~~Table of Contents~~ADTHEORENT HOLDING COMPANY, INC AND SUBSIDIARIES

~~MCAP ACQUISITION CORPORATION~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended September 30,

2023

2022

Cash flows from operating activities

Net (loss) income

$
(1,335
)

$
21,212

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Provision for credit losses

10

240

Amortization expense

6,473

5,872

Depreciation expense

146

143

Amortization of debt issuance costs

42

42

Gain on change in fair value of Seller's Earn-Out

(750
)

(15,664
)
Gain on change in fair value of warrants

(1,436
)

(8,261
)
Gain on deconsolidation of SymetryML

—

(1,939
)
Loss on change in fair value of SAFE Notes

—

788

Loss on fair value of investment in SymetryML Holdings

153

49

Deferred tax benefit

(5,105
)

(5,455
)
Equity-based compensation

5,924

8,627

Seller's Earn-Out equity-based compensation

—

1,364

Changes in operating assets and liabilities:

Accounts receivable

7,324

13,103

Income taxes recoverable

(32
)

(4
)
Prepaid expenses and other assets

(453
)

337

Accounts payable

775

(3,911
)
Accrued compensation, accrued expenses, and other liabilities

(5,918
)

(8,104
)
Net cash provided by operating activities

5,818

8,439

Cash flows from investing activities

Capitalized software development costs

(3,969
)

(2,008
)
Purchase of property and equipment

(88
)

(311
)
Decrease in cash from deconsolidation of SymetryML

—

(69
)
Net cash used in investing activities

(4,057
)

(2,388
)
Cash flows from financing activities

Cash received for exercised options

150

346

Payment of revolver borrowings

—

(39,017
)
Proceeds from SAFE Notes

—

200

Proceeds from SymetryML preferred stock issuance

—

400

Taxes paid related to net settlement of restricted stock awards

(466
)

(231
)
Proceeds from employee stock purchase plan

315

—

Net cash used in financing activities

(1
)

(38,302
)
Net increase (decrease) in cash and cash equivalents

1,760

(32,251
)
Cash and cash equivalents at beginning of period

72,579

100,093

Cash and cash equivalents at end of period

$
74,339

$
67,842

Supplemental disclosure of cash flow information

Increase in lease liabilities from obtaining right-of-use assets - ASC 842 adoption

$
—

$
8,376

Increase in lease liabilities from obtaining right-of-use assets

$
—

$
214

Non-cash investing and financial activities

Capitalized software and property and equipment, net included in accounts payable

$
40

$
56

Equity-based compensation included in capitalized software development costs

$
257

$
—

See accompanying notes to condensed consolidated financial statements.
7
ADTHEORENT HOLDING COMPANY, INC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Note 1 —~~ ~~Description of Organization~~(in thousands, except shares/units and ~~Business Operations~~per share/unit data)

(unaudited)

DESCRIPTION OF BUSINESS

~~MCAP Acquisition Corporation~~AdTheorent Holding Company Inc. and its subsidiaries (the “Company”, “AdTheorent”), is a ~~blank check company incorporated in Delaware~~digital media platform which focuses on ~~November 12, 2020.~~performance-first, privacy-forward methods to execute programmatic digital advertising campaigns, serving both advertising agency and brand customers. The Company ~~was formed~~uses machine learning and advanced data science to organize, analyze and operationalize non-sensitive data to deliver real-world value for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with 1 or more businesses (the “Business Combination”). The Company is an early stagecustomers. Central to its ad-targeting and ~~emerging growth company and, as such,~~campaign optimization methods, the Company ~~is subject~~builds custom machine learning models for each campaign using historic and real-time data to ~~all of the risks associated with early stage and emerging growth companies.~~

~~As of March 31, 2021, the Company had not yet commenced any operations. All activity~~predict future consumer conversion actions for ~~the period November 12, 2020 (inception) through February 25, 2021 relates to the~~every digital ad impression. The Company’s ~~formation~~machine learning models are customized for every campaign and the ~~initial public offering (the “Initial Public Offering”). The Company has selected December 31~~platform “learns” over the course of each campaign as ~~its fiscal year end.~~

The registration statement for the Company’s Initial Public Offering was declared effective on February 25, 2021. On March 2, 2021, the Company consummated the Initial Public Offering of 31,625,000 units (“Units” and, with respectit processes more data related to ~~the shares of Class A common stock included~~post media view conversion experience. AdTheorent is a Delaware corporation headquartered in ~~the Units offered, the “Public Shares”), generating gross proceeds of $316,250,000, which is described in Note 3.~~

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 5,983,333 private placement warrants (the “Private Placement Warrants”) at a price of $1.50 per warrant in a private placement to MCAP Acquisition, LLC (the “Sponsor”), generating gross proceeds of $8,975,000, which is described in Note 4.

Following the closing of the Initial Public Offering on March 2, 2021, an amount of $316,250,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants was placed in a trust account (“Trust Account”) which may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account to the Company’s stockholders, as described below.

Following the closing of the Initial Public Offering $2,431,242 of cash was held outside of the Trust Account available for working capital purposes. As of March 31, 2021, we have available to us $1,467,916 of cash on our balance sheet and a working capital surplus of $1,760,628.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the signing of a definitive agreement to enter a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.

New York, New York.

~~Table of Contents~~2.

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Note 1 — Description of Organization and Business Operations (Continued)~~

The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek stockholder approval of a Business Combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination.

The Company will have until March 2, 2023 to consummate a Business Combination. If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ~~ten~~ business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00). There will be no redemption rights or liquidating distributions with respect to the Founder Shares (as defined below) or the Private Placement Warrants, which will expire worthless if the Company fails to complete a Business Combination within the 24-month time period.

The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure its stockholders that the Sponsor would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 1 — Description of Organization and Business Operations (Continued)~~

~~Liquidity and Management’s Plans~~

Prior to the completion of the initial public offering, the Company lacked the liquidity it needed to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. The Company has since completed its Initial Public Offering at which time capital in excess of the funds deposited in the Trust Account and/or used to fund offering expenses was released to the Company for general working capital purposes. Accordingly, management has since reevaluated the Company’s liquidity and financial condition and determined that sufficient capital exists to sustain operations through March 31, 2022 and therefore substantial doubt has been alleviated.

~~Risks and Uncertainties~~

Management is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statement. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Note 2 — Summary of Significant Accounting Policies~~

Basis of Presentation and Principles of Consolidation

The accompanying ~~financial statements have been~~Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and ~~pursuant~~include the operations of the Company. All intercompany transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022. The Condensed Consolidated Balance Sheet as of December 31, 2022, has been derived from the Company's audited consolidated financial statements as of that date. The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, which include a complete set of footnote disclosures, including the Company's significant accounting policies. The results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Summary of Significant Accounting Policies

There have been no material changes in the Company's significant accounting policies during the nine months ended September 30, 2023, as compared to the significant accounting policies described in Note 2 to the Consolidated Financial Statements for the year ended December 31, 2022, except as detailed below.

Accounts Receivable and ~~disclosure rules~~Allowance for Credit Losses (formerly Allowance for Doubtful Accounts)

Accounts receivable are recorded at the invoiced amount, are unsecured, and ~~regulations~~do not bear interest. The allowance for credit losses is based on the best estimate of the ~~U.S. Securities~~amount of probable credit losses in existing accounts receivable. The Company reviews the allowance for credit losses on a quarterly basis. The allowance for credit losses is determined based on historical collection experience, the review in each period of the status of the then outstanding accounts receivable, while taking into consideration current customer information, and ~~Exchange Commission.~~other macroeconomic and industry factors. Account balances are written off against the allowance when the Company believes it is probable the receivable will not be recovered.

Emerging Growth Company

From time to time, new accounting pronouncements, or Accounting Standard Updates (“ASU”) are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

The Company is an ~~“emerging~~emerging growth company” (“EGC”) as defined in ~~Section 2(a) of the Securities Act, as modified by~~ the Jumpstart Our Business Startups Act of 2012 ~~(the “JOBS~~(“JOBS Act”), and it may take advantage of ~~certain exemptions from various~~reduced reporting requirements that are otherwise applicable to ~~other~~ public ~~companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of~~companies. Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 2 — Summary of Significant Accounting Policies (Continued)~~

~~Further, Section 102(b)(1)~~107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies ~~(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act)~~ are required to comply with ~~the new or revised financial accounting~~those standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, whichThis means that when a standard is issued or revised and it has different application dates for public ~~or private~~and nonpublic companies, the Company ~~as an emerging growth company, can~~has the option to adopt the new or revised standard at the time ~~private~~nonpublic companies adopt the new or revised ~~standard. This may make comparison~~standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of ~~the Company’s financial statements with another public company, which is neither~~such extended transition period or (ii) no longer qualifies as an emerging growth ~~company nor an emerging growth company which~~company. The Company has ~~opted out of using~~elected to use the extended transition period ~~difficult~~for complying with new or ~~impossible because~~revised accounting standards unless the Company otherwise early adopts select standards.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU No. 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes (Topic 740)

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”), which is part of the ~~potential differences in~~FASB’s overall simplification initiative to reduce the costs and complexity of applying accounting standards ~~used.~~

~~Use of Estimates~~

~~The preparation~~while maintaining or improving the usefulness of the ~~balance sheet~~information provided to users of financial statements. ASU 2019-12 simplifies accounting guidance for intra-period allocations, deferred tax liabilities, year-to-date losses in ~~conformity~~interim periods, franchise taxes, step-up in tax basis of goodwill, separate entity financial statements, and interim recognition of tax laws or rate changes. ASU 2019-12 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with ~~GAAP~~early adoption permitted. The Company has determined the adoption did not have a material impact on the Condensed Consolidated Financial Statements.

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326)

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires ~~management~~entities to ~~make estimates~~estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, ~~that affect~~models and methods for estimating expected credit losses over the ~~reported amounts~~entire contractual term of ~~assets and liabilities and disclosure of contingent assets and liabilities at~~the instrument from the date of initial recognition of that instrument. ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company adopted this ASU effective January 1, 2023. The adoption of this ASU did not have a material impact on the ~~financial statements~~Company’s Condensed Consolidated Financial Statements.

REVENUE RECOGNITION

ASC 606, Revenue from Contracts with Customers

Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company measures revenue based on the consideration specified in the customer arrangement, and revenue is recognized when the ~~reported amounts~~performance obligations in the customer arrangement are satisfied. The transaction price of ~~revenues~~a contract is allocated to each distinct performance obligation and ~~expenses during~~recognized as revenue when or as the ~~reporting period.~~

~~Making estimates requires management to exercise significant judgment. It is at least reasonably possible that~~customer receives the ~~estimate~~benefit of the ~~effect of~~performance obligation.

The Company’s revenue streams include Managed Programmatic revenue and Direct Access revenue. The Direct Access offerings are new to the market and not yet material to the Company from a ~~condition, situation~~financial reporting perspective.

For its Managed Programmatic revenue, the Company negotiates insertion orders (“IOs”) with the advertising agency or ~~set of circumstances that existed at~~brand, which specifies the ~~date~~material terms of the ~~financial statements, which management considered~~campaign. IOs are subject to cancellation by the client, usually with no penalty, for the unfilled portion of the IO. The Company’s performance obligation is to deliver digital advertisements in ~~formulating its estimate, could change in~~accordance with the ~~near term due to one or more future confirming events. Accordingly,~~terms of the ~~actual results could differ significantly from those estimates.~~

~~Cash and Cash Equivalents~~

IO. The Company ~~considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents are carried at cost,~~has concluded that this constitutes a single performance obligation for financial reporting purposes and that such obligation is recognized over the time, using the output method, for which ~~approximates fair value. The~~the Company ~~had $1,467,916 in cash and 0 cash equivalents as of March 31, 2021.~~

~~Income Taxes~~

The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicableis transferring value to the ~~periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.~~

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were 0 unrecognized tax benefits and 0 amounts accrued for interest and penalties as of March 31, 2021.customer through delivered advertising units. The Company is ~~currently~~responsible for fulfilling advertising delivery, including optimization and reporting, establishes the selling price for the delivery, and the Company performs billing

and collections, including ultimately retaining credit risk. The Company has therefore determined that it serves as a principal and that gross presentation of revenue is appropriate.

Direct Access customers access the Company’s platform directly and manage all aspects of their advertising campaigns. The Company provides advertiser and marketer customers direct access to the platform so that they can execute and manage advertising campaigns and is not ~~aware~~primarily responsible for the purchase of ~~any issues under review~~advertising inventory, third party data, and other related expenses. Revenue for customers working with the Company on this basis are recorded net of the amount incurred and payable to suppliers for the cost of advertising inventory, third party data and other add-on features, as the Company does not control the purchase nor have pricing discretion with regard to these items. The Company bills clients for their purchases through its platform and the associated platform fees. For the Company’s Direct Access Plus offering, which is used as a higher-touch on-boarding level of service for Direct Access customers who desire greater implementation support, the Company is primarily responsible for the purchase of advertising inventory, third party data, and other related expenses. The Company has therefore determined that ~~could result in~~the Company serves as a principal and that gross presentation of revenue is appropriate.

The Company has elected to expense the costs to obtain or fulfill a contract as incurred because the amortization period of the asset that the Company otherwise would have recognized is one year or less. Therefore, there were no contract cost assets recognized as of September 30, 2023 or December 31, 2022.

The Company has elected not to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period for performance obligations with a remaining performance obligation that is part of a contract that has an original expected duration of one year or less.

Contract assets and contract liabilities related to the Company’s revenue streams were not significant ~~payments, accruals or material deviation from its position.~~to the accompanying Condensed Consolidated Financial Statements.

ACCOUNTS RECEIVABLE, Net

Accounts receivable, net consisted of the following:


	September 30,			December 31,
	2023			2022
Accounts receivable	$	49,309		$	56,243
Other receivables		40			483
	$	49,349		$	56,726
Less: allowance for credit losses		(656	)		(699	)
Accounts receivable, net	$	48,693		$	56,027

The provision for ~~income taxes~~credit losses on accounts receivable was ~~deemed to be immaterial~~$10 and $68 for the three months ended ~~March 31, 2021.~~September 30, 2023 and 2022, respectively, and $10 and $240 for the nine months ended September 30, 2023 and 2022, respectively.

The following table presents changes in the allowance for credit losses:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023			2022
Beginning balance	$	663		$	537	$	699		$	365
Reserve for credit losses		10			68		10			246
Write-offs, net of recoveries		(17	)		—		(53	)		(6	)
Ending balance	$	656		$	605	$	656		$	605

PREPAID EXPENSES

8Prepaid expenses consisted of the following:


	September 30,		December 31,
	2023		2022
Platform operations	$	1,344	$	876
Software		576		501
Insurance		499		—
Other		254		89
Total	$	2,673	$	1,466

PROPERTY AND EQUIPMENT, Net

~~Table~~Property and equipment, net consisted of ~~Contents~~the following:

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~


	September 30,			December 31,
	2023			2022
Computers and equipment	$	908		$	949
Less: accumulated depreciation		(443	)		(429	)
Total	$	465		$	520

Depreciation expense on Property and equipment was $48 and $51 for the three months ended September 30, 2023 and 2022, respectively, and $146 and $143 for the nine months ended September 30, 2023 and 2022, respectively.

INTANGIBLE ASSETS, Net

~~Note 2 — Summary~~Intangible assets, net consisted of ~~Significant Accounting Policies (Continued)~~the following:


			September 30, 2023
	Remaining Weighted Average Useful Life (in years)		Gross amount		Accumulated amortization			Net carrying amount
Software		—	$	6,038	$	(6,038	)	$	—
Capitalized software costs		1.3		14,435		(9,890	)		4,545
Customer relationships		0.3		31,492		(30,373	)		1,119
Trademarks/tradename		3.3		10,195		(6,886	)		3,309
Total			$	62,160	$	(53,187	)	$	8,973


			December 31, 2022
	Remaining Weighted Average Useful Life (in years)		Gross amount		Accumulated amortization			Net carrying amount
Software		—	$	6,038	$	(6,038	)	$	—
Capitalized software costs		1.1		10,173		(7,535	)		2,638
Customer relationships		1.0		31,492		(27,017	)		4,475
Trademarks/tradename		4.0		10,195		(6,125	)		4,070
Total			$	57,898	$	(46,715	)	$	11,183

~~Class A Common Stock Subject to Possible Redemption~~11

Amortization expense was included in the Company’s Condensed Consolidated Statements of Operations as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Platform operations	$	798	$	549	$	2,173	$	1,615
Sales and marketing		1,371		1,370		4,111		4,110
Technology and development		98		—		181		140
General and administrative		2		3		8		7
Total	$	2,269	$	1,922	$	6,473	$	5,872

Total amortization expense for the three months ended September 30, 2023 and 2022 was $2,269 and $1,922, respectively, and $6,473 and $5,872 for the nine months ended September 30, 2023 and 2022, respectively. Amortization expense for capitalized software costs for the three months ended September 30, 2023 and 2022 was $896 and $549, respectively, and $2,354 and $1,614 for the nine months ended September 30, 2023 and 2022, respectively.

Estimated future amortization of intangible assets as of September 30, 2023 is as follows:


Remainder of 2023	$	2,285
2024		3,881
2025		1,782
2026		1,016
2027		7
Thereafter		2
Total	$	8,973

GOODWILL

The Company ~~accounts for~~is a single reporting unit. The goodwill balance as of September 30, 2023 and December 31, 2022 was $34,842.

The Company did not identify a goodwill impairment indicator during the nine months ended September 30, 2023 to necessitate the performance of an interim impairment test. The Company will continue to monitor impairment indicators in future periods, inclusive of its shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable shares of common stock ~~(including shares of common stock that feature redemption rights that are either within the control~~price.

ACCRUED EXPENSES

Accrued expenses consisted of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, shares are classified as stockholders’ equity. The Company’s shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at March 31, 2021, 27,962,071 shares of Class A Common Stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.following:


	September 30, 2023		December 31, 2022
Campaign costs	$	2,128	$	4,081
Income taxes		1,852		120
Deferred revenues		430		1,149
Platform operations		373		401
Other		293		473
Total	$	5,076	$	6,224

~~Cash Held in Trust Account~~12

~~At March 31,~~

10.

DEBT

On December 22, 2021, the ~~assets held in the Trust Account were invested in~~Company entered into a ~~money market fund.~~

~~Concentration of Credit Risk~~

~~Financial instruments that potentially subject~~senior secured credit facilities credit agreement (the “Senior Secured Agreement”) with Silicon Valley Bank (“SVB”). The Senior Secured Agreement allows for the Company to ~~concentration~~borrow up to $40,000 in a revolving credit facility (“Revolving Credit Facility”), including a $10,000 sub-limit for letters of credit ~~risk consist~~and a swing line sub-limit of ~~a cash account in a financial institution which, at times, may exceed~~$10,000. The Revolving Credit Facility commitment termination date is December 22, 2026.

On March 10, 2023, SVB was seized by regulators and placed under the receivership of the Federal ~~Depository~~Deposit Insurance Corporation ~~coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.~~

~~Net~~ ~~Income~~ ~~(Loss) Per Share~~

Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock shares outstanding for the period. The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the Initial Public Offering and Private Placement Warrants since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The Company’s statements of operations includes a presentation of income (loss) per share for common stock shares subject to possible redemption in a manner similar to the two-class method of income (loss) per share. Net income per share, basic and diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, if any, by the weighted average number of Class A redeemable common stock shares outstanding. Net loss per share, basic and diluted, for Class A and Class B non-redeemable common stock is calculated by dividing the net loss, adjusted for income attributable to Class A redeemable common stock shares, by the weighted average number of Class A and Class B non-redeemable common stock shares outstanding for the period. Non-redeemable Class A and Class B common stock shares includes the Founder Shares and non-redeemable common stock shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 2 — Summary of Significant Accounting Policies (Continued)~~

~~The following table reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):~~

For the Three

Months Ended

March 31,

2021
Redeemable Class A common stock

Numerator: Earnings allocable to redeemable Class A common stock

Interest income

$
6,122
Net earnings

$
6,122
Denominator: Weighted average redeemable Class A common stock

Redeemable Class A common stock shares, basic and diluted

30,237,684
Earnings per share Redeemable Class A common stock

$
0.00
Non-Redeemable Class A and B common stock

Numerator: net loss minus redeemable net earnings

Net loss

$
(764,740)
Less: Interest income allocated to redeemable Class A common stock

$
(6,122)
Net loss attributable to Non-redeemable Class A and B common stock

$
(770,862)
Denominator: Weighted average Non-redeemable Class A and B common stock

Non-Redeemable Class A and B common stock shares, basic and diluted

8,353,274
Loss per share Non - redeemable Class A and B common stock

$
(0.09)

~~Fair Value of Financial Instruments~~

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

~~Derivative Financial Instruments~~

~~The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815,~~ “~~Derivatives and Hedging~~”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

~~Recently Issued Accounting Standards~~

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

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 3 — Initial Public Offering~~

Pursuant to the Initial Public Offering, the Company sold 31,625,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of 1 share of the Company’s Class A common stock, $0.0001 par value, and ~~one~~ ~~third of one redeemable warrant~~ (“~~Public Warrant”~~FDIC”). ~~Each Public Warrant entitles the holder to purchase 1 share of Class A common stock at an exercise price of $11.50 per whole share (see Note 7).~~

~~Note 4 — Private Placement~~

Simultaneously with the Initial Public Offering, the Sponsor purchased an aggregate of 5,983,333 Private Placement Warrants at a price of $1.50 per warrant for an aggregate purchase price of $8,975,000.

The Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees.

~~Note 5 — Related Party Transactions~~

~~Founder Shares~~

On December 21, 2020, the Company issued an aggregate of 7,187,500 shares of Class B common stock (the “Founder Shares”) to the Sponsor for an aggregate purchase price of $25,000. On February 25, 2021, the Company effectuated a 0.1 for 1 dividend of its Class B common stock, resulting in an aggregate of 7,906,250 Founder Shares issued and outstanding. The Founder Shares which the Sponsor will collectively own, on an as-converted basis, represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering.

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 5 — Related Party Transactions (Continued)~~

The Sponsor has agreed not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, capital stock exchange or similar transaction that results in the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last reported sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150Two days after the ~~Business Combination,~~failure, the ~~Founder Shares will be released from~~FDIC announced jointly with other agencies that all depositors would have full access to their funds the ~~lock-up.~~

~~Promissory Note — Related Party~~

~~On December 21, 2020, the Sponsor committed~~next morning. The FDIC reopened SVB on March 13, 2023 as a newly organized bridge bank, Silicon Valley Bridge Bank, N.A (“SVBB”) and on March 27, 2023, First Citizens Bank acquired SVBB. The Company’s Senior Secured Agreement remains available to ~~loan~~ the Company ~~an aggregate of up to $300,000 to cover expenses related~~with no amendments to the ~~Initial Public Offering pursuant~~original agreement with SVB, which is now a division of First Citizens Bank.

The Company is subject to ~~a promissory note (the “Note”).~~customary representations, warranties, and covenants. The ~~Note was non-interest bearing~~Senior Secured Agreement requires that the Company meet certain financial and ~~was payable on the earlier of June 30, 2021 or the completion of the Initial Public Offering. On March 2, 2021, the $250,000 outstanding under the Note was repaid in full.~~

~~Related Party Loans~~

~~In order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may,~~non-financial covenants which include, but are not ~~obligated~~limited to, ~~loan~~(i) delivering audited consolidated financial statements to the lender within 90 days after year-end commencing with the fiscal year ending December 31, 2022 financial statements, (ii) delivering unaudited quarterly consolidated financial statements within 45 days after each fiscal quarter, commencing with the quarterly period ending on March 31, 2022 and (iii) maintaining certain leverage ratios and liquidity coverage ratios. As of September 30, 2023 and December 31, 2022, the Company funds as may be required (the “Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation of a Business Combination into warrants at a price of $1.50 per warrant. The warrants will be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds heldwas in ~~the Trust Account would be used to repay the Working Capital Loans.~~

~~Administrative Support Agreement~~

Commencing on the date of the prospectus and until completion of the Company’s Business Combination or liquidation, the Company may reimburse an affiliate of the Sponsor up to an amount of $10,000 per month for office space, secretarial and administrative support. As of March 31, 2021 our Sponsor did not intend to request reimbursement from the Company for any administrative support.

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 6 — Commitments~~

~~Registration Rights~~

Pursuant to a registration rights agreement entered into on February 25, 2021, the holders of the Founder Shares, Private Placement Warrants and the warrants that may be issued upon conversion of the Working Capital Loans (and their underlying securities) are entitled to registration rights. The holders of a majority of these securities are entitled to make up to 3 demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rightsfull compliance with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriters Agreement~~

The Company granted the underwriter a 45-day option to purchase up to 4,125,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. The aforementioned option was exercised on March 2, 2021.

The underwriter was paid a cash underwriting discount of two percent (2.00%) of the gross proceeds of the Initial Public Offering, or $6,325,000. In addition, the underwriter is entitled to a deferred fee of three and a half percent (3.50%) of the gross proceeds of the Initial Public Offering, or $11,068,750. The deferred fee was placed in the Trust Account and will be paid in cash upon the closing of a Business Combination, subject to the terms of the ~~underwriting agreement.~~Senior Secured Agreement.

~~Note 7 – Warrant Liability~~

~~Public Warrants may only be exercised~~As of both September 30, 2023 and December 31, 2022, the Company had one letter of credit for ~~a whole number~~$983. As of ~~shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable~~September 30, 2023 and December 31, 2022, there were no amounts drawn on the ~~later~~Revolving Credit Facility.

11.

INCOME TAXES

For the three months ended September 30, 2023 and 2022, the Company recorded an income tax provision of ~~(a)~~$6,254 and $1,095, respectively, and for the nine months ended September 30, ~~days after~~2023 and 2022, the ~~consummation~~Company recorded an income tax (provision) benefit of ~~a Business Combination or (b) 12~~($938) and $540, respectively. The annual effective income tax rates before discrete items (“AETR”) for the nine months ~~from~~ended September 30, 2023 and 2022 was 36.1% and 15.0%, respectively.

The AETR for the ~~closing~~nine months ended September 30, 2023 was more than the statutory rate of ~~the Initial Public Offering. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.~~

21% primarily due to state and local income taxes, meals and entertainment, and executive equity-based compensation not deductible for tax purposes. The Company ~~will~~did not include any fair value adjustments not reasonably estimable for the full-year in the calculation of its AETR as the full-year impact of these specific items cannot be ~~obligated~~reasonably projected. Refer to ~~deliver any Class A common stock pursuant to~~Note 14 – Seller's Earn-out and Note 15 – Warrants for further detail on fair value adjustments for the ~~exercise of a Public Warrant~~Seller's Earn-Out and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A common stock issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No Public Warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.

warrant liabilities, respectively.

12.

EQUITY-BASED COMPENSATION

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

2021 Long-Term Incentive Plan

~~Note 7 – Warrant Liability (Continued)~~

The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of its initial Business Combination, it will use its best efforts to file with the SEC, and within 60 business days following its initial Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60^th business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.

~~Once the Public Warrants become exercisable, the Company may redeem the Public Warrants for redemption:~~

●

~~in whole and not in part;~~

●

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

●

~~upon not less than 30 days' prior written notice of redemption to each warrant holder; and~~

●

if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and certain issuances of Class A common stock and equity-linked securities) for any 20 trading days within a 30-trading day period commencing no earlier than the date the warrants become exercisable and ending on the third business day before the date on which the Company sends the notice of redemption to the warrant holders.

If and when the Public Warrants become redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration or qualification.

The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 7 – Warrant Liability (Continued)~~

In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faithBoard approved 2021 Long-Term Incentive Plan (the “2021 Plan”) was adopted by the Company’s ~~board~~stockholders on December 21, 2021, initially authorizing the Company to issue 10,131,638 shares of ~~directors~~Common Stock. Annually, on each January 1 and inthrough January 1, 2031, the ~~case of any such issuance~~2021 Plan authorizes the Company to increase the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon,shares available for the funding of the Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price and the $10.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to the greater of the Market Value and the Newly Issued Price.

The Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and the shares of common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and will be non-redeemable 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.

~~At March 31, 2021, there were 10,541,667 whole Public Warrants and 5,983,333 Private Placement Warrants outstanding, respectively, with a fair value of $22,713,332.~~

The Company accounts for the 10,541,667 Public Warrants issued in connection with the Initial Public Offering and the 5,983,333 Private Placement Warrants in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. The warrant agreement contains an Alternative Issuance provision that if less than 70% of the consideration receivable by the holders of the Class A common stock in the Business Combination is payable in the form of common equity in the successor entity, and if the holders of the warrants properly exercises the warrants within thirty days following the public disclosure of the consummation of Business Combination by the Company, the warrant price shall be reducedissuance by an amount equal to the ~~difference (but in no event less than zero)~~lesser of ~~(i)~~(a) 5% of the ~~warrant price in effect prior to~~total number of shares outstanding on the last day of the preceding calendar year or (b) such ~~reduction minus (ii) (A)~~smaller number of shares as determined by the ~~Per Share Consideration (as defined below) minus (B)~~Company’s Board of Directors.

On January 1, 2023, the ~~Black-Scholes Warrant Value (as defined below). The~~ Company added “4,348,415~~Black-Scholes Warrant Value~~” ~~means the value of a Warrant immediately prior~~ shares to the ~~consummation~~shares available for issuance under the 2021 Plan. As of September 30, 2023, 6,627,316 shares remained available for issuance pursuant to the 2021 Plan.

Stock Option Award Activity

For the three months ended September 30, 2023 and 2022, $0 and $62, respectively, of equity-based compensation expense was recognized related to equity options granted, and for the nine months ended September 30, 2023 and 2022, $3 and $187, respectively, of the ~~Business Combination based on~~equity-based compensation expense was recognized related to equity options granted. All equity options were fully vested as of July 1, 2023.

The following table summarizes stock option activity for the ~~Black-Scholes Warrant Model for a Capped American Call on Bloomberg Financial Markets.~~ “nine months ended September 30, 2023:~~Per Share Consideration~~” means (i) if the consideration paid to holders of the common stock consists exclusively of cash, the amount of such cash per common stock, and (ii) in all other cases, the volume weighted average price of the common stock as reported during the ten-trading day period ending on the trading day prior to the effective date of the Business Combination.


	Stock Options			Weighted-Average Exercise Price
Outstanding as of December 31, 2022		6,915,715		$	0.61
Exercised		(233,467	)		0.64
Forfeited		(18,563	)		0.74
Outstanding as of September 30, 2023		6,663,685		$	0.60
Exercisable as of September 30, 2023		6,663,685		$	0.60

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

Restricted Stock Units

~~Note 7 – Warrant Liability (Continued)~~

The ~~Company believes that the adjustments to the exercise price of the warrants is based on a variable that is not an input to the~~ fair value of a “~~fixed-for-fixed~~” ~~option as defined under FASB ASC Topic No. 815~~ – ~~40, and thus~~Restricted Stock Units (“RSUs”) equals the warrants are not eligible for an exception from derivative accounting. The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon the closing of the Initial Public Offering. Accordingly, the Company will classify each warrant as a liability at its fairmarket value and the warrants will be allocated a portion of the proceeds from the issuance of the Units equal to its fair value determined by the Monte Carlo simulation. This liability is subject to re-measurement at each balance sheet date. With each such remeasurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.

~~Note 8~~ – ~~Stockholders’ Equity~~

~~Preferred Stock— The Company is authorized to issue 1,000,000 shares of $0.0001 par value preferred stock. At March 31, 2021, there were 0 preferred shares issued or~~ ~~outstanding~~.

~~Class A Common Stock— The Company is authorized to issue up to 200,000,000 shares of Class A, $0.0001 par value common stock. Holders~~ of the Company’s common stock on the date of the grant. The RSUs are excluded from issued and outstanding shares until they are vested.

On May 24, 2023, the Company granted 5,564,806 RSUs at a fair value of $1.51 per share to employees and Board members, which consisted of a mix of both time-based and performance-based vesting conditions (“PSUs”). The vesting conditions for the PSUs are based on achievement of revenue targets.

Equity-based compensation expense was not recognized on the PSUs for the three and nine months ended September 30, 2023 and 2022, on the basis that achievement of the specified performance targets was not considered probable to be met in the periods. All PSUs granted in the year ended December 31, 2022 were cancelled as of December 31, 2022 due to not obtaining the defined targets of the related grants.

For the three months ended September 30, 2023 and 2022, $2,558, and $2,694 of equity-based compensation expense was recognized, and for the nine months ended September 30, 2023 and 2022, $5,823 and $8,413 of equity-based compensation expense was recognized, related to RSUs with time-based vesting conditions.

The following summarizes RSU activity for the nine months ended September 30, 2023:


	Restricted Stock Units			Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2022		2,764,681		$	9.23
Granted		5,564,806			1.51
Vested		(1,055,472	)		9.01
Forfeited		(169,943	)		7.83
Outstanding as of September 30, 2023		7,104,072		$	3.25

Employee Stock Purchase Plan

On December 21, 2021, the Company’s stockholders approved the AdTheorent Holding Company, Inc. Employee Stock Purchase Plan (the “ESPP”) and the ESPP became effective on such date with an authorized 2,026,328 shares of common stock (subject to certain adjustments to reflect changes in the Company’s capitalization) are reserved and may be purchased by eligible employees who become participants in the ESPP. The purchase price per share of the common stock is the lesser of 85% of the fair market value of a share of common stock on the offering date or 85% of the fair market value of a share of common stock on the purchase date. The first offering period under the ESPP began August 15, 2022 and ended January 14, 2023. Beginning with the second offering period beginning January 14, 2023, each offering period will be six months. Pursuant to the ESPP, on January 1, 2023, the Company added 869,863 shares available for issuance. As of September 30, 2023, there were 2,552,353 shares of common stock available for issuance pursuant to the ESPP.

Total compensation expense related to the ESPP was $26 and $27 for the three months ended September 30, 2023 and 2022, respectively, and $98 and $27 for the nine months ended September 30, 2023 and 2022, respectively, classified within each applicable operating expense category on the accompanying Consolidated Statements of Operations and in the equity-based compensation table below.

The fair value of the purchase rights granted under the ESPP for the offering period beginning July 15, 2023 was $0.51. It was estimated by applying the Black-Scholes Option-Pricing model (“BSM”) to the purchase period in the offering period using the following assumptions:


	July 15, 2023
Grant price	$	1.50
Expected term	6 months
Expected volatility		65.19	%
Risk-free interest rate		5.52	%
Expected dividend yield		0.00	%

Grant price - Closing stock price on the first day of the offering period

Expected Term - The expected term is based on the end date of the purchase period of each offering period, which is three months from the commencement of each new offering period.

Expected volatility - The expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company’s stock.

Risk-free interest rate - The risk-free interest rate is based on a United States (“U.S.”) Treasury rate in effect on the date of grant with a term equal to the expected term.

Equity-Based Compensation Expense

The following table summarizes the total equity-based compensation expense included in the Condensed Consolidated Statements of Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Platform operations	$	412	$	485	$	919	$	1,365
Sales and marketing		1,031		920		2,373		2,773
Technology and development		251		424		640		1,448
General and administrative		890		954		1,992		3,041
Total equity-based compensation expense	$	2,584	$	2,783	$	5,924	$	8,627

Equity-based compensation included in capitalized software development costs was $113 and $0 for the three months ended September 30, 2023 and 2022, respectively and $257 and $0 for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, all stock options were vested and the related compensation cost was fully recognized.

As of September 30, 2023, there was $15,797 of total unrecognized compensation expense related to the RSUs, which is expected to be recognized over a weighted average period of 1.6 years.

13.

EQUITY

The Company has authorized a total of 370,000,000 shares for issuance with 350,000,000 shares designated as common stock and 20,000,000 shares designated as preferred stock.

The Company’s common stockholders are entitled to 1one vote per share for ~~each share. At March 31, 2021, there were 3,662,929 shares of Class A common stock~~ ~~issued~~ ~~or outstanding, (excluding 27,962,071 Class A shares subject to possible redemption).~~

~~Class B Common Stock —~~ ~~The Company is authorized to issue up to 20,000,000 shares of Class B, $0.0001 par value common stock. Holders~~the election of the ~~Company’s common stock are entitled to 1 vote for each share. On February 25, 2021, the~~ Company ~~effectuated a 0.1 for 1 dividend of its Class B common stock resulting in an aggregate of 7,906,250 shares of Class B common stock issued~~directors and~~outstanding. At March 31, 2021, there were 7,906,250 shares of Class B common stock issued and~~ ~~outstanding~~.

~~Holders of Class A common stock and Class B common stock will vote together as a single class on~~ all other matters submitted to a vote of stockholders ~~except as required by law; provided that only holders~~ of ~~Class B common stock have~~ the ~~right to vote for the election of directors prior to~~company. Additionally, the Company’s ~~initial Business Combination.~~

~~The~~common stockholders will be entitled to receive dividends when, as and if declared by the Company Board, payable either in cash, in property or in shares of ~~Class B common~~capital stock, will automatically convert into shares of Class A common stock at the time of the Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like. In the case that additional shares of Class A common stock, or equity linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respectafter payment to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as converted basis, 20% of the sumCompany preferred stockholders having preference, if any. Out of the total ~~number~~authorized common stock, 88,206,048, and 86,968,309 were issued and outstanding as of ~~all~~September 30, 2023 and December 31, 2022, respectively.

The Company’s Board is authorized to issue shares of ~~common~~preferred stock, ~~outstanding upon the completion~~without stockholder approval, with such designations, voting and other rights and preferences as they may determine. As of ~~the Initial Public Offering plus all~~September 30, 2023 and December 31, 2022, there were no shares of ~~Class A common~~preferred stock issued and equity linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity linked securities issued, or to be issued, to any seller in a Business Combination, and any private placement-equivalent units and its underlying securities issued to the Sponsor or its affiliates upon conversion of loans made to the Company).

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

outstanding.

~~Note 8~~ – ~~Stockholders’ Equity (Continued)~~

14.

SELLER'S EARN-OUT

The ~~Company may issue additional common stock or preferred stock to complete its Business Combination or under an employee incentive plan after completion of its Business Combination.~~

~~Note 9 – Fair Value Measurements~~

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

●

~~Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;~~

●

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

●

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

March 31,


Level

2021
Assets:




Cash and marketable securities held in Trust Account

1

$
316,256,122

Liabilities:


Public Warrants

3

$
14,336,666
Private Placement Warrants

3

$
8,376,666

The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change inestimated fair value of ~~warrant liabilities~~the Seller’s Earn-Out, as defined in Note 15 – Seller’s Earn-Out included in the ~~statement of operations.~~

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 9 – Fair Value Measurements (Continued)~~

~~Initial Measurement~~

~~The Company established the initial fair value~~Company's Annual Report on Form 10-K for the ~~Warrants on March 2, 2021, the date of the Company’s Initial Public Offering,~~year ended December 31, 2022, was determined using a Monte Carlo simulation ~~model.~~valuation model using the most reliable information available. Assumptions used in the valuation were as follows:




	September 30, 2023			December 31, 2022
Stock price	$	1.29		$	1.66
Dividend yield		0.00	%		0.00	%
Volatility		70.00	%		75.00	%
Risk-free rate		4.80	%		4.37	%
Forecast period (in years)		1.23			1.98

Dividend yield - The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company ~~allocated~~has not paid and does not intend to pay dividends.

Expected Volatility - The expected volatility assumption was determined by examining the ~~proceeds received~~Company’s historical volatility, the historical volatilities of a group of industry peers, and the implied volatility from ~~(i)~~ the ~~sale~~market price of ~~Units (which~~the Public Warrants.

Risk-free rate - The risk-free rate assumption is ~~inclusive~~based on the U.S. Treasury instruments, the terms of ~~one share~~which were consistent with the expected term of ~~common stock~~the Seller’s Earn-Out.

Forecast period – The forecast period represents the time until expiration of the Seller’s Earn-Out.

Seller’s Earn-Out to equity holders and ~~one-third~~vested Exchanged Options as of ~~one~~Close:

The Seller’s Earn-Out is recorded on the Condensed Consolidated Balance Sheet as a non-current liability since the expected date of achievement based on the valuation model is over twelve months as of September 30, 2023. The following table presents activity for the Seller's Earn-Out measured using the Monte Carlo model, described above, as of September 30, 2023 and December 31, 2022:


	Seller's Earn-Out
Balance at December 31, 2022	$	773
Change in fair value		(750	)
Balance at September 30, 2023	$	23

Seller’s Earn-Out to Exchanged Option and Exchanged Unit holders as of Close:

Equity-based compensation related to the Seller’s Earn-Out to Exchanged Option and Exchanged Unit holders was $0 and $373 for the three months ended September 30, 2023 and 2022, respectively, and $0 and $1,364 for the nine months ended September 30, 2023 and 2022, respectively. The compensation expense was fully recognized in the third quarter of 2022.

Equity-based compensation expense related to the Seller’s Earn-Out to Exchanged Option and Exchanged Unit holders was included in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 as follows:


	Three Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2022
Platform operations	$	44	$	161
Sales and marketing		110		405
Technology and development		37		131
General and administrative		182		667
Total	$	373	$	1,364

15.

WARRANTS

The following table summarizes the number of outstanding Public ~~Warrant), (ii) the sale of~~Warrants and Private Placement Warrants and ~~(iii)~~ the ~~issuance of common stock, first to~~corresponding exercise price:



	September 30, 2023		December 31, 2022		Exercise Price		Expiration Date
Public Warrants		10,541,657		10,541,657	$	11.50	December 21, 2026
Private Placement Warrants		5,432,237		5,432,237	$	11.50	December 21, 2026

Of the Warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to common stock subject to possible redemption, and common stock based on their relative fair values at the initial measurement date. The Warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs.

~~The key inputs into the Monte Carlo simulation model for the~~5,432,237 Private Placement Warrants, ~~and~~551,096 warrants are held in escrow subject to earn-out targets (“Escrow Warrants”). The Escrow Warrants will be released if the volume-weighted average price of the Company’s common stock equals or exceeds $14.00 per share for any 20 trading days within any consecutive 30 trading day period on or before December 21, 2024.

Measurement of Public Warrants ~~were as follows at initial measurement:~~

March 2,

Input

2021

Risk-free interest rate

0.71
%
Expected term (years)

7

Expected Volatility

13
%
Exercise Price

$
11.50

Stock price

$
9.55

~~On March 2, 2021, the Private Placement Warrants and~~The Public ~~Warrants were determined to be $1.40 and $1.37 per warrant for aggregate values of $8,376,666 and $14,442,083, respectively.~~

~~Subsequent Measurement~~

~~The~~ Warrants are measured at fair value on a recurring basis. The ~~subsequent~~ measurement of the Public Warrants as of ~~March 31, 2021~~September 30, 2023 is classified as Level 31 due to the use of ~~unobservable inputs.~~an observable market quote in an active market under the ticker ADTHW.

Measurement of Private Placement Warrants

The Private Placement Warrants are measured at fair value on a recurring basis. As of September 30, 2023, a BSM was used to determine fair value and as of December 31, 2022, a Monte Carlo simulation model is used to determine fair value. The measurement of the Private Placement Warrants is classified as Level 2.

The key inputs into the BSM and Monte Carlo simulation model as of September 30, 2023 and December 31, 2022, respectively, for the Private Placement Warrants ~~and Public Warrants~~ were as ~~follows at March~~follows:


	September 30,			December 31,
	2023			2022
Risk-free interest rate		4.78	%		4.07	%
Dividend yield		0.00	%		0.00	%
Expected term (years)		3.23			3.98
Expected Volatility		70.00	%		69.50	%
Exercise Price	$	11.50		$	11.50
Stock Price	$	1.29		$	1.66

The volatility utilized in estimating the fair value of the Company’s Private Placement Warrant liability as of September 30, 2023, was based on a weighted average of the implied volatility, the guideline public company volatility, and the Company’s historical volatility. The implied volatility was calculated from the public warrants and using the Monte Carlo simulation approach. The guideline public company volatility was estimated based on historical lookback volatility of guideline public companies over a term commensurate with the expected term of the warrant, as well as consideration to implied volatilities sourced from Bloomberg, L.P. The Company’s historical volatility was estimated based on the historical lookback of AdTheorent’s volatility over the time since the Company was publicly traded.

The volatility utilized in estimating the fair value of the Company’s Private Placement Warrant liability as of December 31, ~~2021:~~2022, was based on a weighted average of the implied volatility and guideline public company volatility. The implied volatility was estimated by calibrating to the market price of the public warrants as of December 31, 2022, using a binomial lattice model. The guideline public company volatility was estimated based on historical lookback volatility of guideline public companies over a term commensurate with the expected term of the warrant, as well as consideration to implied volatilities sourced from Bloomberg, L.P.

March 31,

Input

2021

Risk-free interest rate

0.92
%
Expected term (years)

7

Expected Volatility

12
%
Exercise Price

$
11.50

Stock price

$
9.50

Key assumptions are as follows:

~~On March 31, 2021,~~Risk-free interest rate - The risk-free rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Private Placement Warrants.

Dividend yield - The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.

Expected term – The forecast period represents the time until expiration of the Private Placement Warrants.

Expected Volatility - The expected volatility assumption was determined by examining the Company’s historical volatility, the historical volatilities of a group of industry peers, and the implied volatility from the market price of the Public Warrants.

Warrant liability

On September 30, 2023, the fair values of the Public Warrants and ~~Public~~Private Placement Warrants outstanding were determined to be ~~$1.40~~$0.04 and ~~$1.36~~$0.08 per warrant, ~~for aggregate values of $8,376,666~~respectively. On December 31, 2022, the Public Warrants and ~~$14,336,666,~~Private Placement Warrants outstanding were determined to be $0.10 and $0.23 per warrant, respectively.

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 9 – Fair Value Measurements (Continued)~~

The following table presents the changes in the fair value of ~~warrant liabilities:~~

Private



Warrant

Placement

Public

Liabilities

Fair value

$
0

$
0

$
0
Initial Measurement on March 2, 2021

8,376,666

14,442,083

22,818,749
Change in valuation inputs or other assumptions

—

(105,417)

(105,417)
Fair value as of March 31, 2021

$
8,376,666

$
14,336,666

$
22,713,332

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for investments categorized in Level 3.

Level 3 financial liabilities consist of Warrant liability for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

~~Note 10 – Restatement of Previously Issued Balance Sheet~~

~~The Company previously accounted for its outstanding~~ Public ~~Warrants (as defined in Note 7)~~ and Private Placement ~~Warrants (collectively, with~~Warrants:


	Public Warrants			Private Placement Warrants			Total Warrant Liabilities
Fair value as of December 31, 2022	$	1,054		$	1,244		$	2,298
Change in valuation inputs or other assumptions		(632	)		(804	)		(1,436	)
Fair value as of September 30, 2023	$	422		$	440		$	862

16.

SYMETRYML AND SYMETRYML HOLDINGS

SymetryML Holdings, LLC (“SymetryML Holdings”) was a subsidiary of Legacy AdTheorent after a contribution of Legacy AdTheorent’s SymetryML department in exchange for membership interest. Class B interests in SymetryML Holdings that vest over time, comprising 50% of the ~~Public Warrants,~~total equity interests of SymetryML Holdings, were offered to certain employees (a non-controlling interest) of SymetryML. Legacy AdTheorent retained the ~~“Warrants”) issued~~remaining 50% total equity interests, through the holding of all Class A equity interests in ~~connection with its Initial Public Offering~~SymetryML Holdings.

SymetryML Holdings and SymetryML was ultimately deconsolidated as ~~components~~ of ~~equity instead~~March 31, 2022 through a series seed preferred financing transaction (“Deconsolidation”), resulting in a gain of ~~as derivative liabilities. The Warrant Agreement governing the Warrants includes a provision that provides for potential changes~~$1,939, of which $541 related to the ~~settlement amounts dependent upon the characteristics~~remeasurement of the ~~holder~~retained noncontrolling investment to fair value. The gain of $1,939 was recorded within Other Income on the Company’s Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022.

The following table shows the amounts related to the accounting for the Deconsolidation:


	For the Nine Months Ended September 30, 2022
Fair value of consideration received	$	—
Fair value of retained noncontrolling interest		861
Carrying amount of deconsolidated noncontrolling interest		2,372
Less: Carrying amount of deconsolidated net assets		(1,294	)
Gain on Deconsolidation	$	1,939

The Deconsolidation resulted in the removal of the ~~warrant. In addition,~~noncontrolling interest presentation and therefore there is no noncontrolling interest as of September 30, 2023 or December 31, 2022.

VIE Determination

Based on the ~~Warrant Agreement includes~~Company’s assessment, after the Deconsolidation, SymetryML is considered a ~~provision~~variable interest entity (“VIE”) because it does not have sufficient equity at risk to finance its activities without additional subordinated financial support. SymetryML Holdings is not the primary beneficiary as it no longer has the power to direct the activities that inmost significantly impact SymetryML’s economic performance.

Based on the ~~event of~~Company’s assessment, SymetryML Holdings, after the Deconsolidation, is considered a ~~tender offer or exchange offer made to and accepted by holders of more than 50% of~~VIE because the ~~outstanding shares of a single class of stock, all~~ holders of the ~~Warrants would be entitled~~equity investment at risk, as a group, lack the power to ~~receive cash for their Warrants (the “tender offer provision”).~~

~~On April 12, 2021,~~direct the ~~Acting Director~~activities of SymetryML Holdings that most significantly impact its economic performance. This is due to the ~~Division~~conclusion that Class B equity interests do not meet the definition of ~~Corporation Finance and Acting Chief Accountant of~~equity at risk because the ~~Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants~~Class B interests were issued by ~~special purpose acquisition companies entitled “Staff Statement on Accounting~~Legacy AdTheorent to SymetryML management as founders’ equity to compensate for past and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions relatedfuture services to ~~certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement, dated as of February 25, 2021, between the~~SymetryML. The Company ~~and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agreement”).~~

~~Table of Contents~~

~~MCAP ACQUISITION CORPORATION~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~Note 10 – Restatement of Previously Issued Balance Sheet (Continued)~~

In further consideration of the SEC Statement, the Company’s management further evaluated the Warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the ~~Company’s Private Placement Warrants are not indexed to the Company’s common stock in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument~~Company is not ~~an input into~~ the ~~pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation,~~primary beneficiary as it no longer has the ~~Company’s audit committee, in consultation with management, concluded~~power to direct the activities that ~~the tender offer provision fails the “classified in stockholders’ equity” criteria as contemplated by ASC Section 815-40-25.~~most significantly impact SymetryML economic performance.

As a result of the ~~above,~~Deconsolidation of SymetryML and SymetryML Holdings, the Company ~~should have classified the Warrants as derivative liabilities~~has retained a noncontrolling investment in ~~its previously issued financial statement. Under this accounting treatment,~~SymetryML Holdings that provides the Company the ability to exercise significant influence over both VIEs. The entities continue to be considered related parties of the Company following the Deconsolidation.

Retained Fair Value Option Investments in SymetryML and SymetryML Holdings

For its retained noncontrolling investment in SymetryML Holdings, the Company has made an irrevocable election to account for its investment at fair value with changes in fair value reported in earnings. The Company elected to apply fair value accounting to the retained investment in SymetryML Holdings because the Company believes that fair value is the most relevant measurement attribute for these investments, as well as to reduce operational and accounting complexity. The Company’s election to apply fair value accounting to these investments may cause fluctuations in the Company’s earnings from period to period. The fair value of the Company’s retained investment was $636 and $789 as of September 30, 2023 and December 31, 2022, respectively.

The fair value measurements involve significant unobservable inputs, which include total equity value of SymetryML, volatility, risk-free rate, equity holder required rate of return, and discount for lack of marketability (“DLOM”). The total equity value of SymetryML was calculated using the Backsolve Method under the Market Approach. The volatility was based on guideline public companies and adjusted for differences in size and leverage. The risk-free rate was based on U.S. Treasury securities with a term commensurate with the time to ~~measure~~exit. The equity holder required rate of return was based on private equity and venture capital rate of return studies. The DLOM was estimated based on put option models and series volatility.

The Company’s maximum exposure to loss as a result of its involvement with these VIEs is limited to the carrying amount of its investment which is recorded at fair value each reporting period as described above. There are not any explicit or implicit contracts, guarantees, or commitments that would require the Company to provide financial support to the investees or any other arrangements that could expose the Company to losses beyond the fair value of its current investment.

17.

FAIR VALUE MEASUREMENTS

The following tables summarize the ~~Warrants~~Company's assets and liabilities measured at ~~the end of each reporting period as well as re-evaluate the treatment of the Warrants and recognize changes in~~fair value on a recurring basis by level within the fair value hierarchy:


	September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Investment in SymetryML Holdings(2)	$	—	$	—	$	636	$	636
Total assets	$	—	$	—	$	636	$	636
Liabilities:
Public warrants(1)	$	422	$	—	$	—	$	422
Private placement warrants(1)		—		440		—		440
Seller's Earn-Out(1)		—		—		23		23
Total liabilities	$	422	$	440	$	23	$	885


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Investment in SymetryML Holdings(2)	$	—	$	—	$	789	$	789
Total assets	$	—	$	—	$	789	$	789
Liabilities:
Public warrants(1)	$	1,054	$	—	$	—	$	1,054
Private placement warrants(1)		—		1,244		—		1,244
Seller's Earn-Out(1)		—		—		773		773
Total liabilities	$	1,054	$	1,244	$	773	$	3,071

(1)

Refer to Note 15 — Seller's Earn-Out and Note 16 — Warrants included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, for further information about the initial and subsequent measurement, including significant assumptions and valuation methodologies of these instruments.

(2)

Refer to Note 16 — SymetryML and SymetryML Holdings below for further information about the initial measurement, including significant assumptions and valuation methodologies of this investment.

The following tables present a rollforward of the Company's assets and liabilities classified as Level 3 for nine months ended September 30, 2023 and 2022.


	Nine Months Ended September 30, 2023
	Investment in SymetryML Holdings			Seller's Earn-Out Liability
Balance as December 31, 2022	$	789		$	773
Measurement adjustments		(153	)		(750	)
Balance as of September 30, 2023	$	636		$	23


	Nine Months Ended September 30, 2022
	Investment in SymetryML Holdings			Seller's Earn-Out Liability
Balance as December 31, 2021	$	—		$	18,081
Additions		861			—
Measurement adjustments		(49	)		(15,664	)
Balance as of September 30, 2022	$	812		$	2,417

18.

(LOSS) EARNINGS PER SHARE

The computation of net (loss) income per share was as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023			2022
Net (loss) income attributable to AdTheorent Holding Company, Inc.	$	(4,194	)	$	5,725	$	(1,335	)	$	21,762

Weighted-average common shares outstanding - basic		88,175,813			86,492,025		87,869,345			86,003,514
Effect of dilutive equity-based awards		—			5,630,396		—			6,882,337
Weighted-average common shares outstanding - diluted		88,175,813			92,122,421		87,869,345			92,885,851

(Loss) earnings per share:
Basic	$	(0.05	)	$	0.07	$	(0.02	)	$	0.25
Diluted	$	(0.05	)	$	0.06	$	(0.02	)	$	0.23

The following outstanding potentially dilutive securities were excluded from the ~~prior~~calculation of diluted net (loss) income per common stockholder because their impact would have been anti-dilutive for the period presented, or their contingency conditions were not met:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock options		6,663,685		1,541,098		6,663,685		565,303
Restricted stock units		6,066,092		2,840,126		6,066,092		2,563,980
Public warrants		10,541,657		10,541,657		10,541,657		10,541,657
Private placement warrants (1)		5,432,237		5,432,237		5,432,237		5,432,237
Seller's Earn-Out		6,785,714		6,785,714		6,785,714		6,785,714
Sponsor Earn-Out		598,875		598,875		598,875		598,875
Total		36,088,260		27,739,707		36,088,260		26,487,766

(1)

Of the 5,432,237 Private Placement Warrants, 551,096 warrants are held in escrow subject to earn-out targets.

19.

LEASES

The Company has operating lease agreements for office space in the U.S. With the exception of the New York headquarters office lease, the Company’s leases expire at various times through July 2025 and certain leases may be extended at the Company’s option. The New York headquarters office lease expires in 2028. The Company recognizes operating lease expense on a straight-line basis over the term of the lease.

Additionally, the Company has short-term leases with an initial term of twelve months or less that are not recorded on the Condensed Consolidated Balance Sheets.

Lease expense is allocated to operating expense categories (Platform operations, Sales and marketing, Technology and development, General and administrative) in the Condensed Consolidated Statements of Operations in proportion to headcount in each of these categories. The components of lease expense for the three and nine months ended September 30, 2023 and 2022 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	246	$	257	$	745	$	729
Short term lease cost	$	140	$	49	$	404	$	98
Variable lease cost	$	—	$	—	$	—	$	—

Supplemental cash flow information related to the Company’s operating ~~results~~leases for the ~~current period.~~nine months ended September 30, 2023 and 2022 were as follows:


	Nine Months Ended September 30,
	2023		2022
Operating cash flows used for operating leases	$	1,116	$	998
Right-of-use assets obtained in exchange for new operating lease obligations	$	—	$	214

~~The~~Supplemental balance sheet information related to the Company’s ~~accounting~~operating leases as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023			December 31, 2022
Weighted average remaining lease term (years)		4.88			5.59
Weighted average discount rate (%)		3.25	%		3.25	%

Approximate future minimum lease payments for the ~~Warrants~~Company’s operating leases are as ~~components~~follows as of ~~equity instead of as derivative liabilities did not have any effect on the Company’s previously reported investments held in trust, operating expenses, cash flows or cash.~~

As Previously


Reported

Adjustment

As Restated
Balance sheet as of March 2, 2021






Warrant liability

$
—

$
22,818,749

$
22,818,749
Total liabilities

12,185,686

22,818,749

35,004,435
Class A common stock subject to possible redemption ⁽¹⁾

302,376,840

(22,818,750)

279,558,090
Class A common stock

140

228

368
Additional paid in capital

5,018,601

832,151

5,850,752
Accumulated deficit

(19,522)

(832,378)

(851,900)

~~(1)~~

~~Shares of Class A common stock subject to possible redemption as Previously Reported as of March 2, 2021 were 30,237,684, were Adjusted by 2,281,875 and are As Restated at 27,955,809.~~

September 30, 2023:

~~Note 11 – Subsequent Events~~


	September 30, 2023
Remainder of 2023	$	368
2024		1,441
2025		1,433
2026		1,415
2027		1,364
Thereafter		1,023
Total operating lease payments		7,044
Less: Imputed interest		(526	)
Total operating lease liabilities	$	6,518

~~Management of~~In connection with one lease agreement, the Company ~~evaluates events that have occurred after the balance sheet date~~maintains a letter of March 31, 2021 through the date these financial statements were issued. Based upon the review, management did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosurecredit in the ~~financial statements.~~total amount of $983 as of both September 30, 2023 and December 31, 2022.

~~Table of Contents~~

Item 2.2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance and may include statements concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for, our business and the markets in which we operate), financial results, operations, and the markets and communities in which we, our clients, and partners operate, results of operations, revenues, operating expenses, and capital expenditures, sales and marketing initiatives and competition. In some cases, you can identify forward-looking statements because they contain words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “suggests,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements are not guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.

We discuss many of these risks in our Annual Report on Form 10-K for the year ended December 31, 2022 in greater detail under the heading “Item 1A. Risk Factors” and in other filings we make from time to time with the Securities and Exchange Commission (“SEC”). Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q, which are inherently subject to change and involve risks and uncertainties. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made. Given these uncertainties, investors should not place undue reliance on these forward-looking statements.

Investors should read this Quarterly Report on Form 10-Q and the documents that we reference in this report and have filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2022, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

References to “Notes” are notes included in our unaudited Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Unless otherwise indicated, the terms “AdTheorent,” “Company,” “we,” “us,” or “our” refer to AdTheorent Holding Company, Inc., together with its consolidated subsidiaries.

Business Overview

Founded in 2012, we are a digital media platform which focuses on performance-first, privacy-forward methods to execute programmatic digital advertising campaigns, serving both advertising agency and brand customers. Without relying on individualized profiles or ~~“we” refer MCAP Acquisition Corporation.~~sensitive personal data for targeting, we utilize machine learning and advanced data analytics to make programmatic digital advertising more effective and efficient at scale, delivering measurable real-world value for advertisers. Our differentiated advertising capabilities and superior campaign performance, measured by customer-defined business metrics or key performance indicators, have helped fuel our customer adoption and year-after-year growth.

We use machine learning and advanced data science to organize, analyze and operationalize non-sensitive data to deliver real-world value for customers. Central to our ad-targeting and campaign optimization methods, we build custom machine learning models for each campaign using historic and real-time data to predict future consumer conversion actions for every digital ad impression. We have integrations with Digital Ad Exchanges, or Supply Side Platforms (“SSPs”), from which we are sent ad impression opportunities for evaluation and purchase. We predictively score all ad impression opportunities for the purpose of deciding which ad impressions will likely drive valuable conversions or engagement activity for our customers. Our predictive platform scores up to one million digital ad impressions per second and 75 billion to 85 billion digital ad impressions per day, assigning a “predictive score” to each. Each predictive score is determined by correlating non-individualized data attributes associated with the particular impression with data corresponding to previously purchased impressions that yielded consumer conversion or engagement activity. Such non-individualized attributes include variables such as publisher, content and URL keywords, device make, device operating system and other device attributes, ad position, geographic data, weather, demographic signals, creative type and size, etc. The “predictive scores” generated by our platform allow us and our advertising clients to determine which ad impressions are more likely or less likely to result in client-desired key performance

indicators. Our machine learning models are customized for every campaign and our platform “learns” over the course of each campaign as it processes more data related to post media view conversion experience. Based on these statistical probabilities or “predictive scores,” our platform automatically determines bidding optimizations to drive conversions and advertiser return on investment (“ROI”) or return on advertising spend (“ROAS”), delivering on less than 0.001 of the evaluated advertising requests. Our use of machine learning and data science helps us to maximize efficiency and performance, enabling our customers to avoid wasted ad spend related to suboptimal impressions such as impressions that are predicted to be at a greater risk for fraud/invalid traffic or impressions with a higher likelihood of being unviewable, unmeasurable, or not brand safe, among other factors.
Our capabilities extend across the digital ecosystem to identify and engage digital impressions with the highest likelihood of completing customer-desired actions, including online sales, other online actions, and real-world actions such as physical location visitation, in-store sales or vertical specific KPI's such as prescription fills/lift, or submitted credit card applications. Our custom and highly impactful campaign executions encompass popular digital screens — mobile, desktop, tablet, connected TV (“CTV”), Digital Out of Home (“DOOH”) — and all digital ad formats, including display, rich media, video, native and streaming audio. We actively manage our digital supply to provide advertisers with scale and reach, while minimizing redundant inventory, waste and other inefficiencies. Our CTV capability delivers scale and reach supplemented by innovative and industry recognized machine-learning optimizations towards real-world actions and value-added measurement services.
Our platform and machine learning-based targeting provide privacy advantages that are lacking from alternatives which rely on individual user profiles or cookies employing a “one-to-one” approach to digital ad targeting. Our core targeting approach is statistical, not individualized, and as a result we do not need to compile or maintain user profiles, and we do not rely on cookies or user profiles for targeting. Our solution-set is especially valuable to regulated customers, such as financial institutions and pharmaceutical or health companies, and other privacy-forward advertisers who desire efficient and effective digital ad-targeting without individualized or personal targeting data. We adhere to data usage protocols and model governance processes which help to ensure that each customer’s data is safeguarded and used only for that customer’s benefit, and we take a consultative and collaborative approach to data use best practices with all of our customers.
Supplementing our core machine learning-powered platform capabilities, we offer customized vertical solutions to address the needs of advertisers in specialized industries. These specialized solutions feature vertical-specific capabilities related to targeting, measurement and audience validation. Our broader health offering, which encompasses engagements with customers in the verticals and sub-verticals of healthcare, pharmaceutical, pharmacy, over-the-counter brands, and health-related government (collectively, “AdTheorent Health”), harnesses the power of machine learning to drive superior performance on campaigns targeting both healthcare providers and patients, leveraging Health Insurance Portability and Accountability Act (“HIPAA”) compliant methods and targeting practices that comply with Network Advertising Initiative (“NAI”) Code of Conduct and other self-regulatory standards. In the third quarter of 2022, we launched our Health Audience Builder (“HABi”) and Health Audiences, a new-to-market solution which allows programmatic advertisers to use aggregated health data to research and target “audiences” in a more precise, data-driven and less opaque manner than what is currently available across the industry. This solution leverages primary-sourced health data and machine learning to create statistical representations of audiences, but notably is not ID-based and does not include Personal Health Information. These features allow platform users to leverage HABi to build Health Audiences with the goal of achieving health advertisers' key performance indicators, while being privacy forward and HIPAA-compliant by design. In addition, as part of our strategy to establish a scalable foundation for the deployment of innovative verticalized solutions, we launched AdTheorent’s Predictive Audience Builder (“ABi”), a platform tool that allows advertisers to build customizable, machine learning-based predictive audiences for other key verticals. We have also created offerings tailored to address the unique challenges and opportunities in a growing range of other verticals.
Factors Affecting Our Performance
Growth of the Programmatic Advertising Market
Our operating results and prospects will be impacted by the overall continued adoption of programmatic advertising by inventory owners and content providers, as well as advertisers and the agencies that represent them. Programmatic advertising has grown rapidly in recent years; however, recent negative macro-economic sentiment has impacted advertiser spending. Any acceleration, or slowing, of programmatic advertising growth, due to macro-economic factors or otherwise, would affect our operating and financial performance. In addition, even if the programmatic advertising market continues to grow at its current rate, our ability to successfully position ourselves within the market will impact the future growth of the business.
24
Investment in Platform and Solutions to Provide Continued Differentiation in Evolving Market
We believe that the capabilities and differentiation of our platform and solutions has been critical to our historical growth. Continued innovation in an evolving programmatic marketplace will be an important driver of our future growth. We anticipate that operating expenses will increase in the foreseeable future as we invest in platform operations and technology, data science and machine learning capabilities, and data infrastructure and tools to enhance our custom solutions and value-added offerings. We believe that these investments will contribute to our long-term growth, although they may have a negative impact on profitability in the near-term.
Growth in and Retention of Customer Spend
We plan to make incremental investments in sales and marketing to acquire new customers and increase existing customers’ usage of our platform and solutions. We believe that there is significant room for growth within our existing customers, which include many large global brands and advertising agencies. Future revenue and profitability growth depends upon our ability to cost effectively on-board new customers and our on-going ability to retain and scale existing customers.
Our growth has and may continue to be impacted by macroeconomic factors beyond our control such as inflation, rising interest rates, pandemic related factors, global geopolitical uncertainties, among other things, as well as possible year-over-year declines in our acquisition of new customers.
Ability to Continue to Access High Performing Media Inventory in Existing and Emerging Channels
Our ability to deliver upon clients’ targeted key performance indicators is reliant upon our ability to access high quality media inventory across multiple advertising channels at scale. Our future growth will depend on our ability to maintain and grow spend on existing and emerging channels, including advertising on display, rich media, native, video and audio ad formats across mobile, desktop, and CTV formats.
Development of International Markets
Although almost all of our historic revenue is attributable to campaigns and operations in the United States and Canada, we plan to continue to explore opportunities to serve new international markets, including serving the global needs of existing customers. We believe that the global opportunity for programmatic advertising is significant and should continue to expand as publishers and advertisers outside the United States and Canada increasingly seek to adopt the benefits that programmatic advertising provides. We believe that our privacy-forward approach to ad targeting and data usage will provide desired differentiation and value in highly and increasingly regulated markets such as the European Union, which is subject to the General Data Protection Regulation. Our ability to efficiently expand into new markets will affect our operating results.
Managing Seasonality
The global advertising industry experiences seasonal trends that affect the vast majority of participants in the digital advertising ecosystem. Most notably, advertisers have historically spent relatively more in the fourth quarter of the calendar year to coincide with the holiday shopping season, and relatively less in the first quarter. In addition to the impact on revenue, increased fourth quarter demand for advertising inventory applies additional upward pressure on fourth quarter media costs, which adversely impacts profitability. We expect seasonality trends to continue, and our ability to manage resources in anticipation of these trends could affect operating results.
Key Business Metric
To analyze our business performance, determine financial forecasts and help develop long-term strategic plans, we review the following key business metric:
Active Customers
We track active customers, which are defined as our customers who spent over $5,000 during the previous twelve months. We monitor active customers to help understand our revenue performance. Additionally, monitoring active customers helps us understand the nature and extent to which the active customer base is growing, which assists management in establishing operational goals.
25
The number of active customers as of September 30, 2023 was 342 and as of September 30, 2022 was 339, increasing by 3 customers, or 1%, respectively, year over year. The number of active customers as of December 31, 2022 was 347.
Results of Operations

The period-to-period comparisons of our results of operations have been prepared using the historical periods included in our Condensed Consolidated Financial Statements. The following discussion ~~and analysis of our financial condition and results of operations~~ should be read in conjunction with ~~our unaudited~~the Condensed Consolidated ~~financial statements~~Financial Statements and related notes included ~~herein.~~elsewhere in this document as well as the Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC, for additional information regarding the components of our results of operations and our accounting policies.

~~Cautionary~~Three and Nine Months Ended September 30, 2023 Compared to Three and Nine Months Ended September 30, 2022

The following table summarizes our historical results of operation for the periods presented:

Three Months Ended

Nine Months Ended

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

(in thousands)

(% of Revenue)

(in thousands)

(% of Revenue)

(in thousands)

(% of Revenue)

(in thousands)

(% of Revenue)

Revenue

$
40,890

100.0
%

$
37,584

100.0
%

$
111,151

100.0
%

$
114,301

100.0
%
Operating expenses:

Platform operations

22,019

53.8
%

19,581

52.1
%

61,141

55.0
%

58,207

50.9
%
Sales and marketing

11,119

27.2
%

11,127

29.6
%

32,050

28.8
%

32,540

28.5
%
Technology and development

3,794

9.3
%

3,955

10.5
%

10,453

9.4
%

12,393

10.8
%
General and administrative

4,113

10.1
%

4,729

12.6
%

11,638

10.5
%

15,433

13.5
%
Total operating expenses

41,045

100.4
%

39,392

104.8
%

115,282

103.7
%

118,573

103.7
%
Loss from operations

(155
)

-0.4
%

(1,808
)

-4.8
%

(4,131
)

-3.7
%

(4,272
)

-3.7
%
Interest income (expense), net

707

1.7
%

97

0.3
%

1,750

1.6
%

(59
)

-0.1
%
Gain on change in fair value of Seller's Earn-Out

225

0.6
%

2,901

7.7
%

750

0.7
%

15,664

13.7
%
Gain on change in fair value of warrants

1,290

3.2
%

5,674

15.1
%

1,436

1.3
%

8,261

7.2
%
Gain on deconsolidation of SymetryML

—

0.0
%

—

0.0
%

—

0.0
%

1,939

1.7
%
Loss on change in fair value of SAFE Notes

—

0.0
%

—

0.0
%

—

0.0
%

(788
)

-0.7
%
Gain (loss) on fair value of investment in SymetryML Holdings

5

0.0
%

(39
)

-0.1
%

(153
)

-0.1
%

(49
)

0.0
%
Other expense, net

(12
)

0.0
%

(5
)

0.0
%

(49
)

0.0
%

(24
)

0.0
%
Total other income, net

2,215

5.4
%

8,628

23.0
%

3,734

3.4
%

24,944

21.8
%
Net income (loss) before income taxes

2,060

5.0
%

6,820

18.1
%

(397
)

-0.4
%

20,672

18.1
%
(Provision) benefit for income taxes

(6,254
)

-15.3
%

(1,095
)

-2.9
%

(938
)

-0.8
%

540

0.5
%
Net (loss) income

$
(4,194
)

-10.3
%

$
5,725

15.2
%

$
(1,335
)

-1.2
%

$
21,212

18.6
%
26
Revenue

Change

($ in thousands)
2023

2022

$

%

Three Months Ended September 30,

$
40,890

$
37,584

$
3,306

8.8
%
Nine Months Ended September 30,

$
111,151

$
114,301

$
(3,150
)

(2.8
)%
Total revenue increased $3.3 million, or 8.8%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The largest drivers of the increase were in the healthcare/pharmaceutical, government/education/nonprofit, and consumer packaged goods (“CPG”), which collectively increased by $5.4 million, or 30.6%. The increase is primarily due to increased adoption of our AdTheorent Health offering, as well as our Health Audience solution launched in the third quarter of 2022. Offsetting these increases were decreases in the banking, financial services and insurance (“BSFI”), home improvement, and services verticals which collectively decreased approximately $2.2 million, or 27.8% impacted by negative macroeconomic conditions driven by higher interest rates.
Total revenue decreased $3.2 million or 2.8%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The largest drivers of the decrease were in the BFSI, retail, software/websites, and home improvement verticals, which collectively decreased by $11.3 million, or 27.0%. The BFSI and home improvement verticals were impacted by negative macroeconomic conditions driven by higher interest rates. Offsetting these decreases were increases in the healthcare/pharmaceutical, travel, CPG, and alcohol/tobacco verticals, which collectively increased approximately $8.0 million, or 17.3%. The increase is primarily due to increased adoption of our AdTheorent Health offering, as well as our Health Audience solution launched in the third quarter of 2022.
Operating expenses

Change

($ in thousands)
2023

2022

$

%

Three Months Ended September 30,

$
41,045

$
39,392

$
1,653

4.2
%
Nine Months Ended September 30,

$
115,282

$
118,573

$
(3,291
)

(2.8
)%
Operating expenses increased $1.7 million, or 4.2%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 and decreased $3.3 million, or 2.8%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. Refer to the discussion below for further details of these variances.
Platform operations

Change

($ in thousands)
2023

2022

$

%

Three Months Ended September 30,

$
22,019

$
19,581

$
2,438

12.5
%
Nine Months Ended September 30,

$
61,141

$
58,207

$
2,934

5.0
%
Platform operations expenses increased by $2.4 million, or 12.5%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 mainly due to an increase in traffic acquisition costs of $1.7 million associated with increased media purchased through our platform, and a $0.6 million increase in hosting expenses primarily due to increased infrastructure to support the development of our investment in our healthcare offerings and a new multi-year hosting deal that will yield future incentives in this area.
Platform operations expenses increased by $2.9 million, or 5.0%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 mainly due to increases in traffic acquisition costs, data infrastructure expense, and hosting expense. Traffic acquisition costs increased $1.6 million, associated with increased media purchased through our platform. Data infrastructure costs, or costs for data used in our platform which is not related to a specific campaign, increased $0.9 million primarily due to our increased investment in our healthcare offerings. Hosting expenses increased $0.8 million primarily due to increased infrastructure to support the development of our investment in healthcare and a new multi-year hosting deal that will yield future incentives in this area. The increases were offset by a decrease of $0.4 million in equity-based compensation.
27
Sales and marketing

Change

($ in thousands)
2023

2022

$

%

Three Months Ended September 30,

$
11,119

$
11,127

$
(8
)

(0.1
)%
Nine Months Ended September 30,

$
32,050

$
32,540

$
(490
)

(1.5
)%
Sales and marketing expenses remained relatively flat for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 mainly due to a decrease of $0.4 million in employee costs primarily related to lower headcount in our sales and customer support teams, and offsetting increases of $0.2 million related to increases in marketing-related events, $0.1 million in travel-related expenses as employee travel continues to increase.
Sales and marketing expenses decreased by $0.5 million, or 1.5%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 mainly due to a decrease of $0.8 million in employee costs primarily related to lower headcount in our sales and customer support teams, $0.4 million decrease in Seller’s Earnout equity-based compensation as the expense was fully recognized as of September 2022, and a $0.4 million decrease in equity-based compensation. Offsetting the decreases were increases of $0.8 million related to the increase in employee travel in 2023 and $0.3 million for increases in marketing-related events.
Technology and development

Change

($ in thousands)
2023

2022

$

%

Three Months Ended September 30,

$
3,794

$
3,955

$
(161
)

(4.1
)%
Nine Months Ended September 30,

$
10,453

$
12,393

$
(1,940
)

(15.7
)%
Technology and development expenses decreased $0.2 million, or 4.1%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 mainly due to a $0.7 million related to the increase in hours worked on capitalizable projects, and a decrease in equity-based compensation of $0.2 million. Offsetting the decrease is an increase of $0.4 million for additional compensation and other employee related costs and $0.1 million of contract development expenses.
Technology and development expenses decreased by $1.9 million, or 15.7%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 mainly due to a $1.8 million related to the increase in hours worked on capitalizable projects, a decrease of $0.8 million in equity-based compensation, and a $0.4 million decrease related to the deconsolidation of SymetryML Holdings on March 31, 2022. Offsetting the decrease is an increase of $0.9 million in certain employee related expenses for additional compensation and other employee related costs and $0.3 million of increased contract development expenses.

For further information on the deconsolidation of SymetryML Holdings, refer to Note ~~Regarding Forward-Looking~~16 — SymetryML and SymetryML Holdings of our Condensed Consolidated Financial Statements,

~~All statements other than statements of historical fact~~ included elsewhere in this Form ~~10-Q including, without limitation, statements under “Management’s Discussion~~10-Q.

General and ~~Analysis~~administrative


					Change
($ in thousands)	2023		2022		$			%
Three Months Ended September 30,	$	4,113	$	4,729	$	(616	)		(13.0	)%
Nine Months Ended September 30,	$	11,638	$	15,433	$	(3,795	)		(24.6	)%

General and administrative expenses decreased $0.6 million, or 13.0%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 primarily due to a decrease of ~~Financial Condition~~$0.3 million in insurance expense, mainly driven by a decrease in directors and ~~Results of Operations” regarding~~officers insurance, $0.2 million in Seller’s Earnout equity-based compensation, and $0.1 million in equity-based compensation.

General and administrative expenses decreased by $3.8 million, or 24.6%, for the ~~Company’s financial position, business strategy and~~nine months ended September 30, 2023 as compared to the ~~plans and objectives of management for future operations, are forward- looking statements. When used~~nine months ended September 30, 2022 primarily due to a $1.3 million decrease in ~~this Form 10-Q, words~~professional fees such as ~~“anticipate,” “believe,” “estimate,” “expect,” “intend”~~audit, legal, and ~~similar expressions,~~professional consulting fees related to initial costs as ~~they relate to us or~~a publicly traded company, and decreases of $1.0 million in equity-based compensation, $0.9 million of insurance expense, mainly driven by a decrease in directors and officers insurance, and $0.7 million decrease in Seller’s Earnout equity-based compensation.

Interest income (expense)


						Change
($ in thousands)	2023		2022			$		%
Three Months Ended September 30,	$	707	$	97		$	610		628.9	%
Nine Months Ended September 30,	$	1,750	$	(59	)	$	1,809	*

* Not Meaningful

Interest income, net was $0.7 million for the ~~Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs~~three months ended September 30, 2023 resulting in an increase of ~~management, as well as assumptions made by, and information currently available~~$0.6 million when compared to the ~~Company’s management. Actual results could differ materially from those contemplated by the forward- looking statements as a result~~three months ended September 30, 2022 primarily due to an increase in interest income earned of ~~certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable~~$0.5 million related to ~~us or persons acting~~more favorable interest rates on ~~the Company’s behalf are qualified in their entirety by this paragraph.~~money market investments.

~~Overview~~

~~The Company is a blank check company formed under the laws of the State of Delaware on November 12, 2020~~Interest income, net was $1.8 million for the ~~purpose~~nine months ended September 30, 2023 compared to interest expense, net of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Company intends to effectuate its initial Business Combination using cash from the proceeds of Public Offering and the Private Placement, the proceeds of the sale of our securities in connection with our initial Business Combination, our shares, debt or a combination of cash, stock and debt.

~~The issuance of additional shares in connection with an initial Business Combination to the owners of the target or other investors:~~

●

may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one -to-one basis upon conversion of the Class B common stock;

●

~~may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;~~

●

could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

●

~~may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and~~

●

~~may adversely affect prevailing market prices for our Class A common stock and/or warrants.~~

~~Table of Contents~~

~~Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:~~

●

~~default and foreclosure on our assets if our operating revenues after an initial Business Combination are insufficient to repay our debt obligations;~~

●

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

●

~~our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;~~

●

~~our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;~~

●

~~our inability to pay dividends on our common stock;~~

●

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;

●

~~limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;~~

●

~~increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;~~

●

~~limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and~~

●

~~other purposes and other disadvantages compared to our competitors who have less debt.~~

We expect to continue to incur significant costs in the pursuit of our initial Business Combination plans. We cannot assure you that our plans to raise capital or to complete our initial Business Combination will be successful.

~~Results of Operations~~

~~We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to March 31, 2021 were organizational activities, those necessary to prepare~~$0.1 million for the ~~Initial Public Offering (“Initial Public Offering”) and identifying a target company for a business combination. We do not expect~~nine months ended September 30, 2022. The net change was primarily due to ~~generate any operating revenues until after the completion of our business combination. We expect to generate non-operating income~~an increase in ~~the form of~~ interest income earned of $1.6 million related to more favorable interest rates on ~~cash and marketable securities held after the Initial Public Offering. We expect that we will incur increased expenses as a result~~money market investments.

Gain on change in fair value of ~~being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination.~~Seller's Earn-Out


					Change
($ in thousands)	2023		2022		$			%
Three Months Ended September 30,	$	225	$	2,901	$	(2,676	)		(92.2	)%
Nine Months Ended September 30,	$	750	$	15,664	$	(14,914	)		(95.2	)%

For the three months ended ~~March 31,~~September 30, 2023, the Seller's Earn-Out liability decreased $0.2 million in fair value, resulting in a gain for that amount for the period, while in the three months ended September 30, 2022, the Seller’s Earn-out liability decreased in fair value by $2.9 million, resulting in a gain for that amount. These changes in fair value were primarily driven by updates to certain variables such as stock price, stock volatility, risk-free rate, and remaining life.

For the nine months ended September 30, 2023, the Seller's Earn-Out liability decreased $0.8 million in fair value, resulting in a gain for that amount for the period, while in the nine months ended September 30, 2022, the Seller’s Earn-out liability decreased in fair value by $15.7 million, resulting in a gain for that amount. These changes in fair value were primarily driven by updates to certain variables such as stock price, stock volatility, risk-free rate, and remaining life.

The Seller's Earn-Out was a result of the Business Combination on December 22, 2021, ~~we had a net loss of $764,740, which consisted of operating costs of $43,901, formation costs of $832,378, accrued interest income of $6,122 on marketable securities held~~as detailed in Note 3 – Business Combination included in our ~~Trust Account (as defined below)~~Annual Report on Form 10-K for the year ended December 31, 2022, (“Business Combination”).

Gain on change in fair value of warrants


					Change
($ in thousands)	2023		2022		$			%
Three Months Ended September 30,	$	1,290	$	5,674	$	(4,384	)		(77.3	)%
Nine Months Ended September 30,	$	1,436	$	8,261	$	(6,825	)		(82.6	)%

For the three months ended September 30, 2023, the fair value of the warrants liability decreased by $1.3 million resulting in a gain for the period, while in the three months ended September 30, 2022, the fair value of the warrants liability decreased $5.7 million, resulting in a gain for that amount. These changes in fair value were primarily driven by updates to certain variables such as stock price, stock volatility, risk-free rate, and ~~income related~~remaining life.

For the nine months ended September 30, 2023, the fair value of the warrants liability increased by $1.4 million resulting in a gain for the period, while in the nine months ended September 30, 2022, the fair value of the warrants liability increased $8.3 million, resulting in a gain for that amount. These changes in fair value were primarily driven by updates to ~~the warrant liability of $105,417.~~

~~Table of Contents~~

~~Liquidity~~certain variables such as stock price, stock volatility, risk-free rate, and ~~Capital Resources~~remaining life.

~~On March 2, 2021, we consummated the Initial Public Offering of 31,625,000 Units, which includes the full exercise~~The warrants were assumed by the underwriter of the over-allotment option to purchase 4,125,000 Units at $10.00 per Unit, generation gross proceeds of $316,250,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 5,983,333 Private Placement Warrants at $1.50 per Private Placement Warrant to our Sponsor, generation gross proceeds of $8,975,000.

Transaction costs of the Initial Public Offering amounted to $17,853,629 consisting of $6,325,000 of underwriting fees, $11,068,750 of deferred underwriting fees (see Note 6) and $459,879 of other costs. Total offering costs of $832,378 were expensed as a cost of the warrant liability. In addition, following the closing of the Initial Public Offering $2,431,242 of cash was held outside of the Trust Account and is available for working capital purposes.

As of March 31, 2021, we have available to us $1,467,916 of cash on our balance sheet and a working capital surplus of $1,760,628. We will use these funds primarily to and evaluate target businesses, perform business, legal, and accounting due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. The interest income earn on the investments in the Trust Account are unavailable to fund operating expenses.

~~In order to finance transaction costs~~Company in connection with the Business Combination.

(Provision) benefit for income taxes


							Change
($ in thousands)	2023			2022			$			%
Three Months Ended September 30,	$	(6,254	)	$	(1,095	)	$	(5,159	)		471.1	%
Nine Months Ended September 30,	$	(938	)	$	540		$	(1,478	)	*

* Not Meaningful

Provision for income taxes increased $5.2 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Provision for income taxes was $0.9 million for the nine months ended September 30, 2023, compared to a benefit of income taxes of $0.5 million for the nine months ended September 30, 2022.

The AETR for the nine months ended September 30, 2023 was more than the statutory rate of 21% primarily state and local income taxes, meals and entertainment, and executive equity-based compensation not deductible for tax purposes. Additionally, we did not include any fair value adjustments not reasonably estimable for the full-year in the calculation of our AETR, such as the Seller's Earn-out and warrant liabilities as we cannot project the full-year impact of these specific items.

Non-GAAP Financial Information

We calculate and monitor certain non-GAAP financial measures to help set budgets, establish operational goals, analyze financial results and performance, and make strategic decisions. We also believe that the presentation of these non-GAAP financial measures provides an additional tool for investors to use in comparing our results of operations over multiple periods. However, the non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated. The non-GAAP financial measures presented should not be considered as the sole measure of our performance, and should not be considered in isolation from, or a substitute for, comparable financial measures calculated in accordance with GAAP.

The information in the table below sets forth the non-GAAP financial measures that we monitor. Because of the limitations associated with these non-GAAP financial measures, “Adjusted Gross Profit,” “EBITDA,” “Adjusted EBITDA,” “Adjusted Gross Profit as a percentage of Revenue” and “Adjusted EBITDA as a percentage of Adjusted Gross Profit” should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures on a supplemental basis. You should review the reconciliation of the non-GAAP financial measures below and not rely on any single financial measure to evaluate our business.

Adjusted Gross Profit

Adjusted Gross Profit is a non-GAAP profitability measure. Adjusted Gross Profit is a non-GAAP financial measure of campaign profitability, monitored by management and the Board, used to evaluate our operating performance and trends, develop short- and long-term operational plans, and make strategic decisions regarding the allocation of capital. We believe this measure provides a useful period to period comparison of campaign profitability and is useful information to investors and the market in understanding and evaluating our operating results in the same manner as our management and Board. Gross profit is the most comparable GAAP measurement, which is calculated as revenue less platform operations costs. In calculating Adjusted Gross Profit, we add back other platform operations costs, which consist of amortization expense related to capitalized software, depreciation expense, allocated costs of personnel which set up and monitor campaign performance, and platform hosting, license, and maintenance costs, to gross profit.

The following table presents the calculation of gross profit and reconciliation of gross profit to Adjusted Gross Profit for the three and nine months ended September 30, 2023 and 2022.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Revenue	$	40,890	$	37,584	$	111,151	$	114,301
Less: Platform operations		22,019		19,581		61,141		58,207
Gross Profit		18,871		18,003		50,010		56,094
Add back: Other platform operations		7,519		6,739		21,319		19,979
Adjusted Gross Profit (1)	$	26,390	$	24,742	$	71,329	$	76,073

EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP financial measure defined by us as net (loss) income, before interest (income) expense, net; depreciation, amortization; and income tax provision (benefit). Adjusted EBITDA is defined as EBITDA before equity-based compensation expense, transaction costs related to the Business Combination, non-core operations, and other non-recurring items.

Collectively these non-GAAP financial measures are key profitability measures used by our management and Board to understand and evaluate our operating performance and trends, develop short-and long-term operational plans, measure performance goals in employee equity incentive awards, and make strategic decisions regarding the ~~Sponsor~~allocation of capital. We believe that these measures can provide useful period-to-period comparisons of campaign profitability. Accordingly, we believe that these measures provide useful information to investors and the market in understanding and evaluating our operating results in the same manner as our management and the Board.

The following table sets forth a reconciliation of net (loss) income to Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(in thousands)
Net (loss) income	$	(4,194	)	$	5,725		$	(1,335	)	$	21,212
Interest (income) expense, net		(707	)		(97	)		(1,750	)		59
Tax provision (benefit)		6,254			1,095			938			(540	)
Depreciation and amortization		2,317			1,973			6,619			6,015
EBITDA (1)	$	3,670		$	8,696		$	4,472		$	26,746
Equity-based compensation		2,584			2,783			5,924			8,627
Seller's Earn-Out equity-based compensation		—			373			—			1,364
Transaction costs (2)		—			—			166			(131	)
Gain on change in fair value of Seller's Earn-Out (3)		(225	)		(2,901	)		(750	)		(15,664	)
Gain on change in fair value of warrants (4)		(1,290	)		(5,674	)		(1,436	)		(8,261	)
Gain on deconsolidation of SymetryML (5)		—			—			—			(1,939	)
Loss on change in fair value of SAFE Notes (6)		—			—			—			788
(Gain) loss on fair value of investment in SymetryML Holdings		(5	)		39			153			49
Separation expense related to headcount reductions		—			270			—			270
Non-core operations (7)		—			—			—			351
Adjusted EBITDA (1)	$	4,734		$	3,586		$	8,529		$	12,200

Adjusted EBITDA as a Percentage of Adjusted Gross Profit and Adjusted Gross Profit as a Percentage of Revenue


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(in thousands, except percentages)
Gross Profit	$	18,871		$	18,003		$	50,010		$	56,094
Net (loss) income	$	(4,194	)	$	5,725		$	(1,335	)	$	21,212
Net (loss) income as a percentage of Gross Profit		-22.2	%		31.8	%		-2.7	%		37.8	%
Adjusted Gross Profit (1)	$	26,390		$	24,742		$	71,329		$	76,073
Adjusted EBITDA (1)	$	4,734		$	3,586		$	8,529		$	12,200
Adjusted EBITDA as a percentage of Adjusted Gross Profit (1)		17.9	%		14.5	%		12.0	%		16.0	%
Gross Profit	$	18,871		$	18,003		$	50,010		$	56,094
Revenue	$	40,890		$	37,584		$	111,151		$	114,301
Gross Profit as a percentage of Revenue		46.2	%		47.9	%		45.0	%		49.1	%
Revenue	$	40,890		$	37,584		$	111,151		$	114,301
Adjusted Gross Profit (1)	$	26,390		$	24,742		$	71,329		$	76,073
Adjusted Gross Profit as a percentage of Revenue (1)		64.5	%		65.8	%		64.2	%		66.6	%

(1)

We use non-GAAP financial measures to help set budgets, establish operational goals, analyze financial results and performance, and make strategic decisions.

(2)

Includes professional fees directly related to the December 22, 2021 Business Combination.

(3)

In connection with the Business Combination, a Seller's Earn-Out liability was recorded. The gain represents the decrease in fair value of the Seller's Earn-Out in the three and nine months ended September 30, 2023 and 2022.

(4)

In connection with the Business Combination, a liability for warrants was recorded. The gain represents the decrease in fair value of the warrants in the three and nine months ended September 30, 2023 and 2022.

(5)

On March 31, 2022, we deconsolidated SymetryML which resulted in a gain. Refer to Note 16 — SymetryML and SymetryML Holdings of our Condensed Consolidated Financial Statements, included elsewhere in this Form 10-Q, for more information.

(6)

On March 31, 2022, in connection with the deconsolidation of SymetryML, we performed a valuation of the SAFE notes (defined below) on that date which resulted in a loss. Refer to Note 16 — SymetryML and SymetryML Holdings of our Condensed Consolidated Financial Statements, included elsewhere in this Form 10-Q, for more information.

(7)

Prior to March 31, 2022, we had effectuated a contribution of our SymetryML department into a new subsidiary, SymetryML, Inc. We periodically raised capital to fund SymetryML operations by entering into Simple Agreement for Future Equity Notes (“SAFE Notes”) with several parties. We viewed SymetryML operations as non-core, and did not fund future operational expenses incurred in excess of SAFE Notes funding secured. Beginning March 31, 2022, we no longer consolidate SymetryML. Refer to Note 16 — SymetryML and SymetryML Holdings of our Condensed Consolidated Financial Statements, included elsewhere in this Form 10-Q, for more information.

Liquidity and Capital Resources

Our business requires substantial amounts of cash for operating activities, including salaries and wages paid to our employees, development expenses, general and administrative expenses, and others. As of September 30, 2023, we had $74.3 million in cash and cash equivalents.

As of September 30, 2023, our working capital was $104.1 million. All amounts previously drawn on our Revolving Credit Facility, as defined below, were re-paid in January 2022 and we do not anticipate a need to borrow on this facility in the immediate future. We believe we have sufficient sources of liquidity, including cash generated from operations as well as the capacity on the Revolving Credit Facility, to support our operating needs, capital requirements, and debt service requirements for the next twelve months.

The accompanying Condensed Consolidated Financial Statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

Our purchase commitments per our standard terms and conditions with our suppliers and vendors are cancellable in whole or in part with or without cause prior to delivery. If we terminate an order, we will have no liability beyond payment of any balances owing for goods or services delivered previously.

Silicon Valley Bank Revolver

On December 22, 2021, we entered into a Senior Secured Agreement with SVB which allows us to borrow up to $40.0 million in a Revolving Credit Facility, including a $10.0 million sub-limit for letters of credit and a swing line sub-limit of $10.0 million. The Revolving Credit Facility commitment termination date is December 22, 2026. We accounted for the Senior Secured Agreement as a debt modification.

In accordance with the Senior Secured Agreement there are two types of revolving loan, either a Secured Overnight Financing Rate Loan (“SOFR Loan”) loan or an ~~affiliate~~ABR Alternate Base Rate Loan (“ABR Loan”). The revolving loans may from time to time be SOFR Loans or ABR Loans, as determined by the Company. Interest shall be payable quarterly based on the type of loan.

Each SOFR Loan bears interest for each day at a rate per annum equal to Adjusted Term SOFR, as defined in the Senior Secured Agreement, plus the Applicable Margin, as defined in the Senior Secured Agreement. The Applicable Margin can vary between 2.00% and 2.50% based on the leverage ratio of the ~~Sponsor or certain~~Company.

Each ABR Loan (including any swingline loan) bears interest at a rate per annum equal to the highest of the ~~Company’s officers~~Prime Rate in effect on such day, the Federal Funds Effective Rate in effect on such day plus 0.50%, and ~~directors may,~~the Adjusted Term SOFR, as defined in the Senior Secured Agreement, for a one-month tenor in effect on such day plus 1.00% (“ABR”); plus the Applicable Margin, as defined in the Senior Secured Agreement. The Applicable Margin can vary between 1.00% and 1.50% based on the leverage ratio of the Company.

In addition, the Senior Secured Agreement has a commitment fee in relation to the non-use of available funds ranging from 0.25% to 0.35% per annum based on the leverage ratio of the Company.

All obligations under the Senior Secured Agreement are secured by a first priority lien on substantially all assets of the Company.

We are subject to customary representations, warranties, and covenants. The Senior Secured Agreement requires that we meet certain financial and non-financial covenants which include, but are not ~~obligated~~limited to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes the Business Combination, the Company would repay such loaned amounts. In the event that the Business Combination does not close, the Company may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from the trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical(i) delivering audited consolidated financial statements to the ~~private placement warrants issued to~~lender within 90 days after year-end commencing with the ~~Sponsor. The terms~~fiscal year ending December 31, 2022 financial statements, (ii) delivering unaudited quarterly consolidated financial statements within 45 days after each fiscal quarter, commencing with the quarterly period ending on March 31, 2022 and (iii) maintaining certain leverage ratios and liquidity coverage ratios. As of ~~such loans by the Company’s officers and directors, if any, have not been determined and no written agreements exist~~September 30, 2023, we were in full compliance with respect to such loans. The Company does not expect to seek loans from parties other than the Sponsor or its directors or officers or their respective affiliates as it does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the trust account.

~~Off-Balance Sheet Financing Arrangements~~

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

~~We have not entered any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered any non-financial assets.~~

~~Contractual Obligations~~

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. Commencing on the date of the prospectus and until completion of the Company’s Business Combination or liquidation, the Company may reimburse an affiliate of the Sponsor up to an amount of $10,000 per month for office space, secretarial and administrative support.

~~Table of Contents~~

The Underwriter was paid a cash underwriting fee of 2% of gross proceeds of the Public Offering, or $6,325,000. In addition, the Underwriter is entitled to aggregate deferred underwriting commissions of $11,068,750 consisting of (i) 3.5% of the gross proceeds of the Public Offering. The deferred underwriting commissions will become payable to the Underwriter from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination, subject to the terms of the ~~underwriting agreement.~~Senior Secured Agreement.

As of September 30, 2023, we had one letter of credit for approximately $1.0 million and no amounts were drawn on the Revolving Credit Facility.

Cash Flows

The timing of cash receipts from customers and payments to suppliers can significantly impact our cash flows from operating activities. Our collection and payment cycles can vary from period to period.

We are generally contractually required to pay suppliers of advertising inventory and data within a negotiated period of time, regardless of whether our customers pay on time, or at all. While we attempt to negotiate long payment periods with our suppliers and shorter periods from our customers, it is not always successful. As a result, our accounts payable are often due on shorter cycles than our accounts receivables, requiring us to remit payments from our own funds, and accept the risk of bad debt. Our standard payment terms range from 30 to 60 days.

Accounts receivable are recorded at the invoiced amount, are unsecured, and do not bear interest and we record an allowance for credit losses is based on the best estimate of the amount of probable credit losses in existing accounts receivable. Our standard payment terms for our customers range from 30 to 60 days. For the periods presented, the timing of our collections have exceeded the standard payment terms of customers, because like many companies in our industry, we often experience slow payment by advertising agencies, such that advertising agencies typically collect payment from their customers before remitting payment to us. We evaluate the creditworthiness of customers on a regular basis.

We expect to continue generating strong positive cash flows as we scale our operations.

The following table summarizes our cash flows for the periods indicated:

Nine Months Ended September 30,

2023

2022

(in thousands)
Net cash provided by operating activities

$
5,818

$
8,439

Net cash used in investing activities

$
(4,057
)

$
(2,388
)

Net cash used in financing activities

$
(1
)

$
(38,302
)

Operating Activities
Net cash provided by operating activities decreased $2.6 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease was primarily due to the following:
•
Cash collected for revenue decreased $6.1 million.
•
Increase in cash paid for client refunds of $1.3 million.
•
Increase in cash paid for hosting costs related to increased infrastructure to support the development of our increased investment in healthcare and a new multi-year hosting deal of $0.6 million.
•
Increase in cash paid for taxes of $0.5 million.
•
Increase in cash paid for rent of $0.5 million.
•
Increase in cash paid for contract development expenses of $0.4 million.
•
Timing differences of certain payments and collections.
Offsetting increases in operating cash included the following:
•
Decrease in cash paid for professional service fees of $2.0 million, including audit, legal, and consulting, related to being a newly public company in the prior year period.
•
Increase in net cash received for interest of $1.7 million.
•
Decrease in cash paid for employee expenses of $1.5 million primarily due to the decrease in headcount.
•
Decrease in cash paid for insurance of $1.1 million.
•
Decrease in cash paid for sales and marketing expenses of $0.6 million.
Investing Activities
Net cash used in investing activities, primarily consisting of capitalized software costs, increased $1.7 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. Cash used for development of software increased $2.0 million due to the increase in capitalizable projects in 2023.
Financing Activities
Net cash used in financing activities during the nine months ended September 30, 2023 consisted of cash paid for restricted stock withheld for taxes of $0.5 million with offsetting financing cash inflow from proceeds related to cash received from issuance of shares under the ESPP of $0.3 million, and cash received from stock option exercises of $0.2 million.
Net cash used in financing activities during the nine months ended September 30, 2022 was $38.3 million, consisting primarily of the re-payment of revolver borrowings of $39.0 million. We also paid cash for restricted stock withheld for taxes of $0.2 million. Offsetting these payments were proceeds related to the SymetryML issuance of preferred stock of $0.4 million, cash received from stock option exercises of $0.3 million, and proceeds from the SAFE Notes of $0.2 million.
34

Critical Accounting ~~Policies~~Estimates

~~The preparation~~Our Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Preparation of the financial statements ~~and related disclosures in conformity with GAAP~~ requires ~~the Company’s~~our management to make judgments, estimates and assumptions that ~~affect~~impact the reported ~~amounts~~amount of revenue and expenses, assets and liabilities and the disclosure of contingent assets and ~~liabilities at~~liabilities. We consider an accounting judgment, estimate or assumption to be critical when (1) the ~~date~~estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on our Condensed Consolidated Financial Statements.

We have not identified any critical accounting estimates other than estimates and assumptions related to the input values in the valuation models used in the valuation of our Private Placement Warrants, classified as a Level 2 liability and the Seller’s Earn-out liability, classified as a Level 3 liability. Critical accounting estimates are specifically related to expected stock-price volatility, expected term, dividend yield, and risk-free interest rate.

For the Private Placement Warrants, a BSM was used to determine the fair value, respectively. The expected volatility assumption was determined using a weighted average of the ~~financial statements,~~Company’s historical volatility, the historical volatilities of a group of industry peers, and ~~income and expenses during~~ the ~~periods reported. Actual results could materially differ~~implied volatility from ~~those estimates.~~the market price of the Public Warrants. The ~~Company has identified~~risk-free rate assumption is based on the ~~following as its critical accounting policies:~~

~~Net Loss Per Share~~U.S. Treasury instruments, the terms of ~~Common Stock~~

Basic loss per share of common stock is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Consistent with FASB 480, shares subject to possible redemption, as well as their pro rata share of undistributed trust earningswhich were consistent with the ~~two-class method, have been excluded~~expected term of the Private Placement Warrants. The expected term represents the time until expiration of the Private Placement Warrants. The dividend yield is based on the Company’s history, which we anticipate to remain at zero.

For the Seller’s Earn-out, a Monte Carlo simulation valuation model is used to determine the fair value. The expected volatility assumption was determined using a weighted average of the Company’s historical volatility, the historical volatilities of a group of industry peers, and the implied volatility from the ~~calculation~~market price of ~~loss per share of common stock for~~ the three months March 31, 2021. Such shares, if redeemed, only participate in their pro rata share of trust earnings. Diluted loss per share includes the incremental number of shares of common stock to be issued to settle warrants, as calculated using the treasury method. For the three months ended March 31, 2021, the Company did not have any dilutive warrants, securities or other contracts that could potentially, be exercised or converted into common stock. As a result, diluted loss per share of common stockPublic Warrants. The risk-free rate is ~~the same as basic loss per share of common stock for all periods presented.~~

~~Derivative Financial Instruments~~

~~The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815,~~ “~~Derivatives and Hedging~~”~~. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value~~based on the ~~grant date~~U.S. Treasury instruments, the terms of which were consistent with the expected term of the Seller’s Earn-Out. The forecasted period represents the time until expiration of the Seller’s Earn-Out. The dividend yield is based on the Company’s history, which we anticipate to remain at zero.

We evaluate such estimates and ~~is then re-valued at~~assumptions each reporting ~~date, with~~period and reflect changes in the ~~fair value reported~~valuation methodologies that we use.

For further discussion on these items and their impact included in ~~the~~our financial statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classifiedrefer to Note 14 — Seller's Earn-Out and Note 15 — Warrants, included elsewhere in ~~the balance sheet as current or non-current based on whether net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.~~this Form 10-Q.

~~Common stock subject to possible redemption~~35

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at March 31, 2021, common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.

~~Recent Accounting Pronouncements~~

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

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk~~

Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we do not believe that there will be an associated material exposure to interest rate riskRisk.

Not applicable.

~~Table of Contents~~

Item 4. Controls and ~~Procedures~~Procedures.

Evaluation of Disclosure Controls and Procedures: We maintain disclosure controls and procedures ~~are controls~~(as such term is defined in Rules 13a-15(e) and ~~other procedures~~15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that the information required to be disclosed by us in ~~our~~the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms. Disclosure controls~~forms and ~~procedures include, without limitation, controls and procedures designed to ensure that~~such information ~~required to be disclosed in our reports filed or submitted under the Exchange Act~~ is accumulated and communicated to ~~our~~ management, including ~~our~~the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired controls.

~~Evaluation~~As of ~~Disclosure Controls and Procedures~~

~~As required by Rules 13a-15 and 15d-15~~September 30, 2023, we carried out an evaluation, under the ~~Exchange Act,~~supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, ~~carried out an evaluation~~ of the effectiveness of the design and operation of our disclosure controls and procedures ~~as of March 31, 2021.~~defined above. Based upon ~~their~~that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2023, our disclosure controls and procedures ~~(as defined in Rules 13a-15(e) and 15d-15(e) under~~were effective at the Exchange Act) were not effective, due solely to the material weakness in our internal control over financial reporting described below in “Changes in Internal Control Over Financial Reporting”. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.reasonable assurance level.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control ~~Over~~over Financial ~~Reporting~~

Reporting: There ~~were~~have been no changes in our internal control over financial reporting ~~(as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)~~ during the ~~most recent fiscal~~ quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the restatement of our financial statements described in this Form 10-Q had not yet been identified. We have identified a material weakness in our internal control over financial reporting. The material weakness was due to management’s review of the of the accounting treatment for the warrants issued in the initial public offering and sold in the concurrent private placement. Management’s review was insufficient to identify a classification error that led to our restatement of our financial statements, as described in Note 10 to the Notes to Financial Statements entitled “Restatement of Previously Issued Balance Sheet.” In light of the restatement, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

~~Table of Contents~~

PART ~~II -~~ II. OTHER INFORMATION

Item 1. Legal ~~Proceedings~~

~~None.~~Proceedings.

From time to time, we are made aware of legal allegations arising in the ordinary course of our business. We are not currently a party to any actions, claims, suits or other legal proceedings the outcome of which, if determined adversely to AdTheorent, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.

Item 1A. Risk Factors

Except as set forth below, as of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our final prospectus dated February 25, 2021 filed with the SEC, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

~~Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.~~

~~On April 12, 2021, the Staff of the U.S. Securities and Exchange Commission (the “SEC”) issued “~~~~Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)~~” (the “Statement”) discussing the accounting implications of certain terms that are common in warrants issued by special purpose acquisition companies (“SPACs”). In light of the Statement and guidance in Accounting Standards Codification (“ASC”) 815-40, “~~Derivatives and Hedging — Contracts in Entity’s Own Equity~~,” our management evaluated the terms of the Warrant Agreement entered into in connection with our initial public offering, and concluded that our Public Warrants and Private Placement Warrants (together, the “Warrants”) include provisions that, based on the Statement, preclude the Warrants from being classified as components of equity. As a result, we have re-classified the Warrants as liabilities. Under this accounting treatment, we are required to measure the fair value of the Warrants at the end of each reporting period and recognize changes in the fair value from the prior period in our operating results for the current period. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly based on factors which are outside of our control. We expect that we will recognize non-cash gains or losses due to the quarterly fair valuation of our Warrants and that such gains or losses could be material.

We have determined that a material weakness existed in our internal control over financial reporting as of March 2, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

Following the issuance of the SEC Statement, on May 12, 2021, our management and our audit committee, determined that the Company’s audited balance sheet as of March 2, 2021, filed as an exhibit to its Current Report on Form 8-K filed on March 8, 2021, should be restated. See “—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.” In connection with the restatement, we identified a material weakness in our internal controls over financial reporting.

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 annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. If we conclude that a material weakness occurred or is occurring, we expect to evaluate and pursue steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

~~Table of Contents~~

If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

~~We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.~~

Following the issuance of the Statement and our subsequent restatement, our management and our audit committee determined that a material weakness existed in our internal controls over financial reporting.

If we conclude that a material weakness has occurred or is occurring, or as a result of the change in accounting for the Warrants, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from any restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Quarterly Report, other than the below, there have not been any material changes to the information related to the ITEM 1A. “Risk Factors” disclosure in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Our business involves significant risks. You should carefully consider the risks and uncertainties described in our Annual Report, together with all of the other information in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report. The risks and uncertainties described in our Annual Report are not the only ones we ~~have no knowledge~~face.

Additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any ~~such litigation or dispute arising due~~of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to ~~restatement or material weakness~~accomplish our strategic objectives. In that event, the market price of our ~~internal controls over financial reporting. However, we can provide no assurance that such litigation~~common stock could decline and you could lose part or ~~dispute will not arise~~all of your investment.

The recent attack by Hamas on Israel from the Gaza Strip could have an unpredictable effect on the global economy and on international and local securities markets, and adversely affect our business and results of operations.

On October 7, 2023, Hamas militants and members of other terrorist organizations infiltrated Israel’s southern border from the Gaza Strip and conducted a series of terror attacks on civilian and military targets. Thereafter, these terrorists launched extensive rocket attacks on Israeli population and industrial centers located along the Israeli border with the Gaza Strip. Shortly following the attack, Israel’s security cabinet declared war against Hamas. The intensity and duration of Israel’s current war against Hamas is difficult to predict.

