and Chief Executive Officer after its acquisition of Metavante in October 2009, where he had served as Chairman of the Board and Chief Executive Officer since January 2003.

Martire served as President and Chief Operating Officer of Call Solutions, Inc.

from 2001 to 2003 and President and Chief Operating Officer, Financial Institution Systems and Services Group of Fiserv from 1991 to 2001.

Martire’s qualifications to serve on the System1 Board include his years of experience in providing technology solutions to the banking industry, particularly his experience with FIS and Metavante, his knowledge of and contacts in the financial services industry, his strong leadership abilities and experience in driving growth and results in large complex business organizations.

We believe Mr.

Martire is qualified to serve on the System1 Board because of his extensive leadership experience at public companies.

Christopher Phillips is a co-founder of Protected.net and has served as both its Chief Executive Officer and a director since May 2016.

Christopher Phillips has been a member of our Board of Directors since January 2022.

He is a co-founder of Protected.net and has served as its Chief Executive Officer since May 2016 and served as a director from May 2016 until Protected.net's acquisition by System1 in January 2022.

In addition, he has been the Chief Executive Officer of Just Develop It since he co-founded it in 2008.

Previously, Mr.

was Chief Executive Officer and Director of WZUK, a global provider of websites and web hosting.

Phillips was Chief Executive Officer and Director of WZUK, a global provider of websites and web hosting.

He held both positions from April 2014 until the company was sold to Endurance International Group in July 2017.

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Phillips is qualified to serve on the System1 Board because of his business and leadership experience.

Jennifer Prince is the Chief Commercial Officer of the Los Angeles Rams, an American football team in the National Football League, a position that she recently started in December 2021.

Dexter Fowler has served as a member of our Board of Directors since January 2022.

Fowler was an American professional baseball outfielder who played in 14 Major League Baseball (MLB) seasons, most recently with the Los Angeles Angels, before retiring in 2023.

Prior to the Angels, Mr.

Fowler played for the St.

Louis Cardinals from April 2017 to October 2020, for the Chicago Cubs from April 2015 to October 2016 and before that for the Houston Astros from April 2014 to October 2014.

Fowler began his MLB career with the Colorado Rockies in 2004.

Fowler also represented the United States in the 2008 Summer Olympics, as a member of the United States national baseball team.

Fowler also served on the board of directors of Austerliz Acquisition Corporation I, a publicly traded special purpose acquisition company.

We believe Mr.

Fowler is qualified to serve on the System1 Board of Directors because of his professional experience and experience in serving public company boards of directors.

Caroline Horn has served as a member of our Board of Directors since January 2022.

Horn has been a Partner of Andreessen Horowitz since April 2012 where she provides strategic advice to portfolio founders and CEOs on how to assess, hire, develop and retain the best executive talent.

Additionally, Ms.

Horn has served as an advisor at Strava since April 2014 where she provides strategic advice on hiring and people related issues.

Previously, Ms.

Horn served as an Executive Recruiting Manager and Executive Recruiter for Global Leadership for Google, Inc.

GOOGL) from September 2004 to April 2012.

Horn holds a bachelor’s degree in Anthropology from Dartmouth College.

We believe Ms.

Horn is qualified to serve on the System1 Board of Directors because of her leadership experience and expertise in company scaling and technology sectors.

Jennifer Prince has served as a member of our Board of Directors since January 2022.

Prince is the Chief Commercial Officer of the Los Angeles Rams, an American football team in the National Football League, a

position that she has held since December 2021.

From December 2020 through December 2021 Ms.

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Prince was also SVP of advertising at Demand Media from June 2007 to April 2011.

Prince currently serves on the board of directors of Versus Systems Inc.

and Ghostcast Inc.

Prince currently serves on the board of directors of Versus Systems Inc., Hershey Entertainment & Resorts Company and Ghostcast Inc.

Prince holds a bachelor’s degree in communications from U.C.

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We believe Ms.

Prince is qualified to serve on the System1 Board because of her substantial leadership experience and media expertise.

Corporate Governance Guidelines and Code of Business Conduct

Our Board has adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of its directors and director candidates and corporate governance policies and standards as applicable.

In addition, our Board has adopted a Code of Business Conduct and Ethics that applies to all of its employees, officers and directors, including its Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers.

The full text of our Corporate Governance Guidelines and its Code of Business Conduct and Ethics is posted on the Corporate Governance portion of our website (https://ir.system1.com/governance/governance-documents/).

Board Composition

When considering whether directors and director nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable our Board to satisfy its oversight responsibilities effectively in light of its business and structure, our Board expects to focus primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above in order to provide an appropriate mix of experience and skills relevant to the size and nature of its business.

Director Independence

Our Class A Common Stock is listed on NYSE.

NYSE listing standards require that a majority of our Board be independent.

An “independent director” is defined generally as a person other than an officer or employee of System1 or its subsidiaries or any other individual having a relationship with System1 which in the opinion of our Board, could interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

We have “independent directors” as defined in NYSE’s listing standards and applicable SEC rules.

Our Board has determined that John Civantos, William P.

Foley, II., Dexter Fowler, Caroline Horn, Moujan Kazerani, Frank R.

and Jennifer Prince are “independent directors” as defined in the NYSE listing standards and applicable SEC rules.

Committees of the Board

Our Board directs the management of its business and affairs, as provided by Delaware law, and conducts its business through meetings of the board of directors and standing committees.

We have a standing audit committee, compensation committee and nominating and corporate governance committee, each of which operate under a written charter.

In addition, from time to time, special committees may be established under the direction of our Board when it deems it necessary or advisable to address specific issues.

Current copies of our committee charters have been posted on our website, www.system1.com, as required by applicable SEC and the NYSE rules.

The information on or available through any of such website is not deemed incorporated in this Annual Report and does not form part of this Annual Report.

Prince is qualified to serve on the System1 Board of Directors because of her substantial leadership experience and media expertise.

Executive Officers

Below is biographical information for each of our current executive officers as of April 20, 2023, other than Michael Blend and Christopher Phillips (whose biographical information are shown above).

Each executive officer serves at the discretion of the Board of Directors and the Chief Executive Officer.

Name Age Position

Michael Blend

55 Chief Executive Officer and Chairman

Christopher Phillips 37 Chief Executive Officer of Protected.net Group Limited

Brian Coppola

50 Chief Product Officer

Tridivesh Kidambi

41 Chief Financial Officer

Jennifer Robinson

45 Chief Technology Officer

Elizabeth Sestanovich

59 Chief People Officer

Daniel Weinrot

49 General Counsel and Corporate Secretary

Brian Coppola has been System1’s chief product officer since June 2019, and previously served as System1’s vice president and then executive vice president of product since October 2015.

Prior to System1, Mr.

Coppola was the senior vice president of product at Amobee from 2013 to 2015, which he joined via SingTel’s acquisition of Adconion Direct in 2014.

Coppola holds a bachelor’s degree in finance from Loyola Marymount University.

Tridivesh Kidambi has been System1’s chief financial officer since 2016.

Prior to System1, Mr.

from 2007 to 2014.

Kidambi currently serves on the board of directors of Protected.net.

Kidambi received his MBA from Claremont Graduate University’s Drucker School of Management, and holds a bachelor’s degree in economics and mathematics from Claremont McKenna College.

Jennifer Robinson has been System1’s chief technology officer since May 2021.

Prior to System1, Ms.

Robinson was executive vice president, product & technology at Zefr, Inc., a contextual advertising company powered by patented machine learning technology from 2019 to 2021, where she led the product and tech organization.

Prior to Zefr, Ms.

Robinson was the chief technology officer at AwesomenessTV (now a ViacomCBS company) from 2015 to 2018, where she led technology strategy and development.

Robinson received her MBA from NYU’s Stern School of Business, and holds a bachelor’s degree in computer science from The University of Chicago.

Elizabeth Sestanovich has been System1’s chief people officer since June 2021, and previously served as System1’s chief operations officer beginning in August 2016.

Prior to System1, Ms.

Sestanovich also held senior management positions at Carsdirect.com and The Los Angeles Times from 1993 to 2002.

Sestanovich received her Master’s in psychology and organizational behavior from Pepperdine University, and holds a bachelor’s degree in psychology with a minor in economics from UCLA.

Daniel Weinrot has been System1’s general counsel since January 2018.

Prior to System1, Mr.

Weinrot was general counsel and deputy general counsel at Leaf Group Ltd., a diversified digital media and marketplaces company, from 2010 to 2018, and deputy general counsel at Las Vegas Sands Corp, a leading international developer of integrated casino resorts, from 2006 to 2010.

Weinrot started his career as a corporate associate at Latham & Watkins LLP in Los Angeles in 2000.

Weinrot received his J.D.

from The UCLA School of Law, and holds a bachelor’s degree in political economy from U.C.

Delinquent Section 16(A) Reports

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of our Common Stock to file initial reports of beneficial ownership and reports of changes in beneficial ownership with the SEC.

Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed by such person.

Based solely on our review of such forms furnished to us, and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and greater-than-10% stockholders during the fiscal year ended December 31, 2022, except (i) due to administrative errors, each of the following filed one late Form 4 to correct the nature of ownership and amount of securities acquired in connection with the consummation of the Merger:

Michael Blend (one transaction), Moujan Kazerani (two transactions), Brian Coppola (three transactions), Paul Filsinger (three transactions) Tridives h Kidambi (four transactions), Jennifer Robinson (one transaction), Elizabeth Sestanovich (one transaction) Christopher Phillips (three transactions) and Just Develop It Limited (one transaction) and (ii) due to administrative delays in obtaining EDGAR filing codes, each of the following individuals filed one late Form 3 in connection with the consummation of the Merger:

Stanley Blend, Lone Star Friends Trust and JDI & AFH Limited.

Material Changes to the Procedures by which Security Holders May Recommend Nominees to the Board of Directors

On February 23, 2023, the Board approved and adopted amended and restated bylaws (the “Bylaws”).

The Bylaws address the universal proxy rules adopted by the SEC by clarifying that no person may solicit proxies in support of a director nominee other than the Board’s nominees unless such person has complied with Rule 14a-19 under the Exchange Act, as amended, including the applicable notice and solicitation requirements.

Additionally, the Bylaws enhance procedural mechanics and disclosure requirements in connection with stockholder nominations of directors and submissions of proposals regarding other business at stockholder meetings, including requiring additional background information and disclosures regarding proposing stockholders, proposed nominees and business, and other persons related to a stockholder’s solicitation of proxies.

Code of Ethics and Conduct

We have adopted a code of ethics and business conduct that applies to all employees, including employees of our subsidiaries, as well as each member of our Board of Directors.

The code of ethics and business conduct is available at our website at https://ir.system1.com/governance/governance-documents/default.aspx .

We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, at the address specified above.

Audit committee

Our audit committee consists of Frank R.

Martire, Jr., Moujan Kazerani and Jennifer Prince with Frank R.

serving as the chair of the committee.

Our Board has determined that each of these individuals meets the independence requirements of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, Rule 10A-3 under the Exchange Act and the applicable listing standards of the NYSE.

Each member of our audit committee meets the requirements for financial literacy under the applicable NYSE rules.

In arriving at this determination, our Board has examined each audit committee member’s scope of experience and the nature of their prior and/or current employment.

Our Board has determined that Frank R.

qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of the NYSE rules.

In making this determination, our Board has considered Frank R.

Martire, Jr.’s formal education and previous and current experience in financial and accounting roles.

Both our independent registered public accounting firm and management periodically will meet privately with our audit committee.

The audit committee’s responsibilities include, among other things:

● appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;

● discussing with our independent registered public accounting firm their independence from management;

● reviewing with our independent registered public accounting firm the scope and results of their audit;

● pre-approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;

● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual consolidated financial statements that System1 files with the SEC;

● reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and compliance with legal and regulatory requirements;

● establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters;

● the performance of our internal function.

Martire, Jr., Moujan Kazerani and Jennifer Prince, with Mr.

serving as chair.

Rule 10A-3 of the Exchange Act and the NYSE rules require that our Audit Committee be composed entirely of independent members.

Our Board of Directors has affirmatively determined that Mr.

Martire, Jr., Mrs.

Kazerani and Ms.

Prince each meet the definition of “independent director” for purposes of serving on the Audit Committee under Rule 10A-3 of the Exchange Act and the NYSE rules.

Each member of our Audit Committee also meets the financial literacy requirements of NYSE listing standards.

In addition, our Board of Directors has determined that Mr.

Martire qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.

Our audit committee held 7 meetings in 2022.

Our audit committee is responsible for, among other things:

• selecting and hiring our independent auditors, and approving the audit and non-audit services to be performed by our independent auditors;

• assisting the board of directors in evaluating the qualifications, performance, and independence of our independent auditors;

• assisting the board of directors in monitoring the quality and integrity of our financial statements and our accounting and financial reporting;

• assisting the board of directors in monitoring our compliance with legal and regulatory requirements;

• assisting the board of directors in monitoring the performance of our internal audit function;

• monitoring the performance of our internal audit function;

• reviewing with management and our independent auditors our annual and quarterly financial statements;

• establishing procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

• preparing the audit committee report that the rules and regulations of the SEC require to be included in our annual proxy statement.

Our audit committee also reviews the related party transaction policy described under “Certain Relationships and Related Party Transactions.” Our audit committee operates under a written charter which is available on our website at https://ir.system1.com/governance/governance-documents/default.aspx.

Compensation committee

Our compensation committee consists of Moujan Kazerani, Frank R.

and Jennifer Prince, with Moujan Kazerani serving as the chair of the committee.

Each of these individuals are non-employee directors, as defined in Rule 16b-3 promulgated under the Exchange Act.

Our Board has determined that each of these individuals are “independent” as defined under the applicable the NYSE listing standards, including the standards specific to members of a compensation committee.

The compensation committee’s responsibilities include, among other things:

● reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating the performance of our Chief Executive Officer in light of these goals and objectives and setting or making recommendations to the Board regarding the compensation of our Chief Executive Officer;

● reviewing and setting or making recommendations to our Board regarding the compensation of our other executive officers;

● making recommendations to our Board regarding the compensation of our directors;

● reviewing and approving or making recommendations to our Board regarding our incentive compensation and equity-based plans and arrangements;

● appointing and overseeing any compensation consultants.

We believe that the composition and functioning of our compensation committee meets the requirements for independence under the current the NYSE listing standards.

Our compensation committee operates under a written charter which is available on our website at https://ir.system1.com/governance/governance-documents/default.aspx.

Nominating and corporate governance committee

Our nominating and corporate governance committee consists of Caroline Horn, Dexter Fowler and Jennifer Prince, with Caroline Horn serving as the chair of the committee.

Our Board has determined that each of these individuals is “independent” as defined under the applicable listing standards of the NYSE and SEC rules and regulations.

The nominating and corporate governance committee’s responsibilities include, among other things:

● identifying individuals qualified to become members of our Board, consistent with criteria approved by our Board;

● recommending to our Board the nominees for election to System1’s Board at annual meetings of our stockholders;

● overseeing an evaluation of our Board and its committees;

● developing and recommending to our Board a set of corporate governance guidelines.

We believe that the composition and functioning of our nominating and corporate governance committee meets the requirements for independence under the current the NYSE listing standards.

Our Board may from time to time establish other committees.

Code of Ethics

We have a code of ethics that applies to all of its executive officers, directors and employees, including its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.

The code of ethics is available on our website, www.system1.com and attached herein as Exhibit 14.1.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently serves, or has served during the last year, as a member of the board of directors or compensation committee of any entity, other than System1, that has one or more executive officers serving as a member of our Board.

Related Person Policy of System1

Our Board has adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions.

A “Related Person Transaction” is a transaction, arrangement or relationship in which System1 or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest.

A “Related Person” means:

● any person who is, or at any time during the applicable period was, one of Our executive officers or a member of Our Board;

● any person who is known by System1 to be the beneficial owner of more than 5% of our voting stock;

● any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, officer or a beneficial owner of more than 5% of our voting stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our voting stock;

● any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.

We have policies and procedures designed to minimize potential conflicts of interest arising from any dealings it may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time.

Specifically, pursuant to its audit committee charter, the audit committee has the responsibility to review related person transactions.

Our nominating and corporate governance committee operates under a written charter which is available on our website at https://ir.system1.com/governance/governance-documents/default.aspx.

Corporate Governance Guidelines

Our Board adopted written corporate governance guidelines (the “Corporate Governance Guidelines”) to ensure that the Board had the necessary authority and practices in place to review and evaluate our business operations as needed and to make decisions independent of our management.

The guidelines acknowledge the leadership exercised by the Board’s standing committees and their chairs and are intended to serve as a flexible framework within which the Board may conduct its business.

The Corporate Governance Guidelines set forth the practices the Board followed with respect to board composition and selection, board meetings and involvement of senior management, Chief Executive Officer performance evaluations and succession planning, and board committees and compensation.

The Nominating and Corporate Governance Committee assisted our Board in implementing and adhering to the Corporate Governance Guidelines.

The Corporate Governance Guidelines had been reviewed at least annually by the Nominating and Corporate Governance Committee, and changes were recommended to our Board as warranted.

The Corporate Governance Guidelines are available on our website at https://ir.system1.com/governance/governance-documents/default.aspx.

Board Leadership Structure

The Board of Directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board of Directors, as the Board of Directors believes it is in the best interests of the Company to

make that determination based on the position and direction of the Company and the membership of the Board of Directors.

