Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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, a 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.

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. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the registrant's Class A common stock beneficially held by non-affiliates of the registrant, based on the closing price of the shares of Class A common stock on the New York Stock Exchange on ~~April 4, 2023,~~June 30, 2022, was $~~22,989,506~~81,291,242. Shares of the Class A common stock beneficially owned by each executive officer and director of the registrant and each holder of more than 10% of our Class A common stock have been excluded from this calculation because such persons may be deemed to be affiliated. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of April 4,27, 2023, there were 69,546,514 shares of the registrant's Class A common stock outstanding and 66,692,781 shares of the registrant's vote-only, non-economic Class B common stock outstanding.

~~This Annual Report on Form 10-K includes information pertaining to periods prior to the closing of the Business Combination (as defined in "Item 1. Business -~~Item 10. Directors, Executive Officers, and Corporate Information" of this Annual Report). Refer to Note 1 “Nature of Business” and Note 2 "Significant Accounting Policies - Basis of Presentation" of the notes to our consolidated financial statements contained in this Annual Report for further information regarding the basis of presentation. See "Item 1. Business - Corporate Information" of this Annual Report for a description of the Business Combination, which was completed with Altimar Acquisition Corp. II on December 23, 2021. Throughout this Annual Report, references to “we,” “us,” and “our” refer to Fathom Digital Manufacturing Corporation ("Fathom" or the "Company") and its consolidated subsidiaries as the context so requires.Governance.

Certain statements made in this Annual Report on Form 10-K are “forward looking statements.” Statements regarding our expectations regarding the business are “forward looking statements.” In addition, words such as “estimates,” “projected,” “expects,” “estimated,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “would,” “future,” “propose,” “target,” “goal,” “objective,” “outlook” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. The forward-looking statements contained in this Annual Report and in our other periodic filings are not guarantees of future performance, conditions or results and are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under "Risk Factor Summary, Item 1A. Risk Factors,” and "Item7. Management's Discussion and Analysis of Financial Condition and Results of Operations" below. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those anticipated in these forward-looking statements. We may face additional risks and uncertainties that are not presently known to us, or that we deem to be immaterial, which may also impair our business, financial condition, or prospects. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

The ~~following~~Company's Board of Director's ("Board") currently consists of ten directors. Our directors are divided into three classes serving staggered three-year terms. Class I, Class II and Class III directors will serve until our annual meetings of shareholders in 2023, 2024 and 2025, respectively. Each director holds office for the term for which such director is ~~a summary~~elected and thereafter until such director’s successor shall have been duly elected and qualified. At each annual meeting of the risks and uncertainties that could adversely affect our business, financial condition and results of operations and should be read in conjunction with the complete discussion of risk factors set forth in "Item 1A. Risk Factors." Some of the factors could materially and adversely affect our business, financial conditions and results of operations include, but are not limited to the following:

Throughout this Annual Report on Form 10-K, references to “we,” “us,” and “our” refer to Fathom Digital Manufacturing Corporation ("Fathom", the "Company") and its consolidated subsidiaries as the context so requires.

Fathom, through our operating subsidiary Fathom Holdco, LLC (“Fathom OpCo” or "Predecessor"), is a leading on-demand digital manufacturing platform in North America, providing comprehensive product development and production part manufacturing to many of the largest and most innovative companies in the world. We have extensive expertise in both additive and traditional manufacturing, enabling our agile, technology-agnostic platform to blend manufacturing technologies and processes to deliver hybridized solutions designed to meet the specific needs of our customers. This flexible problem-solving approach empowers our customers to accelerate their product development cycles, reducing manufacturing lead times for low to mid-volume production.

We combine diverse, scaled manufacturing capabilities and deep technical know-how to enable our customers to get to market faster, putting their design and product goals above the manufacturing limitations often imposed by other service providers. We pair our expertise and manufacturing capabilities with a unified proprietary suite of software, which becomes an extension of the customer’s digital product development and low to mid-volume production threads. By continuously augmenting our software suite to stay in tune with evolving Industry 4.0 trends, we believe our platform is ideally suited to serve the product development and low-to mid-volume production parts needs of the largest and most innovative companies in the world.

Our differentiated strategy focuses on speed, problem solving, adaptive technical responsiveness, and a focus on manufacturing to meet customers’ design intent, allowing our customers to iterate faster and shorten their product development and production cycles from months to days.

Our deep technical expertise and integrated, software-driven approach underpin a comprehensive suite of capabilities, with over 25 unique manufacturing processes spread across 12 manufacturing facilities with nearly 450,000 square feet of manufacturing capacity in the United States ("U.S."). Our scale and breadth of offerings allows our customers to consolidate their supply chain and product development needs and to source through a single supplier. Fathom seamlessly blends in-house capabilities of 530+ advanced manufacturing systems across plastic and metal additive technologies (90+ industrial-grade systems), computer numerical control ("CNC") machining, injection molding and tooling, precision sheet metal fabrication, and design engineering, catering to a broad set of end markets. Fathom’s manufacturing technologies and capacity are further extended through utilization of a selected group of highly qualified suppliers who specialize in injection molding and tooling and CNC machining.

With over 35 years of industry experience, Fathom is at the forefront of the Industry 4.0 digital manufacturing revolution, serving customers in the technology, defense, aerospace, medical, automotive and IOT sectors. Fathom’s certifications include: International Organization for Standardization ("ISO") 9001:2015, ISO 13485:2016, AS9100:2016, NIST800-171 and International Traffic in Arms Regulations ("ITAR") registered.

Fathom is also a platform built for taking advantage of attractive future merger and acquisition opportunities. Fathom’s acquisition strategy is enabled by our unique integration playbook including our proprietary software platform.

Fathom’s business was founded in 1984 under the name Midwest Composite Technologies, LLC ("MCT"). Following the merger of MCT and Kemeera, LLC in 2019, the business was rebranded to operate under the “Fathom Digital Manufacturing” name and key technical capabilities were added in direct response to the needs of our largest and most innovative corporate customers. Today, Fathom is the result of the successful integration of 13 complementary companies, acquired over the past four years, creating a robust on-demand digital manufacturing platform with a proven array of additive and traditional manufacturing capabilities.

As a result of our scale and superior offerings, we have developed a loyal base of approximately 2,500 customers, including many of the largest and most innovative companies in the world, with excellent representation across Fortune’s 500 list. Over the year ended December 31, 2022, no single customer represented more than 10% of our total revenue.

Our target market consists of the highly fragmented U.S. low-to mid-volume manufacturing market of CNC machining, injection molding, precision sheet metal and additive manufacturing. This market is projected to grow, fueled by increased demand for additive manufacturing and continuation of the trend of customers increasingly outsourcing their product development prototyping and low-to mid-volume manufacturing needs.

Our employees are the foundation of Fathom’s enterprise and are essential to maintaining our business model and competitive advantages. As of December 31, 2022, we had 708 employees working across our U.S. locations. Our employees are distributed across functions, including engineering, production, sales, marketing, and general corporate functions. To date, we have not experienced any work stoppages and consider our relationship with our employees to be good. None of our employees are subject to a collective bargaining agreement or represented by a labor union.

Our human capital resource objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees. The principal purpose of our equity incentive plans is to attract, retain and motivate selected employees, consultants and directors through the granting of equity-based compensation awards and cash-based performance bonus awards.

The health and well-being of our employees are critical to our ongoing ability to operate and serve our customers. We are committed to ensuring the safety and well-being of our employees across each location and job function – this includes providing broad benefits to support their health and wellness needs. We continue to place the utmost importance on complying with governmental regulations and health authority guidance to ensure that the appropriate steps are taken to protect the well-being of all people engaged with our business.

We are subject to various laws, regulations and permitting requirements of federal, state, and local authorities, including related to environmental and health and safety. We are also subject to various U.S. and foreign laws and regulations related to anti-corruption, data privacy, use and security, embargoes, sanctions, and trade and export controls, including those of the jurisdictions in which we operate, source from, or make sales to. We believe that we are in material compliance with all such laws, regulations, and permitting requirements. Changes in current laws or regulations or the imposition of new laws and regulations in the U.S. or elsewhere regarding our business operations and activities may impede our growth, significantly increase our operating costs and impair our business, financial condition or results of operations.

We are subject to domestic environmental laws and regulations governing our operations, including, but not limited to, emissions into the air and water and the use, handling, disposal, and remediation of hazardous substances. A certain risk of environmental liability is inherent in our production activities. These laws and regulations govern, among other things, the generation, use, storage, registration, handling, and disposal of chemicals and waste materials, the presence of specified substances in electrical products, the emission and discharge of hazardous materials into the ground, air, or water, the cleanup of contaminated sites, including any contamination that results from spills due to our failure to properly dispose of chemicals and other waste materials, and the health and safety of our employees. We are required to obtain environmental permits from governmental authorities for certain operations. The cost of complying with current and future environmental laws applicable to our operations, or the liabilities arising from past releases of, or exposure to, hazardous substances, may result in future expenditures.

Fathom OpCo, a Delaware limited liability company, was formed in April 2021 for the purpose of holding a 100 percent equity interest in each of MCT Group Holdings, LLC and its subsidiaries ("MCT Holdings") and in Incodema Holdings, LLC and its subsidiaries ("Incodema Holdings"). On April 30, 2021 Incodema Holdings and MCT Holdings were recapitalized through an exchange of equity pursuant to which each member of Incodema Holdings and each member of MCT Holdings exchanged their equity interests in Incodema Holdings and MCT Holdings, respectively, for equity interests in Fathom OpCo. As a result of this reorganization, each of Incodema Holdings and MCT Holdings are wholly owned subsidiaries of Fathom OpCo.

On December 23, 2021 (the “Closing Date”), Altimar Acquisition Corp. II, a blank check company incorporated as a Cayman Islands exempted company (“Altimar II”), domesticated as a Delaware corporation (the “Domestication”) and changed its name to “Fathom Digital Manufacturing Corporation.” Immediately following the Domestication, Fathom completed a business combination (the “Business Combination”) with Fathom OpCo pursuant to the terms of the Business Combination Agreement, dated as of July 15, 2021, as amended by Amendment No. 1 to Business Combination Agreement, dated as of November 16, 2021 (as so amended, the “BCA” or the “Business Combination Agreement”), by and among Altimar II, Fathom OpCo, Rapid Merger Sub, LLC, a direct, wholly owned subsidiary of Altimar II (“Merger Sub”), and the other parties thereto.

As part of the completion of the transactions contemplated by the Business Combination Agreement (the “Transactions,” and such completion, the “Closing”), Merger Sub merged with and into Fathom OpCo (the “Merger”), with Fathom OpCo being the surviving entity of the Merger. As a result of the Merger and the other Transactions, the combined company was organized in an “Up-C” structure, with Fathom now serving as the sole managing member of Fathom OpCo. Fathom OpCo is now owned in part by former public and private shareholders of Altimar II and in part by continuing equity owners of Fathom OpCo (the “Legacy Fathom Owners”). For a more detailed discussion of the Business Combination and the Transactions, see Fathom's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 2021.

Our mailing address is 1050 Walnut Ridge Drive, Hartland, WI 53029, and our telephone number is (262) 367-8254. Our Class A common stock is listed on the New York Stock Exchange under the symbol “FATH.” Unless the context requires otherwise, “Fathom,” “we,” the “Company,” “us” and “our” refer to Fathom Digital Manufacturing Corporation and our consolidated subsidiaries.

Our website is located at www.fathommfg.com, and our investor relations website is located at http://investors.fathommfg.com/. We file reports with the Securities and Exchange Commission ("SEC"), and copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, on our investor relations website as soon as reasonably practicable after we file such material electronically with or furnish it to the SEC. The SEC also maintains a website that contains our SEC filings. The address of the site is www.sec.gov. We use our http://investors.fathommfg.com/ and www.fathommfg.com websites as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.

The contents of, or information accessible through, our websites are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file or furnish with the SEC, and any references to our websites are intended to be inactive textual references only.

We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition, results of operations or reputation. The risks described below are not the only risks we face. Additional risks not presently known to us or that we currently believe are not material may also significantly affect our business, financial condition, results of operations or reputation. Our business could be harmed by any of these risks. In assessing these risks, you should also refer to the other information contained in this Annual Report on Form 10-K including, but not limited to, the sections entitled “Cautionary Note Regarding Forward-Looking Statements”, and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes.

~~We face significant competition and expect to face increasing competition in many aspects of our business, which could cause our operating results to suffer.~~

The digital manufacturing industry in which we operate is fragmented and highly competitive. We compete for customers with a wide variety of custom parts manufacturers and methods. Some of our current and potential competitors include captive in-house production capabilities, other custom parts manufacturers, brokers of custom parts and additive manufacturing vendors, including those utilizing 3D printing processes. Moreover, some of our existing and potential competitors are researching, designing, developing, and marketing other types of products and manufacturing capabilities. We also expect that future competition may arise from the development or improvement of allied or related techniques for digital manufacturing, including from the issuance of patents to other companies that may inhibit our ability to compete effectively. Furthermore, our competitors may attempt to adopt and improve upon key aspects of our business model, such as development of technology that automates much of the manual labor conventionally required to quote and manufacture custom parts, implementation of interactive web-based and automated user interface and quoting systems and/or building scalable operating models specifically designed for efficient custom parts production. Third-party Computer Aided Design ("CAD") software companies may develop software that mold-makers, injection molders and CNC machine shops could use to compete with our business model. Additive manufacturers may develop stronger, higher temperature resins or introduce other improvements that could more effectively compete with us on part quality. We may also, from time to time, establish alliances or relationships with other competitors or potential competitors, including 3D printer Original Equipment Manufacturers ("OEMs"). To the extent companies terminate such relationships and establish alliances and relationships with our competitors, our business could be harmed.

Existing and potential competitors may have substantially greater financial, technical, marketing and sales, manufacturing, distribution and other resources and name recognition than us, as well as experience and expertise in intellectual property rights, any of which may enable them to compete effectively against us. For example, a number of companies that possess substantial resources have announced that they are beginning digital manufacturing initiatives, which will further strengthen the competition we face.

Though we plan to continue to expend resources to develop new technologies, processes and manufacturing capabilities, we cannot assure you that we will be able to maintain our current competitive position or continue to compete successfully against current and future sources of competition. One challenge in developing new business opportunities is identifying custom parts categories for which our automated quotation and digital manufacturing processes offer an attractive value proposition, and we may not be able to identify any new custom parts categories with favorable economics similar to our existing offerings. If we do not keep pace with technological change, demand for our offerings may decline and our operating results may suffer.

~~Our success depends on our ability to deliver on-demand manufacturing capabilities and custom parts that meet the needs of our customers and to effectively respond to changes in our industry.~~

We derive almost all of our revenue from the manufacture and sale to our customers of quick-turn, low volume custom parts for prototyping, support of internal manufacturing and limited quantity product release up to mid volume production requirements. Our business has been and, we believe, will continue to be, affected by changes in our customers’ new product and product line introductions, requirements and preferences, rapid technological change and the emergence of new standards and practices, any of which could render our technology and manufacturing capabilities less attractive, uneconomical or obsolete. To the extent that our customers’ need for quick-turn to mid-volume production parts decreases significantly for any reason, it would likely have a material adverse effect on our business and operating results and harm our competitive position. In addition, CAD simulation and other technologies may reduce the demand for physical prototype parts. Therefore, we believe that to remain competitive, we must continually expend resources to enhance and improve our technology and manufacturing capabilities.

In particular, we plan to continue to focus a significant portion of those efforts to further develop our technology in areas such as our interactive project management platform and manufacturing processes, technology offerings and broaden the range of parts that we are able to manufacture. We believe successful execution of this part of our business plan is critical for our ability to compete in our industry and grow our business, and there are no guarantees we will be able to do so in a timely fashion, or at all. Broadening the range of parts and technologies that we are able to manufacture and offer is of particular importance because limitations in manufacturability are the primary reason we are not able to fulfill many quotation requests. There are no guarantees that the resources we devote to executing on this aspect of our business plan will improve our business and operating results or result in increased demand for our custom parts and manufacturing capabilities. Failures in this area could adversely impact our operating results and harm our reputation and brands. Even if we are successful in executing in this area, our industry is subject to rapid and significant technological change, and our competitors may develop new technologies and manufacturing capabilities that are superior to ours.

Any failure to effectively meet the needs of our customers or respond to changes in our industry on a cost-effective and timely basis, or at all, would likely have a material adverse effect on our business and operating results and harm our competitive position.

~~Our failure to meet our customers’ expectations regarding quick turnaround time, price or quality could adversely affect our business and results of operations.~~

We believe many of our customers are facing increased pressure from global competitors to be first to market with their finished products, often resulting in a need for quick turnaround of custom parts. We believe our ability to quickly quote, manufacture and ship custom parts has been an important factor in our results to date. There are no guarantees we will be able to meet customers’ increasing expectations regarding quick turnaround time. If we fail to meet our customers’ expectations regarding turnaround time in any given period, our business and results of operations will likely suffer.

Demand for our custom parts and manufacturing capabilities is sensitive to price. We believe our competitive pricing has been an important factor in our results to date. Therefore, changes in our pricing strategies can have a significant impact on our business and ability to generate revenue. Many factors, including our production and personnel costs and our competitors’ pricing and marketing strategies, can significantly impact our pricing strategies. If we fail to meet our customers’ price expectations in any given period, demand for our custom parts and manufacturing capabilities could be negatively impacted and our business and results of operations could suffer.

Most of our customers have a need for specific quality of quick-turn, on-demand custom parts. We believe our ability to create parts meeting our customers’ specifications and quality expectations is an important factor in our results to date. We cannot assure you that we will be able to continue to consistently manufacture custom parts that achieve the production specifications and quality that our customers expect. If we fail to meet our customers’ specifications and quality expectations in any given period, demand for our custom parts and manufacturing capabilities could be negatively impacted and our business and results of operations could suffer.

The strength of our brands is important to our business, and any failure to maintain and enhance our brands would hurt our ability to retain and expand our customer base as well as further penetrate existing customers.

Because our custom parts and manufacturing capabilities are sold primarily through our website, the success of our business depends in part upon our ability to attract new and repeat customers to our website in order to increase business and grow our revenue. Customer awareness and the perceived value of our brands will depend largely on the success of our marketing efforts, as well as our ability to consistently provide quality custom parts within the required timeframes and positive customer experiences, which we may not do successfully. A primary component of our business strategy is the continued promotion and strengthening of our brands. We may choose to increase our branding expense materially, but we cannot be sure that this investment will be profitable. If we are unable to successfully maintain and enhance our brands, this could have a negative impact on our business and ability to generate revenue.

~~Sales efforts to large customers involve risks that may not be present or that are present to a lesser extent with respect to sales to smaller organizations.~~

Attracting and retaining business from large enterprise customers is an element of our business strategy. Sales to large customers involve risks that may not be present or that are present to a lesser extent with sales to smaller organizations, such as longer sales cycles, more complex customer requirements, substantial upfront sales costs, less predictability in completing some of our sales and extended payment terms. A number of factors influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our platform, our various technologies and manufacturing capabilities, the longer period of time typically taken by large customers to evaluate and test our project management platform prior to making a purchase decision and placing an order, the discretionary nature of purchasing and budget cycles and the competitive nature of evaluation and purchasing approval processes. As a result, the length of our sales cycle, from identification of the opportunity to deal closure, may vary significantly from customer to customer, with sales to large enterprises typically taking longer to complete. Moreover, larger organizations may demand more customization, which would increase our upfront investment in the sales effort with no guarantee that these customers will seek to use our manufacturing capabilities widely enough across their organization to justify our substantial upfront investment. A portion of these customers may purchase our offerings on payment terms, requiring us to assume a credit risk for non-payment in the ordinary course of business. If we fail to effectively manage these risks associated with sales to large customers, our business, financial condition, and results of operations may be affected.

Our business depends in part on our ability to process a large volume of new custom part designs from a diverse group of customers and successfully identify significant opportunities for our business based on those submissions.

We believe the volume of new custom part designs we process and the size and diversity of our customer base give us valuable insight into the needs of our prospective customers. We utilize this industry knowledge to determine where we should focus our development resources. If the number of new custom part designs we process or the size and diversity of our customer base decrease, our ability to successfully identify significant opportunities for our business and meet the needs of existing or prospective customers could be negatively impacted. In addition, even if we do continue to process a large number of new custom part designs and work with a significant and diverse customer base, there are no guarantees that any industry knowledge we extract from those interactions will be successfully utilized to help us identify significant business opportunities or better understand the needs of our existing or prospective customers.

~~Wage increases and pressure in certain geographies may prevent us from sustaining our competitive advantage and may reduce our profit margin.~~

Measures are being taken in the U.S. and globally to increase minimum wages, and there is a shortage of skilled labor in certain locations leading to increased wage pressure. Similarly, with an increased global focus on environmental, social and corporate-governance concerns and sustainability, input costs have been steadily rising. Accordingly, we may need to increase the levels of labor compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and amount of labor that our business requires. To the extent that we are not able to control or recoup wage increases through our pricing, wage increases may reduce our margins and cash flows, which could adversely affect our business.

The loss of one or more key members of our management team or personnel, or our failure to attract, integrate and retain additional personnel in the future, could harm our business and negatively affect our ability to successfully grow our business.

We are highly dependent upon the continued service and performance of the key members of our management team and other personnel. The loss of any of these individuals, each of whom is “at will” and may terminate his or her employment relationship with us at any time, could disrupt our operations and significantly delay or prevent the achievement of our business objectives. We believe that our future success will also depend in part on our continued ability to identify, hire, train and motivate qualified personnel. High demand exists for qualified senior management and other key personnel (including technical, engineering, product, finance and sales personnel) in the digital manufacturing industry. A possible shortage of qualified individuals in the regions where we operate might require us to pay increased compensation to attract and retain key employees, thereby increasing our costs. In addition, we face intense competition for qualified individuals from numerous companies, many of whom have substantially greater financial and other resources and name recognition than us. We may be unable to attract and retain suitably qualified individuals who are capable of meeting our growing operational, managerial and other requirements, or we may be required to pay increased compensation in order to do so. For example, our failure to attract and retain shop floor employees may inhibit our ability to fulfill production orders for our customers. Our failure to attract, hire, integrate and retain qualified personnel could impair our ability to achieve our business objectives.

All of our employees are at-will employees, meaning that they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. We generally enter into non-competition agreements with our employees and certain consultants. These agreements prohibit our employees and applicable consultants from competing directly with us or working for our competitors or customers while they work for us, and in some cases, for a limited period after they cease working for us. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees and applicable consultants work and it may be difficult for us to restrict our competitors from benefiting from the expertise that our former employees or consultants developed while working for us. If we cannot demonstrate that our legally protectable interests will be harmed, we may be unable to prevent our competitors from benefiting from the expertise of our former employees or consultants and our ability to remain competitive may be diminished.

One element of our growth strategy relies on business acquisitions. We may not realize the anticipated benefits of such acquisitions, and any acquisition, strategic relationship, joint venture, or investment could disrupt our business and harm our operating results and financial condition.

Our business and customer base have been built in part through organic growth, but also through acquisitions of businesses that increase market share in our current markets or expand into other markets, or broaden our technology, intellectual property or product line capabilities. We have completed 13 acquisitions during the last three years, and we intend to continue to aggressively pursue attractive opportunities to enhance or expand our offerings through acquisitions, strategic relationships, joint ventures or investments that we believe may allow us to implement our growth strategy. For example, in December 2019, we acquired ICO Mold, LLC ("ICOMold") to enable us to expand our existing Search Engine Optimization ("SEO") and Search Engine Marketing ("SEM") capabilities. During 2020 and 2021, we completed six acquisitions that added CNC machining to our manufacturing capabilities, and three acquisitions that added precision sheet metal fabrication to our offerings. We cannot forecast the number, timing or size of any future acquisitions or other similar strategic transactions, or the effect that any such transactions might have on our operating or financial results. We may not be able to successfully identify future acquisition opportunities or complete any such acquisitions if we cannot reach agreement on commercially favorable terms, if we lack sufficient resources to finance such transactions on our own and cannot obtain financing at a reasonable cost or if regulatory authorities prevent such transactions from being completed. Restrictions in the Credit Agreement (as defined in "Item7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Borrowings and Lines of Credit:) also limit our ability to complete new acquisitions.

Although we have substantial experience engaging in these types of transactions, such transactions may be complex, time consuming and expensive, and may present numerous challenges and risks including:

Any one of these challenges or risks could impair our ability to realize any benefit from our acquisitions, strategic relationships, joint ventures or investments after we have expended resources on them, as well as divert our management’s attention. Any failure to successfully address these challenges or risks could disrupt our business and harm our operating results and financial condition. Moreover, any such transaction may not be viewed favorably by investors or other stakeholders.

If we proceed with a particular acquisition, we may have to use cash, issue new equity securities with dilutive effects on existing stockholders, incur indebtedness, assume contingent liabilities, or amortize assets or expenses in a manner that might have a material adverse effect on our financial condition and results of operations. Acquisitions will also require us to record certain acquisition-related costs and other items as current period expenses, which would have the effect of reducing our reported earnings in the period in which an acquisition is consummated. In addition, we could also face unknown liabilities or write-offs due to our acquisitions, which could result in a significant charge to our earnings in the period in which they occur. We have recorded, and in the future will be required to record any goodwill or other long-lived asset impairment charges in the periods in which they occur, which could result in a significant charge to our earnings in any such period.

Achieving the expected returns and synergies from future acquisitions will depend, in part, upon our ability to integrate the products and services, technology, administrative functions and personnel of these businesses into our offering lines in an efficient and effective manner. We cannot assure you that we will be able to do so, that any acquired businesses will perform at levels and on the timelines anticipated by our management or that we will be able to realize these synergies. In addition, acquired technologies and intellectual property may be rendered obsolete or uneconomical by our own or our competitors’ technological advances. Management resources may also be diverted from operating our existing businesses to certain acquisition integration challenges. If we are unable to successfully integrate acquired businesses, our anticipated revenues and profits may be lower. Our profit margins may also be lower, or diluted, following the acquisition of companies whose profit margins are less than those of our existing businesses.

In addition, from time to time we may enter into negotiations for acquisitions, relationships, joint ventures or investments that are not ultimately consummated. These negotiations could result in significant diversion of management time, as well as substantial out-of-pocket costs.

~~If we are unable to manage our growth and expand our operations successfully, our reputation and brands may be damaged, and our business and results of operations may be harmed.~~

Over the past several years, we have experienced rapid growth. For example, we have grown from 44 full-time employees as of October 31, 2018 to 708 full-time employees as of December 31, 2022. Our ability to effectively manage our anticipated growth and expansion of our operations will require us to do, among other things, the following:

These enhancements and improvements will require significant capital expenditures and allocation of valuable management and employee resources. Furthermore, our growth has placed, and will continue to place, a strain on our operational, financial and management infrastructure. Our future financial performance and our ability to execute on our business plan will depend, in part, on our ability to effectively manage any future growth and expansion. There are no guarantees we will be able to do so in an efficient or timely manner, or at all. Our failure to effectively manage growth and expansion could have a material adverse effect on our business, results of operations, financial condition, prospects, reputation and brands, including impairing our ability to perform to our customers’ expectations.

~~We may not timely and effectively scale and adapt our existing technology, processes and infrastructure to meet the needs of our business.~~

A key element to our continued growth is the ability to quickly and efficiently quote an increasing number of customer submissions across geographic regions and to manufacture the related custom parts. This will require us to timely and effectively scale and adapt our existing technology, processes and infrastructure to meet the needs of our business. With respect to our website, project management platform and quoting technology, it may become increasingly difficult to maintain and improve their performance, especially during periods of heavy usage and as our solutions become more complex and our user traffic increases across geographic regions. Similarly, our manufacturing automation technology may not enable us to process the large numbers of unique designs and efficiently manufacture the related custom parts in a timely fashion to meet the needs of our customers as our business continues to grow. Any failure in our ability to timely and effectively scale and adapt our existing technology, processes and infrastructure could negatively impact our ability to retain existing customers and attract new customers, damage our reputation and brands, result in lost revenue, and otherwise substantially harm our business and results of operations.

~~The implementation of our reorganization plan could result in greater costs and fewer benefits than we anticipate, which could materially harm our business, financial condition and operating results.~~

On July 7, 2022, the Board approved a reorganization plan, designed to consolidate the Company’s national footprint, streamline legacy leadership and centralize core business functions following the completion of 13 acquisitions by Fathom since 2019. These measures include consolidation of leadership and other roles through a net workforce reduction of approximately 6%, consolidation of our Oakland, California facility into our Hartland, Wisconsin headquarters, the establishment of a technology center in Fremont, CA and streamlining of certain of our administrative processes. On February 17, 2023, the Company committed to additional actions to continue and expand the reorganization plan. The additional actions include closing and consolidation a location in Texas, reducing the Company’s workforce by an additional 14% and prioritizing investments and operations in line with near-term revenue generation. We expect to substantially complete this reorganization plan by the first half of fiscal year 2023, but the process to complete these reorganization initiatives could take more time, and could be more costly than anticipated. In addition, these initiatives have placed and could place substantial additional demands on our management, which could lead to the diversion of management’s attention from other business priorities. These initiatives could also lead to unanticipated work stoppages, low employee morale, decreased productivity, and a failure to deliver under existing and future commitments to third parties, which could harm our business. As a result of these or any other factors, we could fail to realize the anticipated benefits associated with the reorganization initiatives, which could in turn materially harm our business, financial condition and operating results.

We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all. If we are unable to raise additional capital when needed, our financial condition could be adversely affected and we may not be able to execute our growth strategy.

We intend to continue to make acquisitions and other investments to support our business growth and may require additional funds to respond to business challenges, including the need to complement our growth strategy, increase market share in our current markets or expand into other markets, or broaden our technology, intellectual property or manufacturing capabilities. Accordingly, we may need to obtain equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. The Credit Agreement and any debt financing we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.

~~Numerous factors may cause us not to maintain the revenue growth that we have historically experienced.~~

Although our revenue has grown from $20.6 million for the year ended December 31, 2019 to $161.1 million for the year ended December 31, 2022, we may not be able to maintain our historical rate of revenue growth. We believe that our future revenue growth will depend on many factors, a number of which are out of our control, including among others, our ability to:

~~We cannot assure you that we will be successful in addressing the factors described above and continuing to grow our business and revenue.~~

Errors or defects in the software we use or custom parts we manufacture could cause us to incur additional costs, lose revenue and business opportunities, damage our reputation and expose us to potential liability.

The sophisticated software we use and the often complex custom parts we manufacture may contain errors, defects or other performance problems at any point in the life of the software or custom parts. If errors or defects are discovered in our current or future software or in the custom parts we manufacture for customers, we may not be able to correct them in a timely manner or provide an adequate response to our customers. We may therefore need to expend significant financial, technical and management resources, or divert some of our development resources, in order to resolve or work around those errors or defects. Particularly in the medical sector, errors or defects in our software or custom parts we manufacture could lead to claims by patients against us and our customers and expose us to lawsuits that may damage our and our customers’ reputations. Claims may be made by individuals or by classes of users. Our product liability and related insurance policies may not apply or sufficiently cover any product liability lawsuit that arises from defective software we may use or the custom parts we manufacture. Customers such as our collaboration partners may also seek indemnification for third party claims allegedly arising from breaches of warranties under our collaboration agreements.

Errors, defects, or other performance problems in the software we use or custom parts we manufacture may also result in the loss of, or delay in, the market acceptance of our platform and digital manufacturing capabilities. Such difficulties could also cause us to lose customers and, particularly in the case of our largest customers, the potentially substantial associated revenue which would have been generated by our sales to companies participating in our customer supply chains. Technical problems, or the loss of a customer with a particularly important national or global reputation, could also damage our own business reputation and cause us to lose new business opportunities.

Interruptions to or other problems with our website, project management platform, information technology systems, manufacturing processes or other operations could damage our reputation and brands and substantially harm our business and results of operations.

The satisfactory performance, reliability, consistency, security and availability of our website and interactive project management platform, information technology systems, manufacturing processes and other operations are critical to our reputation and brands, and to our ability to effectively service customers. Any interruptions or other problems that cause any of our website, interactive project management platform or information technology systems to malfunction or be unavailable, or negatively impact our manufacturing processes or other operations, may damage our reputation and brands, result in lost revenue, cause us to incur significant costs seeking to remedy the problem and otherwise substantially harm our business and results of operations.

A number of factors or events could cause such interruptions or problems, including among others: human and software errors, design faults, challenges associated with upgrades, changes or new facets of our business, power loss, telecommunication failures, fire, flood, extreme weather, political instability, acts of terrorism, war, break-ins and security breaches, contract disputes, labor strikes and other workforce-related issues, capacity constraints due to an unusually large number of customers and potential customers accessing our website or project management platform or ordering parts at the same time, and other similar events. These risks are augmented by the fact that our customers come to us largely for our quick-turn low to mid-volume manufacturing capabilities and that accessibility and turnaround speed are often of critical importance to these customers. We are dependent upon our facilities through which we satisfy all of our production demands and in which we house all of the computer hardware necessary to operate our website and systems as well as managerial, customer service, sales, marketing and other similar functions, and we have not identified alternatives to these facilities or established fully redundant systems in multiple locations. In addition, we are dependent in part on third parties for the implementation and maintenance of certain aspects of our communications and production systems, and therefore preventing, identifying and rectifying problems with these aspects of our systems is to a large extent outside of our control.

Moreover, the business interruption insurance that we carry may not be sufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business that may result from interruptions in our offerings and manufacturing processes as a result of system failures.

~~If a natural or man-made disaster strikes any of our manufacturing facilities, we may be unable to manufacture our products for a substantial period of time and our sales will decline.~~

We manufacture the majority of our products in 12 manufacturing facilities located in the U.S. and the rest is manufactured through our supply chain partners. These facilities and the manufacturing equipment we use would be costly to replace if damaged by a natural or man-made disaster, and could require substantial lead time to repair or replace. Our facilities may be harmed by natural or man-made disasters, including, without limitation, earthquakes, floods, tornadoes, fires, hurricanes, tsunamis, nuclear disasters, terrorist attacks, or as a result of the ongoing COVID-19 pandemic. In the event any of our facilities are affected by a disaster, we may:

Although we possess insurance for damage to our property and the disruption of our business from casualties, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.

