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critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. research and development costs as described in notes 2 and 5 to the consolidated financial statements, management uses significant judgment in estimating the amount of research and development costs recognized in each reporting period. management analyzes and estimates the progress of its preclinical studies and clinical trials, completion of milestone events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period. total research and development costs incurred during the year ended december 31, 2021 were $205.2 million and research and development costs accrued were $38.3 million as of december 31, 2021. the principal considerations for our determination that performing procedures relating to research and development costs is a critical audit matter are the significant judgment by management when estimating the costs incurred for services performed by vendors that have not yet been invoiced in estimating the research and development costs to accrue in the reporting period. this in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate the audit evidence obtained relating to estimates of costs accrued. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls over management’s process relating to accruing research and development costs, including controls over estimating the costs incurred for services performed by vendors that have not yet been invoiced. these procedures also included, among others, testing management’s process for estimating the research and development costs to accrue in the reporting period, evaluating the completeness and accuracy of underlying data used in management’s estimate by testing for consistency with a sample of contracts and invoices, testing the f-3 table of contents number of patients screened for and enrolled in the trial, testing the mathematical accuracy of the calculation of the accrual for research and development costs incurred, and evaluating the reasonableness of assumptions used in the estimate. evaluating the reasonableness of assumptions used in the estimate involved assessing management’s ability to reasonably estimate costs incurred that have not been invoiced by (i) performing a comparison of the estimated accrual to average procedure rates per contracts applied to the number of patients screened for and enrolled in the trial, and by (ii) performing a comparison of the estimated accrual to actual costs incurred on similar completed preclinical studies and clinical trials. /s/ pricewaterhouse coopers llp philadelphia, pennsylvania february 24, 2022 we have served as the company’s auditor since 2016.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. revenue recognition - identifying and evaluating terms and conditions in subscription contracts for term-based licenses that impact subscription revenue recognition as described in notes 2 and 3 to the consolidated financial statements, management applies judgment in identifying and evaluating terms and conditions in contracts which may impact revenue recognition. to determine the appropriate amount of revenue to be recognized as the company fulfills its obligations under each of its agreements, management performs the following steps: 1) identification of the contract with a customer; 2) determination of whether the goods or services in a contract comprise performance obligations; 3) measurement of the transaction price; 4) allocation of the transaction price to separate performance obligations; and 5) recognition of revenue when or as the company satisfies each performance obligation. the company’s subscriptions for solutions deployed on-premise within the customer’s technology infrastructure are comprised of a term-based license and an obligation to provide maintenance and support, where the term-based license and the maintenance and support constitute separate performance obligations. for the year ended december 31, 2021, the company’s subscription term-based license revenue was $172.5 million. the principal considerations for our determination that performing procedures relating to revenue recognition - identifying and evaluating terms and conditions in subscription contracts for term-based licenses that impact subscription revenue recognition is a critical audit matter are the significant judgment by management in identifying and evaluating terms and conditions in subscription term-based license contracts that impact revenue recognition. this in turn led to significant auditor effort and subjectivity in performing procedures to evaluate whether terms and conditions in subscription term-based license contracts were appropriately identified and evaluated by management and the impact on the timing and measurement of revenue recognized. 79table of contents addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls related to the identification and evaluation of terms and conditions in subscription term-based license contracts that impact revenue recognition. these procedures also included, among others (i) testing the completeness and accuracy of management’s identification and evaluation of the specific terms and conditions in subscription term-based license contracts with customers by examining revenue contracts on a test basis, and (ii) testing management’s process for identifying and evaluating the terms and conditions in contracts, including management’s determination of the impact of those terms and conditions on the timing and measurement of revenue recognition. /s/ pricewaterhouse coopers llp denver, colorado february 24, 2022 we have served as the company’s auditor since 2016.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. oil and gas properties, depletion and amortization and impairment of long-lived assets - refer to note 1 to the financial statements critical audit matter description as described in note 1 to the financial statements, oil and gas properties are accounted for using the successful efforts method. depletion and amortization of the cost of proved oil and gas properties are calculated using the units-of-production method. proved developed reserves are used as the base for depleting capitalized costs associated with successful exploratory well costs, development costs and related facilities, other than offshore platforms. the sum of proved developed and proved undeveloped reserves is used as the base for depleting or amortizing leasehold acquisition costs and costs to construct offshore platforms and associated asset retirement costs. also, the fund reviews the carrying value of its oil and gas properties for impairment whenever events and circumstances indicate that the recorded carrying value of its oil and gas properties may not be recoverable. recoverability is evaluated by comparing estimated future net undiscounted cash flows to the carrying value of the oil and gas properties at the time of the review. if the carrying value exceeds the estimated future net undiscounted cash flows, the carrying value of the oil and gas properties is impaired, and written down to fair value. f-2 table of contents estimates of proved reserves are key components of the fund’s most significant estimates involving its rate for recording depletion and amortization and estimated future cash flows of oil and gas properties used to test for impairment. annually, the fund engages an independent petroleum engineering firm to perform a comprehensive study of the fund’s proved properties to determine the quantities of reserves and the period over which such reserves will be recoverable. the fund’s estimates of proved reserves are based on the quantities of oil and natural gas that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under existing economic and operating conditions. the fund’s oil and gas properties, net balance was $5.4 million as of december 31, 2021 and depletion and amortization expense recognized was $2.4 million for the period ended december 31, 2021. no impairment was recognized during 2021.. we identified the impact of the oil and natural gas reserve quantities on the oil and gas properties and depletion and amortization financial statement line items and the evaluation of impairment of long-lived assets as a critical audit matter due to the significant judgments made by the fund. the significant judgments made by the fund include the use of specialists to develop and evaluate the fund’s oil and natural gas reserve quantities, future cash flows, reserve risk weightings, future development costs, and future oil and natural gas commodity prices. auditing these significant judgments required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists. how the critical audit matter was addressed in the audit our audit procedures related to the fund’s estimates and assumptions related to oil and natural gas reserve quantities included the following, among others: • we evaluated the reasonableness of the fund’s oil and natural gas reserve quantities by performing the following procedures:   o comparing the fund’s oil and natural gas reserve quantities to historical production volumes. o evaluating the reasonableness of the methodology used and the production volume decline curve. o understanding the experience, qualifications and objectivity of management’s expert, an independent petroleum engineering firm. o comparing forecasts of proved undeveloped oil and natural gas reserves to historical conversions of proved undeveloped oil and natural gas reserves and communication from third-party well operators. • we evaluated management’s assessed reserve risk weighting associated with the development of proved, probable and possible oil and natural gas reserve quantities by comparing the assessed risk to industry surveys.   • we evaluated the reasonableness of future development costs by comparing such costs to the approval for expenditures, historical well cost data and communication from third-party well operators. f-3 table of contents    • we evaluated, with the assistance of our fair value specialists, the reasonableness of future oil and natural gas commodity prices by performing the following procedures:   o understanding the methodology utilized by management for development of the future oil and natural gas commodity prices. o comparing the future oil and natural gas commodity prices to an independently determined range of prices.   o comparing management’s future oil and natural gas commodity prices to published forward pricing indices and third-party industry sources. • we evaluated the future oil and natural gas commodity prices by comparing future oil and natural gas commodity price differentials to historical realized price differentials.   /s/ deloitte & touche llp parsippany, new jersey february 28, 2022 we have served as the fund's auditor since 2006.

critical audit matters thecritical audit matters communicated below are matters arising from the current period audit of the consolidated financial statementsthat were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that arematerial to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. thecommunication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we arenot, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accountsor disclosures to which they relate. 1.intangible assets descriptionof the matter as described in note 8 to the consolidatedfinancial statements as at march 31, 2021, the company has written of intangible asset of $129,337 as management decided todiscontinue the product digin. management assessed the feasibility of the product in the current market conditions and the probable additionalcosts which the entity may have to incur to make it marketable which are substantial. auditingmanagement’s accounting for and disclosure of the writing off of the asset was complex and highly judgmental as it involved ourassessment of the significant judgments made by management when assessing the feasibility of the product or when determining an estimateof costs and resources to be involved or whether an estimate of the loss or range of loss could be made. howwe addressed the matter in our audit weobtained an understanding about evaluation of product development costs, amortization and write offs. we have reviewed the company’sassessment about the likely cost that may have to be incurred and the feasibility of the products. totest the company’s assessment of the writing off the intangible assets among other procedures. we have reviewed that the productwas capitalized in 2015 and over the years the company’s effort in generating revenue has not been materialised. we read the minutesof the meetings of the board of directors, read letters received directly by us from chief operating officer, and evaluated the statusof products based on discussions with management. we also evaluated the appropriateness of the related disclosures. going concern theaccompanying financial statements have been prepared assuming that the company will continue as a going concern. as discussed in note2 to the financial statements, the company has suffered recurring losses from operations and has a net capital deficiency that raisesubstantial doubt about its ability to continue as a going concern. management's plans in regard to these matters are also describedin note 2. the financial statements do not include any adjustments that might result from the outcome of this uncertainty. manohar chowdhry & associates chartered accountants weare serving as the company’s auditor since 2016 bengaluru,india date29-06-2021 f-4 duo world, inc. and subsidiaries consolidated balance sheets march 31, 2021 march 31, 2020 (audited) (audited) assets current assets cash and cash equivalents $21,571 $50,703 accounts receivable – trade 135,872 304,221 prepaid expenses and other current assets 24,723 30,537 accrued revenue 1,076 17,886 total current assets 183,242 403,347 non current assets property and equipment, net of accumulated depreciation of $220,918 and $226,487 respectively 8,974 15,915 intangible assets, net 428,070 644,586 lease right to use asset - 10,330 total non current assets 437,044 670,831 total assets $620,286 $1,074,178 liabilities and shareholders’ deficit current liabilities accounts payable $541,766 $530,872 payroll, employee benefits, severance 530,394 577,513 short term borrowings 430,993 461,950 due to related parties 1,063,397 921,728 payable for acquisition 185,762 185,762 taxes payable 165,924 163,049 accruals and other payables 88,380 68,800 lease creditors - 2,697 deferred revenue 2,898 55,684 total current liabilities 3,009,514 2,968,055 long term liabilities due to related parties 1,345,915 1,349,675 employee benefit obligation 30,039 73,111 long term loan 13,916 - operating lease - 10,333 total long term liabilities 1,389,870 1,433,119 total liabilities $4,399,384 $4,401,174 commitments and contingencies (note 18) shareholders’ deficit ordinary shares: $0.001 par value per share; 400,000,000 shares authorized; 67,754,296 and 67,754,296 shares issued and outstanding, respectively $67,754 $67,754 convertible series “a” preferred shares: $0.001 par value per share; 10,000,000 shares authorized; 5,000,000 and 5,000,000 shares issued and outstanding, respectively 5,000 5,000 additional paid in capital 11,641,336 11,641,336 accumulated deficit (16,041,727) (15,508,871)accumulated other comprehensive income 548,539 467,785 total shareholders’ deficit (3,779,098) (3,326,996) total liabilities and shareholders’ deficit $620,286 $1,074,178 theaccompanying notes are an integral part of these consolidated financial statements. f-5 duo world, inc. and subsidiaries consolidated statements of operations and comprehensive income (loss)(audited) for the year ended, march 31, 2021 march 31, 2020 revenue $346,478 $771,905 cost of revenue (exclusive of depreciation presented below) (285,805) (255,387)gross income 60,673 516,518 operating expenses general and administrative 275,057 378,561 salaries and casual wages 70,813 124,979 selling and distribution 4,884 7,673 depreciation 3,108 15,863 amortization of web site development 3,342 2,067 allowance for bad debts 34,192 30,039 total operating expenses 391,396 559,182 loss from operations $(330,723) $(42,664) other income (expenses): interest expense $(162,903) $(189,026)gain on disposals of property and equipment - 575 other income 9,137 5,377 bank charges (2,401) (3,781)exchange (loss) / gain (11,515) (89,544)total other income (expenses) (167,682) (276,398) loss before provision for income taxes: $(498,405) $(319,062) tax expense : provision for income taxes - - foreign taxes – withheld (34,451) (54,268)net loss $(532,856) $(373,330) basic and diluted loss per share $(0.00) $(0.00) basic and diluted weighted average number of shares outstanding 117,754,296 116,737,903 comprehensive income (loss): unrealized foreign currency translation (loss) gain $80,754 $201,550 net loss (532,856) (373,330)comprehensive loss $(452,101) $(171,780) theaccompanying notes are an integral part of these consolidated financial statements. f-6 duo world, inc. and subsidiaries consolidated statement of changes in shareholders’ deficit common share capital preferred share capital additional paid-in accumulated other comprehensive total shareholders’ shares amount shares amount capital deficit income deficit march 31, 2019 65,754,296 65,754 5,000,000 5,000 11,543,336 (15,163,357) 266,235 (3,283,032) stock issued 2,000,000 2,000.00 - - 98,000 - - 100,000 - net loss - - - - - (373,330) - (373,330) - other comprehensive income - - - - - - 201,550 201,550 - prior period adjustments - - - - - 27,819 - 27,819 - adjustment on operating lease - - - - - (2) - (2) march 31, 2020 67,754,296 67,754 5,000,000 5,000 11,641,336 (15,508,871) 467,785 (3,326,996) net loss - - - - - (532,856) - (532,856) other comprehensive income - - - - - - 80,754 80,754 march 31, 2021 67,754,296 67,754 5,000,000 5,000 11,641,336 (16,041,727) 548,539 (3,779,098) theaccompanying notes are an integral part of these consolidated financial statements. f-7 duo world, inc. and subsidiaries consolidated statements of cash flows(audited) for the period ended, march 31, 2021 march 31, 2020 operating activities: loss before provision for income taxes $(532,856) $(373,330) adjustments to reconcile loss before provision for income taxes to cash provided by operating activities: depreciation and amortization 6,450 17,930 bad debts 34,192 30,039 gain on disposals of property and equipment - 575 previous period adjustments - 27,819 product development cost written off 206,433 95,990 changes in assets and liabilities: accounts receivable - trade 134,156 (209,215)prepayments 22,624 136,710 accounts payable 10,895 41,790 payroll, employee benefits, severance (47,119) (59,124)short term overdraft (30,958) (69,725)due to related parties 141,669 96,737 taxes payable 2,875 5,879 lease creditor (2,697) (8,224)retirement benefit (43,072) (31,589)accruals and other payables (33,205) 45,814 net cash provided by operating activities $(130,613) $(251,924) investing activities: acquisition of property and equipment - (11,459)sale proceeds of disposal of property and equipment - 1,989 intangible assets (12,657) (43,897)net cash used in investing activities $(12,657) $(53,368) financing activities: proceeds from issuance of common stock - 100,000 long term loan 13,916 - net cash provided by financing activities $13,916 $100,000 effect of exchange rate changes on cash 100,222 253,297 net decrease in cash $(29,132) $48,005 cash, beginning of period 50,703 2,698 cash, end of period $21,571 $50,703 supplemental disclosure of cash flow information: cash paid for interest $56,057 $80,111 cash paid for income taxes $- $- supplemental disclosure of non-cash investing and financing activities: common shares issued for services $- $- theaccompanying notes are an integral part of these consolidated financial statements. f-8 duo world inc. and subsidiaries notesto the consolidated financial statements march31, 2021(audited) note1 - organization and nature of operations duo world inc. (hereinafter referred to as “successor” or “duo”), a reporting company since september 26, 2016, wasorganized under the laws of the state of nevada on september 19, 2014. duo software (pvt.) limited (hereinafter referred to as “dssl”or “predecessor”), a company based in sri lanka, was incorporated on september 22, 2004 in the democratic socialist republicof sri lanka, as a limited liability company. duo software (pte.) limited (hereinafter referred to as “dss” or “predecessor”),a singapore based company, was incorporated on june 5, 2007 in the republic of singapore as a limited liability company. dss also includesits wholly-owned subsidiary, duo software india (private) limited (india), which was incorporated on august 30, 2007, under the lawsof india. the financial statements of duo software india (private) limited prepared under realization concept and the management hasa plan to wind up the company and application is made to strike off. on december 3, 2014, duo software (pvt.) limited (dssl) and duo software pte. limited (dss) executed a reverse recapitalization with duo world inc. (duo). see note 4. duo (successor) is a holding company that conducts operations through its wholly owned subsidiaries,dssl and dss (predecessors), in sri lanka, singapore and india. the consolidated entity is referred to as the “company.”the company, having its development center in colombo, has been in the space of developing products and services for the subscription-basedindustry. the company’s applications (“duo subscribe,” “facetone,” and “smoothflow”) providesolutions in the space of customer life cycle management, subscriber billing and work flow. note2 - basis of presentation the company has prepared the accompanying consolidated financial statements and accompanying notes in accordance with accounting principlesgenerally accepted in the united states of america (“ u.s. gaap”). all amounts in the consolidated financial statements arestated in u.s. dollars. wehave recast certain prior period amounts to conform to the current period presentation, with no impact on consolidated net income orcash flows. going concern theaccompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assetsand the satisfaction of liabilities in the normal course of business. these consolidated financial statements do not include any adjustmentsrelating to the recovery of the recorded assets or the classification of the liabilities that might be necessary to continue as a goingconcern. asreflected in the accompanying consolidated financial statements, the company had a net loss of $532,856 and $373,330 for the year ended march 31, 2021 and 2020, respectively; net cash provided by operations of $(130,613) and $(251,924) for the year ended march 31, 2021and 2020, respectively; working capital deficit of $2,826,272 and $2,564,709 as of march 31, 2021 and march 31, 2020, respectively; outstandingstatutory dues towards employee provident fund and employee trust fund of $373,142 and $409,413 as of march 31, 2021 and march 31, 2020,respectively; and a stockholders´ deficit of $3,779,098 and $3,326,996 as of march 31, 2021 and march 31, 2020, respectively. the company has its plan to increase the revenuefrom its cloud products and recover the current losses. and also, the company has evaluated its costs and reduced none core expenses.staff costs, rent costs, office expenses were reduced as a result. f-9 note3 - summary of significant accounting policies basisof consolidation theaccompanying consolidated financial statements include the accounts and transactions of dssl and dss (predecessors) and duo (successor).duo world inc. is the parent company of its 100% subsidiaries duo software (pvt.) limited (dssl) and duo software pte. limited (dss).duo software pte. limited is the parent company of its 100% subsidiary duo software india (private) limited (india). all significantinter-company accounts and transactions have been eliminated in consolidation. useof estimates and assumptions thepreparation of consolidated financial statements in conformity with u.s. generally accepted accounting principles requires managementto make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. makingestimates and assumptions requires management to exercise significant judgment. it is least reasonably possible that the estimate ofthe effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management consideredin formulating its estimate could change in the near term due to one or more future non-confirming events. accordingly, the actual resultscould differ from those estimates and assumptions. the most significant estimates relate to the timing and amounts of revenue recognition,the recognition and disclosure of contingent liabilities and the collectability of accounts receivable. risksand uncertainties the company’s operations are subject to significant risk and uncertainties including financial, operational, competition and potentialrisk of business failure. product revenues are concentrated in the application software industry, which is highly competitive and rapidlychanging. significant technological changes in the industry or customer requirements, or the emergence of competitive products with newcapabilities or technologies could adversely affect operating results. concentrationsof credit risk financialinstruments that potentially subject the company to significant concentrations of credit risk consist principally of cash and cash equivalentsand accounts receivable. the company maintains cash and cash equivalents with various high quality financial institutions and we monitorthe credit ratings of those institutions. the company’s sales are primarily to the companies located in sri lanka, singapore, indonesiaand india. the company performs ongoing credit evaluations of our customers, and the risk with respect to trade receivables is furthermitigated by the diversity, both by geography and by industry, of the customer base. accounts receivable are due principally from thecompanies under stated contract terms. provisions aprovision is recognized when the company has present obligations because of past event and when it is probable that an outflow of resourcesembodying economic benefits will be required to settle the obligations and reliable estimate can be made of amount of the obligation.provisions are not discounted at their present value and are determined based on the best estimate required to settle the obligationat the reporting date. these estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. f-10 accounts receivable and provision for doubtful accounts the company recognizes accounts receivable in connection with the products sold and services provided and has strong policies and proceduresfor the collection of receivables from its clients. however, there are inevitably occasions when the receivables due to the company cannotbe collected and, therefore, have to be written off as bad debts. while the debt collection process is being pursued, an assessment ismade of the likelihood of the receivable being collectable. a provision is, therefore, made against the outstanding receivable to reflectthat component that may not become collectable. the company is in the practice of provisioning for doubtful debts based on the periodoutstanding as per the following: trade receivables outstanding: provision over 24 months 100%over 18 months 50%over 15 months 25%over 12 months 10%over 9 months 5% cash equivalents the company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. as of march31, 2021 and march 31, 2020, there were no cash equivalents. foreign currency translation thefunctional currencies of the company’s foreign subsidiaries are their local currencies. for financial reporting purposes, thesecurrencies have been translated into united states dollars ($) and/or usd as the reporting currency. all assets and liabilities denominatedin foreign functional currencies are converted into u.s. dollars at the closing exchange rate on the balance sheet date and equity balancesare converted at historical rates. revenues, costs and expenses in foreign functional currencies are converted at the average rate ofexchange during the period. conversion adjustments arising from the use of different exchange rates from period to period are includedas a component of shareholders’ deficit as “accumulated other comprehensive income (loss).” gains and losses resultingfrom foreign currency transactions are included in the statement of operations and comprehensive income /(loss) as other income (expense). propertyand equipment fixedassets (including leasehold improvements) are stated at cost, net of accumulated depreciation and amortization. depreciation is computedutilizing the straight-line method over the estimated useful lives of the related assets. the estimated salvage value is considered as nil. amortization of leasehold improvements is computed utilizing the straight-line method over the estimated benefit period of the relatedassets, which may not exceed 15 years, or the lease term, if shorter. repairs and maintenance expenditures, which are not consideredimprovements and do not extend the useful life of the property and equipment, are expensed as incurred. in case of sale or disposal ofan asset, the cost and related accumulated depreciation are removed from the consolidated financial statements and the profit or lossarising from the sale shall be recognized. usefullives of the fixed assets are as follows: furniture & fittings 5 years improvements to lease hold assets lease term office equipment 5 years computer equipment (data processing equipment) 3 years website development 4 years f-11 impairmentof long-lived assets the company reviews long-lived assets, such as property, plant, and equipment for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. recoverability of assets to be held and used is measured by a comparisonof the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. if the carryingamount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amountof the asset exceeds the fair value of the asset. assets to be disposed of by sale would be separately presented in the balance sheetand reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. the assets and liabilitiesof a group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. fair value measurements and fair value of financial instruments the company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fairvalue measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as thecase may be, in an orderly transaction between market participants. as such, fair value may be based on assumptions that market participantswould use in pricing an asset or liability. theestimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable andaccrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of theseinstruments. post retirement benefit plan the company has gratuity as it post employment plan for all the eligible employees. the recognition for the gratuity plan is as below: theexpected postretirement benefit obligation (“epbo”) is the actuarial present value (“apv”) as of a specific dateof the benefits expected to be paid to the employee, beneficiaries, and covered dependents. measurementof the epbo is based on the following: 1.expected amount and timing of future benefits2.expected future costs3.extent of cost sharing the epbo includes an assumed salary progression for a pay-related plan. future compensation levels represent the best estimate after consideringthe individual employees involved, general price levels, seniority, productivity, promotions, indirect effects, and the like. theaccumulated postretirement benefit obligation (“apbo”) is the apv as of a specific date of all future benefits attributableto service by an employee to that date. it represents the portion of the epbo earned to date. after full eligibility is attained, the apbo equals the epbo. the apbo also includes an assumed salary progression for a pay-related plan. revenue recognition, deferred & accrued revenue the company recognizes revenue from the sale of software licenses and related services. the company revenue recognition policy follows guidancefrom accounting standards codification (asc) 606, revenue from contract with customers. revenue is recognized when the company transferredpromised goods and services to the customer and in the amount that reflect the consideration to which the company expected to be entitledin exchange for those goods and services. thefollowing five steps are followed in recognizing revenue from contracts: ●identify the contract(s) with a customer; ●identify the performance obligation of the contract; ●determine the transaction price; ●allocate the transaction price to the performance obligations in the contract and; ●recognize revenue when or as the company satisfies a performance obligation. f-12 theconsideration for the transaction [performance obligation(s)] is determined as per the agreement, contract or invoice for the servicesand products. duo subscribe duo subscribe is a solution for subscriber management and billing. with over a decade of experience in developing applications for thesesectors and having vast amount of domain knowledge on how these sectors operate, duo subscribe is eminently capable of meeting the complexand rigorous demands of businesses around the world. facetone ‘facetone’is a communication and collaboration platform, which provides users the capability of operating and running a high performance contactcenter operation efficiently while saving cost and maximizing revenue opportunities. in-built facetone crm feature provides the opportunityfor contact centers to deliver a superior customer experience and build a better relationship by linking customers and data in real time. smoothflow smoothflowautomates customer engagements, including building chat bots, voice bots and io tbots to deliver an omni channel customer service experience.the product uses the power of artificial intelligence to keep improving the conversational flow and user experience. revenueis recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration weexpect to receive in exchange for those products or services. we enter into contracts that can include various combinations of productsand services, which are generally capable of being distinct and accounted for as separate performance obligations. revenue is recognizednet of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. natureof products and services licensesfor on premise software– the company sells a perpetual nonexclusive license to the customer and enables the customer to installand use the software and its documentation. price per customer varies based on the selection of the products licensed, the number ofsite installations and the number of authorized users. the products offered on this basis are “duo subscribe” and “facetone-enterprise.” enterprisesoftware solutions– the company distributes its software product ‘facetone- hosted version” with third party telecommunicationcompanies. it is a revenue model where the telecommunication provider hosts the company’s software applications and makes themavailable to its customers over the internet for a monthly subscription fee. the company charges telecommunication providers a monthlylicense fee calculated according to number of licenses sold. cloudservices- the company sells its product smoothflow as a “saas” product (software-as-a-service) and services are providedon a monthly subscription model. f-13 amc services- the company offers annual maintenance programs on its licenses that provide for technical support and updates to the company’ssoftware products. initial annual maintenance fees are bundled with license fees in the initial licensing period and recognized whenthe performance obligation of license fee is met. revenue is recognized ratably, or daily, over the term of the maintenance period, whichis typically one year. forthe period ended march 31, 2021 and 2020, the company received only cash as consideration for sale of licenses and related services andnot in kind. forthe years ended march 31, 2021 and 2020, the company had following concentrations of revenues with customers: customer march 31, 2021 march 31, 2020 a 74.04% 69.05%b 8.56% 2.14%c 6.52% 16.66%d 4.74% 5.79%e 3.78% 2.10%other misc. customers 2.36% 4.26% 100.00% 100.00% forthe years ended march 31, 2021 and 2020, the company had following sales by products: product march 31, 2021 march 31, 2020 duo subscriber $286,216 $558,169 facetone 44,115 191,233 software hosting and reselling 16,147 19,974 smoothflow - 2,529 $346,478 $771,905 during the year three customers terminated theircontracts with the company, and the revenue loss from the termination expected to be 82%. significant judgments the company’s contract with customers includes multiple software products and services to deliver and in most of the contracts, theprice of the separately identifiable features are stated separately. in the event the price of the multiple products and services arenot mentioned in the agreement, the company allocates transaction price estimating the standalone selling price of the promised productsand the services. the determination of standalone selling price for each performance obligation requires judgments. the company determinesstandalone selling price for performance obligations based on overall pricing strategies, which consider market in which the companyoperates, historical data analysis, number of users of the product or services, size of the customer and the market price of the hardwareused. contract balances whenthe timing of revenue recognition differs from the timing of invoicing for contract with customers, deferred revenue and accrued revenue/unbilled accounts receivables are recognized by the company. f-14 werecord a receivable when revenue is recognized prior to invoicing and receipt of payments, or deferred revenue when the revenue is recognizedsubsequent to invoicing. revenueunder software implementation contracts are invoiced on stages of completion as stipulated in the agreement and the revenue recognizedwhen the performance obligations are met and customer signs the user acceptance test (uat). the company invoices software license feeand royalty fee at the end of the period according to the customer agreement and accrued revenue/ unbilled revenue is recognized forthe relevant period. the initial annual maintenance fee is bundled with the initial license fee and is invoiced at beginning of the periodand the company recognizes as deferred revenue in the financial statements and is ratably recognized over a period of service. theallowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. we determinethe allowance based on known troubled accounts, historical experience, and other currently available evidence. refer note- 5 for “accounts receivables and provision for doubtful debts” segment information the company has determined that its chief executive officer is its chief operating decision maker. the company’s executive reviewsfinancial information presented on a consolidated basis for the purposes of assessing the performance and making decisions on how toallocate resources. accordingly, the company has determined that it operates in a single reportable segment. deferred revenue - deferred revenue represents advance payments for software licenses, services, and maintenance billed in advance ofthe time revenue is recognized. as at march 31, 2021, and march 31, 2020, deferred revenue recognized were $2,898 and 55,684 respectively. accrued revenue/unbilled accounts receivable - accrued revenue/unbilled accounts receivable primarily occur due to the timing of therespective billings, which occur subsequent to the end of each reporting period. as at march 31, 2021 and march 31, 2020, unbilled/accruedrevenues were $1,076 and $17,886, respectively. the company had no contract liabilities and asset recognized for cost to fulfill a requirement of a customer as at march 31, 2021. costof revenue costof revenue mainly includes cost for server space, product implementation costs, amortization of product development, developer supportand implementation, and consultancy fees related to the products offered by duo. the aggregate cost related to the software implementations,including support and consulting services pertaining to the revenue recognized during the reporting period, is recognized as cost of revenue. productresearch and development productresearch and development expenses consist primarily of salary and benefits for the company’s development and technical supportstaff, contractors’

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.goodwill and intangible asset impairment assessment critical audit matter description as discussed in note 2 of the consolidated financial statements, goodwill and intangible assets are tested for impairment at least annually on the reporting unit level, and more frequently if the company believes indicators of impairment exist. the company determined that one of the reporting unit's (yalla mediterranean) goodwill and intangible assets were impaired and the company recorded goodwill and intangibles impairment losses of approximately $0.3 million and $0.8 million, respectively, for the year ended december 26, 2021. the determination of the fair value of the reporting units and intangibles requires significant estimates and assumptions. changes in these assumptions could have a significant impact on either the fair value of the reporting units and intangibles, the amount of any goodwill impairment charge, or both.we identified the impairment assessment of goodwill and intangibles as a critical audit matter. auditing management's judgements regarding forecasts of future revenue and operating margin, and the discount rate to be applied involved a high degree of subjectivity.how the critical audit matter was addressed in our audit the primary procedures we performed to address this critical audit matter included:f-1table of contents•obtaining an understanding of management's process for determining goodwill and intangible asset impairment;•obtaining and reviewing management's goodwill and intangibles impairment analysis including the fair value of reporting units and intangible balances tested;•comparing the actual sales to those forecasted by the company in previous years in order to assess the historical accuracy of management's forecasting;•utilizing a valuation specialist to assist in evaluating the valuation methodologies utilized by the company for goodwill and intangibles by comparing the methodologies to those utilized by other companies holding similar assets, compared management's assumption inputs to information from external sources and available economic forecasts and data;•evaluating the estimated fair value of the reporting units to the company's market capitalization and evaluating whether any variances from the projections or changes in market capitalization were indicative of potential impairment of the goodwill and identifiable intangible assets; and•evaluating whether the assumptions used in the goodwill and intangibles impairment analysis were reasonable by considering the past performance of reporting units and third-party market data, and whether such assumptions were consistent with evidence obtained in other areas of the audit.acquisitions - valuation of intangible assets acquired critical audit matter description as described in note 3 to the consolidated financial statements, the company completed four acquisitions of gfg holdings inc., twin peaks buyer, llc, fazoli's holdings, llc and native grill & wings franchising, llc with an aggregate purchase price of approximately $912.4 million made up of cash and issuance of common stock and preferred stock. in connection with the acquisitions, the company recorded $439.7 million of trademarks, $94.0 million of franchise agreements, and $73.9 million of customer relationships. as disclosed, the company applied significant judgment in estimating the fair value of the intangible assets acquired, which involved the use of certain estimates and assumptions.we identified valuation of intangible assets acquired as a critical matter because it involved a high degree of judgment and subjectivity in auditing management's forecasted future revenue and operating margin, royalty rates, franchise attrition and the discount rate to be applied.how the critical audit matter was addressed in our audit the primary procedures we performed to address this critical audit matter included:•obtaining an understanding of the company's process for estimating the fair value of the intangible assets acquired;•obtaining and reviewing the purchase agreement for relevant terms and conditions;•evaluating the reasonableness of management's assumptions related to the forecasted sales, expenses and other significant inputs in the third-party valuation reports for the intangible assets acquired; and•utilizing a valuation specialist to assist in evaluating the valuation methodologies utilized by the company by comparing the methodologies to those utilized by other companies holding similar assets, comparing management's assumptions and inputs to information from external sources and available economic forecasts for reasonableness./s/ baker tilly us, llp we have served as the company’s auditor since 2019.

critical audit matters thecritical audit matters communicated below are matters arising from the current period audit of the financial statements that werecommunicated or required to be communicated to the board of directors and that: (1) relate to accounts or disclosures that arematerial to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communicationof critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not,by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accountsor disclosures to which they relate. revenue recognition – identifying and evaluating the timing of revenue recognition descriptionof the matter asdescribed in note 2 of the financial statements, the company’s revenue recognition policy is consistent with applicablerevenue recognition guidance and interpretations. since the company’s products are typically associated with a subscriptionbased service, revenue related to those products is deferred and recognized over the applicable service period. the principalconsiderations for our determination that performing procedures relating to revenue recognition, specifically the identificationand evaluation of the timing of revenue recognition, is a critical audit matter are that there was a significant amount of judgmentexercised by management in identifying and evaluating whether hardware sold has a standalone value and the period over which monitoringand hardware sales should be recognized. auditor judgement is involved in performing our audit procedures to evaluate whetherthe timing of revenue recognition on hardware and monitoring sales was appropriately stated. f-1 how we addressed the matter in our audit ouraudit procedures over determining the time period over which revenue is recognized involved, among others, review over management’sanalysis of estimated customer life, substantive testing of account balances through obtaining invoices, customer contracts andbill of ladings, in order to evaluate whether revenue was recognized in the appropriate period. other procedures performed includedthe evaluation of terms and conditions in contracts, obtaining an understanding of the technology behind the company’s hardware,and the determination of the appropriate amount and timing of revenue recognition based on the contractual terms, assessing therecognition term and evaluated the appropriateness of management’s application of their accounting policies, testing themathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financialstatements. goingconcern – assessing the probability of the company’s ability to continue as a going concern descriptionof the matter asdescribed in note 1 of the financial statements, the company has adequate cash on hand in addition to cash generated from operations,which will provide sufficient liquidity to finance the operating activities of the company at its current level of operationsfor twelve months from the issuance of these financial statements. we determined the company’s ability to continue as agoing concern is a critical audit matter due to the estimation and execution uncertainty regarding the company’s futurecash flows and the risk of bias in management’s judgments and assumptions in estimating these cash flows. how we addressed the matter in our audit ouraudit procedures related to the company’s assertion on its ability to continue as a going concern included the following,among others; we reviewed the design and underlying factors relating to the preparation of forecasted information and considerationsof the company’s obligations; we tested the reasonableness of the forecasted revenue, operating expenses, and uses and sourcesof cash used in management’s assessment of whether the company has sufficient liquidity to fund operations for at leastone year from the financial statement issuance date. this testing included inquiries with management, comparison of prior periodforecasts to actual results, consideration of positive and negative evidence impacting management’s forecasts, the company’sfinancing arrangements in place as of the report date, market and industry factors. /s/ friedman llp we have served as the company’s auditor since 2010.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.revenue recognition – estimation of standalone selling price of the talent material rights and the period of time over which to defer and recognize the consideration allocated to the material rights as described in notes 2 and 12 to the consolidated financial statements, the company charges talent a service fee as a percentage of talent billings primarily using a tiered service fee model based on cumulative lifetime billings by talent to each client. the company recorded total revenue of $502.8 million for the year ended december 31, 2021, of which $297.0 million related to revenue from talent. certain of the company’s contracts with talent contain multiple performance obligations in the event management determines a material right exists. specifically, the arrangements with talent subject to tiered service fees include contract renewal options that represent a material right. for such arrangements, management allocates revenue to each performance obligation based on its relative standalone selling price by applying the portfolio approach practical expedient. standalone selling prices for offerings subject to tiered service fees are estimated based on observable transactions when these services are sold on a standalone basis. standalone selling price for a material right is estimated by determining the discount that the talent would obtain when exercising the option, adjusted for the likelihood that the option will be exercised. management applies significant judgment in the application of the portfolio approach practical expedient, which includes estimating the standalone selling price of the material rights and the period of time over which to defer and recognize the consideration allocated to the material rights. specifically, management applied significant judgment in assessing the appropriateness of the model for the estimates, which includes assessing the appropriateness of the methodology and relevant data inputs to (i) estimate the standalone selling price of the material rights, which includes the standalone selling price of the services when sold separately and the likelihood of exercise of the material rights, and (ii) estimate the period of time over which to defer and recognize the consideration allocated to the material rights. management utilized historical client-talent transaction data in developing the estimates. the company recognizes revenue related to the material rights based on management’s estimate of when the material rights are exercised.the principal considerations for our determination that performing procedures relating to revenue recognition, specifically the estimation of standalone selling price of the talent material rights and the period of time over which to defer and recognize the consideration allocated to the material rights, is a critical audit matter are the significant judgment by management in assessing the appropriateness of the model, methodology and relevant data inputs to estimate the standalone selling price of the material rights, and the period of time over which to defer and recognize the consideration allocated to the material rights. this in turn led to significant auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s determination of the standalone selling price of the services when sold separately, the likelihood of exercise of the material rights, and the period of time over which to defer and recognize the consideration allocated to the material rights.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the revenue recognition process, including the assessment of the appropriateness of the model, methodology and relevant data inputs to estimate the material rights standalone selling price and the period of time over which to defer and recognize the consideration allocated to the material rights. these procedures also included, among others, (i) evaluating the appropriateness of management’s model used in developing the estimates, the reasonableness of the selected methodology and relevant data inputs used in determining the standalone selling price of the services when sold separately and the likelihood of exercise of the material rights, and the period of time over which to defer and recognize the consideration allocated to the material rights, (ii) 71testing the completeness and accuracy of data inputs, and (iii) testing the mathematical accuracy of the model’s calculations and the amounts recorded for the material rights in the consolidated financial statements. /s/ pricewaterhouse coopers llp san jose, california february 15, 2022we have served as the company’s auditor since 2016.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. valuation of goodwill description of the matter the company assigns goodwill acquired in business combinations to its reporting units as of each acquisition date. at december 26, 2020, the company’s goodwill balance related to the consumer auto reporting unit was approximately $80 million. as discussed in note 2 of the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level. the consumer auto market has declined in recent years as competing technologies have emerged and market saturation has occurred. this has resulted in periods of lower revenues and profits for the company’s consumer auto reporting unit. considering these qualitative factors, management performed a quantitative impairment test of the consumer auto reporting unit in the fourth quarter of 2020. considering the uncertainty of future operating results and/or market conditions deteriorating faster or more drastically than the forecasts utilized in management’s estimation of fair value, the company disclosed some or all of the approximately $80 million of goodwill associated with the consumer auto reporting unit is at risk of future impairment. auditing management’s annual goodwill impairment test for the consumer auto reporting unit was complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting unit. in particular, the fair value estimate was sensitive to significant assumptions such as the discount rate, projected future revenues, projected future operating margins, and terminal growth rates which are affected by expectations about future market or economic conditions. 48how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the company’s consumer auto goodwill impairment review process. for example, we tested controls over management's review of the significant assumptions (e.g., discount rate, projected revenue growth rates, projected operating margins, terminal growth rates) used to develop the prospective financial information (pfi) for the quantitative analysis. we also tested management's controls to validate that the data used in the valuation was complete and accurate. to test the estimated fair value of the company’s consumer auto reporting unit, we performed audit procedures that included, among others, assessing the methodology and testing the significant assumptions discussed above and the underlying data used by the company in its analysis. we included valuation specialists on our team to review the company’s model, method, and the more sensitive assumptions such as the discount rate and terminal growth assumptions. we compared the significant assumptions used by management to current industry and economic trends, changes to the company’s business model, forecasts used in the company’s annual operating plans and other relevant factors. we assessed the historical accuracy of management’s forecast estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the consumer auto reporting unit that would result from changes in the assumptions. we reconciled the fair value of the reporting unit to its carrying value, testing the company’s determination of the assets and liabilities used within the reporting unit that are the basis for the carrying value. in addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the company. measurement of reserve for unrecognized income tax benefits description of the matter the company accounts for uncertainty in income taxes in accordance with the fasb asc 740 topic, income taxes. the company operates in a multinational tax environment and is subject to tax laws, regulations and guidelines for intercompany transactions that have transfer pricing subjectivity. the company uses significant judgment to evaluate uncertain tax positions and determine whether the threshold for recognition has been met and to measure the largest amount of benefit that is more likely than not to be realized upon ultimate settlement. as discussed in note 6 to the consolidated financial statements, the company’s balance of gross unrecognized income tax benefits was $85 million at december 26, 2020, primarily related to transfer pricing positions. auditing management’s assessment and measurement of material tax positions is complex and involved especially subjective and complex judgements. the assessment process involves both significant judgment to evaluate each position against the recognition threshold and estimation because the pricing of the intercompany transactions is based on pricing analyses that may produce a number of different outcomes or ranges of outcomes (e.g., the price that would be charged in an arm’s-length transaction). each transfer pricing tax position carries unique facts and circumstances that must be evaluated, and ultimate resolution will be dependent on uncontrollable factors, such as the interpretation of laws and regulations; new case law; the willingness of the income tax authority to settle the issue, including the timing thereof; and other factors. 49 how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the identification, assessment, measurement and valuation of uncertain tax positions related to transfer pricing from intercompany transactions. for example, we tested controls over management’s review of intercompany transfer pricing positions against the measurement criteria, review of inputs and calculations of these uncertain tax positions, which included management’s evaluation of the ranges of outcomes and pricing conclusions reached within the transfer pricing studies. our audit procedures included, among others, involving our tax professionals to test the company’s assessment and measurement of tax positions related to transfer pricing used in intercompany transactions to assess the appropriateness of the ranges of outcomes utilized and the pricing conclusions reached within the transfer pricing studies conducted by the company. for example, we compared the transfer pricing methodology utilized by management to alternative methodologies and industry benchmarks. we also verified our understanding of the relevant facts by reading the company’s correspondence with the relevant tax authorities and any third-party advice obtained by the company. in addition, we used our knowledge of international and local income tax laws, as well as historical settlement activity from income tax authorities, to evaluate the appropriateness of the company’s measurement of uncertain tax positions related to transfer pricing used in these intercompany transactions. /s/ ernst & young llp we have served as the company’s auditor since 1990.