The Board of Directors has determined that having the Company’s current Chief Executive Officer serve as Chairman is the best use of the Chief Executive Officer’s extensive knowledge of the Company and its industry and serves to foster greater communication between the Company’s management and the Board of Directors.

The Company does not have a lead independent director.

Instead, all of the independent directors play an active role on the Board of Directors.

The independent directors make up a majority of the Board of Directors, and a majority of the independent directors are or have been leaders in industry with a history of exercising critical thought and sound judgment.

At executive sessions of the independent directors no presiding director is appointed and each of the independent directors is given the opportunity to raise issues, make comments or express views.

Executive Compensation

EXECUTIVE AND DIRECTOR COMPENSATION

This section discusses the material components of the executive compensation program for our executive officers who are named in the “2022 Summary Compensation Table” below.

In 2022, our “named executive officers” and their positions were as follows:

● Ian Weingarten, Chief Executive Officer (2020-February 2021)

● Michael Blend, Chief Executive Officer (February 2021-present)

• Michael Blend, Chief Executive Officer

• Tridivesh Kidambi, Chief Financial Officer

● Jennifer Robinson, Chief Technology Officer

We note that Mr.

Weingarten terminated employment with us on February 22, 2021.

Michael Blend, our Co-Founder and Executive Chairman of the Board, replaced Mr.

Weingarten as our Chief Executive Officer in February 2021.

Blend currently receives a nominal base salary in the amount of $0.26 annually, and did not receive any cash compensation or incentive equity awards from us during either 2020 or 2021.

• Chris Phillips, Chief Executive Officer of Protected.net Group Limited (“Protected UK”)

Phillips is employed by our subsidiary, Protected UK, as its Chief Executive Officer.

Blend did not receive any cash compensation from us during 2021 or 2022.

This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs.

Actual compensation programs that we adopt following the closing of the Business Combination may differ materially from the currently planned programs summarized in this discussion.

Actual compensation programs that we adopt in the future may differ materially from the currently planned programs summarized in this discussion.

2022 Summary Compensation Table

The following table sets forth information concerning the compensation of our named executive officers for the years ended December 31, 2021 and 2022.

Name and Principal Position

Ian Weingarten

Chief Executive Officer (2020) (1)

Name and Principal Position Year Salary ($) Bonus ($)(1) Stock Awards ($)(2) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($)(3) Total ($)

Michael Blend 2022 — — 8,488,436 — 27,167 8,515,603

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Chief Financial Officer 2021 300,000 — — 75,000 53,585 428,585

Jennifer Robinson

Chief Technology Officer

Weingarten terminated employment and ceased to be our Chief Executive Officer, effective as of February 22, 2021, and was succeeded by Michael Blend, who is also our Co-Founder and Executive Chairman of the Board.

(2) Amounts paid to Mr.

Weingarten and Ms.

Robinson reflect the pro-rated amount of their base salary paid to them in 2021, based on the length of their actual employment with us in 2021.

(3) Amounts reflect the full grant-date fair value of Series F Units in OpenMail and Value Creation Units (“VCUs”) granted during 2021, computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual.

We provide information regarding the assumptions used to calculate the value of grants made to executive officers in our Notes to the consolidated financial statements included in this prospectus.

(4) Non-equity incentive plan compensation consists of payments made pursuant to our annual incentive bonus program based on our pro-forma billings-based adjusted EBITDA performance.

The 2021 bonus for Ms.

Robinson was pro-rated to reflect her partial year of service.

Neither Messrs.

Weingarten nor Blend participated in our 2021 annual cash incentive program.

(5) For fiscal year 2021, all other compensation consists of:

(a) Employer-match contributions to our 401(k) plan on behalf of Messrs.

Weingarten and Kidambi and Ms.

Robinson in the amounts of $2,831, $9,808, and $5,077, respectively;

(b) Distributions not taken into account in determining grant-date fair value under ASC Topic 718 in respect of Series B Units issued by Openmail to Mr.

Kidambi in the amount of $43,777;

Weingarten upon his termination of employment in February 2021 in the amount of $378,571, consisting of (i) continued payment of his base salary in effect at the time of termination for a period of 6 months (in an aggregate amount of $200,000), (ii) payment of fifty percent (50%) of his annual target bonus (in an amount of $130,000), and (iii) company-subsidized COBRA premiums for up to eighteen months following termination (in an aggregate value of $48,571).

(6) Represents a one-time signing bonus paid to Ms.

Robinson in connection with her commencement of employment with us in May 2021.

Chris Phillips 2022 100,000 (4)

20,000,000 6,372,500 — — 26,472,500

Chief Executive Officer, Protected UK

(1) Amounts reflect (i) a one-time discretionary cash bonus paid to Mr.

Kidambi in 2022 in recognition of his efforts in connection with the Merger;

(ii) a liquidation event bonus paid to Mr.

Kidambi as a result of the Merger pursuant to a letter agreement with him;

and (iii) a cash bonus paid to Mr.

Phillips (through Just Develop It Limited, a company controlled by Mr.

Phillips (“JDI”)) related to the restructuring of the earn-out payable in connection with the Company’s acquisition o f Protected UK.

For additional information on the amounts described in this Note 1, see “ 2022 Cash Incentive Compensation—One-Time Bonuses ” below.

(2) Amounts reflect (i) for Mr.

Kidambi, the incremental compensation expense incurred by the Company as a result of the modifi cation of the vesting schedule of the Openmail Series F Units held by him in connection with the Merger;

(ii) for Messrs.

Blend and Kidambi, the grant-date fair market value of fully-vested shares of Class A comm on stock issued during 2022 in respect of such executive officer’s backstop obligations in connection with the Merger and (iii) for each named executive officer, the full grant-date fair value of restricted stock units granted during 2022 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual.

We provide information regarding the assumptions used to calculate the value of all stock awards made to our named executive officers in Note 19 to our consolidated financial statements included in our 2022 Annual Report on Form 10-K.

For additional information, see “ Equity Compensation ” and “ Equity Issuances in connection with Business Combination ” below.

(3) For fiscal year 2022, all other compensation consisted of:

Blend, Company payment of his health and welfare benefit plan premiums in the amount of $27,167.

Kidambi, an employer-match contribution to our 401(k) plan in the amount of $9,807;

a fitness/technology stipend in the amount of $360;

and cash distributions in respect of Openmail Series B Units and Series F Units in the amount of $17,396 and $31,209, respectively.

(4) In 2022, Mr.

Phillips received his base salary in GBP, which was converted into USD for purposes of this 2022 Summary Compensation Table based on the exchange rate on December 31, 2022 , which was 1.2099.

2022 Salaries

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The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting and accounting for the executive’s skill set, experience, role and responsibilities.

The base salary amounts earned by our named executive officers for 2021 are set forth above in the Summary Compensation Table in the column entitled “Salary”.

As of January 27, 2022, the annual base salary for Mr.

Kidambi was $350,000 and the annual base salary for Ms.

Robinson was $325,000.

We expect to further evaluate the base salaries of our executive officers, including our named executive officers, in consultation with our compensation consultant, in connection with consummating the Business Combination and periodically thereafter.

Effective January 28, 2022, the base salary for Mr.

Kidambi was increased from $300,000 to $350,000 to bring his salary in-line with market salaries for similarly-situated executives.

Effective January 1, 2022, Mr.

Phillips’ base salary was decreased from $1,200,000 to $100,000.

The aggregate base salary amounts earned by our named executive officers for 2022 are set forth above in the Summary Compensation Table in the column entitled “Salary”.

2022 Cash Incentive Compensation

2022 Annual Cash Incentive Compensation

Our named executive officers (other than Mr.

Blend) are eligible to earn annual cash incentives under our annual incentive program, determined as a percentage of the applicable officer’s base salary and based on our operating and financial performance, including our annual pro-forma billings based adjusted EBITDA performance, as well as the named executive officer’s contributions to our operating and financial performance.

Annual cash incentives for Mr.

Kidambi and Ms.

Robinson are targeted at 25% and 40% of the applicable officer’s base salary, respectively.

Weingarten did not participate in our 2021 annual incentive program because his employment with us terminated in February 2021.

In addition, as noted above, Mr.

Blend does not currently (and did not in 2020) participate in our annual cash incentive program.

The actual annual cash bonuses awarded to Mr.

Kidambi and Ms.

Robinson are set forth in the Summary compensation Table above in the column entitled “Non-Equity Incentive Plan Compensation”.

Signing Bonus

In May 2021, in connection with her commencement of employment with us, Ms.

Robinson received a one-time signing bonus equal to $80,000.

Robinson’s employment is terminated for “cause” or due to her resignation without “good reason” (each as defined in her employment agreement with us) during the first year of her employment, the signing bonus is repayable to the Company (either in full or, if the termination occurs after the first six months of her employment, with respect to a pro-rata portion thereof).

Kidambi is eligible to earn an annual cash incentive under our annual incentive program targeted at $300,000 based on our operating and financial performance, including our annual pro-forma billings-based adjusted EBITDA performance, as well as individual performance.

Blend and Phillips do not currently (and did not in 2022) participate in our annual cash incentive program.

No bonuses were earned or paid to Mr.

Kidambi for fiscal year 2022 under our annual incentive program.

One-Time Bonuses

On February 4, 2022, we paid a one-time bonus to Mr.

Kidambi in the amount of $500,000, in recognition of his efforts in connection with the closing of the Merger.

Additionally, on February 18, 2022, we paid a one-time bonus to Mr.

Kidambi in the amount of $79,984, pursuant to a letter agreement by and between Mr.

Kidambi and the Company.

Pursuant to such letter agreement, Mr.

Kidambi was entitled to receive a cash bonus upon a liquidation event (which included the Merger) equal to the notional interest accrued on distributions in respect of certain of his Openmail units that were waived by him pursuant to the letter, subject to his continued employment through the liquidation event.

Further, we paid a one-time bonus to Mr.

Phillips ( through JDI) in the amount of $20,000,000 related to the restructuring of an earnout from the Company’s acquisition of Protected UK.

This bonus was paid in two equal installments on each of August 30, 2022 and November 29, 2022.

Equity Compensation

During 2021, in connection with the entry into her employment agreement, we granted 100,000 VCUs to Ms.

Robinson under the S1 Holdco 2017 Value Creation Plan.

Each VCU represented an appreciation right entitling Ms.

Robinson to a share of our appreciated value above the VCU distribution threshold (or strike price), which was $10.00 per VCU with respect to Ms.

Robinson’s 2021 VCU grant.

Robinson’s VCUs are eligible to vest as to 25% of the awarded VCUs on the first anniversary of the vesting start date (which was the commencement of her employment in May 2021) and, with respect to the remaining 75% of the awarded VCUs, in substantially equal quarterly installments thereafter through the fourth anniversary of the vesting start date, subject to Ms.

Robinson’s continued service through the applicable vesting date, and further subject to accelerated vesting in certain circumstances.

In addition, during 2021, Mr.

Kidambi received a grant of 52,500 Series F Units in Openmail, which are intended to constitute “profits interests” for federal income tax purposes.

Such Series F Units are were originally eligible to vest in full upon the later of (i) May 1, 2022 or (ii) the date on which Openmail disposes of its entire ownership interest in Mr.

Kidambi’s employer, in each case, subject to his continued employment through the applicable vesting date.

However, simultaneously with the closing of the Business Combination, the Series F Units were amended such that the Series F Units will vest in full on May 1, 2022 (subject to Mr.

Kidambi’s continued employment through such date).

In connection with the Business Combination, our Board adopted, and our stockholders approved, the 2022 Incentive Award Plan (referred to herein as the 2022 Plan).

During 2022, we granted awards of restricted stock units covering Company common stock to each of our named executive officers, as described below.

Michael Blend’s and Chris Phillip’s Awards

On January 27, 2022, each of Mr.

Blend and Chris Phillips (through an issuance to JDI) was granted an award of 725,000 restricted stock units which was scheduled to vest and become payable in shares of our common stock only if a “Class D Conversion Event” occurred on or prior to the fifth anniversary of the closing of the Merger.

These awards vested in full on March 17, 2022, the date on which a Class D Conversion Event occurred.

For purposes of these awards, a Class D Conversion Event was defined as the earlier of:

(a) the first day on which the volume weighted average price of our common stock equaled or exceeded $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any twenty New York Stock Exchange trading days within a period of thirty consecutive New York Stock Exchange trading days;

or (b) a change of control of the Company (as defined in the applicable award agreement) if the valuation of our common stock in such change of control equaled or exceeded $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like).

If a Class D Conversion Event did not occur on or prior to the fifth anniversary of the closing of the Merger, then the awards would have been forfeited.

These restricted stock units were issued in tandem with dividend equivalents, which represented the right to receive the equivalent value of dividends paid on shares of the common stock underlying such RSUs.

Dividend equivalents are credited as of the dividend record dates that occur during the period that the restricted stock units remain outstanding, and paid if and when the restricted stock units to which the dividend equivalents relate vested and the underlying shares of our common stock were issued.

Tridivesh Kidambi’s Award

On May 10, 2022, Mr.

Kidambi was granted an award of 100,000 restricted stock units.

The award of restricted stock units was originally scheduled to vest (or vested, as applicable) as to:

(i) five percent (5%) on the first anniversary of the vesting commencement date, (ii) three and seventy-five thousands percent (3.75%) on the next four (4) quarterly anniversaries of the vesting commencement date, and (iii) ten percent (10%) on the next eight (8) quarterly anniversaries of the vesting commencement date thereafter, in each case, subject to Mr.

Kidambi’s continued service through the applicable vesting date.

In February 2023, the vesting schedule of the award was amended so that the restricted stock units are now scheduled to vest (or did vest, as applicable), as to:

(A) five percent (5%) on the first anniversary of the vesting commencement date, (B) eleven and twenty-five thousandths percent (11.25%) on the next four (4) quarterly anniversaries of the vesting commencement date, and (C) six and twenty-five thousandths percent (6.25%) on the next eight (8) quarterly anniversaries of the vesting commencement date thereafter, in each case, subject to Mr.

Kidambi’s continued service through the applicable vesting date.

Equity Issuances in connection with the Merger

In connection with their respective backstop obligations in the Merger, each of Messrs.

Blend (through an issuance to Lone Star Friends Trust) and Kidambi were issued 235,104 shares and 16,965 shares, respectively, of fully vested Class A common stock of the Company upon the closing of the Merger.

For additional information regarding such backstop obligations, see Note 3.

Other Elements of Compensation

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Currently, we match contributions made by participants in the 401(k) plan up to a specified percentage of the employee contributions, and these matching contributions are fully vested as of the date on which the contribution is made.

We believe that providing a vehicle for tax-deferred retirement savings though our 401(k) plan, and making fully vested matching contributions without any minimum prior service period, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.

We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan, and making fully vested matching contributions without any minimum prior service period, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.

Employee Benefits and Perquisites

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2021.

We note that Mr.

Blend, our current CEO, did not hold any outstanding equity awards as of December 31, 2021.

Option Awards

Unexercisable

Ian Weingarten

The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards held by Mr.

Kidambi as of December 31, 2022.

Blend nor Mr.

Phillips held any equity awards as of December 31, 2022.

Name Grant Date Vesting Commencement Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($)(1)

Tridivesh Kidambi 2/1/2019 2/1/2019 109,955(2) $515,689

Jennifer Robinson

(1) These S1 Holdco VCUs will fully vest upon satisfaction of both a service-vest and performance-vest (liquidity event) condition.

The service-vest condition is satisfied based on continued service as a director of the Company or employment (as applicable) over a four-year period, with 25% of the VCUs service-vesting on the first anniversary of the vesting commencement date and the remaining 75% of the VCUs service-vesting in substantially equal quarterly increments for three years

thereafter, subject to continued service or employment (as applicable) through the applicable service vesting date.

The performance-vest condition is satisfied upon the occurrence of a change in control or certain public offerings of our securities (or those of our affiliate), in any case, occurring on or prior to the expiration date, which occurs six years from the date of grant.

(2) This amount reflects the value of an unvested profits interest granted to Mr.

Weingarten in April 2019 (referred to below as the “Profits Interest”) in connection with his initial employment as our former Chief Executive Officer, which entitled Mr.

Weingarten to 5% of distributions made by S1 Holdco, LLC after a return on invested capital to its existing investors, subject to a participation threshold of $300,000,000 (which threshold was subject to adjustment as set forth in System1 Holdco, LLC’s operating agreement).

The Profits Interest was eligible to vest over a period of four years from the date of grant in substantially equal quarterly increments based on Mr.

Weingarten’s continued employment through the applicable vesting date, subject to 50% accelerated vesting upon certain qualifying transactions (based on continued employment through the applicable transaction) and 100% accelerated vesting upon an involuntary termination within three months after a qualifying transaction.

A portion of Mr.

Weingarten’s Profits Interest was deemed vested in connection with his termination of employment, a portion was forfeited, and a portion remained unvested as of December 31, 2021, in each case, as described below under “Executive Compensation Arrangements.”

(3) These Openmail Series B-1 Units are intended to constitute “profits interests” for federal income tax purposes, and vest with respect to 25% of the award on the first anniversary of the vesting start date, and with respect to 75% of the award quarterly thereafter (referred to below as the “Openmail Vesting Schedule”), subject to the executive’s continued service through the applicable vesting date, and vested in full upon the closing of the Business Combination.

(4) These Openmail Series F Units are intended to constitute “profits interests” for federal income tax purposes, and vest upon the later of a liquidation event based on continued service through the liquidation event, except that if a liquidation event occurs within four years following the date of grant, then only the number of profits interests that would have vested as of the liquidation event based on the Openmail Vesting Schedule will vest upon the liquidation event, and the remainder of the award will vest on the Openmail Vesting Schedule based on continued service through the applicable vesting date.