~~If our present single or limited source suppliers become unavailable or inadequate, our customer relationships, results of operations and financial condition may be adversely affected.~~

We acquire substantially all of the manufacturing equipment and certain of our materials that are critical to the ongoing operation and future growth of our business from third parties. We do not have long-term supply contracts with any of our suppliers and operate on a purchase-order basis. While most manufacturing equipment and materials for our products are available from multiple suppliers, certain of those items are only available from single or limited sources. Should any of our present single or limited source suppliers for manufacturing equipment or materials become unavailable or inadequate, or impose terms unacceptable to us such as increased pricing terms, we could be required to spend a significant amount of time and expense to develop alternate sources of supply, and we may not be successful in doing so on terms acceptable to us, or at all. Natural disasters, such as hurricanes or tornadoes, may affect our supply of materials, particularly resins, from time to time, and we may purchase larger amounts of certain materials in anticipation of future shortages or increases in pricing. In addition, if we were unable to find a suitable supplier for a particular type of manufacturing equipment or material, we could be required to modify our existing manufacturing processes and offerings to accommodate the situation. As a result, the loss of a single or limited source supplier could adversely affect our relationship with our customers and our results of operations and financial condition.

We accept payments using a variety of methods, including credit card, customer invoicing, physical bank check and payment upon delivery. As we offer new payment options to our customers, we may be subject to additional regulations, compliance requirements and fraud risk. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards or electronic checks, and it could disrupt our business if these companies become unwilling or unable to provide these services to us. We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers, process electronic funds transfers, or facilitate other types of online payments, and our business and operating results could be adversely affected.

~~Workplace accidents or environmental damage could result in substantial remedial obligations and damage to our reputation.~~

Accidents or other incidents that occur at our manufacturing and other facilities or involve our personnel or operations could result in claims for damages against us. In addition, in the event we are found to be financially responsible, as a result of environmental or other laws or by court order, for environmental damages alleged to have been caused by us or occurring on our premises, we could be required to pay substantial monetary damages or undertake expensive remedial obligations. The amount of any costs, including fines or damages payments that we might incur under such circumstances, could substantially exceed any insurance we have to cover such losses. Any of these events, alone or in combination, could have a material adverse effect on our business, financial condition and results of operations and could adversely affect our reputation.

~~Interruptions, delays in service or inability to increase capacity at third-party data center facilities could adversely affect our business and reputation.~~

Our business, brands, reputation, and ability to attract and retain customers depend upon the satisfactory performance, reliability and availability of our project management platform, and depend upon the availability of the internet and our third-party service providers. We rely on third party data center facilities operated by Amazon Web Services (“AWS”), Ace Cloud Hosting (“Ace”), and Right Networks (“Right Networks”) to host our main servers. We do not control the operation of any of AWS, Ace’s, or Right Networks’ data center hosting facilities, and they may be subject to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures, terrorist attacks and similar events. They may also be subject to interruptions due to system failures, computer viruses, software errors or subject to breaches of computer hardware and software security, break-ins, sabotage, intentional acts of vandalism and similar misconduct. And while we rely on service level agreements with our hosting providers, if they do not properly maintain their infrastructure or if they incur unplanned outages, our customers may experience performance issues or unexpected interruptions and we may not meet our service level agreement terms with our customers. We have experienced, and expect that in the future we may experience interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints. These and other similar events beyond our control could negatively affect the use, functionality or availability of our services.

Any damage to, or failure of, our systems, or those of our third-party providers, could interrupt or hinder the use or functionality of our website or project management platform. Resulting impairment of or interruptions of our business may reduce revenue, subject us to claims and litigation, cause customers to terminate their contracts and adversely affect our ability to attract new customers. If we are forced to switch hosting facilities for our main servers, we may not be successful in finding an alternative service provider on acceptable terms or in hosting the computer servers ourselves. Our business will also be harmed if customers and potential customers believe our systems are unreliable.

We and our offerings face increasing public scrutiny related to environmental, social and governance (“ESG”) activities, including diversity and inclusion, environmental stewardship, support for local communities, corporate governance, and transparency. Before making an investment on behalf of our products, we analyze a wide array of considerations, risks, and potential rewards related to the prospective investment. Among the pecuniary considerations we analyze are the present and future material ESG implications of investments. It is expected that investor demands and the prevailing legal environment will require us to spend additional resources and place increasing importance on ESG matters in our review of prospective investments and management of existing ones. Devoting additional resources to ESG matters could increase the amount of expenses we or our businesses are required to bear. Further, emphasis on ESG criteria in evaluating an investment by us or our offerings and products could lead to reduced profits.

ESG matters have been the subject of increased focus by certain U.S. regulators, among others. As a result of this regulatory focus and any related legislative and regulatory initiatives, we may be required to provide additional disclosure with respect to ESG matters. This exposes us to increased disclosure risks, for example due to a lack of available or credible data, and the potential for conflicting disclosures may also expose us to an increased risk of misstatement litigation or miss-selling allegations. Failure to manage these risks could result in a material adverse effect on our business in a number of ways.

~~Climate change, or legal, regulatory or market measures to address climate change, may materially adversely affect our financial condition and business operations.~~

There is evidence of global climate change, which could present risks to our future operations from natural disasters and extreme weather conditions, such as hurricanes, tornadoes, earthquakes, wildfires, or flooding. Such extreme weather conditions could pose physical risks to our facilities and disrupt operation of our supply chain and our customers and may increase operational costs. Concern over climate change will likely result in new legal or regulatory requirements designed to identify or mitigate the effects of climate change on the environment. For example, in the U.S., the SEC is actively engaged in climate-related rulemaking. These proposed rules, depending on how they are finally adopted, as well as other changes the government might implement, could impose significant new burdens on us and our suppliers, with significant costs and operational impacts, and adversely impact our ability to win business and operate successfully. If such laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet the regulatory obligations, and raw material sourcing, manufacturing operations and the distribution of our products may be affected.

We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and/or cash flows.

We face a wide variety of risks related to health epidemics, pandemics and similar outbreaks, especially of infectious diseases, including COVID-19. Since first reported in late 2019, the COVID-19 pandemic has dramatically impacted the global health and economic environment, including millions of confirmed cases and deaths, business slowdowns or shutdowns, labor shortages, supply chain challenges, changes in industrial product development spending, regulatory challenges, inflationary pressures and market volatility. As discussed in our prior and current Form 10-K and 10-Q filings, our operations have been and we expect will continue to be impacted by the COVID-19 pandemic and its related economic challenges. However, we have worked hard to address and mitigate adverse impacts from COVID-19, and we do not currently anticipate significant additional direct impacts from the pandemic itself on our operations. Nonetheless, we cannot predict the future course of events.

If, for example, the COVID-19 pandemic worsens, due to spread, new or additional variants, or if a new health epidemic or outbreak were to occur, we likely would experience broad and varied impacts, including potentially to our workforce and supply chain, with inflationary pressures and increased costs (which may or may not be fully recoverable or insured), schedule or production delays, market volatility and other financial impacts. If any or all of these events were to occur, we could experience adverse impacts on our overall performance, operations and financial results. Given the tremendous uncertainties and variables, we cannot at this time predict the impact of the global COVID-19 pandemic, or any future health epidemics, pandemics, or similar outbreaks, but any one of such events could have a material adverse effect on our business, financial position, results of operations and/or cash flows.

If demand for our offerings and manufacturing capabilities does not grow as expected, or if market adoption of digital manufacturing does not continue to develop, or develops more slowly than expected, our revenues may stagnate or decline and our business may be adversely affected.

The industrial manufacturing market, which today is dominated by conventional manufacturing processes that do not involve digital manufacturing technology, is undergoing a shift towards digital manufacturing. We may not be able to develop effective strategies to raise awareness among potential customers of the benefits of digital manufacturing technologies or our offerings and manufacturing capabilities may not address the specific needs or provide the level of functionality required by potential customers to encourage the continuation of this shift towards digital manufacturing. If digital manufacturing technology does not continue to gain broader market acceptance as an alternative to conventional manufacturing processes, or if the marketplace adopts digital manufacturing technologies and capacities developed by our competitors, we may not be able to increase or sustain the level of sales of our offerings and our operating results would be adversely affected as a result.

~~We could face liability if our digital manufacturing solutions are used by our customers to print dangerous objects.~~

Customers may use our digital manufacturing offerings to produce parts that could be used in a harmful way or could otherwise be dangerous. For example, there have been news reports that 3D printers were used to print guns or other weapons. We have little, if any, control, or knowledge over the parts we manufacture for our customers using our offerings, and it may be difficult, if not impossible, for us to monitor and prevent customers from having certain components of weapons or other dangerous objects manufactured with our services. While we have never digitally manufactured weapons for customers, there can be no assurance that we will not be held liable if someone were injured or killed by a weapon or other dangerous object containing a component part or parts manufactured for a customer using one of our offerings.

~~Because the digital manufacturing market is rapidly evolving, forecasts of market growth may not be accurate.~~

Market opportunity estimates and growth forecasts included in this Annual Report on Form 10-K are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The forecasts and estimates in this Annual Report on Form 10-K relating to the expected size and growth of the markets for digital manufacturing technology and other markets in which we participate may prove to be inaccurate. Even if these markets experience the forecasted growth described in this Annual Report on Form 10-K, we may not grow our business at similar rates, or at all. Our future growth is subject to many factors, including continued market adoption of our offerings, which is subject to many risks and uncertainties. Accordingly, the forecasts and estimates of market size and growth described in this Annual Report on Form 10-K should not be taken as indicative of our future growth. In addition, these forecasts do not consider the impact of the ongoing global COVID-19 pandemic, and we cannot assure you that these forecasts will not be materially and adversely affected as a result.

Unfavorable global economic conditions and changes, including changes in inflation, interest rates and geopolitical matters, could adversely affect our business, financial condition, or results of operations.

Heightened levels of inflation and the potential worsening of macroeconomic conditions, including slower growth or recession, further changes to federal government fiscal or monetary policies, tighter credit and higher interest rates, present risks for us, our suppliers and the stability of the broader manufacturing industrial base. We have experienced pricing increases from our suppliers and we have increased compensation to our employees to help ensure employee retention. To the extent inflation or other factors increase our business costs, it may not be feasible to pass price increases on to our customers or offset higher costs through manufacturing efficiencies. Inflation could also adversely affect the ability of our customers to purchase our products and higher interest rates could adversely affect the ability of our customers to invest in product innovation and development that generate demand for our custom parts. An economic downturn could result in a variety of risks to our business, including weakened demand for our products and our inability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also result in further constraints on our suppliers or cause future customers to delay making payments for our products. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

In addition, the ongoing trade war between the U.S. and China may impact the cost of raw materials, finished products or other materials used in our offerings and our ability to sell our offerings in China. Overall, the U.S.-China trade relationship remains stalled as economic and national security concerns continue to be a challenge. Other changes in U.S. social, political, regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment could also adversely affect our business. We could experience interruptions in production due to the processing of customs formalities or reduced customer spending in the wake of weaker economic performance. If global economic conditions remain volatile for a prolonged period our results of operations could be adversely affected.

~~We may not be able to adequately protect or enforce our intellectual property rights, which could impair our competitive position.~~

Our success and future revenue growth will depend, in part, on our ability to protect our intellectual property. We rely primarily on patents, licenses, trademarks, and trade secrets, as well as non-disclosure agreements and other methods, to protect our proprietary technologies and processes globally. Despite our efforts to protect our proprietary technologies and processes, it is possible that competitors or other unauthorized third parties may obtain, copy, use or disclose our technologies and processes. We cannot assure you that any of our existing or future patents will not be challenged or invalidated in court or patent office proceedings that could be time-consuming, expensive and distract us from operating our business. In addition, competitors could circumvent our patents by inventing around them. As such, any rights granted under these patents may not provide us with meaningful protection. We may not be able to obtain foreign patents corresponding to our U.S. patents. Even if foreign patents are granted, effective enforcement in foreign countries may not be available. If our patents and other intellectual property do not adequately protect our proprietary technology, our competitors may be able to offer product lines similar to ours. Our competitors may also be able to develop similar technology independently or design around our patents. Any of the foregoing events would lead to increased competition and lower our revenue or gross margin, which would adversely affect our net income.

We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims as a result of litigation or other proceedings. Our failure to expand our intellectual property portfolio could adversely affect the growth of our business and results of operations.

We may incur substantial expense and costs in protecting, enforcing and defending our intellectual property rights against third parties. Intellectual property disputes may be costly and can be disruptive to our business operations by diverting attention and energies of management and key technical personnel and by increasing our costs of doing business. Third-party intellectual property claims asserted against us could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from providing our offerings to customers, subject us to injunctions prohibiting or restricting our sale of our offerings, or require us to redesign our offerings, causing severe disruptions to our operations or the marketplaces in which we compete or require us to satisfy indemnification commitments with our customers, including contractual provisions under various license arrangements. In addition, we may incur significant costs in acquiring the necessary third-party intellectual property rights for use in our offerings. Any of these could have an adverse effect on our business and financial condition.

Patent applications in the U.S and most other countries are confidential for a period of time until they are published, and the publication of discoveries in scientific or patent literature typically lags actual discoveries by several months or more. As a result, the nature of claims contained in unpublished patent filings around the world is unknown to us, and we cannot be certain that we were the first to conceive inventions covered by our patents or patent applications or that we were the first to file patent applications covering such inventions. Furthermore, it is not possible to know in which countries patent holders may choose to extend their filings under the Patent Cooperation Treaty or other mechanisms.

In addition, we may be subject to intellectual property infringement claims from individuals, vendors and other parties, including those that are in the business of asserting patents, but are not commercializing products or services in the field of digital manufacturing, or our customers may seek to invoke indemnification obligations to involve us in such intellectual property infringement claims. Furthermore, although we maintain certain procedures to screen custom parts we manufacture on behalf of customers for infringement on the intellectual property rights of others, we cannot be certain that our procedures will be effective in preventing any such infringement. Any third-party lawsuits or other assertion to which we are subject, alleging infringement of trademarks, patents, trade secrets or other intellectual property rights either by us or by our customers may have a significant adverse effect on our financial condition.

Cybersecurity risks and cyber incidents, including cyber-attacks, could adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and confidential information in our possession and damage to our business relationships, any of which could negatively impact our business, financial condition and operating results.

There has been an increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us due to our substantial reliance on information technology. Cyber-attacks and other security threats could originate from a wide variety of sources, including cyber criminals, nation state hackers, hacktivists and other outside parties. As a result of the generally increasing frequency and sophistication of cyber-attacks, and our substantial reliance on technology, we may face a heightened risk of a security breach or disruption with respect to sensitive information resulting from an attack by computer hackers, foreign governments or cyber terrorists.

The operation of our business is dependent on computer hardware and software systems, as well as data processing systems and the secure processing, storage and transmission of information, which are vulnerable to security breaches and cyber incidents. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. In addition, we and our employees may be the target of fraudulent emails or other targeted attempts to gain unauthorized access to proprietary or other sensitive information. The result of these incidents may include disrupted operations, misstated or unreliable financial data, fraudulent transfers or requests for transfers of money, liability for stolen information, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, causing our business and results of operations to suffer. Our reliance on information technology is substantial, and accordingly the risks posed to our information systems, both internal and those provided by third-party service providers are critical. We have implemented processes, procedures and internal controls designed to mitigate cybersecurity risks and cyber intrusions and rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems; however, these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or that our financial results, operations or confidential information will not be negatively impacted by such an incident, especially because the cyber-incident techniques change frequently or are not recognized until launched and because cyber-incidents can originate from a wide variety of sources.

Those risks are exacerbated by the rapidly increasing volume of highly sensitive data, including our and our customers’ proprietary business information and intellectual property, and personally identifiable information of our employees and customers, that we collect and store in our data centers and on our networks. The secure processing, maintenance and transmission of this information are critical to our operations. A significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of employee, customer or other personally identifiable or our or our customers’ proprietary business data, whether by third parties or as a result of employee malfeasance (or the negligence or malfeasance of third party service providers that have access to such confidential information) or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property or a violation of our privacy and security policies with respect to such data could result in significant remediation and other costs, fines, litigation or regulatory actions against us and significant reputational harm.

Our proprietary digital manufacturing software contains third-party open source software components. Our use of such open source software may expose us to additional risks and harm our intellectual property and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our offerings.

Our proprietary digital manufacturing software contains components that are licensed under so-called “open source,” “free” or other similar licenses. Open source software is made available to the general public on an “as-is” basis under the terms of a non-negotiable license. We currently combine our proprietary software with open source software, but not in a manner that we believe requires the release of the source code of our proprietary software to the public. We do not plan to integrate our proprietary software with open source software in ways that would require the release of the source code of our proprietary software to the public; however, our use of open source software may entail greater risks than use of third-party commercial software. Open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. In addition, if we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release to the public or remove the source code of our proprietary software. As is standard practice among technology companies, Fathom leverages open source software in the development of its internal software. Open source software is commonly used as a foundation to which Fathom develops upon, allowing us to customize the software based on the specific needs of Fathom. This approach enables faster development of high quality software. We may also face claims alleging noncompliance with open source license terms or infringement or misappropriation of proprietary software. These claims could result in litigation, require us to purchase a costly license or remove the open source software. In addition, if the license terms for open source software that we use change, we may be forced to re-engineer our solutions, incur additional costs, or discontinue the sale of certain of our offerings if re-engineering could not be accomplished on a timely basis. Although we monitor our use of open source software to avoid subjecting our offerings to unintended conditions, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our offerings. We cannot guarantee that we have incorporated open source software in our proprietary software in a manner that will not subject us to liability or in a manner that is consistent with our current policies and procedures.

Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.

We are subject to general business regulations and laws as well as regulations and laws specifically governing the Internet and e-commerce. Existing and future laws and regulations may impede the growth of the Internet or other online services. These regulations and laws may cover taxation, restrictions on imports and exports, customs, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, broadband residential Internet access and the characteristics and quality of the types of custom parts we manufacture or may manufacture in the future. It is not clear how existing laws governing issues such as property use and ownership, sales and other taxes, fraud, libel and personal privacy apply to the Internet and e-commerce, especially where these laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues raised by the Internet or e-commerce. Those laws that do reference the Internet are being interpreted by the courts and their applicability and reach are therefore uncertain. The costs of compliance with these regulations may increase in the future as a result of changes in the regulations or the interpretation of them. Further, any failures on our part to comply with these regulations may subject us to significant liabilities. Those current and future laws and regulations or unfavorable resolution of these issues may substantially harm our business and results of operations.

~~Aspects of our business are subject to privacy, data use and data security regulations, which may impact the way we use data to target customers.~~

Privacy and security laws and regulations may limit the use and disclosure of certain information and require us to adopt certain cybersecurity and data handling practices that may affect our ability to effectively market our manufacturing capabilities to current, past or prospective customers. In many jurisdictions consumers must be notified in the event of a data security breach, and such notification requirements continue to increase in scope and cost. The changing privacy laws in the U.S., Europe and elsewhere, including the General Data Protection Regulation ("GDPR") in the European Union, which became effective May 25, 2018, and the California Consumer Privacy Act of 2018, which was enacted on June 28, 2018 and became effective on January 1, 2020, create new individual privacy rights and impose increased obligations, including disclosure obligations, on companies handling personal data. The impact of these continuously evolving laws and regulations could have a material adverse effect on the way we use data to digitally market and pursue our customers.

Our business involves the use of hazardous materials, and we and our suppliers must comply with environmental, health and safety laws and regulations, which can be expensive and restrict how we do business.

Our business involves the controlled storage, use and disposal of hazardous materials. We and our suppliers are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. Although we believe that the safety procedures utilized by us and our suppliers for handling and disposing of these materials comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials. In the event of an accident, federal, state or local authorities may curtail our use of these materials and interrupt our business operations. We do not currently maintain hazardous materials insurance coverage. If we are subject to any liability as a result of activities involving hazardous materials, our business and financial condition may be adversely affected and our reputation and brands may be harmed.

If we are unable to meet regulatory quality standards applicable to our manufacturing and quality processes for the parts we manufacture, our business, financial condition or operating results could be harmed.

As a manufacturer of CNC-machined and injection-molded custom parts, we conform to certain international standards, including International Organization for Standardization ("ISO"), 9001:2015 for our injection molding facilities and the AS9100:2016 standard for our CNC-machining facilities in Hartland, WI, Pflugerville, TX, Tempe, AZ, Newark, NY. We conform to the ISO 9001:2015 standard for our plastics manufacturing and the AS9100:2016 standard for our metals manufacturing in Hartland, WI, Pflugerville, TX, Tempe, AZ, and Newark, NY. We conform to the ISO 9001:2015 for our sheet metal custom parts and the AS9100:2016 standards for our CNC-machined custom parts in Hartland, WI, Pflugerville, TX, Tempe, AZ, and Newark, NY. We also conform to international standard ISO 9001:2015 at our manufacturing facilities in Hartland, WI, Newark, NY, Pflugerville, TX, Denver, CO, Round Rock, TX, Tempe, AZ, Miami Lakes, FL, and Elk Grove, IL. We conform to the NIST800-171 standard at our facilities in Oakland, CA and Tempe, AZ. We conform to the ITAR standard at our facilities in Hartland, WI, Ithaca, NY, Denver, CO, Tempe, AZ, and Newark, NY. Additionally, we conform to international standard ISO 13485 at our manufacturing facilities in Round Rock, TX and Miami Lakes, FL. If any system inspection reveals that we are not in compliance with applicable standards, regulators may take action against us, including issuing a corrective action request or discontinuing our certifications. If any of these actions were to occur, it could harm our reputation as well as our business, financial condition and operating results.

We are subject to environmental, health and safety laws and regulations related to our operations and the use of our digital manufacturing systems and consumable materials, which could subject us to compliance costs and/or potential liability in the event of non-compliance.

We are subject to environmental laws and regulations governing our manufacturing operations, including, but not limited to, emissions into the air and water and the use, handling, disposal and remediation of hazardous substances. A certain risk of environmental liability is inherent in our production activities. These laws and regulations govern, among other things, the generation, use, storage, registration, handling and disposal of chemicals and waste materials, the emission and discharge of hazardous materials into the ground, air or water, the cleanup of contaminated sites, including any contamination that results from spills due to our failure to properly dispose of chemicals and other waste materials, and the health and safety of our employees. Under these laws, regulations and requirements, we could also be subject to liability for improper disposal of chemicals and waste materials. Accidents or other incidents that occur at our facilities or involve our personnel or operations could result in claims for damages against us. In the event we are found to be financially responsible, as a result of environmental or other laws or by court order, for environmental damages alleged to have been caused by us or occurring on our premises, we could be required to pay substantial monetary damages or undertake extensive remedial obligations. If our operations fail to comply with such laws or regulations, we may be subject to fines and other civil, administrative or criminal sanctions, including the revocation of permits and licenses necessary to continue our business activities. In addition, we may be required to pay damages or civil judgments in respect of third-party claims, including those relating to personal injury (including exposure to hazardous substances that we generate, use, store, handle, transport, manufacture or dispose of), property damage or contribution claims. Some environmental laws allow for strict and joint and several liabilities for remediation costs, regardless of fault. We may be identified as a potentially responsible party under such laws. The amount of any costs, including fines or damages payments that we might incur under such circumstances, could substantially exceed any insurance we have to cover such losses. Any of these events, alone or in combination, could have a material adverse effect on our business, financial condition and results of operations and could adversely affect our reputation.

The cost of complying with current and future environmental, health and safety laws applicable to our operations, or the liabilities arising from past releases of, or exposure to, hazardous substances, may result in future expenditures. Any of these developments, alone or in combination, could have an adverse effect on our business, financial condition, and results of operations.

We are subject to anti-corruption laws, trade controls, economic sanctions and similar laws and regulations. Our failure to comply with these laws and regulations could subject us to civil, criminal, and administrative penalties and harm our reputation.

We service customers located in a number of countries. Doing business with foreign customers subjects us to U.S. and other anti-corruption laws and regulations imposed by governments around the world with jurisdiction over such commerce with foreign customers, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010, as well as the laws of the countries where we do business. Failure to comply with these anti-corruption laws and regulations could subject us to civil, criminal, and administrative penalties and harm our reputation. We are also subject to various U.S., international, and regional trade laws, including trade and economic sanctions and export controls, imposed by governments around the world with jurisdiction over our commerce with foreign customers. We are also subject to embargoes, sanctions, and trade and export controls imposed by the U.S. and other governments restricting or prohibiting sales to or transactions with specific persons or jurisdictions or the provision of certain items, based on their classification, to certain jurisdictions or persons or for certain end use purposes. Failure to comply with these embargoes, sanctions, and trade and export controls could subject us to civil, criminal, and administrative penalties and harm our reputation. These embargoes, sanctions, and trade and export controls can change rapidly with little to no notice, and therefore, our current and future offerings could become subject to heightened restrictions, which could increase our compliance costs and our risks of potential non-compliance in these areas.

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage being a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could harm our business, results of operations and financial condition.

~~The requirements of being a public company may strain our resources, divert management’s attention and affect its ability to attract and retain qualified board members.~~

As a public company listed in the U.S., we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and any rules promulgated thereunder, as well as the rules of The New York Stock Exchange ("NYSE"). The requirements of these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and increase demand on its systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight will be required and, as a result, management’s attention may be diverted from other business concerns. These rules and regulations can also make it more difficult for us to attract and retain qualified independent members of our board of directors. Additionally, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance. We may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. The increased costs of compliance with public company reporting requirements and our potential failure to satisfy these requirements could have a material adverse effect on our operations, business, financial condition or results of operations.

We have identified material weaknesses in our internal control over financial reporting, resulting from pervasive control deficiencies in our process level controls. Failure to achieve and maintain effective internal control over financial reporting could result in our failure to accurately or timely report our financial condition or results of operations, which could have a material adverse effect on our business and stock price.

We are required to comply with the SEC rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our controls over financial reporting. Although we are required to disclose changes made in our internal controls and procedures on a quarterly basis, we were not required to make our first annual assessment of our internal controls over financial reporting pursuant to Section 404 until this Annual Report on Form 10-K for the fiscal year ending December 31, 2022. This assessment includes disclosure of certain material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC, following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Exchange Act, or the date we are no longer an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS") Act.

As previously disclosed in our Quarterly Reports on Form 10-Q filed with the SEC during 2022, we identified material weaknesses in our internal control over financial reporting. During 2022 we implemented remediation measures related to the previously disclosed material weaknesses and concluded that these have been remediated.

As of December 31, 2022, based on the Company’s implementation of a structured internal controls design and testing process during 2022, we have identified material weaknesses in certain components of the 2013 COSO framework, including the control environment and control activities.

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

The remediation actions are subject to ongoing senior management review, as well as Audit Committee oversight. The Company will not be able to conclude whether the steps to be taken will fully remediate the material weaknesses in internal controls over financial reporting until remediation efforts are completed, tested, and evaluated for effectiveness. Until these weaknesses are remediated, the Company plans to continue to perform additional analyses and other mitigating procedures to ensure that the consolidated financial statements are prepared in accordance with U.S. GAAP.

~~The CORE Investors have substantial influence over our management and policies, and their interests may conflict with ours or yours in the future.~~

CORE Industrial Partners Fund I, L.P. and CORE Industrial Partners Fund I Parallel, L.P. (the "CORE Investors") beneficially own approximately 63.1% of our Class A common stock and Class B common stock, which generally vote together as a single class on matters submitted to a vote of our stockholders, including the election of directors. As a result, the CORE Investors have the ability to influence our business and affairs through their ability to control matters generally submitted to our stockholders for approval, including the election of directors “negative control” rights through their ownership of our common stock combined with certain supermajority voting provisions of our certificate of incorporation (our "Charter") and amended and restated bylaws (our "Bylaws"), and the provisions in the Investor Rights Agreement described below. If the other holders of our Class A common stock are dissatisfied with the performance of our board of directors, theywhose terms have no ability to remove any of our directors, unless for cause and then only upon the affirmative vote of holders of 66-2⁄3% of our outstanding Class A common stock and Class B common stock, voting as a single class.expired.

In addition, in connection with the Business Combination, we entered into the Investor Rights Agreement with the ~~CORE Investors which provides for an initial ten-person board of directors, consisting of nine individuals designated by~~"CORE Investors. The Investor Rights Agreement grants the CORE Investors and one independent director mutually agreed by the CORE Investors and Altimar Sponsor II, LLC (the "Sponsor"). The CORE Investors have certain continued nomination rights for a number of directors ranging from the majority of the board of directors to one director, while they beneficially own shares of common stock in excess of certain ownership percentage of the amount owned by the CORE Investors at the closing of the Business Combination ("Closing"), as determined in accordance with the Investor Rights Agreement. In addition, for so long as the CORE Investors beneficially own shares of common stock representing at least 5% of the amount owned by the CORE Investors at Closing, the CORE Investors will have the right to designate ~~a person~~nominees to ~~attend meetings of~~ our board (including any meetings of any committees thereof) in a non-voting observer capacity. See “Certain Relationships and Related Party Transactions, and Director Independence —Investor Rights Agreement” in our proxy statement for our 2023 annual meeting of stockholders which is expected to be filed with the SEC on or before May 1, 2023, for more details with respectBoard subject to the maintenance of certain ownership requirements. The Investor Rights ~~Agreement.~~Agreement is filed as Exhibit 10.2 to this Annual Report and is incorporated herein by reference.

The CORE Investors and their affiliates engage and will continue to engage in a broad spectrum of activities, including investments in the manufacturing and industrial industries generally, and engage and may continue to engage in the same or similar activities or related lines of business as those in which we are engaged or may engage in, directly or indirectly. In the ordinary course of their business activities, the CORE Investors and their affiliates may engage in activities in which their interests conflict withSet forth below is information concerning our interests or those of our other shareholders, such as investing in or advising businesses that directly or indirectly compete with certain portions of our business or are suppliers or partners of ours. Our Charter provides that none of the CORE Investors, any of their affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or its affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. The CORE Investors and their affiliates also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. In addition, the CORE Investors and their affiliates may have an interest in pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you.directors:

Because we are a “controlled company” for purposes of the corporate governance requirements of the NYSE, our stockholders will not have, and may never have, the protections that these corporate governance requirements are intended to provide.

Because we are a “controlled company” for purposes of the corporate governance requirements of the NYSE, we are not required to comply with the provisions requiring that a majority of our directors be independent, the compensation of our executives be determined by independent directors or nominees for election to our board of directors be selected by independent directors. If we choose to take advantage of any or all of these exemptions, our stockholders may not have the protections that these rules are intended to provide.

Under SEC Rules, we are an “emerging growth company” and a “smaller reporting company” and the reduced SEC disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups ("JOBS") Act. As an emerging growth company, we may follow reduced disclosure requirements and do not have to make all of the disclosures that public companies that are not emerging growth companies do. We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more (as adjusted for inflation); (b) the last day of the fiscal year following the fifth anniversary of the date of the completion of the initial public offering of Fathom; (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (d) the date on which we are deemed to be a "large accelerated filer" under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for complying with new or revised accounting standards; and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for any such new or revised accounting standards.

We may choose to take advantage of some, but not all, of the available exemptions for emerging growth companies. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile.

~~In order to satisfy our obligations as a public company, we have hired, and may need to hire additional qualified accounting and financial personnel with appropriate public company experience.~~

As a public company, we must establish and maintain effective disclosure and financial controls and make changes in our corporate governance practices. We have hired and may need to hire additional accounting and financial personnel with appropriate public company experience and technical accounting knowledge. It may be difficult to retain such personnel, or to recruit additional qualified personnel if needed. Our existing operating expenses and operations will be impacted by the direct costs of our employment of additional accounting and financial personnel and the indirect consequences related to the diversion of management resources from research and development efforts.

~~The Company may be subject to securities litigation, which is expensive and could divert management attention.~~

Following the Business Combination, the per share price of our Class A common stock or the price per Warrant has been volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities litigation, including class action litigation. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could have a material adverse effect on our business, financial condition, and results of operations. Any adverse determination in litigation could also subject the Company to significant liabilities.

~~Because we became a publicly traded company by means other than a traditional underwritten initial public offering, the Company’s stockholders may face additional risks and uncertainties.~~

Because we became a publicly traded company by means of consummating the Business Combination rather than by means of a traditional underwritten initial public offering, there was no independent third-party underwriter selling the shares of the Company’s Class A common stock or warrants to purchase shares of Class A common stock ("the Warrants"), and, accordingly, the Company’s stockholders do not have the benefit of an independent review and investigation of the type normally performed by an unaffiliated, independent underwriter in a public securities offering. Due diligence reviews typically include an independent investigation of the background of the company, any advisors and their respective affiliates, review of the offering documents and independent analysis of the plan of business and any underlying financial assumptions. Although Altimar II performed a due diligence review and investigation of Fathom in connection with the Business Combination, the lack of an independent due diligence review and investigation in connection with that process increases the risk of investment in the Company because Altimar II’s due diligence review and investigation may not have uncovered facts that would be important to a potential investor.

In addition, because the Company did not become a publicly traded company by means of a traditional underwritten initial public offering, security or industry analysts may not provide, or be less likely to provide, coverage of the Company. Investment banks may also be less likely to agree to underwrite secondary offerings on behalf of the Company than they might otherwise be if the Company became a publicly traded company by means of a traditional underwritten initial public offering because they may be less familiar with the Company as a result of more limited coverage by analysts and the media. The failure to receive research coverage or support in the market for the Company’s Class A common stock could have an adverse effect on the Company’s ability to develop a liquid market for the Company’s Class A common stock.

Delaware law, our Charter and our Bylaws contain certain provisions, including anti-takeover provisions, which limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

Our Charter and the Delaware General Corporation Law ("DGCL") contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors and therefore depress the trading price of Fathom’s Class A common stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our board of directors or taking other corporate actions, including effecting changes in management. Among other things, our Charter and Bylaws include provisions regarding:

~~These provisions, alone~~Carey Chen—Director. Mr. Chen has served as a director of Fathom since December 2021. Mr. Chen has served as a member of the Board of Directors Fathom OpCo since October 2019. He has served as President of Altix Corporation, a management consulting firm, since January 2023. Mr. Chen served as Chief Executive Officer of Cadrex Manufacturing Solutions from September 2021 to October 2022 and Chief Executive Officer of Incodema Group from August 2020 to September 2021. Immediately prior, he served as Executive Chairman and President of Cincinnati Incorporated from January 2015 to July 2020. Mr. Chen served as Vice President of Hypertherm, Inc. from 2006 to 2015, and held various operating and corporate roles including Vice President and General Manager – Light Industrial Businesses, Chief Financial Officer, and Chief Information Officer. Earlier in his career, Mr. Chen served as Vice President – Finance for Wiremold | Legrand (PARIS: LR.PA); Chief Financial Officer for Bayliner Marine Corp., a division of the Brunswick Corp. (NYSE: BC); and held various financial planning and strategic development roles for AlliedSignal, Inc. (NYSE: ALD). Mr. Chen currently serves as Chairman of the Board for Roberts Hawaii, Inc., and serves as a director for Chart Industries (NYSE: GTLS), and Hisco, Inc. He is also the treasurer of the American Welding Society, serving his second term. Mr. Chen holds an MBA from the University of Illinois at Urbana-Champaign, a B.S. in Applied Mathematics from the University of California at Los Angeles, and several U.S. patents.

