What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-01 compared with 2022-02-24 · 276 added, 232 removed, 1019 unchanged (33% of the section changed)

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Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders' Equity

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Upland Software, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of intangible assets and contingent consideration in business combinations

Description of the Matter

As disclosed in Note 1 to the consolidated financial statements, the Company’s growth strategy is to pursue acquisitions of complementary technologies and businesses as evidenced by the twenty-nine acquisitions made in the ten years ended December 31, 2021.

As disclosed in Note 3 to the consolidated financial statements, during 2021, the Company completed 3 acquisitions for total consideration of $112.5 million, which included $4.2 million of contingent consideration.

The acquisitions were accounted for as business combinations in accordance with ASC 805.

Auditing the Company's accounting for its acquisitions was complex due to the estimation uncertainty in the Company’s determination of the fair value of identified intangible assets, which primarily consist of developed technology of $9.9 million and customer relationships of $43.2 million, and contingent consideration of $4.2 million.

The estimation uncertainty was primarily due to the judgmental nature of the inputs and assumptions to the valuation models used to measure the fair value of these intangible assets and contingent consideration, as well as the sensitivity of the respective fair values to underlying assumptions.

The Company used the multi-period excess earnings and relief-from-royalty methods, which are variations of the income approach, to measure the customer relationships and developed technology intangible assets, respectively, and the binary option model to measure contingent consideration.

The significant assumptions used to estimate the fair value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates, gross margin, operating expenses, technology obsolescence and customer attrition.

The significant assumptions used to estimate the fair value of the contingent consideration included discount rates and expected future annual revenue streams and the related probability of achievement.

These significant assumptions are forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s accounting for acquisitions, which included management’s review of the determination of the key assumptions used in estimating the fair value of intangible assets and contingent consideration.

To test the estimated fair value of the identified intangible assets and contingent consideration our audit procedures for each of the acquisitions included, among others, reading the purchase agreement, evaluating the Company's use of the multi-period excess earnings method, relief-from-royalty method and binary option model, evaluating the significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

We involved our valuation specialists to assist with our evaluation of the methodologies used by the Company and significant assumptions included in the fair value estimates.

For example, we compared the forecasted results to historical operating results, industry peer results, economic trends, and other relevant factors.

We also assessed the historical accuracy of management’s estimates.

Revenue recognition for new products and services

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We have also evaluated the Company’s income tax disclosures included in Notes 2 and 6 of the consolidated financial statements in relation to these matters.

Evaluation of goodwill for impairment

Description of the Matter

At December 31, 2022, the Company’s goodwill balance was $477 million.

As discussed in Note 1 to the consolidated financial statements, goodwill is tested at least annually for impairment and more frequently when indicators of impairment are identified.

Estimating fair values in connection with this impairment evaluation involves the utilization of the discounted cash flow and guideline public company approaches.

As described in Note 5 to the consolidated financial statements, the Company recorded a goodwill impairment charge of $12.5 million during the year ended December 31, 2022.

Auditing management’s goodwill impairment assessment was complex and required auditor judgment because the estimation of fair values involves subjective management assumptions, including estimation of future cash flows, the long-term rate of growth for the Company’s business and weighted average cost of capital.

Assumptions used in these valuation models are forward-looking, and changes in these assumptions can have a material effect on the determination of fair value.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of certain controls over the Company’s impairment assessment process, including controls over management’s review of the valuation models and its determination of the significant assumptions described above.

To test the Company’s impairment evaluation, our audit procedures included, among others, assessing the valuation methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its evaluation.

For example, we compared the significant assumptions to current industry, market, and economic trends, to historical results of the Company and to other guideline companies within the same industry.

We also performed independent sensitivity analyses to evaluate the changes in the fair value of the reporting unit that would result from changes in the significant assumptions.

We involved our valuation specialists to assist in evaluating the methodologies and auditing the significant assumptions used to calculate the estimated fair values.

/s/ Ernst & Young LLP

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Unbilled receivables 5,313 4,801

Prepaid and other 8,709 12,694

Prepaid expenses and other current assets 8,774 8,709

Total current assets 321,295 262,991

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Deferred commissions, noncurrent 13,794 14,808

Interest rate swap assets 41,168 —

Other assets 1,348 1,350

Total assets $ 1,113,459 $ 1,029,007

Liabilities and stockholders’ equity

(in thousands, except share and per share amounts) December 31,

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

Current liabilities:

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Total liabilities 692,298 712,719

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

Series A Convertible Preferred stock, 0.0001 par value;

5,000,000 shares authorized:

no shares issued and outstanding as of December 31, 2021;

115,000 shares issued and outstanding as of December 31, 2022;

no shares issued and outstanding as of December 31, 2021, respectively.

Stockholders’ equity:

Common stock, $ 0.0001 par value;

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Additional paid-in capital 606,755 568,384

Accumulated other comprehensive loss ( 11,514 ) ( 26,234 )

Accumulated other comprehensive income (loss) 11,110 ( 11,514 )

Accumulated deficit ( 308,998 ) ( 240,585 )

Total stockholders’ equity 308,870 316,288

Total liabilities and stockholders’ equity $ 1,029,007 $ 1,011,220

Total liabilities, convertible preferred stock and stockholders’ equity $ 1,113,459 $ 1,029,007

See accompanying notes.

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Acquisition-related expenses 21,556 21,234 27,075

Impairment of goodwill 12,500 — —

Total operating expenses 253,790 237,240 217,145

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Interest expense, net ( 29,145 ) ( 31,626 ) ( 31,529 )

Loss on debt extinguishment — — ( 2,317 )

Other expense, net ( 781 ) ( 253 ) ( 111 )

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Net loss $ ( 68,413 ) $ ( 58,212 ) $ ( 51,219 )

Preferred stock dividends ( 1,846 ) — —

Net loss attributable to common shareholders $ ( 70,259 ) $ ( 58,212 ) $ ( 51,219 )

Net loss per common share:

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Upland Software, Inc.

Consolidated Statement of Stockholders’ Equity

(in thousands, except share amounts) Common Stock Additional

Consolidated Statements of Equity

( in thousands, except share amount )

Preferred Stock Common Stock Additional

Capital Accumulated

Comprehensive

Comprehensive Income

(Loss) Accumulated

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Stockholders’

Shares Amount

Shares Amount Shares Amount

Balance at December 31, 2019 — — 25,250,120 $ 3 $ 345,127 $ ( 1,223 ) $ ( 131,046 ) $ 212,861

Issuance of common stock in business combination 7,898 — ( 30 ) — — ( 30 )

Issuance of stock under Company plans, net of shares withheld for tax — — 711,994 — ( 1,673 ) — — ( 1,673 )

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Stock-based compensation — — — — 41,692 — — 41,692

Cumulative adjustment related to adoption of accounting standard — — — — — — ( 108 ) ( 108 )

Foreign currency translation adjustment — — — — — 5,173 — 5,173

Unrealized translation gain on intercompany loans with foreign subsidiaries — — — 2,219 — 2,219

Unrealized gain on interest rate swaps — — — 2,424 — 2,424

Unrealized translation gain on foreign currency denominated intercompany loans — — — — — 2,271 — 2,271

Unrealized loss on interest rate swaps — — — — — ( 32,455 ) — ( 32,455 )

Net loss — — — — — — ( 51,219 ) ( 51,219 )

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Issuance of stock under Company plans, net of shares withheld for tax — — 1,109,434 — ( 708 ) — — ( 708 )

Issuance of stock, net of issuance costs 4,025,000 — 130,073 — — 130,073

Stock-based compensation — — — — 53,873 — — 53,873

Cumulative adjustment related to adoption of accounting standard — — — — ( 108 ) ( 108 )

Foreign currency translation adjustment — — — — — ( 6,301 ) — ( 6,301 )

Unrealized translation gain on intercompany loans with foreign subsidiaries — — — 2,271 — 2,271

Unrealized loss on interest rate swaps — — — ( 32,455 ) — ( 32,455 )

Unrealized translation loss on intercompany loans with foreign subsidiaries — — — — — ( 602 ) — ( 602 )

Unrealized gain on interest rate swaps — — — — — 21,623 — 21,623

Net loss — — — — — — ( 58,212 ) ( 58,212 )

Balance at December 31, 2021 — $ — 31,096,548 $ 3 $ 568,384 $ ( 11,514 ) $ ( 240,585 ) $ 316,288

Issuance of Convertible Preferred Stock 115,000 110,445 — — — — — —

Dividends accrued - Convertible Preferred Stock — 1,846 — — ( 1,846 ) — — ( 1,846 )

Issuance of stock under Company plans, net of shares withheld for tax — — 1,125,307 — ( 1,385 ) — — ( 1,385 )

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Non-cash stock compensation expense 41,602 53,873 41,692

Non-cash loss on divestiture of assets — — 1,988

Non-cash loss on impairment of goodwill 12,500 — —

Non-cash loss on retirement of fixed assets 79 — 635

Non-cash loss on debt extinguishment — — 2,317

Changes in operating assets and liabilities, net of purchase business combinations:

Accounts receivable 9,691 ( 1,665 ) 10,355

Prepaids and other ( 7,499 ) ( 8,582 ) ( 5,532 )

Prepaid expenses and other current assets ( 2,741 ) ( 7,499 ) ( 8,582 )

Accounts payable ( 7,175 ) 10,865 ( 3,081 )

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Payments on notes payable ( 5,400 ) ( 5,400 ) ( 5,400 )

Issuance of Series A Convertible Preferred stock, net of issuance costs 110,445 — —

Taxes paid related to net share settlement of equity awards ( 1,576 ) ( 982 ) ( 2,139 )

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$ 8,126 $ 11,670 $ ( 4,893 )

Issuance of common stock in business combination $ — $ — $ 44

See accompanying notes.

