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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 – goodwill impairment analysis – refer to notes 2 and 9 to the consolidated financial statements critical audit matter description goodwill is tested for impairment annually as of october 1, through a qualitative or quantitative assessment and when events and circumstances indicate that the estimated fair value of a reporting unit may no longer exceed its carrying value. the company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit (north america and europe) to its carrying value. the tests were performed using a combination of the discounted cash flow method and the guideline public company method. the determination of the fair value using the discounted cash flow model requires management to make significant assumptions related to forecasts of future revenues, operating margins and discount rates. the goodwill balance was $452.5 million as of december 31, 2021, of which $338.8 million was allocated to the north america reporting unit while the remaining $113.7 million is allocated to the europe reporting unit.47 given the significant judgments made by management to estimate the fair value of its reporting units, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the selection of the discount rate and forecasts of future revenue and operating margin 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 discount rate and forecasts of future revenue and operating margin used by management to estimate the fair values of the north america and europe reporting units included the following, among others:•we evaluated the reasonableness of management’s revenue and operating margin forecasts by comparing the forecast to historical revenues and operating margins and analyst and industry reports for the company and certain of its peer companies.•with the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation and developing a range of independent estimates and comparing those to the discount rate selected by management./s/ deloitte & touche llp cleveland, ohio february 28, 2022we 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 of nee and fpl 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.nee – operating revenue – unrealized losses – refer to note 3 to the financial statements critical audit matter description nee enters into complex energy derivatives and transacts in certain markets that are thinly traded, which may result in subjective estimates of fair value that include unobservable inputs. changes in the derivatives’ fair value for power purchases and sales, fuel sales and trading activities are primarily recognized on a net basis in operating revenues. for the year ended december 31, 2021, unrealized losses associated with level 3 transactions of $924 million are included in operating revenues in the consolidated statement of income of nee. given management uses complex proprietary models and unobservable inputs to estimate the fair value of level 3 derivative assets and liabilities, performing audit procedures to evaluate the appropriateness of these models and inputs required a high degree of auditor judgment and an increased extent of effort, including the need to involve our firm specialists who possess significant quantitative and modeling expertise. 58table of contents how the critical audit matter was addressed in the audit our audit procedures related to operating revenue – unrealized losses included the following, among others: •we tested the effectiveness of controls relating to commodity valuation models, their related level 3 unobservable inputs, and market data validation.•we selected a sample of transactions, obtained an understanding of the business rationale of transactions, and read the underlying contractual agreements.•we used personnel in our firm who specialize in energy transacting to independently value level 3 transactions. for certain fair value models, we used our firm specialists to directly test the underlying assumptions of the unobservable inputs used by management.•we evaluated nee’s disclosures related to the proprietary models and unobservable inputs to estimate the fair value of level 3 derivative assets and liabilities, including the balances recorded and significant assumptions.fpl – impact of rate regulation on the financial statements – refer to note 1 to the financial statements critical audit matter description fpl is subject to rate regulation by the florida public service commission (the “fpsc”), which has jurisdiction with respect to the rates of electric distribution companies. management has determined it meets the requirements under accounting principles generally accepted in the united states of america to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant, and equipment; regulatory assets and liabilities; operating revenues; operation and maintenance expense; and depreciation expense.rates are determined and approved in regulatory proceedings based on an analysis of fpl’s costs to provide utility service and a return on, and recovery of, fpl’s investment in the assets required to deliver utility service. accounting guidance for fpl’s regulated operations provides that rate-regulated entities report assets and liabilities consistent with the recovery of those incurred costs in rates, if it is probable that such rates will be charged and collected. the fpsc has the authority to disallow recovery of costs that it considers excessive or imprudently incurred. future fpsc decisions could impact the accounting for regulated operations, including decisions about the amount of allowable costs and any refunds that may be required. as a result of this cost-based regulation, fpl follows the accounting guidance that allows regulators to create assets and impose liabilities, based on the probability of future cash flows, that would not be recorded by non-rate regulated entities. regulatory assets and liabilities represent probable future revenues that will be recovered from or refunded to customers through the ratemaking process. we identified the impact of rate regulation as a critical audit matter due to the requirement to have auditors with deep knowledge of and significant experience with accounting for rate regulation and the rate setting process due to its inherent complexities.how the critical audit matter was addressed in the audit our audit procedures related to the impact of rate regulation included the following, among others: •we tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. we also tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment and regulatory assets or liabilities; the depreciation and amortization of such amounts in accordance with fpsc orders; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs recognized as property, plant and equipment and regulatory assets in future rates or of a refund or future reduction in rates that should be recognized as a regulatory liability.•we evaluated fpl’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.•we assessed the likelihood of (1) recovery of recorded regulatory assets and (2) obligations requiring future reductions in rates by obtaining, reading and evaluating relevant regulatory orders issued by the fpsc to fpl, including the december 2, 2021 order adopting the stipulation of settlement for fpl's 2021 rate agreement. we also evaluated such regulatory orders and other publicly available filings made by fpl and compared them to management’s recorded regulatory asset and liability balances for completeness.deloitte & touche llp boca raton, florida february 17, 2022we have served as nee’s and fpl’s auditor since 1950.

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 company’s 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 recognition - variable consideration critical audit matter description as described in note 2 to the financial statements, the company records revenue at the transaction price, net of estimates for variable consideration consisting primarily of chargebacks, discounts, and returns, which are established at the time of sales. the company recorded sales deductions of $6.2 million during the year ended of december 31, 2021. actual amounts of consideration ultimately received may differ from estimates. if actual results vary materially from estimates, the company will adjust these estimates, which will affect net sales of the products and results from operations in the period such estimates are adjusted. we identified the determination of variable consideration as a critical audit matter. significant judgment is exercised by the company in estimating variable consideration when determining the amount of revenue to recognize. given these factors, the related audit effort in evaluating management’s judgments in determining the amount of variable consideration used to determine the transaction price was extensive and required a high degree of auditor judgment. how we addressed the matter in our audit the primary procedures we performed to address this critical audit matter included: ▪obtained an understanding of the company’s process and key controls related to the determination of sales deductions. ▪evaluating the company’s accounting policies related to the determination of variable consideration in the calculation of the transaction price. ▪evaluating the reasonableness of management’s estimate of variable consideration in accordance with their accounting policies based on contractual terms and historical data and variable consideration estimates. ▪tested variable consideration amounts on a sample basis by recalculating recorded amounts based on contractual terms. ▪tested the mathematical accuracy of management’s calculations of net revenue and the associated timing of net revenue recognized in the financial statements.f-3 investment in convertible bond and convertible notes payable – determination of fair value critical audit matter description as described in note 5 to the financial statements, the company purchased a convertible bond and elected the fair value accounting option. the fair value of the convertible bond was $26.1 million as of december 31, 2021. the fair value was determined using a lattice pricing model and the change in fair value was recorded as part of other comprehensive income (loss). as described in note 7 to the financial statements, the company issued convertible notes payable resulting in liability treatment of the conversion feature. the fair value of the conversion feature was $7.5 million as of december 31, 2021 the fair value was determined using a lattice pricing model and the change in fair value was recorded as part of other comprehensive income (loss). we identified the determination of the fair value using the binomial lattice model as a critical audit matter. significant judgment is exercised by the company in determining the fair value of the convertible bond and the conversion feature of the convertible notes payable. given these factors, the related audit effort in evaluating management’s judgments in determining the fair value of the convertible bond and the conversion feature of the convertible notes payable was complex and required a high degree of auditor judgment. how we addressed the matter in our audit the primary procedures we performed to address this critical audit matter included: ▪obtaining an understanding of the company’s process of accounting for convertible bonds and the conversion feature of the convertible notes payable. ▪obtaining and reviewing the agreements. ▪evaluating the methods and significant assumptions used by the company’s valuation professional. ▪testing the accuracy and the completeness of the underlying data and the mathematical accuracy of the valuation report. ▪utilizing auditor’s valuation specialist to assist in the evaluation of the methodology used by the company and assumptions included in determining the fair value of the convertible bond and the conversion feature of the convertible notes payable ▪evaluating the related disclosures in the financial statements. /s/ baker tilly us, 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.real estate impairment – refer to note 2 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 the carrying amount may not be recoverable. the company’s evaluation of the recoverability of real estate assets consists of the comparison of 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.given 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 39future cash flow analyses 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 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 controls over management’s evaluation of the recoverability of real estate, including controls over management’s determination of the reasonableness of the applicable capitalization rates.•inquired with management regarding their determination of the capitalization rates, and evaluating the consistency of the capitalization rates used with evidence obtained in other areas of the 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 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./s/ deloitte & touche llp new york, new york february 14, 2022we have served as the company’s auditor since 1969.

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.purchase price allocation for asset acquisitions as described in notes 1 and 13 to the consolidated financial statements, during the year ended december 31, 2020, the company acquired fee simple interests in 34 properties which were accounted for as asset acquisitions for an aggregate purchase price of $149,955,000. for acquired properties accounted for as asset acquisitions management estimates the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, above-market and below-market leases, in-place leases and tenant relationships) and assumed debt. based on these estimates, management allocates the estimated fair value to the applicable assets and liabilities. fair value is determined based on an exit price approach, which contemplates the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. the valuation of the applicable assets and liabilities involves the use of significant estimates and assumptions related to capitalization rates, market rental rates, and the ebitda-to-rent coverage ratios. the principal considerations for our determination that performing procedures relating to the purchase price allocation for asset acquisitions is a critical audit matter are (i) the significant judgment by management when developing the fair value measurements for purchase price allocations, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures related to these fair value measurements, (ii) significant auditor judgment was necessary to evaluate the audit evidence for the relevant significant assumptions relating to the tangible and intangible assets, such as the capitalization rates, market rental rates, and ebitda-to-rent coverage ratios, and (iii) the audit effort included the involvement 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 purchase price accounting, including controls over the development of significant inputs and assumptions used in the estimated fair values of tangible and intangible assets. these procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in testing the process used by management to develop fair value estimates of acquired tangible and intangible assets, which involved evaluating the appropriateness of the valuation methods used and the reasonableness of the significant assumptions related to capitalization rates, market rental rates, and ebitda-to- rent coverage ratios. evaluating the reasonableness of the significant assumptions included considering whether these assumptions were consistent with external market data, comparable transactions, and evidence obtained in other areas of the audit. testing the process used by management involved testing the completeness and accuracy of data provided by management.environmental remediation obligations as described in notes 1 and 5 to the consolidated financial statements, as of december 31, 2020 management has accrued a total of $48,084,000 for their prospective environmental remediation obligations. management records the fair value for an environmental remediation obligation as an asset and liability when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. environmental remediation obligations are estimated based on the level and impact of contaminations at each property. management measures their environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation and discounted to present value. the principal considerations for our determination that performing procedures relating to environmental remediation obligations is a critical audit matter are (i) the significant judgment by management when developing the fair value measurements for the environmental remediation obligations, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures related to these fair value measurements, (ii) significant auditor judgment was necessary to evaluate the significant assumption and audit evidence relating to the projections of future net cash flows and estimated remediation costs and (iii) the audit effort included the involvement 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 valuation of the environmental remediation obligation, including controls over the development of the significant inputs and assumptions related to estimated remediation costs. these procedures also included, among others, testing the process used by management to develop fair value estimates of environmental remediation obligations, which involved evaluating the appropriateness 73 of the methods and testing the completeness and accuracy of the data provided by management. evaluating the reasonableness of the estimated remediation costs assumption included considering whether the assumption was consistent with external market data and evidence obtained in other areas of the audit. professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the significant assumptions related to estimated remediation costs./s/ pricewaterhouse coopers llp new york, new york february 25, 2021we have served as the company’s auditor since at least 1975.

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 grain inventories and grain forward commodity purchase and sales contracts as described in notes 4, 15, and 16 to the consolidated financial statements, the company's grain and oilseed inventories were $1,435.5 million as of august 31, 2021, and commodity derivatives in an asset and liability position were $532.8 million and $444.9 million, respectively, as of august 31, 2021, of which grain inventories and grain forward commodity purchase and sales contracts make up the majority. management enters into various derivative instruments to manage the company's exposure to movements primarily associated with agricultural and energy commodity prices. the net realizable value of grain inventories and fair value of grain forward commodity purchase and sales contracts are determined using inputs that are f-1table of contentsgenerally based on exchange traded prices and/or recent market bids and offers, including location-specific adjustments. location-specific inputs are driven by local market supply and demand and are generally based on broker or dealer quotations or market transactions in either listed or over-the-counter markets.the principal considerations for our determination that performing procedures relating to the valuation of grain inventories and grain forward commodity purchase and sales contracts is a critical audit matter are (i) the significant judgment by management to determine the net realizable value of grain inventories and the fair value of grain forward commodity purchase and sales contracts and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's inputs related to exchange traded prices and/or recent market bids and offers, including location-specific adjustments. 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) testing management's process for determining the net realizable value of grain inventories and the fair value of grain forward commodity purchase and sales contracts; (ii) evaluating the appropriateness of the valuation models; (iii) testing the accuracy of the underlying data used in the valuations; and (iv) evaluating the reasonableness of inputs used by management related to the exchange traded prices and/or recent market bids and offers, including location-specific adjustments. evaluating management's inputs related to the exchange traded prices and/or recent market bids and offers, including location-specific adjustments involved (i) comparing the exchange traded prices and/or recent market bids and location-specific inputs to third-party information; and (ii) comparing the location-specific adjustments to broker or dealer quotations or market transactions in either listed or over-the-counter markets. /s/ pricewaterhouse coopers llp minneapolis, minnesota november 4, 2021 we have served as the company's auditor since 1998.

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, 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.critical audit matter description the company had $16,299,000 in revenue for the year ended december 31, 2021. revenue is derived from (1) product revenue resulting from the sale of functional neurosurgery, navigation, therapy, and biologics and drug delivery disposable products; 2) product revenue resulting from the sale of clear point capital equipment and software; 3) revenue resulting from the service, installation, training and shipping related to clear point capital equipment and software; and 4) consultation revenue and clinical case support revenue in connection with customer-sponsored clinical trials. as disclosed in note 2 to the financial statements, the company recognizes revenue when control of the company’s products and services is transferred to its customers in an amount that reflects the consideration the company expects to receive from its customers in exchange for those products and services in a process that involves identifying the contract with the customer, determining the performance obligation in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied.due to the nature of the company’s customer agreements, management exercises judgment in the following areas in determining appropriate revenue recognition:f-2table of contentsa.the pattern and timing of delivery for each distinct performance obligation; andb.the identification and treatment of contract terms that may impact the timing and amount of revenue recognized.as a result, a degree of auditor judgment was required in performing audit procedures to evaluate the reasonableness of management’s judgments. changes in these judgments can have a material effect on the amount of revenue recognized.how the critical audit matter was addressed in the audit based on our knowledge of the company, we determined the nature and extent of procedures to be performed over service and other revenue as discussed above, including the determination of the revenue streams over which those procedures were performed. our audit procedures included the following for service and other revenue: a.obtained an understanding of the internal controls and processes in place over the company’s revenue recognition processes.a.assessed the recorded revenue by selecting a sample of transactions and compared the amounts recognized to underlying documentation, including evidence of contracts with customers.we have served as the company’s auditors 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 (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.liquidity - impact of covid-19as described in note 1 to the consolidated financial statements, the extent of the effects of covid-19 on the business are uncertain and will depend on future developments, including, but not limited to, the duration and continued severity of covid-19 and the length of time it takes to return the company to profitability. management believes that the ongoing effects of covid-19 have had, and will continue to have, a material negative impact on the company’s financial results and liquidity. management has taken actions to improve the company’s liquidity, including completing various capital market transactions, capital expenditure and operating expense reductions, and accelerating the removal of certain ships from the company’s fleet, with the addition of pursuing refinancing opportunities to reduce interest expense and extend maturities. the principal assumptions used in management’s estimate of future liquidity requirements consisted of (i) the expected continued gradual resumption of guest cruise operations, with the full fleet expected to be back in operation; (ii) the expected, sustained increase in revenue per passenger cruise day through a combination of both passenger ticket and onboard revenue; (iii) the expected gradual increase in occupancy levels during the resumption of guest cruise operations with the return to historical occupancy levels in 2023; (iv) the expected continued spend to maintain enhanced health and safety protocols and to support the resumption of guest cruise operations, including completing the return of crew members to its ships; and (v) maintaining collateral and reserves at reasonable levels. based on these actions and assumptions regarding the impact of covid-19, and considering the company’s available liquidity including cash, short-term investments and borrowings available under the company’s revolving facility at november 30, 2021, as well as management’s expected continued gradual return to service, management concluded there is sufficient liquidity to satisfy the company’s obligations for at least the next twelve months from the issuance of the financial statements.the principal considerations for our determination that performing procedures relating to the impact of covid-19 on the company’s liquidity is a critical audit matter are the significant judgment by management when developing the estimate of future liquidity requirements; this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s estimate of future liquidity requirements, and assumptions related to (i) the expected continued gradual resumption of guest cruise operations; (ii) the expected, sustained increase in revenue per passenger cruise day through a combination of both passenger ticket and onboard revenue; (iii) the expected gradual increase in occupancy levels during the resumption of guest cruise operations; (iv) the expected continued spend to maintain enhanced health and safety protocols and to support the resumption of guest cruise operations, including completing the return of crew members to its ships; and (v) maintaining collateral and reserves at reasonable levels.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 estimate of future liquidity requirements. these procedures also included, among others, (i) testing management’s process for estimating future liquidity requirements for the twelve months after the date the financial statements are issued; (ii) testing the completeness and accuracy of underlying data used in the estimate; (iii) evaluating the reasonableness of the significant assumptions used by management related to the expected continued gradual resumption of guest cruise operations, the expected, sustained increase in revenue per passenger cruise day through a combination of both passenger ticket and onboard revenue, the expected gradual increase in occupancy levels during the resumption of guest cruise operations, the f-38table of contentsexpected continued spend to maintain enhanced health and safety protocols and to support the resumption of guest cruise operations, including completing the return of crew members to its ships, and maintaining collateral and reserves at reasonable levels; and (iv) evaluating management’s estimate of future liquidity requirements and their disclosure in the consolidated financial statements regarding having sufficient liquidity to satisfy the company’s obligations for at least the next twelve months from the issuance of the financial statements. evaluating management’s assumptions related to the expected continued gradual resumption of guest cruise operations, the expected, sustained increase in revenue per passenger cruise day through a combination of both passenger ticket and onboard revenue, the expected gradual increase in occupancy levels during the resumption of guest cruise operations, the expected continued spend to maintain enhanced health and safety protocols and to support the resumption of guest cruise operations, including completing the return of crew members to its ships, and maintaining collateral and reserves at reasonable levels, involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the company; (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 hallandale beach, florida january 27, 2022we have served as the company’s auditors since 2003.

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.vendor rebates and other promotional incentives— refer to note 2 the financial statements critical audit matter description the company receives various rebate and promotional incentives from its suppliers, which include volume and growth rebates, annual and multi-year incentives, and promotional programs. consideration received for incentives that contain volume and growth rebates and annual and multi-year incentives are recorded as a reduction of cost of goods sold. the company systematically and rationally allocates the consideration for these incentives to each of the underlying transactions that results in progress by the company toward earning the incentives. if the incentives are not probable and reasonably estimable, the company records the incentives as the underlying objectives or milestones are achieved. the company records annual and multi-year incentives when earned, generally over 45 the agreement period. the company uses current and historical purchasing data, forecasted purchasing volumes, and other factors in estimating whether the underlying objectives or milestones will be achieved.auditing vendor rebates and other promotional incentives involved especially challenging judgment due to the volume of individual transactions, complexities in complying with the terms of the vendor agreements and the estimates involved which increased the extent of audit effort required. how the critical audit matter was addressed in the audit our audit procedures related to vendor rebates and other promotional incentives included the following, among others:•we tested the effectiveness of the controls over vendor rebates and other promotional incentives, including controls over the completeness and accuracy of the programs and related purchasing data.•we selected a sample of recorded vendor incentives and (1) confirmed the incentive amount and the terms of the executed agreement directly with the vendor and (2) recalculated the incentive amount using the terms of the executed vendor agreement. •we obtained an understanding of the types of vendor rebates and other promotional incentives the company receives, and the company’s accounting policies related to these incentives. based on that understanding, we developed an independent estimate for each type of incentive and compared our estimate to the amount recorded by management. •we tested the adjustment to inventory values related to vendor rebates.•we selected a sample of upward and downward adjustments made throughout the year for previously recorded vendor rebates and other promotional incentives to assess management’s initial estimates. for the selected adjustments we assessed the size and nature of adjustments, compared the balance to prior years to evaluate historical consistency and considered the direction of the adjustments to evaluate management bias./s/ deloitte & touche llp richmond, virginia august 17, 2020 we have served as the company’s auditor since 2007.

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 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 accounts or disclosures to which it relates. f-1 table of contents liquidity assessment critical audit matter description management has prepared the company’s consolidated financial statements on a going concern basis, which contemplates the continuity of operations, and the realization of assets and the satisfaction of liabilities in the normal course of business. as discussed in note 2, the company incurred an operating loss for the year ended december 31, 2021, but had positive working capital as of december 31, 2021 and net cash provided by operating activities for the year ended december 31, 2021. management assesses whether the company has sufficient liquidity to fund its costs for the next twelve months from the consolidated financial statements issuance date in order to determine if there is substantial doubt about the company’s ability to continue as a going concern. in the preparation of this liquidity assessment, management applies judgment to estimate the projected cash flows of the company, which are based on known or planned cash requirements for operating costs as well as planned costs for ongoing efforts to develop technologies to maintain competitive advantage. the principal consideration for our determination that performing procedures relating to the liquidity assessment is a critical audit matter is the significant judgments made by management when assessing whether the company has sufficient liquidity. we determined there is significant estimation and execution uncertainty regarding the company’s future cash flows and the risk of bias in management’s judgments and assumptions in estimating these cash flows. how the critical audit matter was addressed in the audit our audit procedures related to the company’s assertion as to its ability to continue as a going concern included the following, among others: ● we gained an understanding of the company’s process relating to the preparation of projected information and considerations of the company’s obligations. ● we tested the reasonableness of the projected revenues and expenses, and uses and sources of cash used in management’s assessment of whether the company has sufficient liquidity to fund operations for at least one year from the consolidated financial statements issuance date. this testing included inquiries with management, comparison of prior period projections to actual results, and consideration of positive and negative evidence impacting management’s projections. ● we evaluated the reasonableness of management’s assumptions related to the likelihood that the company would be able to reduce operating expenditures if required. kmj corbin & company 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 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.valuation of indefinite and definite-lived intangible assets acquired in the houghton business combination as described in note 2 to the consolidated financial statements, on august 1, 2019, the company completed the combination with houghton international, inc. (“houghton”), whereby the company acquired all of the issued and outstanding shares of houghton from gulf houghton lubricants, ltd. and certain other selling shareholders in exchange for a combination of cash and shares of the company’s common stock. total fair value of consideration transferred was $1,662 million. management allocated $1,028.4 million of the purchase price to intangible assets, comprised of $242.0 million of trademarks and formulations, $677.3 million of customer relationships, and $109.1 million of existing product technology. the determination of the estimated fair value of assets acquired, including indefinite and definite-lived intangible assets, requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, customer attrition rates, royalty rates, asset lives and market multiples, among other items. the valuation methods included discounted cash flow analyses, excess earnings, relief from royalty, and other appropriate valuation techniques to determine the fair value of the assets acquired.the principal considerations for our determination that performing procedures relating to the valuation of indefinite and definite-lived intangible assets acquired in the houghton business combination is a critical audit matter are (i) there was a high degree of auditor judgment and subjectivity in performing procedures and in evaluating audit evidence relating to the estimated fair value of the houghton trademark, houghton customer relationships, and houghton existing product technology due to the significant amount of judgment by management in determining these estimates, (ii) significant audit effort was necessary in evaluating management’s estimated fair value of the aforementioned intangible assets acquired and significant assumptions, including future cash inflows, discount rates, customer attrition rates, and royalty rates, (iii) 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, and (iv) as described in the “opinions on the financial statements and internal control over financial reporting” section, a material weakness as of december 31, 2019 was identified related to designing and maintaining controls over the reliability of certain data used to support the reasonableness of certain assumptions in the accounting for business combinations. 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 fair value estimates. this included evaluating the appropriateness of the discounted cash flow method; testing the completeness, accuracy, and relevance of underlying data used in the estimate; and evaluating the significant assumptions used by management, including the future cash inflows, discount rates, customer attrition rates, and royalty rates. evaluating management’s assumptions related to future cash inflows and customer attrition rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the acquired entity, (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 company’s discounted cash flow method and reasonableness of certain significant assumptions, including the discount rates, royalty rates, and customer attrition rates.42 goodwill impairment assessment - emea reporting unit as described in note 16 to the consolidated financial statements, the company’s consolidated goodwill balance was $607 million as of december 31, 2019 of which $133 million was associated with the emea segment and associated reporting unit (“emea”). management completes its annual goodwill impairment test during the fourth quarter of each year, or more frequently if triggering events indicate a possible impairment in one or more of its reporting units. as disclosed by management, in completing its quantitative impairment test, management compares the reporting units’ fair value to their carrying value, primarily based on future discounted cash flows, in order to determine if an impairment charge is warranted. the estimates of future discounted cash flows involve considerable management judgment and are based upon certain significant assumptions. these assumptions include the weighted average cost of capital (“wacc”) as well as projected revenue growth rates and operating income, which result in estimated ebitda and ebitda margins. the principal considerations for our determination that performing procedures relating to the goodwill impairment assessment associated with emea is a critical audit matter are (i) there was a high degree of auditor judgment and subjectivity in performing procedures and in evaluating audit evidence relating to management’s cash flow projections due to the significant amount of judgment by management in developing the fair value measurement of emea, (ii) significant audit effort was necessary in evaluating management’s cash flow projections and significant assumptions, including the wacc as well as projected revenue growth rates and operating income and (iii) 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 emea. these procedures also included, among others, testing management’s process for developing the fair value estimate. this included evaluating the appropriateness of the discounted cash flow method; testing the completeness, accuracy, and relevance of underlying data used in the estimate; and evaluating the significant assumptions used by management, including the wacc as well as projected revenue growth rates and operating income. evaluating management’s assumptions related to revenue growth rates and projected operating income involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of emea, (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 appropriateness of the company’s discounted cash flow method and reasonableness of certain significant assumptions, including the wacc. /s/ pricewaterhouse coopers llp philadelphia, pennsylvania march 20, 2020we have served as the company’s auditor since at least 1972.

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 – adjustments to model forecasts as described in notes 1 and 5 to the consolidated financial statements, the company’s allowance for credit losses of $1.5 billion reflects management's expected credit losses in the loan and lease portfolio of $92.9 billion as of december 31, 2021. for purposes of determining the level of the allowance for credit losses, management evaluates the company’s loan and lease portfolio by type. management utilizes statistically developed models to project principal balances over the remaining contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable and supportable forecast period. model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and back-testing of model performance to actual realized results. management also considered the impact of portfolio concentrations, changes 123 in underwriting practices, product expansions into new markets, imprecision in its economic forecasts, geopolitical conditions and other risk factors that might influence the loss estimation process. the principal considerations for our determination that performing procedures relating to the allowance for credit losses, specifically certain adjustments to model forecasts, is a critical audit matter are (i) the significant judgment by management in determining the adjustments to model forecasts, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures related to management’s determination of these adjustments to model forecasts, (ii) the significant audit effort in evaluating the audit evidence related to these adjustments to model forecasts, 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 company’s allowance for credit losses estimation process, including controls relating to the allowance for credit losses estimation process for certain adjustments to model forecasts. these procedures also included, among others, testing management’s process for determining the allowance for credit losses and these adjustments to model forecasts, including evaluating the appropriateness of management’s methodology, testing the data utilized by management and evaluating the reasonableness of significant assumptions relating to these adjustments to model forecasts. evaluating significant assumptions relating to these adjustments to model forecasts involved evaluating portfolio composition and concentration, as well as relevant market data. professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s methodology and the reasonableness of significant assumptions relating to these adjustments to model forecasts. buffalo, new york february 16, 2022 we have served as the company’s auditor since 1984.

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.17table of contents property and equipment – self constructed assets – appropriate capitalization of costs – refer to notes 2 and 7 to the financial statements.critical audit matter description the company self-constructs portions of its track structure and rebuilds certain classes of rolling stock. costs that increase capacity, enhance the safety or efficiency of operations, extend the useful life or increase the value of an asset, gain strategic benefit, or provide new service offerings to customers are capitalized by the company. in addition to direct labor and materials, indirect costs that clearly relate to capital projects are also capitalized. the determination by management of costs considered normal repairs and maintenance operating expense versus costs that are capitalized requires significant management judgement.we identified the capitalization of cost additions to self-constructed assets as a critical audit matter. management makes significant judgements when evaluating whether the costs should be charged to the self-constructed asset project and if the specific project the costs are assigned to meet the generally accepted accounting principles requirements related to capitalization. this required a high degree of auditor judgement when performing audit procedures to evaluate compliance with the criteria for cost capitalization and to evaluate the sufficiency of audit evidence obtained.how the critical audit matter was addressed in the audit our audit procedures to test management’s judgements included the following, among others:•for the year ended december 31, 2020, the company capitalized costs of $3.1 billion. we obtained the detail of all property additions for the year and segregated the additions into categories to isolate assets self-constructed by the company from assets purchased by the company from third parties. we made sample selections from the self- constructed asset detail and obtained the details of the specific selected cost and related supporting documents.•we assessed whether the nature of the selected cost reasonably reflected the nature of the capital project to which it was charged.•we inquired with individuals in the company’s engineering and operating departments to understand the nature of projects that were selected for testing to determine if it was a normal repairs and maintenance type project or if it was a project that should be capitalized.•based on the audit evidence obtained, we evaluated management’s judgement that the selected cost on the selected self-constructed project should have been capitalized as an asset based on the nature of the project./s/ deloitte & touche llp fort worth, texas march 1, 2021 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. evaluation of general reserve portion of the allowance for loan losses - evaluation of the qualitative adjustments as described in notes 1 and 3 to the consolidated financial statements, management determines the general reserve portion of the allowance for loan losses using actual historical loss experience for each individual loan category, as well as evaluating whether qualitative adjustments are necessary. as of december 31, 2020, the allowance for loan losses was $6.1 million which consists of two components: the allowance for loans individually evaluated for impairment ("specific reserves"), representing $179,000 and the allowance for loans collectively evaluated for impairment ("general reserve"), representing $5.9 million. the general reserve covers loans that are not individually classified as impaired. in evaluating whether qualitative adjustments are necessary, management considers (1) changes in lending policies and procedures, risk selection and underwriting standards; (2) changes in national, regional and local economic conditions that affect the collectability of the loan portfolio; (3) changes in the experience, ability, and depth of management and other relevant staff; (4) changes in the volume and severity of past due loans, nonaccrual loans or loans classified special mention, substandard, doubtful or loss; (5) quality of loan review and board of directors oversight; (6) changes in the nature and volume of the loan portfolio and terms of loans; (7) the existence and effect of any concentrations of credit and changes in the level of such concentrations; (8) changes in collateral dependent loans; and (9) the effect of other external factors, trends or uncertainties that could affect management's estimate of probable losses, such as competition and industry conditions. the principal considerations for our determination that performing procedures relating to the evaluation of qualitative adjustments used in the calculation of the general reserve portion of the allowance for loan losses is a critical audit matter are as follows: significant judgment used by management when evaluating the qualitative adjustments, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing audit procedures and evaluating audit evidence relating to the qualitative adjustments. 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 evaluating qualitative adjustments by (i) evaluating the appropriateness of the methodology management used in evaluating the qualitative adjustments, (ii) testing the inputs used in the estimate of qualitative adjustments, including the completeness and accuracy of underlying historical loss data, and (iii) evaluating the reasonableness of the qualitative adjustments given current microeconomic trends and portfolio characteristics. /s/ hacker, johnson & smith pa hacker, johnson & smith pa we have served as the company’s auditor since 2008.

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.allocation of revenue to performance obligations as discussed in note 7 to the consolidated financial statements, the company’s contracts with customers typically contain promises to transfer multiple products and services. the company allocates the transaction price to the distinct performance obligations based on their relative standalone selling prices (ss ps). the company estimates the ss ps by maximizing use of observable prices, however, the selling prices of its software licenses and cloud-hosted software as a service (saa s) arrangements are highly variable. thus, the company estimates the ss ps for software licenses and cloud-hosted saa s arrangements using the residual approach, determined based on total transaction price less the ss ps of other goods and services promised in the contract. the company reported $24.0 million of total revenues for the year ended december 31, 2021.37table of contents we identified the evaluation of the allocation of revenue to performance obligations as a critical audit matter. specifically, subjective auditor judgment was required to evaluate (1) the determination that the selling prices of the company’s software licenses and cloud-hosted saa s arrangements are highly variable and meet the criteria for estimating the ssp using the residual approach, and (2) the ss ps of maintenance and support, professional services, and hardware.the following are the primary procedures we performed to address this critical audit matter. we evaluated the design of certain internal controls over the company’s process to allocate revenue to performance obligations. this included controls related to the determination (1) that the selling prices of the company’s software licenses and cloud-hosted saa s arrangements are highly variable and meet the criteria for estimating the ssp using the residual approach, and (2) of the sp ps of maintenance and support, professional services, and hardware. we obtained and inspected the company’s analysis of the selling prices of its software and cloud-based saa s arrangements used to determine that their prices were highly variable. we evaluated that analysis by:•assessing the extent of standalone sales of software and cloud-based saa s arrangements•obtaining and inspecting third party information on market conditions•obtaining and inspecting the company’s pricing strategies, objectives, and practices.we obtained and inspected the company’s analyses used to determine the ss ps of maintenance and support, professional services, and hardware. we compared a selection of selling prices in each of those analyses to executed customer contracts of standalone sales of those items or other observable market transactions. for a sample of software license, cloud-based saa s arrangements, maintenance and support, and professional services revenue transactions, we compared:•the amounts recorded in the financial statements to the company’s contract evaluation used to determine the relative ss ps of each performance obligation•the contract terms used in the contract evaluation to executed customer contracts•the ss ps for each performance obligation in the contract evaluation to the company’s analyses of their standalone selling prices.evaluation of the company’s ability to continue as a going concern as discussed in notes 1 and 15 to the consolidated financial statements, the company has experienced recurring operating losses and negative cash flows from operating activities. additionally, the company's line of credit under its credit agreement with wells fargo bank, national association (wells fargo) had a maturity date of january 15, 2023. as part of a board-approved plan, subsequent to december 31, 2021, the company paid the outstanding balance on its line of credit with wells fargo, terminated the wells fargo credit agreement, and entered into a new line of credit which matures in april 2024 under a loan and security agreement with silicon valley bank (svb). the maximum availability for borrowing under the svb agreement is the lesser of $7.5 million or the sum of a defined borrowing base of 85% of eligible accounts receivable plus $2.5 million. the $2.5 million will be eliminated from availability under the line of credit at the earlier of april 30, 2023 or the date on which net cash, as defined, is less than $5.0 million.we identified the evaluation of the company’s ability to continue as a going concern as a critical audit matter. specifically, a high degree of auditor judgment was required to evaluate the company’s intent and ability to carry out particular courses of action to achieve its future revenue and cost estimates. in addition, a high degree of auditor judgment was required to evaluate the company’s projected borrowing limit under its credit agreement with svb.the following are the primary procedures we performed to address this critical audit matter. we evaluated the design of an internal control related to the company’s evaluation of its ability to continue as a going concern, including its estimation of future revenue and costs. to evaluate the company’s ability to estimate future revenue and cost, we compared the company’s historical projected revenue and cost estimates to actual results. to evaluate future revenue and cost estimates, we compared them to (1) historical results, (2) the company’s written plans that were approved by the board of directors, and (3) the company’s results of operations and financial position for periods after year-end. we performed sensitivity analysis over future revenue estimates to assess the effect of reasonably likely outcomes on the company’s financial condition. we obtained and inspected a selection of new and expanded customer contracts that were signed after year-end and compared them to the company’s written plans. we evaluated the company’s future cost estimates by assessing whether the company’s plans require the action of third parties. we obtained and 38table of contents inspected the company’s credit agreement with silicon valley bank that was signed after year-end. we assessed the company’s projected borrowing limit and projected compliance with the terms of the credit agreement using the written plans that were approved by the board of directors and our sensitivity analysis./s/ kpmg llp we have served as the company’s auditor since 2021.

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. derivatives as described in note 1 to the company’s consolidated financial statements, when the company issues debt that contains a conversion feature and/or warrants to purchase common stock, it first evaluates whether the conversion feature meets the requirements to be treated as a derivative. if the conversion feature within convertible debt meets the requirements to be treated as a derivative, the company estimates and records the fair value of the derivative liability using the black-scholes option pricing model upon the date of issuance. the derivative liability is revalued at the end of each reporting period. we identified the company’s application of the accounting for convertible notes and warrants as a critical audit matter. the principal considerations for our determination of this critical audit matter related to the high degree of subjectivity in the company’s judgments in determining the qualitative factors. auditing these judgments and assumptions by the company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters. 3001 n. rocky point dr. east, suite 200 • tampa, florida 33607 • 813.367.3527 f-1table of contents the primary procedures we performed to address these critical audit matters included the following: ·we obtained debt and warrant related agreements and performed the following procedures: -reviewed agreements for all relevant terms. -tested management’s identification and treatment of agreement terms. -recalculated management’s fair value of each conversion feature based on the terms in the agreements. -assessed the terms and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of the amortization of the debt discount. -used an auditor specialist to calculate the fair value of the derivative liability using the monte carlo method to determine whether the derivative liability recorded by the company was reasonable. impairment of long-lived assets as described in note 1 to the company’s consolidated financial statements, when facts and circumstances indicate that the carrying value of long-lived assets may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of revenues and the resulting gross profit and cash flows. if the sum of the expected future cash flows is less than the carrying amount, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds fair value. we identified the company’s application of impairment of long-lived assets as a critical audit matter. the principal considerations for our determination of this critical audit matter related to the high degree of subjectivity in the company’s judgments in determining the qualitative factors. auditing these judgments and assumptions by the company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters. the primary procedures we performed to address these critical audit matters included the following: ·we obtained management’s impairment analysis on the intangibles and performed the following procedures: -reviewed the analysis. -tested supporting documentation related to management’s conclusion that the expected future cash flows is greater than the carrying value. -assessed the assumptions used by management and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination that no impairment exists. substantial doubt about the company’s ability to continue as a going concern the accompanying financial statements have been prepared assuming that the company will continue as a going concern. as discussed in note 1, the company has incurred net losses and negative cash flow from operations since inception. these factors, and the need for additional financing in order for the company to meet its business plans raises substantial doubt about the company’s ability to continue as a going concern. our opinion is not modified with respect to that matter. accell audit & compliance, pa 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 separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.30table of contents revenue recognition – contract estimates to complete description of the matter as explained in notes 1 and 4 to the consolidated financial statements, revenue is recognized when the company satisfies its performance obligations under a contract. the company’s performance obligations under long-term agreements with its customers are generally satisfied over time. revenue under these long-term agreements is generally recognized over time either using an input measure based upon the proportion of actual costs incurred to estimated total project costs or an input measure based upon actual labor costs as a percentage of estimated total labor costs, depending upon which measure the company believes best depicts the company’s performance to date under the terms of the contract. accounting for these long-term agreements involves the use of various techniques to estimate total revenues and costs. contract estimates are based on various assumptions to project the outcome of future events that may span several years. these assumptions include, among other things, labor productivity, cost and availability of materials, and timing of funding by customers. significant changes in the above estimates could impact the timing and amount of revenue and profitability of the company’s long-term contracts.auditing these estimates requires subjective auditor judgment because of the significant management judgment necessary to develop the estimated total project costs and labor costs at completion due to the size and identified risks for each contract.how we addressed the matter in our audit we obtained an understanding, evaluated the design, and tested the operating effectiveness of relevant internal controls over the company’s process relating to the determination of estimates for long-term projects. for example, we evaluated the design and tested the operating effectiveness of controls over management’s review of the current status of long-term projects, accumulation of costs incurred and costs remaining to complete.to test the total estimates to complete for contracts, our audit procedures included, among others, obtaining an understanding of the contract, evaluating the consistency of estimated costs with the initial budget, and comparing the composition of costs to date with the composition of the costs in the estimates to complete for a sample of contracts. we also performed a retrospective review of management’s cost estimates for a sample of completed contracts by comparing initial estimates with the actual historical data to assess management’s ability to estimate.income tax – valuation allowances on deferred tax assets description of the matter as explained in notes 1 and 14 to the consolidated financial statements, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. the company makes judgments regarding the future realization of deferred tax assets and a valuation allowance must be provided for those assets which it is more likely than not (a likelihood of more than 50%) that some portion or all of the assets will not be realized. the company evaluates positive and negative evidence regarding the recoverability of deferred tax assets. the determination of whether the positive evidence outweighs the negative evidence and the quantification of the valuation allowance requires the company to make estimates and judgments of future financial results. at december 31, 2020, the company had total deferred tax assets of $47.1 million, net of $1.5 million of valuation allowances.auditing the company’s assertion that it was more likely than not that the deferred tax assets would be realized and the related measurement of the valuation allowance was complex due to the highly judgmental nature of the projections of future sources and amounts of taxable income, which rely on significant assumptions, such as the timing of future reversals of existing temporary differences, assessing the impact of tax planning strategies, and making projections of future taxable income. certain of these significant assumptions are forward looking and could be materially affected by future market or economic conditions.31table 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 process to assess the realizability of the deferred tax assets and measurement of the valuation allowances, including controls over management’s review of the significant assumptions described above.to test the realizability of the deferred tax assets and measurement of the valuation allowances, our audit procedures included, among others, evaluating the methodologies used, the significant assumptions for each type of evidence discussed above, and testing the completeness and accuracy of the underlying data used by the company in its analysis. for example, as part of our evaluation of management’s significant assumptions, we involved our tax professionals to assist in our evaluation of the relevant tax laws and regulations in the various jurisdictions, including considering whether the estimated future sources of taxable income were of the appropriate character to utilize the deferred tax assets in the relevant time period. we evaluated the cumulative income or loss positions of the company’s various jurisdictions, assessed management’s model of estimated future reversals of existing temporary differences and evaluated the company’s forecasts of future profits for the purposes of assessing the reasonableness of the company’s estimated future taxable income. we also compared the forecast of future taxable income with other forecasted financial information prepared by the company and performed sensitivity analyses of the significant assumptions to evaluate the changes in realizability of deferred tax assets that would result from changes in the assumptions. in addition, we evaluated the company’s income tax disclosures related to the matters described above./s/ ernst & young llp we have served as the company’s auditor since 1990p

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 - thermal management reporting unit - refer to notes 1 and 6 to the financial statements 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 determines the fair value of its reporting units using income and market approaches. the determination of the fair value using an income approach involves the use of a discounted cash flow model that requires management to make significant estimates and assumptions related to future revenues and expenses, projected capital expenditures, changes in working capital and discount rates. the determination of the fair value using the market approach requires management to make significant assumptions related to earnings before interest, taxes, depreciation, and amortization (ebitda) multiples. the goodwill balance for the thermal management reporting unit was $714.3 million as of december 31, 2021, and no impairment was recognized as the fair value of the reporting unit exceeded its carrying value as of the measurement date. given the significant judgments made by management to estimate the fair value of the reporting unit and the difference between their fair value and carrying value, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to selection of the discount rates, ebitda multiples, and forecasts of future revenues and operating 44margins, required a high degree of auditor judgment and an increased extent of effort, including the need to involve fair value specialists.how the critical audit matter was addressed in the audit our audit procedures related to significant estimates and assumptions for the thermal management reporting unit included the following, among others: •we tested the effectiveness of controls over goodwill, including those over the underlying assumptions to forecast future revenue and operating margins, the selection of the discount rate, and the selection of the ebitda multiples. •we evaluated management’s ability to accurately forecast future revenues and operating margins by comparing actual results to management’s historical forecasts. •we evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the board of directors, and (3) forecasted information included in company press releases, analyst and industry reports of the company and companies in its peer group.•with the assistance of our fair value specialists, we evaluated the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate selected by management.•with the assistance of our fair value specialists, we evaluated the ebitda multiples used in estimating fair value, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its guideline companies.•with the assistance of our fair value specialists, we compared the aggregated fair value estimates of the company’s reporting units to the company’s market capitalization and evaluated the implied control premium. /s/ deloitte & touche llp minneapolis, minnesota february 25, 2022we 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 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. contractual agreements with core exchange programs description of the matter as more fully described in note 2 to the consolidated financial statements, the company enters into contractual arrangements with customers (core exchange programs) which represent the majority of the company’s sales for products that contain remanufactured cores. at march 31, 2021, contract assets and contract liabilities related to core exchange programs recorded on the consolidated balance sheet were $297,153,000 and $166,295,000, respectively. auditing contract assets and contract liabilities related to the core exchange programs involved complex auditor judgment due to the unique terms of each customer arrangement which impact the completeness, existence, valuation and classification of contract assets and liabilities.54table 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 management’s review of contracts with customers, management’s assessment of the accounting for core exchange programs, including unique contractual terms, and management’s review of the related contract assets and liabilities including controls over the completeness and accuracy of data. our audit procedures to test the contract assets and contract liabilities related to core exchange programs included, among others, (i) reviewing agreements and amendments for significant customers, (ii) testing the completeness of management’s identification of contractual terms, (iii) evaluating the consistency of the accounting treatment with the company's policies; and (v) testing the completeness and accuracy of the underlying data used in management’s analyses. marketing allowances description of the matter as more fully described in note 2 and note 14 to the consolidated financial statements, revenue is recognized net of applicable marketing allowances. these marketing allowances vary by contract and can include (i) the issuance of a specified amount of credits against receivables, (ii) support for research or marketing efforts, (iii) discounts granted in connection with shipments of product, and (iv) other marketing, research, store expansion or product development support. at march 31, 2021, marketing allowances recorded on the company’s consolidated balance sheet was $16,826,000, which is presented within contract liabilities. auditing the completeness of marketing allowances was complex because marketing allowances vary by contract and could be impacted by unrecorded marketing allowances provided to customers.55table 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 marketing allowances processes. for example, we tested controls over management’s review of contracts with customers containing marketing allowances, management’s review of the completeness and accuracy of data used in the marketing accrual analysis at period end and management’s review of credits issued to customers subsequent to the balance sheet date. our audit procedures to test marketing allowances included, among others, reviewing significant contracts with customers, obtaining confirmations of contractual terms and conditions from a sample of the company’s customers, and testing credits issued or payments made to customers throughout the year. we tested the completeness and accuracy of data used in the calculation of the marketing allowance by agreeing contractual terms to the underlying agreements. in addition, we evaluated the relationship between revenue and marketing allowances and assessed subsequent events to determine whether there was any new information that would require adjustments to the amounts recorded. /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 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 matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.revenue — refer to notes 1 and 3 to the financial statements critical audit matter description the company’s revenue is comprised of transaction-based fees made up of a significant volume of low-dollar transactions, sourced from multiple systems, databases, and other tools. the processing and recording of revenue is highly automated and is based on contractual terms with merchants, customers 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.given the company’s systems to process and record revenue are highly automated, auditing revenue is complex and challenging due to the extent of audit effort required and involvement of professionals with expertise in information technology (it) necessary 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 procedures, among others:•with the assistance of our it specialists, we:80table of contents–identified the significant systems used to process revenue transactions and tested the effectiveness of general it controls over each of these systems, including testing of user access controls, change management controls, and it operations controls.–performed testing of the effectiveness of system interface controls and automated controls within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenue.•we tested the effectiveness of controls over the company’s relevant revenue business processes, including those in place to reconcile the various systems to the company’s general ledger.•with the assistance of our data specialists, we created data visualizations to evaluate recorded revenue and evaluate trends in the transactional revenue data.•we performed testing of revenue recorded with a combination of substantive analytical procedures, which compares our independent expectation of revenue we developed to the amount of revenue recorded by management, and by performing detail testing of transactions, which compares the recorded revenue for sample transactions to source documents and testing the accuracy of the recorded revenue.acquisitions — refer to note 4 to the financial statements critical audit matter description the company completed the acquisitions of benefitexpress on june 1, 2021 for $275 million and e nett and optal on december 15, 2020 for $577.5 million and accounted for these acquisitions under the acquisition method of accounting for business combinations. in 2020, the company estimated the preliminary fair value of the acquired e nett and optal businesses for purposes of recording the acquisition. during 2021, the purchase price for these acquisitions was allocated to the assets acquired and liabilities assumed based on their respective fair values, including the intangible assets identified of $160 million. management estimated the fair value of the intangible assets, with the assistance of a third-party specialist, utilizing various discounted cash flow methods. the fair value determination of the intangible assets identified required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rates.given the fair value determination of the intangibles for these acquisitions requires management to make significant estimates and assumptions related to the forecasts of future cash flows and the selection of the discount rates, performing audit procedures to evaluate the reasonableness of these estimates and assumptions 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 forecasts of future cash flows and the selection of the discount rates used by management in the fair value determination of the intangibles included the following, among others: •we tested the effectiveness of controls over the valuation of the intangible assets, including management’s control over the forecasts of future cash flows and selection of the discount rates. •we assessed the reasonableness of management’s forecasts of future cash flows by comparing the projections to historical results, certain peer companies and industry data and tested the mathematical accuracy of the forecasts.•with the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodologies and (2) discount rates used by:–evaluating the valuation methods to ensure consistency with generally accepted valuation practices.–testing the source information underlying the determination of the discount rates and testing the mathematical accuracy of the calculations.–developing a range of independent estimates and comparing those to the discount rates selected by management.•we evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.81table of contents/s/ deloitte & touche llp boston, massachusetts march 1, 2022we have served as the company's auditor since 2003.

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. collectability of receivables description of the matter during the two-year period ended december 31,2021, the company purchased and leased back assets to various related parties. the term of the leases ranged between 48-60 months. atthe end of the leases, the related parties have the right to purchase the assets. these leases were accounted for as finance leases inaccordance with accounting standards codification 842, leases. significant judgement is involved in estimating the collectabilityof these receivables. how we addressed the matter in our audit the primary procedures we performed to addressthis critical audit matter included examining each lease agreement, evaluating management’s assessment of the collectability ofeach lease receivable, and testing the collection of outstanding balances at year-end. based on our procedures we deemed the company’streatment of each lease receivable to be appropriate. assurance dimensions 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: (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 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. realizability of deferred tax assets as described in note 12 to the consolidated financial statements, the company has recorded $64.8 million in gross deferred tax assets as of december 31, 2021 and recorded a valuation allowance of $29.8 million. management applies significant judgment in assessing the projections of future taxable income in the determination of the amount of deferred tax assets that were more-likely-than-not to be realized in the future. in assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. - 64 -we identified assessing the realizability of deferred tax assets as a critical audit matter. specifically, we identified there is significant judgment required by management in formulating the forecast of taxable income over the net operating loss expiration periods to determine the amount of deferred tax assets that were more-likely-than-not to be realized in the future. auditing these forecasts involved especially challenging auditor judgment, including the need for specialized knowledge and skill in assessing these elements. the primary procedures we performed to address this critical audit matter included: ●evaluating the design and implementation of controls relating to the projection of taxable income in future periods, including controls over management’s process to select the assumptions utilized. ●evaluating the positive and negative evidence in assessing whether the deferred tax assets are more likely than not to be utilized, including evaluating the trends of historical financial results, projected sources of taxable income in future periods, and market information (such as interest yield curves). ●assessing the reasonableness of management’s historical ability to make forecasts of future taxable income, by performing a retrospective review of the prior year’s estimates. ●utilizing personnel with specialized knowledge and skill in income taxes to assist in the evaluation of the appropriateness of the company’s positions and analysis of the realizability of the deferred tax assets. valuation of investments in mortgage-backed securities as described in notes1and14to the consolidated financial statements, the companyaccounts for its  mortgage-backed securities at fair value, whichtotaled$60.8 million at december 31, 2021.  the fair value of mortgage-backed securities isbased on independent pricing sources and/or third-party brokerquotes, when available. because the price estimates may vary, management must make certain judgments and assumptions about the appropriate price to use to calculate the fair values based on various techniques including observing the most recent market for like or identical assets (including security coupon rate, maturity, yield, prepayment speed), market credit spreads, and model driven approaches.    we identified the valuation of mortgage-backed securitiesasa critical audit matter.  the principal considerations for our determination are: (i)the potential for bias in how management subjectively selects the price from multiple pricing sources to determine the fair value of the mortgage-backed securities and (ii)the audit effort involved, including the use ofvaluation professionals with specialized skill and knowledge.    the primary procedures we performed to address this critical audit matter included:   ●evaluating thedesign and implementation ofcontrolsrelating to the valuation of mortgaged-backed securities, includingcontrols overmanagement’sprocess to select the price from multiple pricing sources.  ●reviewingtherange of values used for each investment position,andassessingthe price selectedfor management bias by comparing the priceto the high, low and average of the range of pricing sources.   ●testing the reasonableness of fair values determined by management by comparing the fair value of certain securities to recent transactions, if applicable. ●utilizing personnel with specialized knowledge and skill in valuation todevelop an independent estimate of the fair value of each investment positionby considering the stated security coupon rate, yield, maturity, and prepayment speeds, and comparing to the fair value used by management. /s/ bdo usa, llp certified public accountants we have served as the company's auditor since 2008.

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.acquisitions - vectren corporation - intangible assets - refer to note 4 to the financial statements critical audit matter description the company completed the acquisition of vectren corporation (“vectren”) for $6 billion in cash on february 1, 2019. the company accounted for the acquisition under the acquisition method of accounting for business combinations. accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including intangible assets and goodwill of $4.6 billion. of the intangible assets acquired, $297 million was allocated to identifiable intangible assets such as customer relationships and trade name with the remainder of $4.3 billion being recorded as goodwill. management estimated the fair value of the identifiable intangible assets using the multi-period excess earnings method, which is a specific discounted cash flow method. in addition, the determination of the business fair value required management to make significant estimates and assumptions related to discount rates and future cash flows. determining the discount rates for the nonregulated businesses acquired required management to estimate the appropriate entity specific risk premiums for those nonregulated businesses based on evaluation of industry and entity-specific risks which included expectations about future market or economic conditions. 102changes in these assumptions could have a significant impact on either the amount of the identified intangible assets, the resulting amount of goodwill, or both.given the fair value determination of intangible assets acquired required management to make significant estimates and assumptions related to the forecasts of future cash flows and the company specific risk premium affecting the discount rate, performing audit procedures to evaluate the reasonableness of these estimates and 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 the forecasts of future cash flows and company specific risk premium affecting the discount rate for the intangible assets of the nonregulated businesses acquired included the following, among others:•we tested the effectiveness of controls over acquisition valuation, including management’s controls over the forecasts of future cash flows and selection of the company specific risk premium assumption used in the determinations of the discount rates.•we considered the impact of changes to the discount rate and long-term growth rate on the fair value.•we evaluated the value at which acquired assets were recorded under the applicable accounting guidance based on the regulated nature of the entity.•we assessed the reasonableness of management’s forecasts by comparing the forecasts to:◦historical revenues and operating margins.◦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.•we evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.•we involved our fair value specialists who assisted in:◦assessing the appropriateness of the valuation methodology used to determine the customer relationship intangible assets and the company specific risk premiums.◦testing the determined discount rates by independently estimating a discount rate for each business using a process consistent with generally accepted valuation practices.goodwill - refer to note 6 to the 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. in its annual goodwill impairment test on july 1, 2019 (“measurement date”) and as triggering events are identified, the company used the discounted cash flow model and a market approach to estimate fair value of each reporting unit, which required management to make significant estimates and assumptions related to forecasts of future revenues and operating margins based on certain assumptions including (i) future capital expenditures and rate base growth, (ii) estimated future rate changes, (iii) discount rates, and (iv) long-term growth rates. changes in these assumptions could have a significant impact on the fair value of a reporting unit, the amount of any goodwill impairment charge, or both. the company’s goodwill is $5.2 billion as of december 31, 2019, of which $4.3 billion resulted from the acquisition of vectren. the fair value of each reporting unit exceeded the carrying value as of the measurement date and, therefore, no impairment was recognized.given the significant assumptions used by management to estimate fair value including (i) future capital expenditures and rate base growth, (ii) estimated future rate changes, (iii) discount rates, and (iv) long-term growth rates, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenue and operating margin, specifically for reporting units containing unregulated business units and vectren rate regulated jurisdictions, required a high degree of auditor judgment and an increased extent of effort, including the need to involve fair value specialists.103how the critical audit matter was addressed in the audit our audit procedures related to the assumptions used to forecast future revenue and operating margin used by management within the discounted cash flow model included the following, among others:•we tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of fair value, such as controls related to management’s forecasts of future capital expenditures, future rate base growth, estimated future rate changes, discount rates, and long-term growth rates.•we evaluated the reasonableness of management’s forecasts by comparing the forecasts to:◦historical revenues, operating margins, capital expenditures, rate base growth, and rate changes.◦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.•we compared future rate changes to the company’s scheduled rate filings and the amount of capital expenditures for the regulated entities to communications with regulators including integrated resource plans.•we compared actual revenue growth and capital expenditures results for 2019 to the planned results as of the acquisition date.•we evaluated the impact of changes in management’s forecasts from the measurement date to december 31, 2019.•we involved our fair value specialists who assisted in:◦assessing the appropriateness of the valuation methodology used to determine the company specific risk premiums in calculating the discount rate.◦testing the determined discount rates by independently estimating a discount rate for each business using a process consistent with generally accepted valuation practices.◦evaluating the reasonableness of the long-term growth rate through a comparison to industry reports and peer companies.impact of rate regulation on the financial statements - refer to notes 2 and 7 to the financial statements critical audit matter description the company, through its regulated electric and gas subsidiaries is subject to rate regulation by the relevant state public utility commissions and, in texas by the railroad commission, and the federal energy regulatory commission (collectively, “the commissions”), and those municipalities (in texas only) served by the company. management has determined it meets the requirements under accounting principles generally accepted in the united states of america to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant, and equipment, net; regulatory assets and liabilities; utility revenues; operation and maintenance expense; and depreciation and amortization expense; and income tax expense.the company’s rates are subject to regulatory rate-setting processes by certain municipalities and the commissions. rates are determined and approved in regulatory proceedings based on an analysis of the company’s costs to provide utility service and a return on, and recovery of, the company’s investment in the utility business. regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates. the regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. decisions to be made by the commissions in the future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required. while the company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the commissions will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment.104we identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about affected account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory actions on the financial statements. management judgments include assessing the likelihood of (1) recovery in future rates of incurred costs, (2) a disallowance of capital investments made by the company and (3) refunds to customers. given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due its inherent complexities.how the critical audit matter was addressed in the audit our audit procedures related to the uncertainty of future decisions by the commissions included the following, among others:•we tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred and deferred as regulatory assets, and (2) refund or future reductions in rates that should be reported as regulatory liabilities. we also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.•we evaluated the company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.•for matters with a high degree of subjectivity, we read relevant regulatory orders issued by the commissions for the company and other public utilities in the states the company operates in, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedence of the commissions’ treatment of similar costs under similar circumstances. we evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.•for regulatory matters in process, we inspected the company’s filings with the commission and the filings with the commission by intervenors that may impact the company’s future rates, for any evidence that might contradict management’s assertions.•we evaluated management’s plans regarding property, plant, and equipment for indications of potential impairment. we inspected the capital-projects budget and inquired of management to identify projects that are designed to replace assets that may be retired prior to the end of the useful life. we inspected minutes of the board of directors and regulatory orders and other filings with the commissions to identify any evidence that may contradict management’s assertion regarding probability of a disallowance of long-lived assets.•we evaluated regulatory filings for any evidence that intervenors are challenging full recovery of the cost of any capital projects and inquired of management to assess whether capitalized costs are probable of disallowance. •we obtained an analysis from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or a future reduction in rates./s/ deloitte & touche llp houston, texas february 27, 2020 we have served as the company’s auditor since 1932.

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.evaluation of customer trade allowances as discussed in note 1 to the consolidated financial statements, the company has recorded a provision for customer trade allowances, consisting primarily of pricing allowances and merchandising programs associated with sales to customers. the liability recorded for the estimated cost of these programs is dependent on factors such as the ultimate purchase volume activity, participation levels of customers, and the related settlement rates for these programs. the company’s liability for customer trade allowances as of december 31, 2020 was $46.8 million.we have identified the evaluation of the customer trade allowance as a critical audit matter because of the higher degree of auditor judgment required to evaluate the company’s estimates. this is due to uncertainty around the amount of settlements, which typically occur in a period subsequent to the related sales transactions, and in particular, the estimate of purchase volumes made by retailers from distributors.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 trade process at disaggregated levels. this included controls related to the company’s trade spend trending and lookback analyses based on final settlement. we analyzed the liability by trade allowance type to identify unusual trends. we assessed the company’s historical ability to accurately estimate its customer trade allowances by comparing historical estimates to final settlements. we compared a sample of settlements subsequent to period end to the amount previously recognized by the company. acquisition-date fair value of acquired trade name as discussed in note 2 to the consolidated financial statements, on january 3, 2020, the company acquired voortman cookies, limited (voortman), including the associated trade name. the acquisition-date fair value of the voortman trade name was $130.0 million.we have identified the evaluation of the acquisition-date fair value of the trade name acquired in the voortman acquisition as a critical audit matter. a high degree of subjective auditor judgment was involved in evaluating discrete period revenue growth rates and royalty rate assumptions used in the relief from royalty method to estimate the acquisition-date fair value of the trade name.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. this included controls over the assumptions listed above used to estimate the acquisition-date fair value of the trade name. we evaluated the reasonableness of the discrete period revenue growth rates by comparing the company’s estimates of forecasted revenue growth to historical actual results and current period performance. we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the reasonableness of: ● the discrete period revenue growth rates by comparing the forecasted amounts to publicly available market data for comparable companies● the royalty rate by comparing the rate determined by management against publicly available market data for comparable transactions. /s/ kpmg llp we have served as the company’s auditor since 2013.

critical audit matter. 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 audits 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 include 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. 149 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. allowances for credit losses the company’s loan portfolio totaled $4.2 billion as of december 31, 2021 and the associated allowance for credit losses on loans was $53.9 million. the company’s unfunded loan commitments totaled $1.7 billion, with an associated allowance for credit loss of $3.5 million. together these amounts represent the allowances for credit losses (“acl”). as discussed in notes 1 and 5 to the consolidated financial statements, the allowance for credit losses related to loans is a contra-asset valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. as discussed in notes 1 and 19 to the consolidated financial statements, the allowance for credit losses related to unfunded commitments is a liability account and is included in other liabilities. the amount of each allowance account represented management’s best estimate of current expected credit losses on these financial instruments considering all relevant available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. in calculating the allowance for credit losses, loans were segmented into pools based upon similar risk characteristics. for each loan pool, management measured expected credit losses over the life of each loan utilizing either a static pool model or a discounted cash flow (dcf) model. the static pool model primarily utilized historical loss rates applied to the estimated remaining life of each pool. the dcf model primarily measures probability of default (“pd”) and loss given default (“lgd”) with pd and lgd estimated by analyzing internally sourced data related to historical performance of each loan pool over a complete economic cycle. the models were adjusted to reflect the current impact of certain macroeconomic variables as well as their expected changes over a reasonable and supportable forecast period. after the reasonable and supportable forecast period, the forecasted macroeconomic variables were reverted to their historical mean utilizing a rational, systematic basis. in some cases, management determined that an individual loan exhibited unique risk characteristics which differentiated the loan from other loans with the identified loan pools. in such cases the loans were evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. management qualitatively adjusted model results for risk factors that were not considered within the modeling processes but were deemed relevant in assessing the expected credit losses within the loan pools. these qualitative factor adjustments modified management’s estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. auditing management’s estimate of the acl involved a high degree of subjectivity due to the nature of the qualitative factor adjustments included in the allowances for credit losses and complexity due to the implementation of the static pool and dcf models. management’s identification and measurement of the qualitative factor adjustments is highly judgmental and could have a significant effect on the acl. 150 how we addressed the matter in our audit the primary procedures we performed related to this cam included: ● obtained an understanding of the company’s process for establishing the acl, including the implementation of models and the qualitative factor adjustments of the acl ● evaluated and tested the design and operating effectiveness of related controls over the reliability and accuracy of data used to calculate and estimate the various components of the acl including: o loan data completeness and accuracy o grouping of loans by segment o model inputs utilized including pd, lgd, remaining life and prepayment speed o approval of model assumptions selected o establishment of qualitative factors o loan risk ratings ● tested the mathematical accuracy of the calculation of the acl ● performed reviews of individual credit files to evaluate the reasonableness of loan credit risk ratings ● tested internally prepared loan reviews to evaluate the reasonableness of loan credit risk ratings ● tested the completeness and accuracy, including the evaluation of the relevance and reliability, of inputs utilized in the calculation of the acl ● evaluated the qualitative adjustments to the acl including assessing the basis for adjustments and the reasonableness of the significant assumptions ● tested the reasonableness of specific reserves on individually evaluated loans ● evaluated credit quality trends in delinquencies, non-accruals, charge-offs and loan risk ratings ● evaluated the overall reasonableness of the acl and evaluated trends identified within peer groups ● tested estimated utilization rate of unfunded loan commitments acquisition as described in note 3 to the consolidated financial statements, the corporation completed the acquisition of kentucky bancshares, inc. during the year ended december 31, 2021 with an acquisition price of $232.9 million, including the recognition of $123.3 million of goodwill. management determined that the acquisition qualified as a business and accordingly, all identifiable assets and liabilities acquired were valued at fair value as part of the purchase price allocation as of the acquisition date. the identification and valuation of such acquired assets and assumed liabilities required management to exercise significant judgment and consider the use of outside vendors to estimate the fair value allocations. we identified the acquisition and the valuation of acquired assets and assumed liabilities a critical audit matter. auditing the acquisition transaction involved a high degree of subjectivity in evaluating management’s operational assumptions, fair value estimates, purchase price allocations and assessing the appropriateness of outside vendor valuation models. 151 how we addressed the matter in our audit the primary procedures we performed to address this critical audit matter included: ● obtaining and reviewing executed plan and agreement of merger documents to gain an understanding of the underlying terms of the consummated acquisition ● obtaining and reviewing management’s reconciliation procedures of significant accounts and testing of completion procedures performed and asset/liability identification considerations made ● testing management’s computation of purchase price and determination of goodwill recognized focusing on the completeness and accuracy of the balance sheet acquired and related fair value purchase price allocations made to identified assets acquired and liabilities assumed ● obtaining and reviewing significant outside vendor valuation estimates and challenging management’s review of the appropriateness of the valuations assessed/allocated to assets acquired and liabilities assumed; including but not limited to, testing all critical inputs, including assumptions applied and valuation models utilized by the outside vendors ● utilization of our forensics & valuation services group to assist with testing and challenging the related fair value purchase price allocations made to identified assets acquired and liabilities assumed ● reviewing and evaluating the adequacy of the disclosures made in the footnotes of the corporation’s sec filings /s/ bkd, llp we have served as the company’s auditor since 2018.

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.errors and omissions reserve — refer to notes 2, 14 and 15 to the financial statements critical audit matter description the company has established provisions against various actual and potential claims, lawsuits and other proceedings relating principally to alleged errors and omissions (‘e&o’) which arise in connection with the placement of insurance and reinsurance and provision of broking, consulting and outsourcing services in the ordinary course of business. such provisions cover claims that have been reported but not paid and also claims that have been incurred but not reported (‘ibnr’). these provisions are established based on actuarial estimates together with individual case reviews. significant management judgment is required to estimate the amounts of such claims. auditing management’s judgments related to its e&o provision, and in particular the broking, consulting and outsourcing business provisions related to the ibnr, and the provisions related to significant claims reported but not paid, involved especially complex and subjective judgment and an increased extent of effort, including the need to involve our actuarial specialists.how the critical audit matter was addressed in the audit we tested the effectiveness of controls over the company’s estimation of the e&o provisions, including controls over the underlying historical claims data, the actuarial methodology used, the assumptions selected by management that are used to calculate the broking, 66 consulting and outsourcing business ibnr provisions, and the establishment and quarterly evaluation of provisions for reported claims, including significant claims. for the ibnr provisions, we evaluated the appropriateness of the ibnr models, including evaluating changes needed or warranted given changes in the business and trends emerging from the covid-19 pandemic, and evaluated the consistency of the model with prior years in order to challenge the methodology used to estimate the provisions. with the assistance of our actuarial specialists, we assessed the methodology and models used, including key inputs and assumptions used in, and arithmetical accuracy of, the models used. we also performed retrospective reviews of management’s estimated claims emergence in comparison to actual results and evaluated the provisions set by management in comparison to a range of independent estimates that we developed. we evaluated the e&o matters and the appropriateness of their projected settlement values through inquiries of, and confirmations from, in-house counsel and external lawyers handling those matters for the company. /s/ deloitte & touche llp philadelphia, pa february 23, 2021 we have served as the company’s auditor since 2017.

critical audit matters the critical audit matter communicated below is a matterarising from the current period audit of the financial statements that wascommunicated or required to be communicated to the audit committee and that: (1)relates to accounts or disclosures that are material to the financial statementsand (2) involved our especially challenging, subjective, or complex judgments.the communication of critical audit matters does not alter in any way ouropinion on the financial statements, taken as a whole, and we are not, bycommunicating the critical audit matter below, providing separate opinions onthe critical audit matter or on the accounts or disclosures to which it relates.carrying value of the investment in pro gold llc as described further in notes 2 and 3 to the financialstatements, the investment in pro gold llc is recorded at historical cost plusits pro-rata share of pro gold llc’s net income and additional paid-in capitalless distributions received from pro gold llc. management evaluates theinvestment in pro gold llc for impairment on an annual basis, or more frequentlyif impairment indicators exist. the determination of the carrying value of theinvestment in pro gold llc requires management to make significant estimates andassumptions. changes in these assumptions could materially affect thedetermination of the fair value of the investment in pro gold llc. we identified the carrying value of the investment in pro gold llc as the critical audit matter. the principal consideration for thisdetermination is that management utilized significant judgment when evaluatingthe investment in pro gold llc for impairment. in turn, auditing management’sjudgments regarding the key factors and assumptions, involved a high degree ofsubjectivity due to the uncertainty of management’s significant judgments. our audit procedures related to the carrying value of theinvestment in pro gold llc included the following, among others: •we recalculated the carrying value using pro gold llc’s august 31, 2020 audited financial statements and subsequent unaudited internal financial statements. •we reviewed audit working papers from pro gold llc’s august 31, 2020 audit. •we tested managements assertion that there was no impairment on the investment in pro gold llc by independently assessing the assertion by performing the following procedures: o reviewing current and previous operating conditions for indication of impairment o reviewing board minutes and news for indications of impairment o reviewing professional industry reports for indications of impairment /s/ widmer roel pc we have served as the cooperative’s auditor since 2008.

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 critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. impairment assessment of real estate assets as described in note 3 to the consolidated financial statements, management reviews properties for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets, including accrued rental income, may not be recoverable through operations. management determines if an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the estimated residual value of the property, with the carrying cost of the property. actual results could differ from estimates supporting the company's impairment analysis. if management's analysis indicates an impairment, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value. as of december 31, 2020, the company had $49 million in real estate assets, net of accumulated depreciation, with no impairment recognized for the year ended december 31, 2020.f-2we identified management's impairment assessment as a critical audit matter primarily because of the significant estimates involved in management's impairment analysis, as these estimates resulted in audit procedures involving a high degree of auditor judgment and subjectivity and challenges in obtaining and evaluating audit evidence.our testing procedures to address this critical audit matter included the following:•obtaining an understanding of the company’s internal control over financial reporting applicable to management’s impairment assessment, including controls pertaining to management’s estimates supporting the impairment analysis;•evaluating the methodology used by management in its impairment analysis;•comparing the operating income before depreciation for each property to historical results;•evaluating the reasonableness of capitalization rates used in management’s impairment analysis, taking into consideration comparable market data, including the location and quality rating of the properties; and•evaluating the completeness and accuracy of the underlying data used by management in its impairment analysis.collectability assessment of accrued rents and accounts receivable as described in note 3 to the consolidated financial statements, management reviews the collectability of charges under its tenant operating leases and accrued rental revenues related to the straight-line method of reporting rental revenue, taking into consideration changes in factors such as the tenant's payment history, the financial condition of the tenant, business conditions in which the tenant operates, and economic conditions in the area where the property is located, including the impact of the covid-19 pandemic on tenants' businesses and financial condition. actual results could differ from estimates supporting the company's collectability analysis. if management deems it probable that a receivable will not be collected, an adjustment will be made to reduce rental revenue. as of december 31, 2020, the company had $1,273,000 in accrued rents and accounts receivable, net of a $398,000 allowance for doubtful accounts. for the year ended december 31, 2020, the company had a bad debt reduction to its rental revenue of $242,000, which included a bad debt adjustment of $57,000 and a straight-line rent reserve adjustment of $51,000 related to the conversion of 4 tenants to cash basis revenue.we identified management's collectability assessment as a critical audit matter primarily because of the significant and unusual nature of the economic impact of the covid-19 pandemic on collectability of charges under tenant operating leases, which materially contributed to a high degree of auditor judgment and challenges in obtaining and evaluating audit evidence when performing audit procedures.our testing procedures to address this critical audit matter included the following:•obtaining an understanding of the company’s internal control over financial reporting applicable to management’s collectability assessment, including controls pertaining to management’s estimates supporting the collectability analysis;•evaluating the methodology used by management in its collectability analysis;•evaluating the reasonableness of the aggregate allowance percentage for accrued rent and accounts receivable, taking into consideration rent payments receivable per leasing agreements and rent payments received from tenants during the year ended december 31, 2020; and•evaluating the completeness and accuracy of the underlying data used by management in its collectability analysis./s/ pannell kerr forster of texas, p.c.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 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. convertible note transaction as described in note 9 to the consolidated financial statements, the company issued convertible notes for aggregate gross proceeds of $500 million in august 2019. the nature of the convertible note transaction required management to allocate the proceeds between the liability and equity components, with the equity component representing the difference between the proceeds and the fair value of a similar liability that does not have an associated conversion feature. to estimate the fair value of a similar liability that does not have an associated conversion feature, management discounted the contractual cash flows of the notes at an estimated interest rate for a comparable non-convertible note. the principal considerations for our determination that performing procedures relating to the convertible note transaction is a critical audit matter are there was significant judgment by management in determining the fair value of the notes, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the estimated interest rate of a comparable non-convertible note, which is a significant assumption in determining the fair value of a similar note that does not have an associated conversion feature. 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. 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 financing process, including controls over management’s fair value determination. these procedures also included, among others, evaluating the methodology used by management to determine the fair value of a similar liability that does not have an associated conversion feature and evaluating management’s selection of the interest rate of a comparable non-convertible note. professionals with specialized skill and knowledge were used to assist in evaluating whether the interest rate of a comparable non-convertible note used by management was reasonable considering consistency with external market and industry data. /s/ pricewaterhouse coopers llp los angeles, california february 27, 2020we have served as the company’s auditor since 2014.

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.revenue – over-time basis – refer to note 2 to the financial statements critical audit matter description the company recognizes revenue when control of a promised good and/or service is transferred to a customer. the company identifies a performance obligation for each promise in a contract to transfer a distinct good or service to the customer. contracts that qualify for over-time revenue recognition are generally associated with the design, development, and manufacture of highly engineered industrial products used in commercial and defense applications and generally span between 2-5 years in duration. the company uses over-time revenue recognition based on the utilization of an input measure used to measure progress of performance obligations, such as costs incurred to date relative to total estimated costs. application of an over-time revenue recognition method requires the use of reasonable and dependable estimates of costs that will be incurred to complete production of goods or provision of services. as of december 31, 2021, revenue was $2.506 billion, of which 50% relates to over-time revenue.75certain of the company’s contracts have limited amount of historical data available requiring the company to make judgments to estimate future costs that will be incurred for these contracts. related to these contracts, auditing these estimates required both extensive audit effort due to a high degree of auditor judgment, especially given the limited historical data for certain contracts, 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 management’s estimates of total costs that will be incurred for certain of the contracts (as discussed above) included the following: •we tested the effectiveness of controls over the long-term contract revenue, including those over the estimates of total costs for the performance obligation.•we performed the following: ◦evaluated the appropriateness and consistency of the methods and assumptions used by management to develop the estimates of future costs that will be incurred for contracts with limited historical experience.◦evaluated management’s ability to achieve the estimates of costs that will be incurred by performing corroborating inquiries with the company’s project managers and engineers, and comparing the estimates to management’s work plans, engineering specifications, and supplier contracts.◦tested the accuracy and completeness of the costs incurred to date.◦compared the actual costs incurred to date to management’s estimated costs to be incurred to date. ◦due to the limited historical data available for certain contracts, we tested changes in management’s total cost estimates. ◦tested the mathematical accuracy of management’s estimates of future costs to be incurred.◦tested the mathematical accuracy of management’s calculation of revenue for the contract./s/ deloitte & touche llp parsippany, new jersey february 24, 2022 we have served as the company's auditor since 2003.

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 from contracts with customers – determination of distinct performance obligations relating to service revenues – refer to note 1 of the financial statements critical audit matter description the company's service revenues within the transportation systems (“sys”) operating segment, primarily derives revenue from long-term engineering & consulting services and software as a service ("saa s"). the company accounts for individual services separately if they are distinct performance obligations, which often requires significant judgment based upon knowledge of the services, the solution provided and the structure of the sales contract. during the year ended march 31, 2021, the company recognized service revenues from contracts with customers of $53.3 million.we identified the determination of distinct performance obligations in contracts with customers relating to service revenues as a critical audit matter. significant judgment is required to determine whether the performance obligations in these sales contracts 35table of contentsare distinct; that is, if a service is separately identifiable from other items in the sales contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. auditing these aspects include especially challenging auditor judgment due to the nature and extent of audit effort required to address this matter.how the critical audit matter was addressed in the audit our audit procedures related to the company’s determination of distinct performance obligations relating to service revenues for these contracts included the following, among others:• we tested the effectiveness of controls related to management’s identification and assessment of distinct performance obligations in contracts with customers.• we selected a sample of customer contracts to evaluate the appropriateness of management’s determination of distinct performance obligations.• we selected a sample of invoices from the accounts receivable detail and determined whether amounts invoiced were in accordance with the related contract terms. further, we inspected line items on the invoice to verify that all line items were included in management's evaluation of performance obligations.• we selected a sample of customer contracts and investigated all changes in current forecasted cost to original forecasted cost to evaluate if changes in estimate are indicative of existing services known by operations personnel, but not previously considered as distinct performance obligations by management.• we investigated offsets to revenue to determine that they represent a valid purpose and a service was not previously identified. • we selected a sample of expenditures and determined whether the good/service represented by the selected transaction was properly identified and evaluated by management as a distinct performance obligation./s/ deloitte & touche llp costa mesa, ca june 1, 2021we 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. revenue recognition – collaboration arrangements – refer to notes 2 and 9 to the financial statements and investment valuation – refer to notes 2, 4, and 10 to the financial statements.critical audit matter description the company recognizes collaboration revenue on license and collaboration agreements as they satisfy performance obligations and transfer control of goods and services to the customer. during 2021, the company entered into two new license and collaboration agreements with counterparties in exchange for a non-controlling equity ownership in each respective counterparty. this resulted in management applying judgments in determining the accounting for these arrangements. specifically, management applied judgment in (1) identifying the performance obligations f-2 within the arrangements and (2) measuring the arrangement consideration. measuring the arrangement consideration required management to estimate the fair value of the equity interests received, which were equity interests in private entities that did not have readily determinable market values. the company recognized $77.7 million of deferred revenue at the inception of the arrangements, which represented the fair value of the equity interests received.auditing the company’s accounting for revenues pertaining to the new arrangements required an increased extent of effort and a high degree of auditor judgment due to the complex and judgmental nature of evaluating the performance obligations included within the license and collaboration agreements. additionally, given management used unobservable inputs to estimate the fair value of the equity interests received, performing audit procedures to evaluate these inputs 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 principal audit procedures related to the company’s revenue recognition and valuation of the equity interests received included the following, among others:•we tested the effectiveness of controls over the company’s processes for assessing the accounting treatment of new collaboration agreements and controls over the valuation of the equity interests received. •we obtained and read the contracts and other documents related to each arrangement. •we tested management’s identification of the promises for completeness, including the identification of distinct performance obligations. for each performance obligation identified, we held corroborative inquires with individuals involved in the negotiation of the agreement and those responsible for overseeing the arrangement to confirm our understanding of those performance obligations as well as the company’s assertions regarding whether those performance obligations are distinct or combined. •we tested the fair value of the equity interests received in exchange for entering into each arrangement. for each equity interest received, and with the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, (2) critical valuation and business assumptions and (3) tested the mathematical accuracy of the underlying valuations. /s/ deloitte & touche llp boston, massachusetts february 24, 2022 we 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 a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.asset management and administration fees (amaf) – refer to note 4 to the financial statements critical audit matter description certain revenues included in asset management and administrative fees are generated through third-party mutual fund and exchange-traded funds (etf) offerings, as well as fee-based advisory solutions. these amaf revenues are made up of a significant volume of low-dollar transactions, and use automated systems to process and record these transactions based on underlying information sourced from multiple systems and contractual terms with individual investors and third-party mutual funds.given that the company’s process to record revenue is highly automated and involves multiple systems and databases, auditing these revenue streams was complex and challenging due to the extent of audit effort required and involvement of professionals with expertise in information technology (it) necessary for us 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 the amaf revenue transactions included the following, among others:•with the assistance of our it specialists, we:◦identified the significant systems used to process revenue transactions and, using a risk-based approach, tested the relevant general it controls over each of these systems.◦performed testing of automated business controls and system interface controls (including batch processing) within the relevant revenue streams.•we tested internal controls within the relevant revenue business processes, including those in place to reconcile the various systems to the company’s general ledger.•we created data visualizations to evaluate recorded revenue and evaluate trends in the revenue data.•for a sample of revenue transactions, we performed detail transaction testing by agreeing the amounts recognized to contractual agreements and testing the mathematical accuracy of the recorded revenue.•for a sample of accounts, we tested the accuracy and completeness of assets under management by obtaining independent pricing support and reconciling total positions to third-party statements.purchase price accounting for the td ameritrade acquisition – client relationship intangible asset – refer to note 3 to the financial statements critical audit matter description on october 6, 2020, the company completed the acquisition of td ameritrade for approximately $22 billion in common stock. the company accounted for the td ameritrade acquisition as a business combination under gaap and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition, including client relationship intangible assets of $8.7 billion. the estimated fair value of client relationships were estimated using the multi-period excess earnings method. the multi-period excess earnings method starts - 129 -the charles schwab corporatio nwith a forecast of all of the expected future net cash flows associated with the asset. the forecast is then adjusted to present value by applying an appropriate discount rate that reflects the risks associated with the cash flow stream. given the fair value determination of client relationship intangible assets requires management to make significant estimates and assumptions related to the determination of net future cash flows, and the selection of the respective discount rates, performing audit procedures to evaluate the reasonableness of these estimates and assumptions 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 determination of net future cash flows and the selection of the discount rate relating to the client relationship intangible assets included the following, among others:•we tested the operating effectiveness of internal controls over the determination of forecasted net future cash flows, selection of the discount rate and the valuation methodology used.•we assessed the knowledge, skill, ability and objectivity of management’s valuation specialist and evaluated the work performed.•with the assistance of our valuation specialists, we evaluated the reasonableness of (1) the valuation methodologies used and (2) discount rate by:◦testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation. ◦developing a range of independent estimates of the discount rate and comparing to the discount rate utilized by management. •when assessing the reasonableness of assumptions related to net future cash flows for client relationship intangible assets, we evaluated whether the assumptions used were reasonable considering the past performance of the acquired company and the company’s strategic plan going forward. •we evaluated whether the assumptions used to estimate net future cash flows were consistent with evidence obtained in other areas of the audit./s/ deloitte & touche llp san francisco, california february 24, 2021we have served as the company's auditor since 1976.

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. interim goodwill impairment assessment as described in notes 3 and 7 to the consolidated financial statements, the company’s goodwill balance was $580.1 million as of january 3, 2021. management assesses goodwill for impairment at the reporting unit level on an annual basis in the company’s fiscal fourth quarter and whenever events or changes in circumstances occur that indicate that the fair value of a reporting unit is below its carrying amount. as of december 30, 2019, the beginning of fiscal year 2020, management changed the financial information that was regularly reviewed by the chief operating decision maker (“codm”) to measure performance and allocate resources. this resulted in a change to the company’s operating segments and reporting units. goodwill was allocated to the newly identified reporting units and management performed impairment assessments on the new reporting units following the change. management estimates the fair value of its reporting units by using forecasts of discounted future cash flows and peer market multiples. estimates of discounted future cash flows for each reporting unit require assumptions related to assumed revenue growth rates, long term growth rates and discount rates. management also considers revenue and earnings trading multiples of the peer companies that have similar financial characteristics to the reporting units. f-2 the principal considerations for our determination that performing procedures relating to the interim goodwill impairment assessment 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 related to the assumed revenue growth rates, long term growth rates, and discount rates, and the revenue and earnings trading multiples of the peer companies; 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, among others: (i) testing management’s process for developing the fair value measurement of the reporting units; (ii) evaluating the appropriateness of the discounted future cash flows and peer market multiples approaches; (iii) testing the completeness and accuracy of underlying data used in the approaches; (iv) evaluating the significant assumptions used by management related to the assumed revenue growth rates, long term growth rates, and the discount rates and the revenue and earnings trading multiples of the peer companies. evaluating management’s assumptions related to the assumed revenue growth rates involved evaluating whether the assumptions used by management 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 the 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 future cash flows and peer market multiples approaches, and the long term growth rates and discount rates. /s/pricewaterhouse coopers llp boston, massachusetts march 18, 2021 we have served as the company's auditor since 2013.

critical audit matters thecritical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicatedor required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financialstatements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit mattersdoes not alter in any way our opinion on the 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 they relate. going concern analysis asdiscussed in note 1 and 7, the company has a going concern due to lack of a source of revenue and incurring losses since inception asof december 31, 2020. auditingmanagement’s evaluation of a going concern can be a significant judgement given the fact that the company uses management estimateson future revenues and expenses, which are difficult to substantiate. toevaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management’splans to mitigate the going concern and management’s disclosure on going concern. /s/ m&k cpas, pllc we have served as the company’s auditor since 2011.

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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. accrual for preclinical study and clinical trial costs as described in note 1 to the consolidated financial statements, the company estimates its preclinical study and clinical trial expenses based on the services it received pursuant to contracts with research institutions and contract research organizations (“cr os”) that conduct and manage preclinical studies and clinical trials on the company’s behalf. clinical trial-related contracts vary significantly in length, and may be for a fixed amount based on milestones or deliverables, a variable amount based on actual costs incurred, capped at a certain limit, or a combination of these elements. the company accrues service fees based on work performed, which relies on estimates of total costs incurred based on milestones achieved, patient enrollment and other events. the majority of the company’s service providers invoice the company in arrears, and to the extent that amounts invoiced differ from its estimates of expenses incurred, the company accrues for additional costs. the financial terms of these agreements vary from contract to contract and may result in uneven expenses and payment flows. the principal consideration for our determination that performing procedures related to the preclinical study and clinical trial expenses, specifically related to the year-end accrual for preclinical study and clinical trial costs, is a critical audit matter is that there f-2was judgment by management in determining the achievement of milestones, patient enrollments and occurrence of other events that creates a present obligation for the company to pay the research institutions and cr os for their services. 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) obtaining an understanding of the company’s estimation process relating to accrual for preclinical study and clinical trial costs; (ii) testing management’s identification of milestones, patient enrollment requirements and other events in its contracts with the research institutions and cr os; (iii) testing management’s determination of the accrual for preclinical study and clinical trial costs for a sample of such milestones, patient enrollments and other events; and (iv) testing the mathematical accuracy of the schedule of accrual for preclinical study and clinical trial costs prepared by management./s/ marcum llp marcum llp we have served as the company’s auditor since 2014.

critical audit matters thecritical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicatedor required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the financialstatements and (2) involved our especially challenging, subjective, or complex judgements. the communication of critical audit mattersdoes not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical mattersbelow, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. f-2 long-lived asset impairment assessment critical audit matter description asdescribed in note 2 to the consolidated financial statements, the company performs impairment testing for its long-lived assets whenevents or changes in circumstances indicate that its carrying amount may not be recoverable and exceeds its fair value. due to challengingindustry economic conditions, the company tested its long-lived assets during the year ended december 31, 2021. the first step of thelong-lived asset impairment review is a recoverability test based upon projected future undiscounted cash flows. howthe critical audit matter was addressed in the audit weidentified the evaluation of the impairment analysis for long-lived assets as a critical audit matter because of the significant estimatesand assumptions management used in the undiscounted cash flow analysis. performing audit procedures to evaluate the reasonableness ofthese estimates and assumptions required a high degree of auditor judgment and an increased extent of effort. ouraudit procedures related to the following: ●testing management’s process for developing the fair value estimate. ●evaluating the appropriateness of the discounted cash flow model used by management. ●testing the completeness and accuracy of underlying data used in the fair value estimate. ●evaluating the significant assumptions used by management related to revenues, gross margin, operating expenses, and long term growth rate to discern whether they are reasonable considering (i) the current and past performance of the entity; (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. inaddition, professionals with specialized skill and knowledge were utilized by the firm to assist in the evaluation of the undiscountedcash flow model. goodwill impairment assessment critical audit matter description asdescribed in note 2 to the consolidated financial statements, the company tests goodwill for impairment annually at the reporting unitlevel, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is lessthan its carrying amount. reporting units are tested for impairment by comparing the estimated fair value of each reporting unit withits carrying amount. if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recorded basedon the difference between the fair value and carrying amount, not to exceed the associated carrying amount of goodwill. the company’sannual impairment test occurred on december 31, 2021. the company utilized a third-party valuation specialist to assist in the preparationof the goodwill impairment test for this reporting unit. the company primarily used a discounted cash flow income method to estimatethe fair value of the reporting unit. howthe critical audit matter was addressed in the audit weidentified the evaluation of the impairment analysis for goodwill as a critical audit matter because of the significant estimates andassumptions management used in the discounted cash flow analysis performed by management to determine fair value of the reporting unit.performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgmentand an increased extent of effort. in addition, the audit effort involved the use of professionals with specialized skill and knowledge. f-3 ouraudit procedures related to the following: ●testing management’s process for developing the fair value of the reporting unit. ●evaluating the appropriateness of the discounted cash flow model utilized by the company. ●testing the completeness and accuracy of underlying data used in the fair value estimate. ●evaluating the significant assumptions provided by management or developed by the third-party valuation specialist related to revenues, gross margin, operating expenses, income taxes, long term growth rate, and discount rate to discern whether they are reasonable considering (i) the current and past performance of the entity; (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. inaddition, professionals with specialized skill and knowledge were utilized by the firm to assist in the evaluation of the discountedcash flow model. determinationand valuation of derivative liabilities critical audit matter description asdescribed further in note 10 of the financial statements, during the year ended december 31, 2021, the company issued convertible notesand warrants that required management to assess whether the conversion features of the convertible notes required bifurcation and separatevaluation as a derivative liability and whether the warrants required accounting as derivative liabilities. the company determined thatthe conversion features of certain of its convertible notes and certain warrants issued in financing arrangements required to be accountedfor as derivative liabilities due to: (1) certain conversion features did not contain an explicit limit on the number of shares to bedelivered in share settlement; and (2) the fact the company could not assert it had sufficient authorized but unissued shares availableto settle certain instruments considering all other stock-based commitments. the derivative liabilities were recorded at fair value whenissued and subsequently re-measured to fair value upon settlement or at the end of each reporting period. the company utilized either monte carlo simulation models or black scholes option pricing models to determine the fair value of the derivative liabilities dependingon the features embedded in the instruments. these models use certain assumptions related to exercise price, term, expected volatility,and risk-free interest rate. weidentified auditing the determination and valuation of the derivative liabilities as a critical audit matter due to the significant judgementsused by the company in determining whether the embedded conversion features and warrants required derivative accounting treatment andthe significant judgements used in determining the fair value of the derivative liabilities. auditing the determination and valuationof the derivative liabilities involved a high degree of auditor judgement, and specialized skills and knowledge were needed. howthe critical audit matter was addressed in the audit ouraudit procedures included the following, among others: ●we inspected and reviewed debt agreements, warrant agreements, conversion notices, and settlement agreements to evaluate the company’s determination of whether derivative accounting was required, including assessing and evaluating management’s application of relevant accounting standards to such transactions. ●we evaluated the reasonableness and appropriateness of the choice of valuation model used for each specific derivative instrument. ●we tested the reasonableness of the assumptions used by the company in the monte carlo and black scholes models, including exercise price, term, expected volatility, and risk-free interest rate. ●we tested the accuracy and completeness of data used by the company in developing the assumptions used in the valuation models. ●we developed an independent expectation for comparison to the company’s estimate, which included developing our own valuation model and assumptions. ●we evaluated the accuracy and completeness of the company’s presentation of these instruments in the financial statements and related disclosures in note 10, including evaluating whether such disclosures were in accordance with relevant accounting standards. f-4 professionalswith specialized skill and knowledge were utilized by the firm to assist in the evaluation of the company estimate of fair value andthe development of our own independent expectation. reverse merger and acquisition – refer to note 3 to the consolidated financial statements critical audit matter description on june 16, 2021, the company consummated a reversemerger in which high wire became a legal subsidiary of spectrum global solutions, inc., but high wire was deemed to be the accountingacquirer. the aggregate purchase price of the merger was $21,334,282. on november 4, 2021, the company acquired 100% of the membershipinterests of secure voice corp., for an aggregate purchase price of $10,463,817. the company accounted for this acquisition as a businesscombination. accordingly, the purchase price was allocated to the assets acquired and liabilities assumed in both transactions at fairvalue as of the transaction dates. the company utilized a third-party valuation specialist to assist in determining the fair value ofthe consideration granted and identifiable intangible assets acquired in each transaction. we identified the estimation of the fair valueof the consideration transferred, assets acquired, and liabilities assumed in these transactions as a critical audit matter. howthe critical audit matter was addressed in the audit weidentified the valuation of the consideration transferred, assets acquired, and liabilities assumed as a critical audit matter becauseof the significant estimates and assumptions management made to determine the fair value of certain of these assets. this required ahigh degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness ofvaluation methodologies applied and the assumptions used such as forecasted sales growth rates, cash flows, attrition rates, market-basedroyalty rates, and estimated discount rates. in addition, the audit effort involved the use of professionals with specialized skill andknowledge. ouraudit procedures related to the following: ●we evaluated management’s and the valuation specialist’s identification of assets acquired and liabilities assumed. ●we obtained management’s purchase price allocation detailing fair values assigned to acquired tangible and intangible assets. ●we obtained valuation report prepared by valuation specialist engaged by management to assist in the purchase price allocation, including determination of fair values assigned to acquired intangible assets, and examined valuation methods used and qualifications of specialist. ●we examined the completeness and accuracy of the underlying data supporting the significant assumptions and estimates used in the valuation report, including historical and projected financial information. ●we evaluated the accuracy and completeness of the financial statement presentation and disclosure of the acquisitions. inaddition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in the evaluations of thevaluation methodologies deployed and the reasonableness of the significant assumptions used. /s/sadler, gibb & associates, llc wehave 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.trade promotions - refer to note 4 to the financial statements critical audit matter description the company offers trade promotions through various programs to customers and consumers. trade promotions include discounts, rebates, slotting, and other marketing activities. trade promotions are recorded as a reduction to net sales with a corresponding reduction to accounts receivable at the time of revenue recognition for the underlying sale. the recognition of trade promotions requires the company to make estimates regarding the volume of incentives that will be redeemed and their costs. these estimates are made using various information including historical data on performance of similar trade promotional activities, as well market data, and the company’s best estimates of current activity. as of august 31, 2019, the allowance for trade promotions balance, which is recorded as a reduction to accounts receivable, was approximately $10.3 million. 47given the subjectivity of estimating the expected promotional claims and the volume of trade promotions, performing audit procedures to evaluate whether the allowance for trade promotion balance is appropriately recorded as of august 31, 2019, required a high degree of auditor judgment and an increased extent of effort.how the critical audit matter was addressed in the audit our auditing procedures related to the allowance for trade promotion balance included the following, among others:•for a selection of allowances for trade promotion balances recorded as of august 31, 2019, we: –confirmed contract terms directly with the customer.–agreed contract terms from the accounting records to the promotion agreement with the customer and verified that the promotion period was prior to september 1, 2019.•we evaluated management’s ability to estimate promotional claims incurred, but not yet received for potential management bias by comparing historical promotional claims received to management’s estimates of the claims to be received. •for a selection of customer promotional claims presented or resolved after august 31, 2019, we compared that amount to the august 31, 2019 allowance for promotion balance and traced presented or resolved deduction to a properly recorded sale./s/ deloitte & touche llp denver, colorado october 30, 2019we 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: (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.valuation of accounts receivable as described in footnote 1 “accounts receivable and allowance for doubtful accounts receivable” and in footnote 3, to the consolidated financial statements, the company’s consolidated accounts receivable balances, net of the related allowance for doubtful receivables of $3,289,816, was $26,974,577 at april 30, 2021. accounts receivable balances are evaluated by management for collectability periodically and at year end. the determination of the valuation of these balances requires management to make significant estimates and assumptions related to the intent and ability of the debtor to pay the amounts due to the company.we identified the valuation of accounts receivable as a critical audit matter. auditing management’s judgments regarding the intent and ability of the debtor to pay the amounts due to the company involved a high degree of subjectivity.f-2table of contents the primary procedures we performed to address this critical audit matter included (a) reviewed management’s process for developing an estimate of the allowance to be recorded, (b) performed accuracy and completeness tests related to system generated data utilized to develop managements estimates, (c) reviewed and verified the historical and subsequent collection history and the age of these receivables through the date of our procedures (d) performed attribute testing on select data utilized by management in developing an estimate of the allowance to be recorded and (e) performed an expectation test for the allowance and compared the results to management's computation of the allowance.goodwill and intangibles impairment assessment as described in footnote 1 “goodwill and intangibles” and in footnote 5, to the consolidated financial statements, the company’s consolidated goodwill balance was $5,011,432 and intangible assets, net was $7,908,360 at april 30, 2021. goodwill is tested for impairment by management at least annually at the reporting unit level and intangible assets with indefinite-lives are also tested for impairment at least annually. the determination of fair value of a reporting unit or fair value of indefinite-lived intangible assets requires management to make significant estimates and assumptions related to forecasts of future revenues, operating margins, discount rates and contributory asset charges. as disclosed by management, changes in these assumptions could have a significant impact on either the fair value of the reporting unit, the goodwill impairment charge, or both and on the fair value of indefinite-lived intangible assets.we identified the goodwill and indefinite-lived intangible asset impairment assessment as a critical audit matter. auditing management’s judgments regarding forecasts of future revenues and operating margins, the discount rate to be applied and the contributory asset charge involved a high degree of subjectivity.the primary procedures we performed to address this critical audit matter included (a) evaluated the reasonableness of management’s forecasts by comparing them to historical information, year to date current information and other supporting information, (b) assessed the reasonableness of the discount rate by evaluating each component, (c) evaluated if the valuation method used by management was appropriate and (d) recomputed the valuation amounts and the goodwill and indefinite-lived intangible asset impairment computations. /s/salberg & company, p.a.salberg & company, p.a.we have served as the company’s auditor since 2012b

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. recoverability assessment of flight equipment held for lease description of the matter as of december 31, 2019, the company had $7.4 billion of flight equipment held for lease. as more fully described in note 2 to the consolidated financial statements, flight equipment held for lease is assessed for recoverability by management on an aircraft-by-aircraft basis annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. auditing the company’s assessment of recoverability of flight equipment held for lease was complex and highly judgmental due to the higher estimation required in determining the future undiscounted cash flows. in particular, the undiscounted future cash flows were sensitive to changes related to significant assumptions such as the estimation of the future projected lease rates and future maintenance cash flows. 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 processes to determine whether the book value of each aircraft is recoverable. this included controls over management’s review of the significant assumptions described above which are included in the company’s recoverability analysis.f - 2 to test the estimated undiscounted future cash flows attributable to the flight equipment held for lease, we performed audit procedures on a sample of transactions that included, among others, evaluating and testing the significant assumptions discussed above and the underlying data used by the company in its analysis. our testing of the company’s significant assumptions included, among others, comparing data to currently contracted lease rental and maintenance cash flows, evaluating future projected lease rates to third party data, evaluating the timing and cost of estimated future maintenance cash flows to manufacturers’ specifications and/or historical data. we also considered current industry and economic trends and changes to the business. we assessed the historical accuracy of certain assumptions by performing a look back analysis. in addition, for the assumptions that most significantly impact recoverability we performed a sensitivity analysis to evaluate the changes to the undiscounted future cash flows from changes in the significant assumptions. accounting for income tax description of the matter the company is incorporated in bermuda and leases its aircraft within over 40 countries. the company’s income is subject to u.s. federal, state and local income taxes, as well as foreign income tax in many of the jurisdictions it leases aircraft. as more fully described in note 11 to the consolidated financial statements, the company recognized a consolidated provision for income taxes of $22.7 million for the year ended december 31, 2019. auditing the company’s income tax accounting was complex due to the complicated international tax structure maintained by the company. specifically, the auditing of the application of changes in tax law and transactions to transfer, buy or sell aircraft in foreign jurisdictions required increased auditor effort, including the use of tax professionals with specialized skills, to evaluate the company’s application of the tax laws in relevant jurisdictions and the related income tax. 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 process to prepare the consolidated income tax provision. our procedures also included, among others, an evaluation of management’s review and consideration of the international tax structure, identification of changes to tax laws in the various jurisdictions in which it operates and its treatment of the transactions to transfer, buy and sell aircraft.to test the income tax related accounts, we performed audit procedures that included, among others, understanding the company’s tax structure as it relates to current leases through review of its organization chart and various lease documents. we evaluated the company’s treatment of tax law changes, if any, in the foreign jurisdictions it operates to current tax laws. we also obtained, and assessed the completeness of, a list of transactions to transfer, purchase and sell aircraft during the period and evaluated the tax treatment of a sample of transactions through review of the lease documents and our assessment of the tax law. our audit procedures were performed with the assistance of our tax professionals with specialized skills and knowledge. /s/ ernst & young llp we have served as the company’s auditor since 2004.

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 separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. inventory obsolescence reserve as described in note d to the consolidated financial statements, as of april 30, 2021, the company recorded an inventory obsolescence reserve of $2,414,310 on raw materials inventory of $72,033,278. a substantial portion of the company’s raw materials inventory has been purchased to fulfill committed future orders or relates to raw materials inventory for which the company is contractually entitled to recover its costs from its customers. for the remaining raw materials inventory (“value over stock raw material inventory”), the company records provisions for f-2 excess and obsolete inventories for the difference between the cost of inventory and its estimated realizable value based on assumptions about future product demand and market conditions. we identified the valuation of the value over stock raw material inventory as a critical audit matter. in determining the obsolescence reserve for value over stock raw material inventory, critical inputs are used over the rates applied to historical usage and future forecasts by inventory item to identify items for specific management review. the evaluation over the need for a reserve requires assumptions over the expected future ability to use the raw material inventory items, based on an assessment of current market conditions, future industry trends, and customer demand. auditing the assumptions used by management in determining the inventory obsolescence reserve involved especially challenging auditor judgment due to the nature and extent of audit effort needed to evaluate the reasonableness of the assumptions and judgments made by management. the primary procedures we performed to address this critical audit matter included:testing the completeness and accuracy of the underlying historical usage and forecast reports used as inputs through the examination of relevant source documents.testing the existence of raw material inventory items through the attendance of physical inventory observations at selected locations.evaluating management's conclusion by testing selected value over stock raw material inventory items, examining relevant sources of information, both internal and external, to corroborate the expected future use of the identified raw material and the extent of any reserve required. evaluating the reasonableness of management’s prior period estimates and current period forecasts for specific inventory reserves by performing a retrospective comparison of prior estimates to current period sales, write-offs, and inventory consumptions as well as evaluating the current period reserve estimate for items that were slow moving in the current period. /s/ bdo usa, llp we have served as the company’s auditor since 2006.

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.net sales/accrued expenses - refer to notes 1 and 15 to the consolidated financial statements critical audit matter description the company generally distributes its products through wholesale distributors, and in many cases, discounts to the net selling prices are determined based on the contractual arrangements that the company has with its end user groups’ purchasing organizations. the company’s contracts provide for variable consideration, including rebates. sales are reported net of distributor rebates that are estimated based on the historical difference between list prices and average end user contract prices and the quantity of products expected to be sold to end users. total rebates due to customers that were not settled as of december 31, 2021, was $14.3 million and are included in accrued expenses as of december 31, 2021. the company must make certain judgments to estimate the liability for rebates as of the fiscal year end. the judgment of determining the liability includes estimating the quantity of products to be sold to end user customers and determining the difference in the product’s list price and the average end user customers’ prices. due to the extent of subjectivity in management’s estimation, our audit in this area involves especially subjective judgment and an increased extent of effort. how the critical audit matter was addressed in the audit our audit procedures related to management’s estimates of rebates included the following, among others:53table of contents•we tested effectiveness of internal controls related to the accounting for rebates, including those over the estimates of quantity of products to be sold to end user customers and the difference in the product’s list price and the average end user prices. •we tested the accuracy and evaluated the relevance of the historical rebate data as an input to the estimated rebates by agreeing rebate rates to contractual arrangements. •we conducted historical trend analysis of rebates paid as a percentage of gross sales. •we performed a comparison of historical rebates paid compared to rebates recorded to evaluate management’s historical estimates. •we evaluated whether the estimated rebates were consistent with evidence obtained in other areas of the audit./s/ deloitte & touche llp deloitte & touche llp atlanta, georgia february 23, 2022we have served as the company’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) 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 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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. valuation of life insurance policies – refer to notes 1 and 6 to the financial statements critical audit matter description the trust’s valuation of life insurance policies is a critical estimate within the financial statements. the trust uses a probabilistic method of valuing life insurance policies, which the trust believes to be the preferred valuation method in its industry. the trust engages an independent actuarial firm to prepare an actuarial analysis to calculate the assets’ fair value using a present value technique to estimate the fair value of the projected future cash flows. the most significant assumptions in estimating the fair value of the life insurance policies are the trust’s estimate of the insureds’ longevity, anticipated future premium obligations, and the discount rate. 25table of contents we identified the trust's valuation of life insurance policies as a critical audit matter. the principal considerations for our determination include the judgments required in the selection of a discount rate and mortality assumptions, both unobservable inputs, and the application of the valuation model used by the trust to estimate the fair value. this matter required a higher degree of auditor judgment and specialized knowledge to audit the estimated fair value of the life insurance policies. how the critical audit matter was addressed in the audit our audit procedures related to this critical audit matter included the following, among others: ·we obtained an understanding of management’s process to develop their fair value estimate and ensure accuracy of key data used in their estimation process. we also evaluated the design of key controls used by management to develop their fair value estimate. ·we performed testing over the completeness and accuracy of the significant data used by management and the trust’s engaged actuary to develop the fair value estimate for life insurance policies. such data includes policyholder information, policy value, annual premium and projected outlays, and future maturity estimates. we also validated the accuracy of the discounted cash flow analysis, including assessment of the discount rate utilized. ·given the complexity of the valuation of the life insurance policies noted above, we engaged an independent outside actuarial firm to assist us in our review of the significant assumptions and methodologies that were developed by the trust’s engaged actuary to assess whether reasonable and acceptable actuarial techniques were utilized. the actuary performing these procedures has significant industry expertise as it relates to life settlement contract valuation. we engaged the independent actuary to evaluate the methods used, assess significant assumptions, and review fair value calculations for accuracy. ·we also evaluated the adequacy of the trust’s disclosures in note 6 in relation to the valuation of life insurance policies. /s/ plante & moran, pllc we have served as the trust’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.evaluation of product liability legal contingencies and disclosures as discussed in notes 2 and 17 to the consolidated financial statements, the company is involved in personal injury claims relating to products sold by the company.we identified the evaluation of the accrued liability and related disclosure for these claims and legal proceedings as a critical audit matter because it required challenging auditor judgment, due to the nature of the estimates and assumptions, including judgments about future events and uncertainties.the primary procedures we performed to address this critical audit matter included the following. we tested certain internal controls over the company’s product liability exposures, including controls related to the evaluation of information from external and internal legal counsel, evaluation of underlying assumptions involving prior legal settlements or settlement agreements, and determination of the accrued liability or related disclosure. we read letters received directly from the company’s external legal counsel that evaluated and quantified the company’s probable or reasonably possible monetary exposure to product-related claims and legal proceedings. we evaluated the company’s ability to estimate its monetary exposure to product-related claims and legal proceedings by comparing historically recorded liabilities to actual amounts incurred upon resolution of prior claims and legal matters. in addition, we also considered relevant publicly available information about the company, its competitors, and the industry with respect to product-related claims and litigation.79table of contents assessment of the fair values of notes hedges and notes conversion derivatives as discussed in notes 2 and 6 to the consolidated financial statements, the company measures at fair value the derivative assets and liabilities associated with its cash convertible notes. as of december 29, 2019, the derivative assets totaled approximately $224.6 million and the derivative liabilities totaled approximately $212.7 million. these derivative assets and liabilities are measured at fair value using option pricing models that use observable and unobservable market data for inputs, including the company’s stock price, implied volatility of the company’s shares, credit spreads, and the risk-free interest rate. some of these inputs are unobservable level 3 inputs.we identified the assessment of the fair values of these notes hedge derivative assets and notes conversion derivative liabilities as a critical audit matter, because of the significance of the account balances, the nature of the option pricing models, including that the calculated fair values were sensitive to possible changes in the key assumptions, including the implied volatility assumption, and that some of the inputs to the fair values were based on unobservable data.the primary procedures we performed to address this critical audit matter included the following. we tested certain internal controls over the valuation process used to estimate the fair values of the derivative assets and liabilities, including controls over the underlying data used in the valuations and the implied volatility assumption that was the most sensitive to determining the fair values. in addition, we tested the company’s internal controls over assessing the competence and objectivity of the third-party valuation specialist engaged to calculate the fair values, as well as independently assessing the professional competence, experience, and objectivity of the company’s third-party valuation specialist.for each series of cash convertible notes, we compared the fair values of each derivative asset to the related derivative liability for correlation. we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the fair values of each derivative asset and liability by developing independent valuation estimates using market data sources, models and key assumptions determined to be relevant and reliable. we also compared the result of the number of options outstanding multiplied by the option strike prices to the outstanding debt balances for each series of cash convertible notes./s/ kpmg llp we have served as the company’s auditor since 2002.

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.purchase price allocation as described in notes 2 and 3 to the consolidated financial statements, upon acquisition of a property, management allocates the purchase price of the property based upon the fair value of the assets acquired and liabilities assumed, which generally consists of land, buildings, tenant improvements, leasing commissions and intangible assets including in-place leases, above market and below market leases and below market ground lease obligations. the purchase price is allocated to the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. the determination of fair value includes the use of significant assumptions such as land comparables, discount rates, terminal capitalization rates and market rent assumptions. above and below market leases and below market ground lease obligations are valued based on the present value of the difference between prevailing market rates and the in-place rates measured over a period equal to the remaining term of the lease for above market leases and below market ground lease obligations, or the remaining term of the lease plus the term of any below market fixed rate renewal options for below market leases. the purchase price is further allocated to in-place lease values based on an estimate of the lease revenue received during a reasonable lease-up period as if the property was vacant on the date of acquisition. the company completed nine acquisitions for consideration of approximately $147.9 million, of which approximately $101.8 million was recorded to land, $44.6 million to buildings, improvements and other assets, and $1.5 million to net leasing intangibles during the year ended december 31, 2019.the principal considerations for our determination that performing procedures relating to purchase price allocation is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates, which resulted in a high degree of auditor judgment, subjectivity and effort in performing procedures relating to the fair value of tangible and intangible assets and liabilities; (ii) significant audit effort was necessary in evaluating the significant assumptions applied to determine the fair value of tangible and intangible assets and liabilities, including discount rates, land comparables, terminal capitalization rates and market rent; 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. 49addressing 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 purchase price allocations, including controls over the valuation methods and significant assumptions, such as discount rates, land comparables, terminal capitalization rates and market rent. these procedures also included, among others, (i) reading the purchase and sales agreements and (ii) testing management’s process for estimating the fair value of tangible and intangible assets and liabilities. testing management’s process included evaluating the appropriateness of the valuation methods and the reasonableness of significant assumptions used by management in developing the fair value estimate, including discount rates, land comparables, terminal capitalization rates and market rent. evaluating the significant assumptions relating to the discount rates, land comparables, terminal capitalization rates and market rent involved obtaining evidence to support the reasonableness of the assumptions, including whether the assumptions used were consistent with evidence obtained in other areas of the audit and third party market data. professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the land comparables./s/pricewaterhouse coopers llp chicago, illinois february 13, 2020we have served as the company's auditor since 1993.

critical audit matters thecritical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicatedor required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financialstatements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit mattersdoes not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical auditmatters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 3001n. rocky point dr. east suite 200 ● tampa, florida 33607 ● 813.367.3527 f-2 convertible notes payable asdescribed in note 3 to the company’s consolidated financial statements, the company accounts for convertible notes deemed conventionaland conversion options embedded in non-conventional convertible notes which qualify as equity under asc 815, in accordance with the provisionsof asc 470-20, which provides guidance on accounting for convertible securities with beneficial conversion features. accordingly, the company records, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences betweenthe fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embeddedin the note. weidentified the company’s application of the accounting for convertible notes as a critical audit matter. the principal considerationsfor our determination of this critical audit matter related to the significant number of transactions which could potentially requirea high degree of subjectivity in the company’s judgments in determining the qualitative factors. auditing these judgments and assumptionsby the company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters. theprimary procedures we performed to address these critical audit matters included the following: ●we obtained debt related agreements and performed the following procedures: -reviewed agreements for all relevant terms. -tested management’s identification and treatment of agreement terms. -determined whether any conversion features existed that resulted in a derivative. -assessed the terms and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of the amortization of the debt discount. -tested management’s calculation of the fair values of the notes that converted during the year, as well as the associated warrants for certain conversions. stock based compensation asdescribed in note 3 to the company’s consolidated financial statements, the company accounts for stock based compensation by applyingthe fair value method of asc 718, which states that compensation cost is measured at the grant date based on the fair value of the awardand is recognized over the service period, which is usually the vesting period. the company values stock based compensation at the marketprice for the company’s common stock and other pertinent factors at the grant date. fully vested and non-forfeitable shares issuedprior to the services being performed are classified as unearned stock compensation. weidentified the company’s application of the accounting for stock based compensation as a critical audit matter. the principal considerationsfor our determination of this critical audit matter related to the significant number of transactions which could potentially requirea high degree of subjectivity in the company’s judgments in determining the qualitative factors. auditing these judgments and assumptionsby the company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters. theprimary procedures we performed to address this critical audit matter included the following: ●we obtained equity related agreements and performed the following procedures: -reviewed agreements for all relevant terms. -tested management’s identification and treatment of agreement terms. -recalculated the fair value of each award based on the market price determined based on the terms in the agreements. -assessed the terms and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of any portion that should be classified as unearned stock compensation. accell audit & compliance, p.a. 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 and that (i) relates to accounts or disclosures that are material to the 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 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 interest-rate related derivatives and hedged items as described in notes 7 and 15 to the financial statements, the fhl bank uses derivatives to manage its exposure to interest-rate risks and reduce funding costs, among other objectives. the total notional amount of derivatives as of december 31, 2020 was $19 billion, of which 83% were designated as hedging instruments, and the fair value of derivative assets and liabilities as of december 31, 2020 was $149 million and $4 million, respectively. the fair values of interest-rate related derivatives and hedged items are generally estimated using standard valuation techniques such as discounted cash flow analysis and comparisons to similar instruments. the discounted cash flow model uses market observable inputs such as discount rate, forward interest rate, volatility, and prepayment assumptions, if applicable.the principal considerations for our determination that performing procedures relating to the valuation of interest-rate related derivatives and hedged items is a critical audit matter are the significant audit effort in evaluating the discount rate, forward interest rate, volatility, and, if applicable, prepayment assumptions used to fair value these derivatives and hedged items, and 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 financial statements. these procedures included testing the effectiveness of controls relating to the valuation of interest-rate related derivatives and hedged items, including controls over the model, data and assumptions. these procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of interest-rate derivatives and hedged items and comparison of management’s estimate to the independently developed ranges. developing the independent range of prices involved testing the completeness and accuracy of data provided by management and independently developing the discount rate, forward interest rate, volatility, and, if applicable, prepayment assumptions./s/ pricewaterhouse coopers llp kansas city, missouri march 18, 2021we have served as the fhl bank’s auditor since 1990.

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.debt - loan and security agreement amendment as described in note 6 to the consolidated financial statements, in december 2018 the company entered into a loan and security agreement (the “loan agreement”) for an aggregate principal amount of $75.0 million. in june 2021, the company entered into an amendment (the “amendment”) to its loan agreement to extend the interest-only period applicable to borrowings under the loan agreement from december 21, 2021 until july 1, 2024 and the final maturity date from december 21, 2023 until june 1, 2026. as the terms of the amendment were not substantially different than the terms of the loan agreement, the amendment was accounted for as a debt modification. the loan agreement represents a long-term obligation of the company and is presented as long-term debt, net of discount, on its consolidated balance sheet. long-term debt, net of discount, totaled $76.2 million as of december 31, 2021.the principal considerations for our determination that performing procedures relating to the loan and security agreement amendment is a critical audit matter are the high degree of auditor effort in performing procedures and evaluating evidence related to management’s determination that the amendment represented an accounting modification.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 debt, including controls over determining the impact of the amendment on the loan agreement. these procedures also included, among others, testing management’s process for determining if the amendment to the loan agreement represented an accounting modification or extinguishment, evaluating the impact of the contractual terms of the amendment by examining the contract, and determining if the change in debt terms is considered substantially 143table of contentsdifferent by calculating the present value of the cash flows under the terms of the amendment and comparing it to the present value of the remaining cash flows under the terms of the original loan agreement. /s/pricewaterhouse coopers llp boston, massachusetts february 25, 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 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.mailbacks and unused medication solution revenues as described in note 2 to the consolidated financial statements, the company’s mailbacks and unused medication solution revenues include revenue allocated to: (i) sale of compliance and container systems, and (ii) return transportation and treatment service. for the year ended june 30, 2021, the company reported revenues for these solutions of $57.8 million. the company estimates a standalone selling price for each performance obligation and recognizes the related revenue when the performance obligations have been satisfied. for the compliance and container system revenue, the company estimates standalone selling price based on the product and services provided, including the expected cost plus a margin. this revenue is recognized when the compliance and container system is delivered to the customer. for return transportation and treatment service revenue, the allocated revenue is recognized when the customer returns the compliance and container system to the company. in certain cases, the compliance and container system is not returned to the company. the company estimates the percentage of compliance and container systems it does not expect to be returned based on historical and expected future return rates and recognizes that revenue at the point of sale to the customer.we identified the estimates used to determine the standalone selling prices for the compliance and container system and the estimates used to determine the expected return rates for transportation and treatment services as a critical audit matter. management applies significant judgment to determine the standalone selling price of the compliance and container system f-2table of contentsperformance obligation and applies significant judgment to determine the expected return rates. auditing this matter involved especially challenging auditor judgment due to the nature and extent of audit effort required to address this matter. the primary procedures we performed to address this critical audit matter included: a.evaluating the reasonableness of management’s judgments and assumptions used in determining the stand-alone selling price for the compliance and container system through: (i) assessing the appropriateness of the method used by management to determine cost, including the overhead allocation, and expected margin, (ii) evaluating the factors considered by management in determining the overhead allocation, and (iii) comparing expected margin used by management to historical margin.b.evaluating the reasonableness of management’s judgments and assumptions used in determining the expected return rates for transportation and treatment services through: (i) reviewing subsequent returns of container systems that had been sold in a previous year in order to perform a retrospective review of previous estimates of return rates, (ii) comparing the expected return rates to historical return rates, and (iii) testing a sample of returns and the underlying shipping documentation to evaluate the accuracy of the data used in the determination of the return rates. /s/ bdo usa, llp we have served as the company's auditor since 2014.

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 — refer to notes 1 and 7 to the financial statements critical audit matter description certain of the company’s revenue contracts with customers include multiple promises (such as hardware systems, software licenses, software and hardware support, and other services). the company typically negotiates contracts with its customers, and while many of these contracts contain standard terms and conditions, certain large enterprises and distributors may have customer specific terms and performance obligations due to the nature of the contracts. pursuant to accounting principles generally accepted in the united states of america, the company is required to evaluate whether each performance obligation represents goods and services that are distinct. a good or service is distinct where the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from the company, and is distinct in the context of the contract, where the transfer of the good or service is separately identifiable from other promises in the contract. the evaluation of performance obligations can require significant judgment and could change the amount of revenue recognized in a given period.87 we identified the evaluation of performance obligations in certain large enterprise and distributor contracts as a critical audit matter because of the judgment management makes in evaluating such contracts and the impact of such judgment on the amount of revenue recognized in a given period. this required a high degree of auditor judgment and an increased extent of testing.how the critical audit matter was addressed in the audit our audit procedures related to the company’s evaluation of performance obligations for certain large enterprise and distributor contracts included the following, among others:• we tested the effectiveness of internal controls related to the review of large enterprise and distributor contracts specifically around the review of the terms and conditions and proper evaluation of performance obligations.• we evaluated management’s significant accounting policies related to revenue recognition for reasonableness and compliance with generally accepted accounting principles.• we selected a sample of contracts for large enterprise and distributor customers and performed the following: o obtained and read contract source documents for each selection, including master agreements, amendments, and other documents that were part of the contract. o assessed the terms and conditions in the contract source documents and evaluated the appropriateness of management’s application of their accounting policies in the evaluation of performance obligations. o where applicable, tested the mathematical accuracy of management’s calculations of revenue and the associated allocation of the transaction price to the various performance obligations. /s/ deloitte & touche llp san jose, california june 21, 2021 we have served as the company's auditor since 1995.

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.69table of contents asset impairment - store assets impairment - refer to notes 1, 2 and 8 to the financial statements critical audit matter description the company’s evaluation of long-lived tangible and right of use (rou) store assets for impairment involves an initial assessment of each store asset group to determine whether events or conditions indicate that the carrying amounts of such assets may not be recoverable. possible indications of impairment may include events or changes in circumstances regarding the financial performance of the stores, regional and local business climates, future plans for the store operations and other qualitative factors. when events or changes in circumstances exist, the company evaluates its store assets for impairment by comparing projected undiscounted net cash flows expected to be generated over the life of the primary asset within the asset group (generally leasehold improvements) to the carrying value of the subject assets. if the carrying value exceeds the undiscounted net cash flows, an analysis is performed to determine the fair value of the store asset group. for those store assets where indications of impairment have been identified, the company makes significant estimates and assumptions to determine whether the asset group is impaired using undiscounted net cash flows expected to be generated over the life of the primary asset within the store asset group, including estimates and assumptions related to forecasted store revenue growth rates. as of december 28, 2019, total net property and equipment, which includes store assets, was $366.8 million; and total rou assets, which includes store rou assets, were $376.2 million. impairment losses recorded on store assets in 2019 were $8.9 million. for those store assets where indications of impairment have been identified, we identified the forecasted store revenue growth rates for new markets where the company has limited historical experience to be a critical audit matter. this required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s forecasted store revenue growth rates. how the critical audit matter was addressed in the audit our audit procedures related to the assessment of forecasted store revenue growth rates for those stores with indicators of impairment included the following, among others: •we tested the effectiveness of controls over management’s estimates of undiscounted net cash flows used to test the store asset group for recoverability, including controls over management’s selection of forecasted store revenue growth rates.•we evaluated the company’s forecasted store revenue growth rates by:•comparing management’s estimate of forecasted store revenue growth rates to: ▪the trend of recent store revenue growth rates within the respective regional or local market,▪external market sources of regional and local optical retail saturation data,▪third party estimates of the impact of regional and local marketing strategies, and ▪regional and local doctor recruiting and retention activities. •comparing the estimate of forecasted store revenue growth rates to the company’s financial forecasts communicated to investors and used to measure management performance.•discussing with management the forecasted store revenue growth rates used in the company’s undiscounted net cash flows and evaluating the consistency of the assumptions used with evidence obtained in other areas of the audit./s/ deloitte & touche llp atlanta, georgia february 25, 2020we have served as the company's auditor since 2002.

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.excess and obsolete inventory reserve as described in notes 1 and 7 to the consolidated financial statements, the company’s consolidated net inventory and inventory reserves as of december 31, 2019 were $98.3 million and $34.1 million, respectively. management establishes reserves for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on estimated reserve percentages, which consider historical usage, known trends, inventory age, and market conditions. the principal considerations for our determination that performing procedures relating to the excess and obsolete inventory reserve is a critical audit matter are there was significant judgment by management in estimating the excess and obsolete inventory reserve, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the reasonableness of the significant assumptions used in developing the reserve, including the estimated reserve percentages. as described in the "opinions on the financial statements and internal control over financial reporting" section, a material weakness was identified as of december 31, 2019 related to ineffective controls over the company’s determination of its estimated reserve for excess and obsolete inventory.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 excess and obsolete inventory reserve; evaluating the appropriateness of the approach; testing the completeness and accuracy of underlying data used in the approach, including historical usage and inventory age; and evaluating the reasonableness of the estimated reserve percentages used by management to determine the excess and obsolete inventory reserve. evaluating the reasonableness of the estimated reserve percentages involved assessing whether they were consistent with the historical data and evidence obtained in other areas of the audit. /s/ pricewaterhouse coopers llp birmingham, alabama february 25, 2020we have served as the company’s auditor since 1986.

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. distributor price adjustment accrual (rebate reserve) as described further in note 1(i) to the consolidated financial statements, revenue is reduced at the date of sale for product price adjustments for certain distributors under local contracts. management estimates accruals for distributor price adjustments based on local contract terms, sales data provided by distributors, historical statistics, current trends and other factors. the balance of the accrual was $3.4 million at september 30, 2019. we identified the distributor price adjustment accrual (referred to as the rebate reserve) as a critical audit matter. - 36 - table of contents the principal consideration for our determination that the rebate reserve is a critical audit matter is the high degree of auditor subjectivity necessary in evaluating certain inputs and assumptions made by management in estimating the amount of the rebate reserve. the nature of audit evidence includes unobservable inputs and assumptions used by management in the estimate, and reliance on a customized sales report by product line. the reserve has a high degree of estimation uncertainty given management’s judgments used to determine the reserve, specifically the use of key assumptions such as average selling price, purchasing trends of distributors and historical product sales and product volume data used to predict future sales and volume levels. our audit procedures related to the rebate reserve included the following, among others. •we tested the design and operating effectiveness of controls relating to management’s calculation and review of the reserve which included verifying the completeness of the input data, mathematical accuracy of the calculation and evaluating the reasonableness of key assumptions used in the calculation. •we tested the reserve calculation prepared by management by performing specific procedures on the key inputs and assumptions such as the monthly sales volume, validity of distributor agreements and applied reserve percentage. the procedures performed are as follows: •we tested the completeness and accuracy of the historical sales (including average selling price) and volume report used in the calculation of the reserve by agreeing total sales to accounting records and tracing a sample of individual sales to supporting audit evidence, such as purchase orders, shipping documents and invoices. •we evaluated the existence and validity of distributor agreements by obtaining a sample of issued credit memos and executed distributor agreements to test compliance with the stated terms in the corresponding agreements. •we analyzed year over year trends in the reserve in comparison with revenue trends to further evaluate reasonableness of the estimate and consistency with expectations. valuation of intangible assets and contingent consideration as described in note 2 to the consolidated financial statements, the company completed an acquisition which resulted in goodwill of $35.1 million, intangible assets of $40.4 million, and contingent consideration of $27.2 million. the determination of the fair value of the intangible assets acquired and contingent consideration required management, with the help of a third-party valuation specialist, to make significant estimates and assumptions including the assumed sales growth rate, margin percentages, economic life and discount rate. we identified the valuation of intangible assets and contingent consideration as a critical audit matter. the principal consideration for our determination that the valuation of intangible assets and contingent consideration associated with the acquisition is a critical audit matter is the subjective auditor judgment required in evaluating the inputs and assumptions used by management in determining fair value. the valuation of the intangible assets and contingent consideration are subject to higher estimation uncertainty due to management judgments in determining key assumptions that include the assumed sales growth rate, margin percentages, economic life and discount rate. changes in these significant assumptions could have a significant impact on the fair value of the intangible assets and contingent consideration. our audit procedures related to the valuation of intangible assets and contingent consideration included the following, among others. •we tested the design and operating effectiveness of controls relating to the valuation report and allocation of purchase price which included management’s review of the valuation report for the completeness and mathematical accuracy of the data, and evaluating the reasonableness of assumptions used in the calculation such as economic life and discount rate. •we utilized a valuation specialist to assist in evaluating the appropriateness of the company’s valuation models developed for acquired assets and evaluating the reasonableness of significant assumptions used including the assumed sales growth rate, margin percentages, economic life and discount rate as compared to industry/market data. - 37 - table of contents •we evaluated whether the assumptions used were reasonable by considering past performance of similar technological assets, industry data, current market forecasts, and whether such assumptions were consistent with evidence obtained in other areas of the audit. /s/ grant thornton llp 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: (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 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 accounts or disclosures to which it relates. assessment of the self-insurance claim liability for workers’ compensation as discussed in notes 1 and 10 to the consolidated financial statements, at april 30, 2020, the company was primarily self-insured for workers’ compensation claims. the self-insurance claim liability for workers’ compensation is determined actuarially based on claims filed and an estimate of claims incurred but not yet reported. actuarial projections of the losses are employed due to the potential variability in the liability estimates. factors affecting the uncertainty of the claim liability include the (1) loss development factors, which includes the development time frame, and settlement patterns, and (2) expected loss rates, which includes litigation and adjudication direction, and medical treatment and cost trends. we identified the assessment of the self-insurance claim liability for workers’ compensation as a critical audit matter. the evaluation of the key assumptions used to estimate the liability, specifically the loss development factors and expected loss 28rates involved significant measurement uncertainty requiring complex auditor judgment. specialized skill and knowledge is necessary to evaluate the methods and key assumptions used to determine the liability. the primary procedures we performed to address this critical audit matter included the following. we tested certain internal controls over the company’s process to determine the self-insurance claim liability for workers’ compensation including controls over the selection of the methods used to determine the liability, and the loss development factors and expected loss rates. we involved actuarial professionals with specialized skill and knowledge, who assisted in: –assessing the methods used by the company’s external actuary by comparing them to generally accepted actuarial methods –evaluating the loss development factors and expected loss rates used by the company’s external actuary by comparing them to industry and regulatory trends. /s/ kpmg llp we have served as the company’s auditor since 1987.

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. accounting for acquisition of co adna holdings, inc.description of the matter as discussed in note 3 to the consolidated financial statements, during the year ended june 30, 2019, the company completed the acquisition of co adna holdings, inc (“co adna”) for a total purchase price of approximately $42.8 million, net of cash acquired. the acquisition was accounted for under the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on the respective fair values.auditing the company’s accounting for its acquisition of co adna was complex due to the significant estimation uncertainty in determining the fair value of identified intangible assets, which principally consisted of customer relationships and developed technology. 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 which rely upon innovation and growth within the optical communications market and applicability of the existing offerings to future technologies. the company used the multi-period excess earnings method and the relief from royalty method to value the customer relationships and developed technology, respectively. the significant assumptions used to estimate the fair value of the customer relationships included the forecasted revenue and earnings generated by the customer relationships and a discount rate that reflected the level of risk associated with the future cash flows attributable to the customer relationships. the significant assumptions used to estimate the fair value of the developed technology included the forecasted revenue generated by the asset group and a discount rate that reflected the level of risk associated with the future revenue attributable to the developed technology. these significant assumptions are forward-looking and could be affected by future economic and market conditions.55 how we addressed the matter in our audit we tested controls that address the risks of material misstatement relating to the valuation of the customer relationships and developed technology. for example, we tested controls over management’s review of the significant assumptions, such as the acquired business’s forecasted revenue and earnings and the discount rates used in the valuation.to test the estimated fair value of the acquired customer relationships and developed technology, our audit procedures included, among others, assessing the appropriateness of the valuation methodologies and testing the significant assumptions discussed above and the underlying data used by the company. for example, we compared the forecasted revenue and earnings to current industry and economic trends as well as the historic financial performance of the acquired business and its primary customers, and compared the projected revenue growth to the assumptions used in the valuation of the company’s photonics reporting unit. we also performed sensitivity analyses to evaluate the changes in the fair value of the intangible assets that would result from changes in the significant assumptions. we involved our valuation specialist to assist in evaluating the valuation techniques and discount rate used to value the customer relationships and developed technology, which included comparison of the selected discount rate to the acquired business’s weighted average cost of capital, an evaluation of the relationship of the weighted average cost of capital, internal rate of return and weighted-average return on assets, and consideration of implied deal multiples exhibited by recent transactions of guideline public companies. accounting for acquisition of redstone aerospace corporation description of the matter as discussed in note 3 to the consolidated financial statements, during the year ended june 30, 2019, the company completed the acquisition of redstone aerospace corporation (“redstone”) for a total purchase price of approximately $29.7 million, net of cash acquired. the acquisition was accounted for under the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on the respective fair values.auditing the company’s accounting for its acquisition of redstone was complex due to the significant estimation uncertainty in determining the fair value of identified intangible assets, which principally consisted of developed technology. the significant estimation uncertainty was primarily due to the sensitivity of the respective fair value to underlying assumptions about the future performance of the acquired business which rely upon significant revenue growth arising from accelerating the deployment and expansion of the acquired business’s operating capacity as well as market-participant based revenue synergies. the company used the relief from royalty method to value the developed technology. the significant assumptions used to estimate the fair value of the developed technology included the forecasted revenue generated by the asset group and a discount rate that reflected the level of risk associated with the future revenue attributable to the developed technology. 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 that address the risks of material misstatement relating to the valuation of the developed technology. for example, we tested controls over management’s review of the significant assumptions, such as the acquired business’s forecasted revenue and the discount rate used in the valuation.to test the estimated fair value of the acquired developed technology, our audit procedures included, among others, assessing the appropriateness of the valuation methodology and testing the significant assumptions discussed above and the underlying data used by the company. for example, we compared the forecasted revenue growth rate to current industry and economic trends and performed sensitivity analyses to evaluate the changes in the fair value of the intangible asset that would result from changes in the significant assumptions, including the timing of projected revenue growth. we involved our valuation specialist to assist in evaluating the valuation techniques and discount rate used to value the developed technology, which included comparison of the selected discount rate to the acquired business’s weighted average cost of capital, an evaluation of the relationship of the weighted average cost of capital, internal rate of return and weighted-average return on assets, and consideration of guideline public company benchmarking analyses reflecting the composition of purchase prices for similar transactions./s/ ernst & young llp we have served as the company’s auditor since 2008.

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. f-2 valuation of derivative liabilities as described in note 5 to the consolidated financial statements, the company measures fair value of derivative liabilities at fair value using level three inputs. to determine fair value of derivative liabilities, the company determines the appropriate valuation methodology and assumptions, including unobservable inputs. the derivative liabilities are measured at fair value using a black-scholes valuation model that uses significant assumptions, including the company's stock price, historical volatility of the company's shares, risk-free interest rate and probability of conversion occurrence through maturity. auditing management's estimate for the fair value of derivative liabilities was complex and highly judgmental as it involved our assessment of the significant assumptions used by management because the fair value calculations were sensitive to changes in assumptions described above, and certain inputs used in the determination of fair values were based on unobservable data, including, but not limited to, the historical volatility and probability of conversion. to test the fair value of derivative liabilities, we performed audit procedures that included, among others, evaluating the methodologies used in the valuation model and the significant assumptions used by the company. contingencies as described in note 8 to the consolidated financial statements, the company is involved in a number of legal proceedings and has made accruals with respect to certain of these matters. for other matters, a liability is not probable, or the amount cannot be reasonably estimated and therefore an accrual has not been made. where a liability is reasonably possible and may be material, such matters have been disclosed. management assessed the probability of occurrence and the estimation of any potential loss based on the ability to predict the number of claims that may be filed or whether any loss or range of loss can be reasonably estimated. in assessing the probability of occurrence in a particular legal proceeding, management exercises judgment to determine if it can predict the number of claims that may be filed and whether it can reasonably estimate any loss or range of loss that may arise from that proceeding. auditing management’s accounting for, and disclosure of, loss or gain contingencies was highly judgmental as it involved our assessment of the significant judgments made by management when assessing the probability of occurrence or when determining whether an estimate of the loss or range of loss could be made. to test the company’s assessment of the probability of occurrence or determination of an estimate of loss, or range of loss, among other procedures, we read the legal documentations, reviewed opinions provided to the company by certain outside legal counsel, read letters received directly by us from internal and external counsel, and evaluated the current status of contingencies based on discussions with internal legal counsel. we also evaluated the appropriateness of the related disclosures. /s/ liggett & webb, p.a. we have served as the company’s auditor since 2008.

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, 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 accounts or disclosures to which it relates.63 evaluation of net real estate property and right-of-use lease assets, net for impairment description of the matter as of december 31, 2019, the company’s consolidated balance sheet included net real estate property and right-of-use lease assets of $3.8 billion and $127.9 million, respectively. as described in note 2 to the consolidated financial statements, the company periodically evaluates its long-lived assets, primarily consisting of investments in real estate, for impairment whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. if indicators of impairment are present, the company evaluates the carrying value of the related long-lived assets in relation to its expected undiscounted future cash flows. the company adjusts the net book value of long-lived assets to fair value if the sum of the expected future undiscounted cash flows is less than book value.auditing management’s long-lived assets impairment analysis was complex and involved a high degree of subjectivity due to the significant estimation required to determine the estimated undiscounted future cash flows of long-lived assets. in particular, the future cash flow estimates were sensitive to significant assumptions such as future rental revenues, operating expenses, occupancy, and capitalization rates which are affected by expectations about future market or economic conditions, as well as management’s intent to hold and operate the property over the term and in the manner assumed in the analysis.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 long-lived assets impairment review process, including controls over management’s review of the significant assumptions described above.to test the company’s evaluation of long-lived assets for impairment, we performed audit procedures that included, among others, assessing the methodologies used, evaluating the significant assumptions discussed above, and testing the completeness and accuracy of the underlying data used by the company in its analysis. we compared the significant assumptions used by management to current market data and performed sensitivity analyses of the significant assumptions discussed above. the evaluation of the company’s methodology and significant assumptions was performed with the assistance of our valuation specialists./s/ ernst & young 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 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 recognition asc 606 — revenue arrangements involving multiple performance obligations consisting of hardware, software, and professional services such as implementation, project management, installation, and consulting services — refer to notes 1 and 17 to the financial statements critical audit matter description many of the company’s revenue arrangements involve multiple performance obligations consisting of hardware, software, and professional services such as implementation, project management, installation, and consulting services. these contracts may contain customer-specific business terms and conditions, including service level commitments, variable consideration, and terms that govern when the customer has taken control. additionally, these contracts may be modified from time to time as the company delivers under the contract. these customer-specific business terms and conditions and modifications may involve complex accounting considerations, including determining whether the company has enforceable rights and obligations, whether contract modifications represent new contracts or modification of existing contracts, whether certain performance obligations are distinct, and other considerations that may impact the timing of revenue recognition. 47table of contents the evaluation of these factors is executed in accordance with the asc 606 revenue recognition framework and requires significant management judgment that could affect the amount and timing of revenue recognition over the contractual period. the computations to recognize revenue under the asc 606 revenue recognition framework can be complex and require a significant volume of data input. additionally, there can be complexity in the computations and entries made to record the related contract assets and liabilities at the balance sheet date. given the challenge in auditing the judgments and computations made in determining revenue recognition for these multiple performance obligation arrangements with customer-specific business terms and conditions and modifications, we identified revenue recognition as a critical audit matter.how the critical audit matter was addressed in the audit our audit procedures related to (1) determining whether the company has enforceable rights and obligations, whether contract modifications represent new contracts or modifications, whether certain performance obligations are distinct and other considerations that may impact the timing of revenue recognition and (2) the completeness and accuracy of the revenue recognition computations and entries used to recognize revenue included the following, among others:•we tested the effectiveness of controls over contract reviews, including management’s use of checklists and other review procedures to determine whether customer-specific business terms are evident in the contract and whether accounting conclusions regarding enforceable rights and obligations, contract modifications, distinct products and services, and other considerations that may impact the timing of revenue recognition are appropriately applied.•we tested the effectiveness of controls over revenue recognition computations and entries to determine whether the computations and entries appropriately reflect the accounting conclusions for these contracts. such controls included (1) the review of the completeness and accuracy of data input into the computations and entries and (2) the review of the mathematical accuracy of the computations and entries. •for a sample of contracts with customers that included existing contracts, new contracts and contract modifications, we:–tested management’s identification of customer-specific terms, whether the company had enforceable rights and obligations, whether contract modifications represented new contracts or modifications to existing contracts, whether customer-specific terms introduced new or implied performance obligations, or other factors influencing the timing, nature and amount of revenue recognized, and assessed management’s conclusions regarding accounting treatment. our procedures included reading the selected contracts and inquiring of the company’s operational personnel to understand the nature of the contract and its business purpose, as well as evaluating management’s conclusions. –evaluated whether the identified accounting conclusions were appropriately reflected in the revenue recognition computations and entries.–tested the accuracy and completeness of the data used in the computations and entries to record revenue.–tested mathematical accuracy of revenue recognition computations and entries. goodwill — device solutions reporting unit — refer to notes 1 and 5 to the financial statements critical audit matter description the company’s evaluation of goodwill for impairment involves the comparison of the fair value of its reporting units to their carrying amounts. due to a decline in the company's updated long-term forecast for the device solutions ("devices") reporting unit, the company identified an impairment indicator and, as a result, evaluated goodwill for impairment during the third quarter of 2020. the company develops its estimate of fair value of the reporting unit using forecast discounted cash flows at the reporting unit level, which requires the company to make significant estimates and assumptions related to forecasts of future revenues and operating costs. changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. the goodwill balance relating to the devices reporting unit is $53.2 million as of december 31, 2020. the estimated fair value of devices exceeded its carrying value as of the measurement date and, therefore, no impairment was recognized. we identified goodwill for devices as a critical audit matter because of the significant estimates and assumptions the company makes to estimate the fair value of devices and the sensitivity of devices' operations to changes in the company’s financial performance. this required a high degree of auditor judgment and an increased extent of effort, including the involvement of our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenues and operating costs. 48table of contents how the critical audit matter was addressed in the audit our audit procedures related to the forecasts of revenue and operating costs ("forecasts") for the devices reporting unit included the following, among others: •we tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of devices, such as controls related to the company’s forecasts.•we inquired of members of the company’s management responsible for the devices reporting unit to understand and corroborate management’s plan to achieve planned forecast revenue growth•we evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the board of directors, and (3) forecasted information included in analyst and industry reports as well as press releases of the company and companies in its peer group.•with the assistance of our fair value specialists, we evaluated the valuation methodology and long-term forecast growth rates, including testing the underlying source information and the mathematical accuracy of the calculations, and developed a range of independent estimates and compared those to selections made by management./s/ deloitte & touche llp seattle, washington february 24, 2021 we 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 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 – interim impairment assessment for international channels reporting unit as described in notes 2, 4 and 19 to the consolidated financial statements, the company’s consolidated goodwill balance was $77.7 billion as of october 3, 2020. management tests goodwill for impairment on an annual basis, and if current events or circumstances require, on an interim basis. in the third quarter of fiscal 2020, management performed an impairment test of the international channels’ goodwill. the carrying value of the international channels exceeded the fair value and management recorded a non-cash impairment charge of $3.1 billion to fully impair the international channels reporting unit goodwill. the fair value was determined using a discounted cash flow analysis. the determination of fair value required management to make assumptions and estimates about how market participants would value the international channels. the more sensitive inputs used in the discounted cash flow analysis include future revenue growth and projected margins as well as the discount rates used to calculate the present value of future cash flows.the principal considerations for our determination that performing procedures relating to the goodwill interim impairment assessment of the international channels reporting unit is a critical audit matter are the significant judgment required of management when determining the fair value of the international channels reporting unit, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s significant assumptions related to future revenue growth, projected margins, and the discount rates used in the fair value measurement of the international channels reporting unit. 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 interim impairment assessment, including controls over the valuation of the international channels reporting unit. these procedures also included, among others, testing management’s process for determining the fair value estimates, which included (i) evaluating the appropriateness of the discounted cash flow model; (ii) testing the completeness and accuracy of underlying data used in the model; and (iii) evaluating the significant assumptions used by management related to the future revenue growth, projected margins and discount rates. evaluating management’s assumptions related to future revenue growth and projected margins 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. professionals with specialized skill and knowledge were used to assist in the evaluation of the company’s discount rates.amortization of produced content cost – predominantly monetized as a group as described in note 8 to the consolidated financial statements, the company produces content for its direct-to-consumer (“dtc”) streaming services and linear television networks. the company generally classifies the content that is initially intended for use on their dtc services or on their linear television networks as group assets. production costs predominantly monetized as a group are amortized based on projected usage (which may be, for example, derived from historical viewership patterns), typically resulting in an accelerated or straight-line amortization pattern. for the year ended october 3, 2020, the company recognized $5.0 billion of amortization expense related to produced content cost predominantly monetized as a group, which is primarily included in “cost of services” in the consolidated statements of operations.the principal considerations for our determination that performing procedures relating to amortization of produced content costs predominantly monetized as a group is a critical audit matter are the high degree of auditor subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s estimate of projected usage used in the amortization calculation.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 amortization of produced content costs predominantly monetized as a group including controls over the estimation of projected usage. these procedures also included, among others, evaluating the content amortization method and testing the completeness and accuracy of the historical viewership data used to calculate the estimate of projected usage./s/ pricewaterhouse coopers llp los angeles, california november 25, 2020 we have served as the company’s auditor since 1938.

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. impairment of real property description of the matter at december 31, 2021, the company’s net real property owned was approximately $30.7 billion. as discussed in note 2 to the consolidated financial statements, the company reviews its real property quarterly on a property-by-property basis to determine if facts and circumstances suggest that the real property may be impaired. if the undiscounted cash flows indicate that the real property will not be recoverable, the carrying value of the real property is reduced to its estimated fair value and an impairment charge is recognized for the difference between the carrying value and the fair value. auditing the company’s process to evaluate real property owned for impairment was complex due to the high degree of subjectivity in determining whether indicators of impairment were present for certain properties, and in determining the future undiscounted cash flows and estimated fair values, if necessary, of properties where indicators of impairment were determined to be present. in particular, the undiscounted cash flows and fair value estimates were sensitive to significant assumptions, including future rental revenues and operating expenses, capitalization rates, and anticipated hold period, which are affected by expectations about future market or economic conditions. 71how 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 process to evaluate real property owned for impairment. this included testing controls over the company’s review of impairment indicators by property and management's review and approval of the significant assumptions described above.to test the company's evaluation of real property for impairment, we performed audit procedures that included, among others, assessing the methodologies used by management, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the company in its analyses. we compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the company’s business and other relevant factors would affect the significant assumptions. in addition, we assessed the historical accuracy of the company’s estimates and performed sensitivity analyses of the significant assumptions to evaluate the changes in the undiscounted future cash flows and estimated fair values of the property that would result from changes in the significant assumptions. real estate acquisitions description of the matter during the year ended december 31, 2021, the company completed approximately $4.1 billion of real estate acquisitions. as disclosed in note 3 of the consolidated financial statements, the total purchase price for all properties acquired has been allocated to the related real estate acquired (tangible assets and identifiable intangible assets and liabilities) based upon their relative fair values. auditing the fair values allocated by management to the real estate acquired was complex because the fair value estimates were sensitive to significant assumptions, including comparable land sales, capitalization rates, discount rates, market rental rates and property operating data, which can be impacted by expectations about future 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 process to account for real estate acquisitions, including controls over the company’s review of the significant assumptions discussed above. to test the fair values allocated to the real estate acquired, we performed audit procedures that included, among others, assessing the methodologies used by management and evaluating the significant assumptions used by the company discussed above. we compared certain of management’s assumptions to external market data for similar properties and tested the clerical accuracy of the valuation models. we involved our valuation specialist in our evaluation of the significant assumptions used by the company and the review of the valuation models. /s/ ernst & young llp 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 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. 45table of contents assessment of the estimation for collections over diagnostic testing for which revenue is recognized. description of matter as described in note 2 to the financial statements, the company records its service revenues from diagnostic testing net of contractual and collection allowances that are estimated based on historical trends and anticipated reimbursement from third party payers. as of december 31, 2021, the company recognized gross revenue of approximately $17.6 million along with contractual allowances of approximately $8.9 million. the net revenue figure of approximately $8.7 million is recorded as net sales on the consolidated statements of operations. the principal considerations for our determination that performing procedures over revenue recognition relating to the service revenue is a critical audit matter is based on the significant judgments by management in estimating the amount to be recognized as revenue as well as the effort and complexity in assessing audit evidence in performing procedures to evaluate the amount recognized. the calculation involves estimating adjustments to gross revenue based upon sales mix and third party contractual terms, such as medicare rates or variations of medicare rates. how we addressed the matter we obtained an understanding of the design of controls in place over the company’s process to calculate the various allowances. our audit procedures included the evaluation of significant inputs through the evaluation of the company's retrospective analysis of allowances as compared to actual payments received, evaluation of estimates based on historical collections by payer, and performance of analytical procedures and sensitivity analyses over the company’s significant inputs to assess the company’s ability to accurately estimate the allowances. we also tested the underlying data used in management’s calculations for accuracy and completeness, which included detail testing of the service revenue. /s/ marcum llp marcum 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. accounting for income taxes as described in notes 1 and 13 to the consolidated financial statements, the company's accounting for income taxes requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements or tax returns. as disclosed by the company, management evaluates the realization of tax assets and estimates of tax liabilities, including reserves for uncertain tax positions. management considers and evaluates numerous factors, which may require periodic adjustments and which may not reflect the final tax liabilities. management adjusts its financial statements to reflect only those tax positions that are more likely than not to be sustained under examination, and considers whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence. as part of the process of preparing consolidated financial statements, the company is required to estimate its taxes in each of the jurisdictions in which it operates. valuation allowances are provided when necessary to reduce deferred tax assets to the amount expected to be realized. the company’s worldwide operating income is subject to varying tax rates and its effective tax rate is highly dependent upon the geographic distribution of its earnings or losses and the tax laws and regulations in each geographical region. the company’s effective tax rate of (8%) for the year ended january 31, 2020 is different than the u.s. federal statutory rate of 21%. the principal considerations for our determination that performing procedures relating to accounting for income taxes is a critical audit matter are there was significant judgment by management in determining the income tax provision and other tax positions, specifically in the determination of taxable income or loss by jurisdiction taxed or benefited at rates other than the u.s. federal statutory rate, and the recognition and measurement of deferred tax assets, valuation allowances, and uncertain tax positions. this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing audit procedures and evaluating audit evidence. the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained. 66 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 income taxes, including those related to the assessment of uncertain tax positions, determination of operating income or loss by jurisdiction taxed or benefited at rates other than the u.s. federal statutory rate, and the recognition and measurement of deferred tax assets and valuation allowances. these procedures also included, among others, (i) testing the calculation of the income tax provision, including the accuracy of taxable income by jurisdiction, (ii) evaluating the reasonableness of cost plus percentages for entities selected for testing based on management’s methodology for determining taxable income or loss by jurisdiction, (iii) evaluating the recognition and measurement of valuation allowances, and (iv) evaluating the recognition and measurement of uncertain tax positions, including management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained for the uncertain tax position selected for testing. professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s judgment and estimates related to management’s methodology for determining taxable income or loss by jurisdiction, which included evaluation of management’s application of relevant rules for determining arm’s length compensation for services. /s/ pricewaterhouse coopers llp san jose, california march 27, 2020 we have served as the company’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 (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. accrued clinical trial and related costs as described in notes 2 and 4 to the consolidated financial statements, the company recorded $21.8 million in accrued clinical trial and related costs as of december 31, 2021. accrued clinical trial and related costs are estimated using data such as patient enrollment, clinical site activations or information provided by outside service providers regarding their actual costs incurred. management determined accrual estimates through reports from and discussions with clinical personnel and outside service providers as to the progress of trials, or the services completed. the principal considerations for our determination that performing procedures relating to accrued clinical trial and related costs is a critical audit matter are the judgment by management in evaluating the data used in developing the accrued clinical trial and related cost estimates, which in turn led to a high degree of auditor judgment and effort in performing procedures to evaluate audit evidence obtained related to patient enrollment, clinical site activations and services rendered by outside service providers used by management in developing the estimates. 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 completeness and accuracy of clinical trial accruals, including controls relating to the reliability of data used in the development of the estimates. these procedures also included, among others, (1) testing management’s process for developing the estimated accrued clinical trial and related costs, (2) evaluating the appropriateness of the approach used by management to develop the estimates, (3) testing the completeness and accuracy of the data used in developing the estimates, including data related to patient enrollment, clinical site activations and services rendered by outside service providers, (4) confirming clinical costs and contracted fees with the clinical vendors on a test basis, and (5) examining clinical vendor contracts on a test basis to evaluate the completeness of costs considered in the estimates. /s/ pricewaterhouse coopers llp san jose, california march 1, 2022 we 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 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 level 3 investments as of december 31, 2021, the fair value of the company’s investments classified as level 3 investments was approximately $1.63 billion, or approximately 94.7% of total investments. as discussed in notes 1, 2, and 9 in the financial statements, the company invests in senior secured debt, including first lien loans, second lien loans and unitranche loans, and, to a lesser extent, collateralized securities, structured products and other similar securities, unsecured debt and equity, of private and thinly-traded u.s. middle-market companies, and substantially all of its investments are classified as level 3 investments. the company’s determination of fair value for these investments requires that management makes subjective judgments and estimates utilizing non-binding broker or dealer consensus pricing and/or quotes, a market approach, an income approach, or a combination of a market and income approach, as appropriate. these approaches require management to make subjective judgments and estimates related to significant unobservable inputs including the discount rates, ebitda multiples, revenue multiples, broker quotes, expected volatility and expected outcome of proposed corporate transactions. we identified the valuation of level 3 investments as a critical audit matter given the company uses significant subjective judgments to estimate the fair value of such investments. auditing the reasonableness of management’s selection of valuation techniques and the related unobservable inputs increased audit effort, including the use of a valuation specialist.71our audit procedures related to the valuation techniques, unobservable inputs and assumptions used by management to estimate the fair value of level 3 investments included the following, among others:•we evaluated the appropriateness of the valuation techniques used for level 3 investments and evaluated the reasonableness of any significant changes in valuation techniques since prior periods. •we evaluated the reasonableness of the related significant unobservable inputs and the reasonableness of any significant changes in significant unobservable inputs from prior periods by comparing these inputs to external sources, including, but not limited to: ◦historical operating results of the investment as obtained from the company, among other sources, the financial statements and the board of directors’ materials of the investment.◦available market data for comparable companies.◦subsequent events and transactions, where available. •we tested the source information used to determine the valuation input and the mathematical accuracy of the calculation used to compute the input.•with the assistance of a valuation specialists, we performed the following: ◦for a portion of level 3 investments, evaluated the valuation techniques compared to those of a market participant, used market information to develop a range of market yield, comparable financial performance multiples and discount rate assumptions and compared them to the assumptions used by management. ◦for a portion of level 3 investments, developed an independent estimate of the fair value and compared our estimates to management’s estimates. •we evaluated management’s ability to reasonably estimate fair value by comparing management’s historical estimates to transactions subsequent to measurement date. we took into consideration changes in market or investment specific factors, where available. /s/ rsm us llp 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 from contracts with customers – refer to notes 2 & 4 to the financial statements critical audit matter description the company’s services provided under contracts with customers include advisory and placement services, which are recorded as advisory and placement fees, respectively. with respect to contracts for which advisory fees are recognized, the company’s primary performance obligation is to stand ready to perform a broad range of services the client may need over the course of the engagement. for such engagements, the customer obtains a 44benefit from the assurance that the company is available to it, when-and-if needed or desired. fees related to these stand-ready performance obligations are recognized over time using a time-based measure of progress. with respect to contracts for which placement fees are recognized, the company has determined that the provision of overall capital advisory services in contemplation of a potential fund placement or capital raise is satisfied over time. fees related to this performance obligation are recognized over time using a time-based method as the customer simultaneously receives and consumes the benefits of the capital advisory services as they are provided. with respect to the transaction price for advisory and placement services, the consideration to which the company expects to be entitled is predominantly variable as the consideration is susceptible to factors outside of the company’s influence and/or contains a large number and broad range of possible consideration amounts. as such, these amounts are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified event.in certain circumstances, management may be required to apply judgment in determining the timing of when there is no longer uncertainty associated with the variable consideration and when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur (e.g. when publicly available information regarding the close of a transaction is not available). we identified advisory and placement fee revenue recognition as a critical audit matter because of the judgment involved in determining the timing of when there is no longer uncertainty associated with the variable consideration and whether it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. this required a high degree of auditor judgment and increased extent of effort to audit and evaluate the client’s determination.how the critical audit matter was addressed in the audit our audit procedures related to the timing of recording of revenue from contracts with customers included the following, among others:•we tested the effectiveness of controls over revenue, including those over the timing of recording revenue.•we selected a sample of contracts for which revenue was recognized in 2019 and january 2020 and performed the following: –evaluated whether the company appropriately recognized revenue in the correct period by obtaining and evaluating evidence, including, but not limited to, inquiry with management, transaction close documents, press releases, confirmations, court approvals, executed agreements and communications, regarding the extent of uncertainty associated with variable consideration. –obtained evidence, including, but not limited to, inquiry with management, examination of transaction close documents, press releases, confirmations, court approvals, executed agreements and communications and evaluated when it was probable that a significant reversal in the amount of cumulative revenue recognized would not occur.•we selected a sample of contracts for which revenue was recognized in 2019 and evaluated the accuracy of management’s calculation by recalculating the revenue amounts and comparing our expectation to the amount recorded by management. /s/ deloitte & touche llp new york, new york february 27, 2020we 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.impairment assessments – goodwill of certain reporting units of the international reporting segment and certain indefinite-lived trademarks as described in notes 2 and 14 to the consolidated financial statements, the company’s goodwill and indefinite-lived trademarks balances were $1.26 billion and $1.38 billion, respectively, as of january 2, 2021. these assets are assessed for impairment at least annually, as of the first day of the company’s third fiscal quarter, and as triggering events occur. the impairment test consists of comparing the fair value of the reporting unit or intangible asset, which is determined using the income approach, to its carrying value. if the carrying value exceeds the fair value of the asset, an impairment loss is recognized in an amount equal to such excess. fair values of reporting units and intangible assets are primarily based on future cash flows projected to be generated from that asset. in performing the discounted cash flow analysis, management makes various judgments, estimates and assumptions, the most significant of which are the assumptions related to revenue growth rates, operating profit margin rates, terminal growth rates, and discount rates. rates used to discount cash flows are dependent upon interest rates and the cost of capital at a point in time.the principal considerations for our determination that performing procedures relating to the impairment assessments for goodwill of certain reporting units of the international reporting segment and certain indefinite-lived trademarks is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement of certain reporting units and indefinