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Form 10-Q P10, Inc. For: Jun 30

August 15, 2022 2:44 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to ____________________

Commission File Number: 001-40937

 

P10, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

87-2908160

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

4514 Cole Ave, Suite 1600

Dallas, TX

75205

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (214) 865-7998

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, $0.001 par value per share

Series A Junior Participating Preferred Stock

    Purchase Rights

 

PX

 

NYSE

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

As of August 8, 2022, the registrant had 38,654,972 shares of the registrant's Class A common stock, par value $0.001, and 78,539,705 shares of the registrant's Class B common stock, par value $0.001, outstanding.

 

 


 

 

 


 

 

 

 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

 

 

Consolidated Balance Sheets

1

 

Consolidated Statements of Operations

2

 

Consolidated Statements of Changes in Stockholders' Equity

3

 

Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

Item 4.

Controls and Procedures

44

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3.

Defaults Upon Senior Securities

46

Item 4.

Mine Safety Disclosures

46

Item 5.

Other Information

46

Item 6.

Exhibits

46

Signatures

47

 

 


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

P10, Inc.

Consolidated Balance Sheets

(in thousands, except share amounts)

 

 

 

As of

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

23,613

 

 

$

40,916

 

Restricted cash

 

 

1,731

 

 

 

2,566

 

Accounts receivable

 

 

6,668

 

 

 

2,854

 

Note receivable

 

 

2,811

 

 

 

2,552

 

Due from related parties

 

 

23,616

 

 

 

12,357

 

Investment in unconsolidated subsidiaries

 

 

2,253

 

 

 

1,803

 

Prepaid expenses and other assets

 

 

3,665

 

 

 

4,759

 

Property and equipment, net

 

 

2,359

 

 

 

981

 

Right-of-use assets

 

 

13,591

 

 

 

14,789

 

Deferred tax assets, net

 

 

39,376

 

 

 

45,151

 

Intangibles, net

 

 

116,541

 

 

 

128,788

 

Goodwill

 

 

418,690

 

 

 

418,701

 

Total assets

 

$

654,914

 

 

$

676,217

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

1,190

 

 

$

401

 

Accrued expenses

 

 

10,478

 

 

 

12,474

 

Due to related parties

 

 

800

 

 

 

2,258

 

Other liabilities

 

 

983

 

 

 

1,808

 

Contingent consideration

 

 

22,950

 

 

 

22,963

 

Deferred revenues

 

 

12,523

 

 

 

12,953

 

Lease liabilities

 

 

15,787

 

 

 

15,700

 

Debt obligations

 

 

187,913

 

 

 

212,496

 

Total liabilities

 

 

252,624

 

 

 

281,053

 

COMMITMENTS AND CONTINGENCIES (NOTE 14)

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

Class A common stock, $0.001 par value; 510,000,000 shares authorized; 37,307,745  issued and 37,307,745 outstanding as of June 30, 2022, and 34,464,920 issued and 34,464,920 outstanding as of December 31, 2021, respectively

 

 

37

 

 

 

34

 

Class B common stock, $0.001 par value; 180,000,000 shares authorized; 79,885,002 shares issued and 79,761,550 shares outstanding as of June 30, 2022, and 82,851,279 shares issued and 82,727,827 shares outstanding as of December 31, 2021, respectively

 

 

80

 

 

 

83

 

Treasury stock

 

 

(273

)

 

 

(273

)

Additional paid-in-capital

 

 

638,585

 

 

 

650,405

 

Accumulated deficit

 

 

(236,139

)

 

 

(255,085

)

Total stockholders' equity

 

 

402,290

 

 

 

395,164

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

654,914

 

 

$

676,217

 

 

1

The Notes to Consolidated Financial Statements

are an integral part of these statements.


 

P10, Inc.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Management and advisory fees

 

$

46,451

 

 

$

33,517

 

 

$

89,478

 

 

$

66,090

 

Other revenue

 

 

287

 

 

 

471

 

 

 

541

 

 

 

666

 

Total revenues

 

 

46,738

 

 

 

33,988

 

 

 

90,019

 

 

 

66,756

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

17,815

 

 

 

12,337

 

 

 

36,309

 

 

 

24,273

 

Professional fees

 

 

2,740

 

 

 

3,406

 

 

 

5,352

 

 

 

6,137

 

General, administrative and other

 

 

4,250

 

 

 

2,215

 

 

 

8,362

 

 

 

4,252

 

Contingent consideration expense

 

 

(140

)

 

 

132

 

 

 

(13

)

 

 