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Upland Software, Inc.

(“Upland,” “we,” “us,” “our,” or the “Company”), a Delaware corporation, is a provider of cloud-based enterprise work management software that enables organizations to plan, manage and execute projects and work.

Upland’s four cloud offerings address a broad range of enterprise work management needs, from strategic planning to task execution in the following functional areas:

Sales, Marketing, Contact Center, Project Management, Information Technology, Business Operations, and Human Resources and Legal.

To support continued growth, Upland intends to pursue acquisitions within its core cloud offerings of complementary technologies and businesses.

(“Upland,” “we,” “us,” “our,” or the “Company”), a Delaware corporation, is a provider of cloud-based software that enables organizations to plan, manage and execute projects and work.

Upland’s cloud offerings address a broad range of software needs, from strategic planning to task execution in the following functional areas:

Sales, Marketing, Contact Center, Knowledge Management, Project Management, Information Technology, Business Operations, and Human Resources and Legal.

To support continued growth, Upland intends to pursue acquisitions within its cloud offerings of complementary technologies and businesses.

Upland expects that this will expand its product offerings, customer base and market access, resulting in increased benefits of scale.

Consistent with Upland’s growth strategy, Upland has made a total of 31 acquisitions in the 11 years ending December 31, 2022.

Summary of Significant Accounting Policies

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

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however, actual results could differ from those estimates.

We assessed the impact of COVID-19 on the estimates and assumptions and determined there was no material impact.

Upland is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of February 28, 2023, the date of issuance of this Annual Report on Form 10-K.

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Issuance of credit is based on ongoing credit evaluations by the Company of customers’ financial condition and generally requires no collateral.

Trade accounts receivable are recorded at the

invoiced amount and do not bear interest.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

Invoices generally require payment due upon receipt of invoice.

The Company generally does not charge interest on past due payments, although the Company's contracts with its customers usually allow it to do so.

generally does not charge interest on past due payments, although the Company's contracts with its customers usually allow it to do so.

To manage accounts receivable credit risk, the Company performs periodic credit evaluations of its customers and maintains current expected credit losses which considers such factors as historical loss information, geographic location of customers, current market conditions, and reasonable and supportable forecasts.

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Provision for credit losses 556 694 1,115

Writeoffs, net of recoveries ( 1,052 ) ( 996 ) ( 1,887 )

Writeoffs, net of recoveries and other ( 505 ) ( 1,052 ) ( 996 )

Balance at end of year $ 1,158 $ 1,107 $ 1,465

Concentrations of Credit Risk and Significant Customers

Concentration of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable.

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Goodwill and Other Intangibles

Goodwill is evaluated for impairment annually in October or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable.

The events and circumstances considered by the Company include the business climate, legal factors, operating performance indicators and competition.

We assess Goodwill for impairment annually on October 1st, or more frequently when an event occurs which could cause the Carrying Value (or GAAP basis book value) of our Company to exceed the estimated fair value of our Company.

The Company adopted ASU 2017-04, Intangibles - Goodwill and Other:

Simplifying the Test for Goodwill Impairment during the first quarter of 2018 which eliminated step 2 from the goodwill impairment test.

As we operate as one reporting unit, the impairment test is performed at the consolidated entity level by comparing the estimated fair value of the Company to the its carrying value.

We have elected to first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying value.

Based on the qualitative assessment, if it is determined that it is more likely than not that the Company's fair value is less than its carrying value we would compare the carrying value of the Company's single reporting unit to its fair value and recognize any excess carrying value as an impairment loss.

We further estimate the fair value of the reporting unit using a fair-value-based approach based on market capitalization to determine if it is more likely than not that the fair value of our reporting unit is less than its carrying amount.

Determining the fair value of goodwill is subjective in nature and often involves the use of estimates and assumptions including, without limitation, use of estimates of future prices and volumes for our products, capital needs, economic trends and other factors which are inherently difficult to forecast.

If actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, we could incur impairment charges in a future period.

No impairment of goodwill was identified during the years ended December 31, 2021, 2020 or 2019.

Simplifying the Test for Goodwill Impairment during the first quarter of 2018.

As we operate as one reporting unit, the Goodwill impairment evaluation is performed at the consolidated entity level by comparing the estimated fair value of the Company to its Carrying Value.

We first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its Carrying Value.

Based on the qualitative assessment, if it is determined that it is more likely than not that the Company's fair value is less than its Carrying Value, then we perform a quantitative analysis using a fair-value-based approach to determine if the fair value of our reporting unit is less than its Carrying Value.

See “ Note 5.

Goodwill and Other Intangible Assets” f or more information regarding our fourth quarter 2022 Goodwill impairment.

Identifiable intangible assets consist of customer relationships, marketing-related intangible assets and developed technology.

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If such intangible assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the intangible assets exceeds the fair value of the assets.

There were no impairments of our intangible assets during the years ended December 31, 2021, 2020 or 2019.

Long-Lived Assets

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Upon the extinguishment of the related debt, any unamortized capitalized debt issuance costs are recorded to Interest expense, net on our consolidated statement of operations.

During the year ended December 31, 2019, the Company wrote off debt issuance costs of $ 2.3 million as a Loss on debt extinguishment on our consolidated statements of operations, as a result of the paydown of our previous credit facility in connection with entering into the Company’s Credit Facility (as hereinafter defined) and discussed in “Note 7.

In 2022 and 2021, the Company had no write offs of debt issuance costs.

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All derivative financial instruments are recorded at fair value as a net asset or liability on our consolidated balance sheets.

The fair value of interest rate swaps included in Interest rate swap liabilities on our consolidated balance sheets as of December 31, 2021 and 2020 was $ 8.4 million and $ 30.0 million, respectively.

As of December 31, 2022, the fair value of interest rate swaps included in Interest rate swap assets on our consolidated balance sheets was $ 41.2 million.

As of December 31, 2021, the fair value of interest rate swaps included in Interest rate swap liabilities was $ 8.4 million.

The change in the fair value of the hedging instruments is recorded in Unrealized gain (loss) on interest rate swaps on our consolidated stateme nts of comprehensive income.

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The carrying values of the Company’s debt instruments approximated their fair value based on rates currently available to the Company.

Preferred Stock

In August 2022, the Company closed on the issuance and sale of its Series A Convertible Preferred Stock (the “Series A Preferred Stock”).

The Company issued 115,000 shares of Series A Preferred Stock, par value $ 0.0001 per share, at a price of $ 1,000 per share, for an initial investment amount of $ 115.0 million.

Pursuant to the Certification of Designation, cumulative preferred dividends accrue quarterly on the Series A Preferred Stock at a rate of (i) 4.5 % per annum until but excluding the seven year anniversary of the closing, and (ii) 7 % per annum on and after the seven year anniversary of the closing .

See “ Note 12.

Series A Preferred Stock—Series A Convertible Preferred Stock” for further details.

The Series A Preferred Stock and cumulative preferred dividends, net of preferred issuance costs, is presented as Mezzanine Equity of $ 112.3 million as of December 31, 2022 in the Company’s consolidated balance sheets.

The Series A Preferred Stock is classified as Mezzanine Equity because it is redeemable at the option of its holders (upon a deemed liquidation event as defined in “ Note 12.

Series A Preferred Stock—Series A Convertible Preferred Stock—Deemed Liquidation Event Redemption” ) and has a condition for redemption that is not solely within the control of the issuer.

Revenue Recognition

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Significant assumptions used in the Monte Carlo simulation model for the PRSUs granted during the year ended December 31, 2022 and 2021 are as follows.

No PRSUs were granted during the year ended December 31, 2019.

Year Ended December 31,

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Foreign Currency Transactions

The functional currency of our foreign subsidiaries are primarily the local currencies.

Results of operations for foreign subsidiaries are translated in USD using the average exchange rates on a monthly basis during the year.

