UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20202022
or
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-39142
Porch Group, Inc.
PropTech Acquisition Corporation
(Exact name of registrant as specified in its charter)
Delaware | 83-2587663 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification |
(847) 477-7963411 1
st Avenue S., Suite 501,Seattle, WA98104
(Address of Principal Executive Offices) (Zip Code)
(855) 767-2400
(Registrant’s telephone number, including area code)
2200 1st Avenue S., Suite 300,Seattle, WA98134
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| | | ||
Title of | Trading symbol | Name of | ||
Common Stock, par value $0.0001 per share | PRCH | The Nasdaq Stock Market LLC | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | |
Large accelerated filer | ☒ | Accelerated filer | ☐ | | |
| | | | | |
Non-accelerated filer | ☐ | Smaller reporting company | |||
☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒☐ No ☐☒
AsThe number of outstanding shares of the registrant’s common stock as of May 12, 2020, there were 17,250,000 shares of Class A common stock and 4,312,500 shares of Class B common stock of the registrant issued and outstanding.6, 2022 was 99,136,900.
PROPTECH ACQUISITION CORPORATION
Form 10-Q
Table of Contents
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2 PART PORCH GROUP, INC. Condensed Consolidated Balance Sheets
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 PORCH GROUP, INC. Condensed Consolidated Statements of Operations
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 PORCH GROUP, INC. Condensed Consolidated Statements of Comprehensive Loss
5 PORCH GROUP, INC. Condensed Consolidated Statements of Stockholders’ Equity (all numbers in thousands, except share amounts, unaudited)
6 PORCH GROUP, INC. Condensed Consolidated Statements of Stockholders’ Equity - Continued (all numbers in thousands, except share amounts, unaudited)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 PORCH GROUP, INC.
8 PORCH GROUP, INC. Condensed Consolidated Statements of Cash Flows - Continued (all numbers in thousands, unaudited)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 9 PORCH GROUP, INC. Notes to Condensed Consolidated Statements (all numbers in thousands, except share amounts and unless otherwise stated, unaudited)
1. Description of Description of Business
Porch helps home service providers grow their business and improve their customer experience. In addition, through these relationships Porch gains access to homebuyers and is able to offer services to make the Unaudited Interim Financial Statements The accompanying unaudited condensed consolidated financial statements include the accounts of
on March 16, 2022. The
The
Comprehensive Loss
Reclassifications Certain reclassifications to previously reported 2021 balances were made to conform to the current period presentation in the unaudited condensed
Use of Estimates The preparation of 10 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts estimated variable consideration for services performed, estimated lifetime value of the
Financial instruments
collection. The Company’s
No individual customer represented more than 10% of the Company’s
As of March 31, 2022, the Company held approximately $233.4 million of cash with one U.S. commercial bank. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. The Company maintains cash balances that may exceed the insured limits by the Federal Deposit Insurance Corporation. Restricted cash equivalents as of March 31, 2022 includes $0.3 million held in certificates of deposits and money market mutual funds pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors, $7.1 million in funds held for the payment of possible warranty claims as required under regulatory guidelines in twenty five states, $0.3 million of customer deposits, $0.4 million in escrow with an insurance regulator, and $2.6 million related to acquisition indemnifications, of which $0.5 million is 11 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) The reconciliation of cash and cash equivalents to amounts presented in the
Long-term insurance commissions receivable balance consists of the Deferred Policy Acquisition Costs The Company capitalizes deferred policy acquisitions costs (“DAC”) which consist primarily of commissions, premium taxes and policy underwriting and production expenses that are directly related to the successful acquisition by the Company’s insurance subsidiary of new or renewal insurance contracts. DAC are amortized to expense on a straight-line basis over the terms of the Changes in DAC for the three months ended March 31, 2022 are as follows:
Fair Value of Financial Instruments Fair value, as defined by the accounting standards, represents the amount at which an asset or liability would be transferred in a current orderly transaction between willing market participants. Emphasis is placed on observable inputs being used to assess fair value. To reflect this approach the standards require a three-tiered fair value hierarchy be 12 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) applied based on the nature of the inputs used when measuring fair value. The three hierarchical levels of inputs are as follows:
The level of the least observable significant input used in assessing the fair value determines the placement of the entire fair value measurement in the hierarchy. Management’s assessment of the significance of a particular input to the fair value measurement requires the use of judgment specific to the asset or liability. Other Insurance Liabilities, Current The following table details the components of other insurance liabilities, current on the condensed consolidated balance sheets:
Income Taxes Provisions for income taxes for the three months ended March 31, 2022 and 2021 were a $0.2 million benefit and a $0.4 million benefit, respectively, and the effective tax rates for these periods were 2.96% and 0.53%, respectively. The difference between the Company’s effective tax rates for the 2022 period and the U.S. statutory rate of 21% was primarily due to a full valuation allowance related to the Company’s net deferred assets. The difference between the Company’s effective tax rates for the 2021 period and the U.S. statutory rate of 21% was primarily due to a full valuation allowance related to the Company’s net deferred tax assets. Recently Adopted Accounting Standards In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update require an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. The amendments of this ASU do not affect the accounting for other assets or liabilities that may arise from revenue contracts with customers in accordance with Topic 606. The amendments of this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods in those fiscal years. The ASU clarifies that early adoption of the amendments is permitted, including adoption in an interim period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition 13 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The Company early adopted this ASU as of January 1, 2022 and will apply the guidance prospectively for business combinations that occur after the adoption date. Therefore, the adoption will have no impact to the existing consolidated balance sheets, statements of operations, and statements of cash 2. Revenue Disaggregation of Revenue The Company generates revenue in its Vertical Software segment from (1) software and service subscription fees received for continued access to and transactions processed using owned software platforms by individual contractors, small business service providers and large enterprise service providers, (2) move-related transactions for a variety of services when end customers are connected with service providers primarily related to moving or settling into a new home, and (3) post-move transactions for the delivery of leads to service providers who primarily support the continued maintenance of the home. The revenue generated by the Company’s Insurance segment is primarily from the sale of its own written insurance and warranty policies or third-party policies via its agency. This revenue includes insurance and warranty premiums earned over the life of the policy, reinsurance profit share, policy fees, commissions earned at the time it is put in force or ceded. Total revenues consisted of the following:
(1)Revenue recognized during the three months ended March 31, 2022 includes revenue from regulated property and casualty insurance entity in the form of insurance premiums, policy fees, ceding commissions, and reinsurance profit sharing of $20.0 million which is accounted for separately from the revenue from contracts with customers. 14 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) Contracts with Customers Contract Assets - Insurance Commissions Receivable A summary of the activity impacting the contract assets during the three months ended March 31, 2022, is presented below:
As of March 31, 2022, $2.0 million of contract assets are expected to be collected within the next 12 months and therefore are included in current accounts receivable on the condensed consolidated balance sheets. The remaining $9.1 million of contract assets are expected to be collected in the following periods and are included in long-term insurance commissions receivable on the condensed consolidated balance sheets. Contract Liabilities — Refundable Customer Deposits A summary of the activity impacting the contract liabilities during the three months ended March 31, 2022 is presented below:
As of March 31, 2022, $16.7 million in contract liabilities related to refundable customer deposits received in advance of warranty services provided, are included in current refundable customer deposits on the consolidated balance sheets because the policyholder may cancel the policy at any time and receive a pro-rated refund. If the policies are not canceled, the balance is expected to be Deferred Revenue Timing may differ between the satisfaction of performance obligations and the collection of amounts from customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. To the extent the amounts relate to services or coverage performed by the Company over time, these liabilities are classified as deferred revenue. If the amounts collected are related to a point in time obligation which has yet to be performed, these liabilities are classified as refundable customer deposits. A summary of the activity impacting deferred revenue balances during the three months ended March 31, 2022 is presented below:
15 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited)
Remaining Performance Obligations Contracts with customers include $4.3 million to performance obligations that will be satisfied at a later date. These amounts primarily include performance obligations that are recorded in the condensed consolidated balance sheets as deferred revenue. The amount of the transaction price allocated to performance obligations to be satisfied at a later date, which is not recorded in the condensed consolidated balance sheets, is immaterial as of March 31, 2022 and December 31, 2021. The Company has applied the practical expedients provided for in the accounting standards, and does not present unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which it has the right to invoice for services performed. Additionally, the Company excludes amounts related to performance obligations that are billed and recognized as they are delivered. 3. Investments The following table provides the Company’s investment income, and realized gains on investments:
The Company did not have significant investment income during the three months ended March 31, 2021. 16 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) The following table provides the amortized cost, fair value and unrealized gains and (losses) of the Company’s investment securities:
The amortized cost and fair value of securities at March 31, 2022, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Other-than-temporary Impairment The Company regularly reviews its individual investment securities for other-than-temporarily impairment. The Company considers various factors in determining whether each individual security is other-than-temporarily impaired, including:
17 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited)
Securities with gross unrealized loss position, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:
At March 31, 2022, and December 31, 2021, there were 448 and 358 securities, respectively, in an unrealized loss position. Of these securities, NaN had been in an unrealized loss position for 12 months or longer. The Company believes there were no fundamental issues such as credit losses or other factors with respect to any of its available-for-sale securities. The unrealized losses on investments in fixed-maturity securities were caused primarily by interest rate changes. It is expected that the securities would not be settled at a price less than par value of the investments. Because the declines in fair value are attributable to changes in interest rates or market conditions and not credit quality, and because the Company has the ability and intent to 18 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) 4. Fair Value The following table details the fair value measurements of assets and liabilities that are measured at fair value on a recurring basis:
Financial Assets Money market mutual funds are valued at the closing price reported by the fund sponsor from an 19 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1 and Level 2. Contingent Consideration – Business The Company estimated the fair value of the business combination contingent consideration triggered by EBITDA or revenue milestones, related to certain 2021 acquisitions using the Monte Carlo simulation method. The fair value of $0.1 million and $0.3 million as of March 31, 2022 and December 31, 2021, respectively, is based on the simulated revenue and net income (loss) of the Company over the maturity date of the contingent consideration. The Company estimated the fair value of the business combination contingent consideration that is triggered by stock price milestones, related to a certain 2021 acquisition, using the Monte Carlo simulation method. The fair value is based on the simulated stock price of the Company over the maturity date of the contingent consideration. As of March 31, 2022, the key inputs used to determine the fair value of $12.7 million, were the stock price of $6.95, strike price of $36.00, discount rate of 8.2% and volatility of 75%. As of December 31, 2021, the key inputs used in the determination of the fair value of $9.3 million included the volume weighted average price of $16.37, strike price of $36.00, discount rate