160

 

Amortization of intangibles

 

 

6,153

 

 

 

7,484

 

 

 

12,334

 

 

 

14,968

 

Strategic alliance expense

 

 

153

 

 

 

 

 

 

305

 

 

 

 

Total operating expenses

 

 

30,971

 

 

 

25,574

 

 

 

62,649

 

 

 

49,790

 

INCOME FROM OPERATIONS

 

 

15,767

 

 

 

8,414

 

 

 

27,370

 

 

 

16,966

 

OTHER (EXPENSE)/INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense implied on notes payable to sellers

 

 

 

 

 

(219

)

 

 

 

 

 

(434

)

Interest expense, net

 

 

(1,525

)

 

 

(5,245

)

 

 

(2,910

)

 

 

(10,500

)

Other income

 

 

791

 

 

 

257

 

 

 

1,120

 

 

 

545

 

Total other (expense)

 

 

(734

)

 

 

(5,207

)

 

 

(1,790

)

 

 

(10,389

)

Net income before income taxes

 

 

15,033

 

 

 

3,207

 

 

 

25,580

 

 

 

6,577

 

Income tax expense

 

 

(3,879

)

 

 

(734

)

 

 

(6,634

)

 

 

(1,395

)

NET INCOME

 

$

11,154

 

 

$

2,473

 

 

$

18,946

 

 

$

5,182

 

Less: preferred dividends attributable to redeemable
   noncontrolling interest

 

 

 

 

 

(495

)

 

 

-

 

 

 

(989

)

NET INCOME ATTRIBUTABLE TO P10

 

$

11,154

 

 

$

1,978

 

 

$

18,946

 

 

$

4,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.10

 

 

$

0.02

 

 

$

0.16

 

 

$

0.05

 

Diluted earnings per share

 

$

0.09

 

 

$

0.02

 

 

$

0.16

 

 

$

0.05

 

Dividends paid per share

 

$

0.03

 

 

$

 

 

$

0.03

 

 

$

 

Weighted average shares outstanding, basic

 

 

117,193

 

 

 

62,465

 

 

 

117,193

 

 

 

62,465

 

Weighted average shares outstanding, diluted

 

 

120,981

 

 

 

66,742

 

 

 

121,259

 

 

 

66,660

 

 

2

The Notes to Consolidated Financial Statements

are an integral part of these statements.


 

P10, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Common Stock - Class A

 

 

Common Stock - Class B

 

 

Treasury stock

 

Additional

 

Accumulated

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

Paid-in-capital

 

Deficit

 

Equity

 

Balance at December 31, 2020

 

62,464

 

 

$

63

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

123

 

 

$

(273

)

$

324,310

 

$

(264,259

)

$

59,841

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

424

 

 

 

 

424

 

Net income attributable to P10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,215

 

 

2,215

 

Balance at March 31, 2021

 

62,464

 

 

$

63

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

123

 

 

$

(273

)

$

324,734

 

$

(262,044

)

$

62,480

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

568

 

 

 

 

568

 

Net income attributable to P10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,978

 

 

1,978

 

Balance at June 30, 2021

 

62,464

 

 

$

63

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

123

 

 

$

(273

)

$

325,302

 

$

(260,066

)

$

65,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Common Stock - Class A

 

 

Common Stock - Class B

 

 

Treasury stock

 

Additional

 

Accumulated

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

Paid-in-capital

 

Deficit

 

Equity

 

Balance at December 31, 2021

 

 

 

$

 

 

 

34,464

 

 

$

34

 

 

 

82,727

 

 

$

83

 

 

 

123

 

 

$

(273

)

$

650,405

 

$

(255,085

)

 

395,164

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,515

 

 

 

 

1,515

 

Deferred offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(70

)

 

 

 

(70

)

Net income attributable to P10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,792

 

 

7,792

 

Exchange of Class B common stock for Class A common stock

 

 

 

 

 

 

 

1,222

 

 

 

1

 

 

 

(1,220

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Settlement of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,466

)

 

 

 

(12,466

)

Balance at March 31, 2022

 

 

 

$

 

 

 

35,686

 

 

$

35

 

 

 

81,507

 

 

$

82

 

 

 

123

 

 

$

(273

)

$

639,384

 

$

(247,293

)

$

391,935

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,717

 

 

 

 

2,717

 

Net income attributable to P10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,154

 

 

11,154

 

Exchange of Class B common stock for Class A common stock

 

 

 

 

 

 

 

1,622

 

 

 

2

 

 

 

(1,622

)

 

 

(2

)