What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-11 · 296 added, 316 removed, 367 unchanged (63% of the section changed)

2 unchanged sentences

(In thousands, except shares, per share and par values)

As of June 30, 2021

As of September 30, 2021

As of December 31, 2020

1 unchanged sentence

Cash and cash equivalents

Accounts receivable, net of allowance of $ 2,066 and $ 2,207 as of June 30, 2021

and December 31, 2020, respectively

December 31, 2020, respectively

Prepaid expenses

4 unchanged sentences

Intangible assets, net

Deferred tax assets,

Deferred tax assets, net

Other non-current

16 unchanged sentences

Mezzanine equity:

Redeemable convertible preferred stock $ 0.001 per share par value, up to

60,137,979 shares authorized and 39,223,194

shares issued and outstanding as

of December 31, 2020

authorized and 39,223,194 shares issued and outstanding as of December 31, 2020

Stockholders’ equity / (deficit):

ommon stock $ 0.001 per share value, up to 204,220,800 shares

authorized, 112,012,693 shares

issued and outstanding as of December 31,

tock, 8,195,464 shares repurchased at a weighted average

price of $ 2.86 per share

tock $ 0.001 per share par value, up to 3,400,000 shares

authorized, 3,054,318 shares issued and outstanding as of December 31, 2020

Class A common stock, par value $ 0.001 per share par value, up to

3,750,000,000 shares authorized and

152,270,401 shares issued and

outstanding as of June 30, 2021

Class B common stock, par value $ 0.001 , up to 50,000,000 shares authorized and

37,856,095 shares issued and

outstanding as of June 30, 2021

112,012,693 shares issued and outstanding as of December 31, 2020

3,054,318 shares issued and outstanding as of December 31, 2020

3,750,000,000

authorized and 155,022,167 shares issued and outstanding as of September 30, 2021

37,856,095 shares issued and outstanding as of September 30, 2021

Additional paid-in

6 unchanged sentences

(In thousands, except share and per share amounts)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Operating expenses:

7 unchanged sentences

Total operating expenses

Loss from operations

(Loss) / income from operations

Interest expense

Other (income s

) / expenses, net

Other expenses / (income), net

Gain on extinguishment of debt

Change in fair value of warrants and derivative liabilities

Total other (income s

Total other expenses

Loss before income taxes

Income tax provision / (benefit)

Other comprehensive loss:

Other comprehensive (loss) / income :

Foreign currency translation adjustment

5 unchanged sentences

Diluted loss per share

Weighted average number of shares used to compute net loss per share

The Company recorded the total stock-based

compensation expense as follows:

Three months ended June 30,

Six months ended June 30,

(1) The Company recorded the total stock-based compensation expense as follows:

Three months ended September 30,

Nine months ended September 30,

Cost of revenues (excluding depreciation and amortization)

5 unchanged sentences

(In thousands, except shares)

Comprehensive

Redeemable Convertible

1 unchanged sentence

Treasury Stock

Comprehensive

Balance as of January 1, 2021

( 8,195,464 )

Shares issued in connection with

Restricted stock grants

3 unchanged sentences

( 17,853,416 )

Foreign currency translation adjustment

Balance as of March 31, 2021

( 8,195,464 )

Conversion of Series A and Series B common shares into Class A and Class B common shares, respectively

common shares

into Class A and Class

( 96,830,836 )

( 3,054,318 )

Conversion of redeemable convertible preferred stock to Class A Common Stock

Conversion of redeemable

( 39,223,194 )

Warrants exercised

Shares issued in connection with the Initial Public Offering

Warrants and options exercised

Equity issuance cost

5 unchanged sentences

( 2,334,753 )

Restricted stock units vesting

Restricted stock units

Stock-based compensation

2 unchanged sentences

( 8,195,464 )

Comprehensive

Options exercised

Shares repurchased

Restricted stock grants

Restricted stock forfeitures

Stock-based compensation

settlement of a

Foreign currency translation adjustment

Balance as of September 30, 2021

( 8,195,464 )

Redeemable Convertible

1 unchanged sentence

Treasury Stock

Balance as of January 1, 2020

Comprehensive

( 8,195,464 )

Shares issued in connection with an

Restricted stock grants

1 unchanged sentence

Stock-based compensation

Foreign currency translation adjustment

Balance as of March 31, 2020

3 unchanged sentences

Stock-based compensation

Foreign currency translation adjustment

Balance as of June 30, 2020

( 8,195,464 )

Restricted stock grants

Restricted stock forfeitures

Stock-based compensation

Balance as of September 30, 2020

( 8,195,464 )

See accompanying notes to condensed unaudited consolidated financial statements.

1 unchanged sentence

(In thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortizatio n

Depreciation and amortization

Stock-based compensation

Deferred income taxes

3 unchanged sentences

working capital (net of acquisitions):

Account receivable

Accounts receivable

Prepaid expenses

17 unchanged sentences

Repurchase of restricted stock

Exercise of warrants

Exercise of warrants and

Repayments against the credit facilities

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash, beginning of period

Cash and cash equivalents and restricted cash, end of period

Supplemental cash flow disclosures including non-cash activities:

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental cash flow disclosures including non-cash

Cash paid for interest

Cash paid for income taxes, net

Contingent consideration liability established in connection with acquisitions

Liability established in connection with acquisitions

Shares issued in connection with acquisitions and other agreements

1 unchanged sentence

settlement of warrants and derivative liabilities

Capitalized stock-based compensation expense as website and software development costs

Capitalized stock-based compensation as website and software development costs

consideration for website and software development costs

See accompanying notes to condensed unaudited consolidated financial statements.

4 unchanged sentences

Zeta Global Holdings Corp., a Delaware Corporation (“Zeta Global Holdings”), and Zeta Global Corp., the operating company of Zeta Global Holdings and a Delaware Corporation (“Zeta” individually, or collectively with Zeta Global Holdings and its consolidated entities, as context dictates, the “Company”), is a marketing technology company that combines proprietary data, artificial intelligence and software to create a technology platform that enables marketers to acquire, retain and grow customer relationships.

The Company’s technology platform powers data-driven

marketing programs for enterprises across a wide range of industries and utilizes all digital distribution channels including email, search, social, mobile, display and connected TV (“CTV”).

incorporated and began operations in October 2007.

The Company’s technology platform powers data-driven marketing programs for enterprises across a wide range of industries and utilizes all digital distribution channels including email, search, social, mobile, display and connected TV (“CTV”).

Zeta was incorporated and began operations in October 2007.

Initial Public Offering (“IPO”)

On June 9, 2021, the Company’s registration statement on

On June 9, 2021, the Company’s registration statement on Form S-1

relating to the initial public offering (“IPO”) of its Class A common stock was declared effective by the Securities and Exchange Commission (“SEC”).

In connection with the IPO, on June 14, 2021, the Company issued and sold 14,773,939

shares of Class A common stock at a public offering price of $ 10

per share for net proceeds of $ 132.7

million, after deducting underwriters’ discounts and commissions (but excluding other offering expenses and reimbursements of $ 6.2

The Company used all of the proceeds from the IPO (i) to satisfy the tax withholding and remittance obligations of holders of its outstanding restricted stock and restricted stock units that ves

in connection with th e

offering by repurchasing and cance ling

shares of Class A restricted stoc k,

shares of Class B restricted stock and

restricted stock units (the “Tax Withholding Repurchase”);

(ii) to repurchase and

shares of Class A restricted stock and 88,518

restricted units at the election of certain holders (the “Class A Stock Repurchase”);

(iii) to repurchase and cancel

shares of Class B common stock and 342,510

shares of restricted Class B common stock from its Chief Executive Officer and Co-Founder,

In connection with the IPO, on June 14, 2021, the Company issued and sold 14,773,939 shares of Class A common stock at a public offering price of $ 10 per share for net proceeds of $ 132.7 million, after deducting underwriters’ discounts and commissions (but excluding other offering expenses and reimbursements of $ 6.2 million).

The Company used all of the proceeds from the IPO (i) to satisfy the tax withholding and remittance obligations of holders of its outstanding restricted stock and restricted stock units that vested in connection with the offering by repurchasing and cancelling 1,799,650 shares of Class A restricted stock, 197,490 shares of Class B restricted stock and 92,671 restricted stock units (the “Tax Withholding Repurchase”);

(ii) to repurchase and cancel 2,158,027 shares of Class A restricted stock and 88,518 restricted units at the election of certain holders (the “Class A Stock Repurchase”);

(iii) to repurchase and cancel 1,767,692 shares of Class B common stock and 342,510 shares of restricted Class B common stock from its Chief Executive Officer and Co-Founder,

David Steinberg (the “Class B Stock Repurchase”);

and (iv) for general corporate purposes, including working capital, operating expenses and capital expenditures, although the Company has not designated any specific uses.

and (iv) for general corporate purposes, including working capital, operating expenses and capital expenditures, although the Company did not designate any specific uses.

The Company may also use a portion of the net proceeds to fund possible investments in, or acquisitions of, complementary businesses, services or technologies.

The Company has no current agreements or commitments with respect to any investment or acquisition.

Reorganization Transactions

1 unchanged sentence

As per the amended and restated certificate of incorporation, the authorized capital stock consists of 3,750,000,000 shares of Class A common stock, par value $ 0.001 per share, 50,000,000 shares of Class B common stock, par value $ 0.001 per share, and 200,000,000 shares of preferred stock, par value $ 0.001 per share.

The number of shares outstanding as of June 30, 2021 was

152,270,401 shares of Class A common stock and

37,856,095 shares of Class B common stock, based on stock outstanding as of March 31, 2021, after giving effect to:

the conversion of 39,223,194 outstanding shares, and unpaid dividends on such outstanding shares, of its

Series A preferred stock, Series B-1 preferred stock, Series B-2 preferred stock, Series C preferred stock, Series E preferred stock, Series E-1 preferred stock, Series F preferred stock, Series F-1 preferred stock, Series F-2 preferred stock, Series F-3 preferred stock and Series F-4 preferred stock into

73,813,713 shares of its

Class A common stock immediately prior to the completion of the IPO (the “Preferred Conversion”);

8,360,331 shares of its

Class A common stock issued in connection with the exercise of outstanding warrants (the “Warrant Exercise”);

the reclassification of 3,054,318 shares of its

existing Series B common stock and 26,722,208 shares of Series A common stock into shares of Class A common stock and the reclassification of 70,108,628 shares of restricted Series A common stock into shares of restricted Class A common stock (of which 8,734,893 have vested in connection with the IPO and 4,138,866 shares repurchased by the Company);

The number of shares outstanding as of June 14, 2021 was 152,270,401 shares of Class A common stock and 37,856,095 shares of Class B common stock, based on stock outstanding as of March 31, 2021, after giving effect to:

the conversion of 39,223,194 outstanding shares, and unpaid dividends on such outstanding shares, of its Series A preferred stock, Series B-1

preferred stock, Series B-2

preferred stock, Series C preferred stock, Series E preferred stock, Series E-1

preferred stock, Series F preferred stock, Series F-1

preferred stock, Series F-2

preferred stock, Series F-3

preferred stock and Series F-4

preferred stock into 73,813,713 shares of its Class A common stock immediately prior to the completion of the IPO (the “Preferred Conversion”);

8,360,331 shares of its Class A common stock issued in connection with the exercise of outstanding warrants (the “Warrant Exercise”);

the reclassification of 3,054,318 shares of its existing Series B common stock and 26,722,208 shares of Series A common stock into shares of Class A common stock and the reclassification of 70,108,628 shares of restricted Series A common stock into shares of restricted Class A common stock (of which 8,734,893 have vested in connection with the IPO and 4,138,866 shares were repurchased by the Company);

the exchange of 39,463,787 shares of Class A common stock (after giving effect to the Preferred Conversion and the Reclassification) held by the Co-Founder

and Chief Executive Officer and his affiliates for an equivalent number of shares of Class B common stock, which is effective upon the filing and effectiveness of our amended and restated certificate of incorporation pursuant to the terms of the exchange agreement entered into between its

and Chief Executive Officer and his affiliates for an equivalent number of shares of Class B common stock, which went into effect upon the filing and effectiveness of our amended and restated certificate of incorporation pursuant to the terms of the exchange agreement entered into between its Co-Founder

and Chief Executive Officer and his affiliates and us (the “Class B Exchange”);

the repurchase of an aggregate of 4,138,866 shares of restricted Class A common stock and 2,307,692 shares of Class B common stock (of which 540,000 is restricted Class B common stock) as a result of the Stock Repurchase and the Tax Withholding Repurchase.

the repurchase of an aggregate of 4,138,866 shares of restricted Class A common stock and 2,307,692 shares of Class B common stock (of which 540,000 shares are restricted Class B common stock) as a result of the Stock Repurchase and the Tax Withholding Repurchase.

Basis of Presentation and Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 10-01

The accompanying condensed unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 10-01

of Regulation S-X.

Accordingly, the unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements.

Accordingly, the condensed unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements.

December 31, 2020 consolidated financial statements data included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements.

In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of June 30, 2021, the results of operations, comprehensive income/(loss), stockholders’ equity, and cash flows for the three-month and six-month

periods ended June 30, 2021 and 2020.

The results of operations for the three-month and six-month periods ended June 30, 2021 and 2020 are not necessarily indicative of the results to be expected for the full year.

In the opinion of the Company’s management, the accompanying condensed unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2021, the results of operations, comprehensive income/(loss), stockholders’ equity, and cash flows for the three-month and nine-month periods ended September 30, 2021 and 2020.

The results of operations for the three-month and nine-month periods ended September 30, 2021 and 2020 are not necessarily indicative of the results to be expected for the full year.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenues and expenses reported during the period.

6 unchanged sentences

Revenue Recognition

Revenue arises primarily from the Company’s technology platform via subscription fees, volume-based

utilization fees and fees for professional services designed to maximize the customer usage of technology.

Revenues are recognized when control of these services is transferred to the customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

Sales and other taxes collected by the Company concurrent with revenue-producing

activities are excluded from revenues.

Revenue arises primarily from the Company’s technology platform via subscription fees, volume-based utilization fees and fees for professional services designed to maximize the customer usage of technology.

Revenues are recognized when control of these services is transferred to the customers, in an amount that reflects the consideration that is expected to be entitled to an exchange for the services.

Sales and other taxes collected by the Company in concurrence with the revenue-producing activities are excluded from revenues.

Contract assets and liabilities

Contract assets represent revenue

recognized for contracts that have not been invoiced to customers.

Total contract assets were $ 2,894 and $ 1,709 as of June 30, 2021 and December 31, 2020, respectively, and are included in the account receivables, net, in the condensed unaudited consolidated balance sheets.

Contract liabilities consists of deferred

revenues that represents amounts billed to the customers in excess of the revenue recognized.

Contract assets represent revenue recognized for contracts that have not been invoiced to customers and also certain sales commissions that are deferred and to be recognized over the expected term of contracts for which such commissions are paid.

Total contract assets were $ 2,507 and $ 1,748 as of September 30, 2021 and December 31, 2020, respectively, and are included in the account receivables, net, in the condensed unaudited consolidated balance sheets.

Contract liabilities consists of deferred revenues that represent amounts billed to the customers in excess of the revenue recognized.

Deferred revenues are subsequently recorded as revenues when earned in accordance with the Company’s revenue recognition policies.

During the six months ended on June 30, 2021 and 2020, the Company billed and collected $ 22,119 and $ 11,589 in advance, respectively and recognized $ 22,559 and $ 11,143 , respectively as revenues out of those advance receipts.

As of June 30, 2021 and December 31, 2020, the deferred revenues are $

and $ 4,053 , respectively.

During the nine months ended September 30, 2021 and 2020, the Company billed and collected $ 34,175 and $ 20,760 in advance, respectively and recognized $ 35,489 and $ 20,576 , respectively as revenues.

As of September 30, 2021 and December 31, 2020, the deferred revenues are $ 2,739 and $ 4,053 , respectively.

Remaining Performance Obligations

7 unchanged sentences

Revenues by delivery channels / platforms are based on whether the customer requirements necessitate integration with platforms or delivery channels not owned by the Company.

When the Company generates revenues entirely through the Company platform, the Company considers it Direct Platform Revenue .

When the Company generates revenue by leveraging its platform’s integration with third parties, it is considered Integrated Platform Revenue.

The following table summarizes disaggregation for the six months ended June 30, 2021, and June 30, 2020.

Six months ended

June 30, 2021

June 30, 2020

When the Company generates revenues entirely through the Company platform, the Company considers it to be direct platform revenues.

When the Company generates revenue by leveraging its platform’s integration with third parties, it is considered integrated platform revenues.

The following table summarizes disaggregation for the three and nine months ended September 30, 2021, and September 30, 2020.

Direct platform revenues

5 unchanged sentences

directors, is based on the estimated fair value of the awards on the date of grant or date of modification of such grants.

The Company accounts for all stock options and restricted shares using a fair value-based method.

The Company accounts for all stock options and restricted shares granted prior to the IPO using a fair value-based method.

The fair value of each stock option granted to employees is estimated on the date of the grant using the Black-Scholes-Merton option pricing model, and the related stock-based compensation expense is recognized over the expected life of the option.

The fair value of the restricted shares is based on the Company’s stock price as of the date of the grants.

The fair value of the restricted shares granted post-IPO

is based on the Company’s closing stock price as of the day prior to the date of the grants.

The Company accounts for the forfeitures, as they occur.

Since the Company’s restricted stock and restricted stock units have both performance condition (i.e.

initial public offering) and a service condition, the Company uses the graded vesting attribution method to amortize the stock-based compensation expense.

The Company operates

one operating segment

Since the Company’s restricted stock and restricted stock units had both a performance condition (i.e.

initial public offering) and a service condition, the Company uses the graded vesting attribution method to amortize the stock-based compensation.

The Company operates as one operating segment.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance.

1 unchanged sentence

Since it operates as one operating segment, all required financial segment information can be found in the condensed unaudited consolidated financial statements.

assets by geographic region are based on the physical location of the customers being served or the assets are as follows:

Revenues and long-lived assets by geographic region are based on the physical location of the customers being served or the assets and are as follows:

Revenues by geographical region consisted of the following;

Six months ended June 30

Three months ended September 30

Nine months ended September 30

International

Total revenues

Total long-lived

assets by geographical region consisted of the following;

June 30, 2021

Total long-lived assets by geographical region consisted of the following;

September 30, 2021

December 31, 2020

2 unchanged sentences

Concentration of Credit Risk

No customer accounted for more than 10% of the Company’s total revenues during the period ended June 30, 2021 and year ended December 31, 2020.

Financial instruments

that potentially

subject the Company to concentration risk consist primarily of accounts receivable from customers.

As of June 30, 2021 and December 31, 2020, the Company had receivables from one of its customers which represents

of the total account receivables balance as of that date, respectively.

No customer accounted for more than 10% of the Company’s total revenues during the period ended September 30, 2021 and year ended December 31, 2020.

Financial instruments that potentially subject the Company to concentration risk consist primarily of accounts receivable from customers.

As of September 30, 2021 , there was no customer that represented more than 10% of accounts receivables balance as of that date.

December 31, 2020, the Company had receivables from one of its customers ,

which represented

14 % of the total account receivables balance as of that date.

The Company continuously monitors whether there is an expected credit loss arising from this customer, and as of the year ended December 31, 2020, no provision was warranted or recorded.

1 unchanged sentence

The details of intangible assets and related accumulated amortization are set forth below:

As of June 30, 2021

As of September 30, 2021

As of December 31, 2020

3 unchanged sentences

Total intangible assets

Amortization expense

was $ 4,948 and $ 9,028 for the three and six months ended June 30, 2021, respectively, and $ 3,913 and $ 7,841 for the three and six months ended June 30, 2020, respectively.

Weighted average useful

life of the unamortized intangibles as of June 30, 2021 was 2.23 years.

Based on the amount of intangible assets subject to amortization, as of June 30, 2021, the Company’s estimated future amortization expense over the next five years and beyond are as follows:

Amortization expense was $ 5,051 and $ 14,079 for the three and nine months ended September 30, 2021, respectively, and $ 3,913 and $ 11,754 for the three and nine months ended September 30, 2020, respectively.

Weighted average useful life of the unamortized intangibles as of September 30, 2021 was 2.10 years.

Based on the amount of intangible assets subject to amortization, as of September 30, 2021, the Company’s estimated future a m

ortization expense over the next five years and beyond are as follows:

Total estimated future amortization expense is as follows:

As of June 30, 2021

As of September 30, 2021

Year ended December 31,

Remaining six months of 2021

Remaining three months of 2021

2026 and thereafter

4 unchanged sentences

Foreign currency translation

Balance as of June 30, 2021

There were no events during the three months ended June 30, 2021 to which an impairment analysis would be warranted.

Balance as of September 30, 2021

There were no events during the three months ended September 30, 2021 to which an impairment analysis would be warranted.

The Company’s acquisitions have been accounted for under the purchase method of accounting.

The total purchase price of each acquisition was allocated to the fair value of assets acquired and liabilities assumed based on their fair values at the acquisition date, with any excess recorded as goodwill.

The Company agreed to pay a portion of the purchase price for certain acquisitions in the form of contingent purchase price, the unpaid amounts of these liabilities are included in the acquisition related liabilities on the condensed unaudited consolidated balance sheets as of June 30, 2021 and December 31, 2020.

March 1, 2021 , the Company entered into a merger Agreement with the sellers of

Kinetic Data Solutions, LLC (“Kinetic”) , an entity controlled by the Chief Executive Officer of the Company, to purchase all of the issued and outstanding stock of Kinetic.

The Company agreed to pay a portion of the purchase price for certain acquisitions in the form of contingent purchase price and the unpaid amounts of these liabilities are included in the acquisition related liabilities on the condensed unaudited consolidated balance sheets as of September 30, 2021 and December 31, 2020.

On March 1, 2021 , the Company entered into a merger agreement with the sellers of Kinetic Data Solutions, LLC (“Kinetic”) , an entity controlled by the Chief Executive Officer of the Company, to purchase all of the issued and outstanding stock of Kinetic.

The fair value of the purchase consideration was estimated at $ 2,762 .

The Company agreed to issue

306,749 shares of Series A common stock with a fair value of $

2,738 and certain

based on the operating performance of the acquired business after the closing date.

was calculated based on the profits of the acquired business and the Company shall pay

10 % of such profits for a period of three years from the acquisition date in cash and in restricted shares of the Company.

The Company agreed to issue 306,749 shares of Series A common stock with a fair value of $ 2,738 and certain earn-outs based on the operating performance of the acquired business after the closing date.

was calculated based on the operating performance of the acquired business and the Company shall pay such earn-out

for a period of three years from the acquisition date in cash and in restricted shares of the Company.

The Company has recorded this transaction based on the preliminary purchase price allocation.

Accordingly, the Company recognized $

1,600 as customer relationships intangibles, $

1,578 as goodwill and $

416 as deferred tax liabilities associated with this acquisition.

March 3, 2021 , the Company entered into a Stock Purchase Agreement with the sellers of Vital Digital, Corp (“Vital”) to purchase all of the issued and outstanding shares of common stock of Vital.

Accordingly, the Company recognized $ 1,600 as customer relationships intangibles, $ 1,578 as goodwill and $ 416 as deferred tax liabilities associated with this acquisition.

On March 3, 2021 , the Company entered into a stock purchase agreement with the sellers of Vital Digital, Corp (“Vital”) to purchase all of the issued and outstanding shares of common stock of Vital.

The fair value of the purchase consideration for this transaction is determined as $ 7,894 , with $ 3,400 in cash, 306,748 shares of Series A common stock with a fair value of $ 2,710 , $ 1,206 in earnouts based on the operating performance of the acquired business after the closing date, and $ 578 in cash holdback.

1 unchanged sentence

Accordingly, the Company has recognized $ 5,320 as customer relationship intangibles, $ 3,910 as goodwill, $ 1,385 as deferred tax liability and $ 49 as other net assets associated with this acquisition.

Caivis, one of the Company’s related parties, owned 5 % interest in Vital as of the effective date of this stock purchase agreement (Refer to Note 1 3

for a description of relationship with

The revenues and earnings from these acquisitions

are not significant to the Company’s

condensed unaudited consolidated financial statements for the three months and six months ending June 30, 2021.