of 7% and volatility of 60%. Contingent Consideration - Earnout The Company estimated the fair value of the earnout contingent consideration using the Monte Carlo simulation method. The fair value of $2.7 million is based on the simulated price of the Company over the maturity date of the contingent consideration and increased by certain employee forfeitures. As of March 31, 2022, the key inputs used to determine the fair value included exercise price of $22.00, volatility of 70%, forfeiture rate of 15% and stock price of $6.95. As of December 31, 2021, the key inputs used in the determination of the fair value included exercise price of $22.00, volatility of 65%, forfeiture rate of 15% and stock price of $15.59. Private Warrants The Company estimated the fair value of the private warrants of $5.0 million using the Black-Scholes-Merton option pricing model. As of March 31, 2022, the key inputs used to determine the fair value included exercise price of $11.50, expected volatility of 71%, remaining contractual term of 3.73 years, and stock price of $6.95. As of December 31, 2021, the key inputs used to determine the fair value included exercise price of $11.50, expected volatility of 60%, remaining contractual term of 3.98 years, and stock price of $15.59. Level 3 Rollforward Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value. 20 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) The changes for Level 3 items measured at fair value on a recurring basis using significant unobservable inputs are as follows:
Fair Value Disclosure As of March 31, 2022 and December 31, 2021, the fair value of the convertible senior notes is $286.9 million and $400.4 million, respectively. The decrease of $113.5 million is primarily due to 5. Property, Equipment, and Software Property, equipment, and software net, consists of the following:
Depreciation and amortization expense related to property, equipment, and software was $1.0 million and $1.1 million for the three months ended March 31, 2022 and 2021, respectively. 21 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) 6. Intangible Assets and Goodwill Intangible Assets Intangible assets are stated at cost or
The aggregate amortization expense related to intangibles was $5.5 million and Goodwill The following tables summarize the changes in the carrying amount of goodwill for the three months ended March 31, 2022:
7. Debt At March 31, 2022, debt comprised of the following:
Convertible Senior Notes Interest expense recognized related to the 0.75% Convertible Senior Notes due 2026 (the “2026 Notes”) was approximately $1.4 million for the three months ended March 31, 2022, and comprised of contractual interest expense and amortization of debt issuance costs. 22 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) 8. Equity and Warrants Common Shares Outstanding and Common Stock Equivalents The following table summarizes the Company’s
The Warrants There was no activity related to public and private warrants during the three months ended March 31, 2022.
9. Stock-Based Compensation Under the Company’s 2020 Stock Incentive Plan (the “2020 Plan”), which replaced the Company’s 2012 Equity Incentive Plan upon the closing of the 23 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) Stock-based compensation consists of expense related to equity awards in the
Detail related to
10. Reinsurance The
The effects of
24 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) The detail of reinsurance balances due is
11. Unpaid Losses and Loss Adjustment Reserve The following table provides the rollforward of the beginning and ending reserve balances for losses and LAE, gross
As a result of additional information on claims occurring in prior years becoming available to management, changes in estimates of provisions of losses and loss adjustment expenses were made, resulting in a decrease of $0.6 million for the 12. Commitments and Contingencies Acquisition Commitments On September 2, 2021, the Company
25 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) Litigation From time to time the Company is or may become subject to various legal proceedings arising in the ordinary course of business, including proceedings initiated by users, other entities, or regulatory bodies. Estimated liabilities are recorded when it is both probable that a liability has been incurred and
Cases under Telephone Consumer Protection Act Porch and/or an acquired entity, GoSmith.com, are party to twelve legal proceedings alleging violations of the These actions are at an early stage in the litigation process. It is not possible to determine the likelihood of an unfavorable outcome of these disputes, although it is reasonably possible that the outcome of these actions may be Kandela, LLC v Porch.com, Inc. In May 2020, the former owners of Kandela, LLC filed complaints against Porch in the Putative Wage and Hours Class Action Proceeding A former employee of HireAHelper™ filed a complaint in San Diego County Superior Court in November 2020, asserting putative class action claims for failure to pay overtime, failure to pay compensation at the time of separation and unfair business practices in violation of California law. HireAHelper™ was served with the complaint in December 2020 and on January 28, 2021 Defendants removed the case to the United States District Court for the Southern District of California. The plaintiff seeks to represent all current and former non-exempt employees of HireAHelper™ and Legacy Porch and Porch’s other affiliated companies in the State of California during the relevant time period. Plaintiffs seek damages for unpaid wages, liquidated damages, penalties, attorneys’ fees and costs for which, Porch has recorded an estimated accrual for a contingent loss based on information currently known. The parties recently attended mediation 26 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) in an effort to resolve the matter. The mediation was successful, and a deal was reached. The parties have executed the long form settlement agreement and obtained preliminary approval from the court on April 25, 2022. Notices will go out to the putative class, and after the notice period, the parties will seek final approval of the settlement from the court on August 11, 2022. If final approval is granted, and the Other In addition, in the 13. Segment Information Beginning in 2021, the Company has 2 reportable segments that are also our operating segments: Vertical Software and Insurance. Our reportable segments have been identified based on how our CODM manages our business, makes operating decisions and evaluates operating and financial performance. The chief executive officer acts as the CODM and reviews financial and operational information for our 2 reportable segments. Operating segments are components of an enterprise for which separate discrete financial information is available and operational results are regularly evaluated by the CODM for the purposes of making decisions regarding resource allocation and assessing performance. Our Vertical Software segment primarily consists of a vertical software platform for the home, providing software and services to home services companies, such Our Insurance segment offers various forms of
homeowner insurance policies through its own insurance carrier and certain homeowner and auto insurance policies through its licensed insurance agency. The Insurance segment also includes home warranty service revenue. The following table
