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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-39157
AgileThought, Inc.
(Exact name of registrant as specified in its charter)
https://cdn.kscope.io/60c52798b5ab0f624fd07ea7f1e5a4ec-agil-20220331_g1.jpg
Delaware
222 W. Las Colinas Blvd. Suite 1650E, Irving, Texas 75039
87-2302509
(State or other jurisdiction of incorporation or organization)(Address of Principal Executive Offices) / (Zip Code)(I.R.S. Employer Identification No.)
(971) - 501-1140
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per shareAGIL
NASDAQ Capital Market
Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per shareAGILW
NASDAQ Capital Market
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  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).     Yes  x   No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filerxSmaller reporting companyx
Emerging growth companyx
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes   o     No  x
The registrant had outstanding 50,473,423 shares of common stock as of May 9, 2022.



TABLE OF CONTENTS
AgileThought, Inc. - Quarterly Report on Form 10-Q
March 31, 2022
Page
1


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. You can generally identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions that concern our expectations, strategy, plans or intentions. We have based these forward-looking statements largely on our current expectations and projections regarding future events and trends that we believe may affect our business, financial condition and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Accordingly, you should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those projected in the forward-looking statements.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:

the financial and business performance of the Company;
our ability to repay and/or continue to service our indebtedness;
our future capital requirements and sources and uses of cash;
our ability to obtain funding for our future operations;
our business, expansion plans and opportunities;
changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;
our ability to develop, maintain and expand client relationships, including relationships with our largest clients;
changes in domestic and foreign business, market, financial, political, regulatory and legal conditions;
our ability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition and our ability to grow and manage growth profitably;
costs related to the business combination;
our ability to successfully identify and integrate any future acquisitions;
our ability to attract and retain highly skilled information technology professionals;
our ability to maintain favorable pricing, utilization rates and productivity levels for our information technology professionals and their services;
our ability to innovate successfully and maintain our relationships with key vendors;
our ability to provide our services without security breaches and comply with changing regulatory, legislative and industry standard developments regarding privacy and data security matters;
our ability to operate effectively in multiple jurisdictions in Latin America and in the United States in the different business, market, financial, political, legal and regulatory conditions in the different markets;
developments and projections relating to our competitors and industry;
the impact of health epidemics, including the COVID-19 pandemic, on our business and the actions we may take in response thereto;
expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012, as amended;
changes in applicable laws or regulations;
the outcome of any known and unknown litigation or legal proceedings and regulatory proceedings involving us; and
our ability to maintain the listing of our securities.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q may not occur. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
2


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
3

AgileThought, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands USD, except share data)March 31, 2022December 31, 2021
Assets
Current assets:
Cash, cash equivalents and restricted cash$2,713 $8,640 
Accounts receivable, net37,677 31,387 
Prepaid expenses and other current assets7,998 7,490 
Current VAT receivables9,165 9,713 
Total current assets57,553 57,230 
Property and equipment, net2,848 3,107 
Goodwill and indefinite-lived intangible assets87,262 86,694 
Finite-lived intangible assets, net65,352 66,233 
Operating lease right of use assets, net5,640 6,434 
Other noncurrent assets1,848 1,612 
Total noncurrent assets162,950 164,080 
Total assets$220,503 $221,310 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$23,057 $20,970 
Accrued liabilities11,842 9,778 
Income taxes payable16 97 
Other taxes payable8,738 9,733 
Current portion of operating lease liabilities2,527 2,834 
Deferred revenue2,426 1,789 
Obligation for contingent purchase price9,026 8,791 
Current portion of long-term debt10,888 14,838 
Total current liabilities68,520 68,830 
Long-term debt, net of current portion46,767 42,274 
Deferred tax liabilities, net2,719 2,762 
Operating lease liabilities, net of current portion3,269 3,759 
Warrant liability2,615 2,137 
Other noncurrent liabilities7,400 6,900 
Total liabilities131,290 126,662 
Stockholders' Equity
Class A common stock $0.0001 par value, 210,000,000 shares authorized, 50,473,423 and 50,402,763 shares issued as of March 31, 2022 and December 31, 2021, respectively
5 5 
Treasury stock, 198,740 and 181,381 shares at cost as of March 31, 2022 and December 31, 2021, respectively
(391)(294)
Additional paid-in capital199,264 198,649 
Accumulated deficit(92,598)(86,251)
Accumulated other comprehensive loss(17,014)(17,362)
Total stockholders' equity attributable to the Company89,266 94,747 
Noncontrolling interests(53)(99)
Total stockholders' equity89,213 94,648 
Total liabilities and stockholders' equity$220,503 $221,310 
The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
4

AgileThought, Inc.
Unaudited Condensed Consolidated Statements of Operations
Three Months Ended
March 31,
(in thousands USD, except share data)20222021
Net revenues$44,224 $37,213 
Cost of revenue30,400 26,231 
Gross profit13,824 10,982 
Operating expenses:
Selling, general and administrative expenses12,619 8,768 
Depreciation and amortization1,754 1,774 
Change in fair value of embedded derivative liabilities (1,410)
Change in fair value of warrant liability478  
Loss on debt extinguishment7,136  
Equity-based compensation expense518 12 
Restructuring expenses753 10 
Other operating expenses, net621 635 
Total operating expense23,879 9,789 
(Loss) income from operations(10,055)1,193 
Interest expense(3,313)(4,328)
Other income (expense) 7,321 (1,308)
Loss before income taxes(6,047)(4,443)
Income tax expense (benefit)251 (608)
Net loss(6,298)(3,835)
Net income attributable to noncontrolling interests49 30 
Net loss attributable to the Company$(6,347)$(3,865)
Loss per share (Note 16):
Basic and Diluted Class A common stock$(0.14)$(0.11)
Weighted average number of shares:
Basic and Diluted Class A common stock46,022,767 34,557,480 
The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
5