However, concurrently with the closing of the Business Combination, such Series F units were amended such that the Series F units became 50% vested upon the closing of the Business Combination, and the remaining 50% will vest in eight equal installments on each of the first eight quarterly anniversaries of the closing thereafter (subject to the applicable executive’s continued employment through such date).

(5) These Openmail Series F Units are intended to constitute “profits interests” for federal income tax purposes, and originally vested upon the later of (i) May 1, 2025 or (ii) the date on which Openmail disposes of its entire ownership interest in the applicable executive’s employer, in each case, subject to the applicable executive’s continued employment through the applicable vesting date.

However, concurrently with the closing of the Business Combination, such Series F Units were amended such that the Series F Units will vest in full on May 1, 2022 (subject to Mr.

Kidambi’s continued employment through such date).

5/10/2022 1/28/2022 100,000(3) $469,000

6/17/2022 2/15/2021 3,684(4) $17,278

(1) Amounts shown were determined by multiplying the number of shares or units shown in the table by the closing price of our common stock on December 30, 2022 (the last trading day of our last completed fiscal year) of $4.69 per share.

(2) Represents Openmail Series F Units that were converted in connection with the Merger into the right to receive shares of Class A and Class C common stock of the Company, and which vested 50% upon the closing of the Merger and vested or are scheduled to vest (as applicable) with respect to the remaining 50% in eight equal installments on each of the first eight quarterly anniversaries of the closing thereafter, subject to the executive’s continued employment through the applicable vesting date.

(3) Represents restricted stock units that, as of December 31, 2022, were originally scheduled to vest as to (i) five percent (5%) on the first anniversary of the vesting commencement date, (ii) three and seventy-five thousands percent (3.75%) on the next four (4) quarterly anniversaries of the vesting commencement date, and (iii) ten percent (10%) on the next eight (8) quarterly anniversaries of the vesting commencement date thereafter, in each case, subject to the executive's continued service through the applicable vesting date.

In February 2023, the vesting schedule of such award was amended such that these restricted stock units are now scheduled to vest (or did vest, as applicable) as to (i) five percent (5%) on the first anniversary of the vesting commencement date, (ii) eleven and twenty-five thousandths percent (11.25%) on the next four (4) quarterly anniversaries of the vesting commencement date, and (iii) six and twenty-five thousandths percent (6.25%) on the next eight (8) quarterly anniversaries of the vesting commencement date thereafter, in each case, subject to the executive's continued service through the applicable vesting date.

(4) Represents restricted stock units that are scheduled to vest (or did vest, as applicable) as to twenty-five percent (25%) on each of the first four anniversaries of the vesting commencement date, subject to the executive's continued service through the applicable vesting date.

Executive Compensation Arrangements

We are party to employment agreements with each of Mr.

Kidambi and Ms.

The Company was previously party to an employment agreement with Mr.

Weingarten, which was terminated in connection with his termination of employment.

In connection with his termination, the Company entered into a separation agreement with Mr.

Kidambi’s and Ms.

Robinson’s employment agreements and Mr.

Weingarten’s separation agreement are summarized below.

During 2022, we were party to an employment agreement with Mr.

Kidambi, the terms of which are summarized below.

Blend and Phillips were not a party to employment agreements with us during 2022.

Tridivesh Kidambi Employment Agreement

We are party to an employment agreement with Mr.

Kidambi that was entered into by our predecessor entity in October 2016, pursuant to which Mr.

In 2022, we were party to an employment agreement with Mr.

Kidambi, which was entered into by our predecessor entity in October 2016 and pursuant to which Mr.

Kidambi serves as our Chief Financial Officer.

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Kidambi’s employment with us is terminated without “cause” (as defined therein) or by Mr.

Kidambi for “good reason” (as defined therein), he will be eligible for the following severance benefits (in addition to any accelerated vesting separately provided under applicable award agreement(s)):

Kidambi for “good reason” (as defined therein), he will be eligible for the following severance benefits:

(i) continued payment of his then-current base salary for 3 months and (ii) company-subsidized COBRA premiums for up to 6 months.

Jennifer Robinson Employment Agreement

We are party to an employment agreement with Ms.

Robinson that was entered into in May 2021, pursuant to which Ms.

Robinson serves as our Chief Technology Officer.

Robinson’s employment agreement sets forth the initial terms and conditions of her employment, including her initial base salary of $300,000, a signing bonus of $80,000 (discussed above under “ 2021 Cash Incentive Compensation-Signing Bonus ”), and an annual bonus targeted at 40% of her base salary.

Under her employment agreement, if Ms.

Robinson’s employment with us is terminated without “cause” (as defined therein) or by Ms.

Robinson for “good reason” (as defined therein), she will be eligible for the following severance benefits (in addition to any accelerated vesting separately provided under applicable award agreement(s)):

(i) continued payment of her then-current base salary for 6 months, (ii) company-subsidized COBRA premiums for up to 6 months, and (iii) accelerated vesting of 25% of her 2021 VCU grant (or such lesser portion of such award that is then-unvested).

If such termination occurs within six months after a “change in control” of the Company (which excludes the

Business Combination), then in lieu of the accelerated vesting described in the preceding sentence, her 2021 VCU grant will vest in full (to the extent then-unvested) upon such termination.

Ian Weingarten Separation Agreement

In connection with his termination in February 2021, the Company entered into a separation agreement with Mr.

Pursuant to this separation agreement, Mr.

Weingarten’s employment was terminated, effective February 22, 2021.

Weingarten executed a release of claims in connection with his termination and received the following severance benefits:

(i) continued payment of his base salary in effect at the time of termination for a period of 6 months, (ii) payment of fifty percent (50%) of his annual target bonus for calendar year 2020, and (iii) company-subsidized COBRA premiums for up to eighteen months following termination (collectively, the “ Severance Payment ”).

Weingarten’s separation agreement also provided that his 2020 VCU grant was deemed to be 75% service-vested (payable on the consummation of the Business Combination in the same manner as other vested VCUs), and that his Profits Interest was deemed (x) vested as to a 3.75% Profits Interest and (y) forfeited as to the remaining 1.25% Profits Interest, in each case, above the applicable adjusted threshold amount (subject to further reduction to a 2.5% Profits Interest in the event that the Business Combination was not consummated).

Director Compensation

The following individuals served as non-employee directors of System1 in 2021:

Foley, II, Frank R.

Martire, Jr., Dexter Fowler, Jennifer Prince, Moujan Kazerani, Caroline Horn and Christopher Phillips.

We have not historically maintained a formal non-employee director compensation program.

However, we have provided cash compensation and awarded options to purchase shares of our Class A Common Stock to non-employee directors from time to time.

Additionally, we reimburse our non-employee directors for their reasonable expenses incurred in attending meetings of the Board and its committees.

No compensation was paid to any director for service in 2021.

We maintain a Director Compensation Program for non-employee directors of the Company (the “Non-Employee Director Compensation Program”), which became effective as of February 25, 2022.

Eligible directors are entitled to receive equity compensation for service on the Board under the Non-Employee Director Compensation Program as follows:

The following individuals served as our non-employee directors in 2022:

John Civantos, William Foley, Dexter Fowler, Caroline Horn, Moujan Kazerani, Frank Martire, and Jennifer Prince.

We maintain a Director Compensation Program for non-employee directors of the Company (the “Non-Employee Director Compensation Program”), which became effective as of February 25, 2022 and is further discussed below under “—Director Compensation Program”.

The Non-Employee Director Compensation Program provides for grants of equity awards to our non-employee directors, commencing with the Company’s annual stockholders meeting for 2023 and, accordingly, our non-employee directors were not compensated under the Non-Employee Director Compensation Program for services provided during 2022.

However, we did award restricted stock units covering shares of our Class A Common Stock to our non-employee directors in fiscal year 2022.

Twenty percent of the restricted stock units subject to each such award vested (or will vest, as applicable) on each quarterly anniversary of January 28, 2022 (or, for Mr.

Civantos, February 25, 2022), subject to the applicable non-employee director’s continued service through the applicable vesting date.

Additionally, we reimbursed our non-employee directors for their reasonable expenses incurred in attending meetings of the Board and its committees, as well as for certain expenses incurred in connection with attending corporate governance programs.

The table below summarizes the compensation we paid to our non-employee directors during the year ended December 31, 2022:

Name Stock Awards ($)(1) Total ($)

John Civantos $233,775 $233,775

William Foley $249,360 $249,360

Dexter Fowler $263,210 $263,210

Caroline Horn $270,140 $270,140

Moujan Kazerani $304,780 $304,780

Frank Martire $332,480 $332,480

Jennifer Prince $304,770 $304,770

(1) Amounts reflect the full grant-date fair value of restricted stock units granted during 2022 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual.

We provide information regarding the assumptions used to calculate the value of all stock awards made to our directors in Note 19 to our consolidated financial statements included in our 2022 Annual Report on Form 10-K.

The aggregate unvested restricted stock units held as of December 31, 2022 by each non-employee director who was serving as of December 31, 2022 were as follows:

John Civantos – 9,000;

William Foley – 9,600;

Dexter Fowler – 10,134;

Caroline Horn – 10,400;

Moujan Kazerani – 11,736;

Frank Martire – 12,802;

and Jennifer Prince – 11,736.

Director Compensation Program

Going forward, eligible directors are entitled to receive equity compensation for service on the Board under the Non-Employee Director Compensation Program as follows:

Annual Awards.

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Compensation Committee Awards.

The Company will grant an award of restricted stock units with a grant date fair value of $20,000 to the eligible director who serves as Chairperson of the Compensation Committee and an award of restricted stock units with a grant date fair value of $10,000 to each eligible director who

serves as a member of the Compensation Committee (other than the Chairperson of the Compensation Committee).

a member of the Compensation Committee (other than the Chairperson of the Compensation Committee).

Nominating and Corporate Governance Committee Awards.

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Each award shall vest as to twenty-five percent (25%) of the award on each of the first three (3) quarterly anniversaries of the applicable grant date, and as to the remaining twenty-five percent (25%) of the award on the earlier to occur of (x) the one-year anniversary of the applicable grant date and (y) the date of the next annual meeting of stockholders following the grant date, subject to the applicable eligible director’s continued service on the Board (or a committee of the Board, as applicable).

All awards of the Non-Employee Director Compensation Program will be granted under, and shall be subject to the terms and provisions of, the Plan.

All awards of the Non-Employee Director Compensation Program will be granted under, and shall be subject to the terms and provisions of, the Award Plan.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information with respect to the beneficial ownership of our Common Stock immediately following the consummation of the Business Combination by:

● each person known by us to beneficially own more than 5% of the outstanding shares of our Common Stock;

● each of our directors;

● each of our named executive officers;

● all of our directors and executive officers as a group.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.

Except as described in the footnotes below and subject to applicable community property laws and similar laws, we believe that each person listed above has sole voting and investment power with respect to such shares.

Unless otherwise noted, the address of each beneficial owner is c/o System1, 4235 Redwood Avenue, Los Angeles, CA 90066.

Class A Common Stock

Shares of Class A

Beneficial Ownership

Name of Beneficial Owner

Common Stock+

The following table sets forth information known to us with respect to beneficial ownership of our common stock as of April 20, 2023 for (i) each member of our Board, (ii) each holder of 5.0% or greater of our common stock, (iii) our Named Executive Officers and executive officers, and (iv) all executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC.

Shares subject to options that are exercisable within 60 days following April 20, 2023 are deemed to be outstanding and beneficially owned by the optionee for the purpose of computing share and percentage ownership of that optionee, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

The percentage of shares beneficially owned is based on 93,252,365 shares of Class A Common Stock and 21,512,757 shares of Class C Common Stock outstanding as of April 20, 2023.

Except as affected by applicable community property laws, all persons listed have sole voting and investment power for all shares shown as beneficially owned by them.

Name of Beneficial Owner Shares of Class A Common Stock+ Class A Common Stock Beneficial Ownership Percentage Voting Power Percentage++

Directors and Executive Officers

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Brian Coppola (2) 417,897 * *

Paul Filsinger(3)

Tridivesh Kidambi (3) 1,204,952 1.3 % 1.0 %

Jennifer Robinson

Elizabeth Sestanovich(5)

Jen Robinson (4) 65,938 * *

Beth Sestanovich (5) 317,957 * *

Daniel Weinrot (6) 154,455 * *

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Moujan Kazerani (10) 90,534 * *

Martire, Jr.(10)

(11) 4,482,879 4.8 % 3.9 %

Christopher Phillips (12) 18,672,586 20.0 % 16.3 %

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Stanley Blend (15) 16,411,892 17.6 % 14.3 %

Lone Star Friends Trust(14)

Trasimene Trebia, LP(8)

BGPT Trebia, LP(10)

Nicholas Baker (16) 7,699,449 8.3 % 6.7 %

CEE Holdings Trust(16)

Denotes less than 1%

Represents shares of Class A Common Stock that the stockholders shown (i) beneficially own as of January 27, 2022 or (ii) have the right to acquire (a) upon exercise of Warrants held by the stockholder, (b) upon exercise of the stockholder’s redemption right of any Class B Units in S1 Holdco held by such stockholder or (c) upon exercise of vested performance-based restricted stock units (“RSUs”) granted to each of Michael Blend and Just Develop It Limited.

* Represents beneficial ownership of less than 1%.

+ Represents shares of Class A Common Stock that the stockholders shown (i) beneficially own as of April 20, 2023 or (ii) have the right to acquire within 60 days upon exercise of (a) warrants, stock options and restricted stock units (“RSUs”) held by the stockholder or (b) the stockholder’s redemption right of any Class B Units in S1 Holdco held by such stockholder as described in the immediately subsequent footnote below.

The shares included in this column are deemed to be outstanding in calculating the percentage ownership of Class A Common Stock of such stockholder, but are not deemed to be outstanding as to any other stockholder.

Includes shares that the stockholders shown have the right to acquire as of January 27, 2022 or within 60 days thereafter as described in immediately preceding footnote above.

Assumes redemption of all Class B Units by all members of S1 Holdco for shares of Class A Common Stock, which would have resulted in an additional 22,077,319 shares of Class A Common Stock outstanding as of January 27, 2022.

++ Includes shares that the stockholders shown have the right to acquire as of April 20, 2023 or within 60 days thereafter as described in immediately preceding footnote above.

Assumes redemption of all Class B Units by all members of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) for shares of Class A Common Stock, which would have resulted in an additional 21,512,757 shares

of Class A Common Stock outstanding as of April 20, 2023.

Holders of Class B Units of S1 Holdco are entitled to have their Class B Units of S1 Holdco exchanged or redeemed for Class A Common Stock on a one-for-one basis or, at the election of the Company, a cash payment in an amount per Class B Unit of S1 Holdco redeemed and calculated based on the volume weighted average market price of a share of Class A Common Stock at the time of redemption.

The Class B Units of S1 Holdco do not have voting rights, but holders of Class B Units of S1 Holdco own a corresponding number of shares of Class C Common Stock of the Company, which have voting rights and vote together with the shares of Class A Common Stock.

(1) Consists of 35,000 Public Warrants exercisable for 35,000 shares of Class A Common Stock at an exercise price of $11.50 per share and 725,000 fully vested RSUs, in each case held directly by Mr.

Excludes (i) 172,440 shares of Class A Common Stock and 961,613 shares of Class A Common Stock issuable upon the exchange or redemption of 961,613 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held by OpenMail2, LLC (“OpenMail2”) and (ii) 45,077 shares of Class A Common Stock and 251,379 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Company), in each case, directly held by the Blend Family Foundation.

OpenMail2 is jointly controlled by Michael Blend, Charles Ursini and Tridivesh Kidambi as members of the board of managers thereof and they may be deemed to jointly control the voting

and dispositive power over the shares held by OpenMail2.

(1) Consists of 35,000 Public Warrants exercisable for 35,000 shares of Class A Common Stock at an exercise price of $11.50 per share and 725,000 shares of Class A Common Stock, in each case held directly by Mr.

Excludes (i) 58,766 shares of Class A Common Stock and 327,681 shares of Class A Common Stock issuable upon the exchange or redemption of 327,681 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company), in each case, held by OpenMail2, LLC (“OpenMail2”) and (ii) 1,045,077 shares of Class A Common Stock and 251,379 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Company), in each case, directly held by the Blend Family Foundation.

OpenMail2 is jointly controlled by Michael Blend, Charles Ursini and Tridivesh Kidambi as members of the board of managers thereof and they may be deemed to jointly control the voting and dispositive power over the shares held by OpenMail2.

The directors of the Blend Family Foundation are Michael Blend, Sandra Blend and Stanley Blend.

The Public Warrants by their terms become exercisable (including by cash settlement) 30 days following the Closing Date.

The terms of the Public Warrants are set forth in the Warrant Agreement filed with the SEC on June 22, 2020 as Exhibit 4.1 to the Issuer’s Current Report on Form 8-K.

The RSUs vested on March 17, 2022 the first trading day on which the volume weighted average price of the Company’s Class A Common Stock exceeded $12.50 per share for 20 trading days within a period of 30 consecutive trading days.

(2) Consists of 77,086 shares of Class A Common Stock and 225,969 shares of Class A Common Stock issuable upon the exchange or redemption of 225,969 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held directly by Mr.

(3) Consists of 335,032 shares of Class A Common Stock and 540,868 shares of Class A Common Stock issuable upon the exchange or redemption of 540,868 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held by Mr.