Goodwill acquired by the Company in these acquisitions is deductible for tax purposes.

Caivis, one of the Company’s related parties, owned 5 % interest in Vital as of the effective date of this stock purchase agreement (refer to Note 13 for a description of relationship with Caivis).

The revenues and earnings from these acquisitions are not significant to the Company’s condensed unaudited consolidated financial statements for the three months and nine months ending September 30, 2021.

Goodwill acquired by the Company in these acquisitions is not deductible for tax purposes.

The pro forma results of the Company as if these acquisitions had taken place on the first day of 2020 were not materially different from the amounts reflected in the accompanying condensed unaudited consolidated financial statements.

The Company has recorded the earn-outs

related to these acquisitions based on the fair value determined on the date of the acquisition, however the Company believes that the actual payouts for these acquisitions could be lower than such recorded fair values.

The Company has recorded the earn-outs related to these acquisitions based on the fair value determined on the date of the acquisition, however the Company believes that the actual payouts for these acquisitions could be different from such recorded fair values.

Acquisition Related Liabilities

The following is a summary of acquisition

related liabilities:

The following is a summary of acquisition related liabilities:

Balance as of January 1, 2021

1 unchanged sentence

Change in fair value of earn-out

Balance as of June 30, 2021

The changes in the fair value of the acquisition related liabilities are included in other income / (expenses) on the condensed unaudited consolidated statements of operations and comprehensive loss.

The Company is a party to a

litigation matter in relation to certain acquisition related liabilities for its eBay CRM acquisition dated November 2, 2015.

The Company has accrued the full amount that it expects to pay to settle this liability, on its condensed unaudited consolidated balance sheets as of June 30, 2021.

Further, the Company has provided a letter of credit amounting to $ 6,028 to the sellers, against these payable amounts.

Balance as of September 30, 2021

The changes in the fair value of the acquisition related liabilities are included in other expenses / (income) on the condensed unaudited consolidated statements of operations and comprehensive loss.

The Company is a party to a litigation matter in relation to certain acquisition related liabilities for its eBay CRM acquisition dated November 2, 2015.

The amounts payable for eBay CRM has been contested by the Company in the court of law.

In view of the numerous legal, technical and factual issues involved in these lawsuits, the Company may settle these liabilities in any amount lower than the book value as of June 30, 2021.

On October 14, 2021, the Company paid a portion of the liability for $ 9,786 to the sellers of eBay CRM business in satisfaction of a judgment, which was being accrued at $ 9,137 .

As such, the Company accrued an additional amount of $ 649 during the three months ending on September 30, 2021 such that the Company has full accrual for the payment relating to this liability as of September 30, 2021.

Further, the Company has provided a letter of credit amounting to $ 6,028 , against these payable amounts, which is in the process of being

cancelled upon satisfaction of the judgment.

Another portion of the liability, which stands at $ 8,000 , is still being contested by the Company and in view of the numerous legal, technical and factual issues involved in these lawsuits, the Company may resolve the remaining liabilities in any amount lower than the accruals as of September 30, 2021.

Credit Facilities

The Company’s long-term

borrowings are as follows:

As of June 30, 2021

The Company’s long-term borrowings are as follows:

As of September 30, 2021

As of December 31, 2020

6 unchanged sentences

Long-term borrowings

In July 2016, the Company

entered into a revolving credit, guaranty and security agreement with a financial institution and subsequently amended the agreement in May 2017.

In July 2016, the Company entered into a revolving credit, guarantee and security agreement with a financial institution and subsequently amended the agreement in May 2017.

The agreement provides for a maximum revolving advance amount of $ 50,000 .

Interest on the outstanding balance is charged at an annual rate of the financial institution’s Prime lending rate (“PLR”)+ 1.25 % or London Interbank Offered Rate (“LIBOR”)+ 2.25 %, as elected by the Company.

Interest on the outstanding balance is charged at an annual rate of the financial institution’s Prime Lending Rate (“PLR”)+ 1.25

% or London Interbank Offered Rate (“LIBOR”)+ 2.25

%, as elected by the Company.

As of December 31, 2020, the outstanding balance of the revolving loan was $ 42,600 .

In addition, the Company also had an outstanding a letter of credit amounting to $ 7,272 against the available revolving credit facility as of December 31, 2020.

In addition, the Company also had an outstanding letter of credit amounting to $ 7,272 against the available revolving credit facility as of December 31, 2020.

The credit facility was fully secured by the financial institution with a first lien on the Company’s account receivables.

The Senior Secured Credit Facility, availed by the Company on February 3, 2021, was used to fully repay and terminate this Credit Agreement with a total payoff amount of $ 42,792 .

In July 2015, the Company

entered into a term loan facility with a financial institution that was also invested in the Company’s Series E-1

In July 2015, the Company entered into a term loan facility with a financial institution that was also invested in the Company’s Series E-1

redeemable convertible preferred stock and subsequently invested in the Company’s Series F redeemable convertible preferred stock.

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Interest expense for the term loan is calculated using a LIBOR rate of no lower than 1.0 %.

The extensions of credit may be used solely to (a) refinance indebtedness, (b) to pay any expenses associated with this line of credit agreement, (c) for working capital, capital expenditures, acquisitions and redemptions of equity interests and (d) for other general corporate purposes and shall not be used for purchases of margin stock.

The Company was

required to repay the principal balance and any unpaid accrued interest on the loans at the maturity date of July 29, 2022.

The extensions of credit may be used solely (a) to refinance indebtedness, (b) to pay any expenses associated with this line of credit agreement, (c) for working capital, capital expenditures, acquisitions and redemptions of equity interests and (d) for other general corporate purposes and shall not be used for purchases of margin stock.

The Company will be required to repay the principal balance and any unpaid accrued interest on the loans at the maturity date of July 29, 2022.

The financial institution had a second lien on the account receivables of the Company and first lien on all the other assets.

The Senior Secured Credit Facility, availed by the Company on February 3, 2021, was used to fully repay and terminate this Credit Agreement with a total payoff amount of $ 137,953 .

On February 3, 2021, the

Company entered into a $ 222,500 Senior Secured Credit Facility (“Senior Secured Credit Facility”) with a syndicate of financial institutions and institutional lenders led by BofA Securities, Inc., as a lead arranger and sole bookrunner, and Bank of America, N.A., as sole administrative agent.

The Senior Secured Credit

Facility is for up to $ 222,500 , which consists of (i) $ 73,750 initial Revolving Facility that was drawn at closing date, (ii) $ 111,250 Term Facility that was drawn at closing date, and (iii) $ 37,500 in incremental Revolving Facility commitment that remains undrawn.

In addition, the Company has an outstanding letter of credit amounting to $ 7,272 against the available revolving credit facility.

The credit facility was fully secured by the financial institution with a first lien on the Company’s account receivables.

Interest on the current outstanding

balances is payable quarterly and calculated using a LIBOR rate of no lower than LIBOR+ 2.125 %

and no higher than LIBOR+ 2.625 %

based on the Company’s consolidated net leverage ratio stated in the credit agreement.

The extensions of credit may be used solely to (a) refinance existing indebtedness, (b) to pay any expenses associated with this line of credit agreement, (c) for acquisitions, and (d) for other general corporate purposes.

3, 2021, the Company entered into a $

222,500 Senior Secured Credit Facility (“Senior Secured Credit Facility”) with a syndicate of financial institutions and institutional lenders led by BofA Securities, Inc., as a lead arranger and sole bookrunner, and Bank of America, N.A., as sole administrative agent.

The Senior Secured

Credit Facility is for up to $ 222,500 , which consists of (i) a $ 73,750 initial Revolving Facility that was drawn at closing date, (ii) a $ 111,250 Term Facility that was drawn at closing date, and (iii) a $ 37,500 in incremental Revolving Facility commitment that remains undrawn.

In addition, the Company has an outstanding letter of credit amounting to $ 7,272

against the available revolving credit facility, of which a letter of credit amounting to $6,028 against the amount payable to eBay is in the process of being

cancelled (refer to Note 6).