TJ Chung—Director. Mr. Chung has served as a director of Fathom since December 2021. Mr. Chung is a Founding Partner at CORE Industrial Partners. Before joining CORE, he spent 15 years as Chief Executive Officer / President of several high-growth electronics and technology businesses, all of which were private equity-backed or ~~together, could delay~~divisions of publicly traded corporations. He currently serves on the boards of Fathom OpCo, J&K Ingredients, Littlefuse (NASDAQ: LFUS), Airgain (NASDAQ: AIRG) and Mastercraft (NASDAQ: MCFT). Mr. Chung holds an MBA from Duke University’s Fuqua School of Business, a MS in Computer Science from North Carolina State University and a B.S. in Electrical Engineering from the University of Texas at Austin. He also serves on the advisory board of the Cockrell School of Engineering at the University of Texas at Austin and the advisory board of the Center of Entrepreneurship and Innovation at Duke University’s Fuqua School of Business.

Dr. Caralynn Nowinski Collens—Director. Dr. Nowinski Collens has served as a director of Fathom since December 2021. Dr. Collens is the Chief Executive Officer of Dimension Inx, a next-generation biofabrication company developing regenerative medical implants that repair tissues and organs. Prior to Dimension Inx, Dr. Nowinski Collens co-founded UI LABS, a first-of-its-kind technology organization focused on the digital future of industries, building the organization from concept in late 2011 through launch in 2014. As Chief Executive Officer, she drove the creation and growth of MxD, the U.S. hub for digital manufacturing

(formerly DMDII), and the City Tech Collaborative, building a network of 350+ partner organizations, deploying $100M across 75+ solution development projects, and ultimately spinning out MxD and City Tech as independent entities in 2019. After starting her first company while a joint medical/business student at the University of Illinois at Chicago, Dr. Nowinski Collens spent her early career in venture capital and corporate finance, primarily focused on technology-based university spin-outs. Dr. Nowinski Collens is the former Chairman of the Board of Directors of MxD and serves on the Executive Council of Granite Creek Capital Partners. She is also a long-time board director and current Chair of Imerman Angels (one-on-one cancer support) and the Vice Chair and Trustee of the Chicago Sunday Evening Club. Dr. Nowinski Collens holds a dual MD / MBA from the University of Illinois College of Medicine and a B.S. from Northwestern University.

Adam DeWitt—Director. Mr. DeWitt has served as a director of Fathom since December 2021. Mr. DeWitt is the chief executive officer of Grubhub Inc. where he has led all functions of the U.S. business since June 2021. Prior to this role, Mr. DeWitt was Grubhub’s president and chief financial officer. During his tenure of a decade at the company, Grubhub’s annual revenues have grown from $20 million to more than $2 billion, and he led the company through its initial public offering in 2014. Before joining Grubhub, Mr. DeWitt was the chief financial officer of publicly-held optionsXpress Holdings, Inc. Mr. DeWitt serves on the board of directors and audit committee of Ritchie Bros. Auctioneers Incorporated (NYSE: RBA), a marketplace for heavy industrial, agricultural and transportation equipment. He is also a member of the board of directors of The Joffrey Ballet and is the treasurer and a member of the board of trustees of the Bernard Zell Anshe Emet Day School. Mr. DeWitt holds a B.A. in Economics from Dartmouth College.

David Fisher—Director. Mr. Fisher has served as a director of Fathom since December 2021. Mr. Fisher has served as Chief Executive Officer and President of Enova International, Inc. (NYSE: ENVA), a provider of online financial services, since January 2013, and as Chairman of the Board of Directors of Enova since November 2014. From September 2011 to March 2012, Mr. Fisher served as Chief Executive Officer of optionsXpress Holdings, Inc. (“optionsXpress”), a retail online brokerage firm, and as Senior Vice President of Charles Schwab Corporation following its acquisition of optionsXpress. From October 2007 to September 2011, Mr. Fisher served as Chief Executive Officer of optionsXpress, from March 2007 to October 2007, as its President, and, from August 2004 to March 2007, as its Chief Financial Officer. Prior to joining optionsXpress, Mr. Fisher served as the Chief Financial Officer of Potbelly Sandwich Works from 2001 through 2004, of RBC Mortgage from 2000 through 2001 and of Prism Financial from December 1998 through January 2001. Mr. Fisher currently serves as a member of the board of directors GoHealth (NASDAQ: GOCO), a leading health insurance marketplace and Medicare-focused digital health company, and of FRISS, a provider of software solutions to insurance companies. He previously served on the board of directors of Just Eat Takeaway.com N.V., GrubHub, Inc. (NASDAQ: GRUB), Innerworkings, Inc. and Chicago Board Options Exchange. Mr. Fisher also serves on the Board of Trustees of the Museum of Science and Industry in Chicago. Mr. Fisher holds a B.S. in Finance from the University of Illinois at Urbana-Champaign and a J.D. from Northwestern University School of Law.

Maria Green—Director. Ms. Green has served as a director of Fathom since December 2021. Ms. Green retired as Senior Vice President and General Counsel of Ingersoll Rand plc (NYSE: IR) in June 2019. Immediately prior to IR, she was Senior Vice President, General Counsel and Secretary at Illinois Tool Works (NYSE: ITW). During her 18 years with ITW, Ms. Green guided the company’s expansion through both acquisitions and organic growth. As General Counsel, she led the Environmental, Health and Safety Group as well as Government Affairs and Risk Management. At Ingersoll Rand, Ms. Green was a member of the Executive Leadership Team and a trusted advisor to the Chief Executive Officer on legal, compliance and strategy issues and led a team of 75 lawyers based in the U.S., Europe, Asia Pacific and Latin America. She co-chaired the Global Business Integrity Council and served as executive sponsor for an employee resource group. Ms. Green joined the board of Tennant Company (NYSE: TNC) as an independent director in March 2019 (Audit and Governance Committees) and was elected to the board of Wisconsin Energy Group (NYSE: WEC) in July 2019 (Audit and Governance Committees). Most recently, Ms. Green joined the board of directors of Littlefuse (NASDAQ: LFUS) in February 2020 (Audit and Governance Committees). Ms. Green holds a B.A. from the University of Pennsylvania and JD from Boston University Law School.

Peter Leemputte—Director. Mr. Leemputte has served as a director of Fathom since December 2021. Mr. Leemputte was Chief Financial Officer and Treasurer at Keurig Green Mountain, Inc. (NASDAQ: KDP) from 2015 to 2016. Prior to Keurig Green Mountain, Inc., Mr. Leemputte was Executive Vice President and Chief Financial Officer at Mead Johnson Nutrition (NYSE: MJN) from 2008 to 2015. Before joining Mead Johnson Nutrition, Mr. Leemputte was Senior Vice President and Chief Financial Officer for Brunswick Corp. (NYSE: BC), and Chicago Title Corp. He has also held various management positions at Mercer Management Consulting, Armco Inc., FMC Corp. and BP (NYSE: BP). Mr. Leemputte has extensive experience in leading finance, accounting, IT, tax, audit and investor relations functions as a Chief Financial Officer at major U.S. corporations, and also led several IPO’s and sale of the companies. Mr. Leemputte has served on the board of Mastercraft (NASDAQ: MCFT) since 2016, Ecogensus LLC (privately held) since 2018, and served on the board of Beazer Homes (NYSE: BZH) from 2005 to 2020. Mr. Leemputte holds an MBA in Finance from the University of Chicago Booth School of Business and a B.S. in Chemical Engineering from Washington University in St. Louis.

Ryan Martin—Director and Chief Executive Officer. Mr. Martin has served as the Chief Executive Officer of Fathom since January 2019 and as a Director of Fathom since December 2021. During this time, he has led the company through unprecedented growth, digital transformation, and multiple add-on acquisitions, which have rapidly expanded Fathom into one of the largest privately held digital manufacturers in North America. Prior to his role at Fathom, he most recently spent over 13 years in leadership roles at General Electric Company (NYSE: GE) spanning across sales, marketing, product development and general management. In his last role at GE, he served as an Executive on the GE additive leadership team ("GE Additive"), where he led the integration and expansion of the commercial team which experienced exponential growth and record-breaking orders in 2018. He was also critical in the integration of two international acquisitions into GE Additive and led the commercialization of multiple new products that GE Additive brought to the market. Mr. Martin graduated with Honors from the Ivy College of Business at Iowa State University. He is also an active member of Young Presidents Organization.

John May—Director. Mr. May has served as a director of Fathom since December 2021. Mr. May is the Founder and Managing Partner of CORE Industrial Partners. Before founding CORE, he spent 18 years working on transactions with several private equity sponsors, principally with the Blackstone Group (NYSE: BX) and H.I.G. Capital. In addition to Fathom's board, he currently serves on the boards all other CORE portfolio companies including Arizona Natural Resources, J&K Ingredients, Kelvix, Saylite, TCG Legacy, 3DXTECH, CGI Automated Manufacturing and RE3DTECH. Mr. May has both served on the board and was a divisional Chief Executive Officer for a public company. Mr. May graduated with Honors from East Carolina University with a business degree. He currently serves on the East Carolina University Foundation, Inc. Board of Directors and is Co-Vice Chair of the Investment Committee. He is also Co-Founder and Chairman of the Board for Imerman Angels, a 501(c)(3) Chicago-based cancer support organization. He also is an active member of YPO (Young Presidents’ Organization), a member of the Economic Club of Chicago and an Advisory Board member of the Industrial Exchange.

Robert Nardelli—Director. Mr. Nardelli has served as a director of Fathom since December 2021. Mr. Nardelli was Chairman and Chief Executive Officer of Chrysler Corp. from 2007 to 2009. Prior to Chrysler, he was Chairman, President and Chief Executive Officer of The Home Depot (NYSE: HD). Before joining The Home Depot, he spent nearly 30 years at General Electric (NYSE: GE), holding the positions of President and Chief Executive Officer of GE Transportation Systems and Chief Executive Officer of GE Power Systems, among several other executive positions. In 2009, Mr. Nardelli joined Cerberus Capital Management as Chief Executive Officer of its operations group, Cerberus Operations and Advisory Company. For the next three years, he and his team turned around several distressed portfolio companies and developed a comprehensive turnaround toolkit. In 2012, Mr. Nardelli founded XLR-8, where he continues to play a key role as Senior Advisor to leading companies. Mr. Nardelli serves as a Partner and Senior Advisor to Emigrant Capital Corp.; Senior Advisor to EY, among others plus a number of equity investments. He sits on the Board of Directors for BWXT Technologies, Inc. (NYSE: BWXT), plus on the board of a number of private equity investment firms. Mr. Nardelli holds an MBA from the University of Louisville and a B.S. from Western Illinois University.

We have a standing audit committee consisting of Dr. Nowinski Collens and Messrs. Dewitt, Leemputte, and Nardelli, with Mr. Leemputte serving as chairman. The audit committee assists the board in overseeing our accounting and financial reporting processes and the audits of our financial statements. Our board has affirmatively determined that each of Dr. Nowinski Collens and Messrs. Dewitt, Leemputte, and Nardelli meets the definition of “independent director” for purposes of the applicable stock exchange rules and the independence requirements of Rule10A-3under the Exchange Act. Our board has also determined that each of Messrs. Dewitt, Leemputte, and Nardelli qualifies as an “audit committee financial expert” as defined by SEC rules.

(1) See Item 10. Directors, Executive Officers and Corporate Governance – Board Structure” for Mr. Martin’s biography.

Mark Frost—Chief Financial Officer. Mr. Frost has served as the Chief Financial Officer at Fathom OpCo since April 2021. He brings over 30 years of financial and executive level management experience from both private and public companies. Most recently, Mr. Frost served as the Chief Financial Officer of Argon Medical Devices. Prior to Argon, Mr. Frost served as the Chief Financial Officer for three public healthcare companies including Analogic (NASDAQ: ALOG), AngioDynamics (NASDAQ: ANGO) and AMRI (NASDAQ: AMRI). Mr. Frost began his career with General Electric (NYSE: GE), where he served in a variety of roles in finance for 14 years. Mr. Frost holds a B.A. in International Relations and Economics from Colgate University. He is also a graduate of the INSEAD Global Executive Program and GE Financial Management Program.

Kurt Bork—Vice President of Sales. Mr. Bork has served as the Vice President of Sales and Marketing at Fathom since March 2023. Mr. Bork has more than 20 years of industry experience. Mr. Bork previously served as Vice President of Sales and Business Development at Mayville Engineering Company (NYSE: MEC), a publicly traded, Wisconsin-based company that provides a variety of manufacturing solutions across diverse end-markets. During his nine-year tenure at MEC, Mr. Bork led commercial and business development activities for the company’s extensive manufacturing infrastructure, including 20 facilities across the U.S. Prior to MEC he was Vice President, Business Development for ATEK Metal Technologies where he oversaw the business development efforts for the company’s highly engineered aluminum castings. Mr. Bork holds an MBA and a B.A. from Marquette University.

There are no family relationships among any of the directors or ~~prevent hostile takeovers~~executive officers of the Company.

Effective upon the consummation of the Business Combination, Fathom adopted a code of business ethics and conduct that applies to all of its directors, officers and other employees, including those officers responsible for financial reporting. The code of business conduct and ethics is available on Fathom’s website at www.investors.fathommfg.com. Fathom expects that, to the extent required by law, any amendments to the code, or any waivers of its requirements, will be disclosed on its website.

Fathom’s Insider Trading Policy, which applies to all employees, officers, and directors, prohibits hedging of Fathom’s securities and engaging in any other transactions involving Fathom-based derivative securities, regardless of whether the covered person is in possession of material, non-public information. The policy does not affect the vesting of securities acquired pursuant to Fathom’s incentive, retirement or stock purchase plans, or other transactions involving purchases and sales of company securities between a covered person and Fathom. Fathom’s Insider Trading Policy also prohibits purchasing Fathom common stock on margin (e.g., borrowing money to fund the stock purchase) and pledging Fathom securities. The Insider Trading Policy is available on Fathom’s website at www.investors.fathommfg.com.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who beneficially own more than 10% of our outstanding common stock to file reports of their stock ownership and changes in ~~control or changes~~their ownership of our common stock with the SEC. To the Company’s knowledge, including the Company’s review of the copies of all such reports furnished to the Company and written representations that no other reports were required in 2022, all Section 16(a) filing requirements were satisfied on a timely basis, except the following reports: (i) one Form 4 filed in October 2022 (reporting one transaction) for Robert Nardelli, (ii) one Form 4 filed in October 2022 (reporting one transaction) for Richard Stump, and (iii) one Form 4 filed in October 2022 (reporting one transaction) for Carey Chen.

As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to smaller reporting companies, as such term is defined in the rules promulgated under the Securities Act. This section describes the material components of the executive compensation program for our Chief Executive Officer and our two other most highly compensated executive officers serving on December 31, 2022, whom we refer to as our Named Executive Officers (“NEOs”).

The objective of Fathom’s compensation program is to provide a total compensation package to each NEO that will enable Fathom to attract, motivate and retain outstanding individuals, align the interests of our executive team with those of our stockholders, encourage individual and collective contributions to the successful execution of our short and long-term business strategies, and reward NEOs for favorable performance.

The following table shows information concerning the annual compensation for services provided to Fathom by our NEOs during the fiscal years ended December 31, 2022 and 2021. Additional information on our NEOs annual compensation for the 2022 fiscal year is provided in the narrative sections following the Summary Compensation Table.

Base salary is paid to attract and retain qualified talent and is set at a level that is commensurate with the executive’s duties and authorities, contributions, prior experience and sustained performance, as well as considering market competitive levels. For 2022, the NEOs had the following base salary rates: Mr. Martin—$425,000, Mr. Stump—$350,000 and Mr. Frost—$350,000.

Annual cash bonuses can be earned if the NEOs achieve certain annual financial and operating performance metrics. For the 2022 performance year, target bonus opportunities as a percent of salary were Mr. Martin 100% of salary and Messrs. Frost and Stump 60% of base salary, with a maximum performance-based payout of up to 200% of target. In 2022, no annual cash bonuses were earned since performance was below the threshold goals set at the start of the year.

In March 2022, Mr. Stump received a retention performance bonus of $250,000. The bonus was pursuant to a 2020 amendment to his September 23, 2019, employment agreement (with such employment agreement otherwise being superseded by the Stump Offer Letter as defined in “—Agreements with our NEOs”), whereby if he remained employed following the delivery of the audited financial statements of Fathom OpCo for the 12 month period ending December 31, 2021, he would be eligible for a retention bonus of $250,000.

In addition to any individual benefits set forth in each NEOs employment arrangements (described below), the NEOs are generally eligible to participate in our executive and employee health and welfare, retirement and other employee benefit programs on the same basis as ~~a Delaware corporation,~~other employees of Fathom, ~~generally is~~ subject to ~~provisions~~applicable law. Each NEO participates in the Midwest Composite Technologies, LLC 401(k) Profit Sharing Plan, sponsored by Fathom’s indirect subsidiary Midwest Composite Technologies, LLC under which eligible employees may elect to contribute a portion of ~~Delaware law, including~~their eligible compensation as pre-tax or Roth deferrals in accordance with the ~~DGCL, although~~limitations imposed under the Internal Revenue Code of 1986, as amended (the “Code”). The plan provides for a safe harbor matching contribution equal to 100% of a participant’s salary deferrals, up to 4% of a participant’s total compensation, subject to limitations imposed under the Code. Other than the Fathom ~~has elected~~Executive Severance and Change in Control Plan (the “Severance Plan”), described in more detail below under Potential Payments Upon Termination or Change in Control, Fathom did not ~~to be governed by Section 203 of the DGCL.~~maintain any executive-specific benefit programs in 2022.

Any provision of our Charter, our Bylaws or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for stockholders to receive a premium for their shares of Fathom’s capital stock and could also affect the price that some investors are willing to pay for Fathom’s common stock.

In addition, the provisions of the Investor Rights Agreement, as described herein, provide the stockholders party thereto with certain board representation and other consent rights that could also have the effect of delaying or preventing a change in control.

Our Charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Fathom’s stockholders, which could limit Fathom’s stockholders’ ability to obtain a favorable judicial forum for disputes with Fathom or its directors, officers or other employees.

The Charter provides that, unless Fathom consents in writing to the selection of an alternative forum, (a) any derivative action or proceeding brought on behalf of Fathom, (b) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee, agent or stockholder of Fathom to Fathom or Fathom’s stockholders, or any claim for aiding and abetting such alleged breach, (c) any action asserting a claim against Fathom or any current or former director, officer, other employee, agent or stockholder of Fathom (i) arising pursuant to any provision of the DGCL, our Charter (as it may be amended or restated) or our Bylaws or (ii) as to which the DGCL confers jurisdiction on the Delaware Court of Chancery or (d) any action asserting a claim against Fathom or any current or former director, officer, other employee, agent or stockholder of Fathom governed by the internal affairs doctrine of the law of the State of Delaware shall, as to any action in the foregoing clauses (a) through (d), to the fullest extent permitted by law, be solely and exclusively brought in the Delaware Court of Chancery; provided, however, that the foregoing shall not apply to any claim arising under federal securities laws, including the Securities Act as to which the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum. Notwithstanding the foregoing, the provisions of Article XI of our Charter will not apply to suits brought to enforce any liability or duty created by the Exchange Act, or any other claim for which the federal district courts of the United States of America shall be the sole and exclusive forum. Further, Section 22 of the Securities Act of 1933, as amended ("Securities Act"), creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by that act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce this forum selection provision as written as to claims arising under the Securities Act.

This choice-of-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Fathom or its directors, officers, stockholders, agents, or other employees, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our Charter inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, Fathom may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect Fathom’s business, financial condition and results of operations and result in a diversion of the time and resources of Fathom’s management and board of directors.

~~Our Charter does not limit the ability of the CORE Investors to compete with us.~~

The CORE Investors and their affiliates engage in a broad spectrum of activities, including investments in the financial services and technology industries. In the ordinary course of their business activities, the CORE Investors and their affiliates may engage in activities where their interests conflict with Fathom’s interests or those of its stockholders. Our Charter provides that none of the CORE Investors, any of their affiliates or any director who is not employed by Fathom (including any non-employee director who serves as one of its officers in both his director and officer capacities) or its affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which Fathom operates. The CORE Investors and their affiliates also may pursue, in their capacities other than as directors of Fathom, acquisition opportunities that may be complementary to Fathom’s business, and, as a result, those acquisition opportunities may not be available to Fathom. In addition, the CORE Investors may have an interest in pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you.

We are a holding company and our only material asset is our interest in Fathom OpCo, and we are accordingly dependent upon distributions made by Fathom OpCo to pay dividends, taxes, and other expenses, including payments under the Tax Receivable Agreement ("TRA").2021 Omnibus Incentive Plan

We ~~are a holding company with no material assets other than our Class A common units in Fathom OpCo ("New Fathom Units") which correspond on a one-to-one basis with~~established the outstanding shares of our Class A common stock. As a result, Fathom has no independent means of generating revenue or cash flow. Our ability to pay taxes, and other expenses, including payments under the TRA, described in Note 21 - ~~Income Taxes~~ within our consolidated financial statements, will depend on the financial results and cash flows of Fathom OpCo and its subsidiaries and the distributions we receive from Fathom OpCo. Deterioration in the financial condition, earnings, or cash flow of Fathom OpCo and its subsidiaries for any reason could limit or impair Fathom OpCo’s ability to pay such distributions. Additionally, to the extent that we need funds and Fathom OpCo and/or its subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of any financing arrangements, or Fathom OpCo and/or its subsidiaries are otherwise unable to provide such funds, it could materially adversely affect Fathom’s liquidity and financial condition.

Subject to the discussion below, Fathom OpCo will continue to be treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax. Instead, taxable income will be allocated to holders of New Fathom Units. Accordingly, we will be required to pay income taxes on our allocable share of any net taxable income of Fathom OpCo. Under the terms of the Second Amended and Restated Limited Liability Company Agreement of Fathom Holdco, LLC, dated as of December 23, 2021 (the "Fathom Operating Agreement"), Fathom OpCo is obligated to make tax distributions to holders of the New Fathom Units (including us) calculated at certain assumed tax rates. In addition to tax expenses, we will also incur expenses related to our operations, including our payment obligations under the TRA, which likely will be significant, and some of which will be reimbursed by Fathom OpCo (excluding payment obligations under the TRA). We intend to cause Fathom OpCo to make ordinary distributions and tax distributions to holders of New Fathom Units on a pro rata basis in amounts sufficient to cover all applicable taxes, relevant operating expenses, payments by us under the TRA and dividends, if any, declared by us. However, as discussed above, Fathom OpCo’s ability to make such distributions may be subject to various limitations and restrictions including, but not limited to, retention of amounts necessary to satisfy the obligations of Fathom OpCo and its subsidiaries and restrictions on distributions that would violate any applicable restrictions contained in Fathom OpCo’s or its subsidiaries’ debt agreements, or any applicable law, or that would have the effect of rendering Fathom OpCo or a subsidiary insolvent. To the extent that Fathom is unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments under the TRA, which could be substantial.

Additionally, although Fathom OpCo and its subsidiaries generally will not be subject to any entity-level U.S. federal income tax, they may be liable for audit adjustments to prior year tax returns, absent an election to the contrary. In the event Fathom OpCo’s calculations of taxable income are incorrect, Fathom OpCo, its subsidiaries and/or their respective owners, including us, in later years may be subject to material liabilities as a result of such audits.

If Fathom OpCo were treated as a corporation for U.S. federal income tax or state tax purposes, then the amount available for distribution by Fathom OpCo could be substantially reduced and the value of our common stock will likely be adversely affected.

An entity that would otherwise be classified as a partnership for U.S. federal income tax purposes (such as Fathom OpCo) may nonetheless be treated as, and taxable as, a corporation if it is a “publicly traded partnership” unless an exception to such treatment applies. An entity that would otherwise be classified as a partnership for U.S. federal income tax purposes will be treated as a “publicly traded partnership” if interests in such entity are traded on an established securities market or interests in such entity are readily tradable on a secondary market or the substantial equivalent thereof. If Fathom OpCo were determined to be treated as a “publicly traded partnership” (and taxable as a corporation) for U.S. federal income tax purposes, Fathom OpCo would be taxable on its income at the U.S. federal income tax rates applicable to corporations and distributions by Fathom OpCo to its partners (including Fathom) could be taxable as dividends to such partners to the extent of the earnings and profits of Fathom OpCo. In addition, we would no longer have the benefit of increases in the tax basis of Fathom OpCo’s assets as a result of exchanges of New Fathom Units for shares of Fathom Class A common stock. Pursuant to the Fathom Operating Agreement, the Exchange TRA Parties (as defined in the TRA) may, from time to time, subject to the terms of the Fathom Operating Agreement, exchange their interests in Fathom OpCo and have such interests redeemed by Fathom OpCo for cash or Fathom stock. While such exchanges could be treated as trading in the interests of Fathom OpCo for purposes of testing “publicly traded partnership” status, the Fathom Operating Agreement requires us to impose restrictions on exchanges that we determine to be necessary or advisable so that Fathom OpCo is not treated as a “publicly traded partnership” for U.S. federal income tax purposes. Accordingly, while such position is not free from doubt, Fathom OpCo is expected to be operated such that it is not treated as a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes and we intend to take the position that Fathom OpCo is not so treated as a result of exchanges of its interests pursuant to the Fathom Operating Agreement.

Pursuant to the TRA, we will be required to make payments to Blocker TRA Parties and Exchange TRA Parties (each as defined in the Tax Receivable Agreement) for certain tax benefits we may claim and those payments will likely be substantial.

The Exchange TRA Parties (as defined in the TRA) may in the future exchange their New Fathom Units, together with the cancellation of an equal number of shares of Class B common stock, for shares of Fathom Class A common stock, or cash pursuant to the Fathom Operating Agreement. Such transactions are expected to result in increases in our allocable share of the tax basis of the tangible and intangible assets of Fathom OpCo and its subsidiaries. These increases in tax basis may increase (for income tax purposes) depreciation and amortization deductions and therefore reduce the amount of income or franchise tax that Fathom would otherwise be required to pay in the future had such sales and exchanges never occurred. Additionally,Omnibus Plan in connection with the closing of the Business Combination ~~we acquired~~in 2021. The purpose of the ~~Blockers (as defined~~Omnibus Plan is: (i) to encourage profitability and growth through short-term and long-term incentives that are consistent with Fathom’s objectives; (ii) to give its participants an incentive for excellence in individual performance; (iii) to promote teamwork among its participants; and (iv) to give us a significant advantage in attracting and retaining key employees, directors, and consultants. The 2021 Omnibus Plan provides for the grant of awards in the ~~TRA) from~~form of incentive stock options within the ~~Blocker TRA Parties (as~~meaning of Section 422 of the Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based awards (including performance shares, performance units and performance bonus awards), and other stock-based or cash-based awards. A total of 16,737,876 shares of Fathom Class A common stock was initially reserved and available for issuance under the 2021 Omnibus Plan.

For regular annual equity grants in 2022, executives including the NEOs, received RSUs and nonqualified stock options that were equally weighted based on the fair value at date of grant. On February 25, 2022, the Company granted the following RSUs and options to the NEOs: 50,619 RSUs and 103,687 options to Mr. Martin, and 33,746 RSUs and 69,125 options to each of Messrs. Frost and Stump. The RSUs and options vest ratably in annual equal installments over three years, generally subject to the continued service of the NEO through each applicable vesting date.

Prior to the closing of the Business Combination, our employees were employed by Fathom OpCo, which was formed in April 2021 in connection with a series of transactions (the “Reorganization”) whereby Fathom OpCo became the direct parent to MCT Group Holdings, LLC (and its subsidiaries), a Delaware limited liability company (“MCT Holdings”), and Incodema Holdings, LLC, a Delaware limited liability company (“Incodema Holdings”). Following the closing of the Business Combination, Fathom became the managing member of Fathom OpCo and the employer to Fathom OpCo’s employees. Historically, Fathom OpCo maintained the MCT Group Holdings, LLC 2019 Phantom Equity Bonus Plan (the “MCT Phantom Plan”) and the Incodema Holdings LLC 2020 Phantom Equity Bonus Plan (the “Incodema Phantom Plan,” together with the MCT Phantom Plan, the “Prior Phantom Plans.”) Messrs. Martin and Stump participated under the MCT Phantom Plan and were eligible to receive awards of phantom equity at the discretion of the board of managers of MCT Holdings. In April 2021, prior to the Reorganization, Mr. Stump received an award of 500 phantom units under the MCT Phantom Plan. Messrs. Martin and Frost did not receive any phantom equity awards under the Prior Phantom Plans in 2021.

Phantom equity units awarded to Messrs. Martin and Stump in 2021 and prior years under the MCT Phantom Plan were subject to the following vesting conditions: (i) 25% would vest subject to the NEOs continued service with the MCT Group on each of the first four anniversaries of the NEOs employment commencement date, and would be accelerated in connection with a change in control of MCT Holdings; and (ii) 75% would vest if MCT Holdings’ investors realized a multiple on invested capital equal to at least 2.0x in connection with a change in control of MCT Holdings.

In connection with the Reorganization, the Prior Phantom Plans and all awards outstanding thereunder were terminated and replaced by a single phantom equity plan sponsored by Fathom OpCo and new awards thereunder, all of which contained terms and conditions that were substantially similar to the Prior Phantom Plans (the “Combined Phantom Plan”) and awards. The Combined Phantom Plan had a pool of phantom units equal to up to 10% of the total value receivable by common unit holders of Fathom OpCo on a sale of Fathom OpCo. Only 62.5% of the pool, or 6.25% of the total value receivable by common unit holders of Fathom OpCo on a sale of Fathom OpCo, had been granted prior to the Business Combination. Mr. Frost received a grant of 1,000 phantom units under the Combined Phantom Plan in July 2021 and Messrs. Martin and Stump’s awards under the Prior Phantom Plans were terminated and replaced by phantom units under the Combined Phantom Plan.

In connection with the closing of the Business Combination, all vested time-based phantom unit awards under the Combined Phantom Plan outstanding immediately prior to the consummation of the Merger and held by individuals who were employed by or performing services for Fathom OpCo or its subsidiaries or affiliates as of the Closing, were cancelled and replaced with grants of restricted shares of Fathom Class A common stock under the 2021 Omnibus Plan. The vesting restrictions on the restricted shares lapsed on the date Fathom filed a Form S-8 registration statement covering the shares of Fathom Class A common stock issuable under the 2021 Omnibus Plan; provided, that the holder was employed or performing services for Fathom on such date. The shares are also subject to the following transfer restrictions: (i) 25% of the shares may be traded upon the expiration of the lock-up period applicable to the shares of Fathom Class A common stock held by the CORE Investors and the CORE Affiliates; (ii) 25% of the shares may be traded if the CORE Investors and the CORE Affiliates collectively Sell-Down an Investor Cumulative Sale Percentage equal to at least 60%; (iii) 25% of the shares may be traded if the CORE Investors and the CORE Affiliates collectively Sell-Down an Investor Cumulative Sale Percentage equal to at least 80%; and (iv) 25% of the shares may be traded if the CORE Investors and the CORE Affiliates collectively Sell-Down an Investor Cumulative Sale Percentage equal to at least 95% (the “Fathom Transfer Restrictions”; the capitalized terms used in clauses (i) through (iv) above in this sentence are defined below to the extent not previously defined).

In addition, in connection with the Business Combination, all unvested time-based phantom unit awards and performance-based phantom unit awards held by individuals who were employed by or performing services for Fathom OpCo or its subsidiaries or affiliates as of the Closing were cancelled and replaced with grants of RSUs with respect to Fathom Class A common stock under the 2021 Omnibus Plan, with time-based RSUs being granted to replace time-based phantom units and performance-based RSUs being granted to replace performance-based phantom units. The time-based vesting RSUs have the same vesting schedule as the cancelled time-based vesting phantom units. Once a time-based RSU is vested, any share deliverable to the RSU holder will be subject to the Fathom Transfer Restrictions.

The performance-based vesting RSUs vest subject to the holder’s continued service through each of the following vesting events: (i) 25% of the RSUs will vest if the CORE Investors and the CORE Affiliates collectively Sell-Down an Investor Cumulative Sale Percentage equal to at least 60%; (ii) 25% of the RSUs will vest if the CORE Investors and the CORE Affiliates collectively Sell-Down an Investor Cumulative Sale Percentage equal to at least 80%; and (iii) 50% of the RSUs will vest if the CORE Investors and the CORE Affiliates collectively Sell-Down an Investor Cumulative Sale Percentage equal to at least 95%.

“CORE Investors” means CORE Industrial Partners Fund I, L.P., a Delaware limited partnership, CORE Industrial Partners Fund I Parallel, L.P., a Delaware limited partnership, CORE Fund I Holdings-2, L.P., a Delaware limited partnership, and CORE Fund I Holdings-5 LP, a Delaware limited partnership.

“CORE Affiliates” means, with respect to the CORE Investors, any person directly controlled by, directly controlling or under direct common control with the CORE Investors. For the avoidance of doubt, CORE Affiliates shall not include co-investors of the CORE Investors.