The functional currency of our foreign subsidiaries are generally the local currencies.

Results of operations for foreign subsidiaries are translated into USD using the average exchange rates on a monthly basis during the year.

The assets and liabilities of those subsidiaries are translated into USD using the exchange rates in effect at the balance sheet date.

The related translation adjustments are recorded as a separate component of the Company’s consolidated statements of stockholders' equity in accumulated other comprehensive loss.

The related translation adjustments are recorded as a separate component of the Company’s consolidated statements of stockholders' equity in accumulated other comprehensive income (loss).

Assets and liabilities denominated in currencies other than the functional currency are remeasured using the current exchange rate for monetary accounts and historical exchange rates for non-monetary accounts, with exchange differences on remeasurement included in other expense, net in the accompanying statements of operations.

For the years ended December 31, 2021 and 2020 net gains related to remeasurement of foreign currency transactions of $ 48.6 thousand and $ 0.2 million, respectively, were recorded in Other expense, net on our consolidated statements of operations.

For the year ended December 31, 2022, net losses related to remeasurement of foreign currency transactions of $ 1.0 million were recorded in Other expense, net on our consolidated statements of operations.

We have foreign currency denominated intercompany loans that were used to fund the acquisition of foreign subsidiaries in 2018 and 2019.

For the years ended December 31, 2021 and 2020, net gains of $ 48.6 thousand and $ 0.2 million, respectively, were recorded in Other expense, net on our consolidated statements of operations.

We have foreign currency denominated intercompany loans that were used to fund the acquisition of foreign subsidiaries.

Due to the long-term nature of the loans, the foreign currency gains (losses) resulting from remeasurement are recognized as a separate component of the Company’s consolidated statements of stockholders' equity in accumulated other comprehensive loss.

During the years ended December 31, 2021, the balances of these intercompany loans were converted to USD.

During the years ended December 31, 2021, 2020 and 2019, a translation loss of $ 0.6 million, gain of $ 2.3 million, and gain of $ 2.2 million, respectively, were recognized as a component of accumulated other comprehensive loss in the Company’s statements of stockholders’ equity, related to long-term intercompany loans.

During the year ended December 31, 2020, the balances of these intercompany loans were converted to USD.

During the years ended December 31, 2022, 2021 and 2020, a translation loss of $ 10.0 million, loss of $ 0.6 million, and gain of $ 2.3 million, respectively, were recognized as a component of accumulated other comprehensive loss in the Company’s statements of stockholders’ equity, related to long-term intercompany loans.

Recent Accounting Pronouncements

Recently issued accounting pronouncements - Adopted

In August 2020, the Financial Standards Accounting Board (“FASB”) issued accounting standards update ASU 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 (the “ASU 2020-06).

ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock.

This update also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions.

ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.

The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments.

The guidance is effective for interim and annual periods beginning after December 15, 2021.

The Company adopted this guidance in the first quarter of fiscal 2022 with an immaterial impact to the consolidated financial statements.

Recently issued accounting pronouncements - Not yet adopted

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The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform.

These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

The Company does not anticipate the adoption of this standard to have a material impact on its consolidated financial statements.

We will adopt Topic 848 when our relevant contracts are modified upon transition to alternative reference rates.

We do not expect our adoption of Topic 848 to have a material impact on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

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Acquisitions completed during the year ended December 31, 2022 include the following:

• Panviva - On June 24, 2021, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Panviva Pty Ltd, an Australian proprietary company (“Panviva”), a cloud-based enterprise knowledge management solution.

Revenues recorded since the acquisition date through December 31, 2021 were approximately $ 3.9 million.

• BlueVenn - On February 28, 2021 the Company entered into an agreement to purchase the shares comprising the entire issued share capital of BlueVenn Group Limited, a company limited by shares organized and existing under the laws of England and Wales (“BlueVenn”), a cloud-based customer data platform.

• BA Insight - On February 22, 2022, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of BA Insight Inc., (“BA Insight”), a cloud-based enterprise knowledge management solution.

Revenues recorded since the acquisition date through December 31, 2022 were approximately $ 7.6 million.

• Second Street - On January 19, 2021, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Second Street Media, Inc., a Missouri corporation (“Second Street”), an audience engagement platform.

• Objectif Lune - On January 07, 2022, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Objectif Lune Inc., a Quebec proprietary company (“Objectif Lune”), cloud-based document workflow product.

Revenues recorded since the acquisition date through December 31, 2022 were approximately $ 20.9 million.

• See “Note 17.

Subsequent Events” for discussion of the acquisitions of Objectif Lune Inc.

and BA-Insight, Inc., which were completed subsequent to December 31, 2021.

We determined that disclosing the amount of Panviva, BlueVenn and Second Street related earnings included in the consolidated statements of operations is impracticable, as certain operations of Panviva, BlueVenn and Second Street were integrated into the operations of the Company from the date of acquisition.

We determined that disclosing the amount of BA Insight and Objectif Lune related earnings included in the consolidated statements of operations is impracticable, as certain operations of BA Insight and Objectif Lune were integrated into the operations of the Company from the date of acquisition.

2021 Acquisitions

The acquisition completed during the year ended December 31, 2021 include the following:

• Localytics - On February 6, 2020, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Char Software, Inc (dba Localytics), a Delaware corporation (“Localytics”), a provider of mobile app personalization and analytics solutions.

2020 Acquisitions

Acquisitions completed during the year ended December 31, 2019 include the following:

• Postup - On April 18, 2019, the Company completed its purchase of the shares comprising the entire issued share capital of Postup Holdings, LLC, a Texas limited liability company (“Postup”), and Postup Digital, LLC, a Texas limited liability company, an Austin-based company providing email and audience development solutions for publishing & media brands.

• Kapost - On May 24, 2019, the Company completed of its purchase of the shares comprising the entire issued share capital of Daily Inches, Inc., d/b/a Kapost, a Delaware corporation (“Kapost”), a content operations platform provider for sales and marketing.

• Cimpl - On August 21, 2019, the Company completed its purchase of the shares comprising the entire issued share capital of Cimpl, Inc., a Canadian corporation (“Cimpl”), a cloud-based telecom expense management platform.

• InGenius - On October 1, 2019, the Company completed its purchase of the shares comprising the entire issued share capital of InGenius Software Inc., a Canadian corporation (“InGenius”), a Computer Telephony Integration (CTI) solution for enterprise contact centers.

• Altify - On October 4, 2019, the Company’s wholly owned subsidiary, Upland Software UK, a limited company incorporated under the laws of England and Wales, entered into an agreement to purchase the shares comprising the entire issued share capital of Altify Ireland Limited, a private company limited by shares organized and existing under the laws of Ireland (“Altify”), a customer revenue optimization (CRO) cloud solution for sales and the extended revenue teams.

The acquisition completed during the year ended December 31, 2020 include the following:

Consideration

The following table summarizes the consideration transferred for the acquisitions described above (in thousands):

Panviva BlueVenn Second Street Localytics Altify InGenius Cimpl Kapost Postup

BA Insight Objectif Lune Panviva BlueVenn Second Street Localytics

Cash $ 33,355 $ 29,750 $ 19,931 $ 53,535 $ 25,436 $ 67,655

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Total consideration $ 35,587 $ 35,644 $ 23,827 $ 57,962 $ 30,721 $ 63,762

(1) Represents cash holdbacks subject to indemnification claims that are payable 12 months from closing for Panviva, Second Street, Localytics, InGenius, Cimpl, Kapost and Postup and 18 months following the closing of BlueVenn.

(1) Represents cash holdbacks subject to indemnification claims that are payable 12 months from closing for Objectif Lune, Panviva, Second Street and Localytics, 15 months following closing for BA Insight and 18 months following the closing of BlueVenn.

(2) Represents the acquisition date fair value of anticipated earnout payments which are based on the estimated probability of attainment of the underlying future performance-based conditions at the time of acquisition.

The maximum potential payout for the BlueVenn, Second Street, Localytics and InGenius earnouts were $ 21.7 million, $ 3.0 million, $ 1.0 million and $ 15.0 million, respectively.

As of December 31, 2021, the fair value of the earnouts for BlueVenn and Second Street were zero .

The earnout for Localytics and InGenius were paid in full during the year ended December 31, 2020 based on an ending fair value of $ 1.0 million and $ 4.5 million, respectively.

The maximum potential payout for the BlueVenn, Second Street and Localytics were $ 21.7 million, $ 3.0 million and $ 1.0 million, respectively.

As of March 31, 2022, the earnout payments for BlueVenn and Second Street were finalized resulting in no payments made.

The earnout for Localytics was paid in full during the year ended December 31, 2020 based on an ending fair value of $ 1.0 million.

Refer to “ Note 4.

