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 September 30, 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)

Delaware	001-39157	87-2302509
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)
222 W. Las Colinas Blvd. Suite 1650E, Irving, Texas	(971) 501-1140	75039
(Address of Principal Executive Offices)	(Registrant's telephone number, including area code)	(Zip Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share	AGIL	NASDAQ Capital Market
Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share	AGILW	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 filer	x	Smaller reporting company	x
		Emerging growth company	x

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 48,243,382 shares of common stock as of November 9, 2022.

	TABLE OF CONTENTS
	AgileThought, Inc. - Quarterly Report on Form 10-Q
	September 30, 2022
		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	57
SIGNATURES		58

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 the risks and uncertainties described in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, 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

AgileThought, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands USD, except share data)	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash, cash equivalents and restricted cash	$	10,361	$	8,640
Accounts receivable, net	33,261		31,387
Prepaid expenses and other current assets	4,145		7,490
Current VAT receivables	7,535		9,713
Total current assets	55,302		57,230
Property and equipment, net	3,198		3,107
Goodwill and indefinite-lived intangible assets	86,563		86,694
Finite-lived intangible assets, net	61,999		66,233
Operating lease right of use assets, net	5,578		6,434
Other noncurrent assets	642		1,612
Total noncurrent assets	157,980		164,080
Total assets	$	213,282	$	221,310
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	10,619	$	20,970
Accrued liabilities	11,547		9,778
Income taxes payable	100		97
Other taxes payable	8,651		9,733
Current portion of operating lease liabilities	1,953		2,834
Deferred revenue	2,690		1,789
Purchase price obligation note payable	9,364		8,791
Current portion of long-term debt and financing obligations	11,689		14,838
Embedded derivative liabilities	25		—
Other current liabilities	3,452		—
Total current liabilities	60,090		68,830
Long-term debt and financing obligations, net of current portion	66,291		42,274
Deferred tax liabilities, net	2,753		2,762
Operating lease liabilities, net of current portion	2,717		3,759
Warrant liability	2,250		2,137
Long-term, embedded derivative liabilities	6,083		—
Other noncurrent liabilities	—		6,900
Total liabilities	140,184		126,662
Commitments and contingencies (Note 18)
Stockholders' Equity
Class A common stock $0.0001 par value, 210,000,000 shares authorized, 48,243,382 and 50,402,763 shares issued as of September 30, 2022 and December 31, 2021, respectively	5		5
Treasury stock, 2,675,288 and 181,381 shares at cost as of September 30, 2022 and December 31, 2021, respectively	(655)		(294)
Additional paid-in capital	203,565		198,649
Accumulated deficit	(111,229)		(86,251)
Accumulated other comprehensive loss	(18,572)		(17,362)
Total stockholders' equity attributable to the Company	73,114		94,747
Noncontrolling interests	(16)		(99)
Total stockholders' equity	73,098		94,648
Total liabilities and stockholders' equity	$	213,282	$	221,310

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

AgileThought, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands USD, except share data)	2022		2021		2022		2021
Net revenues	$	43,395	$	40,420	$	133,785	$	116,573
Cost of revenue	28,517		29,666		89,692		82,709
Gross profit	14,878		10,754		44,093		33,864
Operating expenses:
Selling, general and administrative expenses	13,097		11,188		37,323		30,145
Depreciation and amortization	1,777		1,746		5,268		5,239
Change in fair value of purchase price obligation	—		—		—		(2,200)
Change in fair value of embedded derivative liabilities	(2,906)		(1,884)		(2,906)		(4,406)
Change in fair value of warrant liability	(843)		(759)		113		(759)
Loss on debt extinguishment	11,708		—		17,894		—
Equity-based compensation expense	2,018		6,469		4,555		6,481
Restructuring expense (income)	471		(135)		1,386		(113)
Other operating expenses (income), net	1,213		(96)		2,409		1,011
Total operating expenses	26,535		16,529		66,042		35,398
Loss from operations	(11,657)		(5,775)		(21,949)		(1,534)
Interest expense, net	(3,143)		(4,065)		(9,235)		(12,117)
Other (expense) income	(154)		(851)		6,653		(436)
Loss before income taxes	(14,954)		(10,691)		(24,531)		(14,087)
Income tax expense (benefit)	135		96		358		(13)
Net loss	(15,089)		(10,787)		(24,889)		(14,074)
Net (loss) income attributable to noncontrolling interests	(3)		(188)		89		(21)
Net loss attributable to the Company	$	(15,086)	$	(10,599)	$	(24,978)	$	(14,053)
Loss earning per share (Note 16):
Basic and Diluted Class A common stock	$	(0.33)	$	(0.28)	$	(0.54)	$	(0.39)
Weighted average number of shares:
Basic and Diluted Class A common stock	46,182,392		37,633,267		46,080,399		35,612,677

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

AgileThought, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Loss

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands USD)	2022		2021		2022		2021
Net loss	$	(15,089)	$	(10,787)	$	(24,889)	$	(14,074)
Actuarial loss	—		—		3		—
Foreign currency translation adjustments	(626)		(886)		(1,219)		(122)
Comprehensive loss	(15,715)		(11,673)		(26,105)		(14,196)
Less: Comprehensive (loss) income attributable to noncontrolling interests	(5)		(154)		83		(15)
Comprehensive loss attributable to the Company	$	(15,710)	$	(11,519)	$	(26,188)	$	(14,181)

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

AgileThought, Inc.

Unaudited Condensed Consolidated Statements of Stockholders' Equity

	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Stockholders' Equity
(in thousands USD, except share data)	Shares	Amount		Shares	Amount
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 compensation	87,999	—		—	—		518		—		—		—		518
Employee withholding taxes paid related to net share settlements	(17,359)	—		17,359	(97)		97		—		—		—		—
Redemption of public warrants	20	—		—	—		—		—		—		—		—
Other comprehensive expense	—	—		—	—		—		—		4		—		4
Foreign currency translation adjustments	—	—		—	—		—		—		344		(3)		341
March 31, 2022	50,473,423	5		198,740	(391)		199,264		(92,598)		(17,014)		(53)		89,213
Net (loss) income	—	—		—	—		—		(3,545)		—		43		(3,502)
Equity-based compensation	161,398	—		—	—		2,019		—		—		—		2,019
Employee withholding taxes paid related to net share settlements	(40,117)	—		40,117	(206)		206		—		—		—		—
Monroe share settlement	(2,423,204)	—		2,423,204	—		—		—		—		—		—
Other comprehensive income	—	—		—	—		—		—		(1)		—		(1)
Foreign currency translation adjustments	—	—		—	—		—		—		(933)		(1)		(934)
June 30, 2022	48,171,500	5		2,662,061	(597)		201,489		(96,143)		(17,948)		(11)		86,795
Net loss	—	—		—	—		—		(15,086)		—		(3)		(15,089)
Equity-based compensation	85,109	—		—	—		2,018		—		—		—		2,018
Employee withholding taxes paid related to net share settlements	(13,227)	—		13,227	(58)		58		—		—		—		—
Foreign currency translation adjustments	—	—		—	—		—		—		(624)		(2)		(626)
September 30, 2022	48,243,382	$	5	2,675,288	$	(655)	$	203,565	$	(111,229)	$	(18,572)	$	(16)	$	73,098

December 31, 2020	34,557,480	$	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, 2021	34,557,480	3		151,950	—		101,506		(70,046)		(17,204)		(102)		14,157
Net income	—	—		—	—		—		411		—		137		548
Foreign currency translation adjustments	—	—		—	—		—		—		1,015		(33)		982
June 30, 2021	34,557,480	3		151,950	—		101,506		(69,635)		(16,189)		2		15,687
Net loss	—	—		—	—		—		(10,599)		—		(188)		(10,787)
Equity-based compensation	—	—		—	—		6,469		—		—		—		6,469
Foreign currency translation adjustments	—	—		—	—		—		—		(920)		34		(886)
Business combination	7,413,435	1		—	—		65,840		—		—		—		65,841
September 30, 2021	41,970,915	$	4	151,950	$	—	$	173,815	$	(80,234)	$	(17,109)	$	(152)	$	76,324

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

AgileThought, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

	Nine Months Ended September 30,
(in thousands USD)	2022		2021
Operating activities
Net loss	$	(24,889)	$	(14,074)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of interest from convertible notes	1,922		3,068
Gain on forgiveness of debt	(7,280)		(1,306)
Loss on debt extinguishment	17,894		—
Recoveries of bad debt expense	(47)		(78)
Equity-based compensation	4,555		6,481
Right of use asset amortization	2,222		1,709
Foreign currency remeasurement	106		1,216
Deferred income tax provision	(55)		120
Obligations for purchase price	546		(1,648)
Embedded derivative liabilities	(2,906)		(4,406)
Warrant liability	113		(759)
Amortization of debt issuance costs	2,490		1,479
Depreciation and amortization	5,268		5,239
Changes in assets and liabilities:
Accounts receivable	(1,600)		(15,953)
Prepaid expenses and other current assets	3,313		(5,616)
Accounts payable	(10,829)		7,927
Accrued liabilities	1,407		(2,909)
Deferred revenue	721		(929)
Current VAT receivables and other taxes payable	1,134		(437)
Income taxes payable	3		1,430
Operating lease liabilities	(2,215)		(1,717)
Net cash used in operating activities	(8,127)		(21,163)
Investing activities
Purchase of property and equipment	(681)		(732)
Net cash used in investing activities	(681)		(732)
Financing activities
Proceeds from loans	58,000		3,873
Repayments of borrowings	(37,018)		(27,517)
Payment of debt issuance costs	(10,002)		—
Cash paid for shares withheld from a grantee to satisfy tax withholding	(361)		—
Payments for finance leases	(81)		—
Payments for PIPE transactions costs	—		(13,033)
Proceeds from PIPE investors	—		27,600
Proceeds from capital contributions	—		25,749
Net cash provided by financing activities	10,538		16,672
Effect of exchange rates on cash	(9)		(83)
Net increase (decrease) in cash and cash equivalents	1,721		(5,306)
Cash, cash equivalents and restricted cash at beginning of the period	8,640		9,432
Cash, cash equivalents and restricted cash at end of the period	$	10,361	$	4,126

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements

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 and nine months ended September 30, 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.

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, purchase price obligations in connection with business combinations, fair value of embedded derivative liabilities, and fair value of warrant liability. To the extent the actual results differ materially from these estimates and assumptions, the Company’s future financial statements could be materially affected.

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 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.

•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 Financing	27,600
Less: Transaction costs	(13,033)
Net proceeds from the Business Combination	20,316
Less: Initial fair value of warrant liabilities recognized in the Business Combination	(15,123)
Equity classification of Public Warrants	8,292
Surrender of related party receivables	(1,359)
Debt conversion	38,120
Conversion of mezzanine equity(a)	15,594
Net adjustment to total equity from the Business Combination	$	65,840

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(a)Relates to the transfer from mezzanine equity to permanent equity of the preferred contribution received from LIV Capital on February 2, 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 Combination	8,050,000
Less: redemption of LIVK's Class A ordinary shares	(7,479,065)
Shares of LIVK's Class A ordinary shares	570,935
Shares held by LIVK's sponsor and its affiliates	2,082,500
Shares issued in the PIPE Financing	2,760,000
Shares issued to convert Legacy AgileThought's preferred stock to Class A common stock	2,000,000
Shares issued to Legacy AgileThought's common stockholders	34,557,480
Total shares of Class A common stock immediately after the Business Combination	41,970,915

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 September 30, 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.

The following table summarizes our instruments where fair value differs from carrying value:

	Fair Value Hierarchy Level	September 30, 2022				December 31, 2021
(in thousands USD)		Carry Amount		Fair Value		Carry Amount		Fair Value
Bank credit agreement	Level 3	$	—	$	—	$	31,882	$	31,897
New Second Lien Facility	Level 3	20,228		17,617		16,120		16,214
Blue Torch Credit Facility	Level 3	55,000		52,302		—		—
Purchase Price Obligation Note Payable	Level 3	9,364		7,292		8,791		8,791

The above table excludes our revolving credit facilities, 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.

Warrant Liability

As of September 30, 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 the private warrant liability at September 30, 2022:

(in thousands USD)	Private Placement Warrants
Beginning balance, January 1, 2022	$	2,137
Change in valuation inputs and other assumptions	113
Ending balance, September 30, 2022	$	2,250

Embedded Derivative Liability

In connection with the amendment to the New Second Lien Facility on August 10, 2022, the Company bifurcated embedded derivatives associated with conversion features for Mexican peso-denominated tranches. Embedded derivative liabilities are carried at fair value and classified as Level 3 in the fair value hierarchy. The Company determined the fair values of the bifurcated embedded derivatives by using a scenario-based analysis that estimated the fair value of each embedded derivative based on a probability-weighted present value of all possible outcomes related to the features.

The significant unobservable inputs used in the fair value of the Company’s embedded derivative liabilities include the implied volatility, the period in which the outcomes are expected to be achieved and the discount rate.

The following table presents the changes in the fair value of the embedded derivative liabilities at September 30, 2022:

(in thousands USD)	Embedded Derivative Liability
Beginning balance, January 1, 2022	$	—
Recognition of embedded derivative liability	9,014
Change in valuation inputs and other assumptions	(2,906)
Ending balance, September 30, 2022	$	6,108
Less: Current Portion	25
Embedded derivative liability, net of current portion	$	6,083

Note 5 – Balance Sheet Details

The following table provides detail of selected balance sheet items:

(in thousands USD)	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	10,165	$	8,463
Restricted cash	196		177
Total cash, cash equivalents and restricted cash	$	10,361	$	8,640

(in thousands USD)	September 30, 2022		December 31, 2021
Accounts receivables	$	15,003	$	19,173
Unbilled accounts receivables	17,748		11,716
Other receivables	652		686
Allowance for doubtful accounts	(142)		(188)
Total accounts receivable, net	$	33,261	$	31,387

(in thousands USD)	September 30, 2022		December 31, 2021
Income tax receivables	$	2,900	$	2,369
Prepaid expenses and other current assets	1,245		5,121
Total prepaid expenses and other current assets	$	4,145	$	7,490

(in thousands USD)	September 30, 2022		December 31, 2021
Accrued wages, vacation & other employee related items	$	6,160	$	2,387
Accrued interest	868		381
Accrued incentive compensation	894		654
Receipts not vouchered	2,904		5,872
Accrued liabilities - Related Party	—		17
Other accrued liabilities