The credit facility was fully secured by the financial institution with a first lien on the Company’s assets.

Interest on the

current outstanding balances is payable quarterly and calculated using a LIBOR rate of no lower than LIBOR+ 2.125 % and no higher than LIBOR+ 2.625 % based on the Company’s consolidated net leverage ratio stated in the credit agr e

The extensions of credit may be used solely (a) to refinance existing indebtedness, (b) to pay any expenses associated with this line of credit agreement, (c) for acquisitions, and (d) for other general corporate purposes.

The Company is required to repay the principal balance and any unpaid accrued interest on the Senior Secured Credit Facility on February 3, 2026 .

The Company incurred $ 1,699

as debt issuance costs in the form of the legal fee, underwriter’s fee, etc., these costs are recognized as a reduction in the long-term

borrowings in the condensed unaudited consolidated balance sheets, and are being amortized over the term of the contract on a straight-line basis.

The Senior Secured Credit Facility contains certain financial maintenance covenants including consolidated net leverage ratio and consolidated fixed charge coverage ratio.

The Company incurred $ 1,699 as debt issuance costs in the form of the legal fee, underwriter’s fee, etc., and these costs are recognized as a reduction in the long-term borrowings in the condensed unaudited consolidated balance sheets, and are being amortized over the term of the contract on a straight-line basis.

Secured Credit Facility contains certain financial maintenance covenants including consolidated net leverage ratio and consolidated fixed charge coverage ratio.

In addition, this agreement contains restrictive covenants that may limit the Company’s ability to, among other things, acquire equity interest of the Company from its shareholders, repurchase / retire any of the Company’s securities, and pay dividends or distribute excess cash flow.

Additionally, the Company is required to submit periodic financial covenant letters that would include current net leverage ratio and fixed charge coverage ratio, among others.

As of June 30, 2021, applicable total leverage ratio and fixed charge coverage ratio was

1.25 , respectively and the Company was in compliance of these covenants.

Since the time lag between the effective date of the new credit facility and the June 30, 2021 is minimal and the interest rates on the Company’s new credit facility approximates the current market rates, the fair value of the debt is approximately equal to the carrying amount as of June 30, 2021.

On April 23, 2020, the Company received proceeds

from a loan in the amount of $ 10,000 , bearing annual interest of 1 % and due April 24, 2022 (the “PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

As of September 30, 2021, applicable total leverage ratio and fixed charge coverage ratio was 4.0 and 1.25 , respectively and the Company was in compliance with these covenants.

Since the time

lag between the effective date of the new credit facility and September 30, 2021 is minimal and the interest rates on the Company’s new credit facility approximates the current market rates, the fair value of the debt is approximately equal to the carrying amount as of September 30, 2021.

On April 23, 2020, the Company received proceeds from a loan

in the amount of $ 10,000 , bearing annual interest of 1 % and was due on April 24, 2022

(the “PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The Company evaluated the applicable accounting guidance relative to the PPP Loan and accounted for the proceeds of the PPP Loan as debt under ASC 470.

On June 10, 2021, the Small Business Administration (“SBA”) approved the forgiveness for the full amount of the PPP Loan which included principal of $ 10,000 .

The Company recognized the reversal of the debt liability upon forgiveness of the PPP Loan as “Gain on extinguishment of debt” in its condensed unaudited consolidated statements of operations and comprehensive loss during the three months ended June 30, 2021.

As of September 30, 2021, the repayment schedule for the long-term borrowings was as follows:

As of September 30, 2021

Year Ended December 31,

Remaining three months of 2021

2026 and thereafter

*Includes $ 4,219 repayable against the term loan facility within the

twelve month period ending September 30, 2022.

The Company intends to draw against the available revolving facility to pay off term loan installments and therefore the total borrowings are included in “Long-term borrowings” on the condensed unaudited balance sheets as of September 30, 2021.

Commitments and Contingencies

Purchase obligations

The Company entered into non-cancelable

vendor agreements to purchase services from certain customers.

As of June 30, 2021, the Company was party to outstanding purchase contracts totaling $ 4,918 payable during the remaining six months of 2021 and $ 4,085 payable in 2022.

There were no outstanding purchase contracts payable in 2023 and

The Company entered into non-cancellable

vendor agreements to purchase services.

As of September 30, 2021, the Company was party to outstanding purchase contracts as follows:

As of September 30, 2021

Year Ended December 31,

Remaining three months of 2021

2026 and thereafter

Lease commitments

The Company maintains leased offices

in the United States of America, United Kingdom, India and

rent as of June 30, 2021 and December 31, 2020 was $ 2,605 and $ 2,652 , respectively for these leases and is included in other current liabilities and non-current liabilities on the condensed unaudited consolidated balance sheets.

Commitments for the base rents as of June 30, 2021 are as follows:

As of June 30, 2021

The Company maintains leased offices in the United States of America, United Kingdom, India and France.

Deferred rent as of September 30, 2021 and December 31, 2020 was $ 2,458 and $ 2,652 , respectively for these leases and is included in other current liabilities and non-current

liabilities on the condensed unaudited consolidated balance sheets.

Commitments for the base rents as of September 30, 2021 are as follows:

As of September 30, 2021

Year Ended December 31,

Remaining six months of 2021

Remaining three months of 2021

2026 and thereafter

The Company is a party to various litigation and administrative proceedings related to claims arising from its operations in the ordinary course of business including in relation to certain contingent purchase price obligations noted above.

The Company records provisions for losses when claims become probable and the amounts are estimative.

The Company is a party to various litigations and administrative proceedings related to claims arising from its operations in the ordinary course of business including in relation to certain contingent purchase price obligations noted above.

The Company records provisions for losses when claims become probable, and the amounts are estimable.

Although the outcome of these matters cannot be predicted with certainty, the Company’s management believes that the resolution of the matters will not have a material impact on the Company’s business, results of operations, financial condition, or cash flows.

compensation plan

In 2008, the Company adopted its 2008 Stock Option/Stock Issuance Plan, and, in 2017, adopted Zeta Global Holdings Corp.

Stock-Based Compensation

Stock-based compensation plan

In 2008, the Company adopted its 2008 Stock Option/Stock Issuance Plan, and, in 2017, adopted the Zeta Global Holdings Corp.

2017 Incentive Plan (collectively, the “Plans”).

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The restricted stock and restricted stock units granted under the Plans generally did not vest until a change in control, which generally does not include an initial public offering.

Upon a change in control, restricted stock and restricted stock units vest as

25 % of the shares with the balance of the shares vesting in equal quarterly installments following the change in control over the remainder of a

from the original date of grant.

Upon a change in control, restricted stock and restricted stock units vest as to 25 % of the shares with the balance of the shares vesting in equal quarterly installments following the change in control over the remainder of a five -year term from the original date of grant.

The restricted stock and restricted stock units will fully vest upon a change in control to the extent five years has passed from the original date of grant of the restricted stock or restricted stock units.

Since the vesting of these awards was contingent upon the change of control event, which was not considered probable until it occurs, the Company did not record any stock-based

compensation expense for such awards.

The stock compensation expense has been recognized following the vesting of restricted stock, restricted stock units and options as described below.

In the past, the Company has canceled certain restricted stock and in lieu of such cancellation has issued restricted stock units to the holders for those restricted stock, with the same vesting conditions as restricted stock.

Since the vesting of these awards was contingent upon the change of control event, which was not considered probable until it occurs, the Company did not record any stock-based compensation expense for such awards.

The stock-based compensation has been recognized following the vesting of restricted stock, restricted stock units and options as described below.

In the past, the Company has cancelled certain restricted stock and in lieu of such cancellation has issued restricted stock units to the holders of that restricted stock, with the same vesting conditions as restricted stock.

Restricted Stock and Restricted Stock Units

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For the second category of holders, terms of the modification provide for vesting upon the effective date of the IPO as follows:

(i) 25 % of shares with an original grant date of less than 5 years prior to the IPO and (ii) 100 % of shares with a grant date of 5 years or older.

(i) 25 % of shares with an original grant date of less than five years prior to the IPO and (ii) 100 % of shares with a grant date of five years or older.

Post the IPO, additional vesting is deferred for one year .

Thereafter the remaining shares shall vest in equal quarterly instalments at the end of each quarter until the fifth anniversary of the date of the original grant.