Our segment operating and financial performance measure is segment Adjusted EBITDA (loss). Segment Adjusted EBITDA (loss) is defined as revenue less the following expenses associated with our segments: cost of revenue, sales and marketing, product and technology, and general and administrative expenses. Segment Adjusted EBITDA (loss) also excludes non-cash items or items that management does not consider are reflective our ongoing core operations. 27 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) Currently, we do not allocate any shared expenses to the reportable segments. These expenses are included in Corporate and Other. Corporate and Other includes shared expenses such as sales and marketing, certain product and technology, accounting, human resources, legal and general and administrative, and other income, expenses, gains and losses that are The reconciliation of segment Adjusted EBITDA (loss) to consolidated loss from operations below includes the effects of corporate and other items that the CODM does not consider in assessing segment performance. The following tables provide financial information for the 2 reportable segments and reconciliations to consolidated financial information for the periods presented:
The CODM does not review assets on a All of the Company’s revenue is generated in the United States. As of March 31, 2022 and December 31, 2021, the Company did not have assets located outside of the United States. 14. Basic and Diluted Net Loss Per Share Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of stock options, RSUs, RSAs, convertible notes, earnout shares and warrants. As the Company has reported losses for all periods presented, all potentially dilutive securities are antidilutive and accordingly, basic net loss per share equals diluted net loss per share. 28 PORCH GROUP, INC. Notes to Condensed Consolidated Statements - Continued (all numbers in thousands, except share amounts and unless otherwise stated, unaudited) The following table sets forth the computation of the Company’s basic and diluted net loss attributable per share to common stockholders for the three months ended March 31, 2022 and 2021:
The following table discloses securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because to do so would have been antidilutive for all periods presented:
(1) In connection with the September 16, 2021 issuance of the 2026 Notes, the Company used a portion of the proceeds to pay for the capped call transactions, which are expected to generally reduce the potential dilution to the Company’s common stock. The capped call transactions impact the number of shares that may be issued by effectively increasing the conversion price for the Company from $25 per share to approximately $37.74 per share, which would result in 11,261,261 potentially dilutive shares instead of the shares reported in this table as of March 31, 15. Subsequent Events On April 1, 2022, the Company
29 PART II —OTHER INFORMATION Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. Unless specifically indicated otherwise, the forward-looking statements in this Quarterly Report do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing. You should understand that the following important factors, among others, could affect the Company’s future results and could cause those results or other outcomes to differ materially from those expressed or implied in the Company’s forward-looking statements:
●litigation, complaints, and/or adverse publicity;
●privacy and data protection laws, privacy or data breaches, or the loss of data; and
These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Quarterly Report are more fully described in Part II, Item 1A of this Quarterly Report, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 16,2022 and in any of the Company’s subsequent SEC filings. The risks described in these filings are not exhaustive. New risk factors emerge from time to time, and it is not possible for us to predict all such risk factors, nor can the Company assess the impact of all such risk factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward- looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. The Company undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 30 Business Overview Porch is a vertical software platform for the home, providing software and services to over 25,500 home services companies, such as home inspectors, mortgage companies and loan officers, title companies, moving companies, real estate agencies, utility companies, roofers and others, helping these service providers grow their business and improve their customer experience. The Company provides software and services to home services companies and, through these relationships, gains unique and early access to homebuyers and homeowners, assists homebuyers and homeowners with critical services such as insurance and moving, and, in turn, the Company’s platform drives demand for other services from such companies as part of the value proposition. Porch has three types of customers: (1) home services companies, such as home inspectors, mortgage companies, and loan officers and title companies, for whom Porch provides software and services and who pay recurring SaaS fees and increasingly provide introductions to homebuyers and homeowners; (2) consumers, such as homebuyers and homeowners, whom Porch assists with the comparison and provision of various critical home services, such as insurance, moving, security, TV/Internet, and home repair and improvement; and (3) service providers, such as insurance carriers, moving companies, security companies, title companies, mortgage companies and TV/Internet providers, who pay for new customer sign-ups. The Company sells software and services to companies using a variety of sales and marketing tactics, including teams of inside sales representatives organized by vertical market who engage directly with companies, and enterprise sales teams that target the large named accounts in each of the vertical markets. These teams are supported by various typical software marketing tactics, including digital, in-person (such as trade shows and other events) and content marketing. For consumers, Porch largely relies on our unique and proprietary relationships with over 25,500 companies using the Company’s software to provide the company with end customer access and introductions. The Company then utilizes technology, lifecycle marketing and teams in lower cost locations to operate as a Moving Concierge to assist these consumers with services. The Company has invested in limited direct-to-consumer marketing capabilities, but expects to become more advanced over time with capabilities such as digital and social retargeting. Key Performance Measures and Operating Metrics In the management of these businesses, the Company identifies, measures and evaluates various operating metrics. The key performance measures and operating metrics used in managing the businesses are set forth below. These key performance measures and operating metrics are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), and may not be comparable to or calculated in the same way as other similarly titled measures and metrics used by other companies. The key performance measures presented have been adjusted for divested businesses in 2020.