AgileThought, Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Loss
Three Months Ended
March 31,
(in thousands USD)20222021
Net loss$(6,298)$(3,835)
Actuarial loss4  
Foreign currency translation adjustments341 (218)
Comprehensive loss(5,953)(4,053)
Less: Comprehensive income attributable to noncontrolling interests46 35 
Comprehensive loss attributable to the Company$(5,999)$(4,088)
The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
6

AgileThought, Inc.
Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2022 and 2021
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Stockholders'
Equity
(in thousands USD, except share data)SharesAmountSharesAmount
December 31, 2021
50,402,763 $5 181,381 $(294)$198,649 $(86,251)$(17,362)$(99)$94,648 
Net loss (income)— — — — — (6,347)— 49 (6,298)
Equity-based compensation74,537    518    518 
Employee withholding taxes paid related to net share settlements(3,897)— 17,359 (97)97 — — —  
Redemption of public warrants20 — — — — — — — — 
Other comprehensive expense— — — — — — 4 — 4 
Foreign currency translation adjustments— — — — — — 344 (3)341 
March 31, 202250,473,423 $5 198,740 $(391)$199,264 $(92,598)$(17,014)$(53)$89,213 

Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Stockholders'
Equity
(in thousands USD, except share data)SharesAmountSharesAmount
December 31, 202034,557,480 $3 151,950 $ $101,494 $(66,181)$(16,981)$(137)$18,198 
Net (loss) income— — — — — (3,865)— 30 (3,835)
Equity-based compensation
— — — — 12 — — — 12 
Foreign currency translation adjustments— — — — — — (223)5 (218)
March 31, 202134,557,480 $3 151,950 $ $101,506 $(70,046)$(17,204)$(102)$14,157 
The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
7

AgileThought, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31,
(in thousands USD)20222021
Operating Activities
Net loss$(6,298)$(3,835)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Accretion of interest from convertible notes 1,040 
Gain on forgiveness of debt(7,280)(63)
Loss on debt extinguishment7,136  
Provision for bad debt expense3 (10)
Equity-based compensation518 12 
Right-of-use asset amortization860 780 
Foreign currency remeasurement(252)1,715 
Deferred income tax provision(63)(37)
Obligations for contingent purchase price235 130 
Embedded derivative liabilities  (1,410)
Warrant liability478  
Amortization of debt issue costs421 269 
Depreciation and amortization1,754 1,774 
Changes in assets and liabilities:
Accounts receivable(6,377)(6,108)
Prepaid expenses and other current assets(725)(2,044)
Accounts payable2,231 7,460 
Accrued liabilities2,187 (2,740)
Deferred revenue876 900 
Current VAT receivables and other taxes payable129 (1,419)
Income taxes payable(81)(40)
Operating lease liabilities(863)(774)
Net cash used in operating activities(5,111)(4,400)
Investing activities
Purchase of property, plant and equipment(83)(229)
Net cash used in investing activities(83)(229)
Financing activities
Repayments of borrowings(669)(22,004)
Proceeds from issuance of preferred shares 20,000 
Net cash used in financing activities(669)(2,004)
Effect of exchange rates on cash(64)(110)
Net decrease in cash and cash equivalents(5,927)(6,743)
Cash, cash equivalents and restricted cash at beginning of the period8,640 9,432 
Cash, cash equivalents and restricted cash at end of the period (1)
$2,713 $2,689 
__________
(1) Amount of restricted cash at end of period
$212 $169 
The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements
8

AgileThought, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 – Organization and Basis of Consolidation and Presentation
Organization
AgileThought, Inc. (“AgileThought”) is a global provider of agile-first, end-to-end digital transformation services in the North American market using on-shore and near-shore delivery. The Company’s headquarters is in Irving, Texas. AgileThought’s Class A common stock is listed on the NASDAQ Capital Market (“NASDAQ”) under the symbol “AGIL.”
On August 23, 2021 (the “Closing Date”), LIV Capital Acquisition Corp. (“LIVK”), a special purpose acquisition company, and AgileThought (“Legacy AgileThought”) consummated the transactions contemplated by the definitive agreement and plan of merger (“Merger Agreement”), dated May 9, 2021 (“Business Combination”). Pursuant to the terms, Legacy AgileThought merged with and into LIVK, whereupon the separate corporate existence of Legacy AgileThought ceased, with LIVK surviving such merger (the “Surviving Company”). On the Closing Date, the Surviving Company changed its name to AgileThought, Inc. (the “Company”, “AgileThought”, “we” or “us”).
Basis of Consolidation and Presentation
The Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). For interim financial reporting not all disclosures normally required in annual Consolidated Financial Statements prepared in accordance with U.S. GAAP are required.
The Business Combination was accounted for as a reverse capitalization in accordance with U.S. GAAP (the “Recapitalization”). Under this method of accounting, LIVK is treated as the acquired company and Legacy AgileThought is treated as the accounting acquirer for financial reporting purposes, resulting in no change in the carrying amount of the Company's assets and liabilities. The consolidated assets, liabilities and results of operations prior to the Recapitalization are those of Legacy AgileThought. The shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on shares reflecting the exchange ratio established in the Business Combination.
In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of normal and recurring nature, have been made for the interim periods reported. Operating results for the three months ended March 31, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. The balance sheet as of December 31, 2021 has been derived from the audited Consolidated Financial Statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements for the year ended December 31, 2021 that are included in our annual report on Form 10-K filed with the SEC on March 31, 2022 ("Annual Report"). All intercompany transactions and balances have been eliminated in consolidation. The ownership interest of noncontrolling investors of the Company's subsidiaries are recorded as noncontrolling interest.
The Company evaluated subsequent events, if any, that would require an adjustment to the Company's Unaudited Condensed Consolidated Financial Statements or require disclosure in the notes to the Unaudited Condensed Consolidated Financial Statements through the date of issuance of the condensed consolidated financial statements. Where applicable, the notes to these Unaudited Condensed Consolidated Financial Statements have been updated to discuss all significant subsequent events which have occurred.
9


Note 2 – Summary of Significant Accounting Policies
Refer to Note 2, Summary of Significant Accounting Policies, within our annual Consolidated Financial Statements included in our Annual Report for the full listing of significant accounting policies.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the Unaudited Condensed Consolidated Financial Statements. Further, certain estimates and assumptions include the direct and indirect impact of the COVID-19 pandemic on the Company’s business, financial condition and results of operations. We make significant estimates with respect to intangible assets, goodwill, depreciation, amortization, income taxes, equity-based compensation, contingencies, fair value of assets and liabilities acquired, obligations related to contingent consideration in connection with business combinations, fair value of embedded derivative liabilities, and fair value of warrant liability. The economic impact of the pandemic on the Company’s business depends on its severity and duration, which in turn depend on highly uncertain factors such as the nature and extent of containment efforts, the spread and effects of variants, and the timing and efficacy of vaccines. The high level of uncertainty regarding this economic impact means that management’s estimates and assumptions are subject to change as the situation develops and new information becomes available. To the extent the actual results differ materially from these estimates and assumptions, the Company’s future financial statements could be materially affected.
Fair Value Measurements
The Company records fair value of assets and liabilities in accordance with Financial Accounting Standards Board’s (“FASB”) Account Standards Codification (“ASC”) 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.
ASC 820 includes disclosures around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reporting in one of three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are as follows:
Level 1:Quoted prices for identical instruments in active markets.
Level 2:Other valuations that include quoted prices for similar instruments in active markets that are directly or indirectly observable.
Level 3:Valuations made through techniques in which one or more of its significant data are not observable.
See Note 4, Fair Value Measurements, for further discussion.
Goodwill
Goodwill represents the cost of acquired businesses in excess of the fair value of identifiable tangible and intangible net assets purchased and is allocated to a reporting unit when the acquired business is integrated into the Company. Goodwill is not amortized but is tested for impairment annually on October 1st. The Company will also perform an assessment whenever events or changes in circumstances indicate that the carrying amount of a reporting unit may be more than its recoverable amount. Under FASB guidance, management may first assess certain qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test.
When needed, the Company performs a quantitative assessment of goodwill impairment if it determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In the quantitative test, we compare the fair value of the reporting unit with the respective carrying value. Management uses a combined income and public company market approach to estimate the fair value of each reporting unit. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the excess, limited to the total amount of goodwill allocated to that reporting unit.
This analysis requires significant assumptions, such as estimated future cash flows, long-term growth rate estimates, weighted average cost of capital, and market multiples. The estimates used to calculate the fair value of a reporting unit change
10


from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit.
Intangible Assets
The Company has customer relationships (finite-lived intangible assets) and trade names (finite-lived and indefinite-lived intangible assets) on its Unaudited Condensed Consolidated Balance Sheets.
Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed. We test for impairment when events or circumstances indicate the carrying value of a finite-lived intangible asset may not be recoverable. Consistent with other long-lived assets, if the carrying value is not determined to be recoverable, we calculate an impairment loss based on the excess of the asset’s carrying value over its fair value. The fair value is determined using the discounted cash flow approach of multi-period excess earnings.
During the first quarter of 2021, the Company reassessed and changed the estimated economic life of a certain trade name from indefinite to finite-lived as a result of the shift in operations towards a global strategy as “One AgileThought.” As a result, the Company began amortizing a certain trade name using straight-line method over their average remaining economic life of five years.
Indefinite-lived intangible assets are not amortized but are instead assessed for impairment annually on October 1st and as needed whenever events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An impairment loss is recognized if the asset’s carrying value exceeds its fair value. The Company uses the relief from royalty method to determine the fair value of its indefinite-lived intangible assets. Refer to Note 7, Goodwill and Intangible Assets, Net, for additional information.
Embedded Derivative Liabilities
The Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company has evaluated the terms and features of its redeemable convertible preferred stock issued in February 2021 and identified two embedded derivatives requiring bifurcation from the underlying host instrument pursuant to ASC 815-15, Embedded Derivatives. Embedded derivatives met the criteria for bifurcation due to the instruments containing conversion options and mandatory redemption features that are not clearly and closely related to the host instrument.
Embedded derivatives are bifurcated from the underlying host instrument and accounted for as separate financial instruments. Embedded derivatives are recognized at fair value, with changes in fair value during the period are recognized in "Change in fair value of embedded derivative liabilities" in the Unaudited Condensed Consolidated Statements of Operations. As of March 31, 2022 and in connection with the consummation of the Business Combination that occurred on August 23, 2021, the preferred stock was converted into common stock of the Company and the Embedded derivative ceased to exist. Refer to Note 4, Fair Value Measurements, for additional information.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).
For warrants that meet all of the criteria for equity classification, the warrants are recorded as a component of additional paid-in capital at the time of issuance. For warrants that do not meet all the criteria for equity classification, the warrants are recorded as liabilities. At the end of each reporting period, changes in fair value during the period are recognized in “Change in fair value of warrant liability” in the Company’s Unaudited Condensed Consolidated Statements of Operations. The Company will continue to adjust the warrant liability for changes in the fair value until the earlier of a) the exercise or expiration of the warrants or b) the redemption of the warrants.
Our public warrants meet the criteria for equity classification and accordingly, are reported as a component of stockholders’ equity while our private warrants do not meet the criteria for equity classification and are thus classified as a liability.
11


Accounting Pronouncements
The authoritative bodies release standards and guidance, which are assessed by management for impact on the Company’s Unaudited Condensed Consolidated Financial Statements. Accounting Standards Updates (“ASUs”) not listed below were assessed and determined to be not applicable to the Company’s Unaudited Condensed Consolidated Financial Statements.
The following standards were recently adopted by the Company:
In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform, that refined the scope of ASU No. 2020-04 and clarified some of its provisions. The amendments permit entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by the discounting transition. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted for all entities, including adoption in an interim period. This ASU was adopted by the Company during the second quarter of 2022, resulting in no material impact to the Unaudited Condensed Consolidated Financial Statements.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share, Debt-Modifications and Extinguishments, Compensation-Stock Compensation, and Derivatives and Hedging-Contracts in Entity’s Own Equity. This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU is effective for fiscal years beginning after December 15, 2021 on a prospective basis. Early adoption is permitted for all entities, including adoption in an interim period. The ASU was adopted by the Company on January 1, 2022, resulting in no material impact to the Unaudited Condensed Consolidated Financial Statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations: Accounting for Contract Asset and Contract Liabilities from Contracts with Customers. This ASU requires an entity to recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers. This ASU is expected to reduce diversity in practice and increase comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This standard is effective for annual periods beginning after December 15, 2022, including interim periods therein, with early adoption permitted. The ASU was adopted by the Company on January 1, 2022, resulting in no material impact to the Unaudited Condensed Consolidated Financial Statements.
Note 3 – Business Combination
As discussed in Note 1, Organization and Basis of Consolidation and Presentation, the Company consummated the Business Combination on August 23, 2021, pursuant to the Merger Agreement dated May 9, 2021. In connection with the Business Combination, the following occurred:
On August 20, 2021, LIVK changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware by deregistering as an exempted company in the Cayman Islands and domesticating and continuing as a corporation formed under the laws of the State of Delaware. As a result, each of LIVK’s issued and outstanding Class A ordinary shares and Class B ordinary shares automatically converted by operation of law, on a one-for-one basis, into shares of Class A common stock. Similarly, all of LIVK’s outstanding warrants became warrants to acquire shares of Class A common Stock.
LIVK entered into subscription agreements with certain investors pursuant to which such investors collectively subscribed for 2,760,000 shares of the Company's Class A common stock at $10.00 per share for aggregate proceeds of $27,600,000 (the “PIPE Financing”).
Holders of 7,479,065 of LIVK’s Class A ordinary shares originally sold in LIVK's initial public offering, or 93% of the shares with redemption rights, exercised their right to redeem their shares for cash at a redemption price of approximately $10.07 per share, for an aggregate redemption amount of $75.3 million.
The Business Combination was effected through the merger of Legacy AgileThought with and into LIVK, whereupon the separate corporate existence of Legacy AgileThought ceased and LIVK was the surviving corporation.
On the Closing Date, the Company changed its name from LIV Capital Acquisition Corp. to AgileThought, Inc.
12


An aggregate of 34,557,480 shares of Class A common stock were issued to holders of Legacy AT common stock and 2,000,000 shares of Class A common stock were issued to holders of Legacy AT preferred stock as merger consideration.
After adjusting its embedded derivative liabilities to fair value, upon conversion of the preferred stock, the Company's embedded derivative liabilities were extinguished during the third quarter of 2021. Refer to Note 4, Fair Value Measurements, for additional information.
The Company's private placement warrants meet the criteria for liability classification. For additional information on our warrants, refer to Note 14, Warrants, and Note 4, Fair Value Measurements.
The following table reconciles the elements of the Business Combination to the additional paid-in capital in the Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the year ended December 31, 2021:
(in thousands USD)Business Combination
Cash - LIVK trust and cash, net of redemptions$5,749 
Cash - PIPE Financing27,600 
Less: Transaction costs(13,033)
Net proceeds from the Business Combination20,316 
Less: Initial fair value of warrant liabilities recognized in the Business Combination(15,123)
Equity classification of Public Warrants8,292 
Surrender of related party receivables(1,359)
Debt conversion38,120 
Conversion of mezzanine equity(a)
15,594 
Net adjustment to total equity from the Business Combination$65,840 
_________________
(a)Relates to the transfer from mezzanine equity to permanent equity of the preferred contribution received from LIV Capital on February 02, 2021, which was considered part of the PIPE financing and upon the transaction close, was reclassified to permanent equity of the Company.

The number of shares of Class A common stock issued immediately following the consummation of the Business Combination:
Number of Shares
Class A ordinary shares of LIVK outstanding prior to the Business Combination8,050,000 
Less: redemption of LIVK's Class A ordinary shares(7,479,065)
     Shares of LIVK's Class A ordinary shares570,935 
Shares held by LIVK's sponsor and its affiliates2,082,500 
Shares issued in the PIPE Financing2,760,000 
Shares issued to convert Legacy AgileThought's preferred stock to Class A common stock2,000,000 
Shares issued to Legacy AgileThought's common stock holders34,557,480 
Total shares of Class A common stock immediately after the Business Combination41,970,915 
Note 4 – Fair Value Measurements
The carrying amount of assets and liabilities including cash, cash equivalents, and restricted cash, accounts receivable and accounts payable approximated their fair value as of March 31, 2022, and December 31, 2021, due to the relative short maturity of these instruments.
Long-term Debt
Our debt is not actively traded and the fair value estimate is based on discounted estimated future cash flows or a fair value in-exchange assumption, which are significant unobservable inputs in the fair value hierarchy. As such, these estimates are classified as Level 3 in the fair value hierarchy.
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The following table summarizes our instruments where fair value differs from carrying value:
Fair Value
Hierarchy Level
March 31, 2022December 31, 2021
(in thousands USD)Carry AmountFair ValueCarry AmountFair Value
Bank credit agreement
Level 3$31,270 $31,947 $31,882 $31,897 
New Second Lien Facility
Level 317,069 17,068 16,120 16,214 
The above table excludes our revolving credit facility, subordinated promissory note payable and subordinated zero-coupon loan as these balances approximate fair value due to the short-term nature of our borrowings. The above table also excludes our Paycheck Protection Program loans (“PPP loans”) as the carrying value of the Company’s PPP loans approximates fair value based on the current yield for debt instruments with similar terms. Refer to Note 8, Long-term Debt, for additional information.
Contingent Purchase Price
The Company carries its obligations for contingent purchase price at fair value. The Company recorded the acquisition-date fair value of these contingent liabilities based on the likelihood of contingent earn-out payments and stock issuances subject to the underlying agreement terms. This estimate is classified as Level 3 in the fair value hierarchy. The significant unobservable inputs used in the fair value of the Company’s obligation for contingent purchase price was the discount rate, growth assumptions, and earnings thresholds. After December 31, 2021, the Company subsequently adjusted its contingent purchase price obligation based on payments, accrued interest and exchange rate fluctuations. The following table provides a roll-forward of the obligations for contingent purchase price:
(in thousands USD)Contingent Purchase Price
Opening balance, December 31, 2021
$8,791 
Cash payments 
Accrued interest on the contingent consideration180 
Effect of exchange rate fluctuations55 
Ending balance, March 31, 2022
9,026 
Less: Current portion9,026 
Obligation for contingent purchase price, net of current portion$ 


Warrant Liability
As of March 31, 2022, the Company has private placement warrants, which are liability classified, as discussed in Note 14, Warrants. The Company's private placement warrants are classified as Level 3 of the fair value hierarchy due to use of significant inputs that are unobservable in the market. Private placement warrants are fair valued using the Black-Scholes model, which require a risk-free rate assumption based upon constant-maturity treasury yields. Other significant inputs and assumptions in the model are the stock price, exercise price, volatility, and term or maturity. The volatility input was determined using the historical volatility of comparable publicly traded companies which operate in a similar industry or compete directly against the Company.
The following table presents the changes in the fair value of private warrant liability at March 31, 2022:
(in thousands USD)Private Placement Warrants
Beginning balance, January 1, 2022$2,137 
Change in valuation inputs and other assumptions 478 
Ending balance, March 31, 2022
$2,615 
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Note 5 – Balance Sheet Details
The following table provides detail of selected balance sheet items:
(in thousands USD)March 31,
2022
December 31,
2021
Cash and cash equivalents$2,501 $8,463 
Restricted cash212 177 
Total cash, cash equivalents and restricted cash$2,713 $8,640 
(in thousands USD)March 31,
2022
December 31,
2021
Accounts receivables$19,834 $19,173 
Unbilled accounts receivables17,295 11,716 
Other receivables741 686 
Allowance for doubtful accounts(193)(188)
Total accounts receivable, net$37,677 $31,387 
(in thousands USD)March 31,
2022
December 31,
2021
Income tax receivables$2,554 $2,369 
Prepaid expenses and other current assets5,444 5,121 
Total prepaid expenses and other current assets$7,998 $7,490 

(in thousands USD)March 31,
2022
December 31,
2021
Accrued wages, vacation & other employee related items$3,980 $2,387 
Accrued interest312 381 
Accrued incentive compensation87 654 
Receipts not vouchered6,512 5,872 
Accrued liabilities - Related Party 17 
Other accrued liabilities951 467 
Total accrued liabilities$11,842 $9,778 
The following table is a rollforward of the allowance for doubtful accounts:
Three Months Ended March 31,
(in thousands USD)20222021
Beginning balance, January 1$188 $267 
Charges to expense3 10 
Foreign currency translation2 (4)
Ending balance$193 $273 
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Note 6 – Property and Equipment, Net
Property and equipment, net consist of the following:
(in thousands USD)March 31,
2022
December 31,
2021
Computer equipment$4,191 $4,210 
Leasehold improvements2,247 2,179 
Furniture and equipment1,365 1,691 
Computer software2,432 2,240 
Transportation equipment27 55 
10,262 10,375 
Less: accumulated depreciation(7,414)(7,268)
Property and equipment, net$2,848 $3,107 
Depreciation expense was $0.2 million and $0.3 million for the three months ended March 31, 2022 and 2021, respectively. The Company did not recognize any impairment expense related to property and equipment for the three months ended March 31, 2022 or 2021.
Note 7 – Goodwill and Intangible Assets, Net
The Company performs an assessment each year to test goodwill and indefinite-lived intangible assets for impairment, or more frequently in certain circumstances where impairment indicators arise.
The following table presents changes in the goodwill balances as of March 31, 2022:
(in thousands USD)LATAMUSATotal
December 31, 2021$39,651 $30,694 $70,345 
Foreign currency translation497  497 
March 31, 2022$40,148 $30,694 $70,842 
Summary of our finite-lived intangible assets is as follows:
As of March 31, 2022
(in thousands USD)Gross Carrying AmountCurrency
Translation
Adjustment
Accumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful Life (Years)
Customer relationships$89,915 $(163)$(25,329)64,423 11.5
Tradename1,234 (2)(303)929 3.6
Total$91,149 $(165)$(25,632)$65,352 11.4
As of December 31, 2021
(in thousands USD)Gross Carrying AmountCurrency
Translation
Adjustment
Accumulated Amortization Net Carrying AmountWeighted Average Remaining Useful Life (Years)
Customer relationships$89,915 $(973)(23,669)$65,273 11.8
Tradename1,234 (31)(243)960 3.9
Total$91,149 $(1,004)$(23,912)$66,233 11.7
In 2021, the Company changed the estimated life of a certain tradenames from indefinite to finite-lived and began amortizing it over the average remaining economic life of five years (See Note 2, Summary of Significant Accounting Policies).
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No impairment charges were recognized related to finite-lived intangible assets during the three months ended March 31, 2022 and 2021.
The Company’s indefinite-lived intangible assets relate to trade names acquired in connection with business combinations. The trade names balance was $16.4 million and $16.3 million as of March 31, 2021 and December 31, 2021, respectively. No impairment charges were recognized related to infinite-lived intangible assets during the three months ended March 31, 2022 and 2021.
Note 8 – Long-term Debt
Long-term debt as of March 31, 2022 and December 31, 2021 consists of the following:
(in thousands USD)March 31,
2022
December 31,
2021
Borrowings under bank revolving credit agreement, principal due Nov. 10, 2023
$5,000 $5,000 
Borrowings under bank credit agreement, principal due Nov. 10, 2023
31,270 31,882 
Unamortized debt issuance costs and debt premium(a)
677 (6,915)
Borrowing under bank credit agreements, net of unamortized debt issuance costs
36,947 29,967 
Paycheck Protection Program loans, 1% interest, due May 2, 2025
336 7,673 
Subordinated promissory note payable with a related party, 20% effective December 21, 2021, principal due May 12, 2022
673 673 
Subordinated debt, guaranteed by a related party, principal due July 26, 20223,700 3,700 
Unamortized debt issuance costs(a)
(304)(76)
Subordinated debt, guaranteed by a related party, net of unamortized debt issuance costs3,396 3,624 
Borrowings under convertible note payable with a related party, 11% interest capitalized every three months, principal due March 15, 2023
6,565 6,372 
Borrowings under convertible note payable with a related party, 17.41% interest capitalized every three months, principal due March 15, 2023
10,504 9,748 
Unamortized debt issuance costs(a)
(766)(945)
New Second Lien Facility, net of unamortized debt issuance costs16,303 15,175 
Total debt
57,655 57,112 
Less: current portion of debt
10,888 14,838 
Long-term debt, net of unamortized debt issuance costs and current portion
$46,767 $42,274 
_________________
(a)Debt issuance costs are presented as a reduction of the Company’s debt in the Unaudited Condensed Consolidated Balance Sheets. $0.4 million and $0.3 million of debt issuance cost amortization was charged to interest expense for the three months ended March 31, 2022 and 2021. Debt premium of $0.7 million was recognized upon extinguishment of debt and is presented as an addition to the Company's debt in the Unaudited Condensed Consolidated Balance Sheet.
Credit Agreements
In 2018, the Company entered into a revolving credit agreement with Monroe Capital Management Advisors LLC that permits the Company to borrow up to $1.5 million through November 10, 2023. In 2019, the agreement was amended to increase the borrowing limit to $5.0 million. Interest is paid monthly and calculated as LIBOR plus a margin of 8.0% to 9.0%, based on the Total Leverage Ratio as calculated in the most recent Compliance Certificate. An additional 2.0% interest may be incurred during periods of loan covenant default. At March 31, 2022, the interest rate was 10.0%. The Company must pay an annual commitment fee of 0.5% on the unused portion of the commitment. At March 31, 2022 and December 31, 2021, the Company had no availability under this facility.
In 2018, the Company entered into a term loan credit agreement with Monroe Capital Management Advisors LLC (“First Lien Facility”) that permits the Company to borrow up to $75.0 million through November 10, 2023. In 2019, the agreement was amended to increase the borrowing amount to $98.0 million. Interest is paid monthly and calculated as LIBOR plus a
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margin of 8.0% to 9.0%, based on the Total Leverage Ratio as calculated in the most recent Compliance Certificate. An additional 2.0% interest may be incurred during periods of loan covenant default. At March 31, 2022, the interest rate was 10.0%. Principal payments of $0.6 million are due quarterly until maturity, at which time the remaining outstanding balance is due. Based on amendment dated February 2, 2021, the Company shall pay, in place of the first two regular quarterly principal installments of 2021, from February 2021 through and including July 2021, monthly principal installments of $1.0 million on the last business day of each of these six calendar months.
On March 22, 2021, the Company used $20.0 million from proceeds of issuance of preferred stock to partially pay the First Lien Facility. Refer to Note 15, Stockholders’ Equity, for additional information on issuance of preferred stock.
On June 24, 2021, an amendment was signed to modify the debt covenants for the periods June 30, 2021 and thereafter. In addition to the covenant modifications, the amendment also established the deferral of the monthly $1.0 million principal payments previously due in April and May, along with the $1.0 million payments due in June and July to September 30, 2021. As a result, the regular quarterly principal installments resumed, and the First Lien lenders charged a $4.0 million fee paid upon the end of the term loan in exchange for the amended terms. The amendment resulted in a debt modification, thus the fees payable to the First Lien lenders were capitalized and were being amortized over the remaining life of the First Lien Facility.
On September 30, 2021, the Company entered into an amendment to extend the due date of the $4.0 million in principal payments previously due for April, May, June and July, from September 30, 2021 to October 15, 2021. On October 14, 2021, the Company entered into an amendment to extend the due date from October 15, 2021 to October 29, 2021. On October 29, 2021, the Company entered into an amendment to further extend the due date from October 29, 2021 to November 19, 2021.
On November 15, 2021, the Company entered into an amendment to reset the First Lien Facility’s Total Leverage Ratio and Fixed Charge Coverage Ratio covenants for the quarterly periods of September 30, 2021 to December 31, 2022.
On November 29, 2021, the Company made a $20.0 million principal prepayment, which included the $4.0 million principal payment that was originally due September 30, 2021. The Company made this payment with proceeds from the New Second Lien Facility (defined below). Furthermore, on December 29, 2021, the Company issued 4,439,333 shares of Class A Common Stock to the administrative agent for the First Lien Facility (the “First Lien Shares”), which subject to certain terms and regulatory restrictions, may sell the First Lien Shares upon the earlier of August 29, 2022 and an event of default and apply the proceeds to the outstanding balance of the loan. Subject to regulatory restrictions, the Company may issue additional First Lien Shares from time to time to reduce the amount of debt for purposes of the Total Leverage Ratio to the extent necessary to comply with such financial ratio. In addition, the Company agreed to issue warrants to the administrative agent to purchase $7.0 million worth of the Company’s Class A Common Stock for nominal consideration. The warrants will be issued on the date that all amounts under the First Lien Facility have been paid in full. In addition, the Company may be required to pay the First Lien lenders cash to the extent that we cannot issue some or all of the warrants due to regulatory restrictions. The First Lien lenders charged an additional $2.9 million fee paid upon the end of the term loan in exchange for the amended terms.
On November 22, 2021, the Company entered into an amendment that requires sixty percent (60%) of proceeds from equity issuances be used to repay the outstanding balance on the First Lien Facility. On December 27, 2021, the Company closed a follow on stock offering resulting in $21.8 million of net proceeds, of which $13.7 million was used as payment of the outstanding principal and interest balances for the First Lien Facility.
On March 30, 2022, the Company entered into an amendment with the First Lien and Second Lien Facility Lenders to waive the Fixed Charge Coverage Ratio for March 31, 2022. In addition, the Total Leverage Ratio covenant for the quarterly period of March 31, 2022 was reset. As consideration for entering into this amendment, the Company agreed to pay the First Lien Facility’s administrative agent a fee equal to $500,000. The fee shall be fully earned as of March 30, 2022 and shall be due and payable upon the end of the term loan. However, the fee shall be waived in its entirety if final payment in full occurs prior to or on May 30, 2022. This modification triggered by this new amendment was determined to be substantially different to the old instrument, therefore the modification was accounted for as an extinguishment and the debt instrument was adjusted to fair value as of the March 31, 2022. The Company recognized a loss on debt extinguishment of $7.1 million in the Unaudited Condensed Consolidated Statement of Operations. At March 31, 2022, total fees payable at the end of the term loan, including fees recognized from prior amendments, totaled $7.4 million. These fees are recognized in Other noncurrent liabilities in the Unaudited Condensed Consolidated Balance Sheet.
Second Lien Facility
On July 18, 2019, the Company entered into separate credit agreements with Nexxus Capital and Credit Suisse (“the Creditors”) that permits the Company to borrow $12.5 million from each bearing 13.73% interest. On January 31, 2020, the agreements were amended to increase the borrowing amount by $2.05 million under each agreement. Interest is capitalized every six months and is payable when the note is due. Immediately prior to the Business Combination, the Creditors exercised their option to convert their combined $38.1 million of debt outstanding (including interest) into 115,923 shares of the
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Company's Class A ordinary shares, which were converted into the Company's Class A common stock as a result of the Business Combination. Concurrently with the conversion, the Company amortized the remaining $0.1 million of unamortized debt issuance costs and recognized incremental interest expense in the Unaudited Condensed Consolidated Statements of Operations.
New Second Lien Facility
On November 22, 2021, the Company entered into a new Second Lien Facility (the “New Second Lien Facility”) with Nexxus Capital and Credit Suisse (both of which are existing AgileThought shareholders and have representation on AgileThought’s Board of Directors), Manuel Senderos, Chief Executive Officer and Chairman of the Board of Directors, and Kevin Johnston, Global Chief Operating Officer. The New Second Lien Facility provides for a term loan facility in an initial aggregate principal amount of approximately $20.7 million, accruing interest at a rate per annum from 11.00% for the US denominated loan and 17.41% for the Mexican Peso denominated Loan. The New Second Lien Facility has an original maturity date of March 15, 2023. If the First Lien Facility remains outstanding on December 15, 2022, the maturity date of the New Second Lien Facility will be extended to May 10, 2024. The New Second Lien Facility also includes an option for the Company to extend the maturity date an additional 18 months. The Company recognized $0.9 million in debt issuance costs with the issuance.
Each lender under the New Second Lien Facility has the option to convert all or any portion of its outstanding loans into AgileThought Class A Common Stock on or after December 15, 2022 or earlier, upon our request, at a conversion price equal to the closing price of one share of our Class A Common Stock on the trading day immediately prior to the conversion date. The amounts outstanding under the New Second Lien Facility will only convert into up to 2,098,545 shares of our Class A Common Stock and will only convert at a price per share equal to the then-current market value. On December 27, 2021, Manuel Senderos and Kevin Johnston exercised the conversion options for their respective loan amounts of $4.5 million and $0.2 million, respectively. See Note 15, Stockholders’ Equity, for additional information.
Paycheck Protection Program Loans
On April 30, 2020 and May 1, 2020, the Company received PPP loans through four of its subsidiaries for a total amount of $9.3 million. The PPP loans bear a fixed interest rate of 1% over a two-year term, are guaranteed by the United States federal government, and do not require collateral. The loans may be forgiven, in part or whole, if the proceeds are used to retain and pay employees and for other qualifying expenditures. The Company submitted its forgiveness applications to the Small Business Administration (“SBA”) between November 2020 and January 2021. The monthly repayment terms were established in the notification letters with the amount of loan forgiveness. On December 25, 2020, $0.1 million of a $0.2 million PPP loan was forgiven. On March 9, 2021, $0.1 million of a $0.3 million PPP loan was forgiven. On June 13, 2021, $1.2 million of a $1.2 million PPP loan was forgiven. On January 19, 2022, $7.3 million of a $7.6 million PPP loan was forgiven resulting in a remaining PPP Loan balance of $0.3 million of which $0.1 million is due within the next year. The remaining payments will be made quarterly until May 2, 2025. All loan forgiveness was recognized in Other income (expense), net of the Unaudited Condensed Consolidated Statements of Operations.
Subordinated Promissory Note
On June 24, 2021, the Company entered into a credit agreement with AGS Group LLC (“AGS Group”) for a principal amount of $0.7 million. The principal amount outstanding under this agreement matures on December 20, 2021 (“Original Maturity Date”) and was extended until May 19, 2022 (“Extended Maturity Date”). Interest is due and payable in arrears on the Original Maturity Date at a 14.0% per annum until and including December 20, 2021 and at 20.0% per annum from the Original Maturity Date to the Extended Maturity Date calculated on the actual number of days elapsed.
Exitus Capital Subordinated Debt
On July 26, 2021, the Company agreed with existing lenders and Exitus Capital (“Subordinated Creditor”) to enter into a zero-coupon subordinated loan agreement with Exitus Capital in an aggregate principal amount equal to $3.7 million (“Subordinated Debt”). No periodic interest payments are made and the loan was due on January 26, 2022, with an option to extend up to two additional six month terms. Net loan proceeds totaled $3.2 million, net of $0.5 million in debt discount. Payment of any and all of the Subordinated Debt shall be subordinate of all existing senior debt. In the event of any liquidation, dissolution, or bankruptcy proceedings, all senior debt shall first be paid in full before any distribution shall be made to the Subordinated Creditor. The loan is subject to a 36% annual interest moratorium if full payment is not made upon the maturity date. On January 25, 2022, the Company exercised the option to extend the loan an additional six months to July 26, 2022. The Company recognized an additional $0.5 million in debt issuance costs related to the loan extension.
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Financial Covenants
The First Lien Facility and New Second Lien Facility establish the following financial covenants for the consolidated group:
Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio applies to the consolidated group. For each Computation Period, it is the ratio of (a) EBITDA (as defined in the credit agreement) minus permitted tax distributions (or other provisions for taxes based on income) made during the Computation Period, minus all unfinanced capital expenditures made thereby in such Computation Period to (b) fixed charges (as defined in the credit agreement).
Capital Expenditures. Requires the Company’s aggregate capital expenditures in any fiscal year to not exceed the capital expenditures limit for that fiscal year.
Total Leverage Ratio.   The Total Leverage Ratio applies to the consolidated group and is determined in accordance with US GAAP. It is calculated as of the last day of any Computation Period as the ratio of (a) total debt (as defined in credit agreement) to (b) EBITDA for the Computation Period ending on such day.

The Company received a waiver for the Fixed Charge Coverage Ratio and was compliant with all other debt covenants as of March 31, 2022.
The capital expenditure annual limits in place as of March 31, 2022 are:
Computation Period EndingCapital Expenditure Annual Limit
March 31, 2022 Computation Periods ending June 30 and September 30, 2022$2.10 million
December 31, 2022 and each Computation Period ending thereafter$2.20 million
The covenants requirements in place for the First Lien Facility as of March 31, 2022 are:
Computation Period Ending
Fixed Charge Coverage Ratio to exceed
Total Leverage Ratio
not to exceed
March 31, 2022Not Tested
7.15:1.00
June 30, 2022 and September 30, 2022
0.20:1.00
4.00:1.00
December 31, 2022 and each Computation Period ending thereafter
1.00:1.00
4.00:1.00
The covenants requirements in place for the New Second Lien Facility as of March 31, 2022 are:
Computation Period Ending
Fixed Charge Coverage Ratio to exceed
Total Leverage Ratio
not to exceed
March 31, 2022Not Tested
19.15:1.00
June 30, 2022 and September 30, 2022
0.20:1.00
10.00:1.00
December 31, 2022 and each Computation Period ending thereafter
1.00:1.00
10.00:1.00

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Note 9 – Other Income (Expense)
Items included in other income (expense) in the Unaudited Condensed Consolidated Statements of Operations are as follows:
Three Months Ended March 31,
(in thousands USD)20222021
Foreign exchange gain (loss)$252 $