“Investor Cumulative Sale Percentage” means, on any date of determination, in the ~~TRA). Certain tax assets~~case of a Going Public Transaction, a percentage equal to the quotient of (A) a number equal to the aggregate number of shares of Fathom Class A common stock subject to a Sell-Down by the CORE Investors and ~~attributes~~the CORE Affiliates from and after the consummation of Fathom OpCo’s Going Public Transaction and to and including such date, divided by (B) the aggregate number of shares of Fathom Class A common stock held by the CORE Investors and the CORE Affiliates upon the consummation of the ~~Blockers~~Going Public Transaction and prior to any Sell-Down by the CORE Investors and the CORE Affiliates. The Investor Cumulative Sale Percentage may be ~~available~~adjusted to ~~reduce~~account for any stock splits, reverse stock splits, combinations, or similar structural changes to the ~~amount~~shares of ~~income~~Fathom Class A common stock. For the avoidance of doubt, if, on the date of determination, the calculation of the Investor Cumulative Sale Percentage results in either the vesting of RSUs or ~~franchise tax~~the removal of certain restrictions on the transfer of shares of Fathom Class A common stock as

described herein, then any release of any earn-out shares shall not negate the result of such vesting trigger being achieved or transfer restriction being removed.

“Going Public Transaction” means (i) the consummation of Fathom OpCo’s first underwritten Public Offering of its common stock under the Securities Act, or (ii) whether in one or a series of transactions, any merger, consolidation or other business combination pursuant to which the business of Fathom OpCo is combined with that ~~we would otherwise be required~~of a special purpose acquisition company or other blank-check company that has a class of equity securities publicly listed on the New York Stock Exchange or NASDAQ.

“Public Offering” means the sale in an underwritten public offering registered under the Securities Act of equity securities of Fathom OpCo or a corporate successor to ~~pay in~~Fathom OpCo.

“Sell-Down” means, with respect to any person, (i) any sale by such person pursuant to a registered public offering under the ~~future had we not acquired~~Securities Act, and (ii) any sale by such person to the ~~Blockers.~~public pursuant to Rule 144 promulgated under the Securities Act effected through a broker, dealer or market maker (other than pursuant to Rule 144(b) prior to a Public Offering).

In connection with the Business Combination, we adopted the Fathom 2021 Employee Stock Purchase Plan (“ESPP”), a broad-based benefit plan in which our employees, including our NEOs, may purchase shares of Fathom’s Class A common stock at up to a 15% discount. The ESPP includes an initial share reserve of 1,350,806 shares of Class A common stock issuance pursuant to future grants under the ESPP. The number of shares of Fathom Class A common stock initially reserved for issuance under the ESPP will automatically increase on the first trading day of each calendar year, beginning in 2023, by 1% of the total number of shares of Fathom Class A common stock outstanding on the last day of the prior calendar year.

The Company has entered into agreements with each of the NEOs, the relevant terms of which are summarized below. Capitalized terms appearing in the following descriptions but not defined therein are as defined in the applicable agreement. The below summary is qualified in all respects by reference to the underlying agreement.

Ryan Martin. Mr. Martin is party to an offer letter with Fathom, dated December 23, 2021 (the “Martin Offer Letter”), under which he serves as Chief Executive Officer of Fathom. The Martin Offer Letter provides for an annual base salary of $425,000 and, beginning in 2022, a target annual bonus opportunity equal to 100% of his annual base salary during the relevant performance period. Additionally, the letter provides that Mr. Martin is entitled to participate in the Severance Plan (as described in the Severance Plan section) and for the following unique benefits: (i) a capped monthly health premium of no more than $524 per month, (ii) reimbursement of the premiums for an individual life insurance policy with a face value of at least $1,000,000, and (iii) a monthly car allowance of $1,000.

Mark Frost. Mr. Frost is party to an amended and restated employment agreement with Fathom, dated December 23, 2021 (the “Frost Employment Agreement”), under which he serves as Chief Financial Officer of Fathom. The agreement provides for an annual base salary of $350,000 and a target annual bonus opportunity equal to 50% of his annual base salary in 2021 and 60% of his annual base salary in 2022. The Frost Employment Agreement also provides that Mr. Frost is entitled to certain unique benefits, including: (i) four weeks’ paid vacation, (ii) reimbursement of pre-approved and documented relocation and travel expenses, up to $40,000, and eligibility for reimbursement of additional relocation benefits in the future (if applicable) and (iii) payment or reimbursement for reasonable costs incurred by Mr. Frost for temporary housing and travel for up to five months following his start date, from his then-current home to a home near the Company’s offices.

In the case of a termination without cause by the Company or a resignation for Good Reason by Mr. Frost, he would be entitled to (i) salary continuation for 12 months following his termination date, (ii) payment of a pro rata portion of his annual bonus for the year of termination and (iii) up to 12 months of COBRA premiums for Mr. Frost and his dependents, less the amount Mr. Frost would have been required to contribute for such coverage if he was still an active employee. In the case of a “CIC Qualifying Termination” (as defined in the Frost Employment Agreement), any outstanding equity awards held by Mr. Frost under the Company’s then- current equity plan will vest. Mr. Frost is not a participant in the Company’s Severance Plan.

Richard Stump. Mr. Stump was party to an offer letter with Fathom, dated December 23, 2021 (the “Stump Offer Letter”), under which he serves as Chief Commercial Officer of Fathom. The Stump Offer Letter provided for an annual base salary of $350,000 and, beginning in 2022, a target annual bonus opportunity equal to 60% of his annual base salary during the relevant performance period. Additionally, the letter provided that Mr. Stump was entitled to participate in the Severance Plan (as described in the Severance Plan section below). In connection with the Stump Transition, Mr. Stump will continue to receive his annual base salary

as provided under the Stump Offer Letter through the Stump Separation Date. Otherwise, the term of the Stump Offer Letter, including with respect to Mr. Stump’s eligibility for the Severance Plan, are no longer in effect.

Under their arrangements, each NEO was eligible to participate in the same benefits on the same basis as other senior management of Fathom, as well as to participate in the 2021 Omnibus Plan. In addition, each NEO is bound by certain confidentiality and restrictive covenants under their employment agreements.

On December 23, 2021, the Company’s board of directors approved the Severance Plan, which provides for severance benefits to a select group of the Company’s senior-level executives who enter into participation agreements under the Severance Plan, including Messrs. Martin and Stump (the latter solely prior to his notice of resignation on March 30, 2023) (the “Covered Executives”). Covered Executives may become entitled to severance benefits under the Severance Plan in the event a Covered Executive incurs an involuntary termination by the Company without Cause (as defined in the Severance Plan) or by the Covered Executive resigning for Good Reason (as defined in the Severance Plan), whether or not in connection with a Change in Control (“CIC”) of the Company (as defined in the Severance Plan) (each, a “Qualifying Termination”). Severance benefits under the Severance Plan are determined based on a Covered Executive’s “Tier” and whether the Qualifying Termination of employment occurs within the three months prior to or 12 months following a Change in Control (a “CIC Qualifying Termination”) or not in connection with a Change in Control (“Non-CIC Qualifying Termination”).

In the event Messrs. Martin or Stump incur a Non-CIC Qualifying Termination, provided each NEO timely executes a release of claims and complies with applicable restrictive covenants, he will be entitled to (i) salary continuation for 18 months for Mr. Martin and 12 months for Mr. Stump following their termination date, (ii) payment of a pro rata portion of his annual bonus for the year of termination and (iii) COBRA premiums for each NEO and his dependents, less the amount the NEO would have been required to contribute for such coverage if he was still an active employee, for 18 months for Mr. Martin and 12 months for Mr. Stump.

In the event Messrs. Martin or Stump incur a CIC Qualifying Termination, provided each NEO timely executes a release of claims and complies with applicable restrictive covenants, he will be entitled to (i) a lump sum cash payment equal to 18 months and 12 months of base salary for Mr. Martin and Mr. Stump, respectively, (ii) a lump sum cash payment equal to the NEO’s target annual bonus as of the date of termination multiplied by 1.5x for Mr. Martin and 1.0x for Mr. Stump, and (iii) COBRA premiums for each NEO and his dependents, less the amount the NEO would have been required to contribute for such coverage if he was still an active employee, for 18 months for Mr. Martin and 12 months for Mr. Stump.

The Severance Plan also provides that in the event of a CIC Qualifying Termination, unvested time-vesting equity and long-term incentive awards will automatically vest in full, and any unvested performance-vesting equity and long-term incentive awards will be treated in accordance with the applicable plan and award agreement, with those granted under the 2021 Omnibus Plan generally vesting as described below under “Potential Payments Upon Termination or Change in Control.”

The following table shows information regarding outstanding equity awards held by the NEOs as of December 31, 2022

Our NEOs are eligible for certain severance benefits, to the extent they agree to execute a separation agreement and general release of claims, in connection with a termination without Cause by the Company or a resignation for Good Reason (as each term is defined in the Severance Plan for Messrs. Martin and Stump or the Frost Employment Agreement for Mr. Frost). In addition, Messrs. Martin and Stump are eligible for certain enhanced severance benefits if such termination without Cause or resignation for Good Reason occurs in the period from three months prior, to 12 months following, a Change in Control of the Company (as defined in the Severance Plan). The severance arrangements as summarized above under “Severance Plan” for Messrs. Martin and Stump and “Agreements with our NEOs” for Mr. Frost.

In the event an NEO terminated without Cause by the Company or resigns for Good Reason in the period from three months prior, or 12 months following, a Change in Control of the Company, any outstanding and unvested time-vesting awards held by the NEO under the 2021 Omnibus Plan will automatically vest in full on the NEO’s termination date. Furthermore, any outstanding performance-vesting awards held by the NEO under the 2021 Omnibus Plan will vest (i) at the greater of target performance and

actual performance with respect to any performance period that has completed prior to the termination date and (ii) at target performance with respect to any performance period that has not yet commenced or not yet completed as of the termination date.

Starting after Mr. Stump’s notice of resignation on March 30, 2023, he ceased being eligible to participate in the Severance Plan and will be ineligible to receive any termination-related payments or benefits in connection with any termination prior to the Stump Separation Date. Upon Mr. Stump’s separation from the Company, he will not be owed any payments other than accrued benefits.

The following table provides information concerning the compensation of each non-employee director who served on Fathom’s Board of Directors (“Board”) in 2022.

As of December 31, 2022, our non-employee directors each held the following unvested equity awards:

Following the closing of the Business Combination, we adopted a non-employee director compensation program, which is designed to provide competitive compensation necessary to attract and retain high quality non-employee directors and to encourage

ownership of Fathom stock to further align their interests with those of our stockholders. The new program will provide the following compensation for non-employee directors going forward:

Each initial grant of equity-based awards described above will vest in substantially equal annual instalments on each of the first three anniversaries of the grant date and were awarded on December 23, 2021 to each of our non-employee directors (other than Messrs. Chung and May). Each annual grant of equity-based awards described above will vest in full on the first anniversary of the grant date, or in such other circumstances as set forth in the applicable award agreement. Messrs. Chung and May, each affiliates of the CORE Investors, and Mr. Martin, the Chief Executive Officer of the Company, are not entitled to receive any compensation for serving on our Board.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information known to the Company regarding the beneficial ownership of Company common stock as April 27, 2023 by:

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possess sole or shared voting or investment power over that security, including options, warrants and other securities that are currently exercisable or exercisable within 60 days. Company stock issuable upon the exchange of Fathom OpCo Units and the exercise of options and warrants currently exercisable within 60 days are deemed outstanding solely for purposes of calculating the percentage of total voting power of the beneficial owner thereof.

The percentages of beneficial ownership of Company common stock are based on 69,546,514 shares of Fathom Class A common stock and 66,692,781 shares of Fathom Class B common stock issued and outstanding as of April 27, 2023. Unless otherwise indicated, the Company believes that each person named in the table below has sole voting and investment power with respect to all shares of Fathom common stock beneficially owned by them.

** Percentage of total voting power represents voting power with respect to all Fathom Class A common stock and Fathom Class B common stock, as a single class

(1) The business address of the holder is 1050 Walnut Ridge Drive, Hartland, WI 53029.

(5) Effective March 30, 2023, Mr. Stump resigned from his role as Chief Commercial Officer of the Company.

(6) Information contained in the table above and this footnote is based on a Schedule 13G filed with the SEC on February 14, 2022 by Altimar Sponsor II, LLC (“Altimar”). Altimar is the beneficial owner of 14,547,500 shares, with sole voting power and sole dispositive power to all such shares. The business address of Altimar is 40 West 57th Street, 33rd Floor, New York, NY10019.

(7) Information contained in the table above and this footnote is based on a Schedule 13D/A filed with the SEC on April 10, 2023 by CORE Industrial Partners Fund I, LP (“CORE Fund I”) and CORE Industrial Partners Fund I Parallel, LP (“CORE Parallel Fund I” and, collectively with CORE Fund I, the “CORE Funds”). CORE Industrial Fund Partners GP I, LLC (“CORE Fund I GP”) is the sole general partner of each of the CORE Funds. John May is the managing member of CORE Fund I GP. Consequently, Mr. May and CORE Fund I GP may be deemed the beneficial owners of the shares held by the CORE Funds. The CORE Funds are the beneficial owners of 85,798,027 shares, with shared voting and shared dispositive power to all such shares. The principal business address of each of the CORE Funds and CORE Fund I GP is 150 North Riverside Drive, Suite 2050, Chicago, IL 60606. The principal business address of Mr. May is 201 South Biscayne Boulevard, Suite 1450, Miami, FL 33131. 6,386,341 shares of Class A common stock and New Fathom Units held by the CORE Funds that constitute Earnout Shares (as defined herein) are not reflected in the above table.

(8) Information contained in the table above and this footnote is based on (i) exchanges of New Fathom Units, on a one-for-one basis for shares of Class A Common Stock that took place in June of 2022, and (ii) a Schedule 13F filed with the SEC on February 15, 2023 by Siguler Guff Small Buyout Opportunities Fund III,LP (“SBOF III”), Siguler Guff Small Buyout Opportunities Fund III (F), LP (“SBOF III (F)”), Siguler Guff Small Buyout Opportunities Fund III (C), LP (“SBOF III (C)”), Siguler Guff Small Buyout Opportunities III (UK), LP (“SBOF III (UK)”), Siguler Guff HP Opportunities Fund II,LP (“SG HP”), and Siguler Guff Americas Opportunities Fund, LP (“SG Americas” and, together with SBOFIII, SBOF III (F), SBOF III (C), SBOF III (UK) and SG HP the “SG Funds”). SBOF III, SBOF III (F) and SBOFIII (C) are each controlled by Siguler Guff SBOF III GP, LLC (“SBOFIII GP”). SBOF III (UK) is controlled by Siguler Guff SBOF III (UK) GP, LLP (“SBOF III (UK) GP”). SG HP is controlled by Siguler Guff HP II GP, LLC (“SG HPGP”). SG Americas is controlled by Siguler Guff Americas GP, LLC (“SG Americas GP”

and together with SBOF III GP, SBOF III (UK) GP and SG HP GP, the “SG GPs”). Each of the SG GPs is controlled by its sole member, Siguler Guff Capital, LP, which is controlled by Andrew Guff and George Siguler. Consequently, the SG GPs, Siguler Guff Capital, LP, Andrew Guff and George Siguler may be deemed the beneficial owners of the shares held by the SG Funds. The principal business address of SBOF III (UK) and SBOF III (UK) GP is 3rd Floor North Side Dukes Court, 32 Duke Street, St James’s, London SW1Y 6DF. The principal business address of the SG Funds (except for SBOF III (UK)), the SG GPs (except for SBOF III (UK) GP), Siguler Guff Capital, LP, Andrew Guff and George Siguler is 200 Park Ave, 23rd Floor, New York, NY 10166.

The following table sets forth certain information, as of December 31, 2022, concerning shares of our Class A Common Stock authorized for issuance under the 2021 Omnibus Plan and the ESPP.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Our Board has adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions. A “Related Person Transaction” is a transaction, arrangement or relationship in which Fathom or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” means:

Fathom has policies and procedures designed to minimize potential conflicts of interest arising from any dealings it may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to its charter, the audit committee will have the responsibility to review related person transactions.

Other than as disclosed below, Fathom did not enter into any other related person transactions in 2022.

In connection with the Closing of the Business Combination, Fathom entered into the Tax Receivable Agreement ("TRA") by and among Fathom, Fathom OpCo, each of the Exchange TRA ~~which generally provides for~~Parties (as defined in the ~~payment by it~~TRA) party thereto, each of the Blocker TRA Parties (as defined in the TRA party thereto and CORE Industrial Partners Management LP, in its capacity as TRA Party Representative (as defined in the TRA). Pursuant to the TRA, Fathom is required to pay 85% of ~~the net cash savings,~~certain tax benefits, if any, ~~in U.S. federal, state and local, income and franchise tax (computed using certain assumptions to address the impact of state and local taxes)~~ that it ~~actually~~ realizes (or in certain cases is deemed to realize) as a result of tax basis in certain assets and other tax attributes of Fathom or the Blockers ~~and of Fathom~~(as defined in the TRA) at the time of the Business Combination, ~~(including as a result of any cash payments made to Fathom OpCo in exchange for New Fathom Units pursuant to the Business Combination),~~ any increases in tax basis and other tax benefits related to the payment of cash consideration pursuant to the Business Combination Agreement and any increases in tax basis and other tax benefits resulting from any exchange of New Fathom Units for shares of Class A common stock or cash in the future ~~and tax benefits related to entering into and making payments~~or from any payment under the TRA. ~~We will retain the benefit of the remaining 15% of such tax savings.~~

Payments under the TRA are our obligation not Fathom OpCo’s. The actual increase in our allocable share of Fathom OpCo’s tax basis in its assets, as well as estimating the amount and timing of any payments due to the TRA Parties based on future exchanges under the TRA, is by its nature, imprecise. For purposes of the TRA, savings in tax generally are calculated by comparing Fathom’s actual tax liability (determined by using the actual applicable U.S. federal income tax rate and assumed combined state and local income tax rate) to the amount that Fathom would have been required to pay had it not been able to utilize any of the tax benefits subject to the TRA. The amounts payable, as well as the timing of any payments under the TRA will vary depending upon a number of factors, including the timing of exchanges, the market price of the Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, the depreciation and amortization periods that will apply to any increases in tax basis, the U.S. federal income tax rate then applicable, and the amount and timing of the recognition of Fathom’s income. While many of the factors that will determine the amount of payments that we will make under the TRA are outside of its control, we expect that the payments it will make under the TRA will be substantial. At this time, we estimate that the total amount of future tax benefit payments anticipated to be made in the future as a result of the tax basis of Fathom as of December 31, 2022 will be $35.2 million. The amount of these payments is based upon the assumptions that (i) there are no changes in future income tax rates or tax laws, (ii) Fathom is able to fully utilize tax attributes arising in connection with the Business Combination in future tax periods, and (iii) there is no acceleration of amounts due under the TRA on account of early termination.

Any payments made by us under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us. To the extent that we are unable to make timely payments under the TRA for any reason, the unpaid amounts will be deferred and will accrue interest until paid; however, nonpayment for a specified period may constitute a breach of a material obligation under the TRA and therefore accelerate payments due under the TRA, as further described below. Furthermore, our future obligation to make payments under the TRA could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that may be realized or deemed realized under the TRA. See "Certain Relationships and Related Transactions, and Director Independence — Tax Receivable Agreement." in our proxy statement for our 2023 annual meeting of stockholders which is expected to be filed with the SEC on or before May 1, 2023.

~~In certain cases, payments under the TRA may exceed the actual tax benefits Fathom realizes or be accelerated.~~

Payments under the TRA will be based on the tax reporting positions that Fathom determines under the procedures and assumptions set forth in the TRA, and the U.S. Internal Revenue Service ("IRS") or another taxing authority may challenge all or any part of the tax basis increases, as well as other tax positions that Fathom takes, and a court may sustain such a challenge. In the event that any tax benefits initially claimed by Fathom are disallowed, the Exchange TRA Parties and the Blocker TRA Parties (each as defined in the TRA) will not be required to reimburse Fathom for any excess payments that may previously have been made under the TRA, for example, due to adjustments resulting from examinations by taxing authorities. Rather, excess payments made to such holders will be netted against any future cash payments otherwise required to be made by Fathom under the TRA, if any, after the determination of such excess. However, a challenge to any tax benefits initially claimed by Fathom may not arise for a number of years following the initial time of such payment or, even if challenged early, such excess cash payment may be greater than the amount of future cash payments that Fathom might otherwise be required to make under the terms of the TRA and, as a result, there might not be future cash payments against which to net. Actual tax benefits realized by Fathom may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. As a result, in certain circumstances Fathom could make payments under the TRA in excess of Fathom’s actual income or franchise tax savings, which could materially impair Fathom’s financial condition.

~~Moreover, the~~The TRA provides that, in certain events, including a change of control, breach of a material obligation under the TRA, or Fathom’s exercise of early termination rights, Fathom’s obligations under the TRA will accelerate and Fathom will be required to make a lump-sum cash payment to the Exchange TRA Parties and the Blocker TRA Parties (each as defined in the TRA) and other applicable parties to the TRA equal to the present value of all forecasted future payments that would have otherwise been made under the TRA, which lump-sum payment would be based on certain assumptions, including those relating to Fathom’s future taxable income. The lump-sum payment would likely be substantial and could exceed the actual tax benefits that Fathom realizes subsequent to such payment because such payment would be calculated assuming, among other things, that Fathom would have certain tax benefits available to it and that Fathom would be able to use the potential tax benefits in future years. Assuming no material changes in the relevant tax law, we expect that if we experienced a change of control or the TRA had been terminated at December 31, 2022, the estimated lump-sum payment would be approximately $43.8 million (calculated using a discount rate equal to a per annum rate of LIBOR plus 100 basis points, applied against an undiscounted liability of approximately $78.9 million).

There may be a material negative effect on Fathom’s liquidity if the payments required to be made by Fathom under the TRA exceed the actual income or franchise tax savings that Fathom realizes. Furthermore, Fathom’s obligations to make payments under the TRA could also have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.

Fathom OpCo may directly or indirectly make distributions of cash to us substantially in excess of the amounts we use to make distributions to our stockholders and pay our expenses (including our taxes and payments by Fathom under the TRA). To the extent we do not distribute such excess cash as dividends to our shareholders, the direct or indirect holders of New Fathom Units would benefit from any value attributable to such cash as a result of their ownership of our stock upon an exchange of their New Fathom Units.

We are entitled to receive a pro rata portion of any distributions made by Fathom OpCo. Any cash received from such distributions will first be used to satisfy any tax liability and then to make any payments required to be made by Fathom under the TRA. Subject to having available cash and subject to limitations imposed by applicable law and contractual restrictions, the Fathom Operating Agreement requires Fathom OpCo to make certain distributions to holders of New Fathom Units (including Fathom) pro rata to facilitate the payment of taxes with respect to the income of Fathom OpCo that is allocated to them. To the extent that the tax distributions we directly or indirectly receive exceed the amounts we actually require to pay taxes, TRA payments and other expenses (which is likely to be the case given that the assumed tax rate for such distributions will generally exceed our effective tax rate), we will not be required to distribute such excess cash. Our board of directors may, in its sole discretion, choose to use such excess cash for certain purposes, including to make distributions to the holders of our stock. Unless and until our board of directors chooses, in its sole discretion, to declare a distribution, we will have no obligation to distribute such cash (or other available cash other than any declared dividend) to our stockholders.

No adjustments to the exchange ratio of New Fathom Units for shares of our common stock will be made as a result of either (i) any cash distribution by us or (ii) any cash that we retain and do not distribute to our stockholders. To the extent we do not distribute such cash as dividends and instead, for example, hold such cash balances or use such cash for certain other purposes, this may result in shares of our stock increasing in value relative to the New Fathom Units. The holders of New Fathom Units may benefit from any value attributable to such cash balances if they acquire shares of our stock in an exchange of New Fathom Units.

We may amend the terms of the Warrants in a manner that may be adverse to holders of Public Warrants with the approval by the holders of at least 50% of the then outstanding Public Warrants. As a result, the exercise price of the Warrants could be increased, the exercise period could be shortened and the number of shares of Class A common stock purchasable upon exercise of a Warrant could be decreased, all without approval of each Warrant affected.

Our Warrants were issued in registered form under a Warrant Agreement between Continental Stock Transfer and Trust Company, as Warrant Agent, and us. The Warrants collectively consist of (i) 9,900,000 warrants to purchase one of Altimar II's Class A ordinary shares acquired by the Sponsor in a private placement simultaneously with the closing of the Altimar II IPO (the "Private Placement Warrants") and (ii) 8,625,000 warrants issued in the Altimar II IPO, entitling the holder thereof to purchase one of Altimar II's Class A ordinary shares (the "Public Warrants" and, collectively with the Private Placement Warrants, the "Warrants"). Upon closing of the Business Combination, the shares issuable upon exercise of the Private Placement Warrants and the Public Warrants became shares of Fathom's Class A common stock. The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants with the consent of at least 50% of the then outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, convert the Warrants into cash, shorten the exercise period or decrease the number of shares of Class A common stock, as applicable, purchasable upon exercise of a Warrant.

~~We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to holders of Warrants, thereby making such Warrants worthless.~~

We have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Warrant, provided that the last sale price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) on each of 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which notice of such redemption is given. We will not redeem the Warrants unless an effective registration statement under the Securities Act covering the Class A common stock, issuable upon exercise of the Warrants is effective and a current prospectus relating to the Class A common stock, is available throughout the 30-day redemption period, except if the Warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Warrants could force holders thereof to (i) exercise Warrants and pay the exercise price therefor at a time when it may be disadvantageous for such holders to do so, (ii) sell Warrants at the then-current market price when such holders might otherwise wish to hold Warrants or (iii) accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of such Warrants. None of the Private Placement Warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.

In addition, we may redeem Warrants after they become exercisable for a number of shares of Class A common stock determined based on the redemption date and the fair market value of our Class A common stock. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the Warrants are “out-of-the-money,” in which case holders thereof would lose any potential embedded value from a subsequent increase in the value of the Class A common stock had such Warrants remained outstanding.

We will receive up to an aggregate of approximately $213.0 million from the exercise of the Warrants, assuming the exercise in full of all 18,525,000 Warrants for cash. We will have broad discretion over the use of proceeds from the exercise of the Warrants. We expect to use the net proceeds from the exercise of the Warrants, if any, for general corporate purposes. There is no assurance that the holders of the Warrants will elect to exercise any or all of such Warrants. To the extent that the Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Warrants will decrease.

The volatility in our stock price directly impacts the valuation of our Warrants, and the earnout shares and could increase the volatility in our net income (loss) in our consolidated statements of comprehensive income (loss).

The change in fair value of our Warrants and earnout shares is the result of changes in the price of our Class A common stock at each reporting period. The change in fair value of Warrants, Fathom earnout share liabilities, and Sponsor earnout share liabilities represents the mark-to-market fair value adjustments of these instruments in connection with the Business Combination. Significant changes in our stock price may adversely affect our net income (loss) in our consolidated statements of comprehensive income (loss).

~~There can be no assurance that we will be able to remain in compliance with the continued listing standards of the NYSE.~~

On March 29, 2023, we were notified by the NYSE that the average closing price of our Class A common stock over a prior 30 consecutive trading day period was below $1.00 per share, which is the minimum average closing price per share required to maintain listing on the NYSE under Section 802.01C of the NYSE Listed Company Manual (“Section 802.01C”). Under Section 802.01C, we have a period of six months following the receipt of this notice to regain compliance with the minimum share price requirement, or until our next annual meeting of stockholders if stockholder approval is required to cure the share price non-compliance, as would be the case to effectuate a reverse stock split. We can regain compliance at any time during the six-month cure period if on the last trading day of any calendar month during the cure period, the Common Stock has (i) a closing price of at least $1.00 per share and (ii) an average closing price of at least $1.00 per share over the 30-trading day period ending on the last trading day of such month. As required by the NYSE, we intend to timely respond to the NYSE with respect to our intent to cure the deficiency to regain compliance with the price criteria. We cannot assure you that we will be able to regain compliance with the NYSE’s share price criteria.

In addition, our common stock could also be delisted if (i) our average market capitalization over a consecutive 30 trading-day period is less than $15 million, or (ii) our common stock trades at an “abnormally low” price. In either case, our common stock would be suspended from trading on the NYSE immediately, and the NYSE would begin the process to delist our common stock, subject to our right to appeal under NYSE rules. Additionally, the NYSE considers a listed company to be out of compliance with its continued listing standards if the company’s average global market capitalization over a 30 consecutive trading-day period is less than $50.0 million and, at the same time, the company’s stockholders’ equity is less than $50.0 million. If the company does not regain compliance within a cure period up to a maximum of 18 months, it will be subject to delisting. If any of these were to occur, there is no assurance that any appeal we undertake in these or other circumstances would be successful, nor is there any assurance that we will remain in compliance with the other NYSE continued listing standards.

If we fail to satisfy the NYSE’s continued listing standards, our common stock will be subject to delisting. Delisting from the NYSE would likely have a negative effect on the liquidity and market price of our common stock, reduce the number of investors willing to hold or acquire our common stock, limit or reduce the amount of analyst coverage we receive, and impair your ability to sell or purchase our common stock when you wish to do so. In addition, a delisting from the NYSE might negatively impact our reputation and, as a consequence, our business. Additionally, if we were delisted from the NYSE and we are not able to list our common stock on another national exchange we will not be eligible to use Form S-3 registration statements, which would delay our ability to raise funds in the future, limit the type of offerings of common stock we could undertake, and increase the expenses of any offering.

In the event of a delisting of our common stock, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the NYSE minimum share price requirement or prevent future non-compliance with the NYSE’s listing standards. Additionally, if our common stock is not listed on, or becomes delisted from, the NYSE for any reason, and is quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our common stock may be more limited than if we were quoted or listed on the NYSE or another national securities exchange. You may be unable to sell your common stock unless a market can be established or sustained.

~~Our operating results and financial condition may fluctuate on a quarterly and annual basis.~~

Our operating results and financial condition fluctuate from quarter-to-quarter and year-to-year and are likely to continue to vary due to a number of factors, many of which are not within our control. Both our business and the digital manufacturing industry are changing and evolving rapidly, and our historical operating results may not be useful in predicting our future operating results. If our operating results do not meet the guidance that we provide to the marketplace or the expectations of securities analysts or investors, the market price of our common stock will likely decline. Fluctuations in our operating results and financial condition may be due to a number of factors, including:

In addition, our revenues and operating results may fluctuate from quarter-to-quarter and year-to-year due to our sales cycle and seasonality among our customers. Generally, our digital manufacturing solutions are subject to the adoption and capital expenditure cycles of our customers. Additionally, for our more complex solutions, which may require additional facilities investment, potential customers may spend a substantial amount of time performing internal assessments prior to making a purchase decision. This may cause us to devote significant effort in advance of a potential sale without any guarantee of receiving any related revenues. As a result, revenues and operating results for future periods are difficult to predict with any significant degree of certainty, which could lead to adverse effects on our inventory levels and overall financial condition.

Due to the foregoing factors, and the other risks discussed in this Part I, Item 1A: “Risk Factors” and elsewhere in this Annual Report, you should not rely on quarter-over-quarter and year-over-year comparisons of our operating results as an indicator of our future performance.

~~Our stock price has been and may continue to be volatile or may decline regardless of our operating performance.~~

You may lose some or all of your investment. The trading price of our common stock has been and may continue to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as those described in this “Risk Factors” section and the following:

Furthermore, the trading price of our Class A common stock may be adversely affected by third parties trying to drive down the market price. Short sellers and others, some of whom post anonymously on social media, may be positioned to profit if our stock declines and their activities can negatively affect our stock price.

These broad market, industry and other factors may materially reduce the market price of our common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock continues to be low. As a result, you may suffer a loss on your investment.

~~If securities or industry analysts publish inaccurate or unfavorable research or reports about our business, our stock price and trading volume could decline.~~

The trading market for our common stock depends, in part, on the research and reports that third-party securities analysts publish about us and the industry in which we operate. We may be unable or slow to attract research coverage and if one or more analysts cease coverage of us, the price and trading volume of our securities would likely be negatively impacted. If any of the analysts that may cover us change their recommendation regarding our common stock adversely, or provide more favorable relative recommendations about our competitors or publish inaccurate research or reports, the price of our common stock would likely decline. If any analyst that may cover us ceases covering us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our common stock to decline. Moreover, if one or more of the analysts who cover us downgrades our common stock, or if our reporting results do not meet their expectations, the market price of our common stock could decline.

Our corporate headquarters is located in leased office space in Hartland, Wisconsin. We currently use approximately 450,000 square feet of manufacturing capacity across 12 facilities located throughout the U.S., including Texas, Florida, Arizona, Colorado, California, Wisconsin, Minnesota, New York and Illinois. With the exception of our Minnesota and Illinois locations, which we own, all of our facilities are located in leased premises.

We believe that the facilities we currently occupy are adequate for the purposes for which they are being used and are well maintained. In general, no difficulty is anticipated in negotiating renewals as leases expire or in finding other satisfactory space if the premises become unavailable. See ~~Note 16 “Leases”~~ ~~to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.~~

We may from time to time be involved in litigation and claims incidental to the conduct of our business. We are not currently subject to any pending legal (including judicial, regulatory, administrative or arbitration) proceedings that we expect to have a material impact on our consolidated financial statements. However, given the inherent unpredictability of these types of proceedings and the potentially large and/or indeterminate amounts that could be sought, an adverse outcome in certain matters could have a material effect on Fathom's financial results in any particular period. See Note 20 "Commitments and Contingencies" to our consolidated financial statements for additional information.

~~Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.~~

Our Class A common stock and Public Warrants are currently listed on NYSE under the symbols “FATH” and “FATH.WS”, respectively. Prior to the consummation of the Business Combination, Altimar II’s Class A ordinary shares and Public Warrants traded on the NYSE under the ticker symbols “ATMR” and “ATMR.WS”, respectively.

As of April 4, 2022, there were 32 holders of record of Class A common stock and 2 holders of record of Class B common stock. Such numbers do not include beneficial owners holding our securities through nominee names. Our Class B common stock is not registered and we do not intend to list the Class B common stock on any exchange or stock market.

We do not intend to declare or pay cash dividends in the foreseeable future. Our management anticipates that all earnings and other cash resources, if any, will be retained for investment in our business.

~~Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.~~

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Fathom Digital Manufacturing Corporation's financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth elsewhere in this Annual Report on Form 10-K.

Fathom Digital Manufacturing Corporation was incorporated in Delaware in December 2021. However, our roots stretch back over 35 years with the founding of several of our subsidiaries. The terms “Fathom”, the “Company,” “we,” “us,” and “our” as used herein refer to the business and operations of Fathom Digital Manufacturing Corporation and its consolidated subsidiaries.

We are a leading national on-demand digital manufacturing platform at the forefront of the Industry 4.0 revolution. Industry 4.0 utilizes e-commerce, automation, and data sharing in a cyber-physical system to communicate and cooperate in the manufacturing process over the Internet of Things ("IoT"). Using our expansive manufacturing footprint and extensive expertise in both additive and traditional manufacturing, we provide comprehensive product development and on-demand manufacturing services to many of the largest and most innovative companies in the world. Our unified suite of manufacturing technologies, processes, and proprietary software enables us to deliver hybridized solutions that meet the specific needs of our customers, empowering them to tackle complex manufacturing problems and accelerate product development cycles.

Our differentiated strategy focuses on speed, problem solving, adaptive technical responsiveness, and a technology agnostic approach across our 25 plus manufacturing processes to meet customers’ design intent. This allows our customers to iterate faster, often shortening their product development and production cycles from months to days.

We seamlessly blend in-house capabilities consisting of plastic and metal additive technologies, injection molding and tooling, computer numerical control (“CNC”) machining, and precision sheet metal fabrication. We operate over 530 advanced manufacturing systems across 25 unique manufacturing processes and a 450,000 sq. ft. manufacturing footprint, spanning 12 facilities located primarily within the U.S. We believe we are positioned to serve the largest geographic markets in which our customers are located and enable cost effective and rapid turnaround times for our customers. Our scale and the breadth of offerings allow our customers to consolidate their supply chain and product development needs through the ability to source through a single manufacturing supplier. Fathom’s manufacturing technologies and capacity are further extended through the utilization of a selected group of highly qualified suppliers that specialize in injection molding and tooling and CNC machining.

We have experienced significant growth since inception both organically and through our successful and proven acquisition playbook, which is enabled by our proprietary software platform that allows for a streamlined integration of acquired companies. Over the past three years, we have successfully completed 13 acquisitions to bolster our operations and offerings. Fathom started as Midwest Composite Technologies, LLC ("MCT"), a leader in prototyping and low-volume services. Founded in 1984, MCT specialized in model making, industrial design, and rapid prototyping. Today, MCT serves companies through a variety of in-house additive manufacturing technologies, including 3D printing and processing, CNC machining, injection molding, and industrial design capabilities. In September 2019, we acquired Kemeera, LLC to expand our additive, CNC machining injection molding, and development and engineering services, as well as bring urethane casting capabilities. In December 2019, we acquired ICOMold LLC ("ICOMold") to expand our injection molding capabilities and significantly enhance our customer experience by bringing in-house an interactive, automated quotation system capable of providing feedback in 30 seconds with an intuitive, customer-facing project management portal, which we have continued to develop and enhance. Our acquisition of ICOMold also expanded our capabilities into China. In July 2020, we acquired Incodema, LLC and Newchem, LLC to expand our in-house manufacturing processes to include precision sheet metal engineering solutions, including a broad array of sheet metal cutting and forming solutions such as laser cutting, micro waterjet, specialty stamping, and photochemical etching, among others, for quick and complex, tight tolerance parts. In August 2020, we acquired GPI Prototype & Manufacturing Services, LLC ("GPI") to expand our additive manufacturing capabilities. GPI was one of the first metal additive manufacturing service providers in the U.S., bringing metallurgical expertise in-house and enabling the Company to produce metal parts with complex geometries for on-demand manufacturing applications. In December 2020, we acquired Dahlquist Machine, LLC to expand our precision machining capabilities with state-of-the-art CNC mills and lathes for high-speed precision machining of light metals, aluminum, and plastics. In December 2020, we also acquired Majestic Metals, LLC, further expanding our precision sheet metal fabrication capabilities. Further, in December 2020, we acquired Mark Two Engineering, LLC expanding our precision machining services and footprint in the medical device industry. In February 2021, we acquired Summit Tooling, Inc. and Summit Plastics LLC, further expanding our plastic injection mold manufacturing capabilities. In April 2021, we acquired Centex Machine and Welding Inc. and Laser Manufacturing, Inc. to expand our high-precision manufacturing services specializing in CNC machining and medical device manufacturing. In April 2021, we also acquired Sureshot Precision, LLC (d/b/a Micropulse West) expanding our Electrical Discharge Machine (“EDM”) services, and CNC and manual machining capabilities. Further, in April 2021, we acquired Precision Process, LLC specializing in CNC machining, engineering support, and EDM services.

We continue to invest significantly in the enhancement and expansion of our technologies, processes, and capabilities with the aim of better serving the needs of a broader set of customers and end-markets. As a result of our efforts described above, we have developed a loyal base of approximately 2,500 customers, including many of the most innovative companies in the world. Our customers span across a diverse range of end-markets, including, but not limited to, the aerospace, defense, technology, medical, automotive, and IoT sectors. This diverse customer base has allowed for no single customer to represent more than 7.1% and 4.4% of our revenue in 2022 and 2021, respectively.

We believe the market for our on-demand digital manufacturing services across manufacturing applications is largely unsaturated as companies continue to realize the efficiency and effectiveness of our rapid quotation system and 3D CAD driven manufacturing processes. Our market is projected to grow, fueled by demand for additive manufacturing and continuation of the trend of customers increasingly outsourcing their prototyping and low-to-medium volume production needs. We believe our position as the only on-demand digital manufacturing platform purpose-built to serve the rapid prototyping and low-to-medium volume production needs of the largest and most innovative companies, coupled with our competitive strengths, will allow us to maintain and extend our market leading position.

As a result of a number of factors, our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief discussion of the key factors that may impact the comparability of our results of operations in future operations.

Fathom is subject to corporate level tax rates at the federal, state and local levels. Fathom OpCo was and is treated as a flow-through entity for U.S. federal income tax purposes, and as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, other than for certain consolidated subsidiaries of the Predecessor that are structured as corporations and unless otherwise specified, the historical results of operations and other financial information presented does not include any provision for U.S. federal income tax.

Fathom pays U.S. federal and state income taxes as a corporation on its share of our taxable income. The Business Combination was accounted for as a business combination using the acquisition method of accounting. Accordingly, the assets and liabilities, including any identified intangible assets, were recorded at their preliminary fair values at the date of completion of the Business Combination, with any excess of the purchase price over the preliminary fair value recorded as goodwill. The application of business combination accounting required the use of significant estimates and assumptions.

As a result of the application of accounting for the Business Combination, the historical consolidated financial statements of Fathom OpCo are not necessarily indicative of the Fathom's future results of operations, financial position and cash flows. For example, increased tangible and intangible assets resulting from adjusting the basis of tangible and intangible assets to their fair value would result in increased depreciation and amortization expense in the periods following the consummation of the Business Combination.

In connection with the Business Combination, we entered into a Tax Receivable Agreement (“TRA”) with certain of our pre-Business Combination owners that provides for the payment by Fathom to such owners of 85% of the benefits that Fathom is deemed to realize as a result of the Company’s share of existing tax basis acquired in the Business Combination and other tax benefits related to entering into the TRA.

Additionally, in connection with the Business Combination, we have accounted for the issuance of warrants and earnout shares as liabilities which require re-measurement to fair value at the end of each reporting period, as applicable, and adopted the Fathom 2021 Omnibus Incentive Plan which will result in higher share-based compensation expenses.

We have incurred additional costs associated with operating as a public company, including human resources, legal, consulting, regulatory, insurance, accounting, investor relations and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act and rules adopted by the SEC require public companies to implement specified corporate governance practices that are not applicable to a private company. These additional rules and regulations have increased our legal, regulatory and financial compliance costs and will make some activities more time-consuming and costly.

~~Our financial position and results of operations depend to a significant extent on the following factors:~~

As discussed above, the market in which we operate is projected to grow, fueled by increased demand for additive manufacturing and continuing trends in customer outsourcing of production needs. We operate in a large, fragmented, and competitive industry, competing for customers with a range of digital manufacturers, digital manufacturing brokers, and regional design bureaus. We believe we are uniquely positioned as the only full-service outsourced solution built specifically to cater to the manufacturing needs of enterprise-level corporate customers. In particular, we believe we compare favorably to other industry participants on the basis of the following competitive factors:

We believe that a number of trends affecting our industry have affected our results of operations and may continue to do so. For example, we believe that many of our target customers are facing three mega trends which are disrupting long-term product growth models including (i) increased pressure to shorten product life-cycles, (ii) manufactured parts on-demand, and (iii) expectation to deliver products that are personalized and customized to unique customer specifications. We believe we continue to be well positioned to benefit from these trends given our proprietary technology alignment with Industry 4.0 trends that enables us to automate and integrate processes involved in manufacturing custom parts. The COVID-19 pandemic has also impacted the manufacturing environment. For example, the pandemic accelerated the digitization of manufacturing as companies pivoted to a work-from-home and socially distanced manufacturing plant environment. As a result, the adoption of e-commerce was accelerated, which allows opportunity for us to provide valuable solutions to manufacturers looking to build resiliency in their supply chains through fast, on-demand manufacturers. While our business may be positively affected by these trends, our results may also be favorably or unfavorably impacted by other trends that affect product developer and engineer orders for custom parts in low volumes, including, among others, economic conditions, changes in product developer and engineer preferences or needs, developments in our industry and among our competitors, and developments in our customers’ industries. For a more complete discussion of the risks facing our business, see Item 1A. “Risk Factors” of this Annual Report on Form 10-K.

We believe our combined facilities are adequate for our development and production needs in the near future. Should we need to add space or transition into new facilities, we believe we have the ability to expand our footprint on commercially reasonable terms.

For the purposes of this section, the period from January 1, 2021 to December 22, 2021 is the "predecessor period", and the period from December 23, 2021 to December 31, 2021 is the 2021 "successor period". The predecessor period and the successor period collectively are referred to as the "2021 predecessor and successor periods." Amounts appearing in the remainder of this Item 7 are in 000's.

Revenue was $161,141 for the year ended December 31, 2022, compared to $4,840 and $147,356, for the 2021 successor and predecessor periods, respectively. The increase of $8,945, or 5.9%, was primarily driven by our 2021 acquisitions, and 1.0% organic growth.

Gross profit, or revenue less cost of revenue, was $52,518, or 32.6% of revenue, for the year ended December 31, 2022, compared to $2,115 and $57,078, or 43.7% and 38.7% of revenue, for the 2021 successor and predecessor periods, respectively. The $6,675, or 11.3%, decrease was primarily driven by higher material and labor costs of $6,913 and non-recurring amortization expense of $3,241 related to inventory step-up adjustments from Business Combination purchase accounting, partially offset by the overall increase in revenues of $3,479.

Selling, general and administrative ("SG&A") expenses were $49,869 for the year ended December 31, 2022, compared to $3,133 and $37,507 for the 2021 successor and predecessor periods, respectively. The $9,229 increase in SG&A expenses was driven by higher stock based compensation expense of $4,626, primarily due to the vesting of additional options and restricted stock units granted since the Business Combination, and additional third-party costs of $11,500 related to becoming a public company, including officer’s & director’s insurance, consulting fees, audit fees, and tax fees., partially offset by decreased salary, bonuses and commissions on $5,800.

Depreciation and amortization expenses were $18,179 for the year ended December 31, 2022, compared to $416, and $10,357 for the 2021 successor and predecessor periods, respectively. The increase of $7,406, or 68.7%, was primarily driven by a full year amortization of intangible assets related to the Business Combination.

Restructuring costs of $1,897 for the year ended December 31, 2022 represents costs to consolidate our Oakland, California facility into the Hartland, Wisconsin, facility, transition our finance function to a shared-service model, and consolidated a limited number of leadership roles, as announced in our reorganization plan on July 7, 2022. There were no restructuring charges during the 2021 successor and predecessor periods.

The goodwill impairment charge of $1,189,518 for the year ended December 31, 2022, represents a write down of the carrying amount of goodwill from a decrease in the Company's fair value based upon a quantitative assessment as described in Note 8 - "Goodwill and Intangible Assets, net" to our consolidated financial statements. There was no goodwill impairment charge recorded during the 2021 successor and predecessor periods.

Operating loss was $1,206,945 for the year ended December 31, 2022, compared to an operating loss of $1,434 for the 2021 successor period and an operating income of $9,214 for the 2021 predecessor period. The operating loss was primarily driven by the goodwill impairment charge described in Note 8 - "Goodwill and Intangible Assets, net" to our consolidated financial statements, as well as restructuring costs, additional stock compensation, higher amortization of intangible assets related to the Business Combination, and the inventory step-up adjustment from purchase accounting.

Interest expense was $9,015 for the year ended December 31, 2022, compared to $251 and $13,063 for the 2021 successor and predecessor periods, respectively. The decrease in interest expense of $4,299, or 32.3%, is primarily due to lower debt for the year ended December 31, 2022 compared to the 2021 predecessor period, and lower average interest rates under the Credit Agreement as compared to the 2021 Bridge Loan.

Other expenses were $350 for the year ended December 31, 2022, compared to $308, and $21,007 for the 2021 successor and predecessor periods, respectively. The decrease in other expenses of $20,965, or 98.4%, is due to non-recurring expenses related to the acquisitions that completed in the 2021 predecessor period.

Other income was $99,160 for the year ended December 31, 2022, compared to $35,460 and $5,174 for the 2021 successor and predecessor periods, respectively. The increase in other income of $58,526, or 144.0%, represents the changes in fair value in the earnout share liabilities and the warrant liability during year ended December 31, 2022 of $66,790 and $31,120, respectively. Other income for the 2021 successor period was related to the changes in fair value in the earnout share liabilities and warrant liability of $27,260, and $8,200, respectively. Other income for the 2021 predecessor period included a change in fair value of contingent consideration and a gain on PPP loan forgiveness of $3,550 and $1,624, respectively.

We recorded a tax benefit of $6,662, $3, and $3,208 for 2022, the 2021 successor period and the 2021 predecessor period, respectively. Our income tax benefit for the year ended December 31, 2022 is driven by the federal income tax at the statutory rate of $234,709 partially offset by $130,499 for the non-controlling interest impact, and $104,768 related to non-tax deductible goodwill, which is not tax deductible following our goodwill impairment charges. During the 2021 predecessor period, certain subsidiaries of Fathom OpCo which were previously held as corporations for U.S. federal tax purposes, were reorganized into flow-through entities in non-taxable transactions. As a result, deferred tax liabilities pertaining to the corporate subsidiaries were reversed as income tax benefits during the 2021 predecessor period. During the 2021 successor period, the Company was in a small taxable loss position after accounting for permanent differences on income from the change in warrant liability, earnout share liability, and sponsor earnout liability. As we have assessed that deferred tax assets in the form of net operating losses are not more likely than not to be realized, no income tax benefit was recorded from the taxable loss position.

This Annual Report on Form 10-K includes Adjusted Net Income (Loss) and Adjusted Earnings Before Interest Taxes Depreciation and Amortization ("Adjusted EBITDA"), which are non-GAAP financial measures that we use to supplement our results presented in accordance with U.S. GAAP. We believe Adjusted Net Income (Loss) and Adjusted EBITDA are useful in evaluating our operating performance, as they are similar to measures reported by our public competitors and regularly used by security analysts, institutional investors, and other interested parties in analyzing operating performance and prospects. Adjusted Net Income (Loss) and Adjusted EBITDA are not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. These non-GAAP financial measures supplement and should be considered in addition to and not in lieu of our, U.S. GAAP results.

We include these non-GAAP financial measures because they are used by management to evaluate Fathom’s core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. Adjusted EBITDA excludes certain expenses that are required in accordance with U.S. GAAP because they are non-recurring (for example, in the case of transaction-related costs), non-cash (for example, in the case of depreciation and amortization) or are not related to our underlying business performance (for example, in the case of interest income and expense).

We define and calculate Adjusted Net Income (Loss) as net loss before the impact of any increase or decrease in the estimated fair value of the Company’s warrants and earnout shares as well as transaction-related costs and certain other non-cash and non-core items.

~~The table below presents our Adjusted Net Income (Loss) reconciled to our net income (loss), the closest U.S. GAAP measure, for the periods indicated:~~

~~(2) Represents legal, consulting, and auditing costs associated with the Business Combination;~~

(3) Represents the income statement impacts from the change in fair value related to the Sponsor Earnout Share liability, the Fathom Earnout Share liability, the Warrant liability, and the TRA liability associated with the Business Combination.

(4) Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for new acquisitions, severance, and management fees paid to our principal owner during the predecessor period.

We define and calculate Adjusted EBITDA as net losses before the impact of interest income or expense, income tax expense and depreciation and amortization, and further adjusted for the following items: transaction-related costs, the impact of any increase or decrease in the estimated fair value of the Company's warrants and earnout shares, and certain other non-cash and non-core items, as described in the reconciliation included below.

~~The table below presents our Adjusted EBITDA reconciled to net income (loss), the closest U.S. GAAP measure, for the periods indicated.~~

~~(2) Represents legal, consulting, and auditing costs associated with the Business Combination.~~

~~(5) Represents the change in fair value of contingent consideration payable to former owners of acquired businesses;~~

(6) Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for new acquisitions, severance, and management fees paid to our principal owner during the predecessor period.

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital and capital expenditure needs, contractual obligations and other commitments, with cash flows from operations and other sources of funding. Our current working capital needs relate mainly to our growth strategies, capital equipment investments, and business development efforts, as well as compensation and benefits of our employees. In addition, under our Amended Credit Agreement (as defined below), the Company is subject to various financial covenants, including quarterly net leverage and interest coverage covenants. For the period ending December 31, 2022, the Company was in compliance with the net interest coverage covenant. We did not meet the quarterly net leverage ratio for the period ending December 31, 2022, however, the lenders provided the Company with a loan covenant waiver as of and for this quarterly period. Our ability to expand and grow our business will depend on many factors, including our working capital needs and the evolution of our operating cash flows.

We had $10,713 in cash as of December 31, 2022. We believe our operating cash flows, together with amounts available under the Credit Agreement and our cash on hand will be sufficient to meet our anticipated working capital and capital expenditure requirements during the next 12 months.

We may, however, need additional cash resources due to changed business conditions or other developments, including unanticipated regulatory developments, significant acquisitions, and competitive pressures. Our capital expenditures in 2022 of $13,189 were approximately 8.1% of annual revenue. We believe future growth capital expenditures, excluding any expenditures for buildings and maintenance capital we might purchase for our operations, are likely to be approximately 4.0% of 2023 annual revenue. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If the needed financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to decrease our level of investment in new product launches and related marketing initiatives or to scale back our existing operations, which could have an adverse impact on our business and financial prospects.

On December 23, 2021, the Company entered into a new Credit Agreement (the "New Credit Agreement", which included a $50,000 revolving credit facility and a $125,000 term loan. The Company's borrowings under the revolving credit facility were $37,000 at December 31, 2022. The loans obtained under these facilities will mature in December 2026.

As previously disclosed, the New Credit Agreement was amended as of November 10, 2022 (the New Credit Agreement, as so amended, the “Amended Credit Agreement” or "First Amendment"). Specifically, the Amendment (i) reduced the minimum interest coverage ratio from 3.00 to 1.0 to 2.50 to 1.0 for each fiscal quarter ending in fiscal 2023, to 2.75 to 1.0 for the fiscal quarters ending on March 31, 2024 and June 30, 2024, with the minimum interest coverage ratio reverting back to 3.00 to 1.0 for each fiscal quarter ending on and after September 30, 2024, (ii) increased the maximum net leverage ratio to 4.50 to 1.0 for each fiscal quarter ending on September 30, 2022 through June 30, 2023, which ratio will decrease thereafter over time until it reaches 3.50 to 1.0 for each fiscal quarter ending on and after June 30, 2024, and (iii) prohibits certain restricted payments by the Company otherwise permitted by Section 6.06(g) of the Amended Credit Agreement through September 30, 2024.

The Amendment also replaces the Adjusted LIBO Rate (e.g., LIBO Rate multiplied by the then applicable statutory reserve rate per annum), plus a range of applicable margins, as an interest election under the Amended Credit Agreement, with Term SOFR plus 0.10% (“Adjusted Term SOFR”) per annum and Daily Simple SOFR plus 0.10% per annum, as applicable, in each case plus an applicable margin adjustment ranging from 2.25% to 3.75% based on the Company’s most recent net leverage ratio calculation as of the applicable interest determination date.

In addition, the Amendment replaces the Adjusted LIBO Rate plus 1.00% per annum as one of the interest rate floors applied in determining the alternate base interest rate for ABR Loans (as defined in the Amended Credit Agreement), with Adjusted Term SOFR plus 1.00% per annum. Lastly, the Amendment provides that the applicable margin applicable to ABR Loans increase to 2.75% to the extent the Company’s net leverage ratio equals or exceeds 4.00 to 1.0 on the applicable date.

~~In connection with the preparation and execution of the Amendment, the Company paid customary arranger and lender consent fees, and reasonable and documented expenses of the Administrative Agent.~~

The foregoing description of the Amendment and the Amended Credit Agreement is a summary and is qualified in its entirety by reference to the full text of the Amendment and the Amended Credit Agreement, which is attached to this Quarterly Report as Exhibit 10.1 and incorporated herein by reference.

On March 24, 2023, the Company entered into an amendment of the Amended Credit Agreement (as amended by the Second Amendment, the “Second Amended Credit Agreement" or “Second Amendment”) with the administrative agent thereof (the “Administrative Agent”) and the other lenders party thereto to modify certain financial covenants. References in this Annual Report to the “Credit Agreement” means the New Credit Agreement, the Amended Credit Agreement or the Second Amended Credit Agreement, as the context requires.

Specifically, the Second Amendment (i) suspends, through the fiscal quarter ending on December 31, 2023, applicability of the interest coverage ratio covenant, and reduces the interest coverage ratio from 2.00 to 1.00 for the fiscal quarters ending on March 31, 2024 and June 30, 2024, from 2.25 to 1.00 for the fiscal quarter ending on September 30, 2024, from 2.50 to 1.00 for the fiscal quarter ending on December 31, 2024, and from 3.00 to 1.00 for the fiscal quarter ending on March 31, 2025 and each fiscal quarter thereafter, (ii) suspends through the fiscal quarter ending on December 31, 2023 applicability of the net leverage ratio covenant, and reduces the net leverage ratio from 5.00 to 1.00 for the fiscal quarter ending on March 31, 2024, from 4.75 to 1.00 for the fiscal quarter ending on June 30, 2024, from 4.50 to 1.00 for the fiscal quarter ending on September 30, 2024, from 4.00 to 1.00 for the fiscal quarter ending on December 31, 2024, and from 3.50 to 1.00 for the fiscal quarter ending on March 31, 2025 and each fiscal quarter thereafter, (iii) establishes a new quarterly Minimum EBITDA financial covenant of $3,100 for the three months ending on March 31, 2023, $8,750 for the six months ending on June 30, 2023, $16,750 for the nine months ending on September 30, 2023, and $24,400 for the year ending on December 31, 2023 (excluding for purposes of this covenant adjustments otherwise made pursuant to clauses (xii) through (xviii) of the definition thereof in the Second Amended Credit Agreement), (iv) establishes a new minimum Liquidity covenant (as defined in the Second Amended Credit Agreement) of at least $13,500 on the last day of any month ending on or after March 31, 2023 through and including December 31, 2024, and (v) prohibits certain investments and restricted payments by the Company otherwise permitted by Article VI of the Second Amended Credit Agreement through December 31, 2024. Under the Amended Credit Agreement the Company is subject to various financial covenants, including quarterly net leverage and interest coverage. For the period ending December 31, 2022, the Company was in compliance with the net interest coverage covenant. We did not meet the quarterly net leverage ratio for the period ending December 31, 2022, however, the lenders provided the Company with a loan covenant waiver as of and for the three months ended December 31, 2022.

In connection with the preparation and execution of the Second Amendment, the Company paid $524 in customary arranger and lender consent fees, and reasonable and documented expenses of the Administrative Agent.

The foregoing description of the Second Amendment and the Second Amended Credit Agreement is a summary and is qualified in its entirety by reference to the full text of the Second Amendment and the Second Amended Credit Agreement, which is attached to this Annual Report as Exhibit 10.7 and incorporated herein by reference.

The Company recorded deferred financing costs for 2022, and the 2021 Successor Period of $411, and $1,828, respectively. in conjunction with the Credit Agreement and the applicable principal balances are presented within Long-Term debt, net on the Company's Consolidated Balance Sheets. The Company amortizes the deferred financing costs using the effective interest method.

The revolving credit facility under the Credit Agreement is available for working capital and other general corporate purposes and includes a letter of credit sub-facility of up to $5,000. The Credit Agreement also includes an uncommitted incremental facility, which, subject to certain conditions, provides for additional term loan facilities, and/or an increase in commitments under the revolving credit facility, in an aggregate amount of up to $100,000.

In connection with the Business Combination, we entered into the TRA with certain of our pre-Business Combination owners that provides for the payment by Fathom to such owners of 85% of the benefits that Fathom is deemed to realize as a result of the Company’s share of existing tax basis acquired in the Business Combination and other tax benefits related to entering into the TRA.

Actual tax benefits realized by Fathom may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. While the amount of existing tax basis, the anticipated tax basis adjustments and the actual amount and utilization of tax attributes, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, we expect that the payments that Fathom may make under the TRA will be approximately $79,000 based on the Company's closing share price of $1.32 at December 31, 2022. As of December 31, 2022, we do not expect to make any material payments within the next two years, and anticipate payments to become more material beginning in 2025.

On April 4, 2023, the Tax Receivable Agreement was amended and restated by Fathom and the CORE Investors, which hold a controlling interest in Fathom. The purpose of the amendment was (i) the technical correction of an inadvertent omission from the original Tax Receivable Agreement of certain intended tax benefits to affiliates of the CORE Investors which directly or indirectly owned interests in Fathom OpCo prior to the Business Combination through entities taxed as C-corporations and (ii) to replace LIBOR with SOFR as the reference interest rate in the agreement for the several interest rates applicable under the agreement. The correction described in clause (i) of the immediately preceding sentence did not affect Fathom’s accounting for the Tax Receivable Agreement. A copy of the Amended and Restated Tax Receivable Agreement is filed as Exhibit 10.1 to this Annual Report and incorporated herein by reference.

Net cash provided by operating activities was $3,080 for the year ended December 31, 2022, compared to $521 and $7,223 for the 2021 successor and predecessor periods, respectively. This decrease of $4,664 is primarily due to higher operating loss, and increased working capital requirements,

Cash used in investing activities was $13,189 for the year ended December 31, 2022, compared to $0 and $76,400 for the 2021 successor and predecessor periods, respectively. The decrease of $63,211 was driven by a reduction of the overall cash used in acquisitions by Fathom OpCo for the 2021 predecessor period of $67,428, compared to $0 cash used for acquisitions by Fathom for the year ended December 31, 2022, partially offset by an increase in capital expenditures for the year ended December 31, 2022 of $13,189, compared to $8,972 for the 2021 successor and predecessor periods combined.

Cash provided by financing activities was $572 for the year ended December 31, 2022, compared to $0 and $70,566 for the 2021 successor and predecessor periods, respectively. Proceeds provided by financing activities for the year ended December 31, 2022 came from a $10,000 draw on the revolver facility, and proceeds from issuance of common stock under our ESPP, partially offset by principal payments on our Term Loan of $3,125, tax payments for employee shares withheld in lieu of taxes of $2,976, debt financing fees of $411 related to the Amended Credit Agreement, and contingent consideration payments of $2,750. The cash provided by financing activities for the 2021 predecessor period was driven by the proceeds related to the 2021 Bridge Loan of $183,500, partially offset by payments on the 2021 Term Loan and extinguishment of the 2020 credit facilities of $104,091.

~~Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. See Note 2—Significant Accounting Policies~~ in the accompanying notes to our consolidated financial statements which describes the significant accounting policies used in preparation of the consolidated financial statements. We believe that the most complex and sensitive judgments, because of their potential significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain and are described subsequently. Actual results could differ from management’s estimates.

~~We account for business acquisitions in accordance with Accounting Standards Codification ("ASC") 805,~~ ~~Business Combinations~~ ("ASC 805"). We measure the cost of an acquisition as the aggregate of the acquisition date fair values of the assets transferred and liabilities assumed and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. We record goodwill for the excess of (i) the total costs of acquisition, fair value of any non-controlling interests and acquisition date fair value of any previously held equity interest in the acquired business over (ii) the fair value of the identifiable net assets of the acquired business.

The acquisition method of accounting requires us to exercise judgment and make estimates and assumptions based on available information regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation allowances, liabilities related to uncertain tax positions and contingencies. We must also refine these estimates over a one-year measurement period, to reflect any new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to retroactively adjust provisional amounts that we have recorded for the fair value of assets and liabilities in connection with an acquisition, these adjustments could materially impact our results of operations and financial position. Estimates and assumptions that we must make in estimating the fair value of future acquired technology, user lists and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we estimate the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed, which could materially impact our results of operations.

~~We recognize goodwill in accordance with ASC 350,~~ ~~Intangibles—Goodwill and Other~~ ~~("ASC 350"). Goodwill is the excess of cost of an acquired entity over the fair value amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not amortized.~~

As a result of sustained decreases in the Company’s publicly quoted share price, lower market multiples for a relevant peer group, and challenging macroeconomic conditions, the Company concluded during the third quarter that there were impairment indicators and conducted a quantitative goodwill impairment assessment, including additional testing of its definite-lived intangibles, and other long-lived assets as of September 30, 2022. As a result of this assessment, the Company did not identify an impairment to its definite-lived intangible assets or other long-lived assets, but the Company recorded a $1,066,564 non-deductible, non-cash goodwill impairment charge for the three and nine months ended September 30, 2022 in our unaudited consolidated statements of comprehensive income (loss). During the fourth quarter the Company's stock price experienced an additional sustained decline, and the Company evidenced further deterioration in the macroeconomic conditions, triggering a further impairment analysis as of December 31, 2022. As a result of this assessment the Company did not identify an impairment to its definite-lived intangible assets or other long-lived assets, but it did result in the recognition of an additional impairment charge for the remaining goodwill of $122,954 for the quarter ended December 31, 2022, in our consolidated statements of comprehensive loss. There were no goodwill impairment charges for the 2021 Successor Period and 2021 Predecessor Period.

The Company estimated the fair value of the Company using an equal allocation between the discounted cash flow method under the income approach and the public company guideline method under the market approach. The significant assumptions used in the valuation include revenue growth rates, future gross profit margins and operating expenses used to calculate projected future cash flows, determination of the weighted average cost of capital, and future economic and market conditions. The terminal value is based on an exit revenue multiple which requires significant assumptions regarding the selections of appropriate multiples that consider relevant market trading data. The Company bases its estimates and assumptions on its knowledge of the digital manufacturing industry, recent performance, expectations of future performance and other assumptions the Company believes to be reasonable.

We recognize intangibles assets in accordance with ASC 350. Acquired intangible assets subject to amortization are stated at fair value and are amortized using the straight-line method over the estimated useful lives of the assets. Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. As of December 31, 2022 and December 31, 2021, no impairment charges for intangible assets have been recognized.

The estimates of fair value are based on the best information available as of the date of the assessment, which primarily incorporates management assumptions about expected future cash flows. Although these assets are not currently impaired, there can be no assurance that future impairments will not occur. See Note 3—~~Business Combination with Fathom OpCo,~~ ~~Note 4~~ ~~- Fathom OpCo Predecessor Period Acquisitions,~~ ~~and Note 8—Goodwill and Intangible Assets~~ ~~in the accompanying notes to the consolidated financial statements for more information.~~

~~The Company accounts for revenue under ASC Topic 606,~~ ~~Revenue from Contracts with Customer's~~ ("ASC 606"). Most of the Company’s revenue has one performance obligation and is recognized on a point-in-time basis upon shipment. Over the course of 2022, we were not able to support overtime revenue recognition for customer contracts within our injection molding business and transitioned to recognizing revenue on a point in time basis upon shipment. This change in revenue recognition is immaterial to the overall financial statements in all periods included in this Form 10-K. The Company’s payments terms are consistent with industry standards and never exceed 12 months.

Our contingent liabilities, which are included within the “Other non-current liabilities” caption on our consolidated balance sheets, are uncertain by nature and their estimation requires significant management judgment as to the probability and estimation of the amount of liability. These contingencies include, but may not be limited to, warrants, TRA liabilities, earnout shares, litigation, and management’s evaluation of complex laws and regulations, including those relating to indirect taxes, and the extent to which they may apply to our business and industry. See Note 19 - ~~Fair Value Measurement~~ ~~and Note 20 -~~ ~~Commitments and Contingencies~~ ~~in the accompanying notes to our consolidated financial statements for more information.~~

We regularly review our contingencies to determine whether the likelihood of a liability is probable and to assess whether a reasonable estimate of the liability can be made. Determination of whether a liability estimate can be made is a complex undertaking that considers the judgement of management, third-party research, the prospect of negotiation and interpretations by regulators and courts, among other information. When liabilities can be reasonably estimated, an estimated contingent liability is recorded. We continually reevaluate our indirect tax and other positions for appropriateness.

Our historical and outstanding stock-based compensation awards, including the issuances of options and other stock awards under our equity compensation plans, have typically included service-based or performance-based vesting conditions. For awards with only service-based vesting conditions, we record compensation cost for these awards using the straight-line method over the vesting period. For awards with performance-based vesting conditions, we recognize compensation cost on a tranche-by-tranche basis.

Share based compensation expense is measured based on the grant-date fair value of the share based awards and is recognized over the requisite service period of the awards. We use the Black-Scholes option pricing model to value our stock option awards. The Black-Scholes model requires management to make a number of key assumptions, including expected volatility, expected term, risk-free interest rate and expected dividends. The risk-free interest rate is estimated using the rate of return on U.S. treasury notes with a life that approximates the expected term. The expected term assumption used in the Black-Scholes model represents the period of time that the options are expected to be outstanding and is estimated using the midpoint between the requisite service period and the contractual term of the option.

The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management judgment. As a result, if factors or expected outcomes change and our management uses significantly different assumptions or estimates, our stock-based compensation expense for future periods could be materially different, including as a result of adjustments to share based compensation expense recorded for prior period.

The fair values of the Sponsor earnout shares liability, Fathom earnout shares liability, and Warrants liability were determined using Monte Carlo simulations that have various significant unobservable inputs. The assumptions used could have a material impact on the valuation of these liabilities, and include our best estimate of expected volatility, expected holding periods and appropriate discounts for lack of marketability. Changes in the estimated fair values of these liabilities may have material impacts on our results of operations in any given period, as any increases in these liabilities have a corresponding negative impact on our U.S. GAAP results of operations in the period in which the changes occur. See Note 3 - ~~Business Combination with Fathom OpCo~~ ~~and Note 9 -~~ ~~Warrant Liability~~ ~~in the accompanying notes to our consolidated financial statements for more information.~~

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases ("Topic 842") Section A - Leases: Amendments to the FASB Accounting Standards Codification ("ASC"). The standard requires lessees to recognize the assets and liabilities arising from leases on the balance sheet and retains a distinction between classification of leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The Company adopted this standard and related amendments in the first quarter of 2022, using the modified retrospective approach. Using the modified retrospective approach, the Company determined an incremental borrowing rate at the date of adoption based on the total lease term and total minimum rental payments.

The modified retrospective approach provides a method for recording existing leases at adoption with a cumulative adjustment to retained earnings. The Company elected the package of practical expedients, which permits the Company to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any expired or existing leases as of the effective date. The Company also elected the practical expedient to not allocate lease considerations between lease and non-lease components for real estate leases. As such, real estate lease considerations are treated as a single lease-component and accounted for accordingly. The Company excludes leases with an initial term of 12 months or less from the application of Topic 842.

Adoption of the new standard resulted in the recording of $3,122 and $8,195 of current lease liabilities and long-term lease liabilities, respectively, and $11,986 in corresponding right-of-use lease assets. The difference between the approximate value of the right-of-use lease assets and lease liabilities is attributable to future rent escalations. The cumulative change in the beginning accumulated deficit was $82 due to the adoption of Topic 842. There was no material impact on the Company’s consolidated statement of comprehensive loss or consolidated statement of cash flows. The Company’s comparative periods continue to be presented and disclosed in accordance with previous lease guidance.

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. Altimar II was an emerging growth company as defined in Section 2(a) of the Securities Act of 1933, as amended, and has elected to take advantage of the benefits of this extended transition period. Fathom is expected to remain an emerging growth company at least through the end of the 2023 and is expected to continue to take advantage of the benefits of the extended transition period. This may make it difficult or impossible to compare Fathom financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions for emerging growth companies because of the potential differences in accounting standards used.

We are exposed to market risk in the form of changes in interest rates, foreign currency exchange rates and commodity prices for raw materials. We may, from time to time, enter into derivative financial instruments to manage these risks; however, we do not utilize such instruments or contracts for speculative or trading purposes. In the event that we enter into a derivative financial instrument, it is possible that such future dated contracts could no longer serve as a hedge if the projected cash flow does not occur as anticipated at the time of contract initiation.

We are exposed to interest rate risks as a result of our borrowing and investing activities, which principally includes long-term borrowings, used to maintain liquidity and to fund our business operations and capital requirements. We have a $125.0 million term loan and a $50.0 million revolving credit facility that allows for borrowings at a variable interest rate. As of December 31, 2022 we had $37.0 million in outstanding borrowings on the revolving credit facility. We may enter into interest rate swaps from time to time to manage our mix of fixed and variable interest rate debt effectively. As of December 31, 2022 and 2021, there were no interest rate swaps or other derivative instruments in place. The nature and amount of our long-term debt may vary from time to time as a result of business requirements, market conditions and other factors.

We continually address the impact of changes in commodity prices on our results of operations and cash flow. Our exposure to changes in commodity prices is principally indirect as we do not directly purchase exchange-traded commodities, but rather

purchase raw materials that are a result of further downstream processing, primarily inputs resulting from processing crude oil, natural gas, iron ore, gold, silver and copper. We generally manage the risk of changes in commodity prices that impact our raw material costs by seeking to (i) offset increased costs through increases in prices, (ii) alter the nature and mix of raw materials used to manufacture our finished goods or (iii) enter into commodity-linked sales or purchase contracts, all to the extent possible based on competitive and other economic factors. We may also from time to time enter into derivative financial instruments to mitigate such impact however, as of December 31, 2022 and 2021 we had no derivative financial instruments in place.

Our consolidated financial statements and the related notes, together with the Report of the Independent Registered Public Accounting Firm thereon, are set forth below in the F-pages of this Annual Report on Form 10-K and are incorporated herein by reference.

~~Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.~~

The Company’s management, with the participation of our Chief Executive Officer and our Chief Financial Officer, our principal executive officer and principal financial officer, respectively, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our President and Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2022, due to the material weaknesses in our internal control over financial reporting described below.

The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined in the Exchange Act Rules 13a-15(f). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013 framework).

As a result of this evaluation, management has concluded that, as of December 31, 2022, our internal control over financial reporting was not effective due to the material weaknesses in internal control over financial reporting described below. As an emerging growth company, the Company is not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm in this Annual Report on Form 10-K.

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

Remediation of previously identified material weakness and the strengthening of our internal controls over financial reporting environment was a priority of the Company during 2022. The Company implemented and tested the design and operating effectiveness of new and existing controls related to the previously identified material weaknesses, as follows:

During the fourth quarter of 2022, the Company completed testing of the operating effectiveness of the implemented controls and found them to be effective. As a result, the Company has concluded the material weakness has been remediated as of December 31, 2022.

As of December 31, 2022, based on the Company’s implementation of a structured internal controls design and testing process during 2022, we continue to have material weaknesses in certain components of the 2013 COSO framework, including the control environment and control activities.

These material weaknesses could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.

In light of the material weakness described above, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with U.S. GAAP. Accordingly, we believe that the consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

The Company has a remediation plan for the identified material weaknesses that will dedicate resources and priority to accounting and finance reporting controls over revenue, expenditures, income taxes, and inventory. The remediation plan includes the implementation of companywide policies and procedures for critical accounting areas including revenue and inventory, the enhancement of our documentation retention policy and training for employees on internal controls over financial reporting.

Except for the matters discussed previously, there were no other changes in the Company’s internal control over financial reporting that occurred during our most recently completed fiscal quarter ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

On April 4, 2023, the Tax Receivable Agreement was amended and restated (the “Amended and Restated Tax Receivable Agreement”) by Fathom and the CORE Investors, which hold a controlling interest in Fathom. The purpose of the amendment and restatement was (i) the technical correction of an inadvertent omission from the original Tax Receivable Agreement of certain intended tax benefits to affiliates of the CORE Investors which directly or indirectly owned interests in Fathom OpCo prior to the Business Combination through entities taxed as C-corporations and (ii) to replace LIBOR with SOFR as the reference interest rate in the agreement for the several interest rates applicable under the agreement. The correction described in clause (i) of the immediately preceding sentence did not affect Fathom’s ~~prior~~ accounting for the Tax Receivable Agreement.

The Amended and Restated Tax Receivable Agreement was reviewed and approved by Fathom’s Audit Committee in accordance with Fathom’s related person transaction policy because the CORE Investors are “Related Persons” as defined under the policy and the amount of benefits potentially involved under the agreement exceeds $120,000.

The foregoing ~~description~~disclosure describing the Amended and Restated Tax Receivable Agreement is ~~only~~ a summary of certain provisions of the ~~Amended and Restated Tax Receivable Agreement~~agreement and is qualified in its entirety by reference to all of the provisions of such agreement. Because the description is only a summary of the Amended and Restated Tax Receivable Agreement, ait does not necessarily contain all of the information that you may find useful. A copy of ~~which is~~the Tax Receivable Agreement has been filed as Exhibit 10.1 toof this Annual Report and ~~incorporated herein by reference.~~is available electronically on the website of the SEC at www.sec.gov.

~~Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.~~

The following information will be included in Fathom’s Proxy Statement related to its 2023 Annual Meeting of Stockholders to be filed in definitive form within 120 days after Fathom’s fiscal year end of December 31, 2022 (the “Proxy Statement”) and is incorporated herein by reference:

~~The following information will be included in the Proxy Statement and is incorporated herein by reference:~~

~~Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.~~Independence

~~The following information will~~NYSE listing standards require that a majority of our board of directors be ~~included~~independent, subject to the controlled company exception. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the ~~Proxy Statement~~opinion of the board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our Board has determined that each of Dr. Nowinski Collens, Ms. Green and ~~is incorporated herein by reference:~~

~~Item 13. Certain Relationships and Related Transactions, and Director Independence.~~foregoing NYSE standard.

Immediately following the completion of the Business Combination, the CORE Investors beneficially owned approximately 63.1% of our Class A common stock and Class B common stock, which generally votes together as a single class on matters submitted to a vote of our stockholders, including the election of directors. The ~~following information will~~CORE Investors beneficially own approximately 61.6 of our Class A common stock and our Class B common stock, as of April 27, 2023. Because more than 50% of the voting power for the election of directors of Fathom is held by the CORE Investors, Fathom is a “controlled company” under the NYSE listing requirements. If Fathom were to elect to take advantage of available listing requirement exemptions as a “controlled company” under the NYSE listing standards, Fathom would not be ~~included~~subject to the requirements that would otherwise require us to have: (i) a majority of “independent directors,” as defined under the listing standards of the NYSE; (ii) a nominating committee consisting solely of independent directors; (iii) compensation of our executive officers determined by a majority of the independent directors or a compensation committee consisting solely of independent directors; and (iv) director nominees selected, or recommended for our board’s selection, either by a majority of the independent directors or a nominating committee consisting solely of independent directors. Fathom may in the ~~Proxy Statement~~future elect to take advantage of the foregoing controlled company exemptions from the NYSE board and ~~is incorporated herein by reference:~~board committee independence requirements, but it has elected initially and presently to comply with the independence requirements applicable to non-controlled companies.

~~Information regarding principal accountant~~The following table presents fees for professional services rendered by our independent registered public accounting firm, Grant Thornton LLP ("GT") for the year ended December 31, 2022, and the 2021 predecessor and 2021 successor periods:

The Audit Committee has sole authority to engage and determine the compensation of our independent registered public accounting firm. The Audit Committee also is ~~set forth under~~directly responsible for evaluating the ~~sections~~independent registered public accounting firm, reviewing and evaluating the lead partner of the independent registered public accounting firm and overseeing the work of the independent registered public accounting firm. The Audit Committee annually pre-approves services to be provided by GT and also considers and is required to pre-approve the engagement of GT for the provision of other services during the year. For each proposed service, the independent registered public accounting firm is required to provide detailed supporting documentation at the time of approval to permit the Audit Committee to make a determination as to whether the provision of such services would impair the independent registered public accounting firm’s independence, and whether the fees for the services are appropriate. All services reported in the ~~Proxy Statement entitled “Fees Paid to Independent Registered Public Accounting Firm”~~Audit Fees, Audit-related Fees and ~~“Proposal No. 2 – Ratification of Retention of Independent Registered Public Accounting Firm,” which information is incorporated herein~~Tax Fees above were approved by ~~reference.~~the Audit Committee.

Schedules not listed have been omitted because the information required to be set forth therein is not applicable or is included in the consolidated financial statements or the related notes.

† Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Each person whose signature appears below appoints Ryan Martin and Mark Frost, and each of them, any of whom may act without the joinder of the other, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him or her and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof .

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of registrant and in the capacities indicated below as of April 7, 2023.

We have audited the accompanying consolidated balance sheet of Fathom Digital Manufacturing Corporation (a Delaware corporation) and subsidiaries (the “Company” or “Successor”) as of December 31, 2022, the related consolidated statements of comprehensive (loss) income, shareholders’ equity and redeemable non-controlling interest, and cash flows for the year ended December 31, 2022, the consolidated balance sheet of the Company as of December 31, 2021, the related consolidated statements of comprehensive (loss) income, shareholders’ equity and redeemable non-controlling interest, and cash flows for the period from December 23, 2021 to December 31, 2021, and the consolidated statements of comprehensive (loss) income, Class A contingently redeemable preferred units and members’ equity, and cash flows for the period from January 1, 2021 to December 22, 2021 of Fathom Holdco, LLC (a Delaware limited liability company) and subsidiaries (“Predecessor”), and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, and the financial position as of December 31, 2021, and the results of its operations and cash flows for the period from December 23, 2021 to December 31, 2021 (Successor) and the results of its operations and cash flows for the period from January 1, 2021 to December 22, 2021 (Predecessor), in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2022, due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842).

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~(1) Inclusive of accounts payable to related parties of $1,007~~ ~~and $1,246~~ ~~as of December 31, 2022, and December 31, 2021, respectively.~~

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Consolidated Statement of Shareholders' Equity and Redeemable Non-Controlling Interest~~

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Consolidated Statement of Class A Contingently Redeemable Preferred Units and Members' Equity (Predecessor)~~

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Note 2 - Significant Accounting Policies~~

~~Basis of Presentation~~

The accompanying consolidated financial statements comprise the financial statements of Fathom and its controlled subsidiaries for the fiscal year period from January 1, 2022 to December 31, 2022, the financial statements of Fathom and its controlled subsidiaries for the nine-day period from December 23, 2021 to December 31, 2021 (the "2021 Successor Period"), and the financial statements of Fathom OpCo and its controlled subsidiaries for the period from January 1, 2021 to December 22, 2021 (the "2021 Predecessor Period").

The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission ("SEC").

~~All material intercompany balances have been eliminated in consolidation in each period presented.~~

~~Principles of Consolidation~~

The consolidated financial statements include the accounts of the Company, its controlled subsidiaries, and certain variable interest entities (“VIEs”) where the Company is the primary beneficiary. The Company is deemed to be the primary beneficiary of a VIE when it has both (1) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and (2) exposure to benefits and/or losses that could potentially be significant to the entity. Assets and liabilities of VIEs and their respective results of operations are consolidated from the date that the Company became the primary beneficiary through the date that the Company ceases to be the primary beneficiary. Fathom consolidates the accounts of Fathom OpCo since Fathom OpCo has been determined to be a VIE and Fathom is the primary beneficiary of Fathom OpCo.

~~Business Combination~~

The Company applies the acquisition method to all transactions and other events in which the entity obtains control over one or more other businesses, including the Business Combination, (as defined in Note 3), whereby Fathom was determined to be the primary beneficiary of Fathom OpCo, a VIE. Assets acquired and liabilities assumed are measured at fair value as of the acquisition date. Liabilities related to contingent consideration are recognized at the acquisition date and re-measured at fair value in each subsequent reporting period if the contingent consideration is liability classified. Goodwill is recognized as the excess of the consideration transferred over the fair value of the net identifiable assets acquired.

~~Under Accounting Standards Codification ("ASC") Topic 805 -~~ ~~Business Combinations~~ ("ASC 805"), there is an option to apply push-down accounting, which establishes a new basis for the assets and liabilities of the acquired company based on a “push-down” of the acquirer’s stepped-up basis. The push-down accounting election is made in the reporting period in which the change in control event occurs. Fathom has elected push-down accounting for the Business Combination, and recorded the push-down entries at Fathom OpCo.

~~F-10~~

~~Use of Estimates~~

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires the Company’s management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which the Company’s management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

~~Income Taxes~~

The Company accounts for income taxes and related accounts using the asset/liability method in accordance with ASC Topic 740, Income Taxes (“ASC 740”). Under ASC 740, the Company accrues income taxes payable or refundable and recognizes deferred tax assets and liabilities based on differences between U.S. GAAP and tax bases of assets and liabilities. The Company measures deferred tax assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse and recognizes the effect of a change in enacted rates in the period of enactment. A valuation allowance is established if it is more likely than not that some portion or all of the deferred income tax assets will not be realized.

The Company establishes assets and liabilities for uncertain tax positions taken or expected to be taken in income tax returns, using a more-likely than-not recognition threshold. The Company recognizes penalties and interest related to uncertain tax positions as income tax expense. See Note 9 “Income Taxes,” of these Notes to Consolidated Financial Statements for further discussion.

~~Credit Risk, Major Customers, and Suppliers~~

The Company extends trade credit to its customers on terms that are generally practiced in the industry. During 2022, the 2021 Predecessor Period, and 2021 Successor Period the Company did not have any customers or suppliers that comprised a significant percentage of the Company’s operations. The Company maintains its cash balances within accounts at financial institutions backed by the Federal Deposit Insurance Corporation with some balances being in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash balances

~~Trade Accounts Receivable and Allowance for Doubtful Accounts~~

Accounts receivables are stated at net invoice amounts. An allowance for doubtful accounts is established based on a specific assessment of all invoices that remain unpaid following normal customer payment periods. In addition, a general valuation allowance is established for the remaining accounts receivable that have not been specifically assessed based on historical loss experience as well as geographic and general economic conditions. All amounts deemed to be uncollectible are charged against the allowance for doubtful accounts in the period that determination is made. The allowance for doubtful accounts on accounts receivable balances was $~~876~~ ~~as of December 31, 2022, and $1,150~~ ~~as of December 31, 2021.~~

~~Inventory~~

~~Inventory is stated at the lower of cost or net realizable value (“NRV”), with NRV based on selling prices inthe ordinary course of business, less costs of completion, disposal, and transportation. Costs are determined on the first-in, first-out (“FIFO”) method.~~

~~Property and Equipment~~

Property and equipment are recorded at cost less accumulated depreciation and amortization. The straight-line method is used for computing depreciation. Assets are depreciated over their estimated useful lives. The cost of leasehold improvements are amortized over the lesser of the length of the related leases or the estimated useful lives of the assets. Costs of maintenance and repairs are charged to expense when incurred. See Note 7 for further information.

~~F-11~~

~~Goodwill~~

~~The Company recognizes goodwill in accordance with ASC Topic 350,~~ ~~Goodwill and Other~~ ~~("ASC 350"). Goodwill is the excess of costs of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not amortized.~~

Goodwill is tested for impairment annually as of the first day of the fourth quarter, and is tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment charge for goodwill is recognized only when the estimated fair value of a reporting unit, including goodwill, is less than its carrying amount. The impairment test requires the comparison of the fair value for the Company, our sole reporting unit, with its carrying amount, including goodwill. In performing the impairment test, the Company determined the fair value of its reporting unit using an equal allocation between the discounted cash flow ("DCF") method under the income approach and the public company guideline method under the market approach. The significant assumptions used in the valuation include revenue growth rates, future gross profit margins and operating expenses used to calculate projected future cash flows, determination of the weighted average cost of capital, and future economic and market conditions. The terminal value is based on an exit revenue multiple, which requires significant assumptions regarding the selections of appropriate multiples that consider relevant market trading data. The Company bases its estimates and assumptions on its knowledge of the digital manufacturing industry, recent performance, expectations of future performance and other assumptions the Company believes to be reasonable.

~~Goodwill impairment expense of $1,189,518, $~~0 ~~and $~~0 ~~was incurred for 2022, the 2021 Successor period, and the 2021 Predecessor period, respectively.~~

~~Intangible Assets~~

Acquired intangible assets subject to amortization are stated at cost and are amortized using the straight-line method over the estimated useful lives of the assets. Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. During 2022, the 2021 Successor Period, and the 2021 Predecessor Period there were no ~~impairments of intangible assets.~~

~~New Fathom Units~~

In conjunction with the Business Combination, Fathom OpCo restructured its classes of members' units whereby, subsequent to the Business Combination, Fathom OpCo's equity consists solely of Class A common units (the "New Fathom Units"). Prior to the Business Combination, Fathom OpCo's members' equity consisted of Class A common units and Class B common units. See Note 14 for further information.

~~Warrant Liability~~

The Company accounts for both the Public Warrants (the "Public Warrants") and Private Placement Warrants (the "Private Placement Warrants") (collectively as the "Warrants") as liability-classified instruments based on an assessment of the Warrants’ specific terms and applicable authoritative guidance per ASC Topic 480, ~~Distinguishing Liabilities from Equity~~ ~~("ASC 480") and ASC Topic 815,~~ ~~Derivatives and Hedging~~ ("ASC 815"). The assessment considers whether the Warrants are freestanding financial instruments pursuant to ASC 480, whether Warrants meet the definition of a liability pursuant to ASC Topic 480 and whether the Warrants meet all of the requirements for equity classification under ASC 815, including whether the Warrants are indexed to the Company's Class A common stock. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and as of each subsequent quarterly period end date while the Warrants are outstanding.

Since both the Public Warrants and Private Placement Warrants are liability-classified, the Warrants are required to be recorded at fair value on the date of issuance and each balance sheet date thereafter. Changes in the fair value of the Warrants are recognized as a non-cash gain or loss on the consolidated statement of comprehensive income (loss). The fair value of the Public Warrants was determined using the closing price of the Public Warrants as of December 31, 2022, and the fair value of the Private Placement Warrants was estimated using a Monte Carlo simulation approach. See Note 11 and Note 19 for further information.

~~Fathom Earnout Shares~~

~~F-12~~

~~The Company issued~~ ~~9,000,000~~ shares of Class A common stock and New Fathom Units that are subject to certain vesting and transfer restrictions (collectively, the "Fathom Earnout Shares") as part of the Business Combination. The Fathom Earnout Shares vest in ~~three~~ ~~tranches of~~ ~~3,000,000~~ shares. The first tranche of the Fathom Earnout Shares vest if the volume weighted average price (“VWAP”) of the Company's Class A common stock with respect to a trading day is greater than or equal to $~~12.50~~ ~~for any~~ 20 ~~trading days within a consecutive~~ 30~~-trading-day period. The second tranche of Fathom Earnout Shares vest if the VWAP of the Company's Class A common stock with respect to a trading day is greater than or equal to $15.00~~ ~~for any~~ 20 ~~trading days within a consecutive~~ 30~~-trading-day period. The third tranche of Fathom Earnout Shares vest if the VWAP of the Company's Class A common stock with respect to a trading day is greater than or equal to $20.00~~ ~~for any~~ 20 ~~trading days within a consecutive~~ 30~~-trading-day period.~~

The Fathom Earnout Shares were issued as part of the Business Combination and are accounted for as contingent consideration, and thus purchase consideration, and classified as a liability. This classification requires the Company to re-measure the Fathom Earnout Shares at fair value with each reporting date. See Note 3 for further information.

~~Sponsor Earnout Shares~~

~~Prior to Altimar II's initial public offering, Altimar II Sponsor, LLC (the "Sponsor") received~~ ~~8,625,000~~ ~~Class B Ordinary Shares ("Founder Shares") of the Company in exchange for an investment of $~~25.

~~In conjunction with the Business Combination, the holders of the Founder Shares forfeited~~ ~~2,587,500~~ ~~Founder Shares and received~~ ~~1,267,500~~ ~~shares of Class A common stock, (the "Sponsor Earnout Shares" and, together with the Fathom Earnout Shares, the "Earnout Shares") which vest only if the stock price of the Company reaches $12.50~~ ~~for any~~ 20 ~~days within a consecutive~~ 30~~-trading-day period. The remaining~~ ~~4,770,000~~ ~~Founder Shares were cancelled and replaced with~~ ~~4,770,000~~ ~~shares of Class A common stock of the Company which are recorded as equity in the Company's consolidated balance sheet as of December 31, 2022, and December 31, 2021.~~

The Company classifies the Sponsor Earnout Shares as a liability measured at fair value upon the consummation of the Business Combination, the date of issuance, and each subsequent reporting date. The Sponsor Earnout Shares were not included as part of the consideration transferred in the Business Combination since the Sponsor Earnout Shares do not represent payments to any of the sellers in the Business Combination.

~~Redeemable Non-Controlling Interest~~

Redeemable non-controlling interest represents the Company’s non-controlling interest in consolidated subsidiaries which are not attributable, directly or indirectly, to the controlling Class A common stock ownership of the Company. The Company's comprehensive income (loss) in 2022 and in the 2021 Successor Period is reduced by the portion of Fathom OpCo's comprehensive loss that is attributable to noncontrolling interests.

~~The Company's non-controlling interest is representative of the fact that the Company directly owns~~ 48~~.4% of Fathom OpCo's New Fathom Units while the holders of the non-controlling interest in Fathom OpCo hold~~ ~~51.6~~%. Since the non-controlling interest may be redeemed for cash and redemption is considered outside of the Company's control, the non-controlling interest is recorded in temporary or "mezzanine" equity on the consolidated balance sheet as of December 31, 2022. See Note 3 and Note 14 for further information.

~~F-13~~

~~Tax Receivable Agreement~~

~~In connection with the Business Combination, Fathom entered into the Tax Receivable Agreement ("TRA"), which generally provides for the payment by it of~~ 85% of the net cash savings, if any, in U.S. federal, state and local, income and franchise tax (computed using certain assumptions to address the impact of state and local taxes) that it actually realizes (or in certain cases is deemed to realize) as a result of tax basis in certain assets and other tax attributes.

The TRA is a direct obligation of the Company, and not of its subsidiaries. Since the payments under the TRA will be made to selling shareholders of Fathom OpCo, the fair value of the TRA as of the date of the Business Combination was considered part of the consideration transferred as part of the Business Combination with Fathom OpCo. See Note 3 for further information.

Subsequent to the initial recognition of the TRA as part of the Business Combination on December 23, 2021, the TRA is recorded at fair value. Any changes in fair value of the TRA subsequent to the Business Combination are recorded as non-cash gains or losses in the Company's consolidated statement of comprehensive loss in 2022 and in the 2021 Successor Period. See Note 19 for further information.

Subsequent to the Business Combination, the Company will record additional liabilities under the TRA when Class A Units of Fathom OpCo are exchanged for Class A common stock. Liabilities resulting from these exchanges will be recorded on a gross undiscounted basis and are not remeasured at fair value. During the year ended December 31, 2022, an additional TRA liability of $~~21,360~~ ~~was established as a result of these exchanges. See Note 23 for a description of the amendment and restatement of the TRA dated as of March 27, 2023.~~

~~Foreign Currency Exchange and Translation~~

The expression of assets and liabilities in a foreign currency amount gives rise to exchange gains and losses when such obligations are paid in U.S. dollars. Foreign currency exchange rate adjustment (i.e., differences between amounts recorded and actual amounts owed or paid) are reported in the consolidated statements of comprehensive income (loss) as foreign currency fluctuations occur. Foreign currency exchange rate adjustments are reported in the consolidated statements of cash flows using the exchange rates in effect at the time of the cash flows.

Assets and liabilities of the Company's operations in China are translated into U.S. dollars at the rate of exchange in effect at the close of the period. Income and expenses are translated at an average rate of exchange for the period. The aggregate effect of translating the financial statements is included in other comprehensive income (loss). Adjustments to 2022, the 2021 Successor Period, and the 2021 Predecessor Period, were immaterial.

~~Fair Value Measurements~~

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, Fair Value Measurement ("ASC 820"), approximates the carrying amounts represented in the accompanying consolidated balance sheets, primarily due to their short-term nature, except for the Earnout Shares liability and Warrant liabilities, see Note 19 for further information. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value. There are three levels of inputs that may be used to measure fair value:

~~Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.~~

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques considering the characteristics of the asset.

~~F-14~~

In instances whereby inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

~~Debt Issuance Costs~~

~~The Company incurred debt issuance costs in connection with the $125,000~~ Term Loan established under the New Credit Agreement, and also in entering into the Amended Credit Agreement as disclosed in Note 11. These costs are recorded as a reduction in the recorded balance of the outstanding debt. The costs are amortized over the term of the related debt and reported as a component of interest expense by using the effective interest method.

~~Revenue Recognition~~

~~Segment Reporting~~

In accordance with the Financial Accounting Standards Board's ("FASB") authoritative guidance on segment reporting, the Company has one operating segment and one reportable segment. The Company has one line of business, which is product development and on-demand manufacturing services.

~~Other Comprehensive Loss~~

U.S. GAAP generally requires that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, however, such as foreign currency translation adjustments, are reported as a direct adjustment to the equity section of the consolidated balance sheets. Such items, along with net income, are considered components of comprehensive income or loss.

~~Recent Accounting Pronouncements~~

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02,~~ ~~Leases~~ ("Topic 842") Section A - Leases: Amendments to the FASB Accounting Standards Codification ("ASC"). The standard requires lessees to recognize the assets and liabilities arising from leases on the balance sheet and retains a distinction between classification of leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The Company adopted this standard and related amendments in the first quarter of 2022, using the modified retrospective approach. Using the modified retrospective approach, the Company determined an incremental borrowing rate at the date of adoption based on the total lease term and total minimum rental payments.

~~F-15~~

~~Adoption of the new standard resulted in the recording of $3,122~~ ~~and $8,195~~ ~~of current lease liabilities and long-term lease liabilities, respectively, and $11,986~~ in corresponding right-of-use lease assets. The difference between the approximate value of the right-of-use lease assets and lease liabilities is attributable to future rent escalations. The cumulative change in the beginning accumulated deficit was $82 due to the adoption of Topic 842. There was no material impact on the Company’s consolidated statement of comprehensive loss or consolidated statement of cash flows. The Company’s comparative periods continue to be presented and disclosed in accordance with previous lease guidance.

The FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments ("ASC 326"), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments including trade receivables and available for sale debt securities. ASC 326 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The new standard will be effective for the Company beginning January 1, 2023, and will be applied using a modified retrospective transition method. The FASB subsequently issued other related ASUs that amend ASU No. 2016-13 to provide clarification and additional guidance. The Company evaluated the impact of the new standard concluding that it will not have a material impact on its consolidated financial statements.

The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

~~Note 3 - Business Combination with Fathom OpCo~~

On ~~December 23, 2021~~, Altimar II and Fathom OpCo closed a series of transactions (collectively, the "Business Combination") pursuant to the Business Combination Agreement dated as of July 15, 2021, as amended (the "Agreement"), that resulted in the combined Company becoming a publicly traded company on the New York Stock Exchange ("NYSE") with the Company controlling Fathom OpCo in an "UP-C" structure. At the closing on December 23, 2021, Altimar II domesticated into a Delaware corporation, and the Company, Fathom Digital Manufacturing Corporation, was formed. Following the closing, the public investors, the PIPE Investors, and the Founders collectively held Class A common stock representing approximately ~~10.4% economic interest in Fathom OpCo, and the CORE Investors and the other Legacy Fathom Owners collectively held~~ ~~89.6~~% of economic interest in Fathom OpCo in the form of Class A common stock. Additionally, the Company issued to the legacy Fathom owners shares of Class B common stock, which have no economic rights but entitle each holder to voting power (~~one~~ ~~vote per share). Subsequently to the closing, the Company controls Fathom OpCo and is a holding company with no assets or operations other than its equity interest in Fathom OpCo.~~

The Business Combination was accounted for using the acquisition method with the Company as the accounting acquirer. Under the acquisition method of accounting, the Company's assets and liabilities were recorded at carrying value, and the assets and liabilities associated with Fathom OpCo were recorded at estimated fair value as of the closing date. The excess of the purchase price over the estimated fair value of the net assets acquired was recognized as goodwill. For accounting purposes, the acquirer is the entity that has obtained control of another entity and, thus, consummated a business combination. The determination of whether control has been obtained begins with the evaluation of whether control should be evaluated based on the variable interest or the voting interest model. If the acquiree is a variable interest entity, the primary beneficiary would be the accounting acquirer. Fathom OpCo met the definition of a variable interest entity, and the Company was determined to be the primary beneficiary and is therefore also the accounting acquirer in the Business Combination. See Note 2 and Note 22 for further information.

As a result of the Business Combination, the Company's financial statement presentation distinguishes Fathom OpCo as the "Predecessor" through the closing date. The Company is the "Successor" for periods after the closing date of December 22, 2021. Revenue and earnings from the date of the Business Combination to December 31, 2021, are shown as the "Successor" period on the consolidated statement of comprehensive income (loss). As a result of the application of the acquisition method of accounting in the Successor period, the consolidated financial statements for the Successor period are presented on a full step-up basis and are therefore not comparable to the consolidated financial statements of the Predecessor period that are not presented on the same full step-up basis.

~~F-16~~

~~In connection with the Business Combination, the Company incurred $19,010~~ of transaction expenses. These costs were recorded on the income statement of Altimar II prior to the Business Combination. Since the Predecessor period for purposes of these financial statements was deemed to be the historical results of Fathom OpCo, these transaction costs are not presented in either the Company's consolidated statement of comprehensive income (loss) for the 2021 Predecessor Period However, these transaction costs are reflected in the accumulated deficit balance of the Company in the consolidated balance sheet as of December 31, 2021.

~~Also, in connection with the Business Combination, Fathom OpCo incurred $27,397~~ ~~of transaction expenses. $14,882~~ of this amount represented contingent fees and success fees which would not have been incurred had the Business Combination not closed. The Company therefore elected an accounting policy to present these transaction costs "on-the-line" whereby the transaction costs are not recorded in either the 2021 Predecessor Period of Fathom OpCo or the 2021 Successor Period of the Company. The remaining $~~12,515~~ of transaction expenses were not contingent on the closing of the Business Combination and therefore have been reflected as period costs in the consolidated statement of comprehensive income (loss) for the 2021 Predecessor Period.

~~The seller earnout contingent consideration below represents the estimated fair market value of the~~ ~~9,000,000~~ Fathom Earnout Shares issued in conjunction with the Business Combination. The Fathom Earnout Shares will be settled with shares of Class A common stock or New Fathom Units and is accounted for as liability classified contingent consideration. The Fathom Earnout Shares vest in ~~three~~ ~~equal tranches of~~ ~~3,000,000~~ ~~shares each at the volume-weighted average share price thresholds of $12.50, $15.00~~ ~~and $20.00, respectively. The earnout period related to the Fathom Earnout Shares is~~ ~~five years~~ ~~from the date of the closing of the Business Combination. These estimated fair values are preliminary and subject to adjustment in subsequent periods.~~

~~In conjunction with the Business Combination, the Company recognized a deferred tax liability of $17,573~~. The deferred tax liability was recorded on the standalone books of the Company with an offset to goodwill. The deferred tax liability is included in the other long-term liabilities caption in the table below. See Note 21 for further information.

~~The Business Combination was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred was $1,364,220. See below for a summary of the total consideration transferred.~~

Total

Consideration Transferred:

Total cash consideration
$
53,332

Fathom earnout shares

88,160

Class A common stock transferred

375,478

TRA obligations to the sellers

4,300

Total consideration transferred to sellers

521,270

Non-controlling interest

842,950

Fair value of total consideration transferred
$
1,364,220

~~F-17~~

~~During the year ended December 31, 2022, the Company made measurement period adjustments to the preliminary purchase price allocation which included: (i) a decrease to goodwill of $1,171, (ii) a decrease to accounts receivable of $395, (iii) an increase to prepaids and other current assets of $2,244, and (iv) an increase in accounts payable of $789. The measurement period adjustments were made to reflect facts and circumstances that existed as of the acquisition date and is reflected in the table below.~~

~~The following table sets forth the fair value of the assets acquired, and liabilities assumed in connection with the acquisition:~~

Total

Assets acquired:

Cash and cash equivalents
$
9,577

Accounts receivable, net

24,615

Inventory

12,825

Prepaid expenses

4,580

Other current assets

836

Property and equipment, net

42,930

Goodwill

1,188,293

Intangible assets

270,000

Other assets

2,200

Total assets acquired

1,555,856

Liabilities assumed:

-

Accounts payable

9,019

Taxes payable

71

Accrued expenses

4,860

Current portion - long-term debt

152,000

Deferred revenue

651

Other current liabilities

4,504

Other long-term liabilities

20,531

Total liabilities assumed

191,636

Net identifiable assets acquired
$
1,364,220

Goodwill represents future economic benefits arising from acquiring Fathom OpCo's equity, primarily due to its strong market position and its assembled workforce that are not individually and separately recognized as intangible assets. A portion of the Goodwill is deductible for tax purposes. Goodwill is allocated to the Company's sole reportable segment and reporting unit.

Identifiable Intangible Assets
Fair value

Useful life (in years)

Trade name
$
70,000

15

Customer relationships

180,000

19

Developed software

4,300

5

Developed technology

15,700

5

$
270,000

~~The weighted average amortization period for the amortizable intangible assets at the date of the Business Combination is~~ ~~16.9~~ ~~years.~~

The following table presents unaudited pro forma as if the acquisition of Fathom OpCo had occurred on January 1, 2021 and for the year ended December 31, 2021, after giving effects to certain adjustments. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the acquisition been affected on January 1, 2021. In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the acquisition, including but not limited to revenue enhancements, cost savings or operating synergies that the combined entity may achieve as a result of the acquisition. The Company determined that the 2021 Successor Period was immaterial and therefore, not broken out separately below.

~~F-18~~

~~Pro Forma Information (Unaudited)~~

Year Ended December 31, 2021

Pro forma revenue

$
162,563

Pro forma net loss

(14,088
)
Pro forma net loss attributable to controlling interest

(5,297
)
Pro forma net loss attributable to non-controlling interest

$
(8,791
)

~~The supplemental and unaudited pro forma net (loss) includes the following adjustments:~~

•

~~Adjustment to depreciation and amortization for the year ended December 31, 2021, of $25,759~~;

•

~~Adjustment to interest expense for the year ended December 31, 2021, of ($6,766~~);

•

~~Adjustment to stock-based compensation expense for the year ended December 31, 2021, of ($1,595); and~~

•

~~Adjustment to transaction-related costs for the year ended December 31, 2021, of ($7,984~~).

~~Note 4 - Fathom OpCo Predecessor Period Acquisitions~~

~~In the Predecessor Periods, Fathom OpCo completed a series of acquisitions that were each accounted for under the acquisition method in accordance with ASC 805.~~

~~Acquisition of Summit Tooling, Inc., and Summit Plastics, LLC:~~

Fathom OpCo completed an acquisition of Summit Tooling Inc. ("Summit Tooling") and Summit Plastics LLC (“Summit Plastics”, together with Summit Tooling, “Summit”) on February 1, 2021, in which it acquired ~~100~~ percent of the equity interests of Summit. In conjunction with the equity purchase, Fathom OpCo acquired the real estate in which Summit performs their operations. Summit Tooling designs and manufactures plastic injection molds and Summit Plastics provides molding of precision plastic components for a variety of industries. The primary reason for the acquisition was to expand Fathom OpCo's capabilities in manufacturing and expand its customer base of high-quality manufacturing and industrial technology companies in North America.

~~The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following:~~

Consideration

Total

Cash

$
10,875

Fair value of total consideration transferred

$
10,875

~~The consideration excluded $892~~ ~~of buyer transaction expenses that are included in other expenses within the 2021 Predecessor Period consolidated statement of comprehensive loss. In addition, Fathom OpCo paid a transaction fee of $225~~ ~~to an affiliate of the majority member of Fathom OpCo.~~

The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired business into Fathom OpCo's existing platform. The goodwill recognized is partially deductible for tax purposes.

~~F-19~~

~~The following table sets forth the fair values of the assets acquired, and liabilities assumed in connection with the acquisition of Summit:~~

Recognized amounts of identifiable assets acquired and liabilities assumed

Total

Cash

$
40

Accounts receivable, net

627

Inventory

339

Fixed assets, net

4,371

Intangible assets

5,000

Total assets acquired

10,377

Accounts payable

40

Deferred revenue

776

Other current liabilities

1,418

Total liabilities assumed

2,234

Total identifiable net assets

8,143

Goodwill

$
2,732

~~Below is a summary of the intangible assets acquired in the acquisition:~~

Acquisition Date Fair Value

Estimated Life (Years)
Trade name

$
400

5
Customer relationships

4,600

11
Total intangible assets

$
5,000

~~The amounts of revenue and net loss of Summit since the acquisition date included in the consolidated statements of comprehensive loss for the 2021 Predecessor Period are as follows:~~

Period From January 1 - December 22, 2021 (Predecessor)

Revenue

$
6,748

Net loss

$
(370
)

~~Acquisition of Precision Process Corp.:~~

~~Fathom OpCo completed an acquisition of Precision Process Corp. ("PPC") on April 30, 2021, in which it acquired~~ ~~100~~ percent of the membership interest of PPC. In conjunction with the equity purchase, Fathom Opco acquired the real estate in which PPC performs their operations. PPC is a manufacturing company that offers integrated engineering-to-production services, specializing in making prototype, small-run and mass production of parts and components for medical, high-tech, automotive, and metal stamping industries. The primary reason for the acquisition was to expand Fathom OpCo's capabilities into metal stamping with high-quality manufacturing and industrial technology companies in North America.

~~The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following:~~

Consideration

Total

Cash

$
25,721

Fair value of total consideration transferred

$
25,721

~~The consideration excludes $984~~ ~~of buyer transaction expenses that are included in other expenses within the accompanying consolidated statements of comprehensive loss. Fathom OpCo paid a transaction fee of $264~~ ~~to an affiliate of the majority member of Fathom OpCo.~~

~~F-20~~

~~The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of PPC:~~

Recognized amounts of identifiable assets acquired and liabilities assumed

Total

Cash

$
162

Accounts receivable, net

899

Inventory

480

Fixed assets, net

2,413

Intangible assets

14,200

Total assets acquired

18,154

Accounts payable

148

Accrued expenses

79

Total liabilities assumed

227

Total identifiable net assets

17,927

Goodwill

$
7,794

~~Below is a summary of the intangible assets acquired in the acquisition:~~

Acquisition Date Fair Value

Estimated Life (Years)
Trade name

$
1,100

5
Customer relationships

13,100

17
Total intangible assets

$
14,200

~~The amounts of revenue and net loss of PPC since the acquisition date included in the consolidated statements of comprehensive loss for the 2021 Successor Period is as follows:~~

Period From January 1 - December 22, 2021 (Predecessor)

Revenue

$
6,993

Net loss

$
(34
)

~~Acquisition of Centex Machine and Welding, Inc. and Laser Manufacturing, Inc.:~~

~~Fathom OpCo completed acquisitions of Centex Machine and Welding, Inc. ("Centex") and Laser Manufacturing, Inc. ("Laser") on April 30, 2021, in which it acquired~~ ~~100~~ percent of the equity interests of Centex and Laser. Centex is a top tier medical device manufacturing supplier and Laser provides high precision manufacturing services, combining state of the art technology with expert craftsmanship to deliver superior products. The acquisition was completed in order to expand Fathom OpCo's high-quality manufacturing and industrial technology capabilities in North America.

~~The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following:~~

Consideration

Centex

Laser

Total

Cash

$
11,774

$
6,946

$
18,720

Fair value of total consideration transferred

$
11,774

$
6,946

$
18,720

~~The consideration excluded $1,226~~ ~~of buyer transaction expenses that are included in other expenses within the 2021 Predecessor period consolidated statements of comprehensive loss. Fathom OpCo also paid a transaction fee of $190~~ ~~to an affiliate of the majority member of the Fathom OpCo in connection with the transaction.~~

The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired businesses into the Company’s existing platform. The goodwill recognized is partially deductible for tax purposes.

~~F-21~~

~~The following table sets forth the fair values of the assets acquired, and liabilities assumed in connection with the acquisition of Centex and Laser:~~

Acquisition Date Fair Value

Centex

Laser

Recognized amounts of identifiable assets acquired and liabilities assumed

Cash

$
-

$
68

Accounts receivable, net

1,775

900

Inventory

524

622

Prepaid expenses

108

1

Fixed assets, net

1,787

760

Intangible assets

6,243

3,557

Other assets

1

2

Total assets acquired

10,438

5,910

Accounts payable

252

568

Paycheck Protection Program (PPP) loan

649

-

Accrued expenses

271

27

Other current liabilities

23

44

Other noncurrent liabilities

1,234

703

Total liabilities assumed

2,429

1,342

Total identifiable net assets

8,009

4,568

Goodwill

$
3,765

$
2,378

~~Below is a summary of the intangible assets acquired in the acquisition:~~

Acquisition Date
Fair Value
– Centex

Estimated Life (Years)
Trade name

$
510

5
Customer relationships

5,733

17
Total intangible assets

$
6,243

Acquisition Date
Fair Value
– Laser

Estimated Life (Years)
Trade name

$
290

5
Customer relationships

3,267

17
Total intangible assets

$
3,557

~~The amounts of revenue and net loss of Centex and Laser since the acquisition date included in the consolidated statements of comprehensive loss for the 2021 Predecessor Period and is as follows:~~

Period From January 1 - December 22, 2021 (Predecessor)

Revenue

$
9,642

Net loss

$
(98
)

~~Acquisition of Sureshot Precision, LLC:~~

~~Fathom OpCo completed an acquisition of Sureshot Precision, LLC (d/b/a as "Micropulse West") on April 30, 2021 in which it acquired~~ ~~100~~ percent of the membership interest of Micropulse West. Micropulse West is a full-service specialist offering a variety of services such as wire Electrical Discharge Machine (“EDM”), ram EDM, small hole EDM, CNC and manual machining/turning, surface grinding, and inspection. The acquisition was consistent with Fathom OpCo’s mission to acquire high-quality manufacturing and industrial technology companies in North America.

~~F-22~~

~~The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following:~~

Consideration

Total

Cash

$
12,452

Contingent consideration

1,295

Fair value of total consideration transferred

$
13,747

~~The consideration excludes $869~~ ~~of buyer transaction expenses that are included in other expenses within the 2021 Predecessor Period consolidated statement of comprehensive loss. In addition, Fathom OpCo paid a transaction fee of $130~~ ~~to an affiliate of the majority member of Fathom OpCo.~~

The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired businesses into Fathom OpCo's existing platform. The goodwill recognized is partially deductible for tax purposes.

~~The following table sets forth the fair values of the assets acquired, and liabilities assumed in connection with the acquisition of Micropulse West:~~

Recognized amounts of identifiable assets acquired and liabilities assumed

Total

Cash

$
70

Accounts receivable, net

866

Inventory

333

Other current assets

10

Fixed assets, net

2,490

Intangible assets

7,000

Total assets acquired

10,769

Accounts payable

139

Accrued expenses

13

Other current liabilities

99

Total liabilities assumed

251

Total identifiable net assets

10,518

Goodwill

$
3,229

~~Below is a summary of the intangible assets acquired in the acquisition:~~

Acquisition Date Fair Value

Estimated Life (Years)
Trade name

$
600

5
Customer relationships

6,400

17
Total intangible assets

$
7,000

~~F-23~~

~~The amounts of revenue and net loss of Micropulse West since the acquisition date included in the 2021 Predecessor Period consolidated statement of comprehensive loss is as follows:~~

Period From January 1 - December 22, 2021 (Predecessor)

Revenue

$
4,614

Net loss

$
(115
)

~~Note 5 – Revenue~~

~~The Company accounts for revenue in accordance with ASC 606~~. Revenue is recognized in five steps. The Company identifies the contract with the customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations, and recognizes revenue when (or as) each performance obligation is satisfied. Collectability is a required component of a valid contract. The Company assesses collectability based on a number of factors, including the customer’s past payment history and current creditworthiness. If collectability is not considered probable at inception, the Company would recognize revenue upon cash collection.

The Company provides high quality, advanced rapid prototyping, precision manufacturing and finishing services in low-to-mid volume production scenarios. The Company’s suite of on-demand digital manufacturing services includes additive manufacturing, machining, and molding technologies as well as sheet metal cutting, etching, and forming solutions for customers in the aerospace and defense, electronics, medical, automotive, consumer, and industrial industries, among others. As a result, the majority of revenue recognized in a reporting period is based on completed, invoiced contracts.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. Substantially all of the Company’s Additive Manufacturing, CNC Machining, Urethane Casting, Precision Sheet Metal, and Chemical Etching contracts have a single performance obligation. We recognize revenue when the customer obtains control of the Company’s product, which occurs at a point in time, which is the time of shipment.

~~Below is a listing of the Company’s major sales product lines:~~

•

~~Additive Manufacturing - utilizes plastic and metal 3D printing technology to provide a wide variety of high-quality, precision rapid prototyping solutions and low volume production.~~

•

~~Injection Molding - uses our 3D CAD machining technology for the automated design and manufacture custom tooling and small to medium part production runs.~~

•

~~CNC Machining - delivers high-quality precision parts by way of modern machining methods to drive more outstanding results.~~

•

~~Precision Sheet Metal - produces efficient quick-turn custom sheet metal parts from prototype to mid-volume production runs.~~

~~Ancillary Product Lines~~

•

~~Urethane Casting - used during prototyping, includes finished looking parts for final tests and presentations, and low volume production.~~

•

Chemical Etching - provides customers the ability to quickly make complex precision parts and decorative items – beyond hard tool capability and without the cost – fabricated in dead soft or full hard material without burrs or metal distortion.

The remaining other product lines include, but are not limited to, in-house assistance, and industrial design, engineering services, finishing and assembly services, and customer crating and packaging.

~~F-24~~

~~Revenue by product line for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period was as follows:~~

Period From

January 1 - December 22, 2022

December 23 - December 31, 2021
(Successor)

January 1 - December 22, 2021 (Predecessor)

Revenue:

Additive Manufacturing

$
14,917

$
567

$
17,270

Injection Molding

25,210

919

27,968

CNC Machining

58,388

1,372

41,775

Precision Sheet Metal

55,307

1,700

51,751

Ancillary Product Lines

7,319

282

8,592

Total revenue

$
161,141

$
4,840

$
147,356

~~The Company generally expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within selling, general, and administrative expenses.~~

~~The Company’s deferred revenue balance as of December 31, 2022, and December 31, 2021 (Successor) was $767, and $1,147, respectively. Deferred revenue is the result of billings in excess of revenue being recognized and is recorded in other current liabilities on the Company’s balance sheet.~~

~~Note 8 – Goodwill and Intangible Assets, net~~

~~The changes in the carrying amount of goodwill for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period were as follows:~~

Jan. 1, 2021 (Predecessor)

Goodwill acquired during 2021 (Predecessor)

Dec. 22, 2021 (Predecessor)

Goodwill acquired during 2021 (Successor)

Dec. 31, 2021 (Successor)

Measurement period adjustments

Goodwill impairment

Dec. 31, 2022

Goodwill

$
63,215

$
19,898

$
83,113

$
1,189,464

$
1,189,464

$
54

$
(1,189,518
)

$
-

As a result of sustained decreases in the Company’s publicly quoted share price, lower market multiples for a relevant peer group, and challenging macroeconomic conditions, the Company concluded during the third quarter that there were impairment indicators and conducted a quantitative goodwill impairment assessment, including additional testing of its definite-lived intangibles, and other long-lived assets as of September 30, 2022. As a result of this assessment, the Company did not identify an impairment to its definite-lived intangible assets or other long-lived assets, but the Company recorded a $~~1,066,564~~ non-deductible, non-cash goodwill impairment charge for the three and nine months ended September 30, 2022 in our unaudited consolidated statements of comprehensive income (loss). During the fourth quarter the Company's stock price experienced an additional sustained decline, and the Company evidenced further deterioration in the macroeconomic conditions, triggering a further impairment analysis as of December 31, 2022. As a result of this assessment the Company did not identify an impairment to its definite-lived intangible assets or other long-lived assets, but it did result in the recognition of an additional impairment charge for the remaining goodwill of $~~122,954~~ ~~for the quarter ended December 31, 2022, in our consolidated statements of comprehensive loss. There were~~ no ~~goodwill impairment charges for the 2021 Successor Period and 2021 Predecessor Period.~~

The Company estimated the fair value of the Company using an equal allocation between the discounted cash flow method under the income approach and the public company guideline method under the market approach. The significant assumptions used in the valuation include revenue growth rates, future gross profit margins and operating expenses used to calculate projected future cash flows, determination of the weighted average cost of capital, and future economic and market conditions. The terminal value is based on an exit revenue multiple, which requires significant assumptions regarding the selections of appropriate multiples that consider relevant market trading data. The Company bases its estimates and assumptions on its knowledge of the digital manufacturing industry, recent performance, expectations of future performance and other assumptions the Company believes to be reasonable.

~~F-26~~

~~Intangible assets other than goodwill as of December 31, 2022, and December 31, 2021, were as follows:~~

Year Ended December 31, 2022

Gross

Accumulated Amortization

Net

Useful Life (in years)

Trade name

$
70,000

$
(4,782
)

$
65,218

15

Customer relationships

180,000

(9,707
)

170,293

19

Developed software

4,300

(881
)

3,419

5

Developed technology

15,700

(3,218
)

12,482

5

Total intangible assets

$
270,000

$
(18,588
)

$
251,412

Period Ended December 31, 2021

Gross

Accumulated Amortization

Net

Useful Life (in years)

Trade name

$
70,000

$
(98
)

$
69,902

15

Customer relationships

180,000

(252
)

179,748

19

Developed software

4,300

(6
)

4,294

5

Developed technology

15,700

(22
)

15,678

5

Total intangible assets

$
270,000

$
(378
)

$
269,622

~~Aggregate amortization expense related to intangible assets, excluding goodwill which is not amortized, was $18,209, $378, and $10,535, for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period, respectively. There are~~ no ~~intangible assets, other than goodwill, with indefinite useful lives.~~

~~Estimated amortization expense for each of the next five years and thereafter:~~

Year ended

Total

2023

$
18,140

2024

18,140

2025

18,140

2026

18,041

2027

14,140

Thereafter

164,811

Total

$
251,412

~~Note 9 – Warrant Liability~~

~~The Company's total Warrant liability as of December 31, 2022, and December 31, 2021, is equal to the fair value of the Public Warrants plus the fair value of the Private Placement Warrants.~~

~~As of December 31, 2022, there were~~ ~~8,624,320~~ ~~Public Warrants outstanding. As of December 31, 2021, there were~~ ~~8,625,000~~ ~~Public Warrants outstanding. The Public Warrants became exercisable after February 4, 2022, or one year after the IPO of the Company (i.e., Altimar II's IPO).~~

~~F-27~~

~~The Public Warrants are redeemable when the price per share of Class A common stock equals or exceeds $18.00. Once the Warrants become exercisable, the Company may redeem the outstanding Warrants (except as described with respect to the Private Placement Warrants):~~

•

~~in whole and not in part;~~

•

~~at a price $0.01~~ ~~per Warrant;~~

•

~~upon a minimum of~~ ~~30 days’ prior written notice of redemption to each holder of the Warrant; and~~

•

~~if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00~~ ~~per share (as adjusted) for any~~ 20 ~~trading days within a~~ 30~~-trading day period ending~~ ~~three~~ ~~trading days before the Company sends the notice of redemption to the holders of the Warrants.~~

If the Company calls the Public Warrants for redemption, as described above, the Company’s management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the Warrant agreement. The exercise price and number of shares of Class A common stocks issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger, or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants.

~~As of December 31, 2022, and December 31, 2021, there were also~~ ~~9,900,000~~ Private Placement Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants underlying the units sold in the initial public offering, except that the Private Placement Warrants and the shares of Class A common stock issuable upon the exercise of the Private Placement Warrants were not transferable, assignable, or salable until ~~30 days~~ after the completion of the Business Combination, or January 22, 2022. Additionally, the Private Placement Warrants are exercisable on a cashless basis and non-redeemable, except as described so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

~~The below table summarizes the number of outstanding Warrants and the fair value as of December 31, 2022. See Note 19 for further information.~~

Fair Value

# of Warrants

December 31, 2022

Public Warrants

$
720

8,624,320

Private Placement Warrants

$
2,060

9,900,000

~~The below table summarizes the number of outstanding Warrants and the fair value as of December 31, 2021. See Note 19 for further information.~~

Fair Value

# of Warrants

December 31, 2021

Public Warrants

$
7,600

8,625,000

Private Placement Warrants

$
26,300

9,900,000

~~Note 10 – Reorganization~~

In July 2022, the Company's Board of Directors approved a reorganization plan (the "Reorganization") designed to consolidate the Company’s national footprint, streamline legacy leadership, and centralize core business functions following the completion of 13 ~~acquisitions by Fathom since 2019.~~ ~~Pursuant to the Reorganization, the Company intends to:~~

•

~~Consolidate its existing facility in Oakland, California into Fathom headquarters in Hartland, Wisconsin, improving utilization and reducing costs.~~

•

~~•Establish a Fathom technology center in Fremont, California that will focus on new and emerging technologies, specifically in the additive market; and~~

~~F-28~~

•

~~Consolidate leadership and other roles through a net workforce reduction of approximately~~ 6%, create an accounting shared service organization to streamline company-wide processes and create economies of scale while pursuing additional shared-service systems in other administrative functions.

The Company has commenced workforce reductions and expects to complete these actions by the end of the second quarter of 2023. The Company has completed the relocation of its Oakland, California facility to Hartland, Wisconsin location in the fourth quarter 2022. Reorganizing charges are presented on the face of our consolidated statement of comprehensive loss as an operating expense. For the years ended December 31, 2022, and December 31, 2021, the Company has incurred costs of $~~1,897~~ ~~and $~~0~~, respectively.~~

~~The following table summarizes activity in the liability related to the Company's reorganization plan.~~

Liability balance at December 31, 2021

$
-

Charges

676

Payments

(264
)
Liability balance at December 31, 2022

$
412

The reorganization liability resides in other current liabilities within our consolidated balance sheet and as of December 31, 2022, consists of the lease termination of our Oakland, California facility for $~~149~~ ~~and employee termination costs of $263. Cash payments are expected to be disbursed by the end of the second quarter of 2023.~~

On February 17, 2023, the Company committed to additional actions to continue and expand the reorganization plan. The additional actions include closing and consolidating a location in Texas, reducing the Company’s workforce by an additional 14~~% and prioritizing investments and operations in line with near-term revenue generation. Expected costs associated with the future actions are estimated to be $550~~ ~~and will be incurred during the first and second quarters of 2023.~~

~~Note 11 – Debt~~

~~2021 Term Loan~~

~~On April 30, 2021, Fathom OpCo completed a financing transaction whereby it issued a $172,000~~ term loan due April 2022 (the “2021 Term Loan”) in order to finance the acquisitions of Centex, Laser, Micropulse West, and PPC, as well as to refinance the Company’s existing debt. In conjunction with the Business Combination, the Company repaid $~~20,000~~ of the 2021 Term Loan and the 2021 Term Loan was subsequently refinanced shortly after the closing of the Business Combination. The deferred financing costs are not recorded on the opening consolidated balance sheet as of December 23, 2021, as the costs were determined to have a fair value of zero.

~~Credit Agreement~~

~~On December 23, 2021, Fathom OpCo entered into a financing transaction, which included a $50,000~~ ~~revolving credit facility and $125,000~~ ~~term loan (collectively, the "New Credit Agreement"). The Company's borrowings under the revolving facility were $37,000, $27,000~~ ~~as of December 31, 2022, and December 31, 2021, respectively. The loans made under these facilities will mature in~~ ~~December 2026. The total $152,000~~ ~~proceeds from the New Credit Agreement were used to repay the 2021 Term Loan.~~

As previously disclosed, the New Credit Agreement was amended as of November 10, 2022 (the New Credit Agreement, as so amended, the “Amended Credit Agreement” or "First Amendment"). On March 24, 2023, the Company entered into an amendment of the Amended Credit Agreement (as amended by the Second Amendment, the “Second Amended Credit Agreement" or "Second Amendment") with the administrative agent thereof (the “Administrative Agent”) and the other lenders party thereto to modify certain financial covenants. References in these Notes to the “Credit Agreement” means the New Credit Agreement, the Amended Credit Agreement or the Second Amended Credit Agreement, as the context requires.

~~F-29~~

Specifically, the Second Amendment (i) suspends, through the fiscal quarter ending on December 31, 2023, applicability of the interest coverage ratio covenant, and reduces the interest coverage ratio from ~~2.00~~ ~~to 1.00 for the fiscal quarters ending on March 31, 2024 and June 30, 2024, from~~ ~~2.25~~ ~~to 1.00 for the fiscal quarter ending on September 30, 2024, from~~ ~~2.50~~ ~~to 1.00 for the fiscal quarter ending on December 31, 2024, and from~~ ~~3.00~~ to 1.00 for the fiscal quarter ending on March 31, 2025 and each fiscal quarter thereafter, (ii) suspends through the fiscal quarter ending on December 31, 2023 applicability of the net leverage ratio covenant, and reduces the net leverage ratio from ~~5.00~~ ~~to 1.00 for the fiscal quarter ending on March 31, 2024, from~~ ~~4.75~~ ~~to 1.00 for the fiscal quarter ending on June 30, 2024, from~~ ~~4.50~~ ~~to 1.00 for the fiscal quarter ending on September 30, 2024, from~~ ~~4.00~~ ~~to 1.00 for the fiscal quarter ending on December 31, 2024, and from~~ ~~3.50~~ ~~to 1.00 for the fiscal quarter ending on March 31, 2025 and each fiscal quarter thereafter, (iii) establishes a new quarterly Minimum EBITDA financial covenant of $3,100~~ ~~for the three months ending on March 31, 2023, $8,750~~ ~~for the six months ending on June 30, 2023, $16,750~~ ~~for the nine months ending on September 30, 2023, and $24,400~~ for the year ending on December 31, 2023 (excluding for purposes of this covenant adjustments otherwise made pursuant to clauses (xii) through (xviii) of the definition thereof in the Second Amended Credit Agreement), (iv) establishes a new minimum Liquidity covenant (as defined in the Second Amended Credit Agreement) of at least $~~13,500~~ on the last day of any month ending on or after March 31, 2023 through and including December 31, 2024, and (v) prohibits certain investments and restricted payments by the Company otherwise permitted by Article VI of the Second Amended Credit Agreement through December 31, 2024. At December 31, 2022, the fair value of the Notes is $~~110,227. This is based on discounted cash flows, thus, this is deemed a Level 3 fair value measurement.~~

~~The Company recorded deferred financing costs of $1,828~~ ~~in conjunction with the New Credit Agreement, and $411~~ for the Amended Credit Agreement, and the balances are presented net within current portion of long-term debt, net and long-term debt, net on the Company's consolidated balance sheets. The Company amortizes the deferred financing costs using the effective interest method.

~~The revolving credit facility under the Credit Agreement is available for working capital and other general corporate purposes and includes a letter of credit sub-facility of up to $5,000~~. The Credit Agreement also includes an uncommitted incremental facility, which, subject to certain conditions, provides for additional term loan facilities, an increase in commitments under the Credit Agreement and/or an increase in commitments under the revolving credit facility, in an aggregate amount of up to $~~100,000~~.

Under the Amended Credit Agreement the Company is subject to various financial covenants, including quarterly net leverage and interest coverage. For the period ending December 31, 2022, the Company was in compliance with the net interest coverage covenant. We did not meet the quarterly net leverage ratio for the period ending December 31, 2022, however, the lenders provided the Company with a loan covenant waiver as of and for the three months ended December 31, 2022.

~~The Company’s debt as of December 31, 2022, and December 31, 2021, is as follows:~~

As of December 31, 2022

As of December 31, 2021

Debt Description

Interest Rate

Amount

Interest Rate

Amount

New Credit Agreement Revolver

8.20
%

37,000

3.60
%

27,000

New Credit Agreement Term Loan

8.43
%

121,875

3.72
%

125,000

Total principal long-term debt

158,875

152,000

Debt issuance costs

(1,804
)

(1,812
)
Total debt

157,071

150,188

Less: current portion of long-term debt

42,744

29,697

Long-term debt, net of current portion

$
114,327

$
120,491

~~The balance of the Term Loan matures as follows:~~

Year ended

Total

2023

$
6,250

2024

9,375

2025

9,375

2026

96,875

2027

-

Thereafter

-

Total

$
121,875

~~F-30~~

Interest on all debt is payable quarterly, with the unpaid amount due upon maturity. Interest expense associated with long-term debt for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period, was $~~8,882, $251, and $13,063, respectively. Included in interest expense, net on the accompanying consolidated statements of comprehensive loss is amortization of debt issuance costs of $420, $~~16~~, and $3,126, for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period, respectively.~~

~~In December 2022, the Company entered into a financing agreement through its insurance broker to spread the payment of its annual director’s and officer’s insurance premium over a~~ ~~ten-month~~ ~~period. Total financed payments of $1,265, including a $~~35 ~~financing fee at~~ ~~6.13% annual rate, will be made between January 2023 and October 2023.~~

~~In December 2021, the Company entered into a financing agreement through its insurance broker to spread the payment of its~~

~~annual director’s and officer’s insurance premium over a ten-month period. Total financed payments of $3,001, including a $~~35

~~financing fee at~~ ~~2.57% annual rate, was made between January 2022 and October 2022.~~

~~Note 12 – Other income and expense, net~~

~~Other Income and expense, net is comprised of the following for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period,~~

Period From

January 1, 2022 - December 31, 2022

December 23 - December 31,
2021
(Successor)

January 1 - December 22,
2021
(Predecessor)

Acquisition expenses

$
-

$
-

$
4,045

Transaction expense

-

-

12,515

Loss on debt extinguishment

-

-

2,031

Loan prepayment fees

-

-

1,463

Change in fair value of TRA

-

300

-

Loss on sale of assets

24

-

307

Other

326

8

646

Other expense

350

308

21,007

Gain on sale of assets

(221
)

-

-

Gain on PPP forgiveness

-

-

(1,624
)
Change in fair value of Earnout Shares

(66,790
)

(27,260
)

-

Change in fair value of contingent consideration

(148
)

-

(3,550
)
Change in fair value of Warrants

(31,120
)

(8,200
)

-

Change in fair value of TRA

(600
)

-

-

Other

(281
)

-

-

Other income

(99,160
)

(35,460
)

(5,174
)

~~Note 13 - Share Based Compensation~~

On December 23, 2021, the Company executed the Fathom Digital Manufacturing 2021 Omnibus Incentive Plan (the "2021 Omnibus Plan") to encourage the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company's objectives. The 2021 Omnibus Plan provides that the Company may grant options, stock appreciation rights, restricted shares, restricted stock units, performance-based awards (including performance-based restricted shares and restricted stock units), other share-based awards, other cash-based awards, and any combination of the foregoing.

In connection with the closing of the Business Combination on December 23, 2021, all vested time-based phantom unit awards issued under the Company's former Combined Phantom Plan outstanding immediately prior to the closing of the Business Combination were cancelled and replaced with grants of restricted Shares of Class A common stock, issued under the 2021 Omnibus Plan. These newly issued restricted shares vested upon the Company filing an effective registration statement on Form S-8 with the SEC on April 14, 2022, subject to the continued service of the applicable recipient through such date.

~~F-31~~

Also, in connection with the closing of the Business Combination, all unvested time-based phantom unit awards issued under the Company's former Combined Phantom Plan outstanding immediately prior to the closing of the Business Combination were cancelled and replaced with grants of time-based restricted stock units issued under the 2021 Omnibus Plan. These new issued time-based restricted stock units vest based on what the remaining vest period was under the original award issued under the Combined Phantom plan immediately prior to the Business Combination.

Also, in connection with the closing of the Business Combination, all performance-based phantom unit awards issued under the Company's former Combined Phantom Plan outstanding immediately prior to the closing of the Business Combination were cancelled and replaced with grants of performance-based restricted stock units, issued under the 2021 Omnibus Plan. These newly issued performance-based restricted stock units vest when and if the CORE-affiliated limited partnerships (the "CORE Investors") meet certain "sell-down" thresholds related to the Class A Common stock held by both CORE Investors and affiliates of the CORE Investors as a result of the Business Combination and prior to any sell-downs. The sell-down thresholds are referred to as an "Investor Cumulative Sale Percentage Threshold". The performance-based awards vest in 25%, 25~~%, and~~ 50~~% increments only when an Investor Cumulative Sale Percentage Threshold of~~ 60%, 80~~%, and~~ 95~~% respectively, are met. No such Investor Cumulative Sale Percentage Thresholds were reached during 2022 or the 2021 Successor Period.~~

In accordance with ASC 718 "Stock Compensation", both the time-based awards and the performance-based awards that were cancelled and concurrently replaced with awards issued under the 2021 Omnibus Plan are subject to modification accounting. In accordance with ASC 718, the awards are treated as if they are new awards issued as of December 23, 2021.

~~Share based compensation expense included in selling, general and administrative expenses totaled $7,537, $139, and $~~0 for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period, respectively. There were no material related tax benefits for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period. As of December 31, 2022, there was $~~7,953~~ ~~of total unrecognized compensation expense related to non-vested share-based compensation arrangements. This cost is expected to be recognized over the remaining weighted-average vesting period of~~ ~~1.73~~ ~~years.~~

~~The Company elects to account for forfeitures as they occur rather than estimate the expected forfeitures.~~

~~Stock Options~~

~~Generally, stock option awards vest ratably each year on the anniversary date over a three-year period, have an exercise term of~~ ~~7 years~~, and any vested options must be exercised within 90 days of the employee leaving the Company. The compensation cost of option awards is charged to expense based upon the graded-vesting method over the vesting periods applicable to the option awards. The graded-vesting method provides for vesting of portions of the overall awards at interim dates and results in greater expense in earlier years than the straight-line method.

When options are granted, we calculate the fair value using multiple Black-Scholes option valuation models. Expected volatilities are based upon a selection of public guideline companies. The risk-free rate was based upon U.S. Treasury rates.

~~F-32~~

~~Key assumptions used in the valuation models were as follows for the year ended December 31, 2022:~~

2022

Expected term (years)

4.5

Expected volatility

58.7
%
Expected dividend yield

0.0
%
Risk-free interest rate

1.91
%
Fair value of share

$
4.26

~~There were~~ no ~~options granted in 2021.~~ ~~The following table represents stock option activity for the year ended December 31, 2022:~~

Number of Shares

Weighted Average Exercise Price per Share

Average Remaining Contractual Term

Aggregate Intrinsic Value

Outstanding at January 1, 2022

-

$
-

-

$
-

Granted

317,091

8.71

6.17

-

Exercised

-

-

-

Forfeited

-

-

-

-

Expired

-

-

-

-

Non-vested at December 31, 2022

317,091

$
8.71

6.17

$
-

Exercisable at December, 2022

-

-

-

-

~~The weighted average grant date fair value of options granted during 2022 was $4.26~~.

~~RSU's~~

RSUs are subject to the continued service of the recipient through the vesting date, which is generally from issuance. Beginning December 2021, RSUs granted vest ratably each year on the anniversary date generally over a three-year period rather than at the end of the three year period. Once vested, the recipient will receive one share of common stock for each restricted stock unit. The grant-date fair value per share used for RSUs was determined using the closing price of our Common Stock on the NYSE on the date of the grant. We apply this grant-date fair value per share to the total number of shares that we anticipate will fully vest and amortize the fair value to compensation expense over the vesting period using the straight-line method.

~~The following table represents RSU activity for the year ended December 31, 2022:~~

Shares

Weighted Average Grant Date Fair Value

Aggregate Intrinsic Value

Non-vested at January 1, 2022

6,630,118

$
8.21

$
-

Granted

1,175,580

6.12

-

Vested

(1,197,941
)

9.92

-

Forfeited

(425,420
)

9.90

-

Non-vested at December 31, 2022

6,182,337

$
9.28

$
-

~~The fair value of the time-based awards issued during 2022 were valued using the closing stock price for the Company's Class A common stock on the date of grant.~~

~~The following table represents RSU activity for the 2021 Successor Period:~~

Shares

Weighted Average Grant Date Fair Value

Aggregate Intrinsic Value

Non-vested at December 23, 2021

-

$
-

$
-

Granted

6,630,118

8.21

-

Vested

-

-

-

Forfeited

-

-

-

Non-vested at December 31, 2022

6,630,118

$
8.21

$
-

~~F-33~~

The fair value of the time-based and performance-based awards issued under the 2021 Omnibus Plan were valued using the closing stock price for the Company's Class A common stock on December 23, 2021 (i.e., the grant date), less a discount for lack of marketability ("DLOM") due to certain transfer restrictions applicable to the awards.

~~The closing stock price at the end of business of December 23, 2021, was $10.53~~ ~~and the DLOM was determined to be $2.84~~ ~~per share, therefore, the fair value per award granted was determined to be $7.69~~ ~~per share. The DLOM was calculated using an average of two valuation techniques; an Asian put model and a Finnerty model. The assumptions included in these models include a risk-free rate ranging from~~ ~~0.07% to~~ ~~0.97%, volatility ranging from~~ ~~75.4% to~~ ~~107.8%, and a dividend yield of~~ 0~~%. The weighted average term utilized for the DLOM is~~ ~~2.4~~ ~~years.~~

~~Due to the application of modification accounting under ASC 718, the time-based awards were determined to have a grant date fair value of $10.00~~ ~~per award, which is the fair value of the time-based awards immediately prior to being modified. Since the fair value of the time-based awards immediately after being modified was determined to be $7.69~~ per award as discussed above, the higher fair value per award is utilized as the grant date fair value for the time-based awards granted on December 23, 2021. The performance-based awards were determined to have a grant date fair value of $~~7.69~~ per award in accordance with modification accounting under ASC 718 since, immediately prior to being modified, the performance condition underlying the performance-based awards was not yet considered probable. The weighted average grant date fair value of all awards granted on December 23, 2021 is $~~8.21~~ ~~per award.~~

~~ESPP~~

Our 2022 Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase a variable number of shares of our common stock during each offering period at a discount through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. The ESPP provides for six-month offering periods with a single purchase period. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the last trading day of the offering period. We determine the fair value of stock-based compensation related to our ESPP in accordance with ASC 718 using the component measurement approach and the Black-Scholes standard option pricing model.

~~Employees purchased~~ ~~134,247~~ ~~shares of common stock under the ESPP at an average exercise price of $1.12~~ ~~during 2022. As of December 31, 2022,~~ ~~1,216,559~~ ~~shares remained available for future issuance under the ESPP.~~

We calculate the fair value of the shares under the ESPP using a Black-Scholes option valuation model. Expected volatilities are based upon a selection of public guideline companies. The risk-free rate was based upon U.S. Treasury rates.

~~The fair value of each offering period was estimated using the Black-Scholes option pricing model with the following assumptions:~~

2022

Expected term (years)

0.5 - 2

Expected volatility

62.5
%
Expected dividend yield

0.0
%
Risk-free interest rate

3.00
%
Fair value of share

$
4.81

~~Note 14 –Earnings Per Share and Earnings Per Unit~~

~~Successor~~

Basic net loss per share is computed based on the weighted average number of common shares outstanding. Diluted net loss per share is computed based on the weighted average number of common shares outstanding, increased by the number of any additional shares that would have been outstanding had any potentially dilutive common shares been issued and reduced by the number of units the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. For the purposes of the diluted earnings per share calculation, share options, warrants, time vested restricted stock, earnout shares and conversion of Fathom OpCo units are excluded from the calculation for the year ended December 31, 2021, as the inclusion would be anti-dilutive due to the losses reported in the year.

~~F-34~~

Only the Company's Class A common stock participates in the Company’s undistributed earnings. As such, the Company’s undistributed earnings are allocated entirely to shares of Class A common stock based on the weighted Class A common stock outstanding during 2022 and the 2021 Successor Period.

~~The Company's basic earnings per share calculation is as follows:~~

January 1, 2022 - December 31, 2022

December 23 - December 31,
2021
(Successor)

Class A

Class A

Basic Earnings Per Share:

Numerator

Net (loss) income

$
(1,110,488
)

$
33,470

Less: Net loss attributable to non-controlling interests

(621,903
)

(968
)
Net (loss) income attributable to Class A common stock

$
(488,585
)

$
34,438

Denominator

Weighted average shares of Class A common stock outstanding-basic

57,766,682

50,785,656

Basic Earnings Per Share

$
(8.46
)

$
0.68

~~The Company's diluted earnings per share calculation is as follows:~~

January 1, 2022 - December 31, 2022

Period From December 23 - December 31,
2021
(Successor)

Class A

Class A

Diluted Earnings Per Share:

Numerator

Net (loss) income attributable to holders of Class A common stock

$
(488,585
)

$
33,470

Denominator

Weighted average shares of Class A common stock outstanding-basic

57,766,682

50,785,656

Effect of Dilutive Securities

Assumed exchange for shares of Class A common stock

-

85,054,317

Weighted average shares of Class A common stock outstanding-diluted

57,766,682

135,839,973

Diluted Earnings Per Share

$
(8.46
)

$
0.25

~~Predecessor~~

Basic net loss per unit is computed based on the weighted average number of common units outstanding. Diluted net loss per unit is computed based on the weighted average number of common units outstanding, increased by the number of any additional units that would have been outstanding had any potentially dilutive common units been issued and reduced by the number of units Fathom OpCo could have repurchased from the proceeds from issuance of the potentially dilutive units. Fathom OpCo had no dilutive instruments outstanding as of December 22, 2021 (Predecessor). As a result, basic and diluted earnings per unit are the same as of December 22, 2021 (Predecessor).

Fathom OpCo's Class A common units and Class B common units participate equally in Fathom OpCo's undistributed earnings. As such, Fathom OpCo’s undistributed earnings are allocated pro-rata to the Class A common units and Class B common units based on the weighted Class A common units and Class B common units outstanding as of December 22, 2021 (Predecessor) such that earnings per unit for Class A common units and Class B common units are the same in each period.

~~F-35~~

Period From

January 1 - December 23,
2021
(Predecessor)

January 1 - December 23,
2021
(Predecessor)

Class A

Class B

Basic and Diluted Earnings Per Unit:

Numerator

Net loss

$
(11,690
)

$
(4,784
)
Less: annual dividends on redeemable preferred units

(6,582
)

(2,694
)
Net (loss) attributable to common unitholders

$
(18,272
)

$
(7,478
)
Denominator

Weighted-average units used to compute basic earnings per unit

5,480,611

2,242,981

Basic and Diluted Earnings Per Unit

$
(3.33
)

$
(3.33
)

~~Note 15 – Shareholders’ Equity, Noncontrolling Interest, and Members' Equity~~

~~The Company’s equity consists of a total of~~ ~~500,000,000~~ ~~authorized shares across all classes of capital stock, which the Company has the authority to issue. The~~ ~~500,000,000~~ ~~authorized shares consist of~~ ~~10,000,000~~ ~~authorized shares of preferred stock with a par value of $0.0001~~ ~~per share,~~ ~~300,000,000~~ ~~authorized shares of Class A common stock with a par value of $0.0001~~ ~~per share,~~ ~~180,000,000~~ ~~shares of Class B common stock with a par value of $0.0001~~ ~~par value per share, and~~ ~~10,000,000~~ ~~shares of Class C common stock with a par value of $0.0001~~ ~~per share.~~

~~As of December 31, 2022, the Company had~~ no ~~outstanding shares of preferred stock,~~ ~~65,741,037~~ ~~outstanding shares of Class A common stock,~~ ~~70,153,051~~ ~~outstanding shares of Class B common stock, and~~ no ~~outstanding shares of Class C common stock.~~

~~Shares of Class A common stock are entitled to economic rights and~~ ~~one vote per share. Shares of Class B common stock have no economic rights and~~ ~~one vote per share~~. The number of shares of Class B common stock is equal to the number of New Fathom Units held by the continuing Fathom Owners (as defined below). The New Fathom Units owned by the legacy pre-Business Combination owners (the "Continuing Fathom Unitholders") of Fathom OpCo are exchangeable on a ~~one-for-one basis for shares of Class A common stock~~ (with corresponding surrender of an equal number of shares of Class B common stock for cancellation by the Company). The Company and Fathom OpCo also have the option to redeem the class A units for cash in lieu of shares of Class A common stock. Due to the potential that the Class A units of Fathom OpCo may be redeemed for cash and the redemption is considered outside of the control of the Company, the Company has accounted for the non-controlling interest in Fathom OpCo within temporary or "mezzanine" equity on the Consolidated Balance Sheets as of December 31, 2022, and December 31, 2021.

~~The Company's shares of Class C common stock have identical rights to shares of the Company's Class A common stock. However, there are~~ no outstanding shares of Class C common stock as of December 31, 2022, and December 31, 2021. Further, the Company's certificate of incorporation prohibits any future issuance of shares of Class C common stock.

The Company's shares of preferred stock are authorized but unissued as of December 31, 2022, and December 31, 2021. The Company, acting without shareholder approval, may approve the issuance of one of more series of such preferred shares. In connection with such approval, the Company will approve a "Certificate of Designation" that will set forth the terms of the series of preferred stock, including terms such as dividends and redemption rights.

~~Due to the New Fathom Units held by parties other than the Company, upon the closing of the Business Combination, the Company recorded a non-controlling interest at fair value, which was $842,850. The non-controlling interest is reflective of the fact that the Company owned a~~ ~~37.6% economic interest in Fathom OpCo whereas the Continuing Fathom Unitholders hold the remaining~~ ~~62.4% economic interest in Fathom OpCo.~~

~~F-36~~

~~The table below demonstrates the calculation of the comprehensive loss attributable to the non-controlling interest holders for 2022, and the 2021 Successor Period.~~

January 1 - December 31, 2022

December 23 - December 31,
2021
(Successor)

Fathom OpCo comprehensive loss

$
(1,110,488
)

$
(1,551
)
Noncontrolling interest percentage

51.6
%

64.2
%
Comprehensive loss attributable to noncontrolling interest

$
(621,903
)

$
(968
)

~~Note 16 - Leases~~

The Company leases certain manufacturing facilities, office space, and equipment and determines if an arrangement is a lease at inception. Amounts associated with operating leases and financing leases are included in right-of-use lease assets (“ROU assets”), current lease liabilities and long-term lease liabilities in the Company's consolidated balance sheet.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

If the leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that we would pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses quoted interest rates obtained from financial institutions as an input to derive its incremental borrowing rate as the discount rate for the lease.

~~Leases with an initial term of~~ ~~12 months~~ or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we combine lease and non-lease components.

~~Certain leases include one or more options to renew, with renewal terms that can extend the lease term from~~ ~~one~~ to ~~10 years~~ or more, and the exercise of lease renewal options under these leases is at our sole discretion. Lease terms include the non-cancellable portion of the underlying leases along with any reasonably certain lease periods associated with available renewal periods. Certain of the Company’s operating leases include variable rental payments based on a percentage change of certain consumer price indices ("CPI"). Variable rental payments are recognized in the consolidated statement of comprehensive income (loss) in the period in which the obligation for those payments is incurred. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.


	~~Balance Sheet Location~~	~~December 31, 2022~~
~~Assets~~
~~Operating~~	~~Prepaid expenses and other current assets~~	$	~~143~~
~~Operating~~	~~Right-of-use operating lease assets, net~~		~~10,312~~
~~Financing~~	~~Right-of-use financing lease assets, net~~		~~2,253~~
~~Total lease assets~~		$	~~12,708~~
~~Liabilities~~
~~Current~~
~~Operating~~	~~Current operating lease liability~~	$	~~2,174~~
~~Financing~~	~~Current financing lease liability~~		~~200~~
~~Non-Current~~
~~Operating~~	~~Long-term operating lease liability~~		~~8,958~~
~~Financing~~	~~Long-term financing lease liability~~		~~2,125~~
~~Total lease liability~~		$	~~13,457~~

~~F-37~~

~~The following table sets forth our lease costs included in our consolidated statement of comprehensive (loss) income:~~

Year Ended

December 31, 2022

Operating lease cost

$
3,295

Short-term lease cost

13

Financing lease cost:

Amortization of ROU assets

218

Interest on lease liabilities

136

Sublease income

(137
)
Total lease costs

$
3,525


	~~December 31, 2022~~
~~Weighted-average remaining lease term (years)~~
~~Operating~~		~~6.6~~
~~Financing~~		~~8.1~~
~~Weighted-average discount rate~~
~~Operating~~		~~6.0~~	%
~~Financing~~		~~5.6~~	%

~~Maturities of Leases~~

Operating Leases

Financing Leases

Total

2023

$
2,729

$
326

$
3,055

2024

2,469

335

2,804

2025

2,092

345

2,437

2026

1,634

356

1,990

2027

1,428

366

1,794

Thereafter

3,807

1,200

5,007

Total future lease payments

14,159

2,928

17,087

Less: Discount

3,027

603

3,630

Present value of lease liability

$
11,132

$
2,325

$
13,457

~~Disclosures related to period prior to adoption of the Topic 842~~

~~Operating lease rent expense was $~~53 ~~and $2,226~~ ~~for the 2021 Successor Period, and 2021 Predecessor Period, respectively.~~

~~As of December 31, 2021, future minimum lease payment obligations were as follows:~~

Year ended

Total

2022

$
3,212

2023

3,027

2024

1,959

2025

1,253

2026

443

Thereafter

328

Total future lease payments

$
10,222

~~Note 17 - Related Party Transactions~~

~~Affiliate Purchases~~

For the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period, certain employees of the Company had a non-controlling ownership interest in an affiliated entity, Fathom Precision International Ltd., which supplies services to the Company. Purchases from such affiliate totaled $~~9,120, $700, and $9,165~~ ~~for the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period, respectively.~~

~~F-38~~

~~Management Fees~~

MCT Holdings and Incodema Holdings entered into a management services agreement with an entity related through common ownership to the majority member in August 2018 and July 2020, respectively. For the year ended December 31, 2022, the 2021 Successor Period, and the 2021 Predecessor Period, the Company incurred expenses related to such management fees of approximately $85~~, $~~0~~, and $1,723, respectively. This agreement terminated in connection with the closing of the Business Combination.~~

~~Note 19 – Fair Value Measurement~~

The fair value of the Company’s financial assets and liabilities reflects the Company’s management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

•

Level 1 — Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

•

Level 2 — Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

•

~~Level 3 — Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.~~

~~The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis as of December 31, 2022.~~

Fair Value Measurements as of December 31, 2022

Description

Level 1

Level 2

Level 3

Total

Liabilities:

Tax Receivable Agreement

$
-

$
-

$
4,000

$
4,000

Fathom OpCo acquisitions contingent consideration

-

-

700

700

Sponsor Earnout Shares Liability

-

-

930

930

Fathom Earnout Shares Liability

-

-

5,960

5,960

Warrant liability – Public Warrants

720

-

-

720

Warrant liability – Private Placement Warrants

-

-

2,060

2,060

$
720

$
-

$
13,650

$
14,370

~~F-39~~

~~The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis as of December 31, 2021.~~

Fair Value Measurements as of December 31, 2021

Description

Level 1

Level 2

Level 3

Total

Liabilities:

Tax Receivable Agreement

$
-

$
-

$
4,600

$
4,600

Fathom OpCo acquisitions contingent consideration

-

-

3,598

3,598

Sponsor Earnout Shares Liability

-

-

9,380

9,380

Fathom Earnout Shares Liability

-

-

64,300

64,300

Warrant liability – Public Warrants

7,600

-

-

7,600

Warrant liability – Private Placement Warrants

-

-

26,300

26,300

$
7,600

$
-

$
108,178

$
115,778

~~The following table presents a reconciliation of the beginning and ending balances of recurring level 3 fair value measurements.~~

Level 3 Liabilities

Tax Receivable Agreement liability

Fathom OpCo acquisitions contingent consideration

Sponsor Earnout shares liability

Fathom Earnout shares liability

Warrant liability – Private Placement Warrants

Total

Balance at December 31, 2021

$
4,600

$
3,598

$
9,380

$
64,300

$
26,300

$
108,178

Payments

-

(2,750
)

-

-

-

$
(2,750
)
Net (gain) loss (1)

(600
)

(148
)

(8,450
)

(58,340
)

(24,240
)

$
(91,778
)
Ending balance at December 31, 2022

$
4,000

$
700

$
930

$
5,960

$
2,060

$
13,650

(1) Net gains on changes in recurring level 3 fair value measurements are recognized in other income and net losses on change in recurring level 3 fair value measurements are recognized in other expense in our consolidated statement of comprehensive loss.

~~Tax Receivable Agreement~~

~~The fair value of the TRA is based on multiple inputs and assumptions input into a Monte Carlo simulation model. The significant inputs into this model are the following: a corporate tax rate of~~ ~~26.9%, an annual TRA payment date of February 17, existing non-controlling interest percentage of~~ ~~52.0%, initial amortization deductions of $46,100, $48,900~~ of taxable income forecast by 2032, a sell-down schedule which reflects the expected sale of New Fathom Units by legacy Fathom OpCo shareholders, a Class A common stock price as of December 31, 2022 of $~~1.32, volatility of~~ ~~84.2%, correlation between taxable income and the Class A common stock price of~~ 25~~%, and a cost of debt range from~~ ~~7.3% to~~ ~~10.2~~%

~~Legacy Fathom OpCo Acquisitions Contingent Consideration~~

The fair values for contingent consideration payable are determined by using a discounted cash flow approach with unobservable inputs and is classified as a Level 3 liability in the fair value hierarchy. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each entity to which the contingent consideration relates to, for example EBITDA targets for a given period.

~~F-40~~

~~Earnout Shares Liability~~

The Earnout Shares are accounted for as liabilities in the Company's consolidated balance sheet. The fair values for the Earnout Shares are estimated using a Monte Carlo simulation assuming Geometric Brownian Motion in a risk-neutral framework. The Monte Carlo simulation considers daily simulated stock prices as a proxy for the Company's daily volume-weighted average price ("VWAP"). The key inputs into the valuation of the Earnout Shares are an expected term of ~~3.98~~ ~~years, a risk-free rate of~~ ~~4.11%, operating asset volatility of~~ ~~78.6%, and equity volatility of~~ ~~98.0~~%. The operating asset volatility and the equity volatility assumptions are based on a blended average of operating and equity volatility, respectively, of publicly traded companies within the Company's peer group.

~~Warrants~~

The Public and Private Placement Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within Warrant liability in the accompanying consolidated balance sheet as of December 31, 2022, and December 31, 2021. The Warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within a change in fair value of Warrant liabilities in the statement of operations.

The Public Warrants are valued using a Monte Carlo simulation model; however, the inputs are calibrated such that the fair value of an individual Public Warrant is equal to the quoted and publicly traded prices for the Public Warrants. Since the fair value is based off quoted prices in an active market for identical instruments, the Public Warrants are considered to be a Level 1 fair value measurement. Since the Public Warrants are publicly traded, the price of the underlying Class A common stock, the remaining time until expiration, and the price of the Public Warrants are observable. The Monte Carlo simulation model is calibrated by adjusting the selected volatility until the value of the Public Warrants implied by the model is equal to the publicly traded Class A warrant price (Ticker: FATH.WS).

~~The key inputs to the valuation of the Public Warrants include an expected term of~~ ~~3.98~~ ~~years, a strike price of $11.50, an assumption that the warrants can be early redeemed when the price of the Company's Class A common stock exceeds $18.00~~ ~~for any~~ 20 ~~trading days within a~~ 30~~-day trading period, and the warrants are assumed to remain outstanding until maturity unless they are redeemed early.~~

The Private Placement warrants are valued using a Monte Carlo simulation model, which is considered to be a Level 3 fair value measurement. The volatility for the Private Placement warrants, a key input into the valuation, was estimated to be ~~77.5% based on the publicly traded per share price of the Company's Class A common stock as of December 31, 2022. Other key inputs into the valuation include a term of~~ ~~3.98~~ ~~years, a strike price of $11.50~~ ~~per share, and an assumption that the Private Placement warrants will remain outstanding until maturity since, unlike the Public Warrants, the Private Placement warrants are not redeemable.~~

~~Note 21 – Income Taxes~~

Following the Business Combination in 2021, the Company is a U.S. C-corporation which wholly owns two entities taxed as corporations. Each of the Company and its corporate subsidiaries have an ownership interest in Fathom OpCo and are subject to U.S. federal and state income taxes with respect to their allocable share of taxable income of Fathom OpCo as well as any standalone taxable income or loss generated at the corporation level. All business operations are held within Fathom OpCo and its subsidiaries. Fathom OpCo and its subsidiaries are treated as flow-through entities for federal and substantially all state income tax purposes and therefore are not subject to entity level taxes in most jurisdictions.

As of December 31, 2022, tax years 2019 through 2022 remain open and subject to examination by the Internal Revenue Service and the majority of the states where Fathom OpCo has activities. Upon audit, tax authorities may challenge tax positions of the Company or Fathom OpCo. A tax position successfully challenged by a taxing authority could result in an adjustment to the Company’s provision for income taxes in the period in which a final determination is made. As of 2022, the 2021 Successor Period, and the 2021 Predecessor Period, the Company did not recognize income tax expense or benefits associated with uncertain tax positions.

~~Significant components of the Company’s tax expense (benefit) for 2022, the 2021 Successor Period, and the 2021 Predecessor Period, are as follows:~~

Period From

January 1 2022 - December 31, 2022

December 23 - December 31, 2021 (Successor)

January 1 - December 22, 2021 (Predecessor)

Current expense

State

$
250

$
-

$
52

Federal

-

-

-

Subtotal

250

-

52

Deferred tax benefit

State

(1,564
)

(1
)

(297
)
Federal

(5,613
)

(2
)

(2,963
)
Subtotal

(7,177
)

(3
)

(3,260
)
Total

$
(6,927
)

$
(3
)

$
(3,208
)

~~A reconciliation of the expected statutory federal tax and the total income tax expense (benefit) for 2022, the 2021 Successor Period, and the 2021 Predecessor Period, are as follows:~~

Period From

January 1 2022 - December 31, 2022

December 23 - December 31, 2021 (Successor)

January 1 - December 22, 2021 (Predecessor)

Federal statutory rate (21%)

$
(234,709
)

$
7,028

$
(4,133
)
State income taxes, net of federal benefit

(2,910
)

(38
)

(245
)
Pre-closing income held in flow-through entities

-

-

4,133

Change in tax status of corporate subsidiaries

-

-

(2,963
)
Non-controlling interest in Fathom Holdco, LLC

130,499

222

-

Remeasurement of Fathom and Sponsor earnout shares

(14,026
)

(5,724
)

Remeasurement of TRA and warrant liability

(6,661
)

(1,662
)

-

Valuation allowance

10,369

171

-

Goodwill impairment

104,768

Other

5,743

Total

$
(6,927
)

$
(3
)

$
(3,208
)

~~F-42~~

~~The tax effect of temporary differences that give rise to deferred tax assets and liabilities for 2022, the 2021 Successor Period, and the 2021 Predecessor Period, are as follows:~~

Period Ended

December 31, 2022

December 31, 2021 (Successor)

Deferred tax assets

Net operating losses

$
2,575

$
1,494

Transaction costs

680

861

Interest expense carryforwards

898

762

Stock based compensation

741

-

Investment in Fathom Holdco LLC

8,586

-

Other

7

-

Valuation allowance

(13,487
)

(3,117
)
Total deferred tax assets

-

-

Deferred tax liabilities

Investment in Fathom Holdco, LLC

-

(17,570
)
Total deferred tax liabilities

-

(17,570
)
Total net deferred tax liabilities

$
-

$
(17,570
)

~~Net Operating Losses~~

~~As of December 31, 2022, the Company has federal and state net operating loss ("NOLs") carryforwards of $10,600~~ ~~and $7,200~~, respectfully. The U.S. federal NOLs are not subject to expiration. Utilization of the federal and state net operating losses may be subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code and equivalent state tax provisions. The annual limitations are not expected to restrict the use of any portion of the net operating losses prior to expiration. Nonetheless, the Company believes that it is more likely than not that the benefit from federal and state NOL carryforwards will not be realized.

~~Goodwill Impairment~~

A permanent tax addback adjustment was made for the book goodwill impairment expense. This book goodwill impairment expense also impacted the basis difference and resulting deferred tax impact for the Investment in Fathom Holdco LLC. Due to the significant reduction in the book basis of the investment in Fathom Holdco LLC, the temporary difference related to this investment changed from a deferred tax liability as of December 31, 2021, to a deferred tax asset as of December 31, 2022. Per the valuation allowance discussion below, a full valuation allowance has been established against this deferred tax asset at December 31, 2022.

~~Valuation Allowance~~

The Company recorded a full valuation allowance against the deferred tax assets as of December 31, 2022. The change in the valuation allowance during the 2022 period was the result of an increase in deferred tax assets and the corresponding additional valuation allowance established against the ending deferred tax asset balance. The Company does not believe it is more likely than not that its deferred tax assets will be realized and has therefore established a full valuation allowance against it deferred tax assets as of December 31, 2022.

~~F-43~~

~~TRA, Warrants, Fathom Earnout Shares, and Sponsor Earnout Shares~~

The Company entered into a TRA with members of Fathom OpCo which calls for certain payments to be made to members of Fathom OpCo on account of (i) tax savings generated at the Company related to tax attributes of the Company and Fathom OpCo acquired by the Company in the Business Combination and (ii) future exchanges of Fathom OpCo units for cash or Class A common stock of the Company (See note 2 for further information). Payments required under the TRA for units acquired in the Business Combination are not anticipated to give rise to substantial amounts of future deductible tax differences. Changes in the fair value of the TRA liability established in connection with the transactions contemplated by the Business Combination give rise to permanent differences between financial and taxable income. Payments required under the TRA for units exchanges subsequent to the business combination may give rise to substantial amounts of future deductible tax differences. TRA amounts attributable to subsequent exchanges are not remeasured to fair value. The Company's Fathom Earnout Shares liability and Sponsor Earnout Shares liability to be paid in the form of equity does not give rise to future deductible tax basis for U.S. federal income tax purposes, and accordingly, changes in the fair value of the Fathom Earnout Shares liability and the Sponsor Earnout Shares liability give rise to permanent differences between financial and taxable income. The Company’s Warrants are treated as equity instruments for U.S. federal income tax purposes, and accordingly, changes in the fair value of the Warrant liability give rise to permanent differences between financial and taxable income.


Delaware	98-1571400
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1050 Walnut Ridge Drive Hartland, WI	53029
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	FATH	New York Stock Exchange
Warrants to purchase Class A common stock	FATH.WS	New York Stock Exchange


		Page
	Explanatory Note	1
	~~Cautionary Note Regarding Forward-Looking Statements~~	1
	~~Risk Factor Summary~~	2
~~PART I~~
~~Item 1.~~	~~Business~~	3
~~Item 1A.~~	~~Risk Factors~~	6
~~Item 1B.~~	~~Unresolved Staff Comments~~	33
~~Item 2.~~	~~Properties~~	33
~~Item 3.~~	~~Legal Proceedings~~	33
~~Item 4.~~	~~Mine Safety Disclosures~~	33

~~PART II~~
~~Item 5.~~	~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	34
~~Item 6.~~	~~[Reserved]~~	34
~~Item 7.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	35
~~Item 7A.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	47
~~Item 8.~~	~~Financial Statements and Supplementary Data~~	48
~~Item 9.~~	~~Changes in and Disagreements With Accountants on Accounting and Financial Disclosure~~	48
~~Item 9A.~~	~~Controls and Procedures~~	48
~~Item 9B.~~	~~Other Information~~	50
~~Item 9C.~~	~~Disclosure Regarding Foreign Jurisdictions that Prevent Inspections~~	51

PART III
Item 10.	Directors, Executive Officers, and Corporate Governance	521
Item 11.	Executive Compensation	524
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	5212
Item 13.	Certain Relationships and Related Transactions, and Director Independence	5214
Item 14.	Principal Accountant Fees and Services	5216

PART IV
Item 15.	Exhibits and Financial Statement Schedules	53
~~Item 16.~~	~~Form 10-K Summary~~	53

	~~Exhibit Index~~	54
	~~Signatures~~	56
	~~Index to Financial Statements~~	~~F-1~~17


Name and Position	Year		Salary ($)		Bonus ($)(1)			Stock Awards($)(2)(4)			Option Awards($) (3)(4)			Non-Equity Incentive Plan Compensation ($)			All Other Compensation ($)(5)			Total ($)
Ryan Martin	2022	$		425,500	—		$		450,002	$		450,003	$	—		$		31,325	$		1,356,830
Chief Executive Officer	2021	$		335,827	$	100,000	$		13,965,579	$	—		$		231,800	$		29,539	$		14,662,745
Mark Frost	2022	$		350,192	—		$		300,003	$		300,002	$	—		$		10,869	$		961,066
Chief Financial Officer	2021	$		225,000	—		$		5,385,282	$	—		$		163,883	$		40,293	$		5,814,458
Richard Stump	2022	$		350,192	$	250,000	$		300,003	$		300,002	$	—		$		12,200	$		1,212,397
Former Chief Commercial Officer	2021	$		294,279	$	50,000	$		5,431,059	$	—		$		163,833	$		11,600	$		5,950,771


	Option Awards (1)(2)				Stock Awards (1)
Name	Number of Securities Underlying unexercised options (#) unexercisable.		Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock that have not Vested (#)				Market Value of Shares or Units of Stock that have not Vested ($)(5)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or other Rights that have not Vested (#)(6)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights that have not Vested ($)(5)
Ryan Martin		103,687	8.89	2/25/2029		50,619	(3)	$		66,817		1,396,558	$		1,843,457
						116,380	(4)	$		153,622
Mark Frost		69,125	8.89	2/25/2029		33,746	(3)	$		44,545		403,896	$		533,143

Richard Stump		69,125	8.89	2/25/2029		33,746	(3)	$		44,454		465,519	$		614,485
						38,794	(4)	$		51,207


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


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to


	•		~~an acquired company, asset or technology not furthering our business strategy as anticipated;~~


	•		~~difficulties entering and competing in new product or geographic markets and increased competition, including price competition;~~


	•		~~challenges in working with strategic partners and resolving any related disagreements or disputes;~~


	•		~~high valuation for a company, asset or technology, or changes in the economic or market conditions or assumptions underlying our decision to make an acquisition;~~


	•		~~significant problems or liabilities associated with acquired businesses, assets or technologies, including increased intellectual property and employment-related litigation exposure;~~


	•		~~acquisition of a significant amount of goodwill, which could result in future impairment charges that would reduce our earnings; and~~


	•		~~requirements to record substantial charges and amortization expense related to certain purchased intangible assets, deferred stock compensation and other items, as well as other charges or expenses.~~


	•		~~integration challenges;~~


	•		~~enhance our operational, financial and management controls and infrastructure, human resource policies, and reporting systems and procedures;~~


	•		~~effectively scale our operations, including accurately predicting the need for floor space, equipment, and additional staffing; and~~


	•		~~successfully identify, recruit, hire, train, develop, maintain, motivate, and integrate additional employees.~~


	•		~~retain and further penetrate existing customers, as well as attract new customers;~~


	•		~~consistently execute on custom part orders in a manner that satisfies our customers’ product needs and provides them with a superior experience;~~


	•		~~develop new technologies or manufacturing processes and broaden the range of custom parts we offer;~~


	•		~~capitalize on customers’ product expectations for access to comprehensive, user-friendly e-commerce capabilities 24 hours per day, 7 days per week;~~


	•		~~increase the strength and awareness of our brands across geographic regions;~~


	•		~~respond to changes in customers’ needs, technology and our industry;~~


	•		~~react to challenges from existing and new competitors; and~~


	•		~~respond to an economic slowdown which negatively impacts manufacturers’ ability to innovate and bring new products to market.~~


	•		~~be unable to meet the shipping deadlines of our customers;~~


	•		experience disruptions in our ability to process submissions and generate quotations, manufacture and ship parts, provide marketing and sales support and customer service and otherwise operate our business, any of which could negatively impact our business;


	•		~~need to expend significant capital and other resources to address any damage caused by the disaster; and~~


	•		~~lose customers and be unable to reacquire those customers.~~


	•		~~not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;~~


	•		not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);


	•		~~reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and~~


	•		exemptions from the requirements of holding a nonbinding advisory vote of stockholders on executive compensation, stockholder approval of any golden parachute payments not previously approved and having to disclose the ratio of the compensation of our chief executive officer to the median compensation of our employees.


	•		~~a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board;~~

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company