(2) Consists of (i) 114,360 shares of Class A Common Stock and 288,126 shares of Class A Common Stock issuable upon the exchange or redemption of 288,126 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held directly by Mr.

Coppola, (ii) 2,812 shares of Class A Common Stock issuable from vested RSUs awarded to the securityholder and (iii) 1,916 shares of Class A Common Stock and 10,683 shares of Class A Common Stock upon the exchange of 10,683 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) issuable within 60 days, in each case from OpenMail2.

(3) Consists of (i) 15,000 Public Warrants exercisable for 15,000 shares of Class A Common Stock at an exercise price of $11.50 per share held directly by Mr.

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Kidambi, (iii) 15,518 shares of Class A Common Stock held by Mr.

Kidambi’s spouse (who is also an employee of the Company) and (iv) 61,736 shares of Class A Common Stock Currently held by Lone Investment Holdings, LLC (“LIH”) which shares have been given pro forma effect to Mr.

Kidambi and one expected to be distributed to Mr.

Kidambi upon LIH’s scheduled distribution Excludes 172,440 shares of Class A Common Stock and 961,613 shares of Class A Common Stock issuable upon the exchange of 961,613 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held by OpenMail2.

(5) Consists of 58,841 shares of Class A Common Stock and 208,595 shares of Class A Common Stock issuable upon the exchange or redemption of 208,595 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held by Ms.

(6) Consists of 38,464 shares of Class A Common Stock and 59,642 shares of Class A Common Stock issuable upon the exchange or redemption of 59,642 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held by Mr.

Kidambi’s spouse (who is also an employee of the Company), (iv) an aggregate of 3,750 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded collectively to Mr.

Kidambi and Mr.

Kidambi’s spouse and (v) 4,180 shares of Class A Common Stock and 23,309 shares of Class A Common Stock upon the exchange of 23,309 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) issuable within 60 days, in each case from OpenMail2.

(4) Consists of (i) 52,289 shares of Class A Common Stock held directly by Ms.

Robinson and (ii) 13,649 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the securityholder.

(5) Consists of (i) 74,192 shares of Class A Common Stock and 235,789 shares of Class A Common Stock issuable upon the exchange or redemption of 235,789 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held by Ms.

Sestanovich, (ii) 2,250 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the securityholder and (iii) 871 shares of Class A Common Stock and 4,856 shares of Class A Common Stock upon the exchange of 4,856 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) issuable within 60 days, in each case from OpenMail2.

(6) Consists of (i) 57,860 shares of Class A Common Stock and 88,390 shares of Class A Common Stock issuable upon the exchange or redemption of 88,390 Class B Units of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) held by Mr.

Weinrot, (ii) 2,250 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the securityholder and (iii) 906 shares of Class A Common Stock and 5,050 shares of Class A Common Stock issuable upon the exchange of 5,050 Class B Units

of S1 Holdco (and cancellation of the corresponding shares of Class C Common Stock of the Company) issuable within 60 days, in each case from OpenMail2.

(7) Consists of (i) 90,534 shares of Class A Common Stock held directly by Mr.

Civantos, (ii) 100,000 shares of Class A common stock issuable upon the exercise of 100,000 Warrants, (iii) 75,612 shares of Class A Common Stock securities held by the John Civantos 2011 Family Trust, which shares held by the trust Mr.

Civantos disclaims beneficial interest in such securities except to any pecuniary interest therein and (iv) 29,325 shares of Class A Common Stock .currently held by LIH, which shares have been given pro forma effect to Mr.

Civantos and one expected to be distributed to Mr.

Civantos upon LIH’s scheduled distribution.

(8) Consists of (i) 3,737,205 shares of Class A Common Stock directly held by Trasimene Trebia, LP (the “Trebia Sponsor”), (ii) 4,734,167 shares of Class A Common Stock issuable upon the exercise of 4,734,167 Warrants directly held by the Trebia Sponsor and (iii) 833,750 shares of Class A Common Stock from the automatic conversion of 833,750 shares of Class D Common Stock held by the Trebia Sponsor.

Under the Issuer’s Certificate of Incorporation, the Trebia Sponsor’s shares of Class D Common Stock automatically converted into Class A Common Stock on a one-for-one basis on March 17, 2022, the first trading day that the volume-weighted average price of Class A Common Stock equaled or exceeded $12.50 per share for 20 trading days within a period of 30 consecutive trading days

Civantos, (ii) 100,000 Public Warrants exercisable for 100,000 shares of Class A Common Stock at an exercise price of $11.50 per share held directly by Mr.

Civantos, (iii) 4,500 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the securityholder and (iv) 75,612 shares of Class A Common Stock securities held by the John Civantos 2011 Family Trust, which shares held by the trust Mr.

Civantos disclaims beneficial interest in such securities except to any pecuniary interest therein.

(8) Consists of (i) 20,267 shares of Class A Common Stock held directly by Mr.

Fowler and (ii) 5,067 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the securityholder.

(9) Consists of (i) 20,800 shares of Class A Common Stock held directly by Ms.

Horn and (ii) 5,200 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the securityholder.

(10) Consists of (i) 43,967 shares of Class A Common Stock and 40,700 shares of Class A Common Stock issuable upon exercise of 40,700 Public Warrants, in each case held directly by Mr.

Kazerani, the spouse of Ms.

Kazerani, and (ii) 12,000 shares of Class A Common Stock held by Ms.

Kazerani, (ii) 5,867 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the securityholder and (iii) 12,000 shares of Class A Common Stock held by Ms.

Kazerani’s in-laws, over which shares Ms.

Kazerani’s spouse has voting and dispositive power pursuant to a power of attorney granted to him.

(10) Consists of (i) 2,762,282 shares of Class A Common Stock directly held by BGPT Trebia, LP (the “BGPT Sponsor”) (ii) 2,499,167 shares of Class A Common Stock issuable upon the exercise of 2,499,167 Warrants directly held by the BGPT Sponsor and (iii) 616,250 shares of Class A Common Stock from the automatic conversion of 616,250 shares of Class D Common Stock held by the BGPT Sponsor.

Under the Issuer’s Certificate of Incorporation, the BGPT Sponsor’s shares of Class D Common Stock automatically converted into Class A Common Stock on a one-for-one basis on March 17, 2022, the first trading day that the volume-weighted average price of Class A Common Stock equaled or exceeded $12.50 per share for 20 trading days within a period of 30 consecutive trading days

(11) Consists of (i) 725,000 fully vested RSUs and 500,000 shares of Class A Common Stock issuable upon the exercise of 500,000 Private Placement Warrants , in each case held directly by Just Develop It Limited (“JDIL”) and (ii) 19,508,184 shares of Class A Common Stock currently held by JDI & AFH Limited (“J&A”) which shares have been given pro forma effect to JDIL and one expected to be distributed to JDIL upon J&A’s scheduled distribution.

J&A’s controlling stockholder is JDIL and Mr.

Phillips is a director of J&A.

Phillips is the controlling shareholder and a director of JDIL.The RSUs vested on March 17,2022, the first trading day on which the volume weighted average price of the Company’s Class A Common Stock equaled or exceededs $12.50 per share for 20 trading days within a period of 30 consecutive trading days The Private Placement Warrants by their terms became exercisable (including by cash settlement) 30 days following the Closing Date.

The terms of the Private Placement Warrants are set forth in the Warrant Agreement filed with the SEC on June 22, 2020 as Exhibit 4.1 to the Issuer’s Current Report on Form 8-K.

(12) Consists of 27,181,770 shares of Class A Common Stock issued to Cannae Holdings, LLC, a Delaware limited liability company (“CHL”) pursuant to the Business Combination Agreement, the Backstop Agreement and the A&R Sponsor Agreement.

(11) Consists of (i) 25,600 shares of Class A Common Stock held directly by Mr.

Martire, (ii) 4,450,879 shares of Class A Common Stock directly held by BGPT Trebia LP (the "BGPT Sponsor"), (iii) 6,400 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the security holder, and (iv) 616,250 shares of Class A Common Stock from the automatic conversion of 616,250 shares of Class D Common Stock held by the BGPT Sponsor.

Under the Company's Certificate of Incorporation, the BGPT Sponsor’s shares of Class D Common Stock automatically converted into Class A Common Stock on a one-for-one basis on March 17, 2022, the first trading day that the volume-weighted average price of Class A Common Stock equaled or exceeded $12.50 per share for 20 trading days within a period of 30 consecutive trading days.

The sole general partner of BGPT Sponsor is Bridgeport Partners GP LLC and the sole limited partner of BGPT Sponsor is Bridgeport Partners LP.

Each of Frank R.

and Frank Martire, III serve as a managing member of Bridgeport Partners GP LLC and therefore may be deemed to beneficially own the 4,450,879 shares of Class A Common Stock, and ultimately exercises voting and dispositive power over such shares held by BGPT Sponsor.

Each of Frank R.

and Frank Martire, III disclaims beneficial ownership of these shares and warrants except to the extent of any pecuniary interest therein.

(12) Consists of shares of Class A Common Stock held directly by Just Develop It Limited.

The principal address of Just Develop It Limited is Larch House, Parklands Business Park, Denmead, Hampshire, X0 P07 6XP, United Kingdom.

(13) Consists of (i) 23,466 shares of Class A Common Stock held directly by Ms.

Prince and (ii) 5,867 shares of Class A Common Stock issuable within 60 days from vested RSUs awarded to the securityholder.

(14) Consists of shares of Class A Common Stock held directly by Cannae Holdings, LLC (“CHL”).

CHL is a wholly-owned subsidiary of Cannae Holdings, Inc.

The address of the principal business office of CHI is 1701 Village Center Circle, Las Vegas, Nevada 89134.

(13) Consists of (i) 3,537,147 shares of Class A Common Stock, 500,000 shares of Class A Common Stock issuable upon the exercise of 500,000 Warrants and 7,945,580 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Issuer), in each case, directly held by Lone Star Friends Trust (“Lone Star”), (ii) 592,514 shares of Class A Common Stock and 251,379 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Issuer) directly held by the Dante Jacob Blend Trust, for which Mr.

Blend is the trustee (the “Dante Trust”), (iv) 592,514 shares of Class A Common Stock and 251,379 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Issuer) directly held by the Nola Delfina Blend Trust, for which Mr.

Blend is the trustee (the “Nola Trust”), (v) 45,367 shares directly held by Mr.

Blend in his individual capacity and (vi) 2,857,442 shares of Class A Common Stock distributed to Lone Star by LIH as of the date of this prospectus.

Blend is the trustee of each of Lone Star, the Dante Trust and the Nola Trust, and has voting and dispositive power over the shares held by each of Lone Star, the Dante Trust and the Nola Trust but disclaims beneficial interest in such shares except to the extent of any pecuniary interest therein (if any).

Blend, an attorney at Clark Hill in San Antonio, Texas, is the father of Michael Blend, the Company’s co-founder, CEO and Chairman of the Board.

Michael Blend and his family are the beneficiaries of Lone Star.

(14) See Footnote (13) above.

(15) The shares held by Mr.

Baker give pro forma effect to a distribution of shares currently held by J&A, which one expected to be distributed to Mr.

Baker upon J&A’s scheduled distribution.

(16) Consists of 1,191,217 shares of Class A Common Stock and 3,408,221 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Company), in each case, directly held by the CEE Holdings Trust.

Jackson Hole Trust Co.

is the trustee of the CEE Holdings Trust and has voting and dispositive power over the shares held by the CEE Holdings Trust but disclaims beneficial interest in such shares.

Certain Relationships and Related Transactions, and Director Independence Founder Shares

Founder Shares

On February 18, 2020, the Sponsors purchased 10,781,250 of the Company's Class B ordinary shares (the "Founder Shares") for an aggregate purchase price of $25,000.

On June 16, 2020, the Company effected a share dividend of 2,156,250 shares, resulting in the Sponsors holding an aggregate of 12,937,500 Founder Shares.

All share and per-share amounts have been retroactively restated to reflect the share dividend.

The Founder Shares included an aggregate of up to 1,687,500 shares subject to forfeiture by the Sponsors to the extent that the underwriters' over-allotment was not exercised in full or in part, so that the number of Founder Shares would collectively represent 20% of the Company's issued and outstanding shares upon the completion of the Initial Public Offering.

As a result of the underwriters' election to fully exercise their over-allotment option, 1,687,500 Founder Shares are no longer subject to forfeiture.

The Sponsors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of:

(A) one year after the completion of a Business Combination;

and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A ordinary shares equals or exceeds $12.50 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination (the “VWAP Event”), or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company's shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

On March 17, 2022, Class A Common Stock of the Company met the VWAP Event.

Promissory Note—Related Party

On July 13, 2021 the Sponsors made available to the Company a loan of up to $500,000 pursuant to two promissory notes issued to the Company from the BGPT Sponsor in the amount of $212,500 (the “BGPT Note”) and to Trasimene Sponsor $287,500 (the “Trasimene Note”).

Class A Common Stock ownership is based on information known as of March 14, 2023, the date of the reporting person's most recent Schedule 13D filing as of the record date.

(15) Consists of (i) 6,728,498 shares of Class A Common Stock and 8,452,999 shares of Class A Common Stock issuable upon the exchange or redemption of 8,452,999 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Issuer), in each case, directly held by Lone Star Friends Trust, over which Mr.

Blend is the trustee with sole voting and dispositive power (ii) 592,514 shares of Class A Common Stock and 251,379 shares of Class A Common Stock issuable upon the exchange or redemption of 251,379 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Issuer) directly held by the Dante Jacob Blend Trust, for which Mr.

Blend is the trustee, (iii) 592,514 shares of Class A Common Stock and 251,379 shares of Class A Common Stock issuable upon the exchange or redemption of 251,379 Class B Units of S1 Holdco (and the corresponding shares of Class C Common Stock of the Issuer) directly held by the Nola Delfina Blend Trust, for which Mr.

Blend is the trustee, and (iv) 45,367 shares directly held by Mr.

Blend in his individual capacity.

(16) Consists of (i) 7,208,087 shares held directly by Mr.

Baker and (ii) 491,362 shares held directly by Honix Capital Limited, a limited private company registered in England and Wales (“Honix”).

Baker is the sole director and controlling stockholder of Honix and has the sole voting and dispositive power over the securities held by Honix.

Class A Common Stock ownership is based on information known as of September 9, 2022, the date of the reporting person's most recent Schedule 13D filing as of the record date.

Equity Compensation Plan Information

The following table provides information as of as of December 31, 2022, with respect to the shares of the Company’s Common Stock that may be issued under the Company’s existing compensation plans.

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted Average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans

Equity compensation plans approved by security holders — — 3,186,531

Equity compensation plans not approved by security holders — — —

Totals — — 3,186,531

_____________________

(1) Consists of shares available for future issuance under our 2022 Incentive Award Plan.

The number of shares available for issuance under the 2022 Incentive Award Plan will be annually increased on January 1 of each calendar year (beginning in 2023 and ending in 2032) by an amount equal to the lesser of (i) 2.5% of the total number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by our Board.

Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions (Dollars in thousands, except for per share amounts)

Trebia Transactions

On July 13, 2021 BGTP Trebia LP, a Delaware limited partnership (the "BGPT Sponsor") and Trasimene Trebia, LP, a Delaware limited partnership (the "Trasimene Sponsor", and together with the BGPT Sponsor, the "Sponsors") made available to the Company a loan of up to $500,000 pursuant to two promissory notes issued to the Company from the BGPT Sponsor in the amount of $212,500 (the “BGPT Note”) and to Trasimene Sponsor $287,500 (the “Trasimene Note”).

The Company is entitled to submit drawdown requests to the Sponsor from time to time and the proceeds from any amounts borrowed under the note will be used for on-going operational expenses and certain other expenses.

4 unchanged sentences

As of December 31, 2021, the outstanding balance under the promissory notes was $450,000.

Upon the closing of the Business Combination, the outstanding Notes were satisfied and extinguished.

Related Party Loans

In order to finance transaction costs in connection with a Business Combination, the Sponsors or an affiliate of the Sponsors, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).

Such Working Capital Loans would be evidenced by promissory notes.

The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into warrants at a price of $1.50 per warrant.

Such warrants would be identical to the Private Placement Warrants.

In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.

Sponsor Agreement

In connection with the execution of the Business Combination Agreement and the Backstop Agreement, Trebia amended and restated (i) that certain letter agreement, dated June 19, 2020, between the Sponsors and Trebia (the “Prior Sponsor Agreement”) and (ii) that certain letter agreement, dated June 19, 2020, by and among William P.

Foley, II, Frank R.

Martire, Jr., Paul Danola, Tanmay Kumar, Lance Levy, Mark D.

Linehan, and James B.

Stallings (collectively, the “Insiders”) and Trebia (the “Prior Insider Agreement”), and the other parties thereto, and entered into that certain sponsor agreement (as amended on November 30, 2021, the “Sponsor Agreement”) with the Sponsors, Cannae Holdings, Inc.

(“Cannae”) and certain of the Insiders.

Pursuant to the Sponsor Agreement, among other things, the Sponsors, Cannae and Insiders agreed (A) to vote any Trebia securities in favor of the Business Combination

and other Trebia shareholder matters, (B) not to seek redemption of any Trebia shares and (C) not to transfer any Trebia securities for the period beginning on the Closing Date until the earlier of (x) 180 days following the Closing Date or (y) 150 days after the Closing Date, if the VWAP of the Class A Common Stock equals or exceeds $12.00 per share for any 20 trading days within a 30 trading day period and (D) to be bound to certain other obligations as described therein.