A downturn in the ~~future. Any such litigation or dispute, whether successful or not,~~worldwide economy resulting the recent attack by Hamas on Israel from the Gaza Strip and other conflicts with a global impact that may arise from time to time could have a material adverse effect on our business, results of operations, ~~and~~and/or financial ~~condition or our ability to complete a business combination.~~

condition.

Item 2. Unregistered ~~Sale~~Sales of Equity Securities and Use of ~~Proceeds.~~

~~Unregistered Sales of Equity Securities~~

On March 2, 2021 we completed the private sale of an aggregate of 5,983,333 Private Placement warrants at a price of $1.50 per Placement Warrant to the Sponsor generating gross proceeds to the Company of $8,975,000. This purchase took place on a private placement basis simultaneously with the completion of our Initial Public Offering. No underwriting discounts or commissions were paid with respect to such sale. The issuance of the Private Placement Warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.Proceeds

None.

~~Use of Proceeds from the Public Offering~~

On March 2, 2021, we consummated our Initial Public Offering of 31,625,000 units (the “Units”), including 4,125,000 Units issued pursuant to the exercise in full of the underwriter’s over-allotment option. Each Unit consists of one share of Class A common stock of the Company, par value $0.0001 per share, and one-third of one redeemable warrant of the Company (the “Warrants”), with each whole Warrant entitling the holder thereof to purchase one share of Class A common stock for $11.50 per share. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $316,250,000.

The securities sold in the Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-252607). The SEC declared the registration statement effective on February 25, 2021.

~~Table of Contents~~

Of the gross proceeds received from the Initial Public Offering and the Private Placement Warrants, $316,250,000 was placed in a Trust Account. We paid a total of $6,325,000 in underwriting discounts and commissions and $459,879 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $11,068,750 in underwriting discounts and commission.

Item 3. Defaults Upon Senior Securities

~~None.~~

None.

Item 4. Mine Safety Disclosures

~~Not Applicable~~

Not applicable.

Item 5. Other Information

~~None.~~

None.

~~Table of Contents~~

~~Item 6. Exhibits~~

~~The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.~~


~~No.~~Exhibit		Description ~~of Exhibit~~
31.1*
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act ~~Rules 13a-14(a) and 15(d)-14(a),~~of 1934, as ~~adopted~~Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act ~~Rules 13a-14(a) and 15(d)-14(a),~~of 1934, as ~~adopted~~Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as ~~adopted~~Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as ~~adopted~~Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.
101.INS*101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.CAL*101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*101.DEF		~~XBRL Taxonomy Extension Schema Document~~
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*101.LAB		Inline XBRL Taxonomy Extension ~~Labels~~Label Linkbase Document
101.PRE*101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*Filed herewith.

**~~Furnished.~~

SIGNATURES

~~Table of Contents~~

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ADTHEORENT HOLDING COMPANY, INC.


	~~MCAP ACQUISITION CORPORATION~~	By:	/s/ James Lawson
			James Lawson
~~Date: May 25, 2021~~	~~/s/ Theodore L. Koenig~~		Chief Executive Officer and Director
	~~Name:~~	~~Theodore L. Koenig~~	(principal executive officer)
Date: November 7, 2023	~~Title:~~	~~Chairman and Chief Executive Officer~~
		~~(Principal Executive Officer~~
		By:	/s/ Patrick Elliott
~~Date: May 25, 2021~~	~~/s/ Scott A. Marienau~~		Patrick Elliott
	~~Name:~~	~~Scott A. Marienau~~	Chief Financial Officer
	~~Title:~~	~~Chief Financial Officer~~	(principal financial and accounting officer)
Date: November 7, 2023		~~(Principal Financial and Accounting Officer)~~


~~Delaware~~		~~85-3978415~~
(State or other jurisdiction of incorporation or organization) ~~311 South Wacker Drive, Suite 6400~~ ~~Chicago~~, ~~Illinois~~		(I.R.S. Employer Identification ~~Number)~~ ~~60606~~ No.)
330 Hudson Street, 13th Floor New York, New York	10013
(Address of principal executive offices)		(Zip Code)


~~Registrant’s telephone number, including area code:~~ (~~312~~) ~~258-8300~~Title of each class	Trading Symbol(s)	Name of each exchange on which registered
~~Not applicable~~Common stock, par value $0.0001 per share	ADTH	The Nasdaq Stock Market
~~(Former name or former address, if changed since last report)~~Warrants to purchase common stock	ADTHW	The Nasdaq Stock Market


Large Accelerated filer
~~Large accelerated filer~~	☐		~~Accelerated filer~~	☐
	~~Non-accelerated~~Accelerated filer	☒		~~Smaller reporting company~~	☒
Non-Accelerated filer		☐		Smaller reporting company		☒
	Emerging growth company		~~Emerging growth company~~☒	☒


~~Title of each class~~		~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~Units, each consisting of one Class A Common Stock and one-third of one Redeemable Warrant~~		~~MACQU~~	~~The NASDAQ Stock Market LLC~~Page
~~Class A Common Stock, par value $0.0001 per share~~		~~MACQ~~	~~The NASDAQ Stock Market LLC~~
~~Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50~~PART I.	FINANCIAL INFORMATION	~~MACQW~~3	~~The NASDAQ Stock Market LLC~~


	March 31,		December 31,
	2021		2020
	(Unaudited)
ASSETS

Current Assets
Cash	$	1,467,916	$	25,000
Prepaid expenses		499,664		—
Total current assets		1,967,580		25,000
Deferred offering costs		—		146,634
Other assets		391,643
Cash and marketable securities held in Trust Account		316,256,122		—
Total assets	$	318,615,345	$	171,634

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses	$	206,952	$	65,584
Promissory note payable - related party		—		100,000
Total current liabilities		206,952		165,584
Warrant liability		22,713,332		—
Deferred underwriting fee payable		11,068,750		—
Total liabilities		33,989,034		165,584

Class A Common Stock subject to possible redemption, 27,962,071 and 0 shares, at March 31, 2021 and December 31, 2020, respectively, at redemption value		279,626,302		—

Stockholders' Equity
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN outstanding		—		—
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 3,662,929 and 0 issued and outstanding (excluding 27,962,071 and 0 shares subject to possible redemption), at March 31, 2021 and December 31, 2020, respectively		367		—
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 7,906,250 shares issued and outstanding⁽¹⁾		791		791
Additional paid in capital		5,782,541		24,209
Accumulated deficit		(783,690)		(18,950)
Total Stockholders' Equity		5,000,009		6,050
	$	318,615,345	$	171,634


☒	QUARTERLY 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


~~MCAP Acquisition Corporation~~Delaware	85-3978415
(~~Exact name of registrant as specified in its charter)~~


		~~Page~~
~~PART I – FINANCIAL INFORMATION:~~		1

Item 1.	Financial ~~Statements:~~Statements (Unaudited)	13
	Condensed Consolidated Balance Sheets as of ~~March 31, 2021 (Unaudited)~~September 30, 2023 and December 31, ~~2020 (Audited)~~2022	13
	Condensed ~~Statement~~Consolidated Statements of Operations for the ~~Three Months Ended March 31, 2021 (Unaudited)~~three month and nine month periods ended September 30, 2023 and 2022	24
	Condensed ~~Statement~~Consolidated Statements of ~~Changes in Stockholders’~~ Equity for the ~~Three Months Ended March 31, 2021 (Unaudited)~~three month and nine month periods ended September 30, 2023 and 2022	35
	Condensed ~~Statement~~Consolidated Statements of Cash Flows for the ~~Three Months Ended March 31, 2021 (Unaudited)~~nine month periods ended September 30, 2023 and 2022	47
	Notes to Unaudited Condensed Consolidated Financial Statements ~~(Unaudited)~~	58
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2123
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2536
Item 4.	Controls and Procedures	2636
~~PART II - OTHER INFORMATION:~~	27
PART II.	OTHER INFORMATION	36

Item 1.	Legal Proceedings	2736
Item 1A.	Risk Factors	2736
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2837
Item 3.	Defaults Upon Senior Securities	2937
Item 4.	Mine Safety Disclosures	2937
Item 5.	Other Information	2937
Item 6.	Exhibits	3037
SIGNATURES


	September 30, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	74,339	$	72,579
Accounts receivable, net		48,693		56,027
Income tax recoverable		177		145
Prepaid expenses		2,673		1,466
Total current assets		125,882		130,217
Property and equipment, net		465		520
Operating lease right-of-use assets		4,987		5,732
Investment in SymetryML Holdings		636		789
Customer relationships, net		1,119		4,475
Other intangible assets, net		7,854		6,708
Goodwill		34,842		34,842
Deferred income taxes, net		12,067		6,962
Other assets		308		359
Total assets	$	188,160	$	190,604

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	10,294	$	9,479
Accrued compensation		5,117		8,939
Accrued expenses		5,076		6,224
Operating lease liabilities, current		1,265		1,265
Total current liabilities		21,752		25,907
Warrants		862		2,298
Seller's Earn-Out		23		773
Operating lease liabilities, non-current		5,253		6,201
Total liabilities		27,890		35,179
Stockholders’ equity
Preferred stock, $0.0001 per share, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022		—		—
Common stock, $0.0001 par value, 350,000,000 shares authorized; 88,206,048 and 86,968,309 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		9		9
Additional paid-in capital		89,746		83,566
Retained earnings		70,515		71,850
Total stockholders' equity		160,270		155,425
Total liabilities and stockholders’ equity	$	188,160	$	190,604


Other operating expenses	$	43,901
Loss from operations		(43,901)
Other (expenses):
Warrant issuance costs		(832,378)
Interest income		6,122
Change in fair value of warrant liability		105,417
Other expenses, net		(720,839)
Net loss	$	(764,740)

Weighted average shares outstanding of Class A redeemable common stock, basic and diluted		30,237,684
Basic and diluted net income per share of Class A redeemable common stock	$	0.00
Weighted average shares outstanding of Class A and Class B non-redeemable common stock, basic and diluted		8,353,274
Basic and diluted net loss per share of Class A and Class B non-redeemable common stock	$	(0.09)


	Class A			Class B			Additional				Total
	Common Stock			Common Stock			Paid in		Accumulated		Stockholders'
	Shares	Amount		Shares⁽¹⁾	Amount		Capital		Deficit		Equity

Balance - December 31, 2020	—	$	—	7,906,250	$	791	$	24,209	$	(18,950)	$	6,050

Sale of 31,625,000 Units and Private Placement Warrants, net of underwriters discount and offering costs	31,625,000		3,163	0		—		285,381,838		0		285,385,001
Common stock subject to redemption	(27,962,071)		(2,796)	—		—		(279,623,506)		0		(279,626,302)

Net loss	—		—	—		—		0		(764,740)		(764,740)
Balance - March 31, 2021	3,662,929	$	367	7,906,250	$	791	$	5,782,541	$	(783,690)	$	5,000,009


Cash flow from operating activities:
Net loss	$	(764,740)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest earned in Trust Account		(6,122)
Change in fair value of warrant liability		(105,417)
Transaction costs allocable to warrant liability		832,378
Changes in operating assets and liabilities:
Prepaid expenses		(891,307)
Accounts payable and accrued expenses		191,504
Net cash used in operating activities		(743,704)

Cash flows from investing activities:
Investment of cash in Trust Account		(316,250,000)
Net cash used in financing activities		(316,250,000)

Cash flows from financing activities:
Proceeds from sale of Units, net of underwriting discounts paid		309,925,000
Proceeds from promissory note - related party		150,000
Proceeds from sale of Private Placement Warrants		8,975,000
Repayment of promissory note - related party		(250,000)
Payments of deferred offering costs		(363,380)
Net cash provided by financing activities		318,436,620

Net change in cash		1,442,916
Cash at the beginning of the period		25,000
Cash at the end of the period	$	1,467,916

Non-Cash investing and financing activities:
Initial classification of Class A common stock shares subject to possible redemption	$	302,376,840
Change in value of class A common stock shares subject to possible redemption		22,750,539
Deferred underwriting fee payable		11,068,750
Initial measurement of warrants issued in connection with the Initial Public Offering accounted for as liabilities		22,818,749


	Common Stock
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Noncontrolling Interests			Total Stockholders' Equity
December 31, 2021		85,743,994	$	9	$	70,778		$	42,512		$	(1,416	)		111,883
Equity-based compensation		—		—		1,988			—			—			1,988
Seller's Earn-Out equity-based compensation		—		—		492			—			—			492
Conversion of SAFE Notes into SymetryML preferred stock		—		—		—			—			3,938			3,938
SymetryML preferred stock issuance		—		—		—			—			400			400
Deconsolidation of SymetryML Holdings		—		—		—			—			(2,372	)		(2,372	)
Net loss		—		—		—			(41,740	)		(550	)		(42,290	)
March 31, 2022		85,743,994	$	9	$	73,258		$	772		$	—		$	74,039
Equity-based compensation		—		—		3,856			—			—			3,856
Seller's Earn-Out equity-based compensation		—		—		499			—			—			499
Exercises of options		355,629		—		183			—			—			183
Exercises of warrants		10		—		—			—			—			—
Transaction cost adjustment		—		—		55			—			—			55
Net income		—		—		—			57,777			—			57,777
June 30, 2022		86,099,633	$	9	$	77,851		$	58,549		$	—		$	136,409
Equity-based compensation		—		—		2,783			—			—			2,783
Seller's Earn-Out equity-based compensation		—		—		373			—			—			373
Exercises of options		244,922		—		163			—			—			163
Vesting of restricted stock, net of shares withheld for taxes		346,875		—		(231	)		—			—			(231	)
Net income		—		—		—			5,725			—			5,725
September 30, 2022		86,691,430	$	9	$	80,939		$	64,274		$	—		$	145,222


	For the Three
	Months Ended
	March 31,
	2021
Redeemable Class A common stock
Numerator: Earnings allocable to redeemable Class A common stock
Interest income	$	6,122
Net earnings	$	6,122
Denominator: Weighted average redeemable Class A common stock
Redeemable Class A common stock shares, basic and diluted		30,237,684
Earnings per share Redeemable Class A common stock	$	0.00
Non-Redeemable Class A and B common stock
Numerator: net loss minus redeemable net earnings
Net loss	$	(764,740)
Less: Interest income allocated to redeemable Class A common stock	$	(6,122)
Net loss attributable to Non-redeemable Class A and B common stock	$	(770,862)
Denominator: Weighted average Non-redeemable Class A and B common stock
Non-Redeemable Class A and B common stock shares, basic and diluted		8,353,274
Loss per share Non - redeemable Class A and B common stock	$	(0.09)


		March 31,
	Level	2021
Assets:
Cash and marketable securities held in Trust Account	1	$	316,256,122

Liabilities:
Public Warrants	3	$	14,336,666
Private Placement Warrants	3	$	8,376,666


	March 2,
Input	2021
Risk-free interest rate		0.71	%
Expected term (years)		7
Expected Volatility		13	%
Exercise Price	$	11.50
Stock price	$	9.55


	Private				Warrant
	Placement		Public		Liabilities

Fair value	$	0	$	0	$	0
Initial Measurement on March 2, 2021		8,376,666		14,442,083		22,818,749
Change in valuation inputs or other assumptions		—		(105,417)		(105,417)
Fair value as of March 31, 2021	$	8,376,666	$	14,336,666	$	22,713,332


	As Previously
	Reported		Adjustment		As Restated
Balance sheet as of March 2, 2021
Warrant liability	$	—	$	22,818,749	$	22,818,749
Total liabilities		12,185,686		22,818,749		35,004,435
Class A common stock subject to possible redemption ⁽¹⁾		302,376,840		(22,818,750)		279,558,090
Class A common stock		140		228		368
Additional paid in capital		5,018,601		832,151		5,850,752
Accumulated deficit		(19,522)		(832,378)		(851,900)