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Fair Value of Assets Acquired and Liabilities Assumed

The Company recorded the purchase of the acquisitions described above using the acquisition method of accounting and, accordingly, recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition.

The purchase accounting for the 2021 acquisitions of Panviva are BlueVenn are preliminary as the Company has not finalized the tax impact of these acquisitions.

The Company recorded the purchase of the acquisitions described above using the acquisition method of accounting, and has recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition.

The purchase accounting for the 2022 acquisition of Objectif Lune is preliminary as the Company has not finalized the overall impact of this acquisition.

Management has recorded the purchase price allocations based upon acquired company information that is currently available.

Management expects to complete the purchase accounting for BlueVenn no later than the first quarter of 2022 and no later than the second quarter of 2022 for Panviva.

Management expects to complete the purchase accounting for Objectif Lune no later than the first quarter of 2023.

The following condensed table presents the finalized acquisition-date fair value of the assets acquired and liabilities assumed for the acquisitions closed in 2021 and 2022 (in thousands):

Preliminary Final

Panviva BlueVenn Second Street Localytics

Final Preliminary Final

BA Insight Objectif Lune Panviva BlueVenn Second Street

Year Acquired 2022 2022 2021 2021 2021

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Technology 2,000 5,512 2,194 4,337 3,400

Favorable leases — 291 — — —

Goodwill 25,495 23,382 16,604 44,892 16,586

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Developed technology 6.2 5.0

Favorable Leases 6.3 0.0

Total weighted-average useful life 6.8 6.6

During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill based on changes to management’s estimates and assumptions.

The change in the preliminary acquisition-date fair value of assets and liabilities for Localytics during the year ended December 31, 2020 was related primarily to a $ 0.9 million decrease in deferred tax liabilities.

change in the preliminary acquisition-date fair value of assets and liabilities for BlueVenn and Panviva during the year ended December 31, 2021 was related primarily to an increase in identified intangible assets.

The change in the preliminary acquisition-date fair value of assets and liabilities for BlueVenn and Panviva during the year ended December 31, 2021 was related primarily to an increase in identified intangible assets.

The change in the preliminary acquisition-date fair value of assets and liabilities during the year ended December 31, 2022 for Objectif Lune was related primarily to an increase in identified intangible assets.

We expect to finalize our analysis of certain tax-related considerations during the first quarter of 2023.

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From time to time we may purchase or sell customer relationships that meet certain criteria.

We had no purchase or sale of customer relationships during the year ended December 31, 2021.

During the year ended December 31, 2020, we completed customer relationship acquisitions totaling $ 0.2 million.

We had no purchase or sale of customer relationships during the years ended December 31, 2022 and 2021.

Fair Value Measurements

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and Level 3, defined as unobservable inputs in which little or no market data exists, which therefore requires an entity to develop its own assumptions.

As of December 31, 2021 and 2020 the Company had contingent accrued earnout business acquisition consideration liabilities for which fair values are measured as Level 3 instruments.

As of December 31, 2022, the Company had no contingent accrued earnout business acquisition consideration liabilities for which fair values are measured as Level 3 instruments.

As of December 31, 2021, the Company had contingent accrued earnout business acquisition consideration liabilities for which fair values are measured as Level 3 instruments.

These contingent consideration liabilities were recorded at fair value on the acquisition date and are remeasured periodically based on the then assessed fair value and adjusted, if necessary.

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As the fair value measure is based on the market approach, they are categorized as Level 2.

As of December 31, 2021 and 2020 the fair value of the interest rate swaps are included in Interest rate swap liabilities and Other assets, respectively, on our consolidated balance sheets.

As of December 31, 2022, the fair value of the interest rate swaps is included in the “ Interest rate swap assets ” section compared to December 31, 2021 in which the fair value of the interest rate swaps included in the liabilities section on the Company's consolidated balance sheets.

On February 21, 2023, the Company entered into an amendment to its Credit Facility.

The amendment amended the interest rate benchmark from LIBOR to Secured Overnight Financing Rate (“SOFR”).

See “ Note 18.

Subsequent Events ” for further details.

Liabilities measured at fair value on a recurring basis are summarized below (in thousands):

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Level 1 Level 2 Level 3 Total

Interest rate swap liability $ — $ 8,409 $ — $ 8,409

Cash equivalents - money market funds $ 172,849 $ — $ — $ 172,849

Interest rate swap asset $ — $ 41,168 $ — $ 41,168

$ 172,849 $ 41,168 $ — $ 214,017

Fair Value Measurements at December 31, 2021

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Ending balance $ — $ —

(1) The year ended December 31, 2020 includes payments of $ 1.0 million and $ 4.5 million for the outstanding balance of earnout liabilities related to the acquisition of Localytics and InGenius, respectively, as described in “Note 3.

Acquisitions”.

Sensitivity to Changes in Significant Unobservable Inputs

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Acquired in business combinations 85,102

Adjustment related to prior year business combinations (1)

Adjustment related to finalization of business combinations ( 7,266 )

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Acquired in business combinations 48,768

Adjustment related to prior year business combinations 1,466

Adjustment related to finalization of current year business combinations 109

Foreign currency translation adjustment ( 3,962 )

Impairment of goodwill (1)

Foreign currency translation adjustment and other ( 18,272 )

Balance at December 31, 2022 $ 477,043

(1) Related to changes in the ASC 805 valuation of intangible assets in the prior year business combination of Altify.

(1) Refer to discussion herein and in Note 2.

Basis of Presentation and Summary of Significant Accounting Policies—Goodwill and Other Intangible s.

We performed the annual goodwill impairment test and did not identify an impairment.

As a result of the decline of our stock price impacting our market capitalization during the quarter ended December 31, 2022, we performed a quantitative impairment evaluation as of December 31, 2022, which resulted in a Goodwill impairment of $12.5 million.

This quantitative goodwill impairment analysis applied two methodologies to estimate the Company’s fair value which were:

a) a discounted cash flow method and b) a guideline public company method.

The two methods generated similar results and indicated that the fair value of the Company was less than its carrying value.

The discounted cash flow method requires significant judgments, including estimation of future cash flows, which is dependent on internally developed forecasts, estimation of the long-term rate of growth for our business, and determination of our weighted average cost of capital.

Under the guideline public company method, we estimate fair value based on a market multiple of revenues and earnings derived for comparable publicly traded companies with similar operating characteristics as the Company.

We did not record a goodwill impairment charge for the years ended December 31, 2021 or 2020.

Intangible assets, net, include the estimated acquisition-date fair values of customer relationships, marketing-related assets and developed technology that the Company recorded as part of its business acquisitions purchases and from acquisitions of customer relationships.

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92,585 56,240 36,345

Non-compete agreements 3

Favorable leases 6.3

$ 273 $ 43 $ 230

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The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value or revised useful life.

During the years ended December 31, 2021 and 2020, the Company considered the current market environment and economic conditions arising from the ongoing COVID-19 pandemic as a potential indicator of impairment of its intangible assets and goodwill.

During the fourth quarter of 2019, management made the decision to sunset and divest certain minor non-strategic customer contracts and related website management and analytics assets.

The remaining useful life of certain customer relationship assets included in the sunset asset group were reduced by 1 year to 2.5 years which represents the term left on the current active contracts.

Management has determined there have been no other changes in the useful life during the years ended December 31, 2021, 2020, and 2019.

No impairment was recorded during the years ended December 31, 2021, 2020 and 2019.

Total amortization expense was $ 50.9 million, $ 44.9 million, and $ 32.4 million during the years ended December 31, 2021, 2020 and 2019, respectively.

Total amortization expense was $ 54.6 million, $ 50.9 million, and $ 44.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

There were no material changes in the useful life of our intangible assets during the years ended December 31, 2022, 2021 and 2020.

During the fourth quarter of 2022, the Company reduced the estimated useful life for certain product offerings, which will result in higher estimated amortization expense in 2023.

No impairment of intangible assets were recorded during the years ended December 31, 2022, 2021 and 2020.

As of December 31, 2022, the estimated annual amortization expense for the next five years and thereafter is as follows (in thousands):

Year ending December 31:

2022 $ 49,288

Thereafter $ 25,426

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The annual limitation will result in the expiration of approximately $ 155.0 million of U.S.

federal net operating losses and $ 4.4 million of credit carryforwards before utilization.

federal net operating loss and credit carryforwards will expire beginning in 2022, if not utilized, with $ 36.6 million of net operating losses carrying forward indefinitely.

The entirety of the $ 38.5 million of the foreign net operating loss carryforwards carry forward indefinitely.

federal net operating losses and $ 4.1 million of credit carryforwards before utilization.$ 50.3 million of foreign net operating loss carryforwards carry forward indefinitely, and the remainder will expire beginning in 2041.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred taxes as of December 31 are as follows (in thousands):

Year Ended December 31,

As of December 31,

2022 2021 2020

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Unrealized losses — 1,974 7,617

Research and development expenses 6,243 — —

Other 461 638 658

Valuation allowance for noncurrent deferred tax assets ( 28,627 ) ( 35,701 ) ( 21,179 )

Valuation allowance ( 20,482 ) ( 28,627 ) ( 35,701 )

Net deferred tax assets $ 61,194 $ 49,979 $ 45,129

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Due to the uncertainty surrounding the timing of realizing the benefits of its domestic favorable tax attributes in future tax returns, the Company has placed a valuation allowance against its domestic net deferred tax assets, exclusive of goodwill.

During the years ended December 31, 2021 and 2020, the valuation allowance decreased by approximately $ 7.1 million and increased by approximately $ 14.5 million, respectively.

During the years ended December 31, 2022 and 2021, the valuation allowance decreased by approximately $ 8.1 million and $ 7.1 million, respectively.

The valuation allowance for the year ended December 31, 2022 decreased by approximately $ 13.0 million due to the tax effect of items recorded in other comprehensive income with the remaining increase of approximately $ 4.9 million related primarily to current operations.

The valuation allowance for the year ended December 31, 2021 decreased by approximately $ 5.7 million due to the tax effect of items recorded in other comprehensive income and approximately $ 6.4 million due to acquired net deferred tax liabilities as a result of domestic business combinations, which was recorded as an income tax benefit, which is partially offset with the remaining increase of approximately $ 5.0 million related primarily to current operations.

The valuation allowance for the year ended December 31, 2020 increased by approximately $ 10.7 million due to the tax effect of items recorded in other comprehensive income and decreased approximately $ 2.4 million due to acquired net deferred tax liabilities as a result of domestic business combinations, which was recorded as an income tax benefit, with the remaining increase of approximately $ 6.2 million related to primarily current operations.

At December 31, 2022, we did not provide deferred income taxes on temporary differences resulting from earnings of certain foreign subsidiaries which are indefinitely reinvested.

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Disallowed excess executive compensation ( 0.6 ) % ( 5.3 ) % ( 4.0 ) %

Goodwill impairment ( 3.6 ) % — % — %

Permanent items and other ( 0.5 ) % 0.1 % ( 0.7 ) %

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The Company has determined it has the following unrecognized assets or liabilities related to uncertain tax positions as of December 31, 2022.

It is reasonably possible that a reduction of $ 0.8 million of unrecognized tax benefits may occur within the next 12 months due to the expiration of statutes of limitation, affecting our income tax provision and therefore benefit the resulting effective tax rate.

The actual amount could very depending on any actual settlement prior to the expiration of statutes of limitation.

It is reasonably possible that a reduction of $0.8 million of unrecognized tax benefits may occur within the next 12 months due to the expiration of statutes of limitation, affecting our net income tax provision and therefore benefit the resulting tax rate.

The actual amount could vary depending on any actual settlement prior to the expiration of statutes of limitation.

To the extent the Company is required to recognize interest and penalties related to unrecognized tax liabilities, this amount will be recorded as an accrued liability, (in thousands).

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The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

As of December 31, 2021, the Company had accrued $ 0.4 million of interest or penalties related to uncertain tax positions, none of which is expected to reverse in the next 12 months.

As of December 31, 2022, the Company had accrued $ 0.4 million of interest or penalties related to uncertain tax positions, which is reasonably possible to reverse in the next 12 months.

The Company and its subsidiaries file tax returns in the U.S.

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The Base Rate for any day is a rate per annum equal to the greatest of (i) the prime rate in effect on such day, (ii) the federal funds effective rate (not less than 0.00 %) in effect on such day plus ½ of 1.00%, and (ii) the Eurodollar rate for a one month interest period beginning on such day plus 1.00 %.

On February 21, 2023, the Company entered into an amendment to its Credit Facility.

The amendment amended the interest rate benchmark from LIBOR to SOFR.

Other than the foregoing, the material terms of the Credit Agreement remains unchanged.

See “ Note 18.

Subsequent Events ” for further details.

Accrued interest on the loans will be paid quarterly or, with respect to loans that are accruing interest based on the Eurodollar rate, at the end of the applicable interest rate period.

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The interest rate swap has been designated as a cash flow hedge and is valued using a market approach, which is a Level 2 valuation technique.

At December 31, 2021, the fair value of the interest rate swap was a $ 8.4 million liability as a result of a increase in short term interest rates from 2020 to 2021.

At December 31, 2022, the fair value of the interest rate swap was a $ 41.2 million asset as a result of an increase in short term interest rates from 2021 to 2022.

In the next twelve months, the Company estimates that $ 11.6 million will be reclassified from Accumulated other comprehensive income (loss) to Interest expense, net on our consolidated statement of operations.

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2022 2021 2020

Unrealized gain (loss) recognized in Other comprehensive income on interest rate swaps $ 21,623 $ ( 32,455 ) $ 2,424

Unrealized gain (loss) recognized in Other comprehensive income (loss) on interest rate swaps $ 49,577 $ 21,623 $ ( 32,455 )

Gain (loss) on interest rate swap (included in Interest expense, net on our consolidated statement of operations) $ 283 $ ( 8,250 ) $ ( 5,500 )

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These issuance costs will be amortized to Interest expense, net on our consolidated statement of operations, over the term of the Credit Facility.

During the year ended December 31, 2019, the Company wrote off debt issuance costs of $ 2.3 million as a Loss on debt extinguishment on our consolidated statement of operations, as a result of the paydown of our previous credit facility.

During the years ended December 31, 2021 and 2020, the Company had no write offs of debt issuance costs.

Debt Maturities

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Year ending December 31:

Total debt outstanding $ 522,450

Less unamortized discount 7,467

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Net Loss Per Share

We compute loss per share of our Common Stock and Series A Preferred Stock using the two-class method.

The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

We consider our Series A Preferred Stock to be a participating security, as its holders are entitled to fully participate in any dividends or other distributions declared or paid on our Common Stock on an as-converted basis.

The following table sets for the computations of loss per share:

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$ ( 68,413 ) $ ( 58,212 ) $ ( 51,219 )

Preferred stock dividends and accretion ( 1,846 ) — —

Net loss attributable to common stockholders $ ( 70,259 ) $ ( 58,212 ) $ ( 51,219 )

Weighted–average common shares outstanding, basic and diluted 31,528,881 30,295,769 26,632,116

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Due to the net losses incurred for the years ended December 31, 2022, 2021 and 2020, basic and diluted loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive.

The Company adopted ASU 2020-06 on January 1, 2022 as detailed in “ Note 2.

Basis of Presentation and Summary of Significant Accounting Policies—Recent Accounting Pronouncements—Recently issued accounting pronouncements - Adopted .” As such, the Company is required to use the application of the if-converted method for calculating diluted earnings per share on our Series A Preferred Stock.

The Company applies the treasury stock method for calculating diluted earnings per share on our stock options, restricted stock awards, restricted stock units and performance restricted stock units.

The following table sets forth the anti-dilutive common share equivalents excluded from the weighted-average shares used to calculate diluted net loss per common share:

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Performance restricted stock units 93,750 63,537 66,297

Series A Preferred Stock on an as-converted basis (2)

6,676,923 — —

Total anti–dilutive common share equivalents 8,434,267 1,670,889 1,626,097

(1) All outstanding restricted stock awards became fully vested as of December 31, 2021.

(2) Per ASU 2020-06, the Company is applying the if-converted method to calculated diluted earnings per share.

As of December 31, 2022, the Series A Preferred Stock plus accumulated dividends totaled $ 116.8 million.

The Series A Preferred Stock has a conversion price of $ 17.50 per share, as detailed in “ Note 12.

Series A Preferred Stock”

Operating Leases

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The current and long-term portion of finance lease obligations are included in Accrued expenses and other current liabilities and Other long-term liabilities line items on the consolidated balance sheet, respectively.

As of December 31, 2021, the Company no longer had any finance lease agreements.

At December 31, 2020, the Company's finance lease agreements were generally for four years and contained a bargain purchase option at the end of the lease term.

The Company had no finance lease agreements since December 31, 2021.

Lease Expense

Total office rent expense for the years ended December 31, 2022, 2021 and 2020 were approximately $ 2.5 million, $ 6.2 million and $ 5.9 million , respectively.

The $ 6.2 million office rent expense in 2021 includes approximately $ 4.4 million of transformation charges in conjunction with the closures of the Panviva, BlueVenn, Second Street and Localytics offices as we continue to consolidate and integrate these acquisitions.

The $ 5.9 million office rent expense in 2020 includes approximately $ 3.6 million of transformation charges in conjunction with the closures of the Localytics, Kapost and Altify offices as we continue to consolidate and integrate these acquisitions.

The $ 2.5 million office rent expense in 2022 includes approximately $ 1.1 million of transformation charges in conjunction with the closures of the BA Insight and Objectif Lune offices as we continue to consolidate and integrate these acquisitions.

The $ 6.2 million office rent expense in 2021 includes approximately $ 4.4 million of transformation charges in conjunction with the closures of the the Panviva, BlueVenn, Second Street and Localytics offices as we continue to consolidate and integrate these acquisitions.

The Company has entered into sublease agreements related to excess office space as a result of the Company's transformation activities related to its acquisitions.

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$ 4,658 $ 4,111

Operating cash flows from finance leases

Financing cash flows from finance leases

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Operating leases

Finance leases

Weighted average discount rate

Operating leases

Finance leases

As of December 31, 2022, the Company no longer had any finance lease agreements.

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Property and equipment, net $ 1,830 $ 2,667

Amortization of assets recorded under financing leases is included with depreciation expense.

Amortization of assets recorded under finance leases is included with depreciation expense.

Depreciation and amortization expense on Property and equipment, net was $ 1.5 million, $ 2.0 million and $ 2.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

During 2020 we recognized a $ 0.6 million loss on disposal of assets related primarily to leasehold improvements associated with the consolidation and integration of prior year acquisitions.The Company recorded no impairment of property and equipment and recorded no losses on the disposal of property and equipment during the years ended December 31, 2021 and 2019.

The Company recorded no impairment of property and equipment during the years ended December 31, 2022, 2021 and 2020.

During the years ended December 31, 2022, 2021 and 2020, we recognized a $ 0.1 million,$ 0.0 million and $ 0.6 million loss on disposal of assets related primarily to leasehold improvements associated with the consolidation and integration of prior year acquisitions.

Series A Preferred Stock

On July 14, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Ulysses Aggregator, LP (the “Purchaser”), an affiliate of HGGC, LLC, to issue and sell at closing 115,000 shares of Series A Preferred Stock of the Company, par value $ 0.0001 per share, at a price of $ 1,000 per share (the “Initial Liquidation Preference”) for an aggregate purchase price of $ 115.0 million (the “Investment”).

The Company will use the proceeds of the Investment (a) for general corporate purposes and (b) for transaction-related fees and expenses.

On August 23, 2022 (the “Closing Date”), the closing of the Investment (the “Closing”) occurred, and the Series A Preferred Stock was issued to the Purchaser.

In connection with the issuance of the Series A Preferred Stock, the Company incurred direct and incremental expenses comprised of transaction fees, and financial advisory and legal expenses (the “Series A Preferred Stock Issuance Costs”), which reduced the carrying value of the Series A Preferred Stock.

As of December 31, 2022, the Series A Preferred Stock Issuance Costs totaled $ 4.6 million.

Cumulative preferred dividends accrue quarterly on the Series A Preferred Stock at a rate of 4.5 % per year within the first seven years after the Closing Date regardless of whether declared or assets are legally available for the payment.

Such dividends shall accrue and compound quarterly in arrears from the date of issuance of the shares.

The dividend rate will increase to 7.0 % on the seven-year anniversary of the Closing Date.

The Series A Preferred Stock had accrued unpaid dividends of $ 1.8 million as of December 31, 2022.

Contemporaneous with the Closing Date, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”) and the Company filed a Certificate of Designation (the “Certificate of Designation”) setting out the powers, designations, preferences, and other rights of the Series A Preferred Stock with the Secretary of State of the State of Delaware in connection with the Closing.

Pursuant to the Registration Rights Agreement, the Purchaser has certain customary registration rights with respect to any shares of Series A Preferred Stock or the common stock of the Company issuable upon conversion of the Series A Preferred Stock, including rights with respect to the filing of a shelf registration statement, underwritten offering rights and piggy back rights.

Dividend Provisions

The Series A Preferred Stock rank senior to the Company’s common stock with respect to payment of dividends and rights on the distribution of assets on any liquidation, dissolution or winding up of the affairs of the Company.

The Series A Preferred Stock has an Initial Liquidation Preference of $ 1,000 per share, representing an aggregate Liquidation Preference (as defined below) of $ 1,000 upon issuance.

Holders of the Series A Preferred Stock are entitled to the dividend at the rate of 4.5 % per annum, within first seven years after the Closing Date regardless of whether declared or assets are legally available for the payment.

Such dividends shall accrue and compound quarterly in arrears from the date of issuance of the shares.

The dividend rate will increase to 7.0 % on the seven-year anniversary of the Closing Date.

The dividend can be paid, in the Company’s sole discretion, in cash or dividend in kind by adding to the Liquidation Preference of each share of Series A Preferred Stock outstanding;

provided that, until the stockholder approvals contemplated by Nasdaq Global Market Listing Standard Rules 5635(a), (b) and (d) are obtained, as applicable, the Company may not pay in kind if doing so would cause the common shares issuable upon conversion of the Preferred Stock to exceed 19.9 % of the total outstanding common stock as of the Closing Date.

The Series A Preferred Stock is also entitled to fully participate in any dividends paid to the holders of common stock in cash, in stock or otherwise, on an as-converted basis.

Liquidation Rights

In the event of any Liquidation, holders of the Series A Preferred Stock are entitled to receive an amount per share equal to the greater of (1) the Initial Liquidation Preference per share plus any accrued or declared but unpaid dividends on such shares (the “Liquidation Preference”) or (2) the amount payable if the Series A Preferred Stock were converted into common stock.

The Series A Preferred Stock will have distribution and liquidation rights senior to all other equity interests of the Company.

As of December 31, 2022, the Liquidation Preference of the Series A Preferred Stock was $ 116.8 million.

Optional Redemption

On or after the 7th anniversary of the original issue date of the Series A Preferred Stock, the Company has the right to redeem any outstanding shares of the Series A Preferred Stock for a cash purchase price equal to 105 % of the Liquidation Preference plus accrued and unpaid dividends as of the date of redemption.

Deemed Liquidation Event Redemption

Upon a fundamental change, holders of the Series A Preferred Stock have the right to require the Company to repurchase any or all of its Series A Preferred Stock for cash equal to the greater of (1) 105 % of the Liquidation Preference plus the present value of the dividend payments the holders would have been entitled to through the fifth anniversary of the issue date and (2) the amount that such Preferred Stock would have been entitled to receive as if converted into common shares immediately prior to the fundamental change.

A fundamental change (“Deemed Liquidation Event”) is defined as either the direct or indirect sale, lease, transfer, conveyance or other disposition of all or substantially all the properties or assets of the Company and its subsidiaries to any third party or the consummation of any transaction, the result of which is that any third party or group of third parties become the beneficial owner of more than 50 % of the voting power of the Company.

Voting Rights

The Series A Preferred Stock will vote together with the Common Shares on all matters and not as a separate class (except as specifically provided in the Certificate of Designation or as otherwise required by law) on an as-if-converted basis.

The holders of the Series A Preferred Stock will have the right to elect one member of the Board of Directors for so long as holders of the Series A Preferred Stock own in the aggregate at least 5 % of the shares of common stock on a fully diluted basis.

In addition, the holders of the Series A Preferred Stock will have the right to elect one non-voting observer to the Board of Directors for so long as they hold at least 10 % of the shares of Convertible Preferred Stock outstanding as of the date of the issue date.

Conversion Feature

The Series A Preferred Stock may be converted, at any time in whole or in part at the option of the holder into a number of shares of common stock equal to the quotient obtained by dividing the sum of the Liquidation Preference plus all accrued and unpaid dividends by the conversion price of $ 17.50 (the “Conversion Price”).

The Conversion Price is subject to adjustment in the following events:

• Stock splits and combinations

• Tender offers or exchange offers

• Distribution of rights, options, or warrants at a price per share that is less than the average of the last reported sale prices per share of Common Stock for the ten consecutive trading days

• Spin-offs and other distributed property

• Issuance of equity-linked securities at a price per share less than the conversion price

Anti-Dilution Provisions

The Series A Preferred Stock has customary anti-dilution provisions for stock splits, stock dividends, mergers, sales of significant assets, and reorganization events and recapitalization transactions or similar events, and weighted average anti-dilution protection, subject to customary exceptions for issuances pursuant to current or future equity-based incentive plans or arrangements (including upon the exercise of employee stock options).

Stockholders' Equity

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The common and preferred stock has a par value of $ 0.0001 per share.

No shares of preferred stock are issued or outstanding.

See “ Note 12.

Series A Preferred Stock ” for a description of our Series A Preferred Stock, which is the only class of preferred stock outstanding.

Each share of common stock is entitled to one vote at all meetings of stockholders.

1 unchanged sentence

The holders of common stock are also entitled to receive dividends, when, if and as declared by our board of directors, whenever funds are legally available therefore, subject to the priority rights of any outstanding preferred stock.

Registration Statement

On August 10, 2020, the Company filed a registration statement on Form S-3 (File No.

333-243728) (the “2020 S-3”), which became effective automatically upon its filing and covers an unlimited amount of securities.

The 2020 S-3 will remain effective through August 2023.

On August 14, 2020, we completed a registered underwritten public offering pursuant to the 2020 S-3 of 3,500,000 shares of the Company's $ 0.0001 par value common stock for an offering price to the public of $ 34.00 per share.

In addition, on August 27, 2020 we closed the sale of an additional 525,000 shares issuable pursuant to a fully exercised option to purchase additional shares granted to the underwriters of the offering.

The total net proceeds of the offering, including shares issued pursuant to the fully exercised option, of $ 130.1 million, net of issuance costs of $ 6.8 million, will be used for general business purposes, including the funding of future acquisitions.

There are no open outstanding security offerings at this time.

Registration Statements

On October 21, 2022 we filed a resale registration statement on Form S-3 (File No.

333-267973) (the “2022 S-3”), on behalf of the Purchaser and pursuant to the Registration Rights Agreement, which became effective on November 1, 2022 and covers (i) the issued Series A Preferred Stock and (ii) the number of shares of the Company’s common stock issuable upon conversion of such Series A Preferred Stock, which amount includes and assumes that dividends on the Series A Preferred Stock are paid by increasing the Liquidation Preference of the Series A Preferred Stock for a period of sixteen dividend payment periods from the initial issuance date.

See “ Note 12.

Series A Preferred Stock ” for further details.

Accumulated Other Comprehensive Income (Loss)

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Other comprehensive income (loss) consists primarily of foreign currency translation adjustments for subsidiaries with functional currencies other than the USD, unrealized translation gains (losses) on intercompany loans with foreign subsidiaries, and unrealized gains (losses) on interest rate swaps.

The following table shows the components of accumulated other comprehensive loss, net of income taxes, (“AOCI”) in the stockholders’ equity section on our consolidated balance sheets at the dates indicated (in thousands):

Other comprehensive loss

The following table shows the ending balance of the components of accumulated other comprehensive loss, net of income taxes, in the stockholders’ equity section on our consolidated balance sheets at the dates indicated (in thousands):

Other comprehensive income (loss)

Foreign currency translation adjustment $ ( 22,632 ) $ ( 5,657 )

Unrealized translation gain on intercompany loans with foreign subsidiaries ( 7,426 ) 2,552

Unrealized loss on interest rate swaps ( 8,409 ) ( 30,032 )

Total accumulated other comprehensive loss $ ( 11,514 ) $ ( 26,234 )

Unrealized gain (loss) on interest rate swaps 41,168 ( 8,409 )

Total accumulated other comprehensive income (loss) $ 11,110 $ ( 11,514 )

The Unrealized translation gain on intercompany loans with foreign subsidiaries as of December 31, 2022 is net of unrealized income tax expense of $ 0.4 million.

The income tax expense (benefit) allocated to each component of other comprehensive income (loss) for all other periods and components was not material.

The functional currency of our foreign subsidiaries are the local currencies.

Results of operations for foreign subsidiaries are translated in USD using the average exchange rates on a monthly basis during the year.

The assets and liabilities of those subsidiaries are translated into USD using the exchange rates in effect at the balance sheet date.

The related translation adjustments are recorded in a separate component of stockholders' equity in accumulated other comprehensive loss.

The Company had foreign currency denominated intercompany loans that were used to fund the acquisitions of foreign subsidiaries.

As of April 1, 2020 the Company amended the loan agreements to be denominated in USD.

Due to the long-term nature of the loans, the unrealized translation gains (losses) resulting from re-measurement are recognized as a component of accumulated other comprehensive income (loss).

Stock Compensation Plans

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Under both the 2010 Plan and 2014 Plan, options granted to date generally vest over a three or four year period, with a maximum term of ten years .

The Company also grants restricted stock awards (“RSAs”) which generally vest annually over a three or four year period.

The Company also grants restricted stock awards (“RSAs”) which generally vest over a three or four year period.

Shares issued upon any stock option exercise and restricted under the 2010 Plan or 2014 Plan will be issued from the Company's authorized but unissued shares.

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Total $ 41,602 $ 53,873 $ 41,692

(1) In March 2021 our former co-President and Chief Operating Officer (“COO”) resigned from his positions and entered into an advisory agreement with the Company pursuant to which he will serve as a strategic advisor to the Company through December 31, 2022.

Stock-based compensation for the twelve months ended December 31, 2021 includes $ 6.3 million related to the acceleration and deemed modification of the unvested portion of grants held by our former COO at the time of transition, even though these shares continue to vest over their existing vesting schedule through 2022.

(1) For the year ended December 31, 2021, a former executive resigned from his positions that resulted in stock-based compensation of $ 6.3 million related to the acceleration and deemed modification of the unvested portion of grants held at the time of transition.

In accordance with ASC 718, Compensation—Stock Compensation , the fair value of these awards were modified and all related expense accelerated on the date of modification as a result of the reduction in required service.

Our income tax benefits recognized from stock-based compensation arrangements in each of the periods presented were immaterial due to cumulative losses and valuation allowances.

Restricted Stock Units

Restricted Stock Units (“RSU”)

During the year ended December 31, 2022 the Company granted restricted stock units under its 2014 Stock Incentive Plan, in lieu of restricted stock awards, primarily for stock plan administrative purposes.

Restricted stock unit activity during the year ended December 31, 2021 is as follows:

Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value

Unvested balances at December 31, 2020 1,261,290 $ 39.92

Units granted 1,249,066 47.33

Units vested ( 981,812 ) 42.09

Awards forfeited ( 148,797 ) 43.60

Unvested balances at December 31, 2021 1,379,747 $ 44.69

The total fair value of restricted stock units vested during the years ended December 31, 2021, 2020 and 2019 was approximately $ 28.2 million, $ 31.0 million and $ 10.6 million , respectively.

Performance-Based Restricted Stock Units (“PRSU”)

In 2022 and 2021, fifty percent of the awards granted to our Chief Executive Officer were PRSUs.

The 2022 and 2021 PRSU agreements provide that the quantity of units subject to vesting may range from 0% to 300% of the units granted per the table below based on the Company's absolute total shareholder return (“TSR”) at the end of the eighteen month performance periods.

At the end of the performance period, the 2021 PRSU resulted in no units granted.

The following table summarizes PRSU and RSU activity during the year ended December 31, 2022 :

Number of Units Weighted-Average Grant Date Fair Value

Unvested restricted units outstanding as of December 31, 2021 1,443,284 $ 45.77

Granted 2,126,263 17.40

Vested ( 1,216,128 ) 36.29

Forfeited (1)

( 750,396 ) 32.99

Unvested restricted units outstanding as of December 31, 2022 1,603,023 $ 21.33

(1) Includes forfeited awards related to the 2021 PRSUs.

At June 30, 2022, or the end of the performance period for the 2021 PRSUs, none of the awards vested.

The total fair value of the RSUs vested during the years ended December 31, 2022, 2021 and 2020 was approximately $ 13.9 million, $ 28.2 million and $ 31.0 million, respectively.

As of December 31, 2022, $ 29.5 million of unrecognized compensation cost related to unvested restricted stock awards and restricted stock units (including performance based awards) is expected to be recognized over a weighted-average period of 1.1 years.

Performance Based Restricted Stock Units

In 2020 and 2021, 50 % of the awards made to our Chief Executive Officer were performance based restricted stock units ("PRSUs").

The PRSU agreements provide that the quantity of units subject to vesting may range from 0 % to 300 % of the units granted per the table below based on the Company's absolute total shareholder return at the end of the eighteen month performance period for each award.

Units granted per the table below are based on a 100 % target payout.

Compensation expense is recognized over the required service period of the grant and is determined based on the grant date fair value of the award and is not subject to fluctuation due to achievement of the underlying market-based target.

PRSU activity during the year ended December 31, 2021 is as follows:

PRSUs Outstanding Weighted-Average Grant Date Fair Value

Unvested balances at December 31, 2020 66,297 $ 79.72

Units granted 63,537 84.87

Incremental PRSUs (1)

Units vested ( 135,345 ) 79.72

Unvested balances at December 31, 2021 63,537 $ 84.87

(1) Represents incremental PRSUs earned and vested during the period based on absolute shareholder return achievement over 100 % of target during the performance period.

The PRSU and RSU activity table above includes PRSU units granted that are based on a 100 % target payout.

Compensation expense is recognized over the required service period of the grant.

The fair value of the RSUs is determined based on the grant date fair value of the award.

The fair value of the PRSUs is determined using the Monte Carlo simulation model and is not subject to fluctuation due to achievement of the underlying market-based target.

The total fair value of PRSUs vested during the years ended December 31, 2022, 2021 and 2020 was $ 0.0 million , $ 5.6 million and $ 0.0 million , respectively.

Restricted Stock Awards

Restricted stock activity during the year ended December 31, 2021 is as follows:

Restricted Shares

Outstanding Weighted-Average Grant Date Fair Value

Unvested balances at December 31, 2020 34,508 $ 30.13

Awards granted — $ —

Awards vested ( 34,508 ) $ 30.13

Awards forfeited — $ —

Unvested balances at December 31, 2021 — $ —

The total fair value of restricted stock awards vested during the years ended December 31, 2021, 2020 and 2019 was approximately $ 1.4 million, $ 11.7 million and $ 24.7 million, respectively.

Significant assumptions used in the Monte Carlo simulation model for the PRSUs granted during the year ended December 31, 2022 and year ended December 31, 2021 are as follows:

December 31, 2022 December 31, 2021

Expected volatility 49.5 % 53.6 %

Risk-free interest rate 0.7 % 0.1 %

Remaining performance period (in years) 1.46 1.35

Dividend yield — —

Stock Option Activity

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Outstanding at December 31, 2021 227,605 $ 9.15

Options granted — —

Options exercised ( 44,382 ) 4.32

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The aggregate intrinsic value of options exercised at December 31, 2022, 2021 and 2020, was approximately $ 0.6 million, $ 1.1 million and $ 2.3 million, respectively.

The total fair value of options vested during the years ended December 31, 2021, 2020 and 2019 was approximately $ 0.0 million , $ 0.0 million and $ 0.0 million , respectively.

All of the Company’s outstanding stock options were fully vested as of December 31, 2019.

As of December 31, 2022, there was no remaining unrecognized compensation cost related to stock options.

4 unchanged sentences

Revenue Recognition Policy

Revenues are recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services over the term of the agreement, generally when made available to the customers.

Revenue is recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services over the term of the agreement, generally when made available to the customers.

We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

Revenues are recognized net of sales credits and allowances.

Revenue is recognized net of sales credits and allowances.

Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

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Deferred commissions are reviewed for impairment whenever events or circumstances indicate their carrying value may not be recoverable consistent with the Company's long-lived assets policy as described in “ Note 2.

Summary of Significant Accounting Policies”.

No indicators of impairment were identified during the year ended December 31, 2021.

Basis of Presentation and Summary of Significant Accounting Policies ”.

No indicators of impairment of deferred commissions were identified during the year ended December 31, 2022.

The following table presents the activity impacting deferred commissions for the year ended December 31, 2022 (in thousands):

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The Company has established various international defined contribution plans and one voluntary defined contribution retirement plan qualifying under Section 401(k) of the Internal Revenue Code.

The Company made no contributions to the 401(k) plans for the years ended December 31, 2021, 2020 and 2019.

The Company made no material contributions to the 401(k) plans for the years ended December 31, 2022, 2021 and 2020.

Segment and Geographic Information

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Related Party Transactions

The Company does not have any material related party transactions to report for the year ended December 31, 2022.

We are a party to two agreements, as detailed below, with companies controlled by ESW Capital LLC (“ESW”), a non-management investor in the Company which historically held more than 5 % of the Company's capital stock.

3 unchanged sentences

The effective date of the amendment was January 1, 2017.

The Company has an outstanding purchase commitment in 2022 for software development services pursuant to a technology services agreement in the amount of $ 10.0 million.

For years after 2022, the purchase commitment amount for software development services will be equal to the prior year purchase commitment increased (decreased) by the percentage change in total revenue for the prior year as compared to the preceding year.

During the years ended December 31, 2021, 2020 and 2019, the Company purchased software development services pursuant to a technology services agreement with DevFactory, in the amount of $ 9.6 million, $ 7.4 million, and $ 4.9 million, respectively.

At December 31, 2021 and December 31, 2020, amounts included in accounts payable owed to this company totaled $ 0.0 million and $ 0.0 million , respectively.

During the years ended December 31, 2021 and 2020, the Company purchased software development services pursuant to a technology services agreement with DevFactory, in the amount of $ 9.6 million and $ 7.4 million, respectively.

At December 31, 2021, amounts included in accounts payable owed to this company totaled $ 0.0 million .

• The Company purchased services from Crossover, Inc.

(“Crossover”), a company controlled by ESW Capital, LLC (a non-management investor) of approximately $ 4.0 million, $ 4.8 million, and $ 3.5 million during the years ended December 31, 2021, 2020 and 2019, respectively.

(“Crossover”), a company controlled by ESW Capital, LLC (a non-management investor) of approximately $ 4.0 million and $ 4.8 million during the years ended December 31, 2021 and 2020.

Crossover provides a proprietary technology system to help the Company identify, screen, select, assign, and connect with necessary resources from time to time to perform technology software development and other services throughout the Company, and track productivity of such resources.

While there are no purchase commitments with Crossover, the Company will continue to use their services in 2022.

As of December 31, 2021 and December 31, 2020 amounts included in accounts payable and accrued liabilities owed to this company totaled $ 0.9 million and $ 0.6 million, respectively.

The Company previously had an arrangement with a former subsidiary, Visionael Corporation ("Visionael"), to provide management, human resource, payroll and administrative services.

McDonald, the Company's Chief Executive Officer and Chairman of the Board, beneficially holds approximately 26.18 % interest in Visionael.

In connection with its arrangement with Visionael, the Company has provided advances to Visionael to help cover short term working capital needs.

Visionael ceased operations effective July 31, 2021 and the Company did not receive any fees or pay advances to Visionael during the year ended December 31, 2021.

Fees earned from this arrangement during the year ended December 31, 2020 and 2019 were $ 45,000 , and $ 60,000 , respectively.

As of December 31, 2021 and December 31, 2020 advances to Visionael included in Prepaid and other on the Company’s consolidated balance sheets totaled $ 0.0 million and $ 0.4 million, respectively, net of allowance for credit losses.

During the years ended December 31, 2021 and 2020, the Company recognized allowance for credit losses of $ 0.4 million and $ 0.3 million, respectively, against the remaining outstanding balance.

As of December 31, 2021, amounts included in accounts payable and accrued liabilities owed to this company totaled $ 0.9 million.

Subsequent Events

On January 7, 2022, the Company entered into an agreement to purchase Objectif Lune Inc., a corporation organized under the laws of Quebec (“Objectif Lune”), certain affiliated companies (the “Affiliates”) and certain holding companies associated with the Sellers (the “HoldCos” and together with Objectif Lune and the Affiliates, the “Companies”) pursuant to a Share Purchase Agreement dated January 7, 2022, by and among Upland, 9457-5032 Quebec Inc., a corporation existing under the laws of Quebec and a wholly-owned subsidiary of Upland, the Companies, those persons listed in the share purchase agreement as Sellers, and 9070-7282 Québec Inc.

In connection with this acquisition, Upland also acquired certain assets from a United States based reseller of Objectif Lune’s products.

Objectif Lune will be integrated into and expand on the functionality offered in Upland’s document workflow product suite.

The aggregate consideration paid for the Companies and the US reseller assets was $ 29.0 million in cash at closing (net of cash acquired), paid out of cash on hand, and a $ 5.3 million cash holdback payable in 12 months (subject to indemnification claims).

On February 23, 2022, the Company entered into an agreement to purchase BA-Insight, Inc., a Delaware corporation (“BA”), pursuant to an Agreement and Plan of Merger dated February 23, 2022 (“Merger Agreement”), by and among Upland, Brontes Acquisition Corporation (“Merger Sub”) and Fortis Advisors LLC, in its capacity as a representative of the Stockholders.

Pursuant to the Merger Agreement and the Delaware General Corporation Law, Merger Sub merged with and into BA with BA continuing as the surviving company of the Merger and wholly owned subsidiary of the Company.

The purchase price paid for Brontes was $ 33.4 million in cash at closing (net of cash acquired), paid out of cash on hand, and a $ 0.6 million cash holdback payable payable in 15 months (subject to indemnification claims).

The purchase price allocation for the 2022 acquisitions is preliminary as the Company has not obtained and evaluated all of the detailed information necessary to finalize the opening balance sheet amounts in all respects.

Management expects to finalize its purchase price allocation for these acquisition in the last half of 2022.

In accordance with ASC 855, Subsequent Events , which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events and transactions that occurred after December 31, 2021 through the date the consolidated financial statements were available for issuance.

During this period the Company did not have any material reportable subsequent events other than the acquisitions disclosed above.

On February 21, 2023, the Company entered into that certain Amendment No.1 to the Credit Facility (the “Amendment”), which amends the Credit Facility.

The Amendment amended the interest rate benchmark from the LIBOR to SOFR.

Other than the foregoing, the material terms of the Credit Agreement remain unchanged.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data