BGPT Sponsor and Trasimene Sponsor have each agreed to forfeit 1,450,000 Trebia Class B Ordinary Shares (2,900,000 in the aggregate).

Additionally, (1) the Sponsors have agreed to the Backstop Forfeiture in connection with the equity backstop commitments by Cannae and certain System1 Equityholders and Protected Equityholders, and (2) Trebia has agreed to issue to Cannae or such System1 Equityholders and Protected Equityholders a number of shares of Class A Common Stock equal to the number of ordinary shares so forfeited, in the event and to the extent that Cannae and/or such System1 Equityholders and Protected Equityholders provide such backstop in connection with any valid shareholder redemptions.

Registration Rights

The former holders of Trebia Class B Ordinary Shares, the Trebia Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any Trebia Class A Ordinary Shares issuable upon the exercise of the Trebia Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Trebia Class B Ordinary Shares) are entitled to registration rights pursuant the Prior Registration Rights Agreement requiring Trebia to register such securities for resale (in the case of the Trebia Class B Ordinary Shares, only after conversion to Trebia Class A Ordinary Shares), subject to certain restrictions.

In addition, the former holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a business combination.

However, the Prior Registration Rights Agreement provides that Trebia will not permit any registration statement filed under the Securities Act to become effective until termination of any applicable lockup period.

Trebia will bear the expenses incurred in connection with the filing of any such registration statement.

In connection with the entry into the Registration Rights Agreement, the Prior Registration Rights Agreement was terminated as of the Effective Time, and replaced with the Registration Rights Agreement.

Administrative Services

The Company was party to an administrative services agreement pursuant to which Trebia paid BGPT Sponsor a total of $10,000 per month, until the earlier of the completion of the Business Combination and the liquidation of the trust assets, for office space, utilities, administrative and support services.

Upon the closing of the Merger, the outstanding Notes were satisfied and extinguished.

The Company was party to an administrative services agreement pursuant to which Trebia will pay BGPT Sponsor a total of $10,000 per month, until the earlier of the completion of the Merger and the liquidation of the trust assets, for office space, utilities, administrative and support services.

For the year ended December 31, 2021 and the period between February 11, 2020 and December 21, 2020, the Company had incurred $120,000 and $65,000 in fees for these services, respectively.

After the completion of the Business Combination, this agreement was terminated.

Private Placement Warrants

On June 19, 2020, we completed the sale to the Sponsors of an aggregate of 8,233,334 Trebia Private Placement Warrants for a purchase price of $1.50 per whole warrant for an aggregate of $12,350,000.

Each Trebia Private Placement Warrant entitles the holder to purchase one Trebia Class A Ordinary Share at $11.50 per share.

The Trebia Private Placement Warrants (including the Trebia Class A Ordinary Shares issuable upon exercise thereof) were not able to be, subject to certain limited exceptions, transferred, assigned or sold by the holder until 30 days after the Business Combination.

Underwriting Agreement

The underwriters were entitled to a deferred fee of $0.35 per Trebia unit, or $18,112,500 in the aggregate.

The deferred fee became payable to the underwriters from the amounts held in the Trust Account upon the Company’s completion of the Business Combination, subject to the terms of the underwriting agreement.

Forward Purchase Agreement

On June 5, 2020, the Company entered into the Forward Purchase Agreement with Cannae.

Pursuant to the Forward Purchase Agreement, Cannae agreed to purchase 7,500,000 Trebia Class A Ordinary Shares, plus an aggregate of 2,500,000 redeemable warrants to purchase one Trebia Class A Ordinary Share at $11.50 per share, for an aggregate purchase price of $75,000,000, or

$10.00 per Trebia Class A Ordinary Shares, in a private placement to occur concurrently with the closing of a business combination.

On June 28, 2021, the Forward Purchase Agreement was terminated in connection with the pending Business Combination.

No compensation of any kind, including finder’s and consulting fees, was paid to the Sponsors, the Insiders, or any of their respective affiliates, for services rendered prior to or in connection with the completion of the Business Combination.

However, these individuals were reimbursed for out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.

Trebia’s audit committee reviewed on a quarterly basis all payments that were made to the Sponsors, Trebia’s officers or directors, or any of their affiliates.

Any such payments prior to the Business Combination were made using funds held outside the Trust Account.

Other than quarterly audit committee review of such reimbursements, Trebia did not have any additional controls in place governing its reimbursement payments to its directors and officers for their out-of-pocket expenses incurred in connection with Trebia’s activities on its behalf in connection with identifying and completing the Business Combination.

Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, were paid by Trebia to the Sponsors, Trebia’s officers and directors, or any of their respective affiliates, prior to completion of the Business Combination.

Services Agreement

On December 31, 2018, StartPage B.V., StartMail B.V., and Surfboard Holdings B.V.

entered into a Services Agreement, which has been amended several times, pursuant to which StartMail and Surfboard Holdings provide certain marketing, product and operational services to each other, and StartMail makes certain space in its office location in the Netherlands available to employees of StartPage.

StartMail is owned in part by the stockholders from whom S1 Holdco acquired the outstanding capital stock of Surfboard Holdings which, along with StartPage, are indirect subsidiaries of S1 Holdco.

StartMail incurred $67,500, and Surfboard Holding incurred $120,718, in 2020 pursuant to this agreement.

Non-Recourse Contingent Notes

On March 15, 2019, Qool Media Holdings, ULC (n/k/a System1 Canada ULC) (“Qool Media”), a subsidiary of System1, issued three non-recourse contingent notes in favor of 2683800 Ontario Inc.

in connection with System1’s acquisition of Concourse Media Ltd.

in order to efficiently support the earn out payments for each of the 12-month periods ending March 31, 2020, 2021 and 2022.

2683800 Ontario Inc.

is an entity affiliated with Ryan May, System1’s Senior Vice President—Publishing Strategy, and was the principal stockholder of Concourse Media when it was acquired by System1 through Qool Media.

Qool Media did not pay 2683800 Ontario Inc.

in 2020 pursuant to the contingent note that matured in March 2020, but paid the full $1,715,000 due on the contingent note that matured in March 2021.

Loan Agreement

On February 3, 2020, the Protected UK entered into a short-term intercompany loan with one of its directors.

Under this agreement, the director agreed to provide Protected UK with a $3,000,000 loan that carried an interest rate of 10%.

The loan was drawn on February 3, 2020 in full.

The loan had a maturity date of March 17, 2020, which Protected UK paid back in full on this date.

Protected UK incurred $35,000 of interest on this loan during the year ended December 31, 2020.

On March 13, 2020, Protected UK entered into an intercompany loan payable with System1 SS Protect Holdings, Inc.

Under this agreement, SS Protect Holdings agreed to provide Protected UK with a $6,000,000 loan that carried an interest rate of 10%.

The loan was drawn on March 13, 2020 in full.

The loan had a maturity date of March 13, 2021.

However, Protected UK paid the loan back in full on November 13, 2020.

Protected UK incurred $356,384 of interest expense on this loan during the year ended December 31, 2020.

On November 13, 2020, Protected UK entered into an intercompany loan payable with Protected Security Holdings LLC, the parent company of System1 SS Protect Holdings, Inc.

Under this agreement, Protected Security Holdings agreed to provide Protected UK with a $1,999,947 loan that carried an interest rate of 7.5%.

The loan was drawn on November 13, 2020 in full.

The loan had a maturity date of November 13, 2023.

However, Protected UK paid the loan back in full on December 18, 2020.

Protected UK incurred $14,383 of interest expense on this loan during the year ended December 31, 2020.

On December 17, 2020, Protected UK entered into a loan agreement (the “Protected Loan Agreement”) with S1 SS Protect Holdings Inc.

(“S1 SSP Holdings”), a subsidiary of Protected, pursuant to which Protected UK granted S1 SSP Holdings a secured term loan of up to $30,000,000 available in multiple drawings on the terms and subject to the conditions of the Protected Loan Agreement.

S1 SSP Holdings was to use these loan proceeds to repay loans it had made to certain of its investors, including JDI (an entity controlled by Christopher Phillips),Lone Investment Holdings (an entity controlled by Michael Blend), Roscoe Holdings Trust (an entity controlled by Charles Ursini) and OpenMail LLC (an entity controlled by Michael Blend and Charles Ursini).

Protected UK loaned S1 SSP Holdings $10,059,719 in 2020 pursuant to this agreement.

During the year ended December 31, 2021, S1 SS Protect Holdings drew an additional $21,908,640 from the line of credit provided by the Company as part of the loan agreement.

The loan draw will accrue interest at an interest rate of 3.5% from the time of the loan draw until funds are paid back to the Company.

The loan has a maturity date of January 1, 2023.

As part of this loan, the Company charged S1 SS Protect Holdings a set-up fee of $75,000.

The set-up fee shall be recognized through income over the term of the loan.

As of December 31, 2021 and 2020, the total outstanding balance of the loan with System1 S1 SS Protect Holdings, Inc.

was $32,832,653 and $10,059,719, respectively.

As of December 31, 2021 and 2020, the total amount included in deferred revenue relating to financing fees not yet recognized was $165,594 and $167,712, respectively.

Total financing fees recognized during the years ended December 31, 2021 and 2020 were $77,121 and $2,285, respectively.

The Company recognized $941,416and $0 of interest income related to this loan during the years ended December 31, 2021 and 2020, respectively.

During the year ended December 31, 2021, the Company entered into a short term loan agreement with Just Develop It Limited, which carried an interest rate of 0%.

These loans allowed multiple drawdowns which totaled $29,634,886 and were fully repaid by the end of the period.

In addition to this, as a part of the Host Plus Share Purchase Agreement, the Company assumed a debt payable to Just Develop It Limited which was repaid in full on April 1, 2021.

On May 19, 2021, the Company entered into a loan receivable with a director of the Company.

Under this agreement, the Company agreed to provide the director with a loan facility of up to $2,000,000 which carried an interest rate of 0%.

The loan did not specify a stated maturity date.

The director of the Company drew multiple amounts in accordance with the facility during the year ended December 31, 2021.

The loan was repaid in full to the Company on December 24, 2021.

Acquisition of Host Plus Limited

On March 31, 2021, Protected UK entered into a Share Purchase Agreement to purchase Host Plus Limited.

Each Seller of Host Plus Limited is shareholder of Protected UK.

In addition, Protected UK assumed the debt of Host Plus Limited as part of the acquisition, which was payable to JDI.

JDI is the parent company of Protected UK.

On April 1, 2021, Protected UK provided an intercompany loan to Host Plus Limited who then repaid the outstanding loan in full on the same day in the amount of $448,530.

The loan between Host Plus Limited and JDI did not have a stated maturity date and carried an interest rate of 0%.

Policy for Approval of Related Party Transactions

The audit committee of our Board has adopted an audit committee charter, providing for the review and approval of all transactions involving an amount in excess of $120,000 in which the Company is to be a participant and in which any “related person” (as defined in Item 404(a) under the Exchange Act) has a direct or indirect material interest.

At its meetings, the audit committee shall be provided with the details of each new, existing or proposed related party transaction, including the terms of the transaction, any contractual restrictions that the Company has already committed to, the business purpose of the transaction and the benefits of the transaction to the Company and to the relevant related party.

Any member of the audit committee who has an interest in the related party transaction under review by the audit committee shall abstain from voting on the approval of the related party transaction, but may, if so requested by the chairman of the audit committee, participate in some or all of the audit committee’s discussions of the related party transaction.

Upon completion of its review of the related party transaction, the audit committee may determine to permit or to prohibit the related party transaction.

Principal Accounting Fees and Services

Fees for professional services provided by our independent registered public accounting firm since inception include:

For the year ended

December 31, 2021

Audit Fees (1)

Audit-Related Fees (2)

All Other Fees (4)

After the completion of the Merger, this agreement was terminated.

Investment in Protected by Lone Investment Holdings

On October 16, 2018, S1 Holdco and its subsidiaries purchased a 50.1% interest in Protected for $55,000.

At the time of the transaction, an investment vehicle known as Lone Investment Holdings ("LIH") was a shareholder and creditor of Protected.

LIH owned 7.7% of the equity of Protected, and also was a creditor for $10,500, with respect to shareholder loans for which Protected was the obligor.

LIH’s shareholders primarily consist of members of the Company’s management team.

As a result of the Merger, LIH’s shareholder loan to Protected was repaid, with interest, and LIH also received $1,158 in proceeds from the sale of its equity.

Loan to Former Chief Executive Officer

During 2021, S1 Holdco extended a loan of $1,500 to Ian Weingarten, its former Chief Executive Officer, in connection with his separation agreement.

In January 2022, in conjunction with the consummation of the Merger, the loan was repaid in full.

Services with Paysafe

Protected.net utilizes multiple payment processors in order to process credit card payments from its subscription customers, including Paysafe Financial Services Limited (“Paysafe”).

In March 2021 Paysafe completed a merger with Foley Trasimene Acquisition Corp.

II (“Foley Trasimene”), a special purpose acquisition company sponsored by entities affiliated with William Foley, who was also a sponsor of Trebia Acquisition Corp.

and was a member of the Company’s Board of Directors during 2022.

Protected.net’s payment processing agreement with Paysafe was negotiated before the announcements of both (i) the Merger as well as (ii) the business combination between Paysafe and Foley Trasimene.

The amount due from Paysafe was $2,447 as of December 31, 2022 (Successor).

Agreements with JDI Property Holdings

The Company has agreements with JDI Property Holdings Limited (“JDIP”), an entity controlled by Christopher Phillips, a director of the Company, which allows for the Company to occupy desks at JDIP’s property in such a place as JDIP specifies from time to time in exchange for GBP 52 per month.

The agreements with JDIP expire on October 31, 2026.

Additionally, the Company utilizes a JDIP credit card and the Company reimburses JDIP monthly.

The amount owed to JDIP was insignificant as of December 31, 2022 (Successor).

Waiver of Payments to Director and Greater-than-5% Stockholder

On August 30, 2022, the Company, Protected.net and Just Develop It Limited (“JDI”), an entity controlled by a director of the Company, entered into a Conditional Consent, Waiver and Acknowledgement (the “Waiver”) pursuant to which JDI agreed to waive its right to the Year 3 Stock Bonus Pool, as such term is defined in the Business Combination Agreement, dated as of June 28, 2021 (as amended, the “Business Combination Agreement”) by and among the Company, S1 Holdco, Protected and the other parties signatory thereto in connection with the Merger, consisting of $50,000 of Class A common stock payable in January 2024 and as set forth in Section 12.11(a) of the Business Combination Agreement in exchange for $40,000 in cash payable in four (4) quarterly installments of $10,000 each, commencing on August 30, 2022 and on each three (3) month anniversary thereafter.

In connection with entering into the Waiver, the Company entered into one (1) year contractual lockup agreements with each of Christopher Phillips, a member of the Board of Directors of the Company and the controlling shareholder of JDI (on behalf of himself and JDI), pursuant to which Mr.

Phillips and JDI agreed not to sell each their shares of Class A common stock for one year from September 1, 2022 through August 30, 2023 (the “Lockup Period”);

provided that Mr.

Phillips and JDIL may sell Class A common stock, among other exceptions, at any time during the Lockup Period at prices equal to or in excess of $11.00 per share.

Revolving Note from Company Co-Founders

On April 10, 2023, Orchid Merger Sub II, LLC (“Orchid Sub”), a wholly-owned subsidiary of the Company, entered into a $20,000 revolving note (the “Revolving Note”) with Lone Star Friends Trust (acting by and through its trustee, Stanley Blend, “Lone Star”) and CEE Holding Trust (acting by and through its trustee, Jackson Hole Trust Company, “CEE”, and together with Lone Star, collectively, the “Lenders” and each, a “Lender”), which are trusts established for the benefit of Michael Blend (Chief Executive Officer, co-founder and stockholder) and Charles Ursini (co-founder and stockholder), respectively, in a private transaction approved by the independent and non-interested members of the the Board.

Each Lender provided a $10,000 commitment for an aggregate principal of $20,000 under the Revolving Note to Orchid Sub on a several but not joint basis (each, a “Commitment” and, collectively, the “Commitments”).

Any borrowed loan amounts outstanding under the Revolving Note accrue interest at the rate per annum equal to the Secured Overnight Financing Rate (“SOFR”) as administered by the Federal Reserve Bank of New York plus

Orchid Sub may borrow amounts under the Revolving Note in increments of $100, and may prepay any amounts borrowed at any time without penalty or interest (other than applicable breakage costs, if any).

The final maturity date under the Revolving Note is July 10, 2024.

The Lenders are also entitled to (i) an unused commitment fee equal to 1.0% per annum of the actual daily amount of total unfunded Commitments under the Revolving Note during the period from the closing date to the maturity date, payable quarterly in arrears and (ii) a closing fee equal to 12.0% of each Lender’s Commitment under the Revolving Note, payable within 180 days of April 10, 2023.

In addition, Orchid Sub agreed to reimburse the Lenders for their reasonable and documented costs expenses incurred in connection with the negotiation, documentation and execution of the Revolving Note.

Indemnification agreements

We have entered into indemnification agreements with each of our directors and executive officers.

These indemnification agreements, our Charter and our Bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law.

Subject to certain limitations, our Bylaws also require us to advance expenses incurred by our directors and officers.

There is no pending litigation or proceeding naming any of our directors or officers to which indemnification is being sought, and we are not aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

Employment of a Family Member

One employee of the Company, who is the spouse of an executive officer, received total compensation of $528 , which includes proceeds from the Merger, during 2022.

