UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the three months ended
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:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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 |
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Smaller reporting company |
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Emerging growth company |
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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 May 9, 2022, there were
Table of Contents
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
1 |
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1 |
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2 |
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3 |
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4 |
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6 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
28 |
Item 3. |
41 |
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Item 4. |
42 |
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OTHER INFORMATION |
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Item 1. |
43 |
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Item 1A. |
43 |
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Item 2. |
43 |
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Item 3. |
43 |
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Item 4. |
43 |
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Item 5. |
43 |
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Item 6. |
44 |
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45 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
P10, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
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As of |
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As of |
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March 31, |
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December 31, |
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2022 |
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2021 |
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(Unaudited) |
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ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable |
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Note receivable |
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Due from related parties |
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Investment in unconsolidated subsidiaries |
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Prepaid expenses and other assets |
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Property and equipment, net |
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Right-of-use assets |
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Deferred tax assets, net |
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Intangibles, net |
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Goodwill |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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LIABILITIES: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Due to related parties |
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Other liabilities |
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Contingent consideration |
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Deferred revenues |
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Lease liabilities |
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Debt obligations |
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Total liabilities |
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STOCKHOLDERS' EQUITY: |
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Class A common stock, $ |
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Class B common stock, $ |
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Treasury stock |
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( |
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Additional paid-in-capital |
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Accumulated deficit |
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Total stockholders' equity |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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$ |
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$ |
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The Notes to Consolidated Financial Statements are an integral part of these statements.
1
P10, Inc.
Consolidated Statements of Operations
(Unaudited, in thousands except per share amounts)
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For the Three Months |
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2022 |
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2021 |
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REVENUES |
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Management and advisory fees |
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$ |
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$ |
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Other revenue |
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Total revenues |
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OPERATING EXPENSES |
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Compensation and benefits |
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Professional fees |
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General, administrative and other |
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Contingent consideration expense |
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Amortization of intangibles |
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Strategic alliance expense |
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Total operating expenses |
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INCOME FROM OPERATIONS |
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OTHER (EXPENSE)/INCOME |
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Interest expense implied on notes payable to sellers |
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Interest expense, net |
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Other income |
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Total other (expense) |
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Net income before income taxes |
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Income tax expense |
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NET INCOME |
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$ |
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$ |
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Less: preferred dividends attributable to redeemable |
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NET INCOME ATTRIBUTABLE TO P10 |
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$ |
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$ |
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Earnings per share |
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Basic earnings per share |
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$ |
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$ |
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Diluted earnings per share |
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$ |
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$ |
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Weighted average shares outstanding, basic |
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Weighted average shares outstanding, diluted |
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The Notes to Consolidated Financial Statements are an integral part of these statements.
2
P10, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited, in thousands)
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Total |
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Common Stock |
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Common Stock - Class A |
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Common Stock - Class B |
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Treasury stock |
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Additional |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Paid-in-capital |
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Deficit |
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Equity |
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Balance at December 31, 2020 |
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$ |
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— |
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— |
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$ |
— |
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$ |
( |
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$ |
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$ |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income attributable to P10 |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2021 |
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— |
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— |
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— |
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$ |
— |
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$ |
( |
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Total |
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Common Stock |
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Common Stock - Class A |
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Common Stock - Class B |
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Treasury stock |
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Additional |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Units |
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Amount |
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Units |
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Amount |
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Units |
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Amount |
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Paid-in-capital |
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Deficit |
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Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
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( |
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$ |
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Stock-based compensation |
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Deferred offering costs |
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— |
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— |
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— |
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— |
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( |
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— |
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Net income attributable to P10 |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Exchange of Class B common stock for Class A common stock |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Settlement of stock options |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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The Notes to Consolidated Financial Statements are an integral part of these statements.
3
P10, Inc.
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
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For the Three Months |
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2022 |
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2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating |
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Stock-based compensation |
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Depreciation expense |
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Amortization of intangibles |
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Amortization of debt issuance costs and debt discount |
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Income from unconsolidated subsidiaries |
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( |
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Deferred tax expense |
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Remeasurement of contingent consideration |
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Post close purchase price adjustment |
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Change in operating assets and liabilities: |
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Accounts receivable |
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( |
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Due from related parties |
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( |
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Prepaid expenses and other assets |
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Right-of-use assets |
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Accounts payable |
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( |
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Accrued expenses |
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( |
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( |
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Due to related parties |
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( |
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( |
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Other liabilities |
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Deferred revenues |
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( |
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Lease liabilities |
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( |
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Net cash provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Note receivable |
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Proceeds from note receivable |
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Investments in unconsolidated subsidiaries |
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Proceeds from investments in unconsolidated subsidiaries |
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Software capitalization |
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Post-closing payments for Enhanced working capital |
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( |
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Purchases of property and equipment |
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( |
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Net cash used in investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Repayments on debt obligations |
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Payments of contingent consideration |
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( |
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Debt issuance costs |
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( |
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Net cash used in financing activities |
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Net change in cash, cash equivalents and restricted cash |
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning |
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of |
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$ |
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$ |
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The Notes to Consolidated Financial Statements are an integral part of these statements.
4
P10, Inc.
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
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For the Three Months |
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2022 |
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2021 |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
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Cash paid for interest |
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$ |
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$ |
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Net cash (received)/paid for income taxes |
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$ |
( |
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$ |
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NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES |
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Additions to right-of-use assets |
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Additions to lease liabilities |
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Accrual for settlement of stock options |
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Additions to contingent consideration |
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RECONCILIATION OF CASH, CASH EQUIVALENTS AND |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Total cash, cash equivalents and restricted cash |
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$ |
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$ |
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The Notes to Consolidated Financial Statements are an integral part of these statements.
5
P10, Inc.
Notes to Consolidated Financial Statements
(Unaudited, dollar amounts stated in thousands)
Note 1. Description of Business
Description of Business
On October 20, 2021, P10 Holdings, Inc. ("P10 Holdings"), in connection with its Initial Public Offering ("IPO"), completed a reorganization and restructure. In connection with the reorganization, P10, Inc. ("P10") became the parent company and all of the existing equity of P10 Holdings, which is a wholly owned subsidiary of P10 including the convertible preferred units of P10 Intermediate, as defined below, were converted into common stock of P10. The offering and reorganization included a reverse stock split of P10 Holdings common stock on a
Following the reorganization and IPO, P10 has two classes of common stock, Class A common stock and Class B common stock. Each share of Class B common stock is entitled to ten votes while each share of Class A common stock is entitled to one vote.
P10 and its consolidated subsidiaries (the “Company”) operate as a multi-asset class private market solutions provider in the alternative asset management industry. Our mission is to provide our investors differentiated access to a broad set of solutions and investment vehicles across a multitude of asset classes and geographies. Our existing portfolio of solutions across private equity, venture capital, private credit and impact investing support our mission by offering a comprehensive set of investment vehicles to our investors, including primary fund of funds, secondary investment, direct investment and co-investments, alongside separate accounts (collectively the “Funds”).
The direct and indirect subsidiaries of the Company include P10 Holdings, P10 Intermediate Holdings, LLC (“P10 Intermediate”), which owns the subsidiaries P10 RCP Holdco, LLC (“Holdco”), Five Points Capital, Inc. (“Five Points”), TrueBridge Capital Partners, LLC (“TrueBridge”), Enhanced Capital Group, LLC (“ECG”), Bonaccord Capital Advisors, LLC ("Bonaccord") and Hark Capital Advisors, LLC ("Hark").
Prior to November 19, 2016, P10, formerly Active Power, Inc. designed, manufactured, sold, and serviced flywheel-based uninterruptible power supply products and serviced modular infrastructure solutions. On November 19, 2016, we completed the sale of substantially all our assets and liabilities and operations to Langley Holdings plc, a United Kingdom public limited company. Following the sale, we changed our name from Active Power, Inc. to P10 Industries, Inc. and became a non-operating company focused on monetizing our retained intellectual property and acquiring profitable businesses. For the period from December 2016 through September 2017, our business primarily consisted of cash, certain retained intellectual property assets and our net operating losses (“NOLs”) and other tax benefits. On March 22, 2017, we filed for re-organization under Chapter 11 of the Federal Bankruptcy Code, using a prepackaged plan of reorganization. The Company emerged from bankruptcy on May 3, 2017. On December 1, 2017, the Company changed its name from P10 Industries, Inc. to P10 Holdings, Inc. We were founded as a Texas corporation in
On October 5, 2017, we closed on the acquisition of RCP Advisors 2, LLC ("RCP 2") and entered into a purchase agreement to acquire RCP Advisors 3, LLC ("RCP 3") in January 2018. On January 3, 2018, we closed on the acquisition of RCP 3. RCP 2 and RCP 3 are registered investment advisors with the United States Securities and Exchange Commission.
On April 1, 2020, the Company completed the acquisition of Five Points. Five Points is a leading lower middle market alternative investment manager focused on providing both equity and debt capital to private, growth-oriented companies and limited partner capital to other private equity funds, with all strategies focused exclusively in the U.S. lower middle market. Five Points is a registered investment advisor with the United States Securities and Exchange Commission.
On October 2, 2020, the Company completed the acquisition of TrueBridge. TrueBridge is an investment firm focused on investing in venture capital through fund-of-funds, co-investments, and separate accounts. TrueBridge is a registered investment advisor with the United States Securities and Exchange Commission.
On December 14, 2020, the Company completed the acquisition of
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P10, Inc.