Thereafter the rema i

ning shares shall vest in equal quarterly installments at the end of each quarter until the fifth anniversary of the date of the original grant.

For the third category of holders, terms of the modification provide for vesting to begin at the end of the first quarter following the one -year

anniversary of the IPO, with such shares vesting in equal quarterly instalments at the end of each quarter until the fifth anniversary of the date of the IPO.

anniversary of the IPO, with such shares vesting in equal quarterly installments at the end of each quarter until the fifth anniversary of the date of the IPO.

The revised terms were communicated to the restricted stock and restricted stock unit holders.

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The portion of the awards subject to future service would remain classified as equity awards and expense would be recognized over the remaining future service period.

Following is the activity of restricted stock and restricted stock units granted by the Company:

The following is the activity of restricted stock and restricted stock units granted by the Company:

Weighted Average

Grant Date Fair

Nonvested as of January 1, 2021

( 9,274,893 )

as of January 1, 2021

Forfeited (2)

( 3,979,021 )

( 16,655,197 )

( 68,986,297 )

Cancelled (3)

Modified and reissued

Non-vested as of June 30, 2021

During the six months ended June 30, 2021, the Company granted 5,543,029 restricted stock and 194,849 restricted stock units

to its employees and board members, of which 1,660,677 restricted stock and 98,993 restricted stock units were granted prior to March 12, 2021 and will be governed by the vesting rules described in a), b) and c) above.

Remaining shares that were granted on or after March 12, 2021 shall vest over a period of 4 years, with 25 % vesting on the one -year anniversary of the IPO and the remainder vesting in equal quarterly installments thereafter through the 4th anniversary of the grant date.

The Company also converted 1,198,219 restricted stock into restricted stock units for certain employee related grants included in the canceled grants in the statements of shareholders equity for the six months ending June 30, 2021.

During the six months ended June 30, 2021, the Company forfeited 3,964,122 restricted stock and 14,899 restricted stock units.

During the six months ended June 30, 2021, the Company also canceled 16,655,197 shares of restricted stock granted to holders of series A redeemable convertible preferred shares (see N

condensed unaudited consolidated financial statements

The Company has $ 662,132 of unrecognized compensation expense related to its 61,732,537 unvested restricted stock and restricted stock units, that will be recognized over a weighted average of 1.48 years.

as of September 30

During the nine months ended September 30, 2021, the Company granted 8,824,045 restricted stock and 288,724 restricted stock units to its employees and board members, of which 1,660,677 restricted stock and 98,993 restricted stock units were granted prior to March 12, 2021 and will be governed by the vesting rules described in a), b) and c) above.

Remaining shares that were granted on or after March 12, 2021 shall vest over a period of four years , with 25 % vesting on the one-year

anniversary of the IPO and the remainder vesting in equal quarterly installments thereafter through the 4th anniversary of the grant date.

The Company also converted 1,198,219 restricted stock into restricted stock units for certain employee related grants included in the cancelled grants in the statements of shareholders equity for the nine months ended September 30, 2021.

During the nine months ended September 30, 2021, the 4,682,178 restricted stock and 17,924 restricted stock units were forfeited.

During the nine months ended September 30, 2021, the Company also cancelled 16,655,197 shares of restricted stock granted to holders of series A redeemable convertible preferred shares (see Note 10 to the condensed unaudited consolidated financial statements below).

Performance Stock Unit (“PSU”) Award

On August 18, 2021, the Compensation Committee of the Board of Directors approved 1,500,000 PSU awards under the Company’s 2021 Incentive Award Plan.

Upon achievement of the conditions described below, the PSUs could result in the issuance of up to 3,000,000 shares of Class A common stock.

Each PSU represents the right to receive shares of Class A common stock as set forth in the PSU grant agreement or, at the option of the Company, an equivalent amount of cash.

Participants have no right to the distribution of any shares or payment of any cash until the time (if ever) the PSUs are earned and have vested.

Each PSU provides for the right to receive a dividend equivalent to the value of any ordinary cash dividends paid on substantially all the outstanding shares of Class A common stock if the PSUs are earned and vested.

The PSUs may be earned at the end of each fiscal quarter beginning with the three month period ending on June 30, 2022 and ending with, and including, the three month period ending on December 31, 2025.

Such number of shares of Class A common stock shall be earned as a percentage of the PSUs granted, as set forth in the table below, based on the 20 day volume-weighted average closing price per share (“VWAP”) for such quarter.

The number of PSUs earned for such quarter shall be reduced by the number of PSUs, if any, earned in any prior quarter.

20 Day VWAP of Class A common stock

Percentage of target PSUs

Upon being earned and subject to the participant’s continued service, PSUs will vest in three equal annual installments, with the first installment vesting on the date of determination for the applicable quarter for which such PSUs were earned, and the second and third installments vesting on the second and third anniversaries of such quarterly determination date, subject to accelerated vesting in connection with a change in control.

In the event of Participant’s termination of service for any reason, all unvested PSUs will immediately and automatically be cancelled and forfeited, except, to the extent a Participant is terminated without cause or resigns for good reason, (i) any PSUs earned for any quarter prior to the date of termination will fully vest, and (ii) any PSUs earned in the quarter in which the termination date occurs will fully vest.

The Company engaged a third-party valuation firm to determine the estimated fair value of the PSUs using the Monte Carlo simulation method, which was determined as $ 1.95 per PSU.

During the three and nine months ended September 30, 2021, the Company recognized an expense of $ 86 related to target PSUs during such period.

2021 Employee Stock Purchase Plan (“ESPP”)

In connection with its IPO, the Company adopted the 2021 Employee Stock Purchase Plan, or the 2021 ESPP.

The Company expects that all of its employees will be eligible to participate (the “participants”) in the 2021 ESPP.

The 2021 ESPP permits participants to purchase the Company’s Class A common stock through contributions up to a specified percentage of their eligible compensation.

The maximum number of shares that may be purchased by a participant during any offering period are capped at 10,000 .

In addition, no employee will be permitted to accrue the right to purchase shares under the Section 423 component at a rate in excess of $ 25,000 worth of shares during any calendar year during which such a purchase right is outstanding (based on the fair market value per share of our Class A common stock as of the first day of the offering period).

On July 28, 2021, the Compensation Committee of the Board of Directors approved the Company’s first offering period under the 2021 ESPP, which commenced on August 1, 2021 and will end on November 30, 2021.

Following the end of the first offering period, the 2021 ESPP shall have consecutive offering periods of approximately six months in length commencing each year on December 1 and June 1 and ending on each May 31 and November 30 occurring six months later, as applicable.

During the three months and nine months ended September 30, 2021, the Company recognized an expense of $ 180 at fair value of $ 2.16 per 2021 ESPP share, related to the enrollments under the first offering period that commenced on August 1, 2021.

The fair value of the 2021 ESPP was determined, based on the Monte Carlo simulation method, by a third party valuation firm engaged by the Company.

Unrecognized compensation expense

The Company has $ 607,110 of unrecognized compensation expense related to its 64,360,347 unvested restricted stock and restricted stock units, 1,500,000 performance stock units and common stock to be issued under the ESPP.

This unrecognized stock-based compensation will be recognized over a weighted average period of 1.37 years.

Stockholders’ Equity / (Deficit)

On February 24, 2021, the Company’s Board

of Directors approved the correction of the conversion price of Series A redeemable convertible preferred shares held by certain shareholders and cancelation of

16,655,197 shares of restricted stock granted to these holders of Series A redeemable convertible preferred shares.

On February 24, 2021, the Company’s Board of Directors approved the correction of the conversion price of Series A redeemable convertible preferred shares held by certain shareholders and cancelation of 16,655,197 shares of restricted stock granted to these holders of Series A

redeemable convertible preferred shares.

The Board of Directors determined that the restricted shares were issued to those shareholders in order to avoid dilution of their ownership in the Company as a result of other grants of shares.

1 unchanged sentence

Therefore, the issuance of the restricted shares to these holders of the Series A redeemable convertible preferred shares was determined to be an error and were duplicative with the corrected calculation of the conversion price of Series A redeemable convertible preferred shares.

The conversion price of these Series A redeemable convertible preferred stock was adjusted to $

0.073587 from $

The number of shares outstanding as of June 30, 2021 was

152,270,401 shares of our Class A common stock and

shares of our Class B common stock, based on stock outstanding as of March 31, 2021, after giving effect to each of the Reorganization Transactions described in Note 1, as a result of the Company’s IPO.

Rights of Class A and Class B common stock holders:

The conversion price of these Series A redeemable convertible preferred stock was adjusted to $ 0.073587 from $ 0.59 .

The number of shares outstanding as of June 14, 2021 was 152,270,401 shares of our Class A common stock and 37,856,095 shares of our Class B common stock, based on stock outstanding as of March 31, 2021, after giving effect to each of the Reorganization Transactions described in Note 1, as a result of the Company’s IPO.

Rights of Class A and Class B common stockholders:

The Company’s amended and restated Certificate of Incorporation defines the rights of the different classes of common stock as under:

Equal Status- Except as otherwise provided in the Certificate of Incorporation or required by applicable law, shares of Class A common stock and Class B common stock shall have the same rights, privileges and powers, rank equally (including as to dividends and distributions, and upon any liquidation, dissolution, distribution of assets or winding up of the Company), share ratably and be identical in all respects and as to all matters.

Voting- Except as otherwise required by applicable law, at all meetings of stockholders and on all matters submitted to a vote of stockholders of the Corporation generally, each holder of Class A common stock, as such, shall have the right to one (1) vote per share of Class A common stock held of record by such holder and each holder of Class B common stock, as such, shall have the right to ten (10) votes per share of Class B common stock held of record by such holder.

Equal Status- Except as otherwise provided in the Certificate of Incorporation or required by applicable l a

w, shares of Class A common stock and Class B common stock shall have the same rights, privileges and powers, rank equally (including as to dividends and distributions, and upon any liquidation, dissolution, distribution of assets or winding up of the Company), share ratably and be identical in all respects and as to all matters.

Voting- Except as otherwise required by applicable law, at all meetings of stockholders and on all matters submitted to a vote of stockholders of the Company generally, each holder of Class A common stock, as such, shall have the right to one (1) vote per share of Class A common stock held of record by such holder and each holder of Class B common stock, as such, shall have the right to ten (10) votes per share of Class B common stock held of record by such holder.

Dividend Rights- Shares of Class A common stock and Class B common stock shall be treated equally, identically and ratably, on a per share basis, with respect to any dividends as may be declared and paid from time to time by the Board of Directors of the Company.

Liquidation, Dissolution or Winding Up-

Subject to the preferential or other rights of any holders of Preferred Stock then outstanding, upon the dissolution, distribution of assets, liquidation or winding up of the Corporation, whether voluntary or involuntary, holders of Class A common stock and Class B common stock will be entitled to receive ratably all assets of the Company available for distribution to its stockholders unless disparate or different treatment of the shares of each such class with respect to distributions upon any such liquidation, dissolution, distribution of assets or winding up is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class.

Subject to the preferential or other rights of any holders of Preferred Stock then outstanding, upon the dissolution, distribution of assets, liquidation or winding up of the Company, whether voluntary or involuntary, holders of Class A common stock and Class B common stock will be entitled to receive ratably all assets of the Company available for distribution to its stockholders unless disparate or different treatment of the shares of each such class with respect to distributions upon any such liquidation, dissolution, distribution of assets or winding up is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class.

Shares issued for a settlement

In connection with a settlement of a dispute with a vendor, the Company issued 200,000 shares which it recorded as a General & Administrative expense in the condensed unaudited statements of operations and comprehensive loss.

Warrants and Derivative Liabilities

The following assumptions were used to determine the fair value of the warrants and derivative liabilities as of June 30, 2021 and December 31, 2020:

As of June 30, 2021

The following assumptions were used to determine the fair value of the warrants and derivative liabilities as of September 30, 2021 and December 31, 2020:

As of September 30, 2021

As of December 31, 2020

Exercise price

interest rate

Risk-free interest rate

Expected volatility

Time to maturity (in years)

As of December 31, 2020, the

fair value of the warrants and derivative liabilities was $ 58,100 .

As of December 31, 2020, the fair value of the warrants and derivative liabilities was $ 58,100 .

In connection with the Company’s IPO, all the outstanding warrants were exercised by holders of those warrants and redeemable convertible preferred stock were converted to Class A common stock of the Company.

The derivative liability, that represented the conversion feature of certain redeemable convertible preferred stock has been settled in the additional paid in capital.

For the three months ended June 30, 2021 and 2020, the Company recognized an income of $ 18,600 and an expense of 4,100 ,

respectively related to the changes in the fair value of warrants and derivate liabilities.

For the six months ended June 30, 2021 and 2020, the Company recognized an expense related to changes in the fair value of such warrants and derivative liabilities of $ 5,000 and $ 6,700 , respectively.

As of June 30, 2021, the Company does

have any warrants and derivative liabilities on its condensed unaudited consolidated balance sheets.

For the three months ended September 30, 2020, the Company recognized an expense of $ 9,700 , related to the changes in the fair value of warrants and derivative liabilities.

There was no such expense in the three months ended September 30, 2021 due to the extinguishment of the warrants and derivative liability in connection with the Company’s IPO during Q2 2021.

For the nine months ended September 30, 2021 and 2020, the Company recognized an expense related to changes in the fair value of such warrants and derivative liabilities of $ 5,000 and $ 16,400 , respectively.

Fair Value Disclosures

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Level 1 is defined as observable inputs such as quoted prices in active markets for identical assets;

Level 2 is defined as observable inputs other than Level 1 prices such

as quoted prices for similar assets;

Level 2 is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets;

quoted prices in markets that are not active;

2 unchanged sentences

The following table represents the fair value of the financial instruments measured at fair value on a recurring basis:

As of June 30, 2021

As of September 30, 2021

Cash and cash equivalents*

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Includes cash invested by the Company in certain money market accounts with a financial institution.

As noted above in Note 7, as of June 30, 2021 and December 31, 2020, the Company determined that the Term Loan is classified as Level 3 and the relevant fair values were approximately equal to the book value as of June 30, 2021 and

152,538 as of December 31, 2020 .

The following table reconciles the changes in the fair value of the liabilities categorized within Level 3 of the fair value hierarchy for the six months ended June 30, 2021 and year ended December 31, 2020:

As noted above in Note 7, as of September 30, 2021 and December 31, 2020, the Company determined that the Term Loan is classified as Level 3 and the relevant fair values were approximately equal to the book value as of September 30, 2021 and $ 152,538 as of December 31, 2020.

The following table reconciles the changes in the fair value of the liabilities categorized within Level 3 of the fair value hierarchy for the nine months ended September 30, 2021 and year ended December 31, 2020:

related liabilities

3 unchanged sentences

Extinguishment of the warrant and derivative liabilities

Balance as of June 30, 2021

Balance as of September 30, 2021

In connection with certain business combinations, the Company may owe additional purchase consideration (contingent consideration included in the acquisition related liabilities) based on the financial performance of the acquired entities after their acquisition.

The fair value of the contingent consideration was determined using an unobservable input such as projected revenues, collections of accounts receivables.

The fair value of the contingent consideration was determined using an unobservable input such as projected revenues or collections of accounts receivables.

Changes in any of the assumptions related to the unobservable inputs identified above may change the contingent consideration’s fair value.

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IV, Caivis Investment Company V, LLC and Caivis Investment Company VI, LLC (collectively, the “Caivis Group”) are entities owned by many of the same stockholders of the Company.

In addition, the Chief Executive Officer of the Company owns a controlling interest in Caivis Group.

On April 9, 2012, the Company amended its agreement with Caivis Group, whereby Caivis Group will provide support for general administrative and corporate development activities, including sourcing and evaluating potential partners and acquisition targets to the Company for $ 2,000 per year.

This agreement with Caivis Group was terminated on December 31, 2019 and therefore no such expenses are incurred during FY2020 and the six months ended on June 30, 2021.

As of December 31, 2020, the Company had outstanding payables of $ 533 to Caivis Group included in the “accounts payable and accrued expenses” in the condensed unaudited consolidated balance sheets.