Policies and procedures for related party transactions

We have adopted a related-party transaction policy setting forth the policies and procedures for the review and approval or ratification of transactions involving us and “related persons.” For the purposes of this policy, “related persons” includes our executive officers and directors or their immediate family members, stockholders owning five percent or more of our outstanding common stock and their immediate family members and entities in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a ten percent or greater beneficial ownership interest.

The policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person.

In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction with an unrelated party and the extent of the related person’s interest in the transaction.

All related-party transactions may only be consummated if our audit committee has approved or ratified such transaction in accordance with the guidelines set forth in the policy.

Any member of the audit committee who is a related person with respect to a transaction under review will not be permitted to participate in the deliberations or vote respecting approval or ratification of the transaction.

However, such director may be counted in determining the presence of a quorum at a meeting of the audit committee that considers the transaction.

Director Independence

New York Stock Exchange (“NYSE”) listing standards require that a majority of our Board be independent.

An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

In making these determinations, the Board has considered information provided by the directors and management with regard to the business and personal activities, relationships and related party transactions of each director.

Our Board has determined that Mmes.

Horn, Kazerani and Prince and Messrs.

Civantos, Fowler, and Martire are “independent directors” as defined in the NYSE listing standards and applicable SEC rules.

Our independent directors will have regularly scheduled meetings at which only independent directors are present.

Principal Accountant Fees and Services

Independent Registered Public Accounting Firm Fees

Our audit committee has selected PwC to serve as our independent registered public accounting firm to audit the consolidated financial statements of System1, Inc.

for the fiscal year ending December 31, 2023.

PwC has served as our auditor since 2020.

A representative of PwC is expected to be present virtually at the annual meeting to respond to appropriate questions and make a statement if he or she so desires.

The following table sets forth the aggregate fees billed by PwC for the fiscal years ended December 31, 2022 and December 31, 2021:

Audit Fees (1)

Audit fees consist of fees billed for professional services rendered for the audit of our consolidated financial statements, including quarterly filings, and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings.

$ 8,613,000 $ 1,100,000

Audit Related Fees — —

Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.

(3) Tax Fees.

Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice.

All Other Fees (3)

All other fees consist of fees billed for all other services.

Policy on Board Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditors

The audit committee of the Board has adopted an audit committee charter, providing for the review and approve all transactions involving an amount in excess of $120,000 in which the Company is to be a participant and in which any “related person” (as defined in Item 404(a) under the Exchange Act) has a direct or indirect material interest.

Upon completion of its review of the related party transaction, the audit committee may determine to permit or to prohibit the related party transaction.

Exhibits, Financial Statement Schedules and Reports

(a) (1) Financial Statements.

The following documents are filed as part of this Annual Report:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Shareholders’ Deficit

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

(a) (2) All other schedules are omitted because they are not applicable or not required, or because the required information is included in the consolidated Financial Statements or notes thereto.

(a) (3) We hereby file as part of this Report the exhibits listed in the attached Exhibit Index.

Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C.

Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C.

20549, at prescribed rates or on the SEC website at www.sec.gov.

EXHIBIT INDEX

Incorporated by Reference

Business Combination Agreement, dated as of June 28, 2021, by and among Trebia Acquisition Corp., S1 Holdco, LLC, System1 SS Protect Holdings, Inc., and the other parties that are signatory thereto .

June 29, 2021

Amendment No.

Total $ 8,850,779 $ 1,104,150

(1) Audit Fees consisted of professional services rendered for the audit of our annual consolidated financial statements;

the review of our quarterly consolidated financial statements;

review of Form S-1s, comfort letters, consents, and assistance with and review of other documents filed with the SEC;

and other accounting and financial reporting consultation and research work billed as audit fees or necessary to comply with the standards of the Public Company Accounting Oversight Board (United States).

(2) Tax fees consisted of fees for tax compliance, advice, and planning services and consisted primarily of restructuring advice, review of transfer pricing, and international tax advice related to equity compensation.

(3) All Other Fees are related to license fees for accounting research software.

Pre-Approval of Audit and Non-Audit Services

The audit committee pre-approves all audit, audit-related, tax, and other services performed by our independent auditors.

The audit committee pre-approves specific categories of services up to pre-established fee thresholds.

Unless the type of service had previously been pre-approved, the audit committee must approve that specific service before the independent auditors may perform it.

In addition, separate approval is required if the amount of fees for any pre-approved category of service exceeds the fee thresholds established by the audit committee.

The audit committee has delegated to the chair of the committee pre-approval authority with respect to permitted services, provided that the chair must report any pre-approval decisions to the committee at its next scheduled meeting.

All fees described below were pre-approved by the audit committee.

Exhibits and Financial Statement Schedules

(a) We have filed the following documents as part of this Annual Report on Form 10-K:

Consolidated Financial Statements

Refer to Index to Consolidated Financial Statements in “ Item 8.

Financial Statements and Supplementary Data ” herein.

Financial Statement Schedules

No financial statement schedules are provided because the information called for is not required or is shown in the financial statements of the notes thereto.

Exhibits required to be filed as part of this report are:

Incorporated by Reference Filed or Furnished Herewith

Description Form File No.

Exhibit Filing Date

2.1(a) Business Combination Agreement, dated as of June 28, 2021, by and among Trebia Acquisition Corp., S1 Holdco, LLC, System1 SS Protect Holdings, Inc., and the other parties that are signatory thereto.

8-K 001-39331 2.1 6/29/2021

2.1(b) Amendment No.

1 to the Business Combination Agreement, dated as of November 30, 2021, by and among Trebia Acquisition Corp., S1 Holdco, LLC, System1 SS Protect Holdings, Inc., and the other parties that are signatory thereto.

December 1, 2021

Amendment No.

S-4 333-260714 2.2 12/1/2021

2.1(c) Amendment No.

2 to the Business Combination Agreement, dated January 10, 2022, by and among S1 Holdco, LLC, a Delaware limited liability company, System1 SS Protect Holdings, Inc., a Delaware corporation and the other parties signatory thereto.

January 10, 2022

Amendment No.

8-K 001-39331 10.1 1/20/2022

2.1(d) Amendment No.

3 to the Business Combination Agreement, dated January 25, 2022, by and among S1 Holdco, LLC, a Delaware limited liability company, System1 SS Protect Holdings, Inc., a Delaware corporation and the other parties signatory thereto.

January 26, 2022

8-K 001-39331 10.1 1/26/2022

3.1 Certificate of Incorporation of System1, Inc.

February 2, 2022

Bylaws of System1, Inc.

February 2, 2022

8-K 001-39331 3.1 2/2/2022

3.2 Second Amended and Restated Bylaws of System1, Inc.

8-K 001-39331 3.1 3/1/2023

4.1 Warrant Agreement, dated June 19, 2020, by and between Trebia Acquisition Corp.

and Continental Stock Transfer & Trust Company, as warrant agent.

June 22, 2020

Sponsor Agreement, dated as of June 28, 2021, by and among Trebia Acquisition Corp., BGPT Trebia LP, Trasimene Trebia LP, Cannae Holdings, Inc., S1 Holdco LLC and System1 SS Protect Holdings, Inc.

December 16, 2021

Amended and Restated Sponsor Agreement, dated January 10, 2022, by and among BGPT Trebia LP, Trasimene Trebia, LP and other parties signatory thereto.

January 10, 2022

Registration Rights Agreement, by and among System1, Inc.

and the other parties that are signatory thereto.

February 9, 2022

Tax Receivable Agreement, dated as of January 27, 2022, by and among System1, Inc.

S1 Holdco, LLC and the other signatories thereto.

February 2, 2022

8-K 001-39331 4.1 6/2/2020

4.2 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10.1^ System1, Inc.

2022 Incentive Award Plan.

February 2, 2022

Backstop Facility Agreement, dated as of June 28, 2021, by and among Trebia Acquisition Corp.

and Cannae Holdings, Inc.

December 16, 2021

8-K 001-39331 10.2 2/20/2022

10.2 Amended and Restated Backstop Facility Agreement, dated January 10, 2022, by and between Trebia Acquisition Corp.

and Cannae Holdings, Inc.

January 10, 2022

Protected Support Agreement, dated as of June 28, 2021, by and among each of the Persons listed on Exhibit A thereto, JDI & AFH Limited, Protected.net Group Limited, Protected Security Holdings, LLC and Trebia Acquisition Corp.

December 16, 2021

Mutual Termination Agreement, dated as of June 28, 2021, by and between Trebia Acquisition Corp.

and Cannae Holdings, Inc.

December 16, 2021

8-K 001-39331 10.3 1/10/2022

10.3 Conditional Consent, Waiver and Acknowledgement, dated as of August 30, 2022, by and among System1, Inc., Protected.net Group Limited and Just Develop It Limited.

8-K 001-39331 10.1 8/30/2022

10.4 Lock-Up Agreement, dated as of August 30, 2022, by and between System1, Inc.

and Christopher Phillips.

8-K 001-39331 10.2 8/30/2022

10.5 Lock-Up Agreement, dated as of August 30, 2022, by and between System1, Inc.

and Nicholas Baker.

8-K 001-39331 10.3 8/30/2022

10.6 Transition and Advisory Services Agreement, dated as of November 2, 2022, by and among System1, Inc.

and Paul Filsinger.

8-K 001-39331 10.4 11/2/2022

10.7# Credit and Guaranty Agreement, dated as of January 27, 2022, among Orchid Finco LLC, System1 Midco, LLC, Orchid Merger Sub II, LLC and the subsidiaries from time to time party thereto, S1 Holdco, LLC, Bank of America, N.A.

and the lenders from time to time party thereto.

10.8 Amended and Restated Revolving Note, dated May 16, 2023, by and among Orchid Merger Sub II, LLC, Lone Star Friends Trust and CEE Holding Trust .

10.9 Registration Rights Agreement, dated January 27, 2022, by and among System1, Inc.

and the other parties that are signatory thereto.

S-1 333-262608 10.3 2/9/2022

10.10 Registration Rights Agreement, dated June 19, 2020, among the Company, the Sponsors and certain other security holders named therein.

8-K 001-39331 10.2 06/22/2020

10.11 Form of Indemnification Agreement

March 2, 2022

Subsidiaries of the registrant

Certification Required by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification required by Rules 13a-15 and 15d-15 under the Securities Exhange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbance-Oxley Act of 2002

Certification of Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbance-Oxley Act of 2002

The following financial information from System1 Inc.’s Annual Report on Form 10-

K for the year ended December 31, 2021

formatted in Inline XBRL (Extensible Business

Reporting Language) includes:

Balance Sheets, (ii) the

Statements of Operations, (iii) the

Statements of Changes in Shareholders’

Deficit, (iv) the Statements of Cash Flows and (v) Notes to the Consolidated Financial Statements.

8-K 001-39331 10.4 3/2/2022

10.12^ Employment Agreement, dated as of September 19, 2016, between Tridivesh Kidambi and OpenMail LLC.

10.13^ Employment Agreement, dated as of August 28, 2016, between Elizabeth Sestanovich and OpenMail LLC.

10.14^ Employment Agreement, dated as of September 15, 2015, between Brian Coppola and OpenMail LLC.

10.15^ Employment Agreement, dated as of February 8, 2018, between Daniel Weinrot and OpenMail LLC.

10.16^ Employment Agreement, dated as of May 2, 2021, between Jennifer Robinson and System1, LLC.

10.17 Form of Stockholders Agreement

S-4/A 333-260714 10.3 12/16/2021

10.18 First Amendment to Conditional Consent, Waiver and Acknowledgement

21.1 Subsidiaries of Registrant

23.1 Consent of PricewaterhouseCoopers LLP.

(predecessor)

23.2 Consent of PricewaterhouseCoopers LLP.

31.1* Certification of principal executive officer pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Certification of principal financial and accounting officer pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1** Certification of principal executive officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2** Certification of principal financial and accounting officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS* XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH* XBRL Taxonomy Extension Schema Document.

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB* XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.

104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

X Filed or furnished herewith

* Filed herewith.

** This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

^ Indicates management contract or compensatory plan.

# Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Registrant will furnish copies of any such schedules and exhibits to the SEC upon request.

Form 10-K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned hereunto duly authorized, on this 5th day of June, 2023.

SYSTEM1, INC.

March 30, 2022

/s/ Tridivesh Kidambi

Tridivesh Kidambi

Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

June 5, 2023 By:

/s/ Michael Blend

President (Principal Executive Officer)

March 30, 2022

Michael Blend

/s/ Tridivesh Kidambi

Chief Financial Officer (Principal Financial and Accounting Officer)

March 30, 2022

Tridivesh Kidambi

/s/ William P.

March 30, 2022

/s/ John Civantos

March 30, 2022

Chief Executive Officer and Director

(Principal Executive Officer)

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael Blend and Trividesh Kidambi, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities held on the dates indicated.

Signature Title Date

/s/ Michael Blend Chief Executive Officer, Director June 5, 2023

Michael Blend (Principal Executive Officer)

/s/ Tridivesh Kidambi Chief Financial Officer June 5, 2023

Tridivesh Kidambi (Principal Financial and Accounting Officer)

/s/ John Civantos Director June 5, 2023

John Civantos

/s/ Dexter Fowler

March 30, 2022

/s/ Dexter Fowler Director June 5, 2023

Dexter Fowler

/s/ Caroline Horn

March 30, 2022

/s/ Caroline Horn Director June 5, 2023

Caroline Horn

/s/ Moujan Kazerani Director June 5, 2023

Moujan Kazerani

/s/ Christopher Phillips

March 30, 2022

Director June 5, 2023

/s/ Christopher Phillips Director June 5, 2023

Christopher Phillips

/s/ Jennifer Prince

March 30, 2022

/s/ Jennifer Prince Director June 5, 2023

Jennifer Prince

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Financial Statements:

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Shareholders’ Deficit

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

System1, Inc.

(f/k/a Trebia Acquisition Corp.)

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of System1, Inc.

(f/k/a Trebia Acquisition Corp.) (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in shareholders’ deficit and cash flows for the year ended December 31, 2021 and the period from February 11, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the year ended December 31, 2021 and the period from February 11, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP

We have served as the Company’s auditor since 2020.

Philadelphia, PA

March 30, 2022

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

CONSOLIDATED BALANCE SHEETS

Current assets

Prepaid expenses

Total Current Assets

Cash held in Trust Account

LIABILITIES AND SHAREHOLDERS’ DEFICIT

Current liabilities

Accounts Payable and Accrued Expenses

Promissory note – related party

Total Current Liabilities

Warrant Liability

FPA Liability

Deferred Underwriting Fee Payable

Total Liabilities

Class A Ordinary Shares subject to possible redemption, 51,750,000 shares issued and outstanding at redemption value as of December 31, 2021 and 2020

Shareholders’ Deficit

Preference shares, $ 0.0001 par value;

1,000,000 shares authorized, none issued and outstanding

Class A ordinary shares, $ 0.0001 par value;

400,000,000 shares authorized;

no shares issued and outstanding (excluding 51,750,000 shares subject to possible redemption) at December 31, 2021 and 2020

Class B ordinary shares, $ 0.0001 par value;

40,000,000 shares authorized;

12,937,500 shares issued and outstanding as of December 31, 2021 and 2020

Accumulated deficit

( 60,306,523 )

( 81,333,286 )

Total Shareholders’ Deficit

( 60,305,229 )

( 81,331,992 )

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT

The accompanying notes are an integral part of these consolidated financial statements.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

CONSOLIDATED STATEMENTS OF OPERATIONS

Operating and formation costs

Loss from operations

( 13,327,278 )

Other income (expense):

Transaction costs allocated to warrant and FPA liabilities

( 1,381,051 )

Change in fair value of warrant liability

( 17,328,667 )

Change in fair value of FPA liability

( 10,399,002 )

Gain on termination of FPA

Total other income (expense), net

( 29,108,720 )

Net income (loss)

( 29,914,748 )

Basic and diluted weighted average shares outstanding, Class A ordinary shares

Basic and diluted net income (loss) per share, Class A ordinary shares

Basic and diluted weighted average shares outstanding, Class B ordinary shares

Basic and diluted net income (loss) per share, Class B ordinary shares

The accompanying notes are an integral part of these consolidated financial statements.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

Ordinary Shares

Shareholders’

Balance – February 11, 2020 (inception)

Issuance of Class B ordinary shares to Sponsor

Contribution in excess of fair value of private warrants

Remeasurement of Class A Common Stock subject to redemption to redemption value

( 51,418,538 )

( 52,265,576 )

( 29,914,748 )

Balance - December 31, 2020

( 81,333,286 )

( 81,331,992 )

Balance - December 31, 2021

( 60,306,523 )

( 60,305,229 )

The accompanying notes are an integral part of these consolidated financial statements.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Period

from February

Cash Flows from Operating Activities:

Net income (loss)

( 29,914,748 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Change in fair value of warrants

( 23,699,501 )

Change in fair value of FPA

( 7,494,372 )

Gain on termination of FPA

( 3,160,168 )

Transaction costs incurred in connection with IPO

Changes in operating assets and liabilities:

Prepaid expenses

Accounts payable and accrued expenses

Net cash used in operating activities

( 1,240,496 )

Cash Flows from Investing Activities:

Investment of cash into trust Account

( 517,500,000 )

Net cash used in investing activities

( 517,500,000 )

Cash Flows from Financing Activities:

Proceeds from sale of Units, net of underwriting discounts paid

Proceeds from sale of Private Placement Warrants

Proceeds from issuance of Class B ordinary shares to Sponsor

Proceeds from promissory note – related party

Repayment of promissory note – related party

Payment of offering costs

Net cash provided by financing activities

Net Change in Cash

Cash – Beginning

Cash – Ending

Non-cash investing and financing activities:

Initial classification of warrant liability;

Initial classification of FPA liability;

Initial value of Class A Common Stock subject to possible redemption

Deferred underwriting fee payable

The accompanying notes are an integral part of these consolidated financial statements.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

ORGANIZATION AND PLAN OF BUSINESS OPERATIONS

System1, Inc., (the “Company”, f/k/a Trebia Acquisition Corp.

(“Trebia)) was a blank check company incorporated as a Cayman Islands exempted company on February 11, 2020.

The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”).

On January 27, 2022 the Company consummated its Business Combination as described in Note 6.

Although the Company was not limited to a particular industry or geographic region for purposes of completing a Business Combination, the Company intended to focus on industries that complements the Sponsors’ (as defined below) and management team’s background in financial services, technology, software, data, analytics, services and related areas.

The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of December 31, 2021, the Company had not commenced any operations.

All activity for the period from February 11, 2020 (inception) through December 31, 2021 relates to the Company’s formation, its initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination.

The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest.

The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The registration statements for the Company’s Initial Public Offering became effective on June 16, 2020.

On June 19, 2020, the Company consummated the Initial Public Offering of 51,750,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriters of the over-allotment option to purchase an additional 6,750,000 Units, at $ 10.00 per Unit, generating gross proceeds of $ 517,500,000 which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 8,233,334 warrants (the “Private Placement Warrants”) at a price of $ 1.50 per Private Placement Warrant in a private placement to Trasimene Trebia, LP, an affiliate of Trasimene Capital Management, LLC, and BGPT Trebia LP, an affiliate of Bridgeport Partners LLC (collectively the “Sponsors”), generating gross proceeds of $ 12,350,000 , which is described in Note 4.

At December 31, 2021 and 2020, cash of $ 53,147 and $ 843,643 , respectively, was held outside of the Trust Account (as defined below) and is available for working capital purposes.

Following the closing of the Initial Public Offering on June 19, 2020, an amount of $ 517,500,000 ($ 10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States and invested in U.S.

government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of:

(i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds were intended to be applied generally toward completing a Business Combination.

The Company must have completed its initial Business Combination with one or more target businesses that together have a fair market value equal to at least 80 % of the net assets held in the Trust Account (excluding the amount of any deferred underwriting commissions held in the Trust Account) at the time of the agreement to enter into a Business Combination.

The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50 % or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act, of which the Company has satisfied this requirement within the consummated Business Combination.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

The Company provided its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination in connection with a shareholder meeting called to approve the Business Combination.

The decision as to whether the Company will seek shareholder approval of a Business Combination was made by the Company.

The shareholders were entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account ($ 10.00 per share), calculated as of two business days prior to the completion of a Business Combination.

There were no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Company received an ordinary resolution under Cayman Islands law to approve the Business Combination, which required an affirmative vote of a majority of the shareholders who vote at a general meeting of the Company.

Holders of the Company’s Founder Shares agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased in or after the Initial Public Offering in favor of approving a Business Combination and waived their redemption rights with respect to any such shares in connection with a shareholder vote to approve the Business Combination.

The Company did not redeem its Public Shares in an amount that would have caused its net tangible assets to be less than $ 5,000,001 .

Additionally, each public shareholder was given the option to redeem their Public Shares, without voting, and if they did vote, irrespective of whether they voted for or against a proposed Business Combination.

The Sponsors had agreed (a) to waive their redemption rights with respect to any Founder Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) did not propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to redeem 100 % of the Public Shares if the Company did not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity (iii) to waive its rights to liquidating distributions from the Trust Account with respect to the Founder Shares.

Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company, the funds held in the Trust Account will not be released from the Trust Account until the earliest of:

(1) the completion of the Business Combination;

(2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation.

The Sponsors had agreed to waive their liquidation rights with respect to the Founder Shares if the Company failed to complete a Business Combination within the Combination Period.

The underwriters agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company did not complete a Business Combination.

Going Concern

As of December 31, 2021, the Company had $ 53,147 in its operating bank accounts, $ 517,500,000 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its ordinary shares in connection therewith and working capital deficit of $ 12,886,895 .

The Company has incurred and expects to continue to incur significant costs in pursuit of its Business Combination (see Note 6).

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management addressed this issue with the consummation of the Business Combination Agreement on January 27, 2022, and with new sources of financing.

In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management believes that the funds which the Company has available following the completion of the Business Combination Agreement will enable it to sustain operations for a period of at least one-year from the issuance date of these consolidated financial statements.

Accordingly, substantial doubt about the Company’s ability to continue as a going concern as disclosed in previously issued consolidated financial statements has been alleviated.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

Risks and Uncertainties

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States and the World.

As of the date the consolidated financial statements were issued, there was considerable uncertainty around the expected duration of this pandemic.

The Company has concluded that while it is reasonably possible that COVID-19 could have a negative effect on identifying a target company for a Business Combination, the specific impact is not readily determinable as of the date of these consolidated financial statements.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Orchid Merger Sub I, Inc., Orchid Merger Sub II, LLC and Orchid Finco LLC.

All significant intercompany balances and transactions have been eliminated in consolidation.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

Making estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

One of the more significant accounting estimates included in these consolidated financial statements is the determination of the fair value of the warrant liabilities.

Such estimates may be subject to change as more current information becomes available and accordingly, the actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company did not have any cash equivalents as of December 31, 2021 and 2020.

Cash Held in Trust Account

At December 31, 2021 and 2020, the assets held in the Trust Account were held in cash.

Warrant and FPA Liabilities

The Company accounts for the Public Warrants (as defined in Note 3) and Private Placement Warrants (collectively, the “Warrants”) as well as a forward purchase agreement entered into with the Company’s anchor investor (the “FPA”) as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and the FPA and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the Warrants and FPA are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, or meet all of the requirements for equity classification under ASC 815, including whether the Warrants and FPA are indexed to the Company’s own ordinary shares and whether the holders of the Warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and execution of the FPA and as of each subsequent quarterly period end date while the Warrants and FPA are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, liability-classified warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheets date thereafter.

Changes in the estimated fair value of such warrants and FPAs are recognized as a non-cash gain or loss on the statements of operations.

We account for the Warrants and FPAs in accordance with ASC 815-40 under which the Warrants and FPAs do not meet the criteria for equity classification and must be recorded as liabilities.

The fair value of the Public Warrants has been estimated using the Public Warrants’ quoted market price.

The fair value of the Private Placement Warrants is estimated using the value of the Public Warrants’ quoted market price.

The fair value of the FPAs was estimated using a probability-weighted discounted cash flow approach.

Class A Ordinary Shares Subject to Possible Redemption

The Company accounts for Class A Ordinary Shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” The Company’s conditionally redeemable Class A Ordinary Shares feature certain redemption rights that are considered to be outside of its control and subject to the occurrence of uncertain future events.

Accordingly, at December 31, 2021 and 2020, Class A ordinary shares subject to possible redemption were 51,750,000 , are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheets.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period.

Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit.

At December 31, 2021 and 2020, the Class A Ordinary shares reflected in the balance sheet are reconciled in the following table:

Gross proceeds

Proceeds allocated to Public Warrants

( 24,150,000 )

Class A ordinary shares issuance costs

( 28,115,576 )

Remeasurement of carrying value to redemption value

Class A ordinary shares subject to possible redemption

Offering Costs

The Company complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A “Expenses of Offering.” Offering costs consist of costs incurred in connection with formation and preparation for the Initial Public Offering.

Offering costs were allocated on a relative fair value basis between shareholders’ equity and expense.

The portion of offering costs allocated to the Warrants and FPA has been charged to expense.

The portion of offering costs allocated to the Class A ordinary shares has been charged to shareholders’ equity.

On June 19, 2020, offering costs totaled $ 29,241,089 (consisting of $ 28,462,500 of (current and deferred) underwriting fees and $ 778,589 of other offering costs), of which $ 1,381,051 was charged to expense.

The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”).

ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740, “Income Taxes” (“ASC 740”) clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and 2020.

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company is subject to income tax examinations by major taxing authorities since inception.

The Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.

As such, the Company’s tax provision was zero for the year presented and for the period from February 11, 2020 (Inception) through December 31, 2020.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security “CARES” Act into law.

The CARES Act includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

certain net operating losses (“NOL) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior years, suspend the excess business loss rules, accelerate refunds of previously generated corporate alternative minimum tax credits, generally loosen the business interest limitation under IRC section 163(j) from 30 percent to 50 percent among other technical corrections included in the Tax Cuts and Jobs Act tax provisions.

The Company does not believe that the CARES Act will have a significant impact on Company’s financial position or statements of operations.

Net Income (Loss) Per Share

Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding for the period.

The Company applies the two-class method in calculating earnings per share.

Ordinary shares subject to possible redemption which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings.

The Company has not considered the effect of warrants sold in the Initial Public Offering and the private placement to purchase 25,483,334 ordinary shares in the calculation of diluted loss per share, since the exercise of the warrants into ordinary shares is contingent upon the occurrence of future events.

As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary share for the periods presented.

The following table reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):

For the Period from

February 11,

2020 (Inception) Through

December 31, 2021

December 31, 2020

Basic and diluted net income (loss) per ordinary share

Allocation of net income (loss), as adjusted

( 21,462,531 )

( 8,452,217 )

Basic and diluted weighted average shares outstanding

Basic and diluted net income (loss) per ordinary share

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal Depository Insurance Coverage of $ 250,000 .

The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Fair Value of Financial Instruments

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date.

In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Quoted prices in active markets for identical assets or liabilities.

An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

Observable inputs other than Level 1 inputs.

Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

Recent Accounting Standards

In August 2020, the FASB issued ASU No.

2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted.

The Company is evaluating the impact of adopting ASU 2020-06.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

INITIAL PUBLIC OFFERING

Pursuant to the Initial Public Offering, the Company sold 51,750,000 Units, which includes the full exercise by the underwriter of its option to purchase an additional 6,750,000 Units, at a purchase price of $ 10.00 per Unit.

Each Unit consists of one Class A ordinary share and one -third of one redeemable warrant (“Public Warrant”).

Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at an exercise price of $ 11.50 per share, subject to adjustment (see Note 8).

PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsors purchased an aggregate of 8,233,334 Private Placement Warrants at a price of $ 1.50 per Private Placement Warrant from the Company in a private placement, for an aggregate purchase price of $ 12,350,000 .

Each Private Placement Warrant is exercisable for one Class A ordinary share at a price of $ 11.50 per share, subject to adjustment (see Note 8).

The proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account.

If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.

RELATED PARTY TRANSACTIONS

Founder Shares

On February 18, 2020, the Sponsors purchased 10,781,250 of the Company’s Class B ordinary shares (the “Founder Shares”) for an aggregate purchase price of $ 25,000 .

On June 16, 2020, the Company effected a share dividend of 2,156,250 shares, resulting in the Sponsors holding an aggregate of 12,937,500 Founder Shares.

All share and per-share amounts have been retroactively restated to reflect the share dividend.

The Founder Shares included an aggregate of up to 1,687,500 shares subject to forfeiture by the Sponsors to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the number of Founder Shares would collectively represent 20 % of the Company’s issued and outstanding shares upon the completion of the Initial Public Offering.

As a result of the underwriters’ election to fully exercise their over-allotment option, 1,687,500 Founder Shares are no longer subject to forfeiture.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

The Sponsors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of:

(A) one year after the completion of a Business Combination;

and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A ordinary shares equals or exceeds $ 12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 -trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

Promissory Note — Related Party

On July 13, 2021 the Sponsors made available to the Company a loan of up to $ 500,000 pursuant to two promissory notes issued to the Company from the BGPT Sponsor in the amount of $ 212,500 (the “BGPT Note”) and to Trasimene Sponsor $ 287,500 (the “Trasimene Note”).

The notes are unsecured, non-interest bearing and mature on the earlier of:

(i) May 31, 2022, or (ii) the date on which the Company consummates a Business Combination.

On July 13, 2021, the Company drew-down $ 106,250 under the BGPT Note and $ 143,750 under the Trasimene Note.

On August 9, 2021, the Company drew-down an additional $ 75,000 under the BGPT Note.

On September 30, 2021, the Company drew-down an additional $ 10,000 under the BGPT Note and $ 115,000 under the Trasimene Note.

As of December 31, 2021, the outstanding balance under the promissory notes was $ 450,000 .

This amount was repaid at the closing of the Business Combination.

Administrative Support Agreement

The Company entered into an agreement whereby, commencing on June 16, 2020, the Company will pay BGPT Trebia LP up to $ 10,000 per month for office space and administrative support services.

Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees.

For the year ended December 31, 2021 and for the period from February 11, 2020 (inception) through December 31, 2020, the Company incurred $ 120,000 and $ 65,000 of such fees, respectively.

As of December 31, 2021 and 2020, $ 112,472 and $ 65,000 is included in accrued expenses in the accompanying balance sheets, respectively.

This agreement was terminated, and all amounts were repaid at the closing of the Business Combination.

Related Party Loans

Such Working Capital Loans would be evidenced by promissory notes.

The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $ 1,500,000 of the notes may be converted upon completion of a Business Combination into warrants at a price of $ 1.50 per warrant.

Such warrants would be identical to the Private Placement Warrants.

No Working Capital Loans were issued during year ended December 31, 2021 or for the period from February 11, 2020 (Inception) through December 31, 2020.

Registration Rights

Pursuant to a registration rights agreement entered into on June 19, 2020, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights.

The holders of these securities will be entitled to make up to

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

three demands, excluding short form demands, that the Company register such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination.

However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period.

The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Pursuant to the forward purchase agreement, the Company has agreed to use its reasonable best efforts (i) to file within 30 days after the closing of the initial business combination a resale shelf registration statement with the SEC for a secondary offering of the forward purchase shares and the forward purchase warrants (and underlying Class A ordinary shares), (ii) to cause such registration statement to be declared effective promptly thereafter, (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which Cannae Holdings, Inc.

(“Cannae Holdings”) or its assignee cease to hold the securities covered thereby, and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act and (iv) after such registration statement is declared effective, cause us to conduct underwritten offerings, subject to certain limitations.

In addition, the forward purchase agreement provides for certain “piggy-back” registration rights to the holders of forward purchase securities to include their securities in other registration statements filed by us.

Underwriting Agreement

The underwriters are entitled to a deferred fee of $ 0.35 per Unit, or $ 18,112,500 in the aggregate.

The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

This amount was paid at the closing of the Business Combination.

Forward Purchase Agreement

On June 5, 2020, the Company entered into a forward purchase agreement with Cannae Holdings, a diversified holding company which is externally managed by Trasimene Capital Management, LLC but is not an affiliate of the Company or the Sponsors, pursuant to which Cannae Holdings will purchase Class A ordinary shares in an aggregate share amount equal to 7,500,000 Class A ordinary shares, plus an aggregate of 2,500,000 redeemable warrants to purchase one Class A ordinary share at $ 11.50 per share, for an aggregate purchase price of $ 75,000,000 , or $ 10.00 per Class A ordinary share, in a private placement to occur concurrently with the closing of the Business Combination.

The warrants to be issued as part of the forward purchase agreement will be identical to the warrants sold as part of the units in this offering.

In connection with the forward purchase securities sold to Cannae Holdings, the Sponsors will receive (by way of an adjustment to their existing Class B ordinary shares) an aggregate number of additional Class B ordinary shares so that the initial shareholders, in the aggregate, on an as-converted basis, will hold 20 % of the Company’s Class A ordinary shares at the time of the closing of the Business Combination.

The obligations under the forward purchase agreement do not depend on whether any Class A ordinary shares are redeemed by the public shareholders.

Under the forward purchase agreement, the Company will provide a right of first offer to Cannae Holdings, if the Company proposes to raise additional capital by issuing any equity, or securities convertible into, exchangeable or exercisable for equity securities, other than the units and certain excluded securities.

In addition, if the Company seeks shareholder approval of a Business Combination, Cannae Holdings has agreed under the forward purchase agreement to vote any Class A ordinary shares owned by Cannae Holdings in favor of any proposed initial Business Combination.

In connection with the signing of the Business Combination Agreement and Backstop Agreement, Trebia and Cannae entered into a FPA Termination Agreement to terminate the June 5, 2020 Forward Purchase Agreement.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

Fee Arrangement

The Company entered into a fee arrangement with two service providers pursuant to which certain fees incurred by the Company in connection with a potential Business Combination will be deferred and become payable only if the Company consummates a Business Combination.

If a Business Combination does not occur, the Company will not be required to pay these fees.

As of December 31, 2021 and 2020, the amount accrued for these fees was $ 8,266,666 and $ 0 respectively.

Business Combination Agreement

As previously disclosed on a Form 8-K filed with the SEC on June 29, 2021, on June 28, 2021, the Company entered into a certain Business Combination Agreement (the “Business Combination Agreement”) by and among S1 Holdco, LLC, a Delaware limited liability company (“System1”), System1 SS Protect Holdings, Inc., a Delaware corporation (“Protected” and, together with System1, collectively, the “Targets”) and the other parties signatory thereto.