31
The following table summarizes Average Companies in Quarter and Average Revenue per Account per Month in Quarter for each of the quarterly periods indicated:
The following tables shows the impact of this error on Average Revenue per Account per Month in Quarter:
In 2021, the Company completed acquisitions of V12 Data in Q1, Homeowners of America (“HOA”) and Rynoh in Q2, American Home Protect (“AHP”) in Q3 and Floify in Q4, that impacted the average number of companies in the quarter. Due to COVID-19, some small companies put their business with the Company on hold, which is reflected in a lower number of total companies in 2020 and higher average revenue per account.
32
The following table summarizes our monetized services and average revenue per monetized service for each of the quarterly periods indicated:
The following tables shows the impact of this error on Average Revenue per Monetized Service in Quarter:
In 2021, the Company completed acquisitions of V12 in Q1, HOA and Rynoh in Q2, AHP in Q3 and Floify in Q4, which impacted the number of monetized services in the quarter. In 2020, the Company shifted insurance monetization from getting paid per quote to earning multiyear insurance commissions, resulting in fewer monetized transactions with higher average revenue. In March 2020, COVID-19 impacted the service volumes during the period from March until June. The impact on service volumes, largely recovered by June 30, 2020, and after adjusting for insurance monetization remains above prior year volumes. Recent Developments Adoption of New Accounting Standards We early adopted Accounting Standards Update No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers on January 1, 2022 and will apply the guidance prospectively for business combinations that occur after the adoption date. The adoption has no impact to the existing unaudited condensed consolidated balance sheets, statements of operations, and statements of cash flows. Key Factors Affecting Operating Results The Company has been implementing its strategy as a vertical software platform for the home, providing software and services to over 25,500 home services companies, such as home inspectors, moving companies, utility companies, 33 warranty companies, etc. The following are key factors affecting our operating results in the three months ended March 31, 2022:
Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes of the Company include the accounts of the Company and its consolidated subsidiaries and were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All significant intercompany accounts and transactions are eliminated in consolidation. The Company operates in two operating segments: Vertical Software and Insurance. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the CODM in making decisions regarding resource allocation and assessing performance. The Company has determined that its Chief Executive Officer is the CODM. Components of Results of Operations Total Revenue The Company generates revenue from (1) software and service subscription revenue generated from fees received for providing subscription access to the Company’s software platforms and subscription services across various industries; (2) insurance revenue in the form of commissions from third-party insurance carriers where Porch acts as an independent agent and commissions from reinsurers, insurance and warranty premiums, policy fees and other insurance- 34 related fees generated through its own insurance carrier; (3) move-related service revenue through feesreceived for connecting homeowners to service providers during time of a move including movers, TV/Internet, warranty, and security monitoring providers and for certain move related services for providing select services directly to the homeowner; (4) post-move related revenue in the form of fees earned from introducing homeowners to home service professionals including handymen, plumbers, electricians, roofers etc., and for certain projects for providing select services directly to the homeowner. Software and service subscription revenue primarily relates to subscriptions to the Company’s software offerings across its verticals as well as The Insurance segment offers various property-related insurance policies through its own risk-bearing carrier and independent agency as well as a risk-bearing home warranty company. Third-party insurance companies pay Porch Company’s agency upfront and renewal commissions for selling their policies, reinsurers pay the Company ceding commissions when premiums are ceded from owned insurance products, and revenues are earned in the form of policy premiums collected from insureds from owned insurance products. The Insurance segment also includes home warranty revenue which mainly consists of premiums paid by warranty customers for the Company’s home warranty products. Move-related transactions revenue arises when the Company connects service providers with homeowners that meet pre-defined criteria and may be looking for relevant services. Service providers include movers, TV/Internet, warranty, and security monitoring providers. The Company earns revenue when consumers purchase services from third-party providers. For moving products where the Company manages the process of selecting the service provider and setting the price, the Company generally invoices for projects on a fixed fee or time and materials basis. Post-move-related transaction revenue includes fees earned from introducing consumers to home service providers as well as directly to the homeowner when the Company manages the service. Revenue generated from service providers is recognized at a point in time upon the connection of a homeowner to the service provider. The Company generally invoices for managed services projects on a fixed fee or time and materials basis. Total Costs and Expenses Operating expenses Operating expenses are categorized into four categories:
The categories of operating expenses include both cash expenses and non-cash charges, such as stock-based compensation, depreciation and amortization. Depreciation and amortization are recorded in all operating expense categories, and consist of depreciation from property, equipment and software and intangible assets. 35 Cost of revenue primarily consists of insurance claims losses and loss adjustment expenses, warranty claims, third-party providers for executing moving labor and handyman services when the Company is managing the job, data costs related to marketing campaigns, certain call center costs, credit card processing and merchant fees and operational cost of SaaS businesses. Selling and marketing expenses primarily consist of payroll, employee benefits and stock-based compensation expense, and other headcount related costs associated with sales efforts directed toward companies and consumers, and deferred policy acquisition costs (“DAC”) of new and renewal insurance contracts. Also included are any direct costs to acquire customers, such as search engine optimization (“SEO”), marketing (“SEM”) costs and affiliate and partner leads. The Company capitalizes DAC, which consists primarily of commissions, premium taxes, policy underwriting, and production expenses directly related to the successful acquisition by the Company’s insurance subsidiary of new or renewal insurance contracts. DAC are amortized to expense on a straight-line basis over the terms of the policies to which they relate, which is generally one year. DAC is also reduced by ceding commissions paid by reinsurance companies which represent recoveries of acquisition costs. DAC is periodically reviewed for recoverability and adjusted if necessary. Product and technology development costs primarily consist of payroll, employee benefits, stock-based compensation expense, other headcount-related costs associated with product development, net of costs capitalized as internally developed software. Also included are cloud computing, hosting and other technology costs, software subscriptions, professional services and amortization of internally developed software. General and administrative expenses primarily consist of expenses associated with functional departments for finance, legal, human resources and executive management. The primary categories of expenses include payroll, employee benefits, stock-based compensation expense and other headcount related costs, rent for office space, legal and professional fees, taxes, licenses and regulatory fees, merger and acquisition transaction costs, and other administrative costs. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported and disclosed in the unaudited condensed consolidated financial statements and accompanying notes. On an ongoing basis these estimates, which include, but are not limited to, estimated variable consideration for services performed, estimated lifetime value of the insurance agency commissions, current estimate for credit losses, depreciable lives for property and equipment, the valuation of and useful lives for acquired intangible assets, goodwill, the valuation allowance on deferred tax assets, assumptions used in stock-based compensation expense, unpaid losses for insurance claims and loss adjustment expenses, contingent consideration, earnout liabilities and private warrant liabilities, all of which are evaluated by management. Actual results could differ materially from those At least quarterly, the Company evaluates estimates and assumptions and makes changes accordingly. For information on our significant accounting policies, see Note 1 to the accompanying Porch unaudited condensed consolidated financial statements. During the three months ended March 31, 2022, there were no changes to the critical accounting policies discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed on March 16, 2022. For a complete discussion of our critical accounting policies, refer to Item 7 in the 2021 Annual Report on Form 10-K. 36 Results of Operations Comparison of Three Months Ended March 31, 2022 and 2021 The following table sets forth our historical operating results for the periods indicated:
NM = Not Meaningful Revenue Total revenue increased by $35.8 million, or 134%, from $26.7 million in the three months ended March 31, 2021 to $62.6 million in the three months ended March 31, 2022. During 2021, the Company acquired a number of businesses with an aggregate purchase price of $346.3 million as disclosed in the Company’s Annual Report on Form 10-K. These acquisitions included V12 Data (acquired in January 2021), HOA (acquired in April 2021), Rynoh (acquired in May 2021), AHP (acquired in September 2021) and Floify (acquired in October 2021). Other than V12 Data, these businesses were not owned by the During the quarter ended December 31, 2021, the Company corrected an immaterial error related to revenue from claims fees and contra claims expense, which was corrected in the fourth quarter of 2021. This error impacted revenue and cost of revenue for the three months ended June 30, 2021 and September 30, 2021. The correction did not impact operating loss or net loss in these periods, and did not have any impact on the three months ended March 31, 2021. 37 The following table summarizes the impact of the correction by quarter (in thousands):
Cost of Revenue Cost of revenue increased by $15.3 million, or 257%, from $5.9 million in the three months ended March 31, 2021 to $21.2 million in the three months ended March 31, 2022. The increase in the cost of revenue was primarily attributable to the 2021 acquisitions of V12 Data (acquired in January 2021), HOA (acquired in April 2021), Rynoh (acquired in May 2021), AHP (acquired in September 2021), and Floify (acquired in October 2021). Other than V12 Data, these businesses were not owned by the Company in the three months ended March 31, 2021, therefore no cost of revenue was recognized from these businesses during that period. Thus, the increase in cost of revenue in 2022 is primarily driven by the 2021 acquisitions, by accelerated growth after acquisition and by organic growth. As a percentage of revenue, cost of revenue represented 34% of revenue in the three months ended March 31, 2022 compared with 22% in the same period in 2021. Cost of revenue as a percentage of revenue is higher due to the mix shift in business with insurance as the claims and loss and loss adjustment expense is recorded in cost of revenue. Selling and marketing Selling and marketing expenses increased by $11.1 million, or 76%, from $14.6 million in the three months ended March 31, 2021 to $25.7 million in the three months ended March 31, 2022. The increase is due to $8.3 million related to the selling and marketing costs of the acquired businesses comprised of the underwriting and policy acquisition costs for HOA and additional selling and marketing expenses for V12, AHP, Floify and Rynoh. The increase was also due to a $1.5 million increase in amortization expense related to acquired intangibles. This was partially offset by a decrease of $1.5 million in stock-based compensation expenses. As a percentage of revenue, selling and marketing expenses represented 41% of revenue in the three months ended March 31, 2022 compared with 55% in the same period in 2021.The improvement in selling and marketing expenses as a percentage of revenue is due to the growing economies of scale across the Company’s vertical software and insurance segments. Product and technology Product and technology expenses increased by $2.4 million, or 21%, from $11.8 million in the three months ended March 31, 2021 to $14.2 million in the three months ended March 31, 2022. The increase is mainly due to a $2.0 million increase in amortization expense related to acquired intangibles and a $1.8 million increase in product and technology costs of the acquired businesses, most notably HOA. This was offset by $1.2 million lower stock-based compensation expense. As a percentage of revenue, product and technology expenses represented 23% of revenue in the three months ended March 31, 2022 compared with 44% in the same period in 2021. The improvement in product and technology expenses as a percentage of revenue is due to the growing economies of scale in the overall business. General and administrative General and administrative expenses increased by $2.7 million, or 11%, from $24.0 million in the three months ended March 31, 2021 to $26.7 million in the three months ended March 31, 2022, primarily due to costs related to increased hiring of corporate resources, audit and accounting fees, as well as consulting fees related to the ongoing SOX requirements. In the three months ended March 31, 2022, general and administrative expenses included $11.7 million related to the HOA, AHP, Floify and Rynoh, which were acquired in 2021, and $3.8 million attributable to increased corporate resources, investments in corporate systems and SOX implementation. In addition, during the three months ended March 31, 2022, there was a loss on revaluation of contingent consideration of $3.2 million, while during the three 38 months ended March 31, 2021, there was a gain of $0.4 million. This was offset by stock-based compensation expense for the three months ended March 31, 2022, which was $8.4 million lower than in the same period in 2021. Interest expense, net Interest expense increased by $1.1 million, or 87%, from $1.2 million in the three months ended March 31, 2021 to $2.3 million in the three months ended March 31, 2022. This was primarily due to issuance of $425 million of Convertible Senior Notes in September 2021, that in part was used to pay off the $42.1 million of Senior Secured Term Loans that were outstanding at March 31, 2021. The total level of interest-bearing debt balance was $425.6 million at January 1, 2022 and $50.8 million at January 1, 2021 and this higher outstanding debt balance was the primary reason for the increased interest expense. Change in fair value of earnout liability Changes in fair value of earnout liability were $11.2 million (gain) and $18.8 million (loss) in the three months ended March 31, 2022 and 2021, respectively. The decrease in fair value was primarily due to the decline in the stock price at March 31, 2022 as compared to March 31, 2021. During the three months ended March 31, 2021, $25.8 million of the earnout liability was reclassified to additional paid in capital as a result of Change in fair value of private warrant liability Changes in fair value of private warrant liability were $10.2 million (gain) and $15.9 million (loss) in the Investment income and realized gains, net of investment expenses
Income tax benefit
Segment Results of Operations We 39 Segment Revenue
For the three months ended March 31,
Insurance segment revenues were $27.9 million or 44.6% of total revenue during the same period.The increase from $1.8 million in
Segment Adjusted EBITDA (Loss) Segment Adjusted EBITDA (loss) is defined as revenue less operating expenses associated with
(1) Includes costs that are not directly attributable to our (2) See reconciliation of adjusted EBITDA (loss) to net loss below. 40
This Quarterly Report includes non-GAAP financial measures, such as Adjusted EBITDA (loss), Adjusted EBITDA (loss) as a The Company defines Adjusted EBITDA (loss) as net income (loss) adjusted for interest expense, net, income taxes, other expenses, net, depreciation and amortization, certain non-cash long-lived asset impairment charges, stock-based compensation expense and acquisition-related impacts, amortization of intangible assets, gains (losses) recognized on changes in the Company management uses these non-GAAP financial measures as supplemental measures of the You should not consider these non-GAAP financial measures in isolation, as a substitute to
41 Revenue Less Cost of Revenue The following table reconciles revenue less cost of revenue to
Revenue less cost of revenue increased by $20.6 million, or 98.8% from $20.8 million in the
Adjusted EBITDA (loss) The following table reconciles net loss to Adjusted EBITDA (loss) for the three months ended March 31, 2022 and 2021, respectively (dollar amounts in thousands):
Adjusted EBITDA (loss) for the three months ended March 31, 2022 was $7.1 million, a $2.5 million improvement from Adjusted EBITDA (loss) of $9.6 million for the same period in 2021. During 2021, the Company acquired a number of businesses with an aggregate purchase price of $346.3 million as 42 (acquired in May 2021), AHP (acquired in September 2021) and Floify (acquired in October 2021). Other than V12 Data, these businesses were not owned by the Liquidity and Capital Resources Since inception, as a private company, we have financed our operations primarily from the
During 2021, the Company completed a private offering of $425 million aggregate principal amounts of convertible debt maturing in 2026, and raised $126.7 million and $4.3 million from exercise of public warrants and stock
options, respectively. As of March 31, The Company has incurred net losses since its inception, and has an accumulated deficit at March 31, 2022 and December 31, As of March 31, 2022 and December 31, 2021, the Company had $425.5 million and $425.6 million aggregate principal amount outstanding in convertible notes and promissory notes, respectively. Based on the Company’s current operating and growth plan, management believes cash and cash equivalents at March 31, 2022, are sufficient to finance the Company’s operations, planned capital expenditures, working capital requirements and debt service obligations for at least the next 12 months. As the Company’s operations evolve and continue its growth strategy, including through acquisitions, the Company may elect or need to obtain alternative sources of capital, and it may finance additional liquidity needs in the future through one or more equity or debt financings. The Company may not Porch Group, Inc. is a holding company that transacts a majority of its business through operating subsidiaries, including insurance subsidiaries. Consequently, the Company’s ability to pay dividends and expenses is largely dependent on dividends or other distributions from its subsidiaries. The Company’s insurance company subsidiaries are highly regulated and are restricted by statute as to the amount of dividends they may pay without the prior approval of their respective regulatory authorities. As of March 31, 2022, cash and cash equivalents of $35.5 million and investments held by these companies was $65.3 million. 43 The following table provides a summary of cash flow data for the three months ended March 31, 2022 and 2021:
Operating Cash Flows Net cash used in operating activities was $13.3 million for the three months ended March 31, 2022. Net cash used in operating activities consists of net loss of $5.8 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments include stock-based compensation expense of $5.9 million, depreciation and amortization of $6.5 million, and fair value adjustments to earnout liability and private warrant liability of $11.2 million (gain) and $10.2 million (gain), respectively. Net changes in working capital were a use of cash of $4.1 million, primarily due to increases in current liabilities and reinsurance balance due, offset by losses and loss adjustment expense reserves. Net cash used in operating activities was $22.9 million for the three months ended March 31, 2021. Net cash used in operating activities consists of net loss of $65.1 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments include stock-based compensation expense of $16.8 million, depreciation and amortization of $2.5 million, non-cash accrued and payment-in-kind interest of $0.3 million, fair value adjustments to earnout liability and private warrant liability of $18.8 million (loss) and $15.9 million (loss), respectively. Net changes in working capital were a use of cash of $11.6 million, primarily due to increases in current liabilities. Investing Cash Flows Net cash used in investing activities was $8.1 million for the three months ended March 31, 2022. Net cash used in investing activities is primarily related to purchases of investments of $8.8 million, investments in developing internal-use software of $1.6 million, purchases of property and equipment of $1.2 million, and a $5.0 million non-refundable deposit for an acquisition. This was offset by the cash inflows related to maturities and sales of investments of $8.4 million. Net cash used in investing activities was $23.7 million for the three months ended March 31, 2021. Net cash used in investing activities is primarily related to investments to develop internal-use software of $0.8 million and acquisitions, net of cash acquired of $22.9 million, including V12 Data. Financing Cash Flows Net cash used in financing activities was $0.4 million for the three months ended March 31, 2022. Net cash used in financing activities is primarily related to shares repurchased to pay income tax withholdings upon vesting of RSUs of $0.7 million and debt repayments of $0.2 million, partially offset by proceeds from exercises of stock options of $0.5 million. Net cash provided by financing activities was $72.6 million for the three months ended March 31, 2021. Net cash provided by financing activities is primarily related to exercises of warrants and stock options of $89.9 million, offset by shares repurchased to pay income tax withholdings upon vesting of RSUs of $14.6 million and debt repayments of $0.2 million. 44 Off-Balance Sheet Arrangements Since the date of incorporation, the Company has not engaged in any off-balance sheet arrangements, as defined in Recent Accounting Pronouncements See Note 1 to our unaudited condensed consolidated financial statements as of and
Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to a variety of market and other risks, including the effects of changes in interest rates, and inflation, as well as risks to the availability of funding sources, hazard events, and specific asset risks.
The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. As of March 31, 2022, and December 31, 2021, the Company has interest-bearing debt of $425.5 million and $425.6 million, respectively. Our 0.75% Convertible Senior Notes due 2026 (the “2026 Notes”) have a A one percent increase in As of March 31, 2022, the At March 31, 2022, accounts receivable and reinsurance balances due were $30.0 million and $239.7 million, respectively, were not interest-bearing assets and are generally collected in less than 180 days. As such, the Company does not Inflation Risk Due to significant increases in the Foreign Currency Risk There was no material foreign currency risk for three months ended March 31, 2022. The Company’s activities to date have been conducted in the United States. 45 Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures
Remediation Plan Our remediation efforts for these material weaknesses have included the following:
These remediation measures may be time consuming and costly. In addition, there is no assurance that we will be successful in remediating the material weakness.We plan to continue to assess our internal controls and procedures and intend to take further action as necessary or appropriate to address any other matters we identify. Changes in Internal Control over Financial Reporting
During 2022, the Company continued to take actions on initiatives to improve the internal control environment, which started in 2021. Specifically, we formed an internal working group to detail and implement specific remediation plans for these control deficiencies, engaged with outside consultants to provide advice and assistance, and hired additional personnel to perform and monitor internal control activity. 46 Limitations on Effectiveness of Controls and Procedures As specified above, the Company disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Company management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. 47 PART See Note 12 (“Commitments and Contingencies”) to Part I, Item 1 of this Quarterly Report, which is incorporated by reference into this Part II, Item 1, for a description of certain litigation and legal proceedings.
As of May 10, 2022, the
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. None. 48
* Filed herewith. ** ThesecertificationsarefurnishedtotheSECpursuanttoSection906oftheSarbanes-OxleyActof2002andaredeemednotfiledforpurposesof Section18oftheSecuritiesExchangeActof1934,asamended,norshalltheybedeemedincorporatedbyreferenceinanyfilingunderthe SecuritiesActof1933,exceptasshallbeexpresslysetforthbyspecificreferenceinsuchfiling. 49 SIGNATURES Pursuant to the requirements of Date: May 10, 2022
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