critical audit matter the critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.f-1 license revenue recognition – refer to note 17 (oncology innovation platform) to the financial statements critical audit matter description the company out-licenses certain of its intellectual property (“ip”) and provides related consulting services to pharmaceutical companies in specific territories that allow the customer to use, develop, commercialize, or otherwise exploit the licensed ip. in accordance with accounting standards codification topic 606 (“asc 606”), the company determines each of its performance obligations under the agreements and allocates the transaction price to those obligations accordingly, including the determination as to whether variable consideration within the total transaction price meets the criteria for recognition. the company’s obligations may include delivering the license of ip (if the license is deemed to be distinct), performing continued research and development on the licensed ip, manufacturing the licensed product, or maintaining the legal protection for the licensed ip throughout the duration of the agreement, among other obligations. most of the company’s revenue from its out-licensing is recognized at a point-in-time when the performance obligation is satisfied.we identified license revenue recognition as a critical audit matter because of the judgments necessary for management to: identify performance obligations, determine variable consideration, allocate transaction price amongst the identified performance obligations, and determine the timing of recognition for such revenue. because of the complexity associated with applying the recognition criteria of asc 606, notably related to identification of performance obligations, determination of variable consideration, allocation of transaction price, and determination of timing of revenue recognition, this required extensive audit effort and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures. how the critical audit matter was addressed in the audit our audit procedures related to the recognition of license revenue, included the following, among others: •we tested the effectiveness of controls over the identification of performance obligations, determination of variable consideration, allocation of transaction price, and determination of timing of license revenue recognition. •we evaluated the company’s revenue recognition for licenses through the inspection of license agreements and the evaluation of management’s revenue recognition analysis corresponding to license agreements to validate that such transactions are being recognized in a manner commensurate with the terms of the established contracts and the relevant accounting guidance. evaluating the reasonableness of management’s accounting conclusions involved: o evaluating the accuracy and completeness of performance obligations identified by management in license agreements. we analyzed the license agreements to determine if the arrangement terms that may have an impact on revenue recognition were identified and properly considered in the evaluation of the accounting for the contract. we also inquired of management and reviewed source documentation to assess whether the performance obligations identified by management are complete, and for those performance obligations identified, that they are both capable of being distinct and are distinct within the context of the contract. o determining the reasonableness of management’s determination of the amounts of variable consideration included within total transaction price. we analyzed the nature of performance obligations and the contingencies related to the variable consideration in assessing management’s methods in estimating the amount of variable consideration to be included in total transaction price. o testing the estimates by management in allocating total transaction price amongst the performance obligations identified in the license agreements. we evaluated the reasonableness of management’s methodology in allocating transaction price amongst the performance obligations and recalculated such allocations to determine that such were accurate. o assessing the appropriateness of the method of measurement of progress and timing of recognition for amounts in license agreements. we tested the appropriateness of management’s recognition method (point-in-time or over-time) for performance obligations by evaluating the manner in which the performance obligations are satisfied. f-2 revenue chargebacks – refer to note 17 (commercial platform) to the financial statements critical audit matter description the company has agreements with certain independent pharmaceutical wholesalers. these wholesalers then sell to an end-user (hospital, alternative healthcare facility, or independent pharmacy). in such case, sales are initially recorded at the price sold to the wholesaler. because these prices will be reduced for the end-user, the company records a contra asset in accounts receivable and a reduction to revenue at the time of the sale, using the difference between the list price and the estimated end-user contract price. upon the sale by the wholesaler to the end-user, the wholesaler will chargeback the difference between the original list price and price at which the product was sold to the end-user and such chargeback is offset against the initial estimated contra asset. the provision for chargebacks as of december 31, 2019 was $14.4 million, included as a reduction of accounts receivable.we identified the accrual for chargebacks at the balance sheet date as a critical audit matter because of the judgments necessary for management to estimate the accrual based on estimates of wholesaler inventory stocking levels and of differences between list price and price at which the product was sold to the end-user. given the volume of transactions subject to potential chargeback at the balance sheet date and the level of uncertainty involved in the estimation of the quantity and mix of products in wholesaler inventory, this matter required a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures. how the critical audit matter was addressed in the audit our audit procedures related to revenue chargebacks included the following, among others: •we tested the effectiveness of controls over the company’s chargeback estimation process, which included management’s control activities in reviewing the estimated wholesaler stock levels and anticipated chargeback claims outstanding. •we evaluated the reasonableness of the methodology and assumptions applied by management when developing their chargeback estimate. we tested the accuracy and completeness of amounts in the accrual computations, inquired of management, and reviewed source documentation – including wholesaler agreements and inventory schedules to assess that management’s methodology included relevant data and assumptions to arrive at a reasonable estimation process. •we evaluated whether the methodology and assumptions have been consistently applied, throughout the estimation process, during the course of the year and in a manner consistent with the estimation process in the prior years presented.we selected a sample of activity of the chargeback accrual at the balance sheet date and performed audit procedures on such sample. such procedures included: obtaining wholesaler agreements for the samples and recalculating the year-end accrual for the selected transactions; verifying quantities-on-hand with wholesalers for the sample transactions; and performing a retrospective review of payments received subsequent to the balance sheet date to evaluate reasonableness of the company’s estimate of the chargebacks contra asset at the year-end balance sheet date./s/ deloitte & touche llp williamsville, new york march 2, 2020 we have served as the company’s auditor since 2015.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.uncertain tax positions — refer to notes 3 and 8 to the financial statements critical audit matter description as a multinational corporation, the company is subject to taxation in many jurisdictions, and the calculation of tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. the company’s wholly owned subsidiary in mexico is currently under audit for the fiscal year 2013 and received certain proposed adjustments during fiscal year 2018 from the mexican taxing authorities. during june 2018, the company filed an administrative appeal challenging the 2013 tax assessment. the company is currently waiting for the resolution of the appeal to be issued. the company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. the tax benefits recognized in the financial statements for such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. as of october 31, 2021, uncertain tax positions were $15.7 million. f-3given the determination of whether it is more likely than not that the tax positions challenged by mexican taxing authorities will be sustained on examination requires management to make significant judgments related to the application of tax laws and regulations, performing audit procedures to evaluate the company’s interpretation and compliance with tax laws involved a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists. how the critical audit matter was addressed in the audit our audit procedures related to the determination of whether it is more likely than not that the company’s uncertain tax positions challenged by mexican taxing authorities will be realized included the following, among others: •we tested the effectiveness of the control over the evaluation of uncertain tax positions as it relates to the period subject to audit by the mexican taxing authorities, along with the review of related disclosures.•we obtained the evaluation from the company’s tax advisors related to understanding the advisor’s current assessment of whether it is more likely than not that the company’s uncertain tax positions challenged by the mexican taxing authorities will be sustained on examination. •we obtained communications between the company and the mexican taxing authorities to evaluate management’s assertions regarding the status of the tax assessment. •with the assistance of our tax specialists, we evaluated whether management properly applied the relevant tax laws and regulations in their determination of whether it is more likely than not that the uncertain tax positions challenged by the mexican taxing authorities will be sustained on examination. /s/ deloitte & touche llp los angeles, california december 22, 2021we have served as the company's auditor since 2019.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.acquisition of shooter detection systems - valuation of acquired developed technology intangible asset as described in notes 2 and 7 to the consolidated financial statements, the company acquired shooter detection systems (“sds”) for total consideration of $26.5 million on december 14, 2020, which resulted in $16.4 million of intangible assets being recorded. intangible assets recorded by the company in connection with the sds acquisition primarily included developed technology of $13.5 million. management valued the developed technology by applying the multi-period excess earnings method. this valuation requires management to apply significant judgment in estimating the fair value of intangible assets acquired, which involves the use of significant estimates and assumptions. significant assumptions in valuing these acquired developed technology intangible assets include estimates about future expected cash flows from the developed technology, the obsolescence factor, and the discount rate.the principal considerations for our determination that performing procedures relating to the valuation of the acquired developed technology intangible asset recorded in the acquisition of sds is a critical audit matter are the significant judgment by management in estimating the fair value of the acquired developed technology intangible asset. this in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating the significant assumptions relating to management’s estimate, such as future expected cash flows from the developed technology, the obsolescence factor, and the discount rate. in addition, the audit effort involved the use of professionals with specialized skill and knowledge.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the acquired developed technology intangible asset and controls over development of the future expected cash flows from the developed technology, the obsolescence factor, and the discount rate assumptions utilized in the valuation of the acquired developed technology intangible asset. these procedures also included, among others (i) reading the purchase agreement and (ii) testing management’s process for estimating the fair value of the acquired developed technology intangible asset. testing management’s process included evaluating the appropriateness of the valuation method, testing the completeness and accuracy of data provided by management used in the valuation, and evaluating the reasonableness of significant assumptions related to the future expected cash flows from the developed technology, the obsolescence factor, and the discount rate. evaluating the reasonableness of the future expected cash flows from the developed technology involved considering the past performance of the acquired business, as well as economic and industry forecasts. professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s valuation method and the obsolescence factor and discount rate assumptions./s/ pricewaterhouse coopers llp mclean, virginia february 25, 2021we have served as the company’s auditor since 2009.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. acquisition of bofa international ltd (bofa) - valuation of customer relationships intangible asset as described in note 2 to the consolidated financial statements, the company acquired 88% of the shares of bofa for net consideration of $96.0 million on october 18, 2018, which resulted in the recording of a $39.8 million customer relationships intangible asset. management estimates the fair value of acquired customer relationships using the multi-period excess earnings method. the value is estimated as the present value of the benefits anticipated from ownership of the asset, in excess of returns required on the investment in contributory assets which are necessary to realize those benefits. assumptions used in these calculations include same-customer revenue growth rates, estimated earnings and customer attrition rates. the principal considerations for our determination that performing procedures relating to the valuation of the customer relationships intangible asset as a result of the acquisition of bofa is a critical audit matter are (i) there was a high degree of auditor judgment and subjectivity in applying procedures relating to the fair value measurement of the acquired customer relationships intangible asset due to the significant amount of judgment by management when developing the estimate; (ii) significant audit effort was necessary to perform procedures and evaluate audit evidence related to the customer attrition rate assumption; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the acquired customer relationships intangible asset and controls over development of the significant assumption, the customer attrition rate. these procedures also included, among others, reading the purchase agreement and testing management’s process for estimating the fair value of the acquired customer relationships intangible asset. testing management’s process included evaluating the appropriateness of the valuation method, testing the completeness, accuracy, and relevance of underlying data used in the model, and evaluating the reasonableness of the significant assumption, the customer attrition rate. evaluating the reasonableness of the customer attrition rate involved considering the current and past performance of the acquired business. professionals with specialized skill and knowledge were used to assist in the evaluation of the company’s model and significant assumption, the customer attrition rate.goodwill impairment assessment - reporting unit within the industrial products segment as described in note 5 to the consolidated financial statements, the company’s consolidated goodwill balance and goodwill balance for the industrial products segment was $303.1 million and $218.6 million, respectively, as of july 31, 2019. management conducts a goodwill impairment test during the third quarter of each fiscal year. for reporting units evaluated using a quantitative assessment, the fair values are determined using an income approach, a market approach or a weighting of the two. the income approach determines fair value based on discounted cash flow models derived from the reporting units’ long-term forecasts. the market approach determines fair value based on earnings multiples derived from prices investors paid for the stocks of comparable, publicly traded companies. an impairment loss would be recognized when the carrying amount of a reporting unit’s net assets exceeds the estimated fair value of the reporting unit. estimates and assumptions are utilized in the valuations, including discounted projected cash flows, terminal value growth rates, revenue growth rates, discount rates, and the determination of comparable, publicly traded companies.the principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of one reporting unit within the industrial products segment is a critical audit matter are (i) there was a high degree of auditor judgment and subjectivity in applying procedures relating to the goodwill impairment assessment due to the significant amount of judgment by management when developing the fair value measurement of the reporting unit; (ii) significant audit effort was necessary to perform procedures and evaluate audit evidence related to the revenue growth rates and discount rate assumptions; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures. 26addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the company’s reporting units and controls over development of the significant assumptions including the revenue growth rates and discount rate. these procedures also included, among others, testing management’s process for developing the fair value estimate; evaluating the appropriateness of the valuation models used in management’s estimate; testing the completeness, accuracy, and relevance of underlying data used in the models; and evaluating the reasonableness of significant assumptions used by management, including the revenue growth rates and discount rate. evaluating management’s assumptions related to the revenue growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. the discount rate was evaluated by considering the cost of capital of comparable businesses and other industry factors. professionals with specialized skill and knowledge were used to assist in the evaluation of the company’s models and certain significant assumptions, including the discount rate./s/ pricewaterhouse coopers llp minneapolis, minnesota september 27, 2019 we have served as the company’s auditor since 2002.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.allowance for credit losses - refer to notes a and e to the financial statements critical audit matter description estimates of expected credit losses under the current expected credit loss (“cecl”) methodology required under financial accounting standards board (fasb) accounting standards codification no. 326, financial instruments - credit losses (asc 326) are based on relevant information about current conditions, past events, and reasonable and supportable forward-looking forecasts regarding collectability of the reported amounts. in order to estimate the expected credit losses for loans and unfunded loan commitments, the company used either a cohort or weighted average remaining maturities (“warm”) methodology to determine the historical loss rate, by loan portfolio class, then considered whether qualitative adjustments to those historical loss rates were warranted. as of september 30, 2021, the allowance for credit losses (“acl”) was $171,300,000.significant management judgments are required in determining whether, and to what extent, qualitative adjustments for each portfolio loan class are required. these adjustments are made after considering the conditions over the period from which historical loss 62experience was based and are split into two components: 1) asset or class specific risk characteristics or current conditions at the reporting date related to portfolio credit quality, remaining payments, volume and nature, credit culture and management, business environment or other management factors, not captured in the historical loss rates and 2) reasonable and supportable forecasts of future economic conditions and collateral values.given the significance of the acl, reliance on historical loss rates and the management judgments required for quantitative and qualitative evaluation of past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts, performing audit procedures to evaluate the acl requires a high degree of auditor judgment and increased extent of effort, including the need to involve our credit specialists.how the critical audit matter was addressed in the audit our audit procedures related to the acl, included the following, among others:•we tested the effectiveness of management’s controls over (1) key assumptions and judgments, (2) the cecl estimation model for loan portfolios, (3) the qualitative adjustments determined by management including the reasonable and supportable forecast adjustment selected by management, (4) and disclosures.•we evaluated the appropriateness of the company’s accounting policies, assumptions, and elections involved in the application of the cecl methodology.•we tested the underlying data and mathematical accuracy of the cohort and warm methodologies used to determine the loan portfolio class historical loss rates. •we evaluated the reasonableness and conceptual soundness of the methodologies, as applied in the cecl estimation models, including key assumptions and judgments in estimating expected credit losses.•we evaluated the accuracy and completeness of the company’s disclosures in accordance with asc 326.•specific to the qualitative adjustments made to the historical loss rates:- we assessed the appropriateness of the framework for the qualitative adjustments.- we performed analysis to evaluate the relevance of each of the reasonable and supportable forecast assumptions to historic losses.- we evaluated management’s reasonable and supportable forecast of economic variables by comparing forecasts to relevant external market data.- we assessed management’s determination whether, and to what extent, a qualitative adjustment was warranted to certain loan portfolio classes to account for specific risk characteristics or current conditions that differ from the period over which the historical loss rate was determined. seattle, washington november 19, 2021we have served as the company’s auditor since at least 1982;

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.goodwill impairment assessment as described in note 8 to the consolidated financial statements, goodwill is tested for impairment at a level of reporting referred to as a reporting unit. a reporting unit is an operating segment or one level below an operating segment for which discrete financial information is available and regularly reviewed by segment management. management tests goodwill to determine whether an impairment has occurred at least annually (as of june 30) and on an interim basis if it is more likely than not that a reporting unit’s fair value is less than its carrying value. during the first quarter of 2020, the partnership’s market capitalization declined significantly driven by macroeconomic and geopolitical conditions that occurred in 2020, including the collapse of oil prices driven by both the decrease in demand caused by the covid-19 pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, that resulted in expected decreases in future cash flows for certain assets, which was a triggering event that required management to perform a quantitative impairment test as of march 31, 2020. as a result of this quantitative impairment test as of march 31, 2020, the partnership recorded an impairment loss of $2,515 million and the consolidated goodwill balance was $0 as of december 31, 2020. in the quantitative test, management compares the fair value of the reporting unit with the respective book values, including goodwill, by using an income approach based on a discounted cash flow model. this approach requires management to make long-term forecasts of future revenues, expenses and other expenditures. those forecasts require the use of various assumptions and estimates, the most significant of which are net revenues (total revenues less purchases and related costs), operating expenses, general and administrative expenses and the weighted average cost of capital.the principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the partnership’s reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement of the reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions relating to the weighted average cost of capital; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of reporting units. these procedures also included among others (i) testing management’s process for developing the fair value estimates; (ii) evaluating the appropriateness of the discounted cash flow models; (iii) testing the completeness and accuracy of underlying data used in the models; and (iv) evaluating the reasonableness of the weighted average cost of capital assumptions used by management. professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow models and evaluating the reasonableness of the weighted average cost of capital assumption.f-4table of contents index to financial statements impairment assessment of certain pipeline assets in the transportation segment as described in note 6 to the consolidated financial statements, the partnership’s consolidated net property, plant and equipment balance was $14,620 million as of december 31, 2020. management periodically evaluates property and equipment and other long-lived assets for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable. the carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. if the carrying value exceeds the sum of the undiscounted cash flows, an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset is recognized. the subjective assumptions used to determine the existence of an impairment in carrying value include whether there is an indication of impairment, the grouping of assets, the intention of “holding”, “abandoning” or “selling” an asset, the forecast of undiscounted expected future cash flow over the asset’s estimated useful life and, if an impairment exists, the fair value of the asset or asset group. during the year ended december 31, 2020, the macroeconomic and geopolitical conditions, including the collapse of oil prices driven by both the decrease in demand caused by the covid-19 pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, resulted in expected decreases in future cash flows for certain assets, which was a triggering event that required management to assess the recoverability of the partnership’s carrying value of such long-lived assets. as a result, management recognized approximately $541 million of non-cash impairment losses of which approximately $415 million was associated with certain pipeline assets in the transportation segment located in the central region. the evaluation is highly dependent on management’s key assumptions relating to the cash flows, including (i) future commodity volumes, (ii) tariff rates, (iii) future commodity prices, and (iv) estimated fixed and variable costs. the principal considerations for our determination that performing procedures relating to the impairment assessment of certain pipeline assets included in the transportation segment is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement of these assets due to the forecasted cash flows; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumption related to future commodity volumes; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the impairment assessment of pipeline assets, including controls over management’s process to estimate fair value associated with certain pipeline assets included in the transportation segment located in the central region. these procedures also included, among others (i) testing management’s process for developing the fair value of certain pipeline assets in the transportation segment located in the central region; (ii) evaluating the appropriateness of the discounted cash flow models; (iii) testing the completeness and accuracy of underlying data used in the models; and (iv) evaluating the reasonableness of significant assumptions used by management related to future commodity volumes. evaluating management’s assumptions related to future commodity volumes involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the asset groups; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow models. /s/ pricewaterhouse coopers llp houston, texas february 26, 2021we have served as the partnership’s auditor since 2013.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.real estate impairment —refer to notes 2, 3 and 9 to the financial statements critical audit matter description the company’s real estate assets are individually evaluated for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. the company’s evaluation of the recoverability of real estate assets involves the comparison of the projected undiscounted future cash flows expected to be generated by each real estate asset over the company’s estimated holding period to the respective carrying amount. the company’s undiscounted future cash flow analyses require management to make significant estimates, including estimated terminal values determined using appropriate capitalization rates. total real estate assets as of december 31, 2021 had a net book value of $2.4 billion.given that the company’s estimated capitalization rates used in the evaluation of impairment of real estate assets is a significant assumption made by management, performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flow analyses required a high degree of auditor judgment and an increased level of effort, including the need to involve our fair value specialists.how the critical audit matter was addressed in the audit our audit procedures related to the company’s estimated capitalization rates used in the evaluation of impairment of real estate assets included the following, among others: •we tested the effectiveness of the company’s internal controls over management’s evaluation of the recoverability of real estate, including internal controls over management’s determination of the reasonableness of the applicable capitalization rates.38•inquired with management regarding the appropriateness of the capitalization rates, including considerations related to the impact of covid-19 and evaluating the consistency of the capitalization rates used with evidence obtained in other areas of our audit.•with the assistance of our fair value specialists, we evaluated the reasonableness of the company’s estimated capitalization rates by:◦testing the source information underlying the determination of the capitalization rates by evaluating the reasonableness of the capitalization rates used by management with independent market data, focusing on key factors, including the impact of the covid-19 pandemic, geographical location, tenant composition, and property type. ◦developing a range of independent estimates of capitalization rates and comparing those to the capitalization rates selected by management./s/ deloitte & touche llp new york, new york february 16, 2022we have served as the company’s auditor since 2014.

critical audit matters the critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.revenue – refer to note 2 and 6 to the consolidated financial statements critical audit matter description the company’s revenue generated from its cardlytics platform consists of transaction-based fees made up of a significant volume of low-dollar transactions, sourced from multiple databases. the processing and recording of revenue is highly automated and is based on contractual terms with marketers, f is, and other parties. because of the nature of the company’s transaction-based fees, the company uses automated systems to process and record its revenue transactions.we identified revenue as a critical audit matter because the company’s systems to process and record revenue are highly automated. this required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (it), to identify, test, and evaluate the company’s systems, software applications, and automated controls.how the critical audit matter was addressed in the audit our audit procedures related to the company’s systems to process revenue transactions included the following, among others:•with the assistance of our it specialists, we:•identified the relevant systems used to process revenue transactions and tested the general it controls over each of these systems, including testing of user access controls, change management controls, and it operations controls.67table of contents•performed testing of initial system set-up and monitoring controls, system interface controls, automated controls, and data monitoring controls within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenue.•we tested internal controls within the relevant revenue business processes, including those in place to reconcile the information from various systems to the company’s general ledger.•for a sample of revenue transactions, we performed detail transaction testing by agreeing the amounts recognized to source documents and testing the mathematical accuracy of the recorded revenue.business combinations – refer to notes 2, 4, and 13 to the consolidated financial statements critical audit matter description as disclosed in note 4 to the consolidated financial statements, the company completed the acquisition of bridg inc. ("bridg") during 2021 for a transaction price of $578.9 million. this transaction was accounted for as a business combination. auditing the company's accounting for the acquisition of bridg was complex due to the estimation utilized in the company's determination of the fair value of the contingent consideration initially valued at $230.9 million on the date of acquisition. the significant estimation was primarily due to the complexity of the valuation model used by management to measure the fair value of the contingent consideration and the sensitivity of the fair value to the significant underlying assumptions. in order to determine the fair value of the contingent consideration, the company simulated forecasted annual recurring revenue ("arr") using a revenue volatility assumption from comparable market data. the company then determined the appropriate discount rate for the assumed cash component and used a monte carlo simulation for the assumed stock component. the assumptions used in preparing this model include estimates such as revenue volatility, revenue discount rate, weighted average cost of capital, and the company’s common stock volatility. the assumptions utilized in the model are forward looking and could be affected by future economic and market conditions. as contingent consideration is recorded as a liability it is remeasured using a fair value methodology consistent with the one described above and it will continue to be remeasured until the dates of settlement (upon the first anniversary payment and second anniversary payment dates.) we identified contingent consideration as a critical audit matter because of the judgement surrounding projected arr and the complexity of the valuation model used to value the contingent consideration as well as the material weakness identified. this required a high degree of auditor judgment and an increased extent of effort, including the need for us to involve professionals with valuation expertise.how the critical audit matter was addressed in the audit our audit procedures related to the bridg contingent consideration, specifically the projected arr and valuation model, included the following, among others: •we tested the projected revenues used in the model by comparing them to historical results, third party industry projections, and the company’s internal contracted backlog.•we evaluated management’s ability to accurately forecast revenues by comparing actual results to management’s historical forecasts of revenue.•with the assistance of our valuation specialists, we evaluated the valuation methodology and independently recalculated the estimated fair value of the contingent consideration to compare to the company's recorded amount./s/ deloitte & touche llp atlanta, georgia march 1, 2022we have served as the company’s auditor since 2012.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.goodwill impairment assessment - reporting unit which comprises the surgical solutions reportable segment as described in notes 1 and 4 to the consolidated financial statements, the company’s consolidated goodwill balance as of september 30, 2020 was $1,836 million. the goodwill associated with the surgical solutions reportable segment as of september 30, 2020 was $222 million. as disclosed by management, an impairment assessment is performed on goodwill annually in the third fiscal quarter, or whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value. to determine the estimated fair values of the company’s reporting units, management considers both the market and income approach, which require management to develop assumptions and estimates including the determination of guideline companies and market multiples, projected sales, projected gross margins, and discount rates.the principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the reporting unit which comprises the surgical solutions reportable segment is a critical audit matter are the significant judgment by management when developing the fair value measurement of the reporting unit; this in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the determination of guideline companies and market multiples, projected sales, projected gross margins, and the discount rate. in addition, the audit effort involved the use of professionals with specialized skill and knowledge.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the company’s reporting unit and controls over the development of the assumptions related to the guideline companies and market multiples, projected sales, projected gross margins, and the discount rate. these procedures also included, among others, testing management’s process for developing the fair value estimate; evaluating the appropriateness of both the market and income approach; testing the completeness, accuracy, and relevance of underlying data used; and evaluating the significant assumptions used by management related to the determination of guideline companies and market multiples, projected sales, projected gross margins, and the discount rate. evaluating management’s assumptions related to projected sales and projected gross margins involved evaluating whether the assumptions utilized were reasonable considering (i) the current and past performance of the business, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in evaluating the company’s market and income approaches, the determination of guideline companies and market multiples, and the discount rate./s/ pricewaterhouse coopers llp chicago, illinois november 13, 2020we have served as the company’s auditor since 1985.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.variable consideration in contracts with customers description of the matter as discussed in note 2 of the consolidated financial statements, the transaction price for product sales is typically adjusted for variable consideration, which includes rebates paid to government agencies, specifically medicaid. the company estimates these reserves based upon a range of possible outcomes that are probability-weighted for the estimated payor mix.auditing the company's estimate of variable consideration for amounts to be paid to government agencies was complex and judgmental due to uncertainty about the ultimate third-party payor at the time of shipment to the specialty pharmacies and the amounts of rebates to be paid to those government agencies. the transaction price is sensitive to assumptions used in the rebate calculations.how we addressed the matter in our audit we identified, evaluated and tested controls over management’s review of the calculated reductions to gross product prices related to government agencies including management’s review of the significant assumptions and the data utilized in its calculations. to test the revenue adjustments related to government agencies our audit procedures included, among others, using internal specialists to assist with recalculating government rebates. we also tested the underlying data and inputs used by the company in its determination of the estimated payor mix. we compared the inputs used by management to historical trends, evaluated the change in the estimated rebates amounts recorded throughout the year and assessed the historical accuracy of management’s estimates against actual results.80 table of contents valuation of intangible assets acquired in a business combination description of the matter as discussed in note 2 and 15 of the consolidated financial statements, the company acquired all of the equity interests of motus and algaene x, each a privately held, preclinical stage company. in connection with the acquisition the company recognized $29.6 million of in-process research and development intangible assets.auditing the company's accounting for its acquisition was especially complex due to the significant estimation and judgment required by management in determining the fair value of in-process research and development intangible assets acquired. the significant estimation was primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of the in-process research and development intangible assets. the company used the multi-period excess earnings method of the income approach to measure the fair value of the in-process research and development intangible assets acquired. the significant assumptions used to estimate the fair value of the in-process research and development intangible assets acquired included the estimated probability of regulatory success rates, expected pricing, relevant market size and share and discount rate. given the preclinical nature of the assets acquired, these significant assumptions are forward-looking and could be affected by future economic and market conditions.how we addressed the matter in our audit we identified, evaluated and tested controls over management’s review related to the company’s accounting for acquisitions. our testing of controls included controls over the valuation of the intangible assets acquired including the valuation model used and the underlying assumptions used to develop such estimates, and controls over the completeness and accuracy of the data used to develop the estimates.to test the estimated fair value of the intangible assets, we performed audit procedures that included, among others, evaluating the company's use of the income approach (the multi-period excess earnings method), testing the significant assumptions used in the model, including the discount rate, estimated probability of regulatory success rates, expected pricing, relevant market size and share, and assessing the completeness and accuracy of the underlying data. we compared the significant assumptions to current industry, and market data, to the assumptions used to value similar assets in other acquisitions and to other guideline companies within the same industry. we involved our valuation professionals to assist with our evaluation of the methodology used by the company and significant assumptions included in the fair value estimates./s/ ernst & young llp we have served as the company’s auditor since at least 1999,

critical audit matters the critical audit matters communicated beloware matters arising from the current period audit of the financial statements that were communicated or required to be communicated tothe audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved ourespecially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinionon the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinionson the critical audit matters or on the accounts or disclosures to which they relate. f-2 accounting for investments in variable interestentities description of the matter as discussed in the consolidatedfinancial statement, the company holds interests in an entities that meet the characteristics of a variable interest entity (“vie”).the company determines whether it is the primary beneficiary of a vie at the time it becomes involved witha vie, which requires consolidation based upon the following criteria: a)the power to direct the activities of the entity that most significantly impact its economic success,b)the obligation to absorb the economic losses of the entity, orc)the right to receive the expected residual returns of the entity; ord)the voting rights of some investors in the entity are not proportions to their economic interests andthe activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. we identifiedthe accounting for investment in the variable interest entities to be a critical audit matter. evaluating the company’s judgmentsin determining whether an entity is a vie and the primary beneficiary of the vie required a high degree of complex auditor judgment. how we addressed the matter in our audit our auditprocedures related to accounting for investment in variable interest entity to address this critical audit matter included the following: ·we gained an understanding of the company’s process to identify and account for a vie.·we obtained and read the agreements in which the company evaluated and compared the terms of the agreementsto the company’s assessment.·we reviewed the company’s vie analysis to determine if the vie met the criteria for consolidationin accordance with accounting standards codification (“asc”) 810, consolidations.·we evaluated the factors considered to determine whether the company omitted any significant potentialvariable interests in their analysis. equity investment in unconsolidated entity as discussed in note 3 and 13 to the consolidatedfinancial statements, the company’s investment in avalanche international corp. (avlp) is accounted for under the equity methodof accounting. avlp is a related party controlled by philou ventures, llc, which is an entity affiliated with the company through milton c. ault, iii who is the company’s executive chairman of the board. the company’s investments in avlp include convertible promissorynotes of $21.4 million and other assets of $0.6 million. the company also has entered into an agreement with avlp to provide contractmanufacturing services relating the production of this machinery. management exercised significant judgment in determiningthe carrying amounts of the avlp by evaluating projected operating results and credit risk. the company exercised these judgments withinthe context of avlp being a related party that is both a debtor to the company and customer with a trade relationship. management evaluatedprojected revenue and expenses to evaluate collectability of its investment. the company determines whether the equity methodof accounting is required based on the following criteria: a)the control the investor has over the investeeb)the election of fair value options for the investmentc)the assessment of whether the investment is common stock or in substance common stockd)the significant influence the investor has we identifiedthe accounting for avlp investments to be a critical audit matter. evaluating the company’s judgments in determining whether anentity should be accounting for under the equity method in addition to assessing the recoverability of those investments requires a highdegree of judgment. f-3 how we addressed the matter in our audit our auditprocedures related to accounting for the equity investment in unconsolidated entity to address this critical audit matter included thefollowing: ·we gained an understanding of the company’s process to identify and account for equity investments.·we obtained and read the agreements in which the company evaluated and compared the terms of the agreementsto the company’s assessment.·we reviewed the company’s equity method analysis to determine if the investment met the criteriafor equity method accounting.·we evaluated the factors considered to determine whether the company omitted any other significant investmentsin their analysis.·testing the mathematical accuracy of the discounted cash flow analysis,·assessing the reasonableness of the revenue and expense assumptions and their consistency with other auditevidence /s/ marcum llp marcum llp we have served as the company’s auditor since 2016.

critical audit matter the critical audit matter communicated below isa matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicatedto the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and(2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alterin any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical auditmatter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. net revenue - reserves for promotional allowances critical audit matter description as described in note 1 to the consolidated financialstatements, contracts with customers often include some form of variable consideration in the form of discounts, trade allowances, consumerincentives, coupons, volume-based incentives, cooperative advertising, product returns and other such programs. promotional allowancesare treated as a reduction in revenue when the related revenue is recognized, and are recorded at the net estimated to be received, withupdates to estimates and related accruals of promotional allowances occurring each period based on historical experience and changesin circumstances. we identified the estimation of reserves for promotionalallowances by management as a critical audit matter because the inputs and assumptions utilized by management in estimating these reserves,including consistency of historical data and contract pricing, require significant judgment and create a high degree of estimation uncertainty.consequently, auditing these assumptions requires subjective auditor judgment. how we addressed the matter in our audit the primaryprocedures we performed to address this critical audit matter included: ●obtaining an understanding of management’s processes and controls over calculating the reserves for promotional allowances, including understanding relevant significant inputs and assumptions. ●performing substantive analytical procedures surrounding the reserves for promotional allowances by performing and independent calculation of the allowance by using historical data and assumptions. ●evaluating the reasonableness of key inputs and assumptions relevant to the reserve for promotional allowances, including contractual pricing and rebate arrangements with customers and historical allowance data, which were compared to source documents, and performed sensitivity analysis over key inputs and significant assumptions. ●testing the accuracy, completeness, validity of the underlying data used in schedules calculating the reserve for promotional allowances. ●we considered transactions submitted by customers subsequent to year end up to the date of our auditor’s opinion. we have served as the company’s auditorsince 2009.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.goodwill - fss us reporting unit - refer to note 4 to the financial statements critical audit matter description the company’s evaluation of goodwill for impairment involves the comparison of the estimated fair value of each reporting unit to its carrying amount annually in the fourth quarter of each year as of the end of the fiscal month of august or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists. during the fourth quarter, the company performed a quantitative test to determine the fair value of each reporting unit using discounted cash flow calculations, which required management to make assumptions and estimates that are subject to risk and uncertainty related to future growth rates, margin projections, and the discount rate. changes in these assumptions or estimates may impact the impairment analysis and could reduce the underlying cash flows used to estimate fair values and result in an impairment charge. the fair value of the fss united states (fss us) reporting unit exceeded its carrying amount, and therefore, the company determined that its goodwill was not impaired. we identified the valuation of goodwill for the fss us reporting unit as a critical audit matter because of the significant judgments made by management to estimate its fair value. auditing the discounted cash flow calculations for this reporting unit involved a high degree of auditor judgment and an increased effort, which included the involvement of our fair value s-2table of contentsspecialists, as it related to evaluating management’s assumptions and estimates related to future growth rates, margin projections, and the discount rate.how the critical audit matter was addressed in the audit our audit procedures related to the assumptions and estimates of future growth rates, margin projections, and the discount rate used by management to estimate the fair value of the fss us reporting unit included the following, among others:•we tested the effectiveness of internal controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the fss us reporting unit, including controls related to management’s assumptions and estimates of future growth rates, margin projections, and the discount rate.•we evaluated management’s ability to accurately forecast future fss us reporting unit growth rates and margin projections by comparing actual results to management’s historical forecasts.•we evaluated the reasonableness of management’s fss us reporting unit growth rates and margin projections by comparing the forecasts to:◦historical results.◦internal communications to management and the board of directors.◦forecasted information included in analyst and industry reports for the company and certain of its peer companies.•with the assistance of our fair value specialists, we evaluated (1) the valuation methodology used and (2) the projections of future growth rates and the discount rate by testing the underlying source information, and by developing a range of independent estimates and comparing those to the rate selected by management./s/ deloitte & touche llp philadelphia, pa november 23, 2021we have served as the company's auditor since 2021.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.collectability of operating lease receivables — refer to note 2 to the financial statements critical audit matter description accounts receivable are primarily comprised of rental and reimbursement billings due from tenants, and straight-line rent receivables representing the cumulative amount of future adjustments necessary to present rental income on a straight-line basis. individual leases are assessed for collectability and upon the determination that the collection of f-1table of contentsrents is not probable, accrued rent and accounts receivable are charged off, and the charge off is reflected as an adjustment to rental revenue. revenue from leases where collection is not probable is recorded on a cash basis until collectability is determined to be probable. the company also assessed whether operating lease receivables, at the portfolio level, are appropriately valued based upon an analysis of balances outstanding, effects of tenant bankruptcies, historical levels of bad debt and current economic trends. for the year-ended december 31, 2021, the company reduced rental revenue by $0.8 million due to lease-related reserves and charge offs. we identified the company’s evaluation of collectability of lease receivables as a critical audit matter because of the significant assumptions management makes when determining whether the collection of operating lease receivables is probable. management’s evaluation is based on the best information available to the company at the time of preparing the financial statements and takes into consideration the types of business conducted by tenants and current discussions with the tenants, as well as recent rent collection experience. auditing management’s assessment of collectability of lease receivables required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s analysis and assessment of collectability.how the critical audit matter was addressed in the audit our audit procedures related to the collectability of operating lease receivables included the following, among others:•we tested the effectiveness of controls over management’s evaluation of tenant-level considerations that may indicate that the collection of operating lease receivables is not probable including management’s review of its accounts receivable aging schedule.•we obtained management’s analysis of the collectability of tenant accounts receivables and performed the following procedures, among others:◦tested the completeness and accuracy of the accounts receivable aging schedule as of december 31, 2021, by obtaining tenant agreements, monthly charge statements, and evidence of cash collections subsequent to year end; and◦for a selected sample of tenants with outstanding receivables as of december 31, 2021, evaluated the reasonableness of management’s assumptions regarding collection probability by inspecting tenant correspondence, historical payment patterns and subsequent cash collections, evidence of lease modification negotiations, including rent deferrals or abatements, evidence of tenant bankruptcy or liquidity constraints, and performing corroborating inquiries of management, including the collections department. /s/ deloitte & touche llp mclean, virginia february 24, 2022 we have served as the company's auditor since 2018.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. revenue recognition - identification and satisfaction of performance obligations as described in notes 1 and 2 to the consolidated financial statements, the company derives revenue from the sale of security products, subscriptions, software as a service (“saa s”) offerings, support and maintenance, professional services, or a combination of these items. the company’s revenue was $2,906 million for the year ended december 26, 2020. at contract inception, management assesses the goods and services promised in contracts with customers and identifies a performance obligation that is distinct and separately identifiable from other items in a bundled package and if a customer can benefit from it on its own or together with other resources. determining whether products and services are considered distinct performance obligations or should be combined to create a single performance obligation may require significant judgment by management. determining the nature and timing of satisfaction of performance obligations often involves significant judgment. 85 the principal considerations for our determination that performing procedures relating to revenue recognition - identification and satisfaction of performance obligations, is a critical audit matter are the significant judgment by management in identifying performance obligations and determining the nature and timing of satisfaction of performance obligations in contracts with customers, which in turn led to significant auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to whether performance obligations were appropriately identified and accounted for by management. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included, among others, examining revenue contracts on a test basis and evaluating management’s identification of performance obligations and determination of the nature and timing of the satisfaction of performance obligations. /s/ pricewaterhouse coopers llp dallas, texas march 1, 2021 we have served as the company’s or its predecessor’s auditor since 2017.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 46 table of contents plant closure provision as described in notes 2 and 12 to the consolidated financial statements, at december 31, 2019 there is a provision in place for $49.3 million relating to the company’s legal responsibility for the remediation of hazardous substances or wastes at currently or formerly owned or operated properties, with the principal site giving rise to environmental remediation liabilities being the manufacturing site at ellesmere port in the united kingdom. the company must comply with environmental legislation in the countries in which it operates or has operated and annually reassesses the program of work required. this included management developing estimates and assumptions relating to the cost and timing of performing the remediation work. management used specialists to develop these estimates. costs of future obligations are discounted to their present values using the company’s credit-adjusted risk-free rate. the principal considerations for our determination that performing procedures relating to the plant closure provision is a critical audit matter are that there were significant estimates and assumptions made by management over the valuation of the plant closure provision. this, in turn led to a high degree of auditor judgment, subjectivity and effort in evaluating management’s assumptions including (i) the program of work required and the costs of performing that work; (ii) the timing of performing the remediation work; and (iii) the credit-adjusted risk-free rate used to discount the future obligations. professionals with specialized skill and knowledge were used to assist in performing procedures (i) and (ii) and evaluating the audit evidence obtained. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the valuation of the plant closure provision. these procedures also included, among others, (i) the use of professionals with specialized skill and knowledge to assist in testing management’s process for determining the plant closure provision. this included evaluating the appropriateness of the valuation method and the reasonableness of significant assumptions, including the assessment of the program of work required, cost, and timing assumptions developed by management’s specialists; (ii) evaluating the scope, competency, and objectivity of management’s specialists based on the work they were engaged to perform; and (iii) evaluating the credit-adjusted risk-free rate applied to calculate the present value of the future obligations. pricewaterhouse coopers llp (signed) manchester, united kingdom february 19, 2020 we have served as the company’s auditor since 2019.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.revenue recognition – testing services revenue – refer to note 2 to the consolidated financial statements critical audit matter description during the year ended december 31, 2020, the company’s revenue from testing services was $163.6 million. as discussed in note 2, the company’s testing services revenue is recognized upon the delivery of test results to the prescribing physician, at which time the company bills for its services. the company recognizes revenue related to billings based on transaction prices estimated as the amount that will ultimately be realized. the transaction price estimate represents differences between amounts billed and the estimated consideration the company expects to receive based on historical collection experience and other anticipated adjustments, including anticipated payer denials. in determining the amount to recognize for a delivered test, the company considers factors such as payment history, amount collected per test, payer coverage, and whether there is a reimbursement contract between the payer and the company. the company also considers whether historical collections per test are indicative of future collections or if there are any current or expected developments or changes that could affect reimbursement rates, which is an estimate that requires significant judgment by the company.78table of contents we identified management’s estimation of the transaction price for revenue recorded as a critical audit matter due to the significant judgments required by management to estimate payer behavior. this required a high degree of auditor judgment and an increased extent of effort, including the involvement of more experienced engagement team members, when performing audit procedures to evaluate the estimated transaction prices.how the critical audit matter was addressed in the audit our audit procedures related to management judgments in the estimate of transaction prices for testing services revenue, included the following, among others:•we understood and tested the design, implementation, and operating effectiveness of controls over management’s determination of the assumptions used and the related review and approval of the transaction price estimate.•we tested the methodology used by the company to estimate transaction prices.•we tested the assumptions used by management to calculate transaction prices by:•testing the mathematical accuracy of management’s calculation.•testing the historical cash receipts from payers used in the estimate of transaction prices, by making selections and agreeing the selected information to source documents.•testing management’s ability to estimate transaction prices accurately by comparing recorded revenue to cash receipts received through december 2020.•evaluating trends in revenue and accounts receivable compared to previous periods to identify any evidence that may contradict management’s assertion regarding estimated transaction price./s/ deloitte & touche llp san jose, california february 24, 2021we have served as the company's auditor since 2018.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.inventories as discussed in note 1, and as presented in note 2 to the financial statements, inventories are stated at the lower of cost or net realizable value. costs include all costs incurred to bring each product to its present location and condition. market provisions in respect of lower of cost or net realizable value adjustments and inventory determined to be slow moving are applied to the gross inventory through a reserve. - f2 -table of contents the determination of the reserve for slow-moving and obsolete inventories always requires subjective assumptions related to expectations for future market conditions, customer forecasted orders, and product demand. during 2021 and 2020, the impact of covid-19 on the general economy, and specifically the commercial aerospace industry, continued to adversely impact the company. this included delays and declines in customer orders and revenue recognized, as well as continued high levels of inventories. factors involved in accounting for inventories include verification of existence, determination of cost, and evaluation of reserves. due to the magnitude of the inventories and various complex matters and subjective assumptions, we identified inventories as a critical audit matter, which required a high degree of auditor judgement.addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. the primary procedures we performed included, obtaining an understanding of the process and assumptions used by management related to the accounting for inventories; evaluating management’s physical count procedures; performing our own test count procedures; testing management’s calculations related to costing of products; and testing management’s determination of the reserves. these procedures include testing the completeness and accuracy of the source data used, testing the mathematical accuracy of management’s calculations, evaluating the reasonableness and consistency of the methodology and assumptions applied by management based on current factors, and performing a retrospective review of the prior-year estimates used to identify potential bias of management judgements./s/ freed maxick cp as, p.c.we have served as the company’s auditor since 2005.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. valuation of certain acquired right of use assets as described in note 3 to the consolidated financial statements, the company recorded $19 million of finance lease and financing obligation assets, net and $30 million of operating lease assets, net (collectively “right of use assets”) relating to business combinations completed during the year ended march 26, 2022. the right of use assets acquired are recorded at the present value of remaining lease payments adjusted to reflect favorable or unfavorable market terms of the lease. as disclosed by management, significant judgment is required in estimating the fair value of the right of use assets. favorable or unfavorable market terms used to value the acquired right of use assets are estimated based on comparable market data. the principal considerations for our determination that performing procedures relating to the valuation of certain acquired right of use assets is a critical audit matter are the significant judgment by management in estimating the fair value of certain of the right of use assets, using the favorable or unfavorable market terms and the comparable market data. this in turn led to a high degree of auditor judgment, effort, and subjectivity in performing procedures related to the favorable or unfavorable market terms used to value certain acquired right of use assets and the comparable market data. in addition, the audit effort involved the use of professionals with specialized skill and knowledge. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls over the estimation of the value of the acquired right of use assets, including controls over the estimate of favorable or unfavorable market terms and the comparable market data. these procedures also included, among others, reading the purchase agreements; and for certain acquired right of use assets; (i) testing management’s process for estimating the value of the acquired right of use assets; and (ii) evaluating the appropriateness of the valuation method and testing the completeness and accuracy of the underlying data. professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the comparable market data for certain acquired right of use assets. /s/ pricewaterhouse coopers llp rochester, new york may 23, 2022 we have served as the company’s auditor since at least 1984.

critical audit matters the critical audit matter communicated below is arisingfrom the current period audit of the consolidated financial statements that was communicated or required to be communicated to the auditcommittee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involvedour especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way ouropinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. equity transactions description of the matter: as described in note 8 of the consolidated financial statements, the companyraised capital using convertible instruments which are inherently complex in nature. during the year ended december 31, 2020, these convertibleinstruments were converted into shares of common stock. these transactions converted into common shares in addition to triggering downroundprovisions and deemed dividends. the transactions required complex auditor judgment due to the number and the variety of the types ofinstruments and the subjectivity of assumptions used to value the transactions. how we addressed the matter in our audit addressing the matter involved obtaining an understanding of the controlsover the company’s process for issuing and recording equity. we assessed the appropriateness of judgments made by management indetermining key assumptions used in the valuation of each equity transaction. we obtained and reviewed all material equity agreementsand considered whether the recording was appropriate given the nature of the transaction. we recalculated the value of the amounts recordedbased on management’s key assumptions and on the related stock value at the time of the transaction. we agreed all material cashconsideration received in equity raises to the company’s bank statements. we also tested the accuracy and the completeness of thedisclosure of the transactions. /s/ withum smith+brown, pc we have served as the company’s auditorsince 2020.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.deferred revenues and liability – wyndham rewards loyalty program – refer to notes 2 and 3 to the financial statements critical audit matter description the company operates the wyndham rewards loyalty program under which members earn points that can be redeemed for free nights or other rewards. wyndham rewards members primarily accumulate points by staying at a participating hotel, club resort or vacation rental or by making purchases with their wyndham rewards co-branded credit card. revenues related to the issuance of loyalty points are recognized net of redemptions over time based upon loyalty point redemption patterns, including an estimate of loyalty points that will expire or will never be redeemed. in addition, the company records a liability for estimated future redemption costs of outstanding loyalty points.the company estimates the value of the deferred revenues and related liability (collectively referred to as the “liability”) related to the loyalty program based on (i) an estimated cost per point and (ii) an estimated redemption rate of the overall points earned, which is determined with the assistance of a third-party actuarial firm through historical experience, current trends and the use of an actuarial analysis, and includes an estimate of the points that will expire or will never be redeemed. changes in the estimated cost per point and/or the estimated redemption rate used in the determination of the liability could result in a material change to the amount of liability reported.we identified the estimated cost per point and the estimated redemption rate used in the determination of the liability as a critical audit matter because of the significant judgments made by management to estimate the cost per point and the redemption rate. this required a high degree of auditor judgment and an increased extent of effort, including the involvement of our actuarial specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the selection of the estimated cost per point and the estimated redemption rate.how the critical audit matter was addressed in the audit our audit procedures related to the estimated cost per point and estimated redemption rate used in the determination of the liability included the following, among others: •we tested the effectiveness of the controls related to the liability, including those over the estimate of the cost per point and the estimate of the redemption rate.•we evaluated the assumptions used by management to estimate the cost per point by: ◦testing the underlying data that served as the inputs for the historical cost per point, including historical redemptions. ◦discussing with management the assumptions used in the company’s estimated future cost per point and evaluating the reasonableness by comparing the projections to (1) forecasted information included in industry reports of the company and its peer group, and (2) trends in wyndham rewards member behavior. ◦comparing management’s prior-year estimated cost per point to actual redemptions during the current year to identify potential bias in the determination of the liability.◦evaluating whether the assumptions used by management to estimate the cost per point were consistent with evidence obtained in other areas of the audit.•we evaluated the assumptions used by management to estimate the redemption rate by: ◦testing the underlying data that served as the inputs for the actuarial analysis of the estimated redemption rate, including earnings and redemptions. ◦evaluating whether any approved changes to the wyndham rewards loyalty program have been appropriately incorporated in the actuarial analysis of the estimated redemption rate. ◦comparing management’s prior-year estimated redemption rate to actual redemptions during the current year to identify potential bias in the determination of the liability.f-3table of contents•with the assistance of our actuarial specialists, we developed a range of independent estimates of the liability, utilizing the same underlying data tested above, and compared our estimates to management’s estimates./s/ deloitte & touche llp new york, new york february 16, 2022 we have served as the company’s auditor since 2017.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.goodwill and intangible assets - shave care goodwill and gillette indefinite lived intangible asset - refer to notes 1 and 4 to the financial statements critical audit matter description the company’s evaluation of goodwill and indefinite lived intangible assets for impairment involves the comparison of the fair value of each reporting unit or indefinite lived intangible asset to its carrying value. the company estimates fair value using the income method, which is based on the present value of estimated future cash flows attributable to the respective assets. this requires management to make significant estimates and assumptions related to forecasts of future net sales and earnings, including growth rates beyond a 10-year time period, royalty rates and discount rates. changes in the assumptions could have a significant impact on either the fair value, the amount of any impairment charge, or both. the company performed their annual impairment assessments of the shave care reporting unit as of october 1, 2019 and the gillette brand indefinite lived intangible asset (the “gillette brand”) as of december 31, 2019. because the estimated fair values exceeded their carrying values, no impairments were recorded. given reductions in cash flows caused by currency devaluations, changing consumer grooming habits, the covid-19 pandemic affecting demand and an increase in the competitive market environment, the company revised their cash flow estimates and updated their fair value estimates for the gillette brand as of june 30, 2020 and determined that the fair value of the gillette brand approximated its carrying value. as of june 30, 2020, the shave care reporting unit goodwill was $12.5 billion, and the gillette brand was $14.1 billion. we identified the company’s impairment evaluations of goodwill for the shave care reporting unit and the gillette brand as a critical audit matter because of the reductions in cash flows and the significant judgments made by management to estimate the the procter & gamble company 35fair values of the reporting unit and the brand. a high degree of auditor judgment and an increased extent of effort was required when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the forecasts of future net sales and earnings as well as the selection of royalty rates and discount rates, including the need to involve our fair value specialists.how the critical audit matter was addressed in the audit our audit procedures related to forecasts of future net sales and earnings and the selection of the royalty rates and discount rates for the shave care reporting unit and the gillette brand included the following, among others: •we tested the effectiveness of controls over goodwill and indefinite lived intangible assets, including those over the determination of fair value, such as controls related to management’s development of forecasts of future net sales, earnings, the selection of royalty rates, and discount rates. •we evaluated management’s ability to accurately forecast net sales and earnings by comparing actual results to management’s historical forecasts. •we evaluated the reasonableness of management’s forecast of net sales and earnings by comparing the forecasts to:•historical net sales and earnings.•underlying analysis detailing business strategies and growth plans including consideration of the effects related to the covid-19 pandemic.•internal communications to management and the board of directors. •forecasted information included in company press releases as well as in analyst and industry reports for the company and certain of its peer companies. •with the assistance of our fair value specialists, we evaluated the net sales and earnings growth rates, royalty rates, and discount rates by:•testing the source information underlying the determination of net sales and earnings growth rates, royalty rates, and discount rates and the mathematical accuracy of the calculations.•developing a range of independent estimates for the discount rates and comparing those to the discount rates selected by management./s/ deloitte & touche llp cincinnati, ohio august 6, 2020we have served as the company’s auditor since 1890.

critical audit matters the critical audit matters communicated below are matters arising fromthe current period audit of the financial statements that were communicated or required to be communicated to the auditcommittee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved ourespecially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in anyway our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit mattersbelow, providing separate opinions on the critical audit matters or on the accounts or disclosures to which theyrelate. value of inventories – refer to notes 1 and 4 to the consolidated financial statements critical audit matter description as disclosed in note 1 and 4 to the consolidatedfinancial statements, inventories consist of various components, work-in-process and finished goods, and are carried at the lowerof cost or net realizable value, with cost determined by standard cost methods, which approximate the first-in, first-out method.inventory costs include material, labor and manufacturing overhead. management has established inventory reserves based on estimatesof excess and/or obsolete inventories. we identified the inventory reserve forcertain inventory products as a critical audit matter because of the significant estimates and the assumptions management makesto evaluate their ability to move inventories which have been slow moving during the year. this required a high degree of subjectiveand complex auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonablenessof related assumptions, as well as the viability of management’s plans to sell this inventory, to evaluate whether inventoryreserves for certain inventory products were appropriately recorded as of december 31, 2020. how the critical audit matter was addressed in the audit our audit procedures related to the inventoryreserve for certain inventory products included the following, among others: ● we evaluated the appropriatenessand consistency of management’s methods and assumptions used in developing their estimate of the inventory reserves. ● we evaluated the reasonablenessof management’s plans and strategies to sell certain inventory products deemed to be slow moving and which are already partiallyreserved. ● we performed analysis over keyproduct metrics, inventory turnover, and margins, to identify and evaluate slow-moving inventory categories, negative margins,or other trends which may indicate a requirement to reserve. /s/ rbsm llp we have served as the company’s auditor since 2019.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.66valuation of intangible assets and contingent consideration in business combinations as disclosed in note 1 to the consolidated financial statements, the company’s growth strategy is to pursue acquisitions of complementary technologies and businesses as evidenced by the twenty five acquisitions made in the eight years ended december 31, 2019. as disclosed in note 3 to the consolidated financial statements, during 2019, the company completed five acquisitions for total consideration of $228 million. the acquisitions were accounted for as business combinations in accordance with asc 805.auditing the company's accounting for its acquisitions was complex due to the estimation uncertainty in the company’s determination of the fair value of identified intangible assets, which primarily consist of developed technology of $24 million and customer relationships of $109 million, and contingent consideration of $5 million. the estimation uncertainty was primarily due to the judgmental nature of the inputs and assumptions to the valuation models used to measure the fair value of these intangible assets and contingent consideration, as well as the sensitivity of the respective fair values to underlying assumptions. the company used the multi-period excess earnings and relief-from-royalty methods, which are variations of the income approach, to measure the customer relationships and developed technology intangible assets, respectively, and the binary option model to measure contingent consideration. the significant assumptions used to estimate the fair value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates, gross margin, operating expenses, technology obsolescence and customer attrition. the significant assumptions used to estimate the fair value of the contingent consideration included discount rates and expected future annual revenue streams and the related probability of achievement. these significant assumptions are forward-looking and could be affected by future economic and market conditions.we obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the company’s accounting for acquisitions, which included management’s review of the determination of the key assumptions used in estimating the fair value of intangible assets and contingent consideration. to test the estimated fair value of the identified intangible assets and contingent consideration, our audit procedures for each of the acquisitions included, among others, reading the purchase agreement, evaluating the company's use of the multi-period excess earnings method, relief-from-royalty method and binary option model, evaluating the significant assumptions used by the company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. we involved our valuation specialists to assist with our evaluation of the methodologies used by the company and significant assumptions included in the fair value estimates. for example, we compared the forecasted results to historical operating results, industry peer results, economic trends, and other relevant factors. we also assessed the historical accuracy of management’s estimates.revenue recognition for new products and services the company frequently acquires companies that have their own portfolio of products and services that will be included in the upland suite of offerings. for each of these new products and services, the company must understand the terms and conditions contained in the contracts with customers and evaluate and apply the five step model under asc 606 to ensure proper revenue recognition. management performs detailed contract review procedures to ensure that any non-standard terms and conditions included in the contracts are properly considered in relation to the accounting literature.auditing the company’s revenue recognition analysis related to new products and services, primarily from acquisitions, was challenging due to the effort required in identifying and evaluating non-standard terms and conditions in contracts under upland’s revenue recognition policy, in accordance with asc 606. for example, there may be non-standard terms and conditions that required judgment to determine distinct performance obligations, transaction price, or the pattern of revenue recognition.we obtained an understanding, evaluated the design and tested the operating effectiveness of the company's internal controls over the process to evaluate the application of the company’s revenue recognition policy to newly added products and services. this included the controls related to the determination of distinct performance obligations, transaction price, and pattern of revenue recognition.among other procedures, we obtained and evaluated management’s assessment of the respective revenue recognition for new products and services. we also reviewed management’s evidence for compiling the complete 67portfolio of contracts and selected a sample of executed contracts to review the terms and conditions. for each of the contracts we reviewed, we identified the promised goods and services in the contract and assessed the distinct performance obligations. we also evaluated the impact of non-standard terms and conditions on the determination of the transaction price and pattern of revenue recognition./s/ ernst & young llp we have served as the company’s auditor since 2013.

critical audit matters the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.customer allowances for chargebacks, discounts and damaged goods and accruals for rebates, coupons, product returns and certain fees as described in note 2 to the consolidated financial statements, revenues from product sales are recorded net of estimated allowances for chargebacks, discounts and damaged goods and reflects sales related accruals for rebates, f-2coupons, product returns and certain fees. these allowances and accruals are determined on a product-by-product basis, and are established by management as the company’s best estimate at the time of sale based on each product’s historical experience adjusted to reflect known changes in the factors that impact such allowances. management reviews these allowances on an ongoing basis and adjusts them based on the most recent information available, including actual results since the end of the reporting period. as of december 31, 2020, consolidated allowances in accounts receivable for chargebacks, cash discounts and damaged goods were $1.0 million and consolidated estimated liability for rebates, coupons, product returns and certain fees were $4.1 million. these provisions are recognized concurrently with the sales of products. provisions for chargebacks involve estimates of usage by retailers and other indirect buyers with varying contract prices for multiple wholesalers. the provision for chargebacks varies in relation to changes in product mix, pricing and the level of inventory at the wholesalers. provisions are calculated using historical chargeback experience, and/or expected chargeback levels for new products and anticipated pricing changes. provisions for rebates are recognized based on contractual obligations in place at the time of sales with consideration given to relevant factors that may affect the payment as well as historical experience for estimated market activity. provisions for medicaid are based on historical trends of rebates paid, as well as on changes in wholesaler inventory levels, pricing data and increases or decreases in sales.the principal consideration for our determination that performing procedures relating to these allowances and accruals is a critical audit matter was the significant judgment by management to estimate the reserves due to the significant measurement uncertainty involved in developing the reserves. management tracks the various types of allowances on several different schedules, each of which relates to different contracts agreed to with various customers or the interplay with government payors. management exercises judgment in computing the amount of sales subject to the allowances and tracks the amount of allowances taken over time. all of this in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions.we identified the estimated sales allowances and accruals as a critical audit matter. the primary procedures we performed to address this critical audit matter included: •testing the completeness and accuracy of the underlying data used to estimate the accrual by agreeing the sales data used in the calculation to reports that were reconciled to the financial statements, reconciling the various allowance percentages to signed customer contracts, tracing the allowance amounts used by the various customers during the year to supporting documentation and comparing the estimated allowances from the end of 2019 to actual results that occurred during 2020;•testing the assumptions used by management in the computation of selected allowances to historical results for the related products and any recent changes in factors that could influence the future allowances to be claimed;•comparing actual allowances reported since december 31, 2020 to the estimated reserves and accruals recorded on the december 31, 2020 consolidated balance sheet;•testing the clerical accuracy of the individual customer allowances computed by management and agreeing the total of all estimated allowances to the respective accounts on the financial statements./s/ bkd, llp we have served as the company's auditor since 2020.

critical audit matter the critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. transaction price adjustment – uncollected flexitouch product sales as described further in note 3. summary of significant accounting policies – revenue recognition to the consolidated financial statements, revenue is recognized upon transfer of control of the product to the customer based on a transaction price determined to be the amount of expected consideration to be received for the product. in most cases, there is a contracted third-party payer, such as a commercial insurer, medicare or the veteran’s administration involved with the transaction. the transaction price is impacted by 89table of contentsmultiple factors, including the terms and conditions contracted by third-party payers. thus, payments from third-party payers typically are less than the company’s standard charge and represent an implicit price concession, resulting in variable consideration. the transaction price for commercial payers is determined based on the payment history of the payer drawn from actual write-off and collections experience over a rolling 12-month period, as well as historical patient collections by payer. the company assesses the variable consideration for each medicare claim as a percentage of the total invoice price based on ultimate approval and collection history. there is not variable consideration with sales to the veterans administration. the results of the variable consideration assessment are the primary source of information in estimating the recognition of net revenue and the net valuation of the related accounts receivable. we identified the transaction price adjustment for uncollected flexitouch product sales to commercial payers and medicare as a critical audit matter. the principal considerations for our determination of this critical audit matter are: ●the transaction price adjustment is related to material accounts and disclosures that are important to the users of the consolidated financial statements,●significant judgment is required to estimate the expected amount of cash consideration to be collected, which is a key input into management’s transaction price assessment.●for sales with medicare as the payer, the future collection could significantly differ from those subjective estimates given the payment uncertainty due to the appeals process for claims initially denied.our audit procedures related to the transaction price adjustment for uncollected flexitouch product sales included the following, among others: ●we tested the design and operating effectiveness of management’s key controls relating to their medicare and commercial payer transaction price assessments and commercial payer lookback analysis through reperformance, observation of the control being performed, and inspection of supporting documentation providing evidence of control performance. ●for a sample of commercial payers, we recomputed management’s calculation of the historical collectability percentage by payer based on transactions that occurred during the year to evaluate the completeness and accuracy of underlying data used in the commercial transaction price adjustment and lookback analysis. ●for sales to patients insured by commercial payers, we assessed the reasonableness of management’s year-end analysis of the transaction price adjustment recorded in the prior year compared to actual pricing adjustments experienced in the current period by recomputing the results of management’s historical lookback analysis of collection rates by payer portfolio.●for sales to patients covered by medicare, we tested management’s estimate by evaluating the determination of collection percentage by claim year assumptions including the completeness and accuracy of the underlying data used. /s/ grant thornton llp we have served as the company’s auditor since 2015.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. goodwill impairment assessment as described in notes 1 and 8 to the consolidated financial statements, the company’s consolidated goodwill balance was $326.4 million at june 30, 2019. goodwill is annually tested for impairment as of june 30, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired. potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill. the fair value is estimated using a weighting between discounted cash flows and market multiples valuation techniques. the discounted cash flow analysis requires the use of estimates and assumptions related to cash flow forecasts, discount rates, terminal values and income tax rates. management’s cash flow forecasts included significant judgments and assumptions relating to revenue growth rates.the principal considerations for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter are there was significant judgment by management when developing the fair value measurement of the reporting units using the discounted cash flows and market multiples valuation techniques. this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence obtained related to management’s cash flow forecasts and significant assumptions, including revenue growth rates and discount rates, and related to the weightings applied to the discounted cash flows and market multiples valuations. in addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the company’s reporting units. these procedures also included, among others, testing management’s process for developing the fair value estimates; evaluating the appropriateness of the discounted cash flow model and market multiples valuation; testing the completeness, accuracy and relevance of underlying data used in the models; and evaluating the reasonableness of the significant assumptions used by management including the revenue growth rates and discount rates. evaluating the reasonableness of management’s assumptions related to the company’s cash flow forecasts involved evaluating whether the revenue growth rates were reasonable considering (i) the current and past performance of the reporting units, (ii) the consistency with external market and industry data and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in the evaluation of the company’s discounted cash flow models, the weightings applied to the discounted cash flows and market multiples valuations, and certain significant assumptions, including the discount rates and market multiples./s/ pricewaterhouse coopers llp philadelphia, pennsylvania august 29, 2019 we have served as the company’s auditor since 1918.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated and combined financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated and combined financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated and combined financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.evaluation of the fair value of certain acquired intangible assets as discussed in note 1 to the consolidated and combined financial statements, the company acquired dyal capital partners (dyal) and oak street real estate capital llc (oak street) on may 19, 2021 and december 29, 2021, respectively. the acquisitions were accounted for as business combinations using the acquisition method of accounting as discussed in note 2. as discussed in note 3, the company acquired dyal and oak street for total purchase consideration of $5,607.2 million and $1,083.4 million, respectively. in connection with the acquisitions, the company recognized intangible assets acquired at their acquisition-date fair value. the intangible assets acquired included investment management agreements related to the dyal and oak street acquisitions of $1,859.9 million and $323.3 million, respectively. the intangible assets acquired also included investor relationships related to the dyal and oak street acquisitions of $291.4 million and $157.4 million, respectively.f-2table of contents we identified the evaluation of the fair value of the investment management agreements and investor relationships acquired in the dyal and oak street business combinations as a critical audit matter. subjective and complex auditor judgment was required to evaluate the following assumptions:— projected revenue on assets under management used to value the investment management agreements— investor retention rates used to value the investor relationships— discount rates used to value the investment management agreements and investor relationships. the acquisition-date fair value of investment management agreements and investor relationships were sensitive to changes in the above assumptions. in addition, the projected revenue on assets under management was based on expectations of future market and economic conditions that are uncertain.the following are the primary procedures we performed to address this critical audit matter. we evaluated the design of certain internal controls related to the valuation process for the investment management agreements and investor relationships. this included controls related to the development of the above assumptions. we evaluated the reasonableness of the projected revenue on assets under management by comparing it to historical revenue on assets under management. we involved valuation professionals with specialized skills and knowledge, who assisted in:— evaluating the discount rates used to determine the fair value of the investment management agreements and the investor relationships by (1) comparing their inputs to publicly available market data for comparable entities, (2) recalculating the company’s determination of its weighted average cost of capital (wacc) used to determine its discount rates, and (3) reconciling the company’s determination of its wacc to the company’s weighted average return on assets and internal rate of return— evaluating the discount rates used to determine the fair value of the investment management agreements and the fair value of the investor relationships acquired in the oak street business combination by comparing the company’s determination of the wacc to market information such as venture capital rates of return used to value companies in various stages of development— evaluating the investor retention rates used to determine the fair value of the investor relationships by comparing them to historical retention rates of investors participating in new funds and investment strategies.fair value of earnout securities on date of business combination as discussed in note 1 to the consolidated and combined financial statements, in connection with the business combination on may 19, 2021, the company issued two series of class e shares and the blue owl operating partnerships issued seller earnout units (collectively, the earnout securities). as discussed in note 9, the company recorded an earnout liability of $635.1 million, of which $491.3 million related to the earnout securities. as discussed in note 2, the liability for earnout securities is carried at fair value with changes in fair value included within change in earnout liability in the company’s consolidated and combined financial statements. in addition, as discussed in note 2, earnout securities issued to certain employees in connection with the business combination were accounted for as equity-based compensation. as discussed in note 8, the company recorded total equity-based compensation expense for earnout securities of $63 million. as discussed in notes 1 and 8, the earnout securities had triggering events on july 21, 2021 and november 3, 2021, and as a result, none remained outstanding as of december 31, 2021.we identified the evaluation of the fair value of earnout securities issued on may 19, 2021 in connection with the business combination as a critical audit matter. a higher degree of subjective and complex auditor judgment was required to evaluate the volatility rate developed from guideline public companies and the discount for lack of marketability (dlom) used to estimate the fair value of the earnout securities. the development of these assumptions involved unobservable data or company adjustments of observable data.f-3table of contents the following are the primary procedures we performed to address this critical audit matter. we evaluated the design of certain internal controls related to the valuation process for earnout securities, including controls related to the determination of the volatility rate. we involved valuation professionals with specialized skills and knowledge, who assisted in:— evaluating the dlom by comparing it to an independently developed range of dlo ms— assessing the volatility rate used in the valuation of earnout securities by comparing it to (1) an independently developed volatility rate using comparable peer companies, (2) historical and implied volatility rates of relevant public peer companies, and (3) an independently developed range of volatility rates using the capital structure of the company. /s/ kpmg llp we have served as the company’s auditor since 2016.

critical audit matter the critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. valuation of inventories as described in note 1 and 4 to the financial statements, the company’s inventories balance was $3.9 million as of december 31, 2020. the company values its inventories at lower of cost (determined using the first-in, first-out method) or net realizable value. the company writes down inventory that has expired or become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements. the estimate of excess quantities is subjective and primarily dependent on the estimates of future demand for a particular product. changes in assumptions of product demand could have a significant impact on the amount of write-down recorded. the evaluation by management includes analysis of historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete or for which there are not excess quantities in inventory. f-2 we identified the valuation of inventories, in particular the estimates for excess quantities and obsolescence, as a critical audit matter, because of the significant assumptions and subjective judgments used by management, which in turn led to the use of subjective auditor judgment and audit effort to address the matter. the primary procedures we performed to address the critical audit matter included: ●evaluating management’s process for developing the estimates of excess and obsolete inventories by: ●evaluating the methodology utilized to calculate the write-downs, and ●testing the mathematical accuracy and the appropriateness of the formulaic calculation. ●evaluating the reasonableness of the significant assumptions used by management including those related to future demand by: ●evaluating management’s ability to provide reasonable forecast of sales by comparing prior period sales forecasts to actual results, and ●performing inquiries with nonfinancial personnel, including sales and production employees, regarding obsolete or discontinued inventory items and other factors to corroborate management’s assertions regarding qualitative judgments about excess and obsolete inventories. ●testing the completeness, accuracy, and relevance of the underlying data used in management’s estimate and calculations related to the application of the methodology to specific inventory categories. /s/ moss adams llp san francisco, california march 11, 2021 we have served as the company’s auditor since 2017.

critical audit matters the critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.98table of contents future policy benefits critical audit matter description future policy benefits consist of universal life and annuity contracts of approximately $9.0 billion and traditional life reserves of approximately $910 million at december 31, 2021. as described in note 1, the liability for future policy benefits on traditional products is calculated using assumptions as to future mortality, interest rates and withdrawals based on the company’s experience. the liability for future policy benefits for universal life and annuity contracts represents the contract balance. fixed-index products combine features associated with traditional fixed annuities and universal life contracts, with the option to have interest rates linked in part to an equity index. the equity return component of such policy contracts is identified separately and accounted for at fair value as an embedded derivative. the remaining portion of these policy contracts are recorded separately as fixed annuity or universal life contracts. these contracts are recorded as discounted debt instruments that are accreted to their minimum account values at their projected maturities or termination dates using the effective yield method.auditing estimates for future policy benefits required a high degree of judgment, including the need to involve an actuarial specialist, due to the nature of the data utilized in the complex actuarial models and the high degree of judgment applied by management in determining these liabilities.how the critical audit matter was addressed in the audit our audit procedures related to the future policy benefits liabilities included the following procedures, among others: a.obtained an understanding, evaluated the design and tested the operating effectiveness of controls, including technology controls, over the company’s inputs and processes utilized in the calculation of future policy benefits, and the design and operating effectiveness of controls over the completeness and accuracy of the underlying source data.b.tested the completeness and accuracy of the underlying policy data used in the actuarial analysis. c.engaged an actuarial specialist to evaluate the appropriateness of actuarial methods and assumptions used in developing the estimates related to these liabilities.amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired critical audit matter description as described in note 1, deferred policy acquisition costs include certain costs of successfully acquiring new insurance business, including commissions and other expenses directly related to the acquisition of new business, to the extent the costs are recoverable from future policy revenues and gross profits. premium bonuses and bonus interest credited to contracts during the first contract year are also deferred to the extent the costs are recoverable. for interest sensitive universal life and annuity products, these costs are amortized in relation to the present value of expected gross margins or gross profits on these policies. for nonparticipating traditional life products, these costs are amortized over the premium paying period of the related policies in proportion to the ratio of annual premium revenues to total anticipated premium revenues. the company evaluates the recoverability of deferred policy acquisition costs and sales inducement costs by considering expected mortality, interest earned, credit rates, persistency and expenses and estimated future gross profits or future premiums. amortization is reviewed each year and adjusted retrospectively through an unlocking process when estimates of current or future gross profits/margins (including the impact of investment gains and losses) to be realized from a group of products are revised.the value of business acquired (voba) is an intangible asset based upon the difference between the fair value of policyholder liabilities acquired in a business combination and the same policyholder liability measured in accordance with the company’s accounting policies. it represents the portion of the purchase price allocated to the value of the rights to receive future cash flows from business in force at the acquisition date. voba is subject to recoverability testing, and is amortized following a methodology similar to that used for deferred policy acquisition costs.auditing the amortization of deferred policy acquisition costs, deferred sales inducements and voba was especially challenging due to the complexity and high degree of judgment applied by management, including the need to involve an actuarial specialist, in determining estimated future gross profits. the estimate of future gross profits includes assumptions regarding premium payment and expense patterns, mortality, persistency and investment performance.99table of contents how the critical audit matter was addressed in the audit our audit procedures related to the amortization of deferred policy acquisition costs, deferred sales inducements and voba included the following procedures, among others:a.obtained an understanding, evaluated the design and tested the operating effectiveness of controls, including technology controls, over the company’s inputs and processes utilized in estimating future gross profits and resulting amortization and the design and operating effectiveness of controls over the completeness and accuracy of the underlying source datab.tested the completeness and accuracy of the underlying data used in the actuarial analysis. c.engaged an actuarial specialist to evaluate the appropriateness of actuarial methods and assumptions utilized in the estimated gross profits used for amortization./s/bkd, llp firm id 686we have served as the company’s auditor since 2014.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.f-3revenue recognition of greenhill & co., inc.description of the matter at december 31, 2020, the aggregate advisory fee revenue was $311.7 million. as explained in note 2 to the consolidated financial statements, the company earns its revenue by providing services under contracts with its clients in one primary revenue stream: advisory fee revenues for mergers and acquisitions engagements, financing advisory and restructuring engagements, and private capital advisory. for performance obligations related to services that are either required to be recognized over-time or at a point in time, there is judgment involved in determining the most appropriate measure of progress towards satisfaction of each performance obligation or in determining that the fees are no longer constrained. auditing the company’s evaluation of performance obligations being met required a high degree of auditor judgment due to the subjectivity in determining the measure that most faithfully depicts the entity’s performance in satisfying performance obligations within the company’s primary revenue streams and consistently applying the selected measure across similar arrangements.how we addressed the matter in our audit we tested controls that address the risks of material misstatement relating to recognition of advisory fee revenue. for example, we tested controls over management’s review around identifying performance obligations for advisory related engagements and concluding on the recognition criteria based on the satisfaction of those obligations.to test the recognition of advisory fee revenue, our audit procedures included, among others, evaluating the measures used by management in identifying performance obligations and allocating the engagement fee. we compared the revenue recognized by management to executed engagement letters and other external documentation. for example, we evaluated management’s methodology for assessing performance obligations and the application of that methodology across a variety of different revenue arrangements. as part of this assessment, we compared the types of advisory fees recognized against the accounting treatment applied, overtime vs. point in time. we also tested the completeness and accuracy of the revenue transactional data recorded in the general ledger./s/ ernst & young llp we have served as the company’s auditor since 1997.

critical audit matters the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, 73table of contentssubjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.allowance for credit losses the company’s loan portfolio totaled $5.23 billion as of december 31, 2021 and the allowance for credit losses on loans was $64.6 million. the company’s unfunded loan commitments totaled $1.6 billion, with an allowance for credit loss of $2.3 million. the company’s available-for-sale and held-to-maturity securities portfolios totaled $1.5 billion as of december 31, 2021, and the allowance for credit losses on securities was $167,000. together these amounts represent the allowance for credit losses (“acl”). as more fully described in notes 1, 3 and 4 to the company’s consolidated financial statements, the company estimates its exposure to expected credit losses as of the balance sheet date, for existing financial instruments held at amortized cost, securities classified as available for sale and off-balance sheet exposures, such as unfunded loan commitments, letters of credit and other financial guarantees that are not unconditionally cancelable by the company.the determination of the acl requires management to exercise significant judgment and consider numerous subjective factors, including determining qualitative factors utilized to adjust historical loss rates, loan credit risk grading and identifying loans requiring individual evaluation among others. as disclosed by management, different assumptions and conditions could result in a materially different amount for the estimate of the acl.  we identified the acl at december 31, 2021 as a critical audit matter. auditing the acl involved a high degree of subjectivity in evaluating management’s estimates, such as evaluating management’s identification of credit quality indicators, grouping of loans determined to be similar into pools, estimating the remaining life of loans in a pool, assessment of economic conditions and other environmental factors, evaluating the adequacy of specific allowances associated with individually evaluated loans and assessing the appropriateness of loan credit risk grades.the primary procedures we performed at initial adoption of topic 326 at january 1, 2020 and as of december 31, 2021, to address this critical audit matter included:• obtained an understanding of the company’s process for establishing the acl.• tested the design and operating effectiveness of controls, including those related to technology, over the acl, including:o loan data completeness and accuracy o reconciliation of loan balances accounted for at amortized cost and underlying detail o classifications of loans by loan pool o historical charge-off datao the calculation of loss rates given probability of default and loss given default o review of commercial real-estate appraisalso the calculation of estimated remaining lives of the loans o the establishment of qualitative adjustments o loan credit risk ratings o establishment of specific acl on individually evaluated loans, o management’s review and disclosure controls over the acl• tested the completeness and accuracy of the information utilized in the acl, including evaluating the relevance and reliability of such information• tested the acl model’s computational accuracy such as probability of default, loss given default and estimated remaining lives of loans• evaluated the qualitative adjustments to the acl including assessing the basis for adjustments and the reasonableness of the significant assumptions including consideration of impact of the covid-19 pandemic74table of contents• tested the loan review functions and evaluated the reasonableness of loan credit risk ratings• evaluated the reasonableness of specific allowances on individually evaluated loans• evaluated the overall reasonableness of assumptions used by management considering trends identified within peer groups• evaluated the accuracy and completeness of topic 326 disclosures in the consolidated financial statements• evaluated credit quality trends in delinquencies, non-accruals, charge-offs and loan risk ratings; • tested estimated utilization rate of unfunded loan commitments• reviewed documentation prepared to assess the methodology utilized in the acl calculation for securities for reasonableness/s/ bkd, llp we have served as the company’s auditor since 2016.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. impairment assessments of certain indefinite-lived intangible assets composed of investment management agreements as described in notes 2 and 8 to the consolidated financial statements, the company’s net intangible assets balance of $2,542.7 million as of december 31, 2021 is net of $121.9 million of impairment recognized in 2021, and includes indefinite-lived investment management agreements, indefinite-lived trademarks and definite-lived client relationships. the indefinite-lived intangible asset balance related to investment management agreements was $2,114.8 million as of december 31, 2021, which is net of $115.6 million of impairment recognized in 2021. management performs its annual impairment assessment of indefinite-lived intangible assets as of october 1 of each year, or more frequently if changes in circumstances indicate that the carrying value may be impaired. if the fair value of the intangible asset is less than the carrying amount, an impairment is recognized. during the second quarter of 2021, management performed an interim impairment assessment on a certain indefinite-lived intangible asset composed of investment management agreements due to a significant decrease in assets under management and unfavorable changes in the forecast on this specific asset. a discounted cash flow model was used to determine the estimated fair value of the investment management agreements. the results of the discounted cash flow model revealed a fair value of nil and management therefore impaired the entire $40.8 million balance of the intangible asset. as part of management’s annual impairment assessment, management used a qualitative approach to determine the likelihood of impairment of indefinite-lived intangible assets, with assets under management being the focus of the assessment. after reviewing the results of the qualitative assessment, a certain intangible asset composed of investment management agreements with a carrying value of $117.8 million as of october 1, 2021 required further review to determine if it was impaired. management prepared a discounted cash flow model to determine the estimated fair value of the intangible asset, which was below the carrying value of the asset and a $74.8 million impairment was recorded. some of the inputs used in the interim and annual discounted cash flow models required significant management judgment, including the discount rates, terminal growth rates, forecasted financial results and market returns. 59table of contents the principal considerations for our determination that performing procedures relating to the impairment assessments of certain indefinite-lived intangible assets composed of investment management agreements is a critical audit matter are (i) the significant judgment by management when determining the fair value of certain indefinite-lived intangible assets and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the forecasted financial results and market returns. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s impairment assessments of intangible assets, including controls over the valuation of certain indefinite-lived intangible assets composed of investment management agreements. these procedures also included, among others (i) testing management’s process for determining the fair value of certain indefinite-lived intangible assets composed of investment management agreements; (ii) evaluating the appropriateness of the discounted cash flow model; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model; and (iv) evaluating the reasonableness of significant assumptions used by management related to the forecasted financial results and market returns. evaluating management’s significant assumptions related to the forecasted financial results and market returns involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of investment companies subject to the investment management agreements; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. /s/ pricewaterhouse coopers llp denver, colorado february 24, 2022we have served as the company’s auditor since 2019.

critical audit matters critical audit matters are matters arising from the current periodaudit of the financial statements that were communicated or required to becommunicated to the audit committee and that: (1) relate to accounts or disclosuresthat are material to the financial statements and (2) involved our especiallychallenging, subjective, or complex judgments. we determined that there are nocritical audit matters./s/ mazars usa llp we have served as the trust's auditor since 2006

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgements. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.26table of contents valuation of goodwill and indefinite lived intangibles (note 1 and note 5 to the consolidated financial statements)critical audit matter as disclosed in the consolidated financial statements, goodwill and indefinite lived intangibles are tested for impairment annually at the reporting unit level on november 30 unless an interim test is required due to the presence of indicators that goodwill and indefinite lived intangibles may be impaired. significant judgment is exercised by management in determining if impairment is present and at what amount. as a part of this determination, significant estimation is required to determine the fair value of each reporting unit. fair value is estimated by management based on an income approach using a discounted cash flow model. in particular, the fair value estimates are sensitive to significant assumptions such as the operating performance projections, terminal growth rate, industry factors, and discount rates.given these factors, auditing management’s quantitative impairment tests for goodwill and indefinite lived intangible assets involved especially challenging, subjective, and complex auditor judgment and increased audit effort.how our audit addressed the critical audit matter our principal audit procedures related to the company’s annual goodwill and indefinite lived intangibles impairment test included the following, among others:·we gained an understanding of and evaluated the design and implementation of the company’s controls that address the risk of material misstatement related to potential impairment, including methods, data, and significant assumptions used in developing the discounted cashflow analysis as well as the completeness and accuracy of the underlying data used by the company in its analyses;·we evaluated management’s significant accounting policies related to impairment of goodwill and indefinite-lived intangible assets for reasonableness;·we evaluated significant judgments made by management, including the identification of two reporting units along with a separate unit to capture the corporate overhead;·we evaluated management’s ability to estimate future cash flows, including projected revenues, by performing a retrospective review of select company historical cash flow forecasts;·we evaluated management’s projected revenues and cash flows by comparing the projections to the underlying business strategies and growth plans and performed a sensitivity analysis related to the key inputs to projected cash flows, including revenue growth rates, to evaluate the changes in the fair value of the reporting unit that would result from changes in assumptions;·with the assistance of our firm’s valuation professionals with specialized skills and knowledge in valuation methods and models, we tested the company’s discounted cash flow models, including certain assumptions including the terminal value and discount rates; and·we evaluated management’s reconciliation of the fair value measurements from the individual reporting units discounted cash flows to the company’s market capitalization./s/ cohn reznick llp we have served as the company's auditor since 2008.

critical audit matters the critical audit matters communicated beloware matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicatedto the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii)involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in anyway our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit mattersbelow, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. f-2 going concern assessment as discussed in notes 1 to the consolidated financialstatements, on february 4, 2021 the company sold an aggregate of 2,790,697 units at a price to the public of $4.30 per unit (the “offering”),each unit consisting of one share of the company’s common stock, par value $0.001 per share (the “common stock”), anda warrant exercisable for five years to purchase one share of common stock at an exercise price of $4.30 per share (the “warrants”).in light of the above, the company’s management has concluded that there are no material uncertainties that give rise to significantdoubt over the company’s ability to continue as a going concern for at least twelve months from the date of the approval of thefinancial statements. we identified management’s assumptions usedto assess the company’s ability to continue as a going concern as a critical audit matter due to inherent complexities and uncertaintiesrelated to the company’s management’s plans. auditing these assumptions involved especially challenging auditor judgment dueto the nature and extent of audit evidence and effort required to address these matters. the primary procedures we performed to addressthis critical audit matter included the following: ●assessingthe reasonableness of key assumptions underlying management’s forecast operating cash flows, including revenue growth and grossmargin assumptions and evaluating the reasonableness of management’s forecast operating cash flows. ●evaluatingthe probability that the company will be able to reduce capital expenditures and other operating expenditures if required. ●assessingmanagement’s plans in the context of other audit evidence obtained during the audit to determine whether it supported or contradictedthe conclusions reached by management. ●assessingthe effect of events and agreement signed after balance sheet date. /s/ halperin ilanit.certified public accountants (isr.)pcaob number 650100001 tel aviv, israel march 31, 2022 we have served as the company’s auditor since 2018

critical audit matters the critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.revenue recognition — refer to notes 1 and 4 to the financial statements critical audit matter description the company recognizes revenue on contracts over time. accounting for contracts and programs involves the use of various techniques to estimate total contract revenue and costs. for contracts, management estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. contract estimates are based on various assumptions to project the outcome of future events. these assumptions include labor productivity and availability; the complexity of the services being performed; the cost and availability of materials; the performance of subcontractors; and negotiations with the customer on contract modifications. for the year ended december 31, 2021, revenue was $1,784 million.we identified revenue on contracts as a critical audit matter because of the assumptions necessary to estimate total costs and revenue for the performance obligations. this required extensive audit effort due to the volume and complexity of contracts and required a high degree of auditor judgment when performing audit procedures to audit management’s estimates and assumptions related to total costs and revenue. f-2index to consolidated financial statements how the critical audit matter was addressed in the audit our audit procedures related to management’s estimates of total costs and revenue for the performance obligations used to recognize revenue included the following, among others:•we tested the effectiveness of controls over contract revenue, including management’s controls over the estimates of total costs and revenue for performance obligations.•we developed an expectation of revenue and compared it to the recorded balance.•we selected a sample of contracts and performed the following for each contract:– evaluated whether the contracts were properly included in management’s calculation of contract revenue based on the terms and conditions of each contract, including whether the customers simultaneously receive and consume the benefits of the company’s services.– compared the transaction prices to the consideration expected to be received based on current rights and obligations under the contracts and any modifications that were agreed upon with the customers.– tested management’s identification of distinct performance obligations by evaluating whether the underlying services were an integrated set of tasks and deliverables as a single service solution, as well as the impact of contract modifications.– tested the accuracy and completeness of the costs incurred to date for the performance obligation.– evaluated the estimates of total cost and revenue for the performance obligation by: •comparing costs incurred to date to the costs management estimated to be incurred to date.•comparing management’s estimates for the selected contracts to costs and revenue of similar performance obligations, when applicable, as well as current contractual requirements. •developing an independent expectation of management’s estimated cost based upon historical labor efforts and compared it to the estimated cost prepared by management.•selecting a sample of items representing contractual consideration and agreeing the samples to contract documents or other supporting documentation related to management’s estimate of variable consideration and contract scope changes.•testing the mathematical accuracy of management’s calculation of revenue for the performance obligation. •we selected a sample of performance obligations and the associated estimate of profitability at completion as prepared by management and compared it to the recorded cost and revenue.•we evaluated management’s ability to estimate total costs and revenue accurately by comparing actual costs and profits to management’s historical estimates for performance obligations that have been fulfilled.acquisitions – zenetex – customer related intangible assets — refer to notes 1 and 3 to the financial statements critical audit matter description the company acquired zenetex for $117.6 million on december 31, 2020. the company conducted valuations of certain acquired assets and liabilities as of the date of acquisition, including customer related intangible assets of $57.1 million, which were finalized during the current fiscal year. management’s determination of customer related intangible assets fair value required significant judgment. these judgments included cash flow analyses using management’s best estimate of future revenue, earnings and cash flows, as well as analysis of historical performance of zenetex. the cash flow analyses were discounted to adjust for risks in these estimates. these judgments may cause final amounts to differ materially from original estimates. given the judgments necessary to audit such accounting conclusions, the estimates required an increased extent of audit effort due to the uncertainty associated with future events and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures, including the need to involve our fair value specialists.how the critical audit matter was addressed in the audit our audit procedures related to the valuation of customer related intangible assets included the following, among others: •we obtained and read the executed purchase agreement.•we tested the effectiveness of controls over the valuation of customer related intangible assets, including management’s controls for identifying the intangible assets, determining forecasts of future cash flows and selecting the discount rate.f-3index to consolidated financial statements•we tested the completeness and accuracy of the underlying data used in the fair value model which included inspecting contractual documents and comparing projected cash flows to both historical actual results and industry data.•with the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate by testing the source information underlying the determination of the discount rate, testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rate selected by management.•we performed sensitivity analyses over assumptions used in the fair value model, to evaluate the risk associated with a change in assumptions to the recorded fair value of the customer related intangible assets.•we compared the significant assumptions to current industry, market and economic trends, historical results of zenetex and to other relevant factors including benchmark data.•we evaluated the adequacy of the company’s financial statement disclosures related to the acquisition./s/ deloitte & touche llp denver, colorado march 7, 2022we have served as the company's auditor since 2013.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.liabilities for self-insured claims as discussed in note 2 to the consolidated financial statements, the company uses a combination of self-insurance programs and purchased insurance to provide for the costs of liability, vehicular, and workers’ compensation claims (self-insured claims). the company records estimates of the undiscounted liability associated with claims incurred as of the balance sheet date, including estimates of claims incurred but not reported, by considering historical cost experience, demographic and severity factors, and judgments about current and expected levels of cost per claim and retention levels. these liabilities are recorded within accrued liabilities and other long-term liabilities as of december 31, 2020.we identified the assessment of the estimated liabilities for self-insured claims as a critical audit matter. the evaluation of the uncertainty in the amounts that will ultimately be paid to settle these claims required subjective auditor judgment. assumptions that may affect the estimated liability of claims include the consideration of historical cost experience, severity factors, and judgments about current and expected levels of cost per claims and retention levels that have uncertainty related to future occurrences or events and conditions. additionally, the company’s liabilities for self-insured claims included estimates for expenses of claims that have been incurred but have not been reported, and specialized skills were needed to evaluate the actuarial methods and assumptions used to assess these estimates. the following are the primary procedures we performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls over the company’s self-insurance process. this included controls over the assumptions used in estimating the liabilities for self-insured claims. in addition, we compared the company’s estimates of liabilities for individual self-insured claims to current available information, which included legal claims, incident and case reports, current and historical cost experience, or other evidence. we involved an actuarial professional with specialized skills and knowledge, who assisted in:•comparing the company’s actuarial reserving methodologies with accepted actuarial methods and procedures54table of contents•evaluating assumptions used in determining the liability, including expected level of cost per claim and retention levels, in relation to recent historical loss payment trends and severity factors•developing an independent expected range of liabilities, including liabilities for claims that have been incurred but have not been recorded, based on actuarial methodologies•comparing the company’s recorded liability to the independently developed liability range.assessment of the carrying value of goodwill as discussed in notes 2 and 9 to the consolidated financial statements, the goodwill balance as of december 31, 2020 was $4,599 million. the company performs goodwill impairment testing annually, or more frequently if events or circumstances indicate the carrying value of a reporting unit that includes goodwill might exceed the fair value of that reporting unit. in assessing the carrying value of goodwill, the company uses a third-party appraiser, who uses a combination of an income approach and a market approach to estimate fair value. the income approach is based on the present value of estimated future cash flows, discounted at a risk-adjusted rate to estimate the fair value of the reporting units. the market approach is based on comparable market multiples for companies engaged in similar business, as well as recent transactions within the industry. we identified the assessment of the carrying value of goodwill for each of the company’s reporting units as a critical audit matter. assessment of certain assumptions used to estimate fair value under the income approach, including the fair value model, long-term future growth rates, and the risk-adjusted discount rate, had estimation uncertainty, which resulted in subjective auditor judgment and required specialized skills and knowledge. additionally, assessment of the guideline public companies and transactions within the industry used to estimate fair value under the market approach required significant auditor judgment. changes to these assumptions may have a significant effect on the company’s assessment of the carrying value of the goodwill.the following are the primary procedures performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls over the company’s goodwill impairment assessment process. this included controls related to the determination of the fair value of the reporting units, the estimate of long-term future growth rates, the assumptions used to develop the risk-adjusted discount rates, and the determination of the guideline public companies and transactions within the industry. we performed sensitivity analyses over the fair value model for long-term future growth rates to assess their impact on the company’s determination of the fair value of each reporting unit. we compared the company’s historical growth rate forecast to actual results to assess the company’s ability to accurately forecast. we involved valuation professionals with specialized skill and knowledge, who assisted in:•comparing the valuation methodologies used by the company to valuation standards•comparing the company’s risk-adjusted discount rates to risk-adjusted discount rate ranges that were independently developed using publicly available third-party market data for comparable entities•comparing the long-term growth rates to industry data, economic growth data, and long-term growth rates used by the company in prior years’ valuation analyses•evaluating the guideline public companies and transactions used by the company by reading the business descriptions, examining financial metrics of the comparable public companies and transactions within the industry, and considering market participant guidance and perspective./s/ kpmg llp we have served as the company’s auditor since 2011.

critical audit matter the critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. allowance for credit losses as described in note c to the financial statements, the company had finance receivables of $1.1 billion, for which an allowance of $247.2 million was recorded as of april 30, 2022. management estimates the allowance for credit losses on finance receivables by applying a loss-rate method using historical credit loss experience (both timing and severity of losses) and collateral values. the estimate is adjusted for current conditions and reasonable and supportable forecasts to reflect management’s expectations for credit losses on the finance receivables, which include factors such as current and expected changes in the fair market value of repossessed vehicles, the effects of macroeconomic factors such as changes in inflation, and the discontinuation of covid-19 pandemic government provided benefits. we identified the allowance for credit losses as a critical audit matter. 38 the principal considerations for our determination that the allowance for credit losses is a critical audit matter were the significant judgments made by management, including the adjustment for the forecasted effects on expected losses from projected levels of inflation and the discontinuation of covid-19 pandemic government provided benefits. these judgements led to a high degree of auditor judgment and subjectivity in performing procedures over these assumptions. our audit procedures related to the allowance for credit losses included the following, among others: ● we tested the design and operating effectiveness of controls relating to management’s allowance for credit losses estimation process, which included controls over the judgements related to its forecast for the effects on expected losses from projected levels of inflation and the discontinuation of covid-19 pandemic government provided benefits. ● we tested management’s process for determining the allowance for credit losses, including its forecast for the effects of expected losses from projected levels of inflation and the discontinuation of covid-19 pandemic government provided benefits. /s/ grant thornton llp we have served as the company’s auditor since 1999.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.investment in real estate – evaluation of impairment – refer to notes 2 and 17 to the financial statements.critical audit matter description the company’s evaluation for impairment of its investment in real estate involves an initial assessment of each real estate asset to determine whether events or changes in circumstances exist that may indicate that the carrying amount of a real estate asset is no longer recoverable. possible indicators of impairment may include changes in market conditions; significant decreases in a real estate asset’s occupancy, rental income, operating income, or market value; declines in tenant performance; tenant bankruptcies; changes to lease structures; or a planned disposition in which a real estate asset’s fair value is less than its current carrying value, among others. when an indicator of potential impairment exists, the company evaluates the real estate asset for impairment by comparing undiscounted future cash flows expected to be generated over the holding period of the real estate asset to its respective carrying amount. if the carrying amount of the real estate asset exceeds its undiscounted future cash flows, an analysis is performed to determine the fair value of the real estate asset for measurement of impairment.the company makes significant assumptions, the most critical of which involve assessments of market conditions, hold periods, and market values of its real estate assets, to identify those with potential impairment. changes in these assumptions could have a significant impact on which real estate assets are identified for further analysis. for a real estate asset with an identified indicator of potential impairment, the company makes significant estimates and assumptions to project the real estate asset’s undiscounted future cash flows expected to be generated over the company’s remaining holding period. estimates and assumptions made include those related to the real estate asset’s market rent growth and terminal capitalization rates, and assumptions related to tenant activity, such as future lease signings and renewals. in the event that a real estate asset is not recoverable based on the results of the undiscounted cash flow analysis, the company will adjust the real estate asset to its fair value based upon discounted cash flow or direct capitalization models, third-party appraisals, or broker selling estimates or sale agreements, when available, and recognize an impairment loss for the carrying amount in excess of fair value.based on the company’s impairment analysis, certain real estate assets were identified as possessing impairment indicators and were then subject to an undiscounted cash flow test. based on the results of the undiscounted cash flow tests, certain real estate assets were determined to be unrecoverable by the company. an impairment loss of approximately $2.4 million was recognized during the year ended december 31, 2020 on those unrecoverable real estate assets. we identified the identification and analysis of impairment indicators for real estate assets and the impairment of real estate assets as a critical audit matter because of (1) the significant assumptions management makes when identifying and analyzing f-2indicators to determine whether events or changes in circumstances have occurred indicating that the carrying amounts of real estate assets may not be recoverable and (2) for those real estate assets where indications of impairment have been identified, the significant estimates and assumptions management makes to estimate the undiscounted cash flows of real estate assets, and for those real estate assets that are not recoverable, the significant estimates and assumptions management makes to determine the fair value of the real estate assets. a high degree of auditor judgment was required when performing audit procedures to evaluate (1) whether management appropriately identified and analyzed impairment indicators, (2) the reasonableness of management’s undiscounted future cash flows analysis, and (3) the determination of fair value for unrecoverable real estate assets.how the critical audit matter was addressed in the audit our audit procedures related to the identification and analysis of real estate assets for possible indications of impairment, and our procedures related to the estimate of future undiscounted cash flows and the determination of fair value for unrecoverable real estate assets, included the following, among others:•we evaluated the company’s identification and analysis of impairment indicators by:◦searching for adverse asset-specific and market conditions through review of third-party industry reports, real estate industry news sources, and websites and financial reports of key anchor tenants across the portfolio, among other sources. ◦independently evaluating key impairment indicators, such as projected net operating income and changes in occupancy of each real estate asset, and comparing the results of our analysis to the indicators identified by management. ◦reviewing management’s specific real estate asset disposition plans and assessing for impairment any real estate asset with potential sales prices below the recorded real estate asset value.•we evaluated the company’s estimate of undiscounted future cash flows and the determination of fair value for unrecoverable real estate assets by:◦comparing the projections included in management’s estimate of future undiscounted cash flows to the company’s historical results and external market sources.◦evaluating whether the impacts caused by the covid-19 pandemic on a real estate asset’s cash flows were properly considered in the company’s cash flow projections, including the projected hold period, impact of rent deferrals and concessions, probability of lease renewals and execution of new leases, and operational health of tenant businesses.◦assessing the market rent growth rate and terminal capitalization rate used to determine the residual value of the real estate asset upon future sale against third-party industry reports and recent comparable sales information.◦discussing with management the assumptions used in the company’s valuation models and evaluating the consistency of the assumptions used with evidence obtained in other areas of the audit.◦evaluating the source information used by management when determining the fair value of a real estate asset based on broker selling estimates or sale agreements./s/ deloitte & touche llp cincinnati, ohio march 12, 2021 we have served as the company's auditor since 2009.

critical audit matter critical audit matters are mattersarising from the current-period audit of the financial statements that were communicated or required to be communicated to theaudit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved ourespecially challenging, subjective, or complex judgments. we determined that there are nocritical audit matters. /s/ bf borgers cpa pc we have served as the company's auditorsince 2020

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.39revenue from contracts with customers - identification of distinct performance obligations and estimate of standalone selling price as described in note 1 to the consolidated financial statements, the company derives its revenue from sales of its products, support and services. product revenue consists of the company’s software integrated with industry standard hardware and sold as complete turn-key integrated solutions, as stand-alone software applications or sold on a subscription or consumption basis. customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. the company’s contracts with customers often include promises to transfer multiple products and services to a customer. determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. judgment is required to determine the standalone selling price (“ssp”) for each distinct performance obligation. for products and services aside from maintenance and support, the company estimates ssp by adjusting the list price by historical discount percentages. ssp for software and hardware maintenance and support fees is based on the stated percentages of the fees charged for the respective products.the principal considerations for our determination that performing procedures relating to revenue recognition, specifically related to management’s identification of distinct performance obligations and their estimate of standalone selling price, is a critical audit matter are that there was significant judgment by management in both the identification of distinct performance obligations, specifically the determination that the on-premises software is determined to be a distinct performance obligation from support, and in estimating the standalone selling price using market pricing conditions and other observable inputs, such as historical pricing practices, for each distinct performance obligation. this in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s identification of distinct performance obligations within contracts with customers and the judgments made by management used to estimate the standalone selling price used to allocate the transaction price to the distinct performance obligations. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included, among others, (i) evaluating the company’s revenue recognition accounting policy; (ii) testing management’s identification of distinct performance obligations in its contracts with customers; (iii) testing management’s process for estimating standalone selling price which included testing the completeness and accuracy of input data used and evaluating the reasonableness of significant assumptions used by management, principally market and pricing conditions and other observable inputs such as historical pricing practices; and (iv) evaluation of the accuracy of management’s allocation of transaction price to the performance obligations contained within a sample of contracts with customers./s/ marcum llp marcum llp we have served as the company’s auditor since 2019.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.impairment assessments of certain indefinite-lived trademarks as described in notes 2 and 14 to the consolidated financial statements, the company owns indefinite-lived trademarks in the amount of $1.30 billion as of december 28, 2019. these assets are assessed for impairment at least annually, as of the first day of the third fiscal quarter, and more often as triggering events occur. the impairment test consists of comparing the fair value of the intangible asset to its carrying amount. the company recognizes an impairment loss for the amount by which an identifiable intangible asset’s carrying value exceeds its fair value. as disclosed by management, fair values of intangible assets are primarily based on future cash flows projected to be generated from that asset. in assessing fair value, management relies on a number of factors to discount anticipated future cash flows including long-term sales growth rates, operating results, business plans and present value techniques. rates used to discount cash flows are dependent upon interest rates and the cost of capital at a point in time. there are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of intangible asset impairment.the principal considerations for our determination that performing procedures relating to the impairment assessments of certain indefinite-lived trademarks is a critical audit matter as there was significant judgment by management when estimating the fair value measurement of the indefinite-lived trademarks. this in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s cash flow projections and significant assumptions, including long-term sales growth rates and discount rates. in addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the company’s impairment assessments of indefinite-lived trademarks, including controls over the significant assumptions and data. these procedures also included, among others, evaluating management’s process for developing the fair value estimate; evaluating the appropriateness of the discounted cash flow model; testing the completeness, accuracy and relevance of underlying data used in the model; and evaluating the significant assumptions used by management, including the long-term sales growth rates and discount rates. evaluating management’s assumptions related to long-term sales growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the past performance of the associated branded products, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in the evaluation of the discount rates.f-4table of contents accounting for deferred taxes as described in notes 2 and 19 to the consolidated financial statements, the company has recognized $397.6 million and $302.3 million of deferred tax assets and deferred tax liabilities, respectively, as of december 28, 2019. as disclosed by management, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the income tax basis of assets and liabilities, as well as for realizable operating loss and tax credit carryforwards, at tax rates in effect for the years in which the differences are expected to reverse. the company periodically estimates the probable tax obligations using historical experience in tax jurisdictions and informed judgment. there are inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which the company transacts business. the judgments and estimates made at a point in time may change based on the outcome of tax audits, as well as changes to, or further interpretations of regulations.the principal considerations for our determination that performing procedures relating to the accounting for deferred taxes is a critical audit matter as there was significant judgment by management when assessing complex tax regulations in the jurisdictions in which the company operates. this in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the identification and accurate measurement of deferred tax assets and liabilities. in addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained. as described in the “opinions on the financial statements and internal control over financial reporting” section, a material weakness was identified related to this matter.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to accounting for deferred taxes, including evaluation of temporary differences within various jurisdictions. these procedures also included, among others, testing the provision for income taxes, including the effective tax rate reconciliation, permanent and temporary differences, inspecting correspondence with tax regulators and external tax advisors, testing the underlying data, and evaluating the significant assumptions used in establishing and measuring tax-related assets and liabilities. professionals with specialized skill and knowledge were used to assist in evaluating the application of relevant tax regulations in various jurisdictions./s/ pricewaterhouse coopers llp greensboro, north carolina february 10, 2020we have served as the company’s auditor since 2006.

critical audit matter due to the estimation and uncertainty regarding our future cash flows, available capitaland the risk of bias in management’s judgments and assumptions in their determination. although our audited financial statements forthe year ended december 31, 2021 were prepared under the assumption that we would continue our operations as a going concern, the reportof our independent registered public accounting firm that accompanies our financial statements for the year ended december 31, 2021 containsa critical audit matter description relating to our ability to continue as a going concern due to the estimation and uncertainty regardingour future cash flows, available capital and the risk of bias in management’s judgments and assumptions in their determination.we have generated losses since inception and have relied on cash on hand, sales of securities, external bank lines of credit, and issuanceof third-party and related party debt to support cashflow from operations. for the year ended december 31, 2021, we incurred operatinglosses from continuing operations of $3,721,157 (before deducting losses attributable to non-controlling interests and excluding the incomeof discontinued operations), cash flows used in operating activities from continuing operations of $897,566 (excluding the cashflow fromdiscontinued operations) and negative working capital of $1,295,692 (excluding the negative working capital from discontinued operations). however, management believes, based on our operatingplan, that current working capital and current and expected additional financing is sufficient to fund operations and satisfy our obligationsas they come due for at least one year from the financial statement issuance date. we also believe that the proceeds from this offeringwill be sufficient to fund our operations for significantly more than the next year. however, wedo believe additional funds are required to execute our business plan and our strategy of acquiring additional businesses. the funds requiredto execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a target businessdeems acceptable in a given transaction. the amount of funds needed to execute our business plan also depends on what portion of the purchaseprice of a target business the seller of that business is willing to take in the form of seller notes or our equity or equity in one ofour subsidiaries. given these factors, we believe that the amount of outside additional capital necessary to execute our business planon the low end (assuming target company sellers accept a significant portion of the purchase price in the form of seller notes or ourequity or equity in one of our subsidiaries) ranges between $100,000 to $250,000. if, and to the extent, that sellers are unwilling toaccept a significant portion of the purchase price in seller notes and equity, then the cash required to execute our business plan couldbe as much as $5,000,000. although we do not believe that we will requireadditional cash to continue our operations over the next twelve months, there are no assurances that we will be able to raise our revenuesto a level which supports profitable operations and provides sufficient funds to pay obligations in the future. our prior losses havehad, and will continue to have, an adverse effect on our financial condition. in addition, continued operations and our ability to acquireadditional businesses may be dependent on our ability to obtain additional financing in the future, and there are no assurances that suchfinancing will be available to us at all or will be available in sufficient amounts or on reasonable terms. our financial statements donot include any adjustments that may result from the outcome of this uncertainty. if we are unable to generate additional funds in thefuture through our operations, financings or from other sources or transactions, we will exhaust our resources and will be unable to continueoperations. if we cannot continue as a going concern, our shareholders would likely lose most or all of their investment in us. 40 we may not be able to effectively integratethe businesses that we acquire. our ability to realize the anticipated benefitsof acquisitions will depend on our ability to integrate those businesses with our own. the combination of multiple independent businessesis a complex, costly and time-consuming process and there can be no assurance that we will be able to successfully integrate businessesinto our business, or if such integration is successfully accomplished, that such integration will not be costlier or take longer thanpresently contemplated. integration of future acquisitions may include various risks and uncertainties, including the factors discussedin the paragraph below. if we cannot successfully integrate and manage the businesses within a reasonable time, we may not be able torealize the potential and anticipated benefits of such acquisitions, which could have a material adverse effect on our share price, business,cash flows, results of operations and financial position. we will consider other acquisitions that we believewill complement, strengthen and enhance our growth. we evaluate opportunities on a preliminary basis from time to time, but these transactionsmay not advance beyond the preliminary stages or be completed. such acquisitions are subject to various risks and uncertainties, including: ●the inability to integrate effectively the operations, products, technologies and personnel of the acquired companies (some of which are in diverse geographic regions) and achieve expected synergies; ●the potential disruption of existing business and diversion of management’s attention from day-to-day operations; ●the inability to maintain uniform standards, controls, procedures and policies; ●the need or obligation to divest portions of the acquired companies; ●the potential failure to identify material problems and liabilities during due diligence review of acquisition targets; ●the potential failure to obtain sufficient indemnification rights to fully offset possible liabilities associated with acquired businesses; and ●the challenges associated with operating in new geographic regions. our future success is dependent on the employeesof our manager, our manager’s operating partners and the management team of our business, the loss of any of whom could materiallyadversely affect our financial condition, business and results of operations. our future success depends, to a significant extent,on the continued services of the employees of our manager. the loss of their services may materially adversely affect our ability to managethe operations of our businesses. the employees of our manager may leave our manager and go to companies that compete with us in the future.in addition, we depend on the assistance provided by our manager’s operating partners in evaluating, performing diligence on andmanaging our businesses. the loss of any employees of our manager or any of our manager’s operating partners may materially adverselyaffect our ability to implement or maintain our management strategy or our acquisition strategy. the future success of our existing and futurebusinesses also depends on the respective management teams of those businesses because we intend to operate our businesses on a stand-alonebasis, primarily relying on their existing management teams for day-to-day operations. consequently, their operational success, as wellas the success of any organic growth strategy, will be dependent on the continuing efforts of the management teams of our businesses.we will seek to provide these individuals with equity incentives and to have employment agreements with certain persons we have identifiedas key to their businesses. however, these measures may not prevent these individuals from leaving their employment. the loss of servicesof one or more of these individuals may materially adversely affect our financial condition, business and results of operations. we may experience difficulty as we evaluate,acquire and integrate businesses that we may acquire, which could result in drains on our resources, including the attention of our management,and disruptions of our on-going business. we acquire small businesses in various industries.generally, because such businesses are privately held, we may experience difficulty in evaluating potential target businesses as muchof the information concerning these businesses is not publicly available. therefore, our estimates and assumptions used to evaluate theoperations, management and market risks with respect to potential target businesses may be subject to various risks and uncertainties.further, the time and costs associated with identifying and evaluating potential target businesses and their industries may cause a substantialdrain on our resources and may divert our management team’s attention away from the operations of our businesses for significantperiods of time. 41 in addition, we may have difficulty effectivelyintegrating and managing acquisitions. the management or improvement of businesses we acquire may be hindered by a number of factors,including limitations in the standards, controls, procedures and policies implemented in connection with such acquisitions. further, themanagement of an acquired business may involve a substantial reorganization of the business’ operations resulting in the loss ofemployees and customers or the disruption of our ongoing businesses. we may experience greater than expected costs or difficulties relatingto an acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition. we face competition for businesses thatfit our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisitionopportunities. we have been formed to acquire and manage smallbusinesses. in pursuing such acquisitions, we expect to face strong competition from a wide range of other potential purchasers. althoughthe pool of potential purchasers for such businesses is typically smaller than for larger businesses, those potential purchasers can beaggressive in their approach to acquiring such businesses. furthermore, we expect that we may need to use third-party financing in orderto fund some or all of these potential acquisitions, thereby increasing our acquisition costs. to the extent that other potential purchasersdo not need to obtain third-party financing or are able to obtain such financing on more favorable terms, they may be in a position tobe more aggressive with their acquisition proposals. as a result, in order to be competitive, our acquisition proposals may need to beaggressively priced, including at price levels that exceed what we originally determined to be fair or appropriate. alternatively, wemay determine that we cannot pursue on a cost-effective basis what would otherwise be an attractive acquisition opportunity. we may not be able to successfully fundacquisitions due to the unavailability of debt or equity financing on acceptable terms, which could impede the implementation of our acquisitionstrategy. in order to make acquisitions, we intend to raisecapital primarily through debt financing, primarily at our operating company level, additional equity offerings, the sale of equity orassets of our businesses, offering equity in our company or our businesses to the sellers of target businesses or by undertaking a combinationof any of the above. because the timing and size of acquisitions cannot be readily predicted, we may need to be able to obtain fundingon short notice to benefit fully from attractive acquisition opportunities. such funding may not be available on acceptable terms. inaddition, the level of our indebtedness may impact our ability to borrow at our company level. the sale of additional shares of any classof equity will also be subject to market conditions and investor demand for such shares at prices that may not be in the best interestof our shareholders. these risks may materially adversely affect our ability to pursue our acquisition strategy. we may change our management and acquisitionstrategies without the consent of our shareholders, which may result in a determination by us to pursue riskier business activities. we may change our strategy at any time withoutthe consent of our shareholders, which may result in our acquiring businesses or assets that are different from, and possibly riskierthan, the strategy described in this report. a change in our strategy may increase our exposure to interest rate and currency fluctuations,subject us to regulation under the investment company act of 1940, as amended, which we refer to as the investment company act, or subjectus to other risks and uncertainties that affect our operations and profitability. if we are unable to generate sufficientcash flow from the anticipated dividends and interest payments that we expect to receive from our businesses, we may not be able to makedistributions to our shareholders. our primary business is the holding and managingof controlling interests our operating businesses. therefore, we will be dependent upon the ability of our businesses to generate cashflows and, in turn, distribute cash to us in the form of interest and principal payments on indebtedness and distributions on equity toenable us, first, to satisfy our financial obligations and, second, to make distributions to our common shareholders. the ability of ourbusinesses to make payments to us may also be subject to limitations under laws of the jurisdictions in which they are incorporated ororganized. if, as a consequence of these various restrictions or otherwise, we are unable to generate sufficient cash flow from our businesses,we may not be able to declare, or may have to delay or cancel payment of, distributions to our common shareholders. in addition, the put price and profitallocation will be payment obligations and, as a result, will be senior in right to the payment of any distributions to ourshareholders. further, we are required to make a profit allocation to our manager upon satisfaction of applicable conditions topayment. see item 1 “business—our manager—our manager as an equity holder” for more information aboutour manager’s put right and profit allocation. 42 our loans with third parties contain certainterms that could materially adversely affect our financial condition. we and our subsidiaries are parties tocertain loans with third parties, which are secured by the assets of our subsidiaries. the loans agreements contain customaryrepresentations, warranties and affirmative and negative financial and other covenants. if an event of default were to occur underany of these loans, the lender thereto may pursue all remedies available to it, including declaring the obligations under itsrespective loan immediately due and payable, which could materially adversely affect our financial condition. see item 7“management’s discussion and analysis of financial condition and results of operations—liquidity and capital resources” for further discussion regarding our borrowing activities. in the future, we may seek to enter intoother credit facilities to help fund our acquisition capital and working capital needs. these credit facilities may expose us to additionalrisks associated with leverage and may inhibit our operating flexibility and reduce cash flow available for payment of distributions toour shareholders. we may seek to enter into other credit facilitieswith third-party lenders to help fund our acquisitions. such credit facilities will likely require us to pay a commitment fee on the undrawnamount and will likely contain a number of affirmative and restrictive covenants. if we violate any such covenants, our lenderscould accelerate the maturity of any debt outstanding and we may be prohibited from making any distributions to our shareholders. suchdebt may be secured by our assets, including the stock we may own in businesses that we acquire and the rights we have under intercompanyloan agreements that we may enter into with our businesses. our ability to meet our debt service obligations may be affected by eventsbeyond our control and will depend primarily upon cash produced by businesses that we currently manage and may acquire in the future anddistributed or paid to us. any failure to comply with the terms of our indebtedness may have a material adverse effect on our financialcondition. in addition, we expect that such credit facilitieswill bear interest at floating rates which will generally change as interest rates change. we will bear the risk that the rates that weare charged by our lenders will increase faster than we can grow the cash flow from our businesses or businesses that we may acquire inthe future, which could reduce profitability, materially adversely affect our ability to service our debt, cause us to breach covenantscontained in our third-party credit facilities and reduce cash flow available for distribution. we may engage in a business transactionwith one or more target businesses that have relationships with our executive officers, our directors, our manager, our manager’semployees or our manager’s operating partners, or any of their respective affiliates, which may create or present conflicts of interest. we may decide to engage in a business transactionwith one or more target businesses with which our executive officers, our directors, our manager, our manager’s employees, our manager’soperating partners, or any of their respective affiliates, have a relationship, which may create or present conflicts of interest. regardlessof whether we obtain a fairness opinion from an independent investment banking firm with respect to such a transaction, conflicts of interestmay still exist with respect to a particular acquisition and, as a result, the terms of the acquisition of a target business may not beas advantageous to our shareholders as it would have been absent any conflicts of interest. the operational objectives and businessplans of our businesses may conflict with our operational and business objectives or with the plans and objective of another businesswe own and operate. our businesses operate in different industriesand face different risks and opportunities depending on market and economic conditions in their respective industries and regions. a business’operational objectives and business plans may not be similar to our objectives and plans or the objectives and plans of another businessthat we own and operate. this could create competing demands for resources, such as management attention and funding needed for operationsor acquisitions, in the future. if, in the future, we cease to control andoperate our businesses or other businesses that we acquire in the future or engage in certain other activities, we may be deemed to bean investment company under the investment company act. we have the ability to make investments in businessesthat we will not operate or control. if we make significant investments in businesses that we do not operate or control, or that we ceaseto operate or control, or if we commence certain investment-related activities, we may be deemed to be an investment company under the investment company act. our decision to sell a business will be based upon financial, operating and other considerations rather than aplan to complete a sale of a business within any specific time frame. if we were deemed to be an investment company, we would either haveto register as an investment company under the investment company act, obtain exemptive relief from the sec or modify our investmentsor organizational structure or our contract rights to fall outside the definition of an investment company. registering as an investmentcompany could, among other things, materially adversely affect our financial condition, business and results of operations, materiallylimit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independentof us or our manager and otherwise will subject us to additional regulation that will be costly and time-consuming. 43 we have identified material weaknesses inour internal control over financial reporting. if we fail to develop or maintain an effective system of internal controls, we may notbe able to accurately report our financial results and prevent fraud. as a result, current and potential shareholders could lose confidencein our financial statements, which would harm the trading price of our common shares. companies that file reports with the sec, includingus, are subject to the requirements of section 404 of the sarbanes-oxley act of 2002, or sox 404. sox 404 requires management to establishand maintain a system of internal control over financial reporting and annual reports on form 10-k filed under the securities exchange act of 1934, as amended, or the exchange act, to contain a report from management assessing the effectiveness of a company’s internalcontrol over financial reporting. separately, under sox 404, as amended by the dodd-frank wall street reform and consumer protection actof 2010, public companies that are large accelerated filers or accelerated filers must include in their annual reports on form 10-k anattestation report of their regular auditors attesting to and reporting on management’s assessment of internal control over financialreporting. non-accelerated filers and smaller reporting companies, like us, are not required to include an attestation report of theirauditors in annual reports. a report of our management is included under item9a. “controls and procedures”. we are a smaller reporting company and, consequently, are not required to includean attestation report of our auditor in our annual report. however, if and when we become subject to the auditor attestation requirementsunder sox 404, we can provide no assurance that we will receive a positive attestation from our independent auditors. during its evaluation of the effectiveness ofinternal control over financial reporting as of december 31, 2021, management identified material weaknesses. these material weaknesseswere associated with our lack of (i) appropriate policies and procedures to evaluate the proper accounting and disclosures of key documentsand agreements, (ii) adequate segregation of duties with our limited accounting personnel and reliance upon outsourced accounting servicesand (iii) sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience in theapplication of gaap commensurate with our financial reporting requirements. we are undertaking remedial measures, which measureswill take time to implement and test, to address these material weaknesses. there can be no assurance that such measures will be sufficientto remedy the material weaknesses identified or that additional material weaknesses or other control or significant deficiencies willnot be identified in the future. if we continue to experience material weaknesses in our internal controls or fail to maintain or implementrequired new or improved controls, such circumstances could cause us to fail to meet our periodic reporting obligations or result in materialmisstatements in our financial statements, or adversely affect the results of periodic management evaluations and, if required, annualauditor attestation reports. each of the foregoing results could cause investors to lose confidence in our reported financial informationand lead to a decline in our share price. risks related to our retail and appliances business if we fail to acquire new customers or retainexisting customers, or fail to do so in a cost-effective manner, we may not be able to achieve profitability. our success depends on our ability to acquireand retain customers in a cost-effective manner. we have made significant investments related to customer acquisition and expect to continueto spend significant amounts to acquire additional customers. we cannot assure you that the net profit from new customers we acquire willultimately exceed the cost of acquiring those customers. if we fail to deliver a quality shopping experience, or if consumers do not perceivethe products we offer to be of high value and quality, we may not be able to acquire new customers. if we are unable to acquire new customerswho purchase products in numbers sufficient to grow our business, we may not be able to generate the scale necessary to drive beneficialnetwork effects with our suppliers or efficiencies in our logistics network, our net revenue may decrease, and our business, financialcondition and operating results may be materially adversely affected. we believe that many of our new customers originatefrom word-of-mouth and other non-paid referrals from existing customers. therefore, we must ensure that our existing customers remainloyal to us in order to continue receiving those referrals. if our efforts to satisfy our existing customers are not successful, we maynot be able to acquire new customers in sufficient numbers to continue to grow our business, or we may be required to incur significantlyhigher marketing expenses in order to acquire new customers. 44 our success depends in part on our abilityto increase our net revenue per active customer. if our efforts to increase customer loyalty and repeat purchasing as well as maintainhigh levels of customer engagement are not successful, our growth prospects and revenue will be materially adversely affected. our ability to grow our business depends on ourability to retain our existing customer base and generate increased revenue and repeat purchases from this customer base, and maintainhigh levels of customer engagement. to do this, we must continue to provide our customers and potential customers with a unified, convenient,efficient and differentiated shopping experience by: ●providing imagery, tools and technology that attract customers who historically would have bought elsewhere; ●maintaining a high-quality and diverse portfolio of products; ●delivering products on time and without damage; and ●maintaining and further developing our in-store and online platforms. if we fail to increase net revenue per activecustomer, generate repeat purchases or maintain high levels of customer engagement, our growth prospects, operating results and financialcondition could be materially adversely affected. our business depends on our ability to buildand maintain strong brands. we may not be able to maintain and enhance our brands if we receive unfavorable customer complaints, negativepublicity or otherwise fail to live up to consumers’ expectations, which could materially adversely affect our business, resultsof operations and growth prospects. maintaining and enhancing our brands is criticalto expanding our base of customers and suppliers. our ability to maintain and enhance our brand depends largely on our ability to maintaincustomer confidence in our product and service offerings, including by delivering products on time and without damage. if customers donot have a satisfactory shopping experience, they may seek out alternative offerings from our competitors and may not return to our storesand sites as often in the future, or at all. in addition, unfavorable publicity regarding, for example, our practices relating to privacyand data protection, product quality, delivery problems, competitive pressures, litigation or regulatory activity, could seriously harmour reputation. such negative publicity also could have an adverse effect on the size, engagement, and loyalty of our customer base andresult in decreased revenue, which could adversely affect our business and financial results. in addition, maintaining and enhancing these brandsmay require us to make substantial investments, and these investments may not be successful. if we fail to promote and maintain our brands,or if we incur excessive expenses in this effort, our business, operating results and financial condition may be materially adverselyaffected. we anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brands may become increasinglydifficult and expensive. maintaining and enhancing our brands will depend largely on our ability to provide high quality products to ourcustomers and a reliable, trustworthy and profitable sales channel to our suppliers, which we may not be able to do successfully. customer complaints or negative publicity aboutour sites, products, delivery times, customer data handling and security practices or customer support, especially on blogs, social mediawebsites and our sites, could rapidly and severely diminish consumer use of our sites and consumer and supplier confidence in us and resultin harm to our brands. our efforts to expand our business intonew brands, products, services, technologies, and geographic regions will subject us to additional business, legal, financial, and competitiverisks and may not be successful. our business success depends to some extent onour ability to expand our customer offerings by launching new brands and services and by expanding our existing offerings into new geographies.launching new brands and services or expanding geographically requires significant upfront investments, including investments in marketing,information technology, and additional personnel. we may not be able to generate satisfactory revenue from these efforts to offset thesecosts. any lack of market acceptance of our efforts to launch new brands and services or to expand our existing offerings could have amaterial adverse effect on our business, prospects, financial condition and results of operations. further, as we continue to expand ourfulfillment capability or add new businesses with different requirements, our logistics networks become increasingly complex and operatingthem becomes more challenging. there can be no assurance that we will be able to operate our networks effectively. 45 we have also entered and may continue to enterinto new markets in which we have limited or no experience, which may not be successful or appealing to our customers. these activitiesmay present new and difficult technological and logistical challenges, and resulting service disruptions, failures or other quality issuesmay cause customer dissatisfaction and harm our reputation and brand. further, our current and potential competitors in new market segmentsmay have greater brand recognition, financial resources, longer operating histories and larger customer bases than we do in these areas.as a result, we may not be successful enough in these newer areas to recoup our investments in them. if this occurs, our business, financialcondition and operating results may be materially adversely affected. if we fail to manage our growth effectively,our business, financial condition and operating results could be harmed. to manage our growth effectively, we must continueto implement our operational plans and strategies, improve and expand our infrastructure of people and information systems and expand,train and manage our employee base. we have rapidly increased employee headcount since our inception to support the growth in our business.to support continued growth, we must effectively integrate, develop and motivate a large number of new employees. we face significantcompetition for personnel. failure to manage our hiring needs effectively or successfully integrate our new hires may have a materialadverse effect on our business, financial condition and operating results. additionally, the growth of our business placessignificant demands on our operations, as well as our management and other employees. for example, we typically launch hundreds of promotionalevents across thousands of products each month on our sites via emails and pers

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.valuation of embedded derivatives associated with fixed index annuity products as described in notes 2 and 4 to the consolidated financial statements, the company issues fixed index annuity products, which provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the “participation rate”) of the amount of increase in the value of a particular index, such as the standard & poor’s 500 index, over a specified period. the company accounts for the options attributed to the policyholder for the estimated life of the contract as embedded derivatives. as of december 31, 2019, the value of embedded derivatives associated with fixed index annuity products is $1.6 billion, which is included in policyholder account liabilities. the accounting requirement is to record these embedded derivatives at estimated fair value. the value of the embedded derivatives is determined based on the present value of the estimated discounted future options costs. as described by management, in estimating the fair value of the embedded derivatives associated with fixed index annuity products, management used significant unobservable inputs with respect to projected portfolio yields, discount rates and surrender rates. the discount rate is based on risk-free rates adjusted for management’s non-performance risk and risk margins for non-capital market inputs. increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. the principal considerations for our determination that performing procedures relating to the valuation of embedded derivatives associated with fixed index annuity products is a critical audit matter are there was significant judgment by management in estimating the fair value of embedded derivatives, specifically the significant unobservable inputs to the discount rate, which included management’s non-performance risk and risk margins for non-capital market inputs. this in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s discount rate assumption. also, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained from these procedures. 102addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s valuation of embedded derivatives associated with fixed index annuity products, including controls over the company’s development of the significant assumption. these procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in testing management’s process for determining the fair value of the embedded derivatives associated with fixed index annuities. this included testing the completeness and accuracy of the data provided by management, evaluating the appropriateness of the valuation method and the reasonableness of the discount rate assumption. evaluating the significant assumption related to the discount rate involved evaluating whether management’s non-performance risk and risk margins for non-capital market significant unobservable inputs were reasonable considering relevant macroeconomic conditions, consistency with external market and industry data, and current and past policyholder experience. /s/ pricewaterhouse coopers llp indianapolis, indiana february 25, 2020 we have served as the company’s auditor since 1983.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.revenue recognition - over time accounting - input method - refer to note 2 to the financial statements critical audit matter description the company recognizes revenue for contracts in the cyber intelligence solutions segment that require significant customization of the software to meet the requirements of the customer over the term of the contract (“over time”) as the company’s performance does not create an asset with an alternative use and the company has an enforceable right to payment including a reasonable profit throughout the process. the company uses labor hours incurred to measure progress towards completion for contracts involving significant customization and the extent of progress towards completion is measured based on the ratio of labor hours incurred to the total estimated labor hours at completion of the performance obligation. the company’s determination of revenue recognition for contracts accounted for over time that require significant customization of the software involves estimating the total labor hours needed to complete the contracts and updating those estimates throughout the life of those contracts. this requires management to make significant estimates related to forecasts of future labor hours for 58table of contentscontracts for which revenue is recognized over time. changes in the estimates of total labor at completion for such contracts could have a significant impact on the timing or amount of revenue recognition during the year. given the judgments necessary to estimate total labor hours at completion for contracts involving significant customization for which revenue is recognized over time, auditing such estimates required extensive audit effort due to the complexity of long-term contracts and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures. how the critical audit matter was addressed in the audit our audit procedures related to the estimates of future labor hours and labor hours at completion included the following, among others: •we tested the effectiveness of controls over revenue recognized over time, including those over labor hours incurred to date and estimates of future labor hours at completion. •we selected a sample of contracts accounted for over time that required significant customization of the software and performed the following;–evaluated whether the contracts were properly included in management’s calculation of revenue recognized over time based on the terms and conditions of each contract. –tested the completeness and accuracy of labor hours incurred by agreeing to supporting documentation and time-charged records and corroborating the labor hours incurred with project managers.–evaluated the reasonableness and consistency of the methods and assumptions used by management to develop the estimates of future labor hours and labor hours at completion. –evaluated management’s ability to achieve the estimates of future labor hours and labor hours at completion by comparing the estimates to management’s work plans and performing corroborating inquiries with the company’s project managers related to their expectation of labor hours at completion.•evaluated management’s ability to estimate total labor hours by comparing the estimated labor hours at contract inception to actual labor hours incurred at project completion or as of year-end./s/ deloitte & touche llp new york, new york march 31, 2020we have served as the company’s auditor since 2001.

critical audit matter the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. income taxes - receivables for south korean tax disputes as described in notes 1, 8, and 11 to the consolidated financial statements, in evaluating the tax benefits associated with the company’s various tax filing positions, management records a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized. adjustments are made to the asset or liability for unrecognized tax benefits in the period in which the company files the return containing the tax position or when new information becomes available. the company is currently appealing certain south korean tax assessments and tax refund claims for tax years 2010 through 2018. the company is required to deposit the disputed tax amounts with the south korean government as a condition of its appeal of any tax assessments. the company believes that it is more likely than not that the company will prevail in the appeal process and as a result, management recorded a non-current receivable of $350 million as of december 31, 2021. the principal considerations for our determination that performing procedures relating to the receivables for south korean tax disputes is a critical audit matter are (i) the significant judgment by management when applying the more likely than not recognition criteria to the company’s uncertain tax positions based on the application of the tax law; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to management’s assumption that the company will prevail in the appeal of any tax assessments; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to uncertain tax positions, including management’s assessment of the south korean tax disputes. these procedures also included, among others, obtaining management’s assessment and evidence supporting the more-likely-than-not tax position on the south korean tax disputes and evaluating the reasonableness of the likelihood that the tax positions will ultimately be sustained upon examination by the south korean tax authorities and through the appeal process. professionals with specialized skill and knowledge were used to assist in evaluating management’s assessment and supporting evidence related to the application of the tax law. /s/ pricewaterhouse coopers llp new york, new york february 14, 2022 we have served as the company’s auditor since 1944.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. impairment assessment over long-lived assets - refer to notes 2, 3 and 4 to the consolidated financial statements critical audit matter description the company's long-lived assets were $61.3 million and related accumulated depreciation and amortization was $44.7 million as of december 31, 2021. as discussed in the company’s accounting policy in note 2, long-lived assets (asset groups) with finite lives are reviewed for impairment whenever indicators of impairment exist. management determined that there were triggering events in the fourth quarter of 2021 after considering qualitative and quantitative aspects of the business. as such, the company evaluated its various asset groups for recoverability as of december 31, 2021 using an undiscounted cashflow assessment and concluded that no impairment exists at that date. we identified the company's impairment assessment over long-lived assets as a critical audit matter. auditing the company’s impairment assessment involved a high degree of subjectivity in determining significant assumptions included in the company’s undiscounted cash flows model, which include management’s estimates related to forecasted future growth rates, gross margin to cover costs, and demand for services. performing audit procedures and evaluating audit evidence obtained related to these considerations required a high degree of auditor judgment and effort. how the critical audit matter was addressed in the audit our audit procedures performed to address this critical audit matter included the following, among others: ● we gained an understanding of the design of the controls over management’s process to develop their estimates included in the impairment assessment of long-lived assets. we also gained an understanding of the design of the controls used by management to develop their estimates. ● we evaluated the reasonableness of the company’s undiscounted cash flow forecast used in the impairment assessment by evaluating the significant assumptions used to develop the projected future cash flows of the assets group, tested the completeness and accuracy of the underlying data used by the company, performed comparisons of historical actuals to forecasted activity, and considered positive and negative evidence impacting management’s forecasts. ● we tested the mechanical accuracy of the amounts and formulas included in the company’s undiscounted cash flow assessment and agreed long-lived asset balances to the company’s consolidated general ledger. ● with the assistance of our fair value specialists, we performed sensitivity analyses of the assumptions to evaluate the changes in the future cash flows that could result from changes in the assumptions. management’s assessment over going concern – refer to note 2 to the consolidated financial statements critical audit matter description the company's consolidated financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realization of assets and settlement of liabilities in the normal course of business. for the twelve months ended december 31, 2021 and 2020, the company incurred net losses of $8.1 million and $2.5 million, respectively. as of december 31, 2021, the company had current liabilities of $12.5 million, which exceeded total current assets of $5.6 million by $6.9 million. the company’s substantial working capital deficit was the result of outstanding debt of $8.7 million that was set to mature within one year of the balance sheet date on october 15, 2022. due to the recent developments and improvements to their financial position as discussed in note 2 to the consolidated financial statements, including a refinance of the company’s credit agreement previously with east west bank, entry into the master lease agreement, entry into the invoice purchase agreement which provides advances up to a maximum of $10.0 million, and entry into the convertible subordinated note, the company believes that substantial doubt over their ability to continue as a going concern from one year after the date of issuance of the audited consolidated financial statements, or july 6, 2022, has been alleviated. we identified the company’s assessment over going concern as a critical audit matter. the principal considerations for our determination include the high degree of management subjectivity in determining significant assumptions included in the company’s estimation of future cash flows, which include management’s estimates related to future operations. performing audit procedures and evaluating audit evidence obtained related to these considerations required a high degree of auditor judgment and effort. how the critical audit matter was addressed in the audit our audit procedures performed to address this critical audit matter included the following, among others: ● we obtained an understanding of management’s process to develop their estimates included in the future cash flows assessment. we also gained an understanding of the design of the controls used by management to develop their estimates. ● we tested the reasonableness of the forecasted revenue, operating expenses, and uses and sources of cash flows in management’s assessment of whether the company has sufficient liquidity to meet its obligations for at least one year from the consolidated financial statement issuance date. this testing included inquiries with management, performing sensitivity analyses to assess the impact of changes in the key assumptions included in management’s liquidity forecast models, assessing management’s liquidity forecast model in the context of other audit evidence obtained during the audit to determine whether it supported or contradicted the conclusions reached by management, consideration of positive and negative evidence impacting management’s forecasts, the company’s financing arrangements in place as of the report date, and market and industry factors. ● we reviewed subsequent events, which included analysis of the significant financing transactions discussed above, compliance with terms of the previous debt agreement as of december 31, 2021 and terms of the new agreements entered into in march 2022, read board of director meeting minutes, and performed inquiries with those charged with governance. ● we also evaluated the adequacy of the company’s disclosures in note 2 in relation to the going concern uncertainty matter as well as considered the adequacy of management’s plans during our assessment of management’s evaluation of going concern. effect on consolidated financial statements of material weakness in internal control over financial reporting critical audit matter description as disclosed in item 9a. controls and procedures, the company identified the following material weakness. the company has not properly segregated duties as one or two individuals initiate, authorize, and complete certain transactions. this lack of segregation of duties and oversight is heightened when unique or complex transactions are executed. we identified the material weakness as a critical audit matter. given this material weakness and unique and complex transactions consummated during the year, a significant change in our audit plan was required with an increased audit effort. our audit procedures performed to address this critical audit matter included the following, among others: ● we performed a substantive audit approach over significant, unique transactions including recognition of the employee retention credit receivable, accounting for the subordinated debt conversion to equity with a related party, and accounting for the tax impacts related to the internal revenue service code section 382 (“section 382”) change in control transaction. ● our response to the critical audit matter identified above was to use more experienced engagement team members in conducting our audit procedures, increase the direction and supervision of engagement team members, increase the extent of testing, and modify the nature of audit procedures performed. ● we performed additional procedures including: o we tested the employee retention credits that pertained to amended 941’s for the 2020 calendar year. o we tested the company’s full time equivalent employee headcount and qualified wages in relation to the provisions in the employee retention credit (erc) introduced by the coronavirus aid, relief and economic security (cares) act. o we reviewed terms of the subordinated debt conversion agreement noting that the debt and accrued interest were converted into shares of the company common stock and a warrant to acquire additional shares of common stock. o with the assistance of our fair value specialists, we tested the fair value of the common stock and warrant issued in the debt conversion. o with the assistance of our tax specialists, we tested the company’s section 382 analysis and resulting deferred tax liability. we have served as the company’s auditor since 2010.

critical audit matters;◾we will provide reduced disclosure about our executive compensation arrangements; and◾we will not require nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments.we will remain an egc until the earliest of (i) december 31, 2024 (the last day of the fiscal year following the fifth anniversary of the completion of our ipo), (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous rolling three-year period, or (iv) the date on which we are deemed to be a large accelerated filer under the securities exchange act of 1934, as amended, or the exchange act.we are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. we may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million as of the last day of the second quarter of the most recently completed fiscal year.if we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our annual report on form 10-k and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.recent accounting pronouncements we have reviewed all recently issued standards and have determined that, other than as disclosed in note 2 to our consolidated financial statements appearing elsewhere in this annual report, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations. item 7a. quantitative and qualitative disclosures about market risk.we are a smaller reporting company as defined by rule 12b-2 of the exchange act and are not required to provide the information required under this item. 101table of contents item 8. financial statements and supplementary data. morphic holding, inc.index to consolidated financial statements page report of independent registered public accounting firm f-1consolidated balance sheets f-2consolidated statements of operations and comprehensive loss f-3consolidated statements of stockholders’ equity f-4consolidated statements of cash flows f-6notes to consolidated financial statements f-7 102table of contents report of independent registered public accounting firm to the shareholders and the board of directors of morphic holding, inc. opinion on the financial statements we have audited the accompanying consolidated balance sheets of morphic holding, inc. (the company) as of december 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended december 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). in our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the company at december 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended december 31, 2020, in conformity with u.s. generally accepted accounting principles. basis for opinion these financial statements are the responsibility of the company's management. our responsibility is to express an opinion on the company’s financial statements based on our audits. we are a public accounting firm registered with the public company accounting oversight board (united states) (pcaob) and are required to be independent with respect to the company in accordance with the u.s. federal securities laws and the applicable rules and regulations of the securities and exchange commission and the pcaob. we conducted our audits in accordance with the standards of the pcaob. those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. the company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. as part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. accordingly, we express no such opinion. our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. we believe that our audits provide a reasonable basis for our opinion. /s/ ernst & young llp we have served as the company’s auditor since 2017.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee of the company’s board of directors and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.measurement of uncertain tax positions description of the matter as discussed in note 10 to the consolidated financial statements, the company recorded income tax expense related to us and non-us tax paying jurisdictions totaling $39.7 million for the year ended june 30, 2020 and a liability for unrecognized tax benefits totaling $4.4 million at june 30, 2020. the company’s accounting for income taxes involves the application of complex tax regulations in each of the international tax paying jurisdictions in which it operates. the determination of income subject to income tax in each tax paying jurisdiction requires management to apply transfer pricing guidelines for certain intercompany transactions related to certain european countries and make assumptions and estimates about the value of transactions when allocating income and deductions between consolidated entities in different tax paying jurisdictions. the estimates and assumptions used in these allocations can result in uncertainty in the measured tax benefit. auditing the completeness and measurement of the liability for recognized tax benefits related to certain intercompany transactions was complex because the assumptions are based on the interpretation of tax laws and legal rulings in multiple tax paying jurisdictions and require significant judgment in determining whether a tax position’s technical merits are more-likely-than-not to be sustained and measuring the amount of tax benefit that qualifies for recognition.67how we addressed the matter in our audit we tested controls over the process to assess the technical merits of tax positions related to certain intercompany transactions, as well as management’s process to measure the benefit of those tax positions, including controls over the completeness and accuracy of the underlying data. for example, we tested controls over management’s review of the evaluation of matters identified by and discussed with various tax authorities. our audit procedures with respect to the calculation of the liability for unrecognized tax benefits involved an assessment of the technical merits of the company’s tax positions performed with the assistance of tax subject matter professionals with knowledge of and experience with the application of international and local income tax laws by the relevant income tax authorities. these procedures also included, among others, evaluating third-party advice obtained by the company and making inquiries of its external tax advisers. we also evaluated the company’s significant assumptions and the completeness and accuracy of the data used to determine the amount of tax benefits recognized and tested the accuracy of such calculations. fair value of derivative liability description of the matter during may 2019, the company entered into an equity commitment and investment agreement for the issuance and sale of 650,000 shares of catalent’s series a preferred stock for an aggregate purchase price of $650.0 million. as discussed in note 9 to the consolidated financial statements, the series a preferred stock included a dividend adjustment feature that met the definition of a derivative for accounting purposes. the dividend adjustment feature was bifurcated from the series a preferred stock and recorded separately as a derivative liability and has a $23.6 million balance as of june 30, 2020.auditing the company’s valuation of this derivative was challenging as the company uses complex valuation methodologies that incorporate significant assumptions which include the discount rate and forecasted volatility of the company’s common stock price. the valuation includes assumptions about economic and market conditions with uncertain future outcomes. how we addressed the matter in our audit we tested controls over the risks of material misstatement relating to the valuation of the derivative liability. for example, we tested controls over management’s review of the valuation models, the underlying assumptions used in the model and the related accounting conclusions. to test the valuation of the derivative liability, our audit procedures included, among others, evaluating the methodologies used in the valuation model and testing the significant assumptions. for example, we compared the discount rate that was adjusted for the company’s credit risk to the interest rates on comparable debt instruments, and we compared the forecasted volatility of the company’s common stock price to its historical volatility. we also assessed the completeness and accuracy of the underlying data. we involved our internal valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the company. we have also evaluated the company’s financial statement disclosures related to these matters included in note 9 to the consolidated financial statements. /s/ ernst & young llp we have served as the company’s auditor since 2007.

critical audit matter the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. recognition of the contingent note receivable as described in notes 2, 4 and 15 to the consolidated financial statements, on july 27, 2018, the company completed the sale of its 50% interest in the galore creek partnership and its 40% interest in the copper canyon mineral property (“the sale”). as part of the consideration for the sale, the company received a $75 million note (the “contingent note receivable”), which is contingent upon the approval of a galore creek project construction plan by the owner(s). the company had not assigned a value to the contingent note receivable as management determined that galore creek project construction approval was not probable as of the closing of the galore creek sale. management’s determination did not change as of november 30, 2020. the contingent note will be recognized when, in management’s judgment, it is probable that the payment will occur, and that the amount recorded will not reverse in future periods. the principal considerations for our determination that performing procedures relating to the recognition of the contingent note receivable is a critical audit matter are that there was judgment made by management when determining if recognition was required, which in turn led to a high degree of subjectivity in performing audit procedures to evaluate management’s determination of the probability of whether a construction plan will be approved. addressing the matter involved performing procedures and evaluating audit evidence, in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s process of assessing the basis for recognizing the contingent note receivable. these procedures also included evaluating how management formulated their judgment as to the likelihood of the owner(s) of the project approving the galore greek project construction plan. this included considering both publicly available information and the latest annual progress report provided by the owner(s) of the project to the company under the terms of the sale agreement. (signed) pricewaterhouse coopers llp chartered professional accountants vancouver, canada january 27, 2021 we have served as the company's auditor since 1984.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. leased aircraft return costs description of the matter as described in notes 1 and 10 to the consolidated financial statements, the company’s aircraft lease agreements often require the company to return aircraft airframes and engines to the lessor in a certain condition or pay an amount to the lessor based on the leased airframe or engine’s actual condition. lease return costs are recognized beginning when it is probable that such costs will be incurred, and they can be estimated. when costs become both probable and estimable, they are accrued as a component of supplemental rent, through the remaining lease term. when determining the need to accrue lease return costs, there are various factors for which management considers such as the contractual terms of the lease agreement, current condition of the aircraft, the age of the aircraft at lease expiration, projected number of hours run on the engine at the time of return, the number of projected cycles run on the airframe at the scheduled time of return and the ability to utilized previously paid maintenance reserves to offset projected costs. as of december 31, 2021, the company has accrued liabilities of $49 million for leased aircraft return costs. auditing management’s estimate of leased aircraft return costs required significant judgment given the complexity involved in determining the timing and cost of future maintenance events, including the estimated utilization of leased airframes and engines.how we addressed the matter in our audit to test the estimate of lease return costs, our audit procedures included, among others, testing the assumptions used and the accuracy and completeness of the underlying data used in the calculations. for example, to test the assumptions related to the timing of future maintenance events, we compared projected event timing to the time interval between recently completed maintenance events and against underlying regulatory requirements. we also confirmed current and projected utilization metrics and projected timing of events with maintenance personnel. we also tested the historical accuracy of management’s forecasts of maintenance events by comparing when recent maintenance events occurred to management’s initial projections. to test the assumptions related to cost, we compared the projected cost of future maintenance events to historical experience, or the costs required by the contractual agreements based on projected return condition of the airframe or engine at lease return.realizability of deferred tax assets description of the matter at december 31, 2021, the company had deferred tax assets of $646 million, inclusive of a related valuation allowance, and deferred tax liabilities of $621 million. as discussed in notes 1 and 17 to the consolidated financial statements, the company records a valuation allowance based on the assessment of the realizability of the company’s deferred tax assets. deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.auditing management’s assessment of recoverability of deferred tax assets involved subjective estimation and complex auditor judgement in weighing the positive and negative evidence to determine whether a valuation allowance for deferred tax assets is needed including the company’s estimate of future taxable income that may be affected by market and economic conditions.how we addressed the matter in our audit to test the realizability of the company’s deferred tax assets, our audit procedures included, among others, evaluating the assumptions used to develop the scheduling of the future reversal of existing taxable temporary differences and evaluating the assumptions used by the company to develop projections of future taxable income. we compared the projections of future taxable income with the actual results of prior periods, as well as management’s consideration of current industry and economic trends. we also compared the projections of future taxable income with other forecasted financial information prepared by the company. in addition, we involved our tax specialists to evaluate the application of tax law in the performance of these procedures./s/ ernst & young llp we have served as the company’s auditor since 2013.

critical audit matters the critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.real estate impairment —refer to notes 2, 3 and 9 to the financial statements critical audit matter description the company’s real estate assets are individually evaluated for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. the company’s evaluation of the recoverability of real estate assets involves the comparison of the aggregate projected undiscounted future cash flows expected to be generated by each real estate asset over the company’s estimated holding period to the respective carrying amount. the company’s undiscounted future cash flow analyses require management to make significant estimates, including estimated terminal values determined using appropriate capitalization rates. total real estate assets as of december 31, 2020 had a net book value of $2.2 billion.given that the company’s estimated capitalization rates used in the evaluation of impairment of real estate assets is a significant assumption made by management, performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flow analyses required a high degree of auditor judgment and an increased level of effort, including the need to involve our fair value specialists.how the critical audit matter was addressed in the audit our audit procedures related to the company’s estimated capitalization rates used in the evaluation of impairment of real estate assets included the following, among others: •we tested the effectiveness of the company’s internal controls over management’s evaluation of the recoverability of real estate, including internal controls over management’s determination of the reasonableness of the applicable capitalization rates.45•inquired with management regarding the appropriateness of the capitalization rates, including considerations related to the impact of covid-19 and evaluating the consistency of the capitalization rates used with evidence obtained in other areas of our audit.•with the assistance of our fair value specialists, we evaluated the reasonableness of the company’s estimated capitalization rates by:◦testing the source information underlying the determination of the capitalization rates by evaluating the reasonableness of the capitalization rates used by management with independent market data, focusing on key factors, including the impact of the covid-19 pandemic, geographical location, tenant composition, and property type. ◦developing a range of independent estimates of capitalization rates and comparing those to the capitalization rates utilized by management.evaluation of collectibility of receivables – refer to note 3 to the financial statements critical audit matter description the company evaluates the collectibility of amounts due from tenants. in light of the recent and ongoing covid-19 pandemic, the company is closely monitoring changes in the collectibility assessment of its tenant receivables as a result of certain tenants suffering adverse financial consequences. management exercises judgment in assessing collectibility and considers payment history, current credit status and publicly available information about the financial condition of the tenant, among other factors. the company recognizes changes in the collectibility assessment of these operating leases as adjustments to rental revenue. tenant receivables, including receivables arising from the straight-lining of rents, are written-off directly when management deems that the collectibility of substantially all future lease payments from a specific lease is not probable of collection.we identified management’s assumptions utilized in determining whether a tenant’s lease payments are collectible as a critical audit matter because of the significant judgements involved and the material impact to receivables. performing audit procedures to evaluate these assumptions required a high degree of auditor judgment and an increased extent of effort.how the critical audit matter was addressed in the audit our audit procedures related to management’s assumptions in evaluating the collectibility of receivables included the following, among others: •we tested the effectiveness of controls over management’s evaluation of collectibility including controls over the assumptions utilized by management.•we evaluated the company’s estimate of the collectibility of receivables by:◦testing management’s estimate including reading available information of tenant filings, financial statements, news articles, and analyst reports among other procedures based on the tenant’s payment history, current credit status and publicly available information about the financial condition of the tenant.◦inquiring with the company’s employees in departments outside of accounting to corroborate evidence regarding each of the tenant specific collectibility assessments.◦evaluating positive and contradictory evidence obtained through the procedures described above, other evidence obtained throughout our audit, and events or changes in facts and circumstances occurring subsequent to year end, but before the date the consolidated financial statements were available to be issued.deloitte & touche llp new york, new york february 17, 2021we have served as the company’s auditor since 2014.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.uncertain tax positions description of the matter as described in notes 2 and 14, the company establishes reserves for uncertain tax positions for positions that are taken on their income tax returns that might not be sustained upon examination by the taxing authorities. at december 31, 2021, the company has recorded approximately $224 million relating to uncertain tax positions.in determining whether an uncertain tax position exists, the company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benefit is measured on a cumulative probability basis that is more likely than not to be realized upon the ultimate settlement. the company identifies its certain and uncertain tax positions and then evaluates the recognition and measurement steps to determine the amount that should be recognized. the company then evaluates uncertain tax positions in subsequent periods for recognition, de-recognition or re-measurement if changes have occurred, or when effective settlement or expiration of the statute of limitations occurs.61table of contents auditing the uncertain tax positions is complex because of the judgmental nature of the tax accruals and various other tax return positions that might not be sustained upon review by taxing authorities. the company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world due to its complex global footprint. taxing jurisdictions significant to aptiv include barbados, china, germany, ireland, luxembourg, mexico, south korea, the u.k. and the u.s.how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of controls related to the recognition, measurement and the evaluation of changes in uncertain tax positions. this included testing controls over management’s review of the tax positions, their evaluation of whether they met the measurement threshold and then recalculating the amounts recognized based upon a cumulative probability assessment performed by management.our audit procedures to test the company’s uncertain tax positions included, among others, involvement of our tax professionals, including transfer pricing professionals. this included evaluating tax opinions and third-party transfer pricing studies obtained by the company and assessing the company’s correspondence with the relevant tax authorities. we analyzed the company’s assumptions and data used to determine the amount of tax benefit to recognize and tested the accuracy of the calculations. our testing also included the evaluation of the ongoing positions and consideration of changes, the recording of penalties and interest and the ultimate settlement and payment of certain tax matters.revenue recognition description of the matter as described in notes 2 and 24, aptiv occasionally enters into pricing agreements with its customers that provide for price reductions, some of which are conditional upon achieving certain joint cost saving targets. in addition, from time to time, aptiv makes payments to customers in conjunction with ongoing business. revenue is recognized based on the agreed-upon price at the time of shipment, and sales incentives, allowances and certain customer payments are recognized as a reduction to revenue at the time of the commitment to provide such incentives or make these payments. certain other customer payments or upfront fees are considered to be a cost to obtain a contract as they are directly attributable to a contract, are incremental and management expects the payments to be recoverable. in these cases, the customer payment is capitalized and amortized to revenue based on the transfer of goods and services to the customer for which the upfront payment relates. as of december 31, 2021, aptiv has recorded $92 million related to these capitalized upfront payments.auditing the accounting for and completeness of arrangements containing elements such as sales incentives, allowances and customer payments, including the appropriate timing and presentation of adjustments to revenue as well as costs to obtain a contract is judgmental due to the unique facts and circumstances involved in each revenue arrangement, as well as on-going commercial negotiations with customers.how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the review of customer contracts. this included testing controls over the company’s process to identify and evaluate customer contracts that contain sales incentives, allowances and customer payments that impact revenue recognition.our audit procedures to test the completeness of the company’s identification of such contracts included, among others, interviewing sales representatives who are responsible for negotiations with customers and testing cash payments to customers. to test management’s assessment of customer contracts containing sales incentives, allowances and customer payments, our procedures included, among others, selecting a sample of customer agreements, obtaining and reviewing source documentation, including master agreements, and other documents that were part of the agreement, and evaluating the contract terms to determine the appropriateness of the accounting treatment./s/ ernst & young llp we have served as the company’s auditor since 2006d

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. allowance for credit losses – commercial loans and commercial real estate loans loss factors as described in notes 1 and 4 to the consolidated financial statements, the company’s allowance for credit losses of $1.1 billion, represents management’s estimate of losses inherent in the loan and lease portfolio of $90.9 billion as of december 31, 2019. the company’s allowance for credit losses allocated to commercial loans and commercial real estate loans comprise a significant portion of the total allowance for credit losses. the allowance for credit losses allocated to commercial loans and commercial real estate loans is primarily determined by applying loss factors to groups of loan balances based on loan type and management’s classification of commercial loans and commercial real estate loans under the company’s loan grading system. factors considered in assigning loan grades and loss factors include borrower-specific information, levels of and trends in portfolio charge-offs and recoveries, levels of and trends in portfolio delinquencies and impaired loans, changes in the risk profile of specific portfolios, trends in volume and terms of loans, effects of changes in credit concentrations, and observed trends and practices in the banking industry. 111 the principal considerations for our determination that performing procedures relating to the allowance for credit losses – commercial loans and commercial real estate loans loss factors is a critical audit matter are (i) the application of significant judgment and estimation by management in determining the commercial loans and commercial real estate loans loss factors, which led to a high degree of auditor judgment and subjectivity in performing procedures related thereto, (ii) a high degree of auditor judgment was necessary to evaluate the evidence obtained related to the commercial loans and commercial real estate loans loss factors, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the company’s allowance for credit losses estimation process, including controls over commercial loan and commercial real estate loan loss factors. these procedures also included, among others, testing management’s process for determining the allowance for credit losses allocated to commercial loans and commercial real estate loans, including testing the completeness and accuracy of data used in the estimate and the involvement of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the methodology and evaluating the reasonableness of the commercial loans and commercial real estate loans loss factors. evaluating the commercial loan and commercial real estate loan loss factors included evaluating the reasonableness of the impact of borrower-specific information, levels of and trends in portfolio charge-offs and recoveries, levels of and trends in portfolio delinquencies and impaired loans, changes in the risk profile of specific portfolios, trends in volume and terms of loans, effects of changes in credit concentrations, and observed trends and practices in the banking industry. buffalo, new york february 19, 2020 we have served as the company’s auditor since 1984.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.revenue recognition - u.s. wholesale as described in notes 2 and 3 to the consolidated financial statements, the company’s u.s. wholesale revenue was $1,126,415 thousand for the year ended january 1, 2022. the company relies on shipping terms to determine when performance obligations are satisfied. when goods are shipped to wholesale customers “fob shipping point,” control of the goods is transferred to the customer at the time of shipment if there are no remaining performance obligations. the company recognizes the revenue once control passes to the customer. the transaction price is the amount of consideration the company expects to receive under the arrangement. the company is required to estimate variable consideration (if any) and to factor that estimation into the determination of the transaction price. the company may offer sales incentives to wholesale customers, including discounts.the principal consideration for our determination that performing procedures relating to u.s. wholesale revenue recognition is a critical audit matter is the significant audit effort in performing procedures related to the company’s revenue recognition. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the recording of u.s. wholesale revenue at the transaction price once control passes to the customer. these procedures also included, among others (i) testing the completeness, accuracy, and occurrence of revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, including purchase orders, invoices, proof of shipment, and subsequent cash receipts, where applicable; ii) testing the completeness, accuracy, and occurrence of a sample of sales incentive transactions by obtaining and inspecting source documents, including support for the nature of the incentive, amount, and agreement with the customer; and iii) confirming a sample of outstanding customer invoice balances as of january 1, 2022 and obtaining and inspecting source documents, including invoices, proof of shipment, and subsequent cash receipts, where applicable, for confirmations not returned./s/ pricewaterhouse coopers llp atlanta, georgia february 25, 2022we have served as the company’s auditor since at least 1968.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.f-1 goodwill, infiltrator water technologies reporting unit —refer to note 8 to the financial statements critical audit matter description the company’s evaluation of goodwill for impairment involves comparing the carrying value of each reporting unit to the estimated fair value of the reporting unit. the company’s determination of estimated fair value of the reporting unit is determined by considering both the market approach and the income approach. the determination of the estimated fair value requires management to make significant estimates and assumptions related to the valuation of the reporting unit. changes in these assumptions could have a significant impact on either the fair value of the reporting unit, the amount of any goodwill impairment charge, or both. the company’s consolidated goodwill balance was $599.1 million as of march 31, 2021, of which $495.8 million was allocated to the infiltrator reporting unit, which is the reporting unit that exhibits significant sensitivity to changes in estimates and assumptions given the limited cushion between the carrying value and estimated fair value. as of march 31, 2021, the estimated fair value of the infiltrator reporting unit exceeded its carrying value by more than 25%.we identified the valuation of goodwill for infiltrator as a critical audit matter because of the significant assumptions made by management to estimate its fair value. those assumptions included revenue growth rates, forecasted ebitda, and the selection of the discount rate. our performance of audit procedures to evaluate the assumptions required a high degree of auditor judgment and an increased extent of audit effort, including the need to involve our fair value specialists.how the critical audit matter was addressed in the audit our audit procedures related to testing the fair value of the infiltrator reporting unit focused on revenue growth rates, forecasted ebitda, and the selection of the discount rate and included the following procedures, among others: •we tested the operating effectiveness of management’s internal controls over revenue growth rates, forecasted ebitda, and the selection of the discount rate. •we assessed the reasonableness of management’s forecast by comparing the forecasted revenue growth rates and forecasted ebitda information used to infiltrator’s historical results and internal communications to management and the board of directors, as well as comparing the forecasted revenue growth rates to peer company and industry historical revenue growth rates and forecasts. •with the assistance of our fair value specialists, we evaluated the reasonableness of the following significant valuation assumptions: o the discount rate, by testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation. o the long-term revenue growth rate in the terminal period through industry and macroeconomic benchmarking. /s/ deloitte & touche llp columbus, ohio may 27, 2021we have served as the company's auditor since 2002.

critical audit matters thecritical audit matters below are matters arising from the current period audit of the financial statements that were communicated orrequired to be communicated to those charged with governance and that: (1) relate to accounts or disclosures that are material to thefinancial statements and (2) involved our especially challenging, subjective, or complex judgements. the communication of critical auditmatters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the criticalaudit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. impairmentof property, plant and equipment the group has property, plant and equipment amounting to usd219,669 as representing 51% of the group’s total assets as at july 31,2021. the group carries out an impairment test by comparing the recoverable amount of cash generating unit (“cgu”) based on value inuse method and the carrying amounts. theimpairment test was significant to our audit due to complexity of the assessment process involving significant judgements and estimationuncertainty in making key assumptions about future market and economic conditions growth rates, profit margins, discount rate, etc. forvalue in use of cgu based on the future discounted cash flows. ourprocedures in relation to management’s impairment assessments included, amongst others: (a)examining management’s cash flows forecast that support the impairment assessment;(b)assessing the reliability of management’s forecast through the review of past trends of actual financial performance against previous forecast results;(c)evaluating the reasonableness and consistency of key assumptions and inputs used in cash flow projection to available external industry sources of data;(d)performing sensitivity analysis to stress test the key assumptions and inputs used in the impairment assessment; and(e)assessing the adequacy and reasonableness of the disclosures in the financial statements. /s/jp centurion & partners plt jp centurion & partners plt we have served as the company’s auditor since 2021.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgement. the communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.inventory basis adjustment description of the matter as explained under the critical accounting policies and estimates in the financial statements, the estimated fair values for inventories carried at market and forward commodity purchase and sale contracts are based on exchange-quoted prices adjusted for differences in local markets and/or quality, referred to as basis. market valuations for inventories or fair values for forward commodity purchase and sales contracts are adjusted for 3location and quality differences (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. the stated fair values as of december 31, 2020 for inventories, commodity contracts in an asset position, and commodity contracts in a liability position were $69.6 million, $28.4 million and $41.9 million, respectively.auditing the estimated fair values for inventories carried at market and forward commodity purchase and sale contracts is complex due to the judgment involved in determining market prices, specifically related to determining the estimated basis adjustment. the basis adjustment is impacted by specific local supply and demand characteristics at each facility and the overall market. factors such as substitute products, weather, fuel costs, contract terms, and futures prices also impact the basis adjustment.how we addressed the matter in our audit we obtained an understanding over the company’s determination of the estimated fair values for inventories carried at market and forward commodity purchase and sale contracts.to test the estimated fair values of inventories carried at market and forward commodity purchase and sale contracts, our audit procedures included, among others, evaluating (i) the reasonableness of the significant assumptions used by management including comparison of quoted commodity pricing to local and regional market conditions, (ii) the historical adjustments to inventory balances as compared to the current year’s adjustment, and (iii) the completeness and accuracy of the underlying data supporting the basis adjustments. specifically, we compared the basis adjustments used by management to local grain elevators and recent trade prices, including recently executed transactions. we also evaluated the adequacy of the company’s financial statement disclosures related to the estimated fair value of inventories carried at market and forward commodity purchase and sale contracts.we have served as south dakota soybean processors, llc’s auditor since 2008.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. inventory valuation - adjustments for excess or obsolete inventories as described in notes 2 and 7 to the consolidated financial statements, the company’s consolidated inventories balance was $20.3 million as of december 31, 2020. the company’s inventories are valued using standard cost, approximating average cost, and are stated at the lower of cost or net realizable value. the company adjusts the carrying value of inventories based on assumptions about future demand, market conditions and technical obsolescence. if actual demand were to be substantially lower than estimated, there could be a significant adverse impact on the carrying value of inventories and results of operations. the principal considerations for our determination that performing procedures relating to net realizable value adjustments to inventories is a critical audit matter are the significant amount of judgment by management in developing the assumptions of the forecasted product demand, which in turn lead to significant audit judgment, subjectivity, and effort in performing audit procedures and evaluating audit evidence relating to the forecasted product demand. additionally, for newer products there may be limited historical data with which to evaluate forecasts. 39 addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included, among others, testing management’s process for developing the valuation allowance for excess and obsolete inventory, testing the completeness and accuracy of the underlying data used in the estimate, and evaluating management’s assumptions of forecasted product demand. evaluating management’s forecasted product demand for reasonableness involved considering historical sales by product, comparing prior period estimates to actual results of the same period, and determining whether the demand forecast used was consistent with evidence obtained in other areas of the audit./s/ bpm llp we have served as the company’s auditor since 2015.

critical audit matter the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. significant unusual transaction as described in note 7, on september 29, 2020, the company and its subsidiary, core alaska, llc, and a wholly-owned subsidiary of kinross gold corporation, entered into a purchase agreement in which core alaska, llc sold a 30.0% membership interest in the peak gold, llc joint venture company to the subsidiary of kinross gold corporation (the “core transactions”). for the peak gold, llc joint venture interest, the company received $32.4 million in cash and 809,744 shares of the company’s own common stock. of the $32.4 million cash consideration received, $1.2 million constituted a reimbursement prepayment for the company’s portion of potential future royalty payment obligations. the company recorded the $32.4 million cash proceeds and the 809,744 shares of the company’s common stock at fair value and recognized a gain on sale of $39.6 million. in conjunction with the core transactions, through a series of legal transactions, the company (through a subsidiary) obtained sole control of approximately 167,000 acres of alaska state mining claims (collectively, the “transactions”). these claims have been recorded at a book value of zero as that was the historical book value on the date which full control of the claims was obtained, and fair value could not be measured. in consideration for full control of these claims, the company granted royal gold corporation new royalties from certain production that may be generated from these claims. we identified management’s accounting and reporting of the transactions as a critical audit matter. auditing the company’s accounting for the transactions was complex due to the significant judgment used by management in determining the proper accounting treatment for the unique terms and conditions of the agreements, including the valuation of the consideration received and the estimated income tax impact. this in turn required a high degree of auditor judgment and an increased effort when performing audit procedures to evaluate the reasonableness of management’s accounting conclusions, valuation of the consideration received, the income tax impact and the related presentation and disclosure of the transactions in the consolidated financial statements. the primary procedures we performed to address this critical audit matter included: ·assessing the significant terms and provisions of the transactions for the appropriate accounting treatment to evaluate management’s conclusion of the appropriate accounting treatment. ·testing the appropriateness of the methodology and assumptions used in the calculation of the fair value of the consideration transferred. this included using our internal valuation specialist to evaluate the reasonableness of the fair value calculated by management as well as evaluating key inputs, data and assumptions used in the calculation. ·recalculating the gain on the transactions, including assessing the completeness and accuracy of the data used in the calculation. ·utilizing our internal tax specialist in evaluating the appropriateness of the income tax accounting impact from the transactions. ·evaluating the completeness and accuracy of the presentation and disclosures of the transactions. /s/ moss adams llp houston, texas august 30, 2021 we have served as the company’s auditor since 2017.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.89table of contents estimate of mileage credits not expected to be redeemed as discussed in note 1(l) to the consolidated financial statements, the company’s loyalty program awards mileage credits to passengers for flights on the company’s airline, flights on partner airlines, or for using the services of other program participants. the company accounts for such mileage credits earned using the deferred revenue method, which includes an estimate for mileage credits not expected to be redeemed. the company’s loyalty program liability was $9.2 billion as of december 31, 2020 and the associated passenger revenue for mileage credits redeemed for travel was $1.1 billion for the year ended december 31, 2020.we identified the assessment of the estimated number of mileage credits not expected to be redeemed as a critical audit matter. a high degree of auditor judgment was required to evaluate the applicability of historical data used to develop the estimate. the following are the primary procedures we performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls over the company’s loyalty program accounting process, including controls related to the estimation of mileage credits not expected to be redeemed. we assessed the company’s methodology used to evaluate this estimate and determined it was consistent with historical periods. we developed an independent expectation of mileage credits not expected to be redeemed, which included consideration of industry and historical information. we compared the results of our independent expectation to the company’s recorded amount of loyalty program liability and the associated passenger revenue. sufficiency of audit evidence over realizability of operating loss carryforwards as discussed in notes 1(i) and 7 to the consolidated financial statements, the company had $4.0 billion of operating loss carryforwards, which are recorded as deferred tax assets at december 31, 2020. deferred tax assets are recognized related to operating loss carryforwards that will reduce future taxable income. the company provides a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all the deferred tax assets, will not be realized. in evaluating the need for a valuation allowance, management considers the weighting of all available positive and negative evidence, which includes, among other things, the nature, frequency and severity of current and cumulative taxable income or losses, as well as future projections of profitability.we identified the evaluation of the sufficiency of audit evidence over the realizability of operating loss carryforwards as a critical audit matter. evaluating the sufficiency of audit evidence required subjective auditor judgment, and the involvement of tax professionals in order to assess the nature and extent of procedures performed in assessing the realizability of the operating loss carryforwards. the following are the primary procedures we performed to address this critical audit matter. we performed risk assessment procedures and applied auditor judgment to determine the nature and extent of procedures to be performed over the income tax accounts and disclosures. we evaluated the design and tested the operating effectiveness of certain internal controls over the company’s deferred tax asset valuation allowance process, including controls related to the realizability of operating loss carryforwards. we evaluated positive and negative evidence used in assessing whether the deferred tax assets were more-likely-than-not to be realized in the future, including evaluating the nature, frequency and severity of current and cumulative taxable income or losses, as well as future projections of profitability. we evaluated the reasonableness of management’s future projections of profitability considering (i) historical profitability of the company, (ii) consistency with industry data and economic trends, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. we involved tax professionals who assisted in the evaluation of the nature, frequency and severity of current and cumulative taxable income or losses. further, we assessed the sufficiency of audit evidence obtained over the realizability of the operating loss carryforwards by evaluating the cumulative results of the audit procedures, qualitative aspects of the company’s accounting practices, and potential bias in the accounting estimate. /s/ kpmg llp we have served as the company’s auditor since 2014.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.contingent consideration liability as described in notes 4 and 5 to the consolidated financial statements, the company acquired a controlling interest in rhapsody international, inc. (doing business as napster) in january 2019, which included contingent consideration as part of the purchase price. the amount of contingent consideration payable is limited to the amount received in selling the acquired interests over five years following the acquisition if the proceeds are less than $15 million. all of the interests in napster held by the company, including the acquired interests, were sold in december 2020. in connection with this transaction, the company estimated the fair value of the contingent consideration liability based on a probability-weighted valuation methodology. management estimated the fair value of the liability as of december 31, 2020 to be $4.8 million. the fair value of the liability decreased by $8.6 million during the year ended december 31, 2020.61we identified the measurement of the fair value of the contingent consideration liability to be a critical audit matter. the principal considerations for our determination were: (i) the evaluation of the purchase agreement terms in relation to contract law; and (ii) the evaluation of the settlement amount probabilities. auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge in contract law.the primary procedures we performed to address this critical audit matter included:•recalculating the allocation of the proceeds from the sale of napster to the interests sold, including the acquired interests, to assess the probabilities utilized by management for estimating the fair value of the contingent consideration liability. •utilizing professionals with specialized skills and knowledge in contract law to assist in the interpretation and assessment of the appropriateness of management’s evaluation and assumptions within the terms of the purchase agreement.revenue recognition – business-to-business software licensing, subscription services, and product sales as described in note 3 to the consolidated financial statements, the company generates revenue from various sources including software licensing, subscription services, product sales, and advertising. certain of the company’s revenue agreements relating to software licensing, subscription services, and product sales with business-to-business customers contain multiple performance obligations and the company must identify those performance obligations and recognize revenue at a point in time or over time depending on the nature of the performance obligation.we identified the process of the identification of performance obligations and the recognition of revenue for business-to-business software licensing, subscription services, and product sales based on the nature of each performance obligation as a critical audit matter. auditing these transactions was challenging and complex due to the volume of contracts and unique contract terms requiring significant effort to assess and identify the performance obligations within these agreements which determines the pattern of revenue recognition for each performance obligation.the primary procedures we performed to address this critical audit matter included:•evaluating management’s accounting policies and practices, including the reasonableness of management’s judgments and assumptions related to evaluation of performance obligations and their pattern of revenue recognition.•examining a sample of revenue contracts and other source documents to test management’s identification of significant terms and application of their revenue recognition policy by: (i) identifying each distinct performance obligation and (ii) assessing the determination of the appropriate pattern of revenue recognition for each performance obligation./s/ bdo usa, llp we have served as the company’s auditor since 2020.

critical audit matters the critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.liability for future policy benefits– refer to notes 1 and 3 to the consolidated financial statements critical audit matter description as of december 31, 2021, the liability for future policy benefits totaled $43.6 billion, and included benefits related to variable annuity contracts with guaranteed benefit riders and universal life insurance contracts with secondary guarantees. management regularly reviews its assumptions supporting the estimates of these actuarial liabilities and differences between actual experience and the assumptions used in pricing the policies and guarantees may require a change to the assumptions recorded at inception as well as an adjustment to the related liabilities. updating such assumptions can result in variability of profits or the recognition of losses. 68table of contents given the future policy benefit obligation for these contracts is sensitive to changes in the assumptions related to general account and separate account investment returns, and policyholder behavior including mortality, lapses, premium persistency, benefit election and utilization, and withdrawals, auditing management’s selection of these assumptions involves an especially high degree of estimation.how the critical audit matter was addressed in the audit our audit procedures related to the updating of assumptions by management included the following, among others:•we tested the effectiveness of management’s controls over the assumption review process, including those over the selection of the significant assumptions used related to general account and separate account investment returns, and policyholder behavior including mortality, lapses, premium persistency, benefit election and utilization, and withdrawals. •with the assistance of our actuarial specialists, we evaluated the appropriateness of the significant assumptions used, developed an independent estimate of the future policy benefit liability for a sample of policies, and compared our estimates to management’s estimates. •we tested the completeness and accuracy of the underlying data that served as the basis for the actuarial analysis, including experience studies, to test that the inputs to the actuarial estimate were reasonable.•we evaluated the methods and significant assumptions used by management to identify potential bias.•we evaluated whether the significant assumptions used were consistent with evidence obtained in other areas of the audit.deferred acquisition cost (dac) – refer to notes 1 and 4 to the consolidated financial statements critical audit matter description the company incurs and defers certain costs in connection with acquiring new and renewal insurance business. these deferred costs, amounting to $4.9 billion as of december 31, 2021, are amortized over the expected life of the policy contract in proportion to actual and expected future gross profits, premiums or margins. for deferred annuities and universal life contracts, expected future gross profits utilized in the amortization calculation are derived using assumptions such as separate account and general account investment returns, mortality, in-force or persistency, benefit elections and utilization, and withdrawals. the assumptions used in the calculation of expected future gross profits are reviewed at least annually.given the significance of the estimates and uncertainty associated with the long-term assumptions utilized in the determination of expected future gross profits, auditing management’s determination of the appropriateness of the assumptions used in the calculation of dac amortization involves an especially high degree of estimation.how the critical audit matter was addressed in the audit our audit procedures related to management’s determination of dac amortization included the following, among others: •we tested the effectiveness of management’s controls related to the determination of expected future gross profits, including those over management’s review that the significant assumptions utilized related to separate account and general account investment returns, mortality, in-force or persistency, benefit elections and utilization, and withdrawals represented a reasonable estimate. •with assistance from our actuarial specialists, we evaluated the data included in the estimate provided by the company’s actuaries and the methodology utilized, and evaluated the process used by the company to determine whether the significant assumptions used were reasonable estimates based on the company’s own experience and industry studies.•we inquired of the company’s actuarial specialists whether there were any changes in the methodology utilized during the year in the determination of expected future gross profits. •we inspected supporting documentation underlying the company’s experience studies and, utilizing our actuarial specialists, independently recalculated the amortization for a sample of policies, and compared our estimates to management’s estimates.69table of contents•we evaluated whether the significant assumptions used by the company were consistent with evidence obtained in other areas of the audit and to identify potential bias.•we evaluated the sufficiency of the company’s disclosures related to dac amortization.embedded derivative liabilities related to variable annuity guarantees – refer to notes 1, 7, and 8 to the consolidated financial statements. critical audit matter description the company sells index-linked annuities and variable annuity products with guaranteed minimum benefits, some of which are embedded derivatives that are required to be bifurcated from the host contract, separately accounted for, and measured at fair value. as of december 31, 2021, the fair value of the embedded derivative liability associated with certain of the company’s annuity contracts was $8.8 billion. management utilizes various assumptions in order to measure the embedded liability including expectations concerning policyholder behavior, mortality and risk margins, as well as changes in the company’s own nonperformance risk. these assumptions are reviewed at least annually by management, and if they change significantly, the estimated fair value is adjusted by a cumulative charge or credit to net income.given the embedded derivative liability is sensitive to changes in these assumptions, auditing management’s selection of these assumptions involves an especially high degree of estimation.how the critical audit matter was addressed in the audit our audit procedures related to the assumptions selected by management for the embedded derivative liability included the following, among others:•we tested the effectiveness of management’s controls over the embedded derivative liability, including those over the selection of the significant assumptions related to policyholder behavior, mortality, risk margins and the company’s nonperformance risk. •with the assistance of our actuarial specialists, we evaluated the appropriateness of the significant assumptions, tested the completeness and accuracy of the underlying data and the mathematical accuracy of the company’s valuation model.•we evaluated the reasonableness of the company’s assumptions by comparing those selected by management to those independently derived by our actuarial specialists, drawing upon standard actuarial and industry practice.•we evaluated the methods and assumptions used by management to identify potential bias in the determination of the embedded liability.•we evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit./s/ deloitte & touche llp charlotte, north carolina march 2, 2022we have served as the company’s auditor since 2005.

critical audit matters the critical audit matter communicated below is a atter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the board of directors and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.impairment of acquired in-process research and development costs the company acquired in-process research and development (“iprd”) consisting of inventory, hardware designs, software designs, and a trademark all pertaining to early development stage drone design.as described in note 2 to the consolidated financial statements, the company’s acquired iprd costs balance was $871,000 as of december 31, 2020. iprd is reviewed for impairment annually, or more frequently if indicators of impairment exist. the company performed an impairment test for the iprd and concluded that it was not impaired at december 31, 2020. the evaluation of impairment involves comparing the current fair value of iprd to its carrying value. management uses the assistance of an independent specialist to determine the estimated fair value of iprd. fair value is estimated using a model that contains various quantitative adjustments. the determination of fair value using this technique requires the use of significant inputs, estimates and assumptions and other industry-based information of peer companies within the aerospace industry and similar industries that have development stage research and development (“r&d”) activities.the principal consideration for our determination that performing procedures relating to the impairment assessments of the iprd is a critical audit matter is the significant and inherent judgment required in developing the fair value measurement of the asset. in turn, this led to a high degree of auditor judgment, effort and subjectivity in performing procedures and evaluating audit evidence related to these inputs, estimates, and significant assumptions for the impairment assessment. in addition, the audit effort involved the use of an independent impairment analysis provided by a management specialist with specialized skill and knowledge.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included the following, among others:·we assessed the reasonableness of the inputs, assumptions, and estimates utilized within the company’s impairment analysis, which included financial data of certain peers within the company’s industry and similar industries that have development stage r&d activities.·we tested financial data utilized in the impairment analysis to assess the accuracy of the inputs.·we assessed the reasonableness of other quantitative inputs by obtaining and evaluating the information against source documentation.·we tested the completeness and accuracy of total r&d costs data provided by management to the independent specialist.·we tested the overall mathematical accuracy of the impairment calculation./s/ hacker, johnson & smith pa we have served as the company's auditor since 2014.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.84warranty reserve – estimation of product replacement reserve description of the matter as discussed in note 2 to the consolidated financial statements, the company has a warranty reserve of $22.1 million. the company provides insulin pump end customers with a four-year warranty and may replace any pumps that do not function in accordance with the product specifications. warranty costs are estimated at the time of shipment. management applies significant judgment to determine relevant assumptions to calculate the reserve, including the assessment of historical warranty experience and replacement cost.auditing management’s estimate of warranty reserve on pumps was complex and judgmental due to the significant estimation required by management in estimating the value of the warranty reserve. in particular, the warranty reserve estimate is sensitive due to significant assumptions including replacement rates and replacement product costs, especially as it relates to recently released pump versions for which replacement rates specific to that version are not yet known. as such, replacement rates of recently released pumps are based primarily upon historical rates of prior versions which ultimately may not be predictive of the experience of new pumps, due to new features and capabilities of the more recent releases. these assumptions are affected by actual customer experience and changes in these assumptions could have a material impact on the company’s estimated reserve. this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to these determinations and management’s significant assumptions for the warranty reserve.how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of the company’s controls over the warranty reserve estimation process. for example, we tested controls over management's review and calculation of significant assumptions underlying the warranty reserve, such as replacement rates and actual replacement product costs, and tested controls over the accuracy and completeness of data used.to test the company’s warranty reserve, we performed audit procedures that included, among others, testing the completeness and accuracy of the underlying data used in the estimation calculation and evaluated the appropriateness of management’s methodology to calculate the warranty reserve. we also evaluated the reasonableness of management’s significant assumptions related to replacement rates and replacement cost, including review for contrary evidence. evaluating management’s significant assumptions involved evaluating the historical claims data utilized by management in estimating both the replacement rates and costs of known and anticipated claims. we assessed the historical accuracy of management’s estimates by performing a lookback analysis and performing sensitivity analyses of the significant assumptions to evaluate the impact of changes in the warranty reserve that would result from changes in the assumptions. we tested the mathematical accuracy of the warranty reserve calculation and obtained documentation and performed inquiries of company management to evaluate the completeness of the company’s estimate. in addition, for revisions made to the estimated reserve, we evaluated the reasonableness of the subsequent changes by comparing the revised assumptions to the original estimated assumptions and evaluated the reasons for the subsequent change.85valuation of convertible notes description of the matter as described in note 7 to the consolidated financial statements, in may 2020 the company issued $287.5 million of convertible senior notes due in 2025 (convertible notes), which permit the company to settle in cash or stock at its option. the company entered into separate capped call transactions to reduce potential dilution upon conversion of the convertible notes. these transactions are collectively referred to as the convertible notes transactions.auditing the company’s determination of the value allocated to the liability and equity components was complex and highly judgmental as a result of the significant estimation required to determine the fair value of the liability component, measured at the estimated fair value of similar debt without the conversion option. the difference between the initial proceeds of the convertible notes and the value allocated to the liability component being recognized in stockholders’ equity (deficit) as the carrying amount of the equity component. the fair value of similar debt that does not have an associated conversion feature was determined using the company’s effective interest rate. the effective interest rate for the convertible notes was estimated using a binomial lattice model with various assumptions, the most significant assumptions being expected volatility of the company’s common stock and discount rate. additionally, the company performed a detailed analysis of the terms of the convertible notes transactions to identify whether any derivatives that required separate mark-to-market accounting under applicable accounting guidance were present.how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the company’s convertible notes transactions. for example, we tested the company’s controls over the initial recognition and measurement of the convertible notes transactions, including the assessment of the risk adjusted yield and the recording of the associated liability and equity components.our testing of the company’s initial accounting for the convertible notes transactions, among other procedures, included reading the underlying agreements and evaluating the company’s accounting analysis of the initial accounting of the convertible notes transactions, including the determination of the balance sheet classification of each transaction and identification of any derivatives included in the arrangements. to test the estimated fair value of the conversion option, our audit procedures included, among others, evaluating methodologies used in the valuation model and testing the significant assumptions. for example, we compared the discount rate that was adjusted for the company’s credit risk to the interest rates on comparable debt instruments, and we compared the forward-looking implied volatility to our independently calculated estimated equity volatility specific to the convertible note. in addition, we involved our internal valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the company. we have also evaluated the company’s financial statement disclosures related to these matters included in note 7 to the consolidated financial statements./s/ ernst & young llp we have served as the company's auditor since 2009.

critical audit matters the critical audit matters communicated beloware matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicatedto the audit committee and that: (i) relate to accounts or disclosures that are material to the consolidated financial statements and(ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does notalter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the criticalaudit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. basis of presentation and going concern –disclosure the accompanying consolidated financial statementshave been prepared assuming that the company will continue as a going concern. as discussed in note 2 to the consolidated financial statements,the company has suffered recurring losses from operations, and recorded an accumulated deficit as of august 31, 2021, and the companycurrently has net working capital deficit. currently management’s forecasts and related assumptions illustrate their ability tomeet the obligations through management of expenditures and, if necessary, obtaining additional debt financing, loans from existing directorsand shareholders and private placements of capital stock for additional funding to meet its operating needs. should there be constraintson the ability to access such financing, the company can manage cash outflows to meet the obligations through reductions in capital expendituresand other operating expenditures. we identified management’s assessment ofthe company’s ability to continue as a going concern as a critical audit matter. management made judgments to conclude that it isprobable that the company’s plans will be effectively implemented and will provide the necessary cash flows to fund the company’sobligations as they become due. specifically, the judgments with the highest degree of impact and subjectivity in determining it is probablethat the company’s plans will be effectively implemented included its ability to reduce capital expenditures and other operatingexpenditures, its ability to access funding from the capital market and its ability to obtaining loans from existing directors and shareholders.auditing the judgments made by management required a high degree of auditor judgment, subjectivity and effort in performing proceduresand evaluating the relevant audit evidence. addressing the matter involved performing proceduresand evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these proceduresincluded the following, among others: (i) evaluating the probability that the company will be able to access funding from the capitalmarket; (ii) evaluating the probability that the company will be able to reduce capital expenditures and other operating expendituresif required (iii) evaluating the probability that the company will be able to obtain the loan from existing directors and shareholdersand (iv) assessing the adequacy of the company’s going concern disclosures included in note 2 to the consolidated financial statements. /s/ centurion zd cpa & co. centurion zd cpa & co. we have served as the company’s auditor since 2020.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.52 identification of embedded derivatives description of the matter as discussed in notes 8, 9 and 13 of the consolidated financial statements, on february 26, 2021 the company executed a series of transactions which included a term loan credit agreement, an amended abl credit agreement, a series a preferred stock repurchase and exchange agreement and a series c preferred stock purchase agreement. certain of these agreements contain conversion features that are not considered clearly and closely related to their respective host contracts. accordingly, these embedded features are bifurcated and separately accounted for at fair value as derivatives with changes in fair value reported in other (income) charges, net in the consolidated statement of operations. auditing management’s evaluation of the initial accounting for these transactions was challenging due to the complexity in assessing the company's analysis of the terms of the agreements to identify whether there were any embedded derivatives that required separate identification and valuation under applicable accounting guidance. how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of the company's controls over the company's accounting for the transactions, including its controls over the evaluation of the existence of and accounting for the embedded derivatives. our testing of the company's initial accounting for the transactions, among other procedures, included inspecting the underlying agreements and evaluating the company's accounting analysis of the initial accounting for the transactions, including the determination of the balance sheet classification of each transaction and identification of any derivatives included in the arrangements. we also assessed the appropriateness of the disclosures in the consolidated financial statements. retirement benefits – valuation of private equity investment description of the matter as described in note 19 to the consolidated financial statements, at december 31, 2021 the company’s u.s plan holds $1,082 million in private equity investments. the private equity investments are valued primarily based on independent appraisals, discounted cash flow models, cost and comparable market transactions. these investments are valued by the u.s. plan using the net asset value (nav) per share expedient. for investments with lagged pricing, the company uses the latest available net asset values, and also considers expected return and other relevant material events for the year-end valuation of these investments. auditing the fair value of these private equity investments is challenging because of the higher estimation uncertainty associated with the inputs to the underlying net asset values and estimated returns used in determining year-end valuations for investments with lagged pricing. additionally, certain information regarding the fair value of these private equity investments is based on unaudited information available to management at the time of valuation. how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of the company's controls over the valuation of plan assets. this included testing management’s controls over private equity investment valuation, which included a comparison of historical returns to benchmarks, a look-back analysis to identify if there were significant changes in the private equity fund valuations subsequent to year-end values, inspecting responses to questionnaires sent to asset managers and evaluating the fourth quarter returns of benchmark indices to assess whether the valuations of the u.s. plan’s private equity investments with lagged pricing should be adjusted. our audit procedures included, among others, comparing private equity investment returns to selected relevant benchmarks and understanding variations, obtaining the latest audited financial statements and comparing to the company's recorded values and understanding any significant differences. we also inquired of management about changes to the investment portfolio and/or related investment strategies and considerations. we assessed the historical accuracy of management's estimates by comparing actual activity to previous estimates. we evaluated for contrary evidence by confirming the net asset values of the investments and ownership interests directly with the trustees and a sample of managers at year end. we also assessed the appropriateness of the disclosures in the consolidated financial statements.53 we have served as the company’s auditor since 2020.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.44table of contents valuation of chico’s reporting unit goodwill – impairment assessment description of the matter at january 30, 2021, the carrying value of goodwill for the chico’s reporting unit was $16.4 million, after recognition of an impairment charge of $20.0 million during the first quarter of fiscal year 2020. as discussed in notes 1, 3 and 8 to the consolidated financial statements, goodwill is tested for impairment at least annually, or more frequently when circumstances indicate carrying values may not be recoverable. as a result of the significant decline in the company’s market capitalization during the first quarter of 2020, the company concluded that impairment indicators were present and performed an interim quantitative impairment assessment for the goodwill related to the chico’s reporting unit as of april 4, 2020. the company performed its annual impairment test during the fourth quarter of fiscal year 2020, which resulted in no incremental impairment charges to chico’s reporting unit goodwill. for both assessments, the company estimated the fair value of the chico’s reporting unit using the discounted cash flow income approach.auditing management’s quantitative goodwill impairment tests for the chico’s reporting unit was complex and involved a high degree of subjectivity due to the significant estimation required to determine the fair value of the reporting unit. in particular, under the discounted cash flow method, the fair value estimate was sensitive to significant assumptions, such as changes in the weighted-average cost of capital (“wacc”) and assumptions within the prospective financial information, including revenue growth rates, cost of sales percentages, and other expense percentages which are affected by expectations about future company performance as well as market or economic conditions.how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the company’s goodwill impairment review process for the chico’s reporting unit, including controls over management’s review of the significant assumptions described above. to test the estimated fair value of the chico’s reporting unit, we performed audit procedures that included, among others, assessing the valuation methodology used and testing the significant assumptions discussed above and the underlying data used by the company in its analyses. we compared the significant assumptions used by management to current industry and economic trends, including comparison to available market data on expected u.s. gross domestic product recovery and expected retail-industry recovery curves as impacted by the covid-19 pandemic. we also compared the projected financial information to the chico’s brand’s historical results and business plans as adjusted for the impact of covid-19 and tested management’s reconciliation of the fair value of its collective reporting units to the market capitalization of the company. we involved our valuation specialists to assist in evaluating the valuation methodology used and to assist in evaluating the wacc significant assumption. we evaluated the wacc by comparing it to a wacc range that we independently developed using publicly available market data for comparable entities and further evaluated whether management’s methodology for determining the wacc reflected the risk associated with the forecasted cash flows of the chico’s reporting unit. valuation of whbm trademark – impairment assessment description of the matter at january 30, 2021, the carrying value of the white house black market (“whbm”) trademark was $5.0 million, after recognition of impairment charges of $28.0 million and $1.0 million during the first and fourth quarters of fiscal year 2020, respectively. as discussed in notes 1, 3 and 8 to the consolidated financial statements, indefinite-lived intangible assets are assessed for impairment at least annually, or more frequently when circumstances indicate carrying values may not be recoverable. as a result of the significant decline in the company’s market capitalization during the first quarter of 2020, the company concluded that impairment indicators were present and performed an interim quantitative impairment assessment of its indefinite-lived intangible assets as of april 4, 2020. the company performed its annual impairment test during the fourth quarter of fiscal year 2020. for both assessments, the company estimated the fair value of the whbm trademark using the relief-from-royalty method which is a variation of the income approach.auditing management’s quantitative impairment tests for the whbm trademark was complex and involved a high degree of subjectivity due to the significant estimation required to determine the fair value of the whbm trademark under the relief-from-royalty method. in particular, the fair value estimate was sensitive to significant assumptions, such as changes in the royalty rate and revenue growth rate projections, which are affected by expectations about future company performance as well as market or economic conditions.45table of contents how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the company’s whbm trademark impairment review process, including controls over management’s review of the significant assumptions described above. to test the estimated fair value of the whbm trademark, we performed audit procedures that included, among others, assessing the valuation methodology used and testing the significant assumptions discussed above and the underlying data used by the company in its analyses. we compared the significant assumptions used by management to develop the revenue growth rate projections, used to forecast cash flows, to current industry and economic trends, including comparison to available market data on expected u.s. gross domestic product recovery and expected retail-industry recovery curves as impacted by the covid-19 pandemic. we also compared revenue forecasts to whbm brand’s historical results and business plans as adjusted for the impacts of the covid-19 pandemic. we involved our valuation specialists to assist in evaluating the valuation methodology used and to assist in the evaluation of the selected royalty rate. we evaluated the royalty rate by comparing it to the royalty rates within licensing agreements of guideline public companies and performed a profit split analysis based on the whbm forecasted earnings before interest and taxes margins. further, we compared the fair value of the whbm trademark as a percent of the total fair value of the whbm reporting unit to the same percentage for comparable market transactions.we performed sensitivity analyses on the royalty rate assumption to evaluate the changes in the fair value of the whbm trademark that would result from changes in the significant assumption. valuation of store assets - impairment assessment description of the matter as discussed in notes 1, 4 and 8 to the consolidated financial statements, the company reviews long-lived assets, including property and equipment and operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. store assets are grouped at the lowest level for which they are largely independent of other assets or asset groups. if the estimated undiscounted future cash flows related to the asset group are less than the carrying value, the company recognizes a loss equal to the difference between the carrying value and the estimated fair value, determined by the estimated discounted future cash flows of the asset group. due to significant operating losses and the temporary closure of all of the company’s stores during the first quarter of fiscal year 2020 and lower-than-expected earnings for fiscal 2020 and forecast for future periods, resulting from the covid-19 pandemic, the company concluded that indicators of impairment were present and performed quantitative impairment tests of its long-lived store assets during fiscal year 2020. as a result, the company recognized an impairment loss on its store property and equipment, primarily leasehold improvements, of $19.1 million and on its store operating lease right-of-use assets of $3.2 million in fiscal year 2020. auditing management’s store asset impairment analyses was complex and involved a high degree of subjectivity due to the significant estimation required to determine the assumptions utilized to project the undiscounted cash flows of the store asset group as part of the recoverability test. in particular, the recoverability test estimates were sensitive to changes in the store revenue growth rate assumptions, which are affected by expectations about future company performance as well as economic conditions.46table of contents how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the company’s store impairment review process, including controls over management’s review of the significant assumption described above. to test the estimates within the recoverability test for the company’s store impairment analyses, we performed audit procedures that included, among others, assessing the methodology used in the undiscounted cash flow model and testing the store revenue growth rate assumptions used to project the undiscounted cash flows as well as testing the underlying data used by the company in its analyses. we compared the significant assumptions used by management to develop the store revenue growth rates to current industry and economic trends, including comparison to available market data on expected u.s. gross domestic product recovery and expected retail-industry recovery curves as impacted by the covid-19 pandemic. we also compared revenue forecasts to historical results and business plans as adjusted for the impacts of the covid-19 pandemic.we performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the individual retail stores that would result from changes in the underlying assumptions./s/ ernst & young llp we have served as the company’s auditor since 2002.

critical audit matter the critical audit matters communicatedbelow are matters arising from the current period audit of the consolidated financial statements that were communicated or requiredto be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidatedfinancial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of criticalaudit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not,by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accountsor disclosures to which they relate. critical audit matter description stock based compensation during the year ended december31, 2020, the company recorded stock-based compensation expense of $2.5 million. as discussed in note 8 to the consolidated financialstatements, the company issues various types of equity awards, including stock options and restricted stock units. auditing the company’s accountingfor stock-based compensation required complex auditor judgment due to the number and variety of equity awards outstanding, theinclusion of performance vesting criteria in certain awards, and the subjectivity of assumptions used to value stock-based awards.in particular, judgment was required to evaluate the nature of the performance conditions, as well as to assess the satisfactionof the performance targets. how we addressedthe matter in our audit to test stock based compensationexpense, we performed audit procedures that included, among others, obtaining an understanding of the company’s controlsover stock-based compensation, assessing the completeness of the awards granted and evaluating the methodologies used to estimatethe fair value of these awards. we also tested the accuracy of the data used in measuring the awards by agreeing the underlyinginputs, such as grant date, grant price, performance targets and vesting terms, among others, back to source documents, such ascompensation meeting minutes or award letters and testing the clerical accuracy of the calculation of the expense recorded. wedetermined whether milestone targets were satisfied in accordance with the contractual conditions and recalculated grant date fairvalue. we also evaluated the adequacy of the company’s stock-based compensation disclosures included in note 8 in relationto these matters. /s/ friedman llp we have served as the company’s auditor since 2014.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. realization of net deferred tax assets at alcoa canada company as described in notes b and p to the consolidated financial statements, the company had $410 million of net deferred tax assets as of december 31, 2019, including $137 million of net deferred tax assets at alcoa canada company, most significantly related to pension obligations and derivatives. alcoa canada company is in a three-year cumulative loss position as of december 31, 2019. valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50%) that a tax benefit will not be realized. management applies judgment in assessing all available positive and negative evidence, such as history of profitable operations and projections of taxable income, in evaluating whether it is more likely than not that the net deferred tax assets will be realized in the future. projections of taxable income is based on macroeconomic indicators and involves assumptions related to, among others, commodity prices, volume levels, and key inputs and raw materials such as alumina, calcined petroleum coke, liquid pitch, energy, labor, and transportation costs. the principal considerations for our determination that performing procedures relating to the realization of net deferred tax assets at alcoa canada company is a critical audit matter are there was significant judgment by management in determining whether the net deferred tax assets are more likely than not to be realized in the future as alcoa canada company is in a three-year cumulative loss position. this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to management’s assessment of the realization of net deferred tax assets and management’s assumption for projected taxable income, including commodity prices, and costs relating to alumina, calcined petroleum coke, liquid pitch, and energy. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s assessment of the realization of net deferred tax assets at alcoa canada company, including controls over projected taxable income. these procedures also included, among others, evaluating the positive and negative evidence available in management’s assessment of the realization of net deferred tax assets at alcoa canada company, testing the completeness and accuracy of underlying data used in management’s assessment, and evaluating the reasonableness of management’s assumption related to projected taxable income. evaluating management’s assumption related to projected taxable income, including commodity prices, and costs relating to alumina, calcined petroleum coke, liquid pitch, and energy involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of alcoa canada company, (ii) the consistency with external market and industry data, and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit. /s/ pricewaterhouse coopers llp pricewaterhouse coopers llp pittsburgh, pennsylvania february 21, 2020we have served as the company’s auditor since 2015.

critical audit matters the critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.goodwill – pr ana reporting unit – refer to notes 2 and 6 to the consolidated financial statements critical audit matter description the company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. the company uses a combination of discounted cash flow analysis and market-based valuation methods, which requires management to make significant estimates and assumptions related to projected cash flow, discount rates, market-based multiples, and other operating performance measures. changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, if any, or both. the goodwill balance was $68.6 million as of december 31, 2020, of which $54.2 million was allocated to the pr ana reporting unit (“pr ana”). the fair value of pr ana exceeded its carrying value as of the measurement date and, therefore, no impairment was recognized.auditing management’s estimates and assumptions related to projected cash flow, discount rates, market-based multiples, and other operating performance measures for pr ana involved especially subjective judgment.35table of contents how the critical audit matter was addressed in the audit our audit procedures related to management’s estimates and assumptions related to projected cash flow, discount rates, market-based multiples, and other operating performance measures for the pr ana goodwill impairment analysis included the following, among others:•we tested the effectiveness of internal controls over the pr ana goodwill impairment analysis, including those over the forecasts for cash flow and other operating performance measures, and the selection of the discount rate and market-based multiples.•we evaluated management’s ability to accurately forecast cash flow and other operating performance measures by comparing actual results to management’s historical forecasts.•we evaluated the reasonableness of management’s cash flow forecasts by comparing the forecasts to:◦historical cash flow.◦forecasted information included in company press releases as well as in analyst and industry reports for the company and certain of its peer companies.•we evaluated the impact of changes in management’s cash flow forecasts from the october 31, 2020 annual measurement date to december 31, 2020.•to evaluate the reasonableness of the discount rate, with the assistance of our fair value specialists, we:◦developed a range of independent estimates of the discount rate and compared those to the discount rate selected by management to assess the appropriateness of the discount rate assumption.◦tested the inputs and source information underlying the determination of the discount rate by comparing to reputable third-party data or industry information and tested the mathematical accuracy of the calculation.•with the assistance of our fair value specialists, we evaluated the reasonableness of the selection and application of valuation multiples management applied in i market-based valuation method through comparison to valuation multiples for guideline public companies.intangible assets, net – pr ana trademark– refer to notes 2 and 6 to the consolidated financial statements critical audit matter description the company has trademarks and trade names (“trademarks”) that are indefinite-lived intangible assets. as of december 31, 2020, the carrying value of the intangible assets was $103.6 million, of which $70.5 million was attributed to pr ana’s trademark, after recognizing $17.5 million of impairment loss in the year ended december 31, 2020. the company used the relief from royalty method to estimate fair value, which requires management to make significant estimates and assumptions related to projected sales, royalty rates and discount rates to estimate the net present value of future cash flows relating to the pr ana trademark.auditing management’s estimates and assumptions related to projected sales, royalty rates, and discount rates for pr ana involved especially subjective judgment.how the critical audit matter was addressed in the audit our audit procedures related to management’s estimates and assumptions related to projected sales, royalty rates, and discount rates for the pr ana trademark valuation included the following, among others:•we tested the effectiveness of controls over intangible assets, including those over the forecasts of future sales, and the selection of the discount rate and royalty rate.•we evaluated management’s ability to accurately forecast future sales by comparing actual results to management’s historical forecasts.•we evaluated the reasonableness of management’s sales forecasts by comparing the forecasts to:◦historical sales.◦forecasted information included in company press releases as well as in analyst and industry reports for the company and certain of its peer companies.36table of contents•we evaluated the impact of changes in management’s forecasts from the october 31, 2020 annual measurement date to december 31, 2020.•to evaluate the reasonableness of the (1) discount rate and (2) royalty rate, with the assistance of our fair value specialists, we:◦developed a range of independent estimates of the discount rate and compared those to the discount rate selected by management to assess the appropriateness of the discount rate assumption.◦tested the inputs and source information underlying the determination of the discount rate by comparing to reputable third-party data or industry information and tested the mathematical accuracy of the calculation.◦compared the royalty rate selected by management to rates from royalty agreements in the outdoor apparel industry for comparable companies and the company’s own contract royalty rates.long-lived asset valuation – refer to notes 2, 5 and 9 to the consolidated financial statements critical audit matter description the company evaluates retail location long-lived assets for impairment when events or changes in circumstances exist that may indicate that the carrying amounts of retail location long-lived assets are no longer recoverable. events that result in an impairment review include plans to close a retail location or a significant decrease in the operating results of the retail location. when such an indicator occurs, the company evaluates its retail location long-lived assets for impairment by comparing the undiscounted future cash flow expected to be generated by the location to the retail location long-lived asset’s carrying amount. if the carrying amount of an asset exceeds the estimated undiscounted future cash flow, an analysis is performed to estimate the fair value of the asset. an impairment is recorded if the fair value of the retail location long-lived asset is less than the carrying amount.the company makes significant assumptions to evaluate retail location long-lived assets for possible indications of impairment. changes in these assumptions could have a significant impact on the retail location long-lived assets identified for further analysis. for the year ended december 31, 2020, impairment charges from underperforming retail location long-lived assets were $7.0 million for lease right-of-use assets and $4.5 million for property, plant, and equipment.given the company’s evaluation of possible indications of impairment of retail location long-lived assets requires management to make significant assumptions, performing audit procedures to evaluate whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of retail location long-lived assets may not be recoverable involved especially subjective judgment.how the critical audit matter was addressed in the audit our audit procedures related to the evaluation of retail location long-lived assets for possible indications of impairment included the following, among others:•we tested the effectiveness of controls over management's identification of possible circumstances that may indicate that the carrying amounts of retail location long-lived assets are no longer recoverable.•we evaluated management's analysis of long-lived assets for indications of impairment analysis by:◦testing retail location long-lived assets for possible indications of impairment, including searching for locations with a history of losses, current period loss, or projected losses.◦performing inquiries of management regarding the process and assumptions used to identify potential indicators of impairment and evaluating the consistency of the assumptions with evidence obtained in other areas of the audit./s/ deloitte & touche llp portland, oregon february 25, 2021we have served as the company’s auditor since at least 1994;

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 1.accrual of clinical trial costs description of the matter as discussed in note 3 to the consolidated financial statements, the company records research and development costs associated with clinical trial activities based upon estimates of costs incurred through the balance sheet date that have yet to be invoiced by the contract research organizations (“cro”) and other vendors. the company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. estimated accruals are determined based on reviewing contractual terms and through communications with internal clinical personnel and external service providers including cro’s as to the 61progress or state of its trials. the principal consideration for our determination that performing procedures related to the clinical trial expenses, specifically related to the year-end accrual for clinical trial costs, is a critical audit matter is that there was judgment by management in determining the progress of the activities included in the individual clinical trial agreements based on internal and external information, and involves a high volume of data.how we addressed the matter in our audit to evaluate the accrual for clinical expenses, our audit procedures included, among others, testing the completeness and accuracy of the underlying data used in the estimates and evaluating the significant assumptions including, but not limited to, subject visit dates and costs per subject visit, that are used by management to estimate the recorded accruals. to assess the reasonableness of the significant assumptions, we obtained an understanding the company’s estimation process relating to accrual for clinical trial costs, corroborated the progress of clinical trials with the company’s clinical team and obtained confirmations directly from third parties related to active patient sites, currently enrolled patients, and subject visit dates. we also tested a sample of subsequent payments to assess the impact to the accrual through the balance sheet date and compared that to the company’s estimates.2.fair value of contingent consideration description of the matter as discussed in note 4 to the consolidated financial statements, the company’s acquisition-related purchase price contingent liability, which is estimated using scenario-based methods based upon the company’s analysis of the likelihood of obtaining specified approvals from the federal drug administration as well as reaching cumulative revenue milestones and is remeasured to its estimated fair value each reporting period, with changes in fair value recorded in the statements of operations. auditing the valuation of the acquisition-related contingent consideration liability was complex and highly judgmental due to the significant estimation required in determining the fair value. in particular, the fair value estimate was sensitive to significant assumptions such as the company’s projected future sales, which are affected by expectations about approval of a new drug application, future industry, market or economic conditions, and are forward-looking and inherently uncertain. how we addressed the matter in our audit to evaluate the estimated fair value of the contingent consideration liability, we performed audit procedures that included, among others, assessing the terms of the arrangement, evaluating the methodology used, and testing the significant assumptions discussed above used by the company in its analysis. we involved our valuation specialists to assist in the evaluation of the significant assumptions and methodology used by the company. we also compared the significant assumptions to current industry, market and economic trends. /s/ marcum llp marcum llp we have served as the company’s auditor since 2014.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.acquisition of contessa health, inc. – evaluation of the fair value of noncontrolling interest and of certain intangible assets as discussed in notes 2 and 4 to the consolidated financial statements, the company accounts for business combinations using the acquisition method of accounting. the company acquired contessa health, inc. (contessa) on august 1, 2021. intangible assets acquired in connection with this transaction included acquired names, technology and non-compete agreements. in addition, the company recorded noncontrolling interest related to the acquisition.57we identified the evaluation of the fair value of the noncontrolling interest and of certain intangible assets, which consisted of acquired names and technology, acquired in the contessa transaction as a critical audit matter. subjective auditor judgment was required to evaluate the identification of intangible assets acquired and significant assumptions used in the valuation of noncontrolling interest and of certain intangible assets. specifically, the significant assumptions included projected revenue growth rates, projected earnings before interest, taxes, depreciation and amortization (ebitda), and the weighted average cost of capital (wacc). changes to these assumptions could have had a significant effect on the company’s estimate of fair value of noncontrolling interest and intangible assets. the following are the primary procedures we performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls over the company’s acquisition accounting process, including controls over the identification of intangible assets acquired and the development of the significant assumptions used in the valuation of the noncontrolling interest and of the intangible assets. we read the purchase agreement to identify the significant terms, conditions, and intangible assets acquired and compared them to the company’s analysis of intangible assets acquired. we evaluated the company’s projected revenue growth rates by comparing such assumptions to those of contessa’s peers and to industry reports. we evaluated the company’s projected ebitda by comparing such assumptions to those of contessa’s peers. additionally, we compared the company’s projected revenue growth rates and projected ebitda to contessa’s and the company’s historical actual results. we involved valuation professionals with specialized skills and knowledge, who assisted in:•evaluating the company’s identification of intangible assets acquired•evaluating the wacc, which was used by the company to determine the discount rate, by comparing the company's inputs to the wacc to publicly available data for comparable entities and assessing the resulting wacc.evaluation of the non-contractual revenue adjustment estimates for home health and hospice as discussed in note 2 to the consolidated financial statements, the company determines the transaction price for revenue contracts based on gross charges for services provided, reduced by contractual revenue adjustments and an estimate for non-contractual revenue adjustments. non-contractual revenue adjustments are recorded for self-pay, uninsured patients, and other payors by major payor class based on historical collection experience, evaluated for current economic conditions. adjustments resulting from payment reviews and adjustments arising from the inability to obtain appropriate billing documentation, authorizations, or face-to-face documentation are factors that are relevant to the estimate of ultimate collection. the non-contractual revenue adjustments represent the difference between amounts billed and amounts the company expects to collect based on its collection history with similar payors.we identified the evaluation of the non-contractual revenue adjustment estimates noted above for the home health and hospice segments as a critical audit matter. subjective and complex auditor judgment was required to evaluate the method and historical collection experience used by the company when developing the non-contractual revenue adjustment estimate. specifically, the significant judgments related to evaluating the relevance of historical collection experience to the determination of the estimate, which included evaluation of current conditions, trends, historical adjustment experience, and other factors.the following are the primary procedures we performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls related to the company’s revenue process, including controls over the method and significant judgments for estimating non-contractual revenue adjustments noted above. we assessed the outcome of the estimation of non-contractual revenue adjustments in the prior period to identify circumstances or conditions that are relevant to the determination of the current year estimate. to assess the current year method and the relevance of the historical collection experience, we also evaluated current conditions, trends, historical adjustment experience, and other factors relevant to the estimation of non-contractual revenue adjustments./s/ kpmg llp we have served as the company's auditor since 2002.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.96 allowance for advances to suppliers description of the matter the company’s short-term and long-term advances to suppliers totaled approximately $153 million as of march 31, 2020, and the allowances totaled $16 million. as discussed in note 1 of the financial statements, the company provides agronomy services and seasonal advances of seed, fertilizer, and other supplies to tobacco farmers for crop production. these advances are repaid through the delivery of tobacco to the company. management determined the allowance based on assumptions including the assessment of historical loss information and crop projections. auditing management’s estimate for the allowance on advances to suppliers was complex and involved subjective auditor judgment as the estimate relies on a number of factors that are affected by market and economic conditions outside the company’s control. there is uncertainty associated with the assumptions used which could have a significant effect on the allowance estimate. how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of the company’s internal controls over the allowance on the advances to suppliers. for example, we tested controls over the supplier advance approval and management’s review and approval of the models used to calculate the allowance. we also tested controls used by management to evaluate the data used in making the estimates for completeness and accuracy. to test the allowance for advances to suppliers, our audit procedures included, among others, evaluating the significant assumptions used in the allowance calculation. for example, we compared historical loss information to management’s estimate of projected crop yield and analyzed the sensitivity of significant assumptions to evaluate the changes in the allowance that would result from changes in the assumptions. we analyzed subsequent events to identify potential sources of contrary information to management’s assumptions. allowance for recoverable value-added tax (“vat”) credits description of the matter the company’s gross balance of recoverable value-added tax (“vat”) credits totaled approximately $52 million as of march 31, 2020, and the related allowance totaled approximately $19 million. as discussed in note 1 of the financial statements, in many foreign countries, the company pays and receives a significant amount of vat on purchases and sales of tobacco and tobacco related material. items subject to a vat vary from jurisdiction to jurisdiction as do the rates at which the tax is assessed. some jurisdictions allow companies to apply for refunds of unused vat credits from the tax authorities, but the refund process may take an extended period of time and it is not uncommon for refund applications to be challenged or rejected. some jurisdictions also permit companies to sell or transfer unused vat credits to third parties in private transactions although the proceeds realized may be heavily discounted from the face value of the credits. management applied judgment in calculating the valuation allowance to estimate the credits that are not expected to be recovered. auditing management’s estimate of the vat allowance was complex and involved a high degree of subjectivity as the estimate relies on a number of factors including interpretations of applicable tax laws and regulations as well as economic and political conditions outside the company’s control. there is uncertainty associated with the assumptions used which could have a significant effect on the estimate. how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of the company’s internal controls over the allowance on the vat. for example, we tested controls over management’s review and approval of the models used in the allowance and the completeness and accuracy of the data inputs and outputs used in the calculation. to test the vat allowance estimate, our audit procedures included, among others, evaluating the significant assumptions used to estimate the vat allowance and assessing the historical accuracy of management’s estimates. for example, we evaluated whether the historical loss of credits used in management’s calculation was representative of the current collectability of the credits. we analyzed the sensitivity of significant assumptions to evaluate the changes in the allowance that that would result from changes in the assumptions and we considered subsequent events to identify potential sources of contrary information to management’s assumptions. 97 accounting for acquisition of fruitsmart description of the matter as described in note 1 and 2 to the consolidated financial statements, on january 1, 2020 the company acquired 100% of the capital stock of fruit smart, inc. (“fruit smart”) for approximately $80 million in cash, up to $25 million of contingent consideration payments, and $3.8 million of working capital on-hand at the date of acquisition. the acquisition of fruit smart was accounted for as a business combination. auditing the company's accounting for its business combination was complex due to the significant estimation required by management to determine the fair value of the contingent consideration ($6.7 million) and identifiable intangible assets including customer relationships ($9.5 million). significant estimation was required due to the application of the valuation models and assumptions used by management to measure the fair value of the contingent consideration liability and the customer-related intangible asset. the significant assumptions used in determining the fair value included volatility, discount rate and forecasted results (e.g., revenue growth rates and operating profit margins). how we addressed the matter in our audit we tested the company's controls over its accounting for business combinations. for example, we tested controls over the recognition and measurement of consideration transferred (including contingent consideration) and the customer-related intangible asset acquired, including management’s review over the valuation models and significant assumptions.to test the estimated fair value of the contingent consideration and customer related intangible asset, we performed audit procedures that included, among others, assessing the conditions that must be met for the contingent consideration to become payable and the significant assumptions used in the estimated fair value of the customer-related intangible asset and contingent consideration. for example, we tested the completeness and accuracy of the underlying data and compared the significant assumptions to current industry, market and economic trends, historical results of the acquired business, and other guidelines used by companies within the same industry. we involved our valuation specialists to assist in evaluating the company's use of its valuation models. we performed a sensitivity analysis of the significant assumptions to evaluate the change in the fair values that would result from changes in assumptions. /s/ ernst & young llp we have served as the company’s auditor since 1971.

critical audit matters thecritical audit matters communicated below are matters arising from the currentperiod audit of the consolidated financial statements that were communicated orrequired to be communicated to the audit committee and that: (1) relate toaccounts or disclosures that are material to the consolidated financialstatements and (2) involved our especially challenging, subjective, or complexjudgments. the communication of critical audit matters does not alter in anyway our opinion on the consolidated financial statements, taken as a whole, andwe are not, by communicating the critical audit matters below, providingseparate opinions on the critical audit matters or on the accounts ordisclosures to which they relate.assessment of the allowance for loan and lease lossesrelated to originated loans collectively evaluated for impairment asdiscussed in notes 1 and 7 to the consolidated financial statements, the company’s allowance for loan and lease losses related to originated loans collectivelyevaluated for impairment (alll) was $68.4 million of a total allowance and loanand lease losses of $116.5 million as of december 31, 2019. the alll estimateconsists of both quantitative and qualitative loss components. the companyestimates the quantitative component of the alll for the commercial, consumer,and auto loan and leasing portfolio segments by applying loss factors that aredeveloped considering the company’s historical loss experience over a look backperiod as adjusted for an estimated loss emergence period. for the commercialloan segment these are also based on assigned loan grades. for the residentialmortgage loan portfolio the methodology incorporates probability of default(pd) and loss given default (lgd) assumptions to determine the applicable lossfactors. qualitative adjustments to such loss factors are made when internaland external factors are identified that are not taken into account by thequantitative component of the alll. 82 we identified the assessment of the alll as a critical audit matter because it involved significant measurementuncertainty requiring complex auditor judgment, and knowledge and experience inthe industry. specifically, complex and subjective auditor judgment wasrequired to assess the (1) methodologies and data used to derive thequantitative loss factors, (2) key assumptions including how loans with similarrisk characteristics are segmented, the historical look back periods and theloss emergence periods, (3) loan grades assigned to commercial loans, and (4)development and evaluation of qualitative adjustments.the primary procedures we performedto address the critical audit matter included the following. we tested certaininternal controls over the company’s alll process, including controls relatedto the (1) development of the alll methodology, (2) determination of the keyfactors and assumptions used to estimate the loss factors, (3) periodic testingof commercial loan grades, (4) determination of the qualitative adjustments,and (5) analysis of the alll results, trends and ratios. we evaluated thepooling of loans with similar risk characteristics, including loan mix andlevels of delinquencies, non-performing loans, and net charge-offs. we testedthe relevance of sources of internal and external data and key assumptions,including the historical look back periods, by evaluating (1) if loss data inthe historical look back period was representative of the creditcharacteristics of the current portfolio, and (2) the sufficiency of loss datawithin the historical look back period. we assessed the appropriateness of theloss emergence period assumptions by considering the company’s credit riskpolicies and observable loss data. in addition, we involved creditrisk professionals with specialized industry knowledge and experience whoassisted in evaluating:− the company’s all lmethodology for compliance with u.s. generally accepted accounting principles,− the resultingquantitative loss factors, including key assumptions,− the appropriateness ofloan portfolio segmentation,− the framework used todevelop the resulting qualitative factors and the effect of those factors onthe alll compared with relevant credit risk factors and credit trends, and− individual loan gradesfor a selection of commercial loans. assessment of the allowance for loan losses andinterest income related to the acquired loan portfolios as discussed in notes 1, 6 and 7 tothe consolidated financial statements, the company accounts for certainacquired loans with evidence of deterioration in credit quality sinceorigination (purchased credit impaired or pci loans) under fasb asc topic310-30 (asc 310-30). the company’s allowance for loan losses related to pc iloans (the asc 310-30 all) was $31.5 million of the total allowance of loan andlease losses of $116.5 million as of december 31, 2019. interest income on pc iloans amounted to $45.1 million during the year ended december 31, 2019,excluding the acquired loans from the scotiabank & usvi acquisition. the company’s pci loans predominantly consist of pools of commercial and mortgageloans. the recognition of the asc 310-30 all and interest income on the pc iloans is dependent on having a reasonable expectation about the timing andamount of cash flows expected to be collected from scheduled customerrepayments, collateral values, foreclosures or other collection efforts. the company’s determines cash flows expected to be collected from pci loans usingassumptions including probability of default (pd), loss severity, assigned loangrades for commercial loans, and prepayment rates for mortgage loans. the company performs a quarterly evaluation of actual versus expected cash flowsand assesses the credit quality of these loans based on delinquency, severityfactors and loan grades on commercial loans. we identified the assessment of the asc 310-30 all and interest income on pci loans as a critical audit matterbecause it involved significant measurement uncertainty requiring complexauditor judgment. specifically, complex and subjective auditor judgement wasrequired to assess the (1) methodology to derive the expected cash flows, and(2) key assumptions including the pd, loss severity and assigned loan gradesfor commercial loans. the primary procedures we performedto address the critical audit matter included the following. we tested certaininternal controls over the company’s asc 310-30 all process and the process forrecognizing interest income on pci loans, including controls related to the (1)development of the asc 310-30 methodology, (2) determination of key assumptionsused to develop the cash flows expected to be collected, and (3) measurement ofthe asc 310-30 all estimate and interest income on pci loans. we tested therelevance and reliability of inputs and key assumptions, including the pd and lossseverity assumptions, loan grades on commercial loans and whether additionalfactors and alternative assumptions should be used. 83 in addition, we involved creditrisk professionals with specialized industry knowledge and experience whoassisted in evaluating: − the company’s asc310-30 methodology for compliance with u.s. generally accepted accountingprinciples, − for a selection ofpools, the company’s cash flow backtesting results, and the benchmarking ofexpected cash flows developed by the company against expected cash flowsdeveloped by an external specialist, and − the individual loangrades for a selection of commercial loans. assessment of the fair value measurements of acquiredloans and core deposit intangibles in the scotiabank & usvi acquisition as discussed in note 2 to theconsolidated financial statements, on december 31, 2019, the company completedthe acquisition of scotiabank de puerto rico (sbpr) and certain assets andliabilities of the bank of nova scotia – puerto rico branch and the bank of nova scotia – virgin islands branch (the “scotiabank pr & usvi acquisition”). the acquisition was accounted for as a business combination using theacquisition method of accounting. accordingly, assets acquired, liabilitiesassumed and consideration paid were recorded at their estimated fair values atthe acquisition date. the acquisition date fair value of the acquired loans was$2.2 billion, primarily consisting of loans valued in loan pools (acquired loanpools) and the acquisition date fair value of the core deposit intangible (cdi)was $41.5 million. the fair value of acquired loans was based on the incomeapproach utilizing a discounted cash flow methodology that used projections ofinterest and principal payments based on loan contractual terms, and applying certainvaluation assumptions, including probability of default rates, loss severity,discount rates, and prepayment rates. the fair value of the cdi was estimatedby projecting net cash flow benefits, including assumptions related to customerattrition rates, discount rate, and alternative costs of funds. we identified the assessment of thefair value measurements of acquired loan pool and cdi acquired as part of the scotiabank pr & usvi acquisition as a critical audit matter. the assessmentencompassed the evaluation of the fair value methodologies for acquired loanpools and cdi, including the assumptions used in the fair value estimates. thevaluation assumptions for acquired loan pools related to probability of defaultrates, loss severity and discount rates, and the valuation assumptions for the cdi related to discount rate and alternative cost of funds rate. theseassumptions involved significant measurement uncertainty and requiredspecialized skills and knowledge to evaluate. additionally, there was auditorjudgment involved in designing and performing audit procedures in order toevaluate and test these key assumptions. the primary procedures we performedto address the critical audit matter included testing certain internal controlsover the (1) development of the fair value methodologies, (2) determination ofthe key assumptions for acquired loan pools and cdi and (3) analysis of thefair value measurement results. we involved valuation professionals withspecialized skills and knowledge, who assisted in:− evaluating thevaluation methodologies for compliance with u.s. generally accepted accountingprinciples,− developing an estimateof fair value for a selection of acquired loan pools using the loan contractualterms and independently developed assumptions used by other marketparticipants, and compared the results to the company’s estimate of fair value,− evaluating the cd ivaluation assumptions by comparing those assumptions it against publiclyavailable market data used by other market participants, and− developing an estimateof the fair value for the cdi using the company’s cash flow assumptions andindependently developed assumptions used by other market participants andcompared the results to the company’s estimate of fair value./s/ kpmgllp san juan, puerto rico march 2, 2020we haveserved as the company’s auditor since 2005.

critical audit matter for the personnel staffing group recoverable allowance.basis for opinion these financial statements are the responsibility of the company's management. our responsibility is to express an opinion on the company’s financial statements based on our audits. we are a public accounting firm registered with the pcaob and are required to be independent with respect to the company in accordance with the u.s. federal securities laws and the applicable rules and regulations of the securities and exchange commission and the pcaob.we conducted our audits in accordance with the standards of the pcaob. those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. we believe that our audits provide a reasonable basis for our opinion.critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.47 valuation of incurred but not reported loss and loss expense reserves description of the matter as of december 31, 2020, the liability for incurred but not reported loss and loss expense reserves, net of reinsurance (“ibnr”), represented a significant portion of the loss and loss expense reserve, net of reinsurance. as discussed in note a and note c to the consolidated financial statements, the carrying amount of the loss and loss expense reserve, net of reinsurance, is management’s best estimate of the ultimate liability for indemnity costs and related adjustment expense necessary to investigate and settle claims and is based upon individual case estimates for reported claims and actuarial estimates for ibnr. the estimate for ibnr is determined based on evaluations of individual reported claims and by actuarial estimation processes considering historical experience, relevant economic information, and available industry statistics. the ibnr estimate is driven by management’s expected loss ratio assumption, which is comprised of various factors, including historical payment patterns and expected future trends in claim severity and frequency. auditing management’s best estimate of ibnr was complex and required the involvement of our actuarial specialists due to the significant measurement uncertainty associated with the estimation and high degree of subjectivity in management’s determination of the expected loss ratio assumption. management’s expected loss ratio assumption has a significant effect on the valuation of ibnr. how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the process for estimating ibnr. these audit procedures included, among others, testing management’s review and approval controls over the expected loss ratio assumption for estimating ibnr. with the assistance of actuarial specialists, our audit procedures included, among others, an evaluation of the company’s expected loss ratio assumption, which included a comparison of historical payment patterns, expected future trends in claim severity and frequency, and consideration of relevant economic information and other industry factors to our prior year analysis and actual current year loss activity. to evaluate the expected loss ratio assumption, we developed an independent range of reasonable reserve estimates that we compared to management’s best estimate of ibnr. we also analyzed year-to-year movements within our independently developed range. additionally, we performed a review of the development of prior years’ reserve estimates. personnel staffing group recoverable allowance description of the matter as of december 31, 2020, the company has a recoverable due from a single customer, personnel staffing group, for $47.3 million related to claims that have been paid or will be paid on behalf of personnel staffing group by the company for which the company has recorded a $16.5 million credit impairment allowance. as discussed above and in note a and note t to the consolidated financial statements, the allowance amount is management’s best estimate of the ultimate credit impairment for the recoverable based on the expected timing and amount of cash flows from personnel staffing group. this estimate is particularly sensitive to the default and recovery in default assumptions which have a significant impact on the allowance. these assumptions involve significant uncertainty and management judgment. auditing management’s best estimate of the personnel staffing group recoverable allowance (the allowance) required the involvement of our valuation specialists due to the significant measurement uncertainty associated with management’s estimation. the uncertainty is primarily driven by the high degree of subjectivity in management’s determination of the default and recovery in default assumptions. how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the process for estimating the allowance. these audit procedures included, among others, testing management review and approval controls over the assumptions for estimating the allowance. with the assistance of our valuation specialists, our audit procedures included, among others, reviewing contract terms between personnel staffing group and the company, reading minutes of the meetings of the committees of the board of directors, reading summaries of the lawsuits with personnel staffing group, reviewing legal letters pertinent to the matter, reviewing historical bankruptcy data from similar entities within the industry, and evaluating the company’s selection of methods used to estimate the allowance compared with those methods used in the industry for similar types of analyses. to evaluate the significant assumptions used by management, we compared the significant assumptions to industry data for entities with similar characteristics to personnel staffing group and financial data specific to personnel staffing group. with the assistance of the valuation specialists, we developed an independent range of reasonable allowance estimates that we compared to management’s best estimate.we have served as the company’s auditor since 1970.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. accrued clinical trial expenses description of the matter as of december 31, 2021, the company recorded $13.5 million for accrued clinical trial expenses. as described in note 2 to the financial statements, the company’s expense accruals for clinical trials are based on estimates of contracted services provided but not yet billed by third-party vendors. when billing terms under such contracts do not coincide with the timing of when the work is performed, management is required to make estimates of outstanding obligations to those third parties at the end of each reporting period. accrual estimates are based on a number of factors, including management’s knowledge of the research and development program activities, invoicing to date, and the provisions in the contract. if possible, the company obtains information regarding unbilled services directly from these service providers and performs procedures to challenge these estimates based on their internal understanding of the services provided to date. auditing accrued clinical trial expenses was complex because of the efforts applied by management to determine the commencement and completion date of vendor tasks, and the cost and extent of work performed during the reporting period for services not yet billed by contracted third-party vendors. testing the company’s accrued clinical trial expense models also involved increased effort due to the high volume of data used to determine the estimated accrual.how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the company’s process for estimating the accrued clinical trial expenses, including controls over management’s assessment and measurement of clinical trial progress and related estimates of accrued clinical trial costs, and the completeness and accuracy of underlying data used in the analysis.we evaluated the estimate of accrued clinical trial expenses. we performed audit procedures that included, among others, direct confirmation of contract terms and conditions with a sample of the company’s third-party vendors. we confirmed progress of contracted clinical activities with third-party vendors and compared such data to the company’s estimates of progress as reflected in their accrual models. we tested the accuracy of the calculations and data utilized, and evaluated the reasonableness of the assumptions used in management’s accrual models by vouching actual invoices paid to date, agreeing inputs back to contractual terms and holding discussions with clinical or administrative staff outside of the finance function to corroborate progress and estimated level of expended effort incurred by the company’s third-party vendors.united kingdom research and development tax relief scheme description of the matter as of december 31, 2021, the company recorded $12.4 million of other income for amounts received under the united kingdom’s (“uk’s”) small and medium-sized enterprises (“sme") research and development (“r&d”) tax relief scheme. as described in note 18 to the consolidated financial statements, the company carries out extensive research and development activities that benefit from uk’s sme r&d tax relief scheme, whereby an entity can make an election to receive an enhanced uk tax deduction on its eligible r&d activities or, when an sme entity is in a net operating loss position, elect to surrender net operating losses that arise from its eligible r&d activities in exchange for a cash payment from the uk tax authorities. the company records these amounts as a component of other income, net after an election for tax relief in the form of cash payments has been made for a discrete tax year by submitting the claim, and collectability is deemed probable and reasonably assured. auditing the amounts recorded related to the uk’s sme r&d tax relief scheme was complex due to the application of foreign tax regulations that allow the company to claim a cash refundable benefit.how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the company’s process for calculating the uk’s sme r&d tax relief scheme. we evaluated other income recorded for the uk’s sme r&d tax relief scheme. we performed audit procedures that included, among others, utilizing professionals with specialized skill and knowledge to assist in evaluating the company’s eligibility to participate in the scheme, inspecting the reasonableness of types of qualified the expenses and programs used to determine the claim, and evaluating the reasonableness of the company’s application of relevant foreign tax regulations associated with the uk’s sme r&d tax relief scheme. we tested the completeness, accuracy, and relevance of information used in the calculation of the claim. we evaluated the status, results of communications and audits by the uk tax authorities associated with past and current claims made by the company under the uk’s sme r&d tax relief scheme./s/ ernst & young llp we have served as the company’s auditor since 2007.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.acquisitions of ati industrial automation, inc. and schneider electric motion usa, inc. – valuation of developed technologies and customer relationships intangible assets as described in note 4 to the consolidated financial statements, the company completed the acquisitions of ati industrial automation, inc. (ati) and schneider electric motion usa, inc. (sem) in 2021. the acquisition of ati resulted in a $23.9 million customer relationships intangible asset and a $19.8 million developed technologies intangible asset being recorded, and the acquisition of sem resulted in a $41.7 million customer relationships intangible asset and a $9.1 million developed technologies intangible asset being recorded. assets acquired and liabilities assumed have been recorded by management at their estimated fair values as of the acquisition dates. the fair values of intangible assets were based on valuations using an income approach, specifically the multi-period excess earnings method for customer relationships and the relief-from-royalty method for developed technologies. the process for estimating the fair values of these identifiable intangible assets requires the use of significant estimates and assumptions by management, including revenue growth rates, customer attrition rates, royalty rates, discount rates, technology obsolescence curves, and ebitda margins.the principal considerations for our determination that performing procedures relating to the valuation of the developed technologies and customer relationships intangible assets acquired in the ati and sem acquisitions is a critical audit matter are (i) the significant judgment by management when determining the fair value of the developed technologies and customer relationships assets, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, royalty rates, discount rates, and technology obsolescence curves used in the valuation of the developed technologies intangible assets and the revenue growth rates, discount rates, customer attrition rates, and ebitda margins used in the valuation of the customer relationships intangible assets, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s (i) valuation of the developed technologies and customer relationships intangible assets and (ii) development of significant assumptions related to revenue growth rates, customer attrition rates, royalty rates, discount rates, technology obsolescence curves and ebitda margins. these procedures also included, among others, (i) reading the purchase agreements and (ii) testing management’s process for determining the fair value of the developed technologies and customer relationships intangible assets. testing management’s process included evaluating the appropriateness of the multi-period excess earnings and relief-from-royalty valuation methods, testing the completeness and accuracy of underlying data used by management, and evaluating the reasonableness of management’s significant assumptions related to the revenue growth rates, royalty rates, discount rates, and technology obsolescence curves used in the valuation of the developed technologies intangible assets and the revenue growth rates, discount rates, customer attrition rates, and ebitda margins used in the valuation of the customer relationships intangible assets. evaluating the reasonableness of the revenue growth rates in the valuation of developed technologies and revenue growth rates, ebitda margins, and customer attrition rates used in the valuation of the customer relationships involved considering the past performance of the acquired businesses, consistency with economic and industry forecasts, and whether these assumptions were consistent with evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the valuation methods and of the reasonableness of the royalty rates, discount rates, and technology obsolescence curves in the valuation of the developed technologies intangible assets and the customer attrition rates and discount rates used in the valuation of the customer relationships intangible assets. 53 fair value of the contingent consideration for arges gmb h acquisition as described in notes 4 and 7 to the consolidated financial statements, the company had $3.8 million of a contingent consideration liability as of december 31, 2021 related to the 2019 acquisition of arges gmb h. the contingent consideration payments are payable annually based on actual revenue achievement against certain revenue targets by the company from august 2019 through december 2026. management determines the estimated fair value of the contingent consideration liability using a monte carlo valuation method. the unobservable inputs used by management to determine the fair value of the contingent consideration liability included historical and projected revenues, revenue volatility, cost of debt, and the discount rate.the principal considerations for our determination that performing procedures relating to the fair value of the contingent consideration for the arges gmb h acquisition is a critical audit matter are (i) the significant judgment by management when determining the fair value, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the monte carlo valuation method and evaluating management's significant assumptions related to the projected revenues, revenue volatility, and discount rate, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s valuation of the contingent consideration, including controls over management’s valuation method and significant assumptions related to projected revenues, revenue volatility, and discount rate. these procedures also included, among others, (i) testing management’s process for determining the fair value of the contingent consideration, (ii) evaluating the appropriateness of the monte carlo valuation method, (iii) testing the completeness and accuracy of underlying data used by management, and (iv) evaluating the significant assumptions used by management related to the projected revenues, revenue volatility, and discount rate. evaluating the assumptions related to projected revenues involved evaluating whether the assumptions used by management were reasonable considering the current and past performance of the acquired business, consistency with external market data, and whether these assumptions were consistent with evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in the evaluation of the company’s monte carlo valuation method and the revenue volatility and discount rate assumptions. /s/ pricewaterhouse coopers llp boston, massachusetts march 1, 2022we have served as the company’s auditor since 2013.

critical audit matter.critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee of the company’s board of directors and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.measurement of uncertain tax positions and foreign tax credits description of the matter as discussed in note 10 to the consolidated financial statements, the company recorded income tax expense related to us and non-us tax paying jurisdictions totaling $22.9 million for the year ended june 30, 2019 and a liability for unrecognized tax benefits totaling $3.8 million at june 30, 2019. the company’s accounting for income taxes involves the application of complex tax regulations in each of the international tax paying jurisdictions in which it operates. the determination of income subject to income tax in each tax paying jurisdiction requires management to apply transfer pricing guidelines for certain intercompany transactions and make assumptions and estimates about the value of transactions when allocating income and deductions between consolidated entities in different tax paying jurisdictions. the estimates and assumptions used in these allocations can result in uncertainty in the measured tax benefit. additionally, the company is entitled to claim us foreign tax credits for taxes paid at international tax paying jurisdictions. certain of the assumptions and allocations used in the determination of the key inputs underlying the foreign tax credits are highly subjective and can also materially affect the calculation of us income taxes owed on global intangible low tax income. 67auditing the completeness and measurement of the liability for recognized tax benefits related to certain intercompany transactions was complex because the assumptions are based on the interpretation of tax laws and legal rulings in multiple tax paying jurisdictions and require significant judgment in determining whether a tax position’s technical merits are more-likely-than-not to be sustained and measuring the amount of tax benefit that qualifies for recognition. additionally, auditing the calculation of the foreign tax credits was complex because the estimates and assumptions about apportionment and allocation methodologies are highly judgmental.how we addressed the matter in our audit we tested controls over the process to assess the technical merits of tax positions related to certain intercompany transactions, as well as management’s process to measure the benefit of those tax positions, including controls over the completeness and accuracy of the underlying data. for example, we tested controls over management’s review of the evaluation of matters identified by and discussed with various tax authorities. we also tested controls over the calculation of foreign tax credits, including management’s review of such calculations and the completeness and accuracy of the data underlying the calculations. our audit procedures with respect to the calculation of the liability for unrecognized tax benefits and the benefit for foreign tax credits involved an assessment of the technical merits of the company’s tax positions performed with the assistance of tax subject matter professionals with knowledge of and experience with the application of international and local income tax laws by the relevant income tax authorities. these procedures also included, among others, evaluating third-party advice obtained by the company and making inquiries of its external tax advisers. we also evaluated the company’s significant assumptions and the completeness and accuracy of the data used to determine the amount of tax benefits recognized and tested the accuracy of such calculations. for foreign tax credits, we also performed sensitivity analyses on the significant assumptions related to allocations and apportionment to evaluate how changes in assumptions affected the measurement of tax credits, and verified the completeness and accuracy of the computations. valuation of customer relationship intangible assets in the paragon acquisition description of the matter during fiscal 2019, the company completed its acquisition of paragon bioservices, inc. (paragon) for an aggregate nominal purchase price of $1,192.1 million. as discussed in note 3 to the consolidated financial statements, the transaction was accounted for using the acquisition method of accounting for business combinations. auditing the company’s accounting for the paragon acquisition was complex and required the involvement of specialists due to the significant estimation uncertainty involved in determining the $389.0 million fair value of the acquired customer relationship intangible assets recorded. estimating the fair value of the customer relationship intangible assets involved the application of a valuation methodology and models using assumptions including a discount rate, revenue growth rates and appropriate profit margins on such revenues, customer contract renewal rates and a customer attrition rate. these significant assumptions are forward-looking and could be affected by future economic and market conditions.how we addressed the matter in our audit we tested controls over the risks of material misstatement relating to the measurement and valuation of the acquired customer relationship intangible assets. for example, we tested controls over management’s review of the valuation models and the underlying assumptions used to develop such estimates. to test the estimated fair value of the acquired customer relationship intangible assets, our audit procedures included, among others, evaluating the company’s selection of a valuation method and testing the models and significant assumptions used in the models, including the completeness and accuracy of the underlying data. for example, we compared the significant assumptions to current industry and market trends and to the historical results of the acquired business. we also performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the acquired customer relationship intangible assets that would result from changes in the assumptions. in addition, we involved internal valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the company.fair value of derivative liability description of the matter during may 2019, the company entered into an equity commitment and investment agreement for the issuance and sale of 650,000 shares of catalent’s series a preferred stock for an aggregate purchase price of $650.0 million. as discussed in note 9 to the consolidated financial statements, the series a preferred stock included a dividend adjustment feature that met the definition of a derivative for accounting purposes. the dividend adjustment feature was bifurcated from the series a preferred stock and recorded separately as a derivative liability at its estimated fair value on the date of issuance and as of june 30, 2019 of $39.7 million and $26.8 million, respectively.68auditing the company’s valuations of this derivative was challenging as the company uses complex valuation methodologies that incorporate significant assumptions which include the discount rate and forecasted volatility of the company’s common stock price. the valuations include assumptions about economic and market conditions with uncertain future outcomes. how we addressed the matter in our audit we tested controls over the risks of material misstatement relating to the valuations of the derivative liability. for example, we tested controls over management’s review of the valuation models, the underlying assumptions used in the models and the related accounting conclusions. to test the valuations of the derivative liability, our audit procedures included, among others, evaluating the methodologies used in the valuation model and testing the significant assumptions. for example, we compared the discount rate that was adjusted for the credit risk of the company to the interest rates on comparable debt instruments, and we compared the forecasted volatility of the company’s common stock price to its historical volatility. we also assessed the completeness and accuracy of the underlying data. in addition, we involved our internal valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the company. we have also evaluated the company’s financial statement disclosures related to these matters included in note 9 to the consolidated financial statements. revenue from contracts with customers description of the matter as discussed above and in note 1 to the consolidated financial statements, the company adopted accounting standards codification 606 (“asc 606”): revenue from contracts with customers as of july 1, 2018. as discussed in note 1 and note 2 to the consolidated financial statements, the company earns its revenue by providing services under contracts with its customers in three primary revenue streams: manufacturing and commercial product supply, development services, and clinical supply services. for performance obligations related to services that are required to be recognized over-time, there is judgment involved in determining the most appropriate measure of progress towards satisfaction of each performance obligation. auditing the company’s assessment of measure of progress required a high degree of auditor judgment due to the subjectivity in determining the measure that most faithfully depicts the entity’s performance in satisfying performance obligations within each of the company’s revenue streams and consistently applying the selected measure across similar arrangements.how we addressed the matter in our audit we tested controls over the risks of material misstatement relating to the determination of the most appropriate measure of progress towards satisfaction of performance obligations for each of its revenue streams. to test the measures of progress used for performance obligations related to services that are required to be recognized over-time, our audit procedures included, among others, evaluating the appropriateness of the company’s accounting policy for each type of arrangement. we also tested the identified measure of performance for a sample of arrangements by reading the contracts with the customers and reviewing the contract analyses prepared by management. we evaluated whether the selected measures of progress towards satisfaction of performance obligations were applied consistently across similar arrangements. we also tested the completeness and accuracy of the underlying data used for the measure of progress. /s/ ernst & young llp we have served as the company’s auditor since 2007.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.mineral reserves - asset retirement obligations, valuation of long-lived assets and depreciation, depletion and amortization of property, plant and equipment -refer to notes 3, 5 and 11 to the financial statements critical audit matter description mineral reserve estimates, combined with estimated annual production levels, are used to determine the mine closure dates utilized in recording the fair value liability for asset retirement obligations for active operating mines. since the liability represents the present value of the expected future obligation, a significant change in mineral reserves or mine lives could have a substantial effect on the recorded obligation. mineral reserve estimates are also used in evaluating potential impairments of mine asset groups as they are indicative of future cash flows and in determining maximum useful lives utilized to calculate depreciation, depletion and amortization of long-lived mine assets. the company performs an 136table of contentsin-depth evaluation of its mineral reserve estimates by iron ore mine on a periodic basis, in addition to routine annual assessments. the determination of mineral reserves requires management, with the support of management’s experts, to make significant estimates and assumptions related to key inputs including (1) the determination of the size and scope of the iron ore body through technical modeling, (2) the estimates of future iron ore prices, production costs and capital expenditures, and (3) management’s mine plan for the proven and probable mineral reserves (collectively “the mineral reserve inputs”). changes in any of the judgments or assumptions related to the mineral reserve inputs can have a significant impact with respect to the accrual for asset retirement obligations, the impairment of long-lived asset groups and the amount of depreciation, depletion and amortization expense. the consolidated accrued mine closure obligation balance was $165.3 million as of december 31, 2019, of which $22.0 million related to active operations. the total asset balance associated with the company’s continuing operations for its mining & pelletizing reportable segment was $1,643.1 million as of december 31, 2019, of which $1,156.0 million related to long-lived assets. depreciation, depletion and amortization expense for the company’s mining & pelletizing reportable segment was $79.0 million for the year ended december 31, 2019.given the significant judgments and assumptions made by management to estimate mineral reserves and the sensitivity of changes to mineral reserve estimates on the company’s recorded asset retirement obligations, long-lived asset impairment considerations, and calculated depreciation, depletion and amortization expense, performing audit procedures to evaluate the reasonableness of management’s judgments and estimates related to the mineral reserve inputs required a high degree of auditor judgment and an increased extent of effort.how the critical audit matter was addressed in the audit our audit procedures related to management’s significant judgments and assumptions related to mineral reserve quantities and the related mine closure dates included the following, among others:•we tested the operating effectiveness of internal controls related to the company’s estimation of mineral reserve quantities and the related mine closure dates.•we evaluated the experience, qualifications and objectivity of management’s experts, including in-house mine engineers.•for an iron ore mine subject to the company’s routine annual assessment we evaluated management’s assessment by:◦understanding the process used by management to survey and analyze the geological and operational status of current year mine production. ◦evaluating the historical accuracy of management’s technical model as compared to actual mine production results.◦comparing the mine plan, updated for current year depletion, to▪presentations to the audit committee.▪information by asset group, asset retirement obligation valuation models, and depreciation, depletion and amortization expense calculations.•for an iron ore mine subject to the company’s periodic in-depth evaluation of its mineral reserve estimate:◦we evaluated management’s determination of the size and scope of the iron ore body, by:▪understanding the process used by management to complete research and exploration activities including mineralized resource drill samples.▪understanding the methodology utilized by management to apply the research and exploration data to the development of a technical model of the iron ore body.▪evaluating the historical accuracy of management’s technical model as compared to actual mine production results.◦we evaluated management’s estimates of future iron ore prices, production costs and capital expenditures (the “financial assumptions”), by:▪understanding and testing the methodology utilized by management for development of the 137table of contentsfuture iron ore prices recognizing that the price shall not exceed the three-year trailing average index price of iron ore adjusted to the company’s realized price.▪evaluated management’s ability to accurately forecast future iron ore prices, production costs and capital expenditures by comparing actual results to management’s historical forecasts.▪evaluated the reasonableness of management’s estimates of future iron ore prices to forecasted information included in analyst reports.▪evaluated the reasonableness of management’s forecast for production costs and capital expenditures by comparing the forecasts to: (1) historical results and (2) internal communications to management and the board of directors.◦we evaluated management’s mine plan for the proven and probable mineral reserves, by:▪understanding the process used by management to develop the mine plan for proven and probable mineral reserves applying key inputs such as the technical model of the iron ore body and the financial assumptions.▪comparing the mine plan to•presentations to the audit committee.•historical mine plan(s).•information by asset group, asset retirement obligation valuation models, and depreciation, depletion and amortization expense calculations./s/ deloitte & touche llp cleveland, ohio february 20, 2020 we have served as the company's auditor since 2004.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.33table of contents inventory valuation description of the matter at march 27, 2021, the company’s net inventory balance was $173.3 million. as discussed in note 2 of the financial statements, inventories are stated at the lower of cost or net realizable value, which includes considerations for inventory becoming obsolete or in excess of management’s forecasted customer unit demand. the company writes down inventories to net realizable value based on forecasted customer unit demand while taking into account product release schedules and product life cycles. the company also writes down inventory, as appropriate, based on the age and condition of the inventory.auditing management’s estimate of excess and obsolete inventory involved subjective auditor judgment because management’s determination of whether a write down is warranted is judgmental and the estimate is sensitive to changes in assumptions, including management’s assumptions over forecasted demand which may be impacted by, among other things, future market and economic conditions outside of the company’s control.how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the valuation of inventory. for example, we tested controls over management’s review of forecasted demand, the significant assumptions, and the data underlying the excess and obsolete inventory valuation estimate.among other audit procedures performed, we evaluated the significant assumptions discussed above, including the forecasted customer unit demand utilized in the estimate, and tested the completeness and accuracy of the underlying data used in management’s calculation. we evaluated adjustments to forecasted demand for specific product considerations, assessed the historical accuracy of management’s estimates by performing a retrospective analysis comparing prior period forecasted demand to actual historical sales and inspected historical gross margins to assess whether any items were being sold at a loss.uncertain tax positions description of the matter as described in note 18 to the consolidated financial statements, the company has recorded accrued liabilities relating to unrecognized tax benefits resulting from uncertain tax positions of $32.9 million as of march 27, 2021. the company and its subsidiaries are subject to u.s. federal income tax as well as income tax in multiple state and foreign jurisdictions. furthermore, the company’s fiscal years 2017 to 2021 remain open to examination by the major taxing jurisdictions.auditing management’s analysis of the uncertainties in its tax positions was complex and judgmental because the company’s evaluation and measurement of each tax position involves assessing uncertainties with respect to the application of complex tax rules, which are subject to interpretation. the company uses significant judgment in determining whether a tax position is more likely than not to be sustained and measuring the amount of tax benefit that qualifies for recognition.how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the existence of uncertain tax positions and measurement of the benefit of those positions. for example, we tested controls over management’s review of the technical merits of tax positions, the events and information that impacted tax positions, the estimate of the most likely outcome, and the data utilized in the estimate. to test the valuation of uncertain tax positions, our audit procedures included, among others, analyzing the company’s assumptions and data used to determine the amount of tax benefit to recognize and testing the accuracy of the calculations. in considering the measurement criteria, we involved our tax professionals to assess the technical merits of the company’s tax positions. this included assessing the company’s correspondence with the relevant tax authorities and evaluating income tax opinions or other third-party advice obtained by the company. we also used our knowledge of, and experience with, the application of international and local income tax laws by the relevant income tax authorities to evaluate the company’s accounting for those tax positions. we also evaluated the company’s income tax disclosures included in note 18 to the consolidated financial statements in relation to these matters./s/ ernst & young llp we have served as the company’s auditor since 1984.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. determination of standalone selling price as discussed in note 2 of the consolidated financial statements, the company’s contracts with clients often include multiple performance obligations. for these contracts, the company allocates the transaction price to each performance obligation in the contract on a relative standalone selling price basis. standalone selling price is the price at which the company would sell a promised good or service separately to a client. when the standalone selling price is not directly observable from actual standalone sales, the company estimates a standalone selling price making maximum use of any observable data and estimates of what a client in the market would be willing to pay for the goods or services. we identified the assessment of the determination of standalone selling price as a critical audit matter. subjective auditor judgment was required to evaluate standalone selling prices determined using ranges of observable standalone sales and ranges of selling price data when directly observable sales are not available. the following are the primary procedures we performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls related to the company’s revenue process, including controls over the determination of standalone selling prices. we evaluated the methodology used to determine standalone selling prices by considering whether there were any changes in goods and services sold or selling practices that could affect the 3methodology or the relevance of selling price data used in the methodology. we tested observable selling price reports by agreeing selling price inputs to revenue contracts. for a selection of standalone selling prices, we evaluated the company’s assessment of the effect that observable selling price data has on the standalone selling price. for a selection of standalone selling prices that were changed from a previously established price, we assessed the revised standalone selling prices by comparing them to observable selling price data. sufficiency of audit evidence over it systems used in the revenue recognition process as discussed in note 18 to the consolidated financial statements, the company generated $1,499.4 million of revenue in north america for the year-ended december 31, 2021. the processing and recording of revenue in north america is reliant upon multiple information technology (it) systems. we identified the sufficiency of audit evidence over it systems used in the revenue recognition process in north america as a critical audit matter. subjective auditor judgment was required to evaluate the sufficiency of audit evidence obtained because of the complexity of the it environment related to the revenue recognition process. specifically, obtaining an understanding of the systems used in the company’s recognition of revenue and evaluating the related internal controls required the involvement of professionals with specialized skills and knowledge. the following are the primary procedures we performed to address this critical audit matter. we performed risk assessment procedures and applied auditor judgment to determine the nature and extent of procedures to be performed over revenue. we involved it professionals with specialized skills and knowledge, who assisted in 1) gaining an understanding of the systems used in the company’s recognition of revenue and 2) evaluating the design and testing the operating effectiveness of certain internal controls over the revenue process. this included the general it and it application controls related to recording revenue in north america. on a sample basis, we also tested certain revenue transactions by comparing the recorded amounts to underlying documentation. we evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed including the appropriateness of the nature and extent of audit evidence. fair value measurement of the reacquired right intangible asset acquired in the bisnode acquisition as discussed in note 16 to the consolidated financial statements, the company acquired 100% ownership of bisnode on january 8, 2021 for total consideration of $805.8 million. as a result, the company recognized a reacquired right intangible asset for $270.0 million. the determination of the fair value of the reacquired right intangible asset required the company to make certain assumptions regarding cash flows from projected revenues and expenses, and the discount rate used in the calculation. we identified the assessment of the fair value measurement of the reacquired right intangible asset acquired in the bisnode acquisition as a critical audit matter. a high degree of subjective auditor judgment was required to evaluate the projected revenues and expenses, and discount rate used to determine the fair value of the reacquired right intangible asset. changes to these assumptions could have had a significant effect on the company’s estimate of fair value of the reacquired right intangible asset. the following are the primary procedures we performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls over the company’s acquisition date valuation process, including controls over the development of the relevant assumptions listed above. we evaluated the projected revenues and expenses by (1) comparing them to historical results of the acquired entity and the company and (2) current industry and economic trends. we performed sensitivity analyses to assess the impact that changes to the projected revenues and expenses, and discount rate would have on the fair value of the reacquired right intangible asset. we involved valuation professionals with specialized skills and knowledge, who assisted in: •recalculating the fair value of the reacquired right intangible asset using the company’s cash flow forecasts and an independently developed range of discount rates; and comparing it to the company’s fair value estimate.4•evaluating the discount rate by comparing it to an independently developed range of discount rates using publicly available market data for certain comparable entities. /s/ kpmg llp we have served as the company’s auditor since 2019

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. depletion expense and impairment of oil and gas properties impacted by the company’s estimation of proved reserves as described further in note 1 to the financial statements, the company uses the full cost method of accounting for oil and gas operations. this accounting method requires management to make estimates of proved reserves and related future net cash flows to compute and record depletion, depreciation and amortization, as well as to assess potential impairment of oil and gas properties (the full cost ceiling test). to estimate the volume of proved oil and gas reserve quantities, management makes significant estimates and assumptions including forecasting the production decline rate of producing properties and forecasting the timing and volume of production associated with the company’s development plan for proved undeveloped properties. in addition, the estimation of proved reserves is also impacted by management’s judgments and estimates regarding the financial 59table of contents index to financial statementsperformance of wells associated with those proved reserves to determine if wells are expected to be economical under the appropriate pricing assumptions that are required in the estimation of depletion, depreciation and amortization expense and potential ceiling test impairment assessments. we identified the estimation of proved reserves as it relates to the recognition of depletion, depreciation and amortization expense and the assessment of potential impairment as a critical audit matter.the principal consideration for our determination that the estimation of proved reserves is a critical audit matter is that relatively minor changes in certain inputs and assumptions that are necessary to estimate the volume and future cash flows of the company’s proved reserves could have a significant impact on the measurement of depletion, depreciation and amortization expense and/or impairment expense. in turn, auditing those inputs and assumptions required subjective and complex auditor judgment.our audit procedures related to the estimation of proved reserves included the following, among others: •we tested the design and operating effectiveness of internal controls relating to management’s estimation of proved reserves for the purpose of estimating depletion, depreciation and amortization expense and assessing the company’s oil and gas properties for potential ceiling test impairment;•we evaluated the independence, objectivity, and professional qualifications of the company’s reserves specialist, made inquiries of those reservoir engineers regarding the process followed and judgements made to estimate the company’s proved reserve volumes and read the report prepared by the company’s reserve specialist;•we evaluated sensitive inputs and assumptions used to determine proved reserve volumes and other cash flow inputs and assumptions that are derived from the company’s accounting records, such as historical pricing differentials, operating costs, estimated capital costs, and ownership interest. we tested management’s process for determining the assumptions, including examining the underlying support, on a sample basis where applicable. specifically, our audit procedures involved testing management’s assumptions as follows:◦compared the estimated pricing differentials used in the reserve report to realized prices related to revenue transactions recorded in the current year and examined contractual support for pricing differentials, where applicable;◦tested the model used to estimate the operating costs at year end and compared to historical operating costs;◦tested the model used to determine the future capital expenditures and compared estimated future capital expenditures used in the reserve report to amounts expended for recently drilled and completed wells, where applicable;◦tested the working and net revenue interests used in the reserve report by inspecting land and division order records;◦evaluated the company’s evidence supporting the proved undeveloped properties reflected in the reserve report by examining historical conversion rates and support for the company’s ability to fund and intent to develop the proved undeveloped properties; and ◦applied analytical procedures to the reserve report by comparing to historical actual results and to the prior year’s reserve report. /s/ grant thornton llp we have served as the company's auditor since 2005.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.valuation of casino receivables — refer to notes 2 and 4 to the financial statements critical audit matter description as discussed in note 2 to the financial statements, accounts receivable at december 31, 2019 include credit extended to casino patrons and junket operators. the company records an allowance for doubtful accounts based on the amount of probable credit losses. the company determines the allowance by analyzing the collectability of patron and junket operator accounts using several factors including, age of the account, collection history, patron and junket operator financial condition, and other available information.66table of contents auditing the valuation of accounts receivable involved a high degree of subjectivity in evaluating management’s judgments related to the collectability of patron and junket operator accounts receivable, especially as it relates to the evaluation of patron and junket operator assets available to repay amounts owed.how the critical audit matter was addressed in the audit we planned and performed the following procedures in connection with forming our overall opinion on the financial statements:•we tested the operating effectiveness of controls over the granting of casino credit, controls over the collection processes and management’s review controls over the assessment of the collectability of casino receivables, including the information used by management in those controls.•for a selection of casino receivables, we (1) obtained evidence related to payment history and correspondence with patron or junket operator, (2) evaluated management’s use of this information in establishing allowance for doubtful accounts, and (3) examined subsequent settlement, if any.•performed a retrospective analysis of historical reserves evaluating subsequent collections and write-offs./s/ deloitte & touche llp las vegas, nevada february 7, 2020we have served as the company's auditor since 2013.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.the hershey company | 2019 form 10-k | page 43valuation of accrued liabilities for trade promotion activities description of the matter the unsettled portion of the company’s obligation for trade promotion activities at december 31, 2019 was $181.0 million. as discussed in note 1 of the consolidated financial statements, the company promotes its products through programs such as, but not limited to, discounts, coupons, rebates, in-store display incentives, and volume-based incentives. the company recognizes the estimated costs of these trade promotion activities as a component of variable consideration when determining the transaction price. the unsettled portion of the company’s obligation for trade promotion activities is included in accrued liabilities in the consolidated balance sheet.auditing management’s calculation of the unsettled portion of the company’s obligation for trade promotion activities was highly subjective and required significant judgment as a result of the nature of the required estimates and assumptions. in particular, the estimates required an analysis of the programs offered, expectations regarding customer and consumer participation, historical sales and payment trends, and experience with payment patterns associated with similar programs offered in the past. the estimated cost of these programs is sensitive to changes in trends with regard to customer and consumer participation, particularly for new programs and for programs related to the introduction of new products.how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls related to the company’s calculation of the accrued liabilities for trade promotion activities. for example, we tested controls over management’s review of the completeness of the promotional activities as well as the significant assumptions and the data inputs utilized in the calculations. to test the unsettled portion of the company’s obligation for trade promotion activities, we performed audit procedures that included, among others, assessing (1) the expected value estimation methodology used by management, (2) whether all material trade promotion activities were properly included in management’s estimate, and (3) the significant assumptions discussed above and the underlying data used in its analyses. specifically, when evaluating the significant assumptions, we compared them to historical trends, third party data, and assumptions used in prior periods, and inspected management’s retrospective review of actual trade promotion activities compared to previous estimates. we also performed sensitivity analyses of significant assumptions to evaluate the changes in the estimate that would result from changes in the assumptions. valuation of identifiable intangible assets in business acquisition description of the matter as discussed in note 2 of the consolidated financial statements, the company completed the acquisition of one brands, llc on september 23, 2019 for net consideration of $402.2 million in a transaction that was accounted for as a business combination. auditing the company’s accounting for its acquisition of one brands, llc was complex due to the significant estimation uncertainty in the company’s determination of the fair value of acquired identifiable intangible assets, which principally consisted of trademarks with an estimated fair value of $144.9 million and customer-related intangible assets with an estimated fair value of $58.8 million. the significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business and due to the limited historical data on which those assumptions were based. the company used a discounted cash flow model to measure these acquired identifiable intangible assets. the significant assumptions used to estimate the fair value of the trademarks and customer-related intangible assets included discount rates, royalty rates, customer attrition rates, and certain significant assumptions that formed the basis of projected cash flows, including forecasted revenue growth rates and operating margins. these significant assumptions are forward-looking and could be affected by future economic and market conditions.the hershey company | 2019 form 10-k | page 44how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the company’s valuation of the acquired identifiable intangible assets. for example, we tested controls over the recognition and measurement of these intangible assets, including management’s review of the significant assumptions and methods discussed above. to test the estimated fair value of the acquired trademarks and customer-related intangible assets, we performed audit procedures that included, among others, evaluating the company’s selection of valuation methods and testing the models and significant assumptions discussed above, including the completeness and accuracy of the underlying data. for example, we compared the significant assumptions to current industry, market, and economic trends and to the historical results of the acquired business. we also performed sensitivity analyses of these significant assumptions to evaluate the changes in the fair value of the acquired identifiable intangible assets that would result from changes in the assumptions. we involved our internal valuation specialists to assist in evaluating the significant assumptions and methodologies used by the company./s/ ernst & young llp we have served as the company‘s auditor since 2016.

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or 88table of contentsdisclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.the impact of proved oil and natural gas reserves on proved oil and natural gas properties, net as described in notes 2 and 9 to the consolidated financial statements, the company’s consolidated proved oil and natural gas properties, net balance was $5.1 billion as of december 31, 2019. depreciation, depletion and amortization (dd&a) expense for the year ended december 31, 2019 was $787.2 million. for the year ended december 31, 2019, the company did not record impairment of proved oil and natural gas properties. oil and natural gas exploration and development activities are accounted for using the successful efforts method. all capitalized well costs and leasehold costs of proved properties are amortized on a unit-of-production basis over the remaining life of proved developed reserves and total proved reserves, respectively, related to the associated field. the company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have occurred. the company estimates the expected undiscounted future cash flows of its oil and gas properties by field and compares such undiscounted future cash flows to the carrying amount of the oil and gas properties in the applicable field to determine if the carrying amount is recoverable. as disclosed by management, the factors used to determine the undiscounted future cash flows are subject to management’s judgment and expertise and include, but are not limited to, estimates of proved reserves, future commodity pricing, future production estimates and estimates of operating and development costs. periodic revisions to the estimated reserves and related future net cash flows may be necessary as a result of a number of factors, including reservoir performance, new drilling, oil and natural gas prices, cost changes, technological advances, new geological or geophysical data or other economic factors. the estimates of oil and natural gas reserves have been developed by specialists, specifically petroleum engineers.the principal considerations for our determination that performing procedures relating to the impact of proved oil and natural gas reserves on proved oil and natural gas properties, net is a critical audit matter are there was significant judgment by management, including the use of specialists, when developing the estimates of proved oil and natural gas reserves. this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the significant assumptions used in developing those estimates, including future production, future price differentials, and future development costs.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s estimates of proved oil and natural gas reserves, the calculation of dd&a expense and the impairment assessment of proved oil and natural gas properties. these procedures also included, among others, evaluating the significant assumptions used by management in developing these estimates, including future production, future price differentials and future development costs. procedures were also performed to test the unit-of-production rate used to calculate dd&a expense and to test the identification of triggering events. the work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the estimates of proved oil and natural gas reserves. as a basis for using this work, the specialists’ qualifications and objectivity were understood, as well as the methods and assumptions used by the specialists. the procedures performed also included tests of the data used by the specialists and an evaluation of the specialists’ findings. evaluating the significant assumptions relating to the estimates of proved oil and natural gas reserves also involved obtaining evidence to support the reasonableness of the assumptions, including whether the assumptions used were reasonable considering the past and current performance of the company, and whether they were consistent with evidence obtained in other areas of the audit./s/pricewaterhouse coopers llp houston, texas february 26, 2020we have served as the company’s auditor since 2007.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.indicators of impairment of real estate owned and investment in unconsolidated joint ventures description of the matter at december 31, 2021, the company’s real estate owned, net and investment in and advances to unconsolidated joint ventures, net were approximately $9.6 billion and $702.5 million, respectively. as more fully described in note 2 to the consolidated financial statements, the company periodically evaluates these assets for indicators of impairment, and this includes, among other things, judgments based on factors such as operational performance, market conditions, the company’s intent and ability to hold each asset, as well as any significant cost overruns on development or redevelopment communities. during 2021, the company did not recognize an impairment related to real estate f - 2table of contentsowned, net or any other than temporary impairments related to its investment in unconsolidated joint ventures. auditing the company’s evaluation for indicators of impairment was complex due to a high degree of subjectivity in the identification of events or changes in circumstances that may indicate an impairment of its real estate owned or that the value of its investment in unconsolidated joint ventures may be other than temporarily impaired. differences or changes in these judgments could have a material impact on the company’s analysis.how we addressed the matter in our audit we tested the company’s internal controls over the asset impairment evaluation process. this included testing controls over management’s determination and review of the considerations used in the impairment indicator analysis. our procedures with regards to the company’s evaluation for indicators of impairment included, among others, testing the completeness and accuracy of management’s impairment analysis and evaluating management’s judgments determining whether indicators of impairment were present. for example, we performed inquires of management, considered historical operating results and the current market conditions, performed an independent assessment using both internally and externally available information, read the minutes of the meetings of the board of directors, and reviewed the company’s development and redevelopment costs.accounting for acquisitions of real estate investment properties description of the matter during 2021, the company acquired real estate investment properties which were accounted for as asset acquisitions. the aggregate increase in real estate and other assets due to these acquisitions was approximately $1.5 billion. as more fully described in note 3 to the consolidated financial statements, the total consideration was allocated to land, land improvements, buildings and improvements, and real estate intangible assets based on their relative fair value.auditing the company’s acquisition of real estate investment properties is complex and requires a higher degree of auditor judgment due to the significant assumptions that are utilized in the determination of the relative fair values of the assets acquired. the significant assumptions used in management’s analysis to estimate the fair value of these components includes capitalization rates, market comparable prices for similar land parcels, market rental rates, leasing commission rates as well as the time it would take to lease any acquired buildings that were vacant at acquisition. how we addressed the matter in our audit we tested the company’s internal controls over the acquisition of real estate investment properties and the resulting purchase price allocations. this included testing controls over management’s identification of the assets acquired and liabilities assumed and evaluating the methods and significant assumptions used by the company to develop such estimates. our testing of the fair values of the assets acquired included, among others, evaluating the selection of the company's valuation model and testing the significant assumptions discussed above as well as the completeness and accuracy of the underlying data. for example, we compared management’s assumptions to observable market transactions and replacement costs associated with the fair value of the land and buildings and improvements. for in-place leases, we compared management’s assumptions to published market data for comparable leases, related leasing commissions and the amount of time it would take to lease up the space to stabilization assuming the space was vacant at acquisition. we involved our real estate valuation specialists to assist in evaluating the significant assumptions listed above. in addition, we performed sensitivity tests on the significant assumptions to evaluate the change in the fair value resulting from changes in the assumptions. f - 3table of contents/s/ ernst & young llp we have served as the company's auditor since at least 1984,

critical audit matters the critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.performance-based fees as described in notes 2 and 3 to the consolidated financial statements, performance-based fees earned were $132.6 million for the year ended december 31, 2020. the transaction price for the asset management performance obligation for certain hedge fund and alternative investment advisory contracts, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. the performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value and the level at which the fund’s value exceeds the contractual threshold required to earn such a fee. with respect to the constraining factors related to the fund’s market value, management measures assets under management (aum) using established market-based valuation methods and fair valuation (non-observable market) methods. fair valuation methods, including discounted cash flow models and other methods, are used only where aum cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. the principal considerations for our determination that performing procedures relating to performance-based fees is a critical audit matter are the significant audit effort in performing procedures and evaluating evidence related to these fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration, and the audit effort also included the involvement of professionals with specialized skill and knowledge to assist in evaluating management's estimate of the funds' market value where fair valuation methods are used. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to the company’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of aum. these procedures also included, among others, testing management’s process for determining performance-based fees, including evaluating the appropriateness of the methods used, testing the contractual claw-back provisions to which the variable consideration is subject and, on a sample basis, evaluating the reasonableness of management’s assumptions related to the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts and the probability of significant fluctuations in the funds’ market value and, as applicable, the level at which a fund’s value exceeded the contractual threshold required to earn such fees. in evaluating management’s estimates of the funds’ market value, procedures included the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of securities used in determining the underlying funds’ market value where fair valuation methods are used, and comparison of management’s estimate of the securities’ fair value to the independently developed ranges. developing the independent estimate of securities’ fair value involved testing the completeness and accuracy of data provided by management and independently developing the significant assumptions for the sampled securities./s/pricewaterhouse cooper llp new york, new york february 11, 2021we have served as the company’s auditor since 2006.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.goodwill impairment assessment as described in notes 2 and 9 to the consolidated financial statements, the company’s consolidated goodwill balance was $35.5 billion as of december 28, 2019. management tests reporting units for impairment annually as of the first day of the second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. management recognized non-cash impairment losses in selling, general and administrative costs (sg&a) of $1.2 billion for the year ended december 28, 2019. reporting units are tested for impairment by comparing the estimated fair value of each reporting unit with its carrying amount. if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recorded based on the difference between the fair value and carrying amount, not to exceed the associated carrying amount of goodwill. management generally utilizes the discounted cash flow method under the income approach to estimate the fair value of reporting units. estimating the fair value of reporting units requires the use of estimates and assumptions, including estimated future annual net cash flows (including net sales, cost of products sold, sg&a, depreciation and amortization, working capital, and capital expenditures), income tax rates, discount rates, long-term growth rates and other market factors.the principal considerations for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter are there was significant judgment by management when developing the fair value measurement of the reporting units. this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing our procedures and in evaluating management’s cash flow projections and significant assumptions, including net sales, cost of products sold, sg&a, discount rates and long-term growth rates. in addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the company’s reporting units. these procedures also included, among others (i) testing management’s process for developing the fair value estimates, (ii) evaluating the appropriateness of the discounted cash flow method, (iii) testing the completeness and accuracy of underlying data used in 43the fair value estimates, and (iv) evaluating management’s cash flow projections and significant assumptions including net sales, cost of products sold, sg&a, discount rates and long-term growth rates. evaluating management’s assumptions related to net sales, cost of products sold, sg&a, discount rates and long-term growth rates involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with market data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in the evaluation of the company’s discounted cash flow method and certain significant assumptions, including the discount rates and long-term growth rates.indefinite-lived intangible assets impairment assessment as described in notes 2 and 9 to the consolidated financial statements, the company’s consolidated indefinite-lived intangible assets balance, which consists primarily of individual brands, was $43.4 billion as of december 28, 2019. management conducts an impairment test annually as of the first day of the second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a brand is less than its carrying amount. management recognized non-cash impairment losses of $687 million in sg&a for the year ended december 28, 2019. brands are tested for impairment by comparing the estimated fair value of each brand with its carrying amount. if the carrying amount of a brand exceeds its estimated fair value, an impairment loss is recorded based on the difference between the fair value and carrying amount. management utilizes either an excess earnings method or relief from royalty method to estimate the fair value of its brands. the determination of fair value using the excess earnings method requires the use of estimates and assumptions including the estimated future annual net cash flows for each brand (including net sales, cost of products sold, and sg&a), contributory asset charges, income tax considerations, long-term growth rates, discount rates and other market factors. the determination of fair value using the relief from royalty method requires the use of estimates and assumptions including estimated future annual net sales for each brand, royalty rates, income tax considerations, long-term growth rates, discount rates and other market factors.the principal considerations for our determination that performing procedures relating to the indefinite-lived intangible assets impairment assessment is a critical audit matter are there was significant judgment by management when developing the fair value measurement of the brands. this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing our procedures related to indefinite-lived intangible assets and in evaluating management’s cash flow projections and significant assumptions, including net sales, cost of products sold, sg&a, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method. in addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained. as previously disclosed by management, a material weakness existed during the year related to this matter.addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. these procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible assets impairment assessment, including controls over the valuation of the company’s indefinite-lived intangible assets. these procedures also included, among others (i) testing management’s process for developing the fair value estimates, (ii) evaluating the appropriateness of the excess earnings and relief from royalty methods, (iii) testing the completeness and accuracy of underlying data used in the fair value estimates, and (iv) evaluating management’s cash flow projections and significant assumptions including net sales, cost of products sold, sg&a, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method. evaluating management’s assumptions related to net sales, cost of products sold, sg&a, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance of the brand, (ii) the consistency with market data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in the evaluation of the company’s excess earnings and relief from royalty methods and certain significant assumptions, including the royalty rates, long-term growth rates and discount rates./s/ pricewaterhouse coopers llp chicago, illinois february 14, 2020 we have served as the company’s or its predecessors' auditor since 1979.

critical audit matters the critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. professional liability reserve as discussed in note 1(j) and 6 to the consolidated financial statements, the company determines their professional liability accrual by evaluating historical experience, trends, loss reserves, and actuarial studies. as of december 31, 2020, the company recorded professional liability reserves totaling $40,894 thousand.we identified the evaluation of the professional liability reserve as a critical audit matter. a high degree of complex and subjective auditor judgment, including the involvement of actuarial professionals with specialized skills and knowledge, was required in evaluating the company’s actuarial estimates and assumptions, specifically estimates for incurred but not reported claims. changes in the actuarial estimates or assumptions could have a significant impact on the liability recognized.36 the following are the primary procedures we performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls related to the process to estimate the professional liability reserve. this included a control related to the selection of expected loss rates used in the estimates for incurred but not reported claims. we tested the key inputs to determine the incurred but not reported estimate. this included testing data used by the company’s actuarial specialist to determine the expected loss rates, specifically claims history used in the actuarial models, for consistency with the actual claims incurred and paid by the company. we also involved actuarial professionals with specialized skills and knowledge, who assisted in evaluating the company’s actuarial estimates and assumptions, specifically expected loss rates, by comparing them to the company’s historical data, and industry and regulatory trends. fair value of intangible assets in acquisition of stratus video as discussed in note 2 to the consolidated financial statements, the company acquired stratus video on february 14, 2020 for a purchase price of $485,568 thousand. in connection with the acquisition, the company recorded various intangible assets, including customer relationships, tradenames and trademarks, and developed technology (collectively, the intangible assets). the acquisition-date fair value of the intangible assets was $227,000 thousand. we identified the evaluation of fair value of the intangible assets acquired in the stratus video acquisition as a critical audit matter. a high degree of subjective auditor judgment, including the involvement of valuation professionals with specialized skills and knowledge, was required in evaluating the assumptions used in the valuation model for each acquired intangible asset. the discounted cash flow model included the following assumptions for which there was limited observable market information, and the calculated fair value of such assets was sensitive to possible changes to these key assumptions:•revenue growth rates•tradename/trademark royalty rate•annual customer attrition rate•developed technology royalty rate•earnings before interest, tax, depreciation, and amortization (ebitda) margins•weighted-average cost of capital (wacc), including the discount rate the following are the primary audit procedures we performed to address this critical audit matter. we evaluated the design and tested the operating effectiveness of certain internal controls related to the company’s process to estimate the fair value of intangible assets. this included controls related to the development of the key assumptions listed above. we evaluated the company’s forecasted revenue growth rates by comparing forecasted growth assumptions to those of stratus video’s peers and industry reports. we compared (1) the stratus video’s forecasted revenue growth rates and ebitda margins to historical actual results for stratus video, and (2) forecasted annual customer attrition rate to historical customer sales data. in addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:•evaluating the company’s tradename/trademark and developed technology royalty rates assumption to licensing transactions for similar intellectual property;•evaluating the company’s wacc, including the discount rate, by comparing it against a discount rate range that was independently developed using publicly available market data for comparable peers; •developing an estimate of the acquisition-date fair value of the intangible assets using the company’s cash flow forecast and an independently developed discount rate and comparing the results to the company’s fair value estimate. /s/ kpmg llp we have served as the company’s auditor since 2000.

critical audit matter the critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.valuation of inventory - refer to notes 1, 3 and 4 to the financial statements critical audit matter description inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, direct overhead costs incurred during development and home construction, and common costs that benefit the entire community, less impairments, if any. inventory is recorded at cost, unless events and circumstances indicate that the carrying value of the inventory is impaired, at which point the inventory is written down to fair value. management assesses inventory for recoverability on a quarterly basis to determine if events or changes in local or national economic conditions indicate that the carrying amount of an asset may not be recoverable. the inventory balance was $1.92 billion and $1.77 billion at december 31, 2020 and 2019, respectively.in conducting the review for impairment indicators, management evaluates certain qualitative and quantitative factors at the community level. this includes, among other things, margins on sales contracts in backlog; the margins on homes that have 49been delivered; expected changes in margins with regard to future home sales over the life of the community and with regard to future land sales; the value of the land itself as well as any results from third-party appraisals; selling strategies; or alternative land uses (including disposition of all or a portion of the land owned). given the subjectivity in determining whether qualitative or quantitative impairment indicators are present for a community, management exercises significant judgment in the identification of whether impairment indicators are present. accordingly, auditing management’s assessment of impairment indicators requires a high degree of auditor judgment and an increased extent of effort.how the critical audit matter was addressed in the audit our audit procedures related to the company’s identification of impairment indicators for inventory included the following, among others: •we tested the operating effectiveness of controls over management’s evaluation of impairment indicators. •we evaluated the reasonableness of management’s assessment of impairment indicators by: ◦evaluating management's process for identifying qualitative impairment indicators by community and whether management appropriately considered such indicators.◦evaluating management's process for identifying quantitative impairment indicators by community and whether management appropriately considered such indicators. ◦conducting a completeness assessment to determine whether additional impairment indicators were present during the period that were not identified by management. /s/ deloitte & touche llp columbus, ohio february 19, 2021we have served as the company’s auditor since 1976.