The Business Combination Agreement provides for, among other things, the consummation of the following transactions (the “Business Combination”):

(i) the Company will transfer by way of continuation from the Cayman Islands to Delaware and domesticate as a Delaware corporation in accordance with Section 388 of the DGCL and with Section 206 of the Cayman Islands Companies Act (As Revised) (the “Domestication”), and (ii) upon which time, the Company will enter into a series of business combination transactions which, following the consummation of the Business Combination, will result in each of (A) System1, LLC, a Delaware limited liability company and the current operating subsidiary of System1, and (B) Protected.net Group Limited, a private limited company organized under the laws of the United Kingdom and the current operating subsidiary of Protected, becoming subsidiaries of the Company (such combined company, “System1 Group”).

Following the consummation of the Business Combination, System1 Group will be organized in an “Up-C” structure, in which substantially all of the assets and business of the Company will be held by subsidiaries of System1.

System1 Group’s business will continue to operate through the subsidiaries of System1 and Protected.

Upon consummation of the Business Combination, and after the Domestication, the Company will have three classes of common stock, which are as follows:

• Class A common stock, par value $ 0.0001 per share (the “System1 Group Class A Common Stock”), which will be publicly traded.

• Class C common stock, par value $ 0.0001 per share (the “System1 Group Class C Common Stock”), which will have the right to one vote per share.

• Class D common stock, par value $ 0.0001 per share (“System1 Group Class D Common Stock”), that do not entitle the holder to any voting rights except as required by applicable law.

The System1 Group Class D Common Stock will automatically convert into shares of System1 Group Class A Common Stock on a one-for-one basis if, following the closing of the Business Combination (the “Closing”), the post-Closing dollar volume-weighted average price (“VWAP”) of System1 Group equals or exceeds $ 12.50 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days before the fifth anniversary of the Closing.

If the System1 Group Class D Conversion Event has not occurred by the fifth anniversary of the Closing, all outstanding shares of System1 Group Class D Common Stock will automatically be forfeited to the System1 Group and canceled for no consideration therefor, including any dividends or dividend catch-up payments owed in respect thereof.

Subject to the terms of the Business Combination Agreement, the aggregate consideration to be paid to the equity holders of System1 and Protected in connection with the Business Combination will be a combination of cash and equity consideration.

The aggregate cash consideration payable under the Business Combination Agreement will be approximately $ 462,500,000 (the “Closing Cash Consideration”) of which (x) approximately $ 212,500,000 cash proceeds will be received by System1 and Protected management equity holders (subject to certain adjustments set forth in the Business Combination Agreement), and (y) $ 250,361,620 cash proceeds will be

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

received by certain non-management equity holders of System1.

The aggregate equity consideration payable under the Business Combination Agreement will be approximately $ 667,500,000 , consisting of shares of the Company’s Class A Common Stock and the Company’s Class C Common Stock (valued at $ 10 per share) (the “Closing Equity Consideration”).

In the event that the value of shareholder redemptions exceeds $ 417,500,000 , then the Closing Cash Consideration and Closing Equity Consideration are subject to a dollar-for-dollar adjustment.

In such case, current equity holders of System1 and Protected have, pursuant to the terms of the Business Combination Agreement, agreed to reduce the Closing Cash Consideration by such amount and proportionally increase the Closing Equity Consideration.

If the value of shareholder redemptions exceeds $ 462,500,000 , the current equity holders of System1 and Protected may elect, in their sole discretion, to further reduce the Closing Cash Consideration and proportionally increase the Closing Equity Consideration.

In connection with the Business Combination Agreement, Trebia entered into a commitment letter (the “Commitment Letter”) with Bank of America, N.A.

(“Bank of America”) pursuant to which at the closing of the Business Combination, Bank of America has committed to provide Orchid Finco LLC (“Finco”), as the borrower, a $ 400 million first lien term loan facility (the “Term Loan”) and a $ 50 million revolving facility (the “Revolving Facility” and, together with the Term Facility, the “New Facility”).

The Term Loan will mature seven years after the Closing and will amortize in equal quarterly installments in an aggregate annual amount equal to 1 % of the original principal amount of the Term Loan.

The Revolving Facility will mature five years after the Closing.

The $ 518 million of cash currently held in Trebia’s trust account will be backstopped by the $ 200 million Cannae Subscription, together with $ 218 million of the Bank of America Term Loan, which will be utilized as a backstop for potential future redemptions by Trebia public shareholders.

This in conjunction with the Seller Backstop Amount and the Additional Seller Backstop Election provides for a potential 100 % backstop for potential future redemptions by Trebia public shareholders.

Bank of America’s commitment to provide the New Facility is subject to a limited number of conditions, including the non-occurrence of a material adverse effect with respect to the Targets.

Sponsor Agreement

In connection with the execution of the Business Combination Agreement and the Backstop Agreement, as defined below, Trebia amended and restated (a) that certain letter agreement, dated June 19, 2020, by and among the Sponsors and Trebia and (b) that certain letter agreement, dated June 19, 2020, by and among Trebia, certain of the directors and officers of Trebia (the “Insiders”) and the other parties thereto, and entered into that certain sponsor agreement (the “Sponsor Agreement”) with the Sponsors, Cannae, the Insiders, System1 and Protected.

Pursuant to the Sponsor Agreement, among other things, the Sponsors along with Cannae and the Insiders agreed (i) to vote any Trebia securities in favor of the Business Combination and other Trebia Shareholder Matters (as defined in the Business Combination Agreement), (ii) not to seek redemption of any Trebia securities, (iii) not to transfer any Trebia securities for the period beginning on the day of the Closing until the earlier of (x) 180 days following the Closing or (y) if the VWAP of System1 Group Class A Common Stock equals or exceeds $ 12.00 per share for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days, 150 days thereafter, and (iv) to be bound to certain other obligations as described therein.

BGPT Sponsor and Trasimene Sponsor have each also agreed to, in conjunction with the closing of the Business Combination, forfeit 1,450,000 Trebia Class B Ordinary Shares ( 2,900,000 in the aggregate).

Trebia will also issue (x) 725,000 shares of System1 Group Class D Common Stock to Trasimene Sponsor and 725,000 shares of System1 Group Class D Common Stock to BGPT Sponsor, and (y) 725,000 System1 Group restricted stock units to each of Michael Blend and Just Develop It Limited, a private limited company incorporated in England and Wales, in the case of each of (x) and (y) subject to the BGPT Sponsor and Trasimene Sponsor forfeiture of 1,450,000 Trebia Class B ordinary shares.

The System1 Group restricted stock units will be subject to the same vesting and other terms as the System1 Group Class D Common Stock.

Additionally, (x) the Sponsors have agreed to, in conjunction with the closing of the Business Combination, forfeit up to 1,734,694 (in the aggregate) Trebia Class B Ordinary Shares in connection with the equity backstop commitments by Cannae and certain System1 and Protected equity holders and (y) Trebia has agreed to issue to Cannae or such System1 and Protected equity holders a number of System1 Group Class A Common Stock equal to such forfeiture, in the event and to the extent that Cannae and/or such System1 and Protected equity holders provide such backstop in connection with any valid shareholder redemptions.

On January 10, 2022, Trebia entered into the Amended and Restated Sponsor Agreement (the “ A&R Sponsor Agreement ”) by and among BGPT Trebia LP (the “ BGPT Sponsor ”), Trasimene Trebia, LP (the “ Trasimene Sponsor ” and, together with the BGPT Sponsor, the “ Sponsors ”) and the other parties signatory thereto, which amends and restates the Letter Agreement, dated June 28, 2021 and as

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

amended on November 30, 2021 by and among such parties (the “ Original Sponsor Agreement ”), in order to provide that the Sponsors will forfeit up to (a) 1,275,510 Founder Shares (as defined in the Business Combination Agreement) (the “ Initial Cannae Founder Shares ”) to Trebia, and Trebia will issue to Cannae an equal number of shares of Trebia Class A Common Stock in connection with, and based upon the extent of, Cannae’s existing backstop obligations under the Original Backstop Agreement, (b) 1,000,000 Founder Shares to Trebia, and Trebia will issue to members of management of the Companies an equal number of shares of Trebia Class A Common Stock in connection with, and based upon the extent of, their backstop obligations under the Business Combination Agreement, and (c) an additional 1,352,941 Founder Shares (the “ Additional Cannae Founder Shares ”) to Trebia, and Trebia will issue to Cannae an equal number of shares of Trebia Class A Common Stock in connection with, and based upon the extent of, Cannae’s obligation with respect to the Additional Cannae Backstop Amount.

The A&R Sponsor Agreement also provides that the Additional Backstop Purchase Shares, the Additional Cannae Founder Shares, and 50 % of the Initial Cannae Founder Shares will not be subject to the lockup provisions thereof.

Backstop Agreement

In connection with the signing of the Business Combination Agreement, Trebia and Cannae entered into a certain Backstop Facility Agreement (the “ Backstop Agreement ”) whereby Cannae has agreed, subject to the other terms and conditions included therein, at the BPS Closing (as defined in the Backstop Agreement), to subscribe for System1 Group Class A Common Stock in order to fund redemptions by shareholders of Trebia in connection with the Business Combination, in an amount of up to $ 200,000,000 .

On January 10, 2022, Trebia entered into the Amended and Restated Backstop Facility Agreement (the “ A&R Backstop Agreement ”), which amends and restates the Backstop Facility Agreement, dated June 28, 2021 by and between Cannae Holdings, Inc.

(“ Cannae ”) and Trebia (the “ Original Backstop Agreement ”), in order to increase Cannae’s aggregate backstop commitment by $ 50,000,000 (the “ Additional Cannae Backstop Commitment ”) from $ 200,000,000 to $ 250,000,000 .

The Additional Cannae Backstop Commitment now obligates Cannae, to the extent that the total Trebia Shareholder Redemption Value is in excess of $ 417,500,000 , to backstop up to 50 % of the Trebia Shareholder Redemption Value in excess of $ 417,500,000 (the “ Additional Cannae Backstop Amount ”) by purchasing a number of shares of Trebia Class A Common Stock equal to the actual Additional Cannae Backstop Amount (as contemplated by the A&R Backstop Agreement) divided by $ 10 (the “ Additional Backstop Purchase Shares ”) At the close of the Business Combination, Cannae's aggregate commitment under the Backstop Agreement was $ 246,484,460 .

SHAREHOLDERS’ EQUITY

Preference Shares —The Company is authorized to issue 1,000,000 preference shares with a par value of $ 0.0001 .

The Company’s board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series.

The board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects.

At December 31, 2021 and 2020, there were no preference shares issued or outstanding.

Class A Ordinary Shares —The Company is authorized to issue 400,000,000 Class A ordinary shares, with a par value of $ 0.0001 per share.

Holders of Class A ordinary shares are entitled to one vote for each share.

At December 31, 2021 and 2020, there were 51,750,000 Class A ordinary shares issued and outstanding, including Class A ordinary shares subject to possible redemption presented as temporary equity.

Class B Ordinary Shares —The Company is authorized to issue 40,000,000 Class B ordinary shares, with a par value of $ 0.0001 per share.

Holders of the Class B ordinary shares are entitled to one vote for each share.

At December 31, 2021 and 2020, there were 12,937,500 Class B ordinary shares issued and outstanding .

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

Only holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination.

Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the Company’s shareholders except as otherwise required by law.

The Class B ordinary shares will automatically convert into Class A ordinary shares on the first business day following the completion of A business combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20 % of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of Initial Public Offering, plus (ii) the sum of (a) the total number of ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued by the Company in connection with or in relation to the completion of a Business Combination (including the forward purchase shares, but not the forward purchase warrants), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in a Business Combination and any private placement warrants issued to the Sponsors or any of their affiliates upon conversion of Working Capital Loans, minus (b) the number of Public Shares redeemed by public shareholders in connection with a Business Combination.

Any conversion of Class B ordinary shares will take effect as a compulsory redemption of Class B ordinary shares and an issuance of Class A ordinary shares as a matter of Cayman Islands law.

In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.

Warrants —Public Warrants may only be exercised for a whole number of shares.

No fractional shares will be issued upon exercise of the Public Warrants.

The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering.

The Public Warrants will expire five years from the completion of a Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available.

No warrant will be exercisable and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants.

The Company will use its commercially reasonable efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the warrants in accordance with the provisions of the warrant agreement.

If a registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60 th business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.

In addition, if the Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of the Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company elects to do so, the Company will not be required to file or maintain in effect a registration statement, but it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

In such event, each holder would pay the exercise price by surrendering the warrants for that number of Class A ordinary shares equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied the excess of the “fair market value” less the exercise price of the warrants by (y) the fair market value and (B) 0.361 .

The “fair market value” shall

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

mean the volume weighted average price of the Class A ordinary shares for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.

Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $ 18.00 —Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:

● in whole and not in part;

● at a price of $ 0.01 per Public Warrant;

● upon not less than 30 days’ prior written notice of redemption to each warrant holder and

● if, and only if, the last reported sale price of the Class A ordinary shares for any 20 trading days within a 30 trading day period ending three business days before sending the notice of redemption to warrant holders (the “Reference Value”) equals or exceeds $ 18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like).

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

However, we will not redeem the warrants unless an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30 -day redemption period.

Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $ 10.00 —Once the warrants become exercisable, the Company may redeem the outstanding warrants:

● in whole and not in part;

● at $ 0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” of the Class A ordinary shares;

● if, and only if, the Reference Value (as defined in the above under “Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $ 18.00 ”) equals or exceeds $ 10.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like);

● if the Reference Value is less than $ 18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) the private placement warrants must also be concurrently called for redemption on the same terms (except as described below with respect to a holder’s ability to cashless exercise its warrants) as the outstanding public warrants, as described above.

The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation.

However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price.

Additionally, in no event will the Company be required to net cash settle the Public Warrants.

If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants.

Accordingly, the Public Warrants may expire worthless.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $ 9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the Sponsors or their affiliates, without taking into account any Founder Shares held by the Sponsors or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $ 9.20 per share, the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115 % of the higher of the Market Value and the Newly Issued Price, and the $ 10.00 and $ 18.00 per share redemption trigger prices described above adjacent to “Redemption of warrants when the price per Class A ordinary share equals or exceeds $ 18.00 ” and “Redemption of warrants when the price per Class A ordinary share equals or exceeds $ 10.00 ” will be adjusted (to the nearest cent) to be equal to 100 % and 180 % of the higher of the Market Value and the Newly Issued Price, respectively.

The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that (x) the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (y) the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees and (z) the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will be entitled to registration rights.

If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

FAIR VALUE MEASUREMENTS

Warrant Liability

The following table presents the Company’s fair value hierarchy for liabilities measured at fair value on a recurring basis as of December 31, 2021.

Warrant liabilities:

Public Warrants

Private Warrants

Total Warrants Liabilities

The following table presents the Company’s fair value hierarchy for liabilities measured at fair value on a recurring basis as of December 31, 2020.

Warrant liabilities:

Public Warrants

Private Warrants

Total Warrants Liabilities

FPA Liability

The Public Warrants were valued using the instrument’s publicly listed trading price (NYSE:

TREB.WS) as of the balance sheet dates.

The value of the Private Warrants was estimated using the Public Warrants’ publicly listed trading price (NYSE:

TREB.WS) as of the balance sheet dates, which is considered a Level 2 fair value measurement.

The Private Placement Warrants have the same value as the Public Warrants since they are also subject to the make-whole table, per the Company's warrant agreement.

Given the Private Warrants and Public Warrants are similar instruments and the Public Warrants have quoted prices in an active market, the publicly listed trading price of the Public Warrants estimates the value of the Private Warrants.

SYSTEM1, INC.

(f/k/a TREBIA ACQUISITION CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

The following table presents a summary of the changes in the fair value of the Level 3 liability related to the Private Placement Warrants, measured on a recurring basis.

Private Placement

Warrant Liability

Fair value, December 31, 2020

Change in fair value

( 7,657,001 )

Fair value, December 31, 2021

Transfer from Level 3 to Level 2

( 9,468,334 )

Fair value, December 31, 2021

FPA Liability

The liability for the FPAs were valued using an adjusted net assets method, which is considered to be a Level 3 fair value measurement.

Under the adjusted net assets method utilized, the aggregate commitment of $ 75 million pursuant to the FPAs is discounted to present value and compared to the fair value of the ordinary shares and warrants to be issued pursuant to the FPAs.

The fair value of the ordinary shares and warrants to be issued under the FPAs were based on the public trading price of the Units issued in the Company’s IPO.

The excess (liability) or deficit (asset) of the fair value of the ordinary shares and warrants to be issued compared to the $ 75 million fixed commitment is then reduced to account for the probability of consummation of the Business Combination.

As of June 30, 2021, the FPA liability was reduced to zero as the FPA was terminated per the FPA Termination Agreement between Trebia and Cannae Holdings in conjunction with the Business Combination Agreement as discussed in Note 6.

The following table presents a summary of the changes in the fair value of the FPA liability, a Level 3 liability, measured on a recurring basis.

Fair value, December 31, 2020

Change in fair value

( 7,494,372 )

Gain on termination of FPA

( 3,160,168 )

Fair value, December 31, 2021

Transfers to/from Level 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.

For the year ended December 31, 2021, there was a transfer from Level 3 to Level 2 of $ 9,468,334 representing the fair value of the Private Placement Warrants.

SUBSEQUENT EVENTS

The Company has evaluated events that have occurred after the balance sheet up to the date the consolidated financial statements were issued.

The Company did not identify any subsequent events that would have required adjustment to or disclosure in the consolidated financial statements, except for the disclosures relating to the consummation of its Business Combination Agreement on January 27, 2022 as disclosed in Note 1 and 6 to 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-K

Item 9A. Controls and Procedures