During the six months ended on June 30, 2021, the Company paid an amount of $ 533 and as such there is no outstanding payable to Caivis as of June 30, 2021.

In addition, the Chief Executive Officer of the Company owns a controlling interest in the Caivis Group.

On April 9, 2012, the Company amended its agreement with the Caivis Group, whereby the Caivis Group will provide support for general administrative and corporate development activities, including sourcing and evaluating potential partners and acquisition targets to the Company for $ 2,000 per year.

This agreement with the Caivis Group was terminated on December 31, 2019 and therefore no such expenses are incurred during FY2020 and the nine months ended on September 30, 2021.

As of December 31, 2020, the Company had outstanding payables of $ 533 to the Caivis Group included in the “accounts payable and accrued expenses” in the condensed unaudited consolidated balance sheets.

During the nine months ended on September 30, 2021, the Company paid an amount of $ 533 and as such there is no outstanding payable to the Caivis Group as of September 30, 2021.

Casting Made Simple Corp.

(“CMS”) is an entity owned by Caivis group and the Chief Executive Officer’s spouse.

On December 28,

the Company entered into an agreement with CMS to monetize traffic generated through websites owned by CMS and give a profit

During the three and six months ended June 30, 2021, the Company recognized $ 66 and $ 162 , respectively and during

six months ended June 30, 2020, the Company recognized $ 89 and $ 153 , respectively, as direct cost of revenues in the

condensed unaudited consolidated statements of operations and comprehensive loss, representing the profit shared by the Company with

As of June 30, 2021 and December 31, 2020, the Company had outstanding payables of $ 57 and $ 70 , respectively to CMS and

included in the “accounts payable and accrued expenses” in the condensed unaudited consolidated balances sheets.

(“CMS”) is an entity owned by the Caivis Group and the Chief Executive Officer’s spouse.

On December 28, 2018, the Company entered into an agreement with CMS to monetize traffic generated through websites owned by CMS and give a profit share to CMS.

During the three and nine months ended September 30, 2021, the Company recognized $ 49 and $ 211 , respectively and during the three and nine months ended September 30, 2020, the Company recognized $ 92 and $ 277 , respectively, as direct cost of revenues in the condensed unaudited consolidated statements of operations and comprehensive loss, representing the profit shared by the Company with CMS.

As of September 30, 2021 and December 31, 2020, the Company had outstanding payables of $ 48 and $ 70 , respectively to CMS and included in the “accounts payable and accrued expenses” in the condensed unaudited consolidated balances sheets.

The Company’s income tax provision consists of federal, foreign, and state taxes necessary to align the Company’s year-to-date

1 unchanged sentence

At each interim period, the Company updates its estimate of the annual effective tax rate and records cumulative adjustments, as necessary.

For the interim period ended June 30, 2020, the Company utilized the annual effective tax rate methodology to determine its income tax provision.

For the interim period ended June 30, 2021, the Company departed from the annual effective tax rate methodology and computed its income tax provision using a discrete method.

For the interim period ended September 30, 2020, the Company utilized the annual effective tax rate methodology to determine its income tax provision.

For the interim period ended September 30, 2021, the Company departed from the annual effective tax rate methodology and computed its income tax provision using a discrete method.

The use of the discrete method was made in accordance with authoritative accounting guidance, which allows for the use of a discrete method when there are significant changes to the projected annual effective tax rate as a result of minor adjustments to projected pre-tax

For the three months ended June 30, 2021, the Company recorded an income tax provision of $ 584 .

The income tax provision relates primarily to current foreign taxes and an increase in the valuation allowance related to certain foreign deferred tax assets.

For the three months ended June 30, 2020, the Company recorded an income tax provision of $ 396 related primarily to foreign taxes.

The effective tax rate for the three months ended June 30, 2021 was ( 0.62 )% on a pre-tax

For the three months ended September 30, 2021, the Company recorded an income tax provision of $ 428 .

The income tax provision related

primarily to foreign taxes.

For the three months ended September 30, 2020, the Company recorded an income tax provision of $ 301 related primarily to foreign taxes.

The effective tax rate for the three months ended September 30, 2021 was ( 0.62 )% on a pre-tax

loss of $ 68,701 .

The effective tax rate for the three months ended June 30, 2020 was ( 2.70 )% on a pre-tax

The effective tax rate for the three months ended September 30, 2020 was ( 2.37 )% on a pre-tax

loss of $ 12,702 .

5 unchanged sentences

Basic net loss per share is computed using the two-class

method, by dividing the net loss by the weighted-average

number of shares of common stock of the Company outstanding during the period.

method, by dividing the net loss by the weighted-average number of shares of common stock of the Company outstanding during the period.

Diluted net loss per share is computed by giving effect to all potential shares of common stock of the Company, including redeemable convertible preferred stock, outstanding stock options, warrants, to the extent dilutive, and reduced by the amount of cumulative dividends earned on the preferred shares.

However, the unvested restricted stock and restricted stock units as of June 30, 2021 and 2020 of

61,732,537 and

76,224,208 , respectively, are not considered as participating securities and are anti-dilutive and as such are excluded from the weighted average number of shares used for calculating basic and diluted net loss per share.

However, the unvested restricted stock, restricted stock units and performance stock units as of September 30, 2021 and 2020 of 65,860,347 and 84,486,332 respectively, are not considered as participating securities and are anti-dilutive and as such are excluded from the weighted average number of shares used for calculating basic and diluted net loss per share.

Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock of the Company outstanding would have been anti-dilutive.

The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Cumulative redeemable convertible preferred stock dividends

Numerator for Basic and Dilutive loss per share -

Loss available to common stockholders

Numerator for Basic and Dilutive loss per share - loss available to common stockholders

Class A common stock

3 unchanged sentences

Warrants (convertible to Series A common stock)

Denominator for Basic and Dilutive Loss per share-Weighted-average

Denominator for Basic and Dilutive loss per share-weighted-average common stock

Basic loss per share

3 unchanged sentences

Anti-dilutive common equivalent shares were as follows:

Three months ended June 30,

Six months ended June 30,

Options (convertible to Series A c

Warrants (convertible to Series A c

Three months ended September 30,

Nine months ended September 30,

Options (convertible to Series A common stock)

Warrants (convertible to Series A common stock)

Redeemable convertible preferred stock

Restricted stock and restricted stock units

Performance stock units

Subsequent Event

On July 28, 2021, the Compensation Committee of the Board of Directors approved the launch of the Zeta Global Holdings Corp.

2021 Employee Stock Purchase Plan (the “ESPP”) pursuant to which eligible employees may acquire shares of the Company’s Class A common stock at a discounted price through payroll deductions to assist such employees in acquiring a stock ownership interest in the Company, subject to and in accordance with the terms of the ESPP.

The ESPP provides that employees may contribute to the ESPP through regular after-tax payroll deductions over offering periods that are typically six months in length.

However, the first offering period is four months in length and ends on November 30, 2021.

At the end of the offering period, the accumulated funds will be used to purchase Zeta’s shares at a 15% discount to the lower of the price on the applicable offering period start date and the purchase date, which is the last day of the offering period.

Employees may elect to contribute up to 15% of their base compensation to the ESPP, subject to certain limitations set forth in the ESPP.

On October 1, 2021, the Company acquired the digital survey platform business of Apptness Media Group, LLC (“Seller”)

As consideration for the acquisition, the Company (i) paid $ 17,934 in cash to Seller, and (ii) issued shares of the Company’s Class A common stock, par value $ 0.001 per share (the “Shares”), to Seller with an aggregate value of $ 23,000 calculated based on the closing price of the Shares on the New York Stock Exchange on September 30, 2021.

The Shares are subject to an eighteen month lock-up

period with approximately equal release installments every six months.

Additionally, the Company may also (i) release to Selle r

a $ 1,750 indemnity hold-back in eighteen months and (ii) pay up to $ 22,000 in earn-out

consideration payable 50 % in cash and 50 % in shares, based on the performance of the acquired business over the next three years.

The Company has not completed the purchase price allocation of this acquisition prior to the issuance of these financial statements, and an estimate of the financial effect of the transaction cannot be made.

All other business combination disclosures are not available due to the proximity of the acquisition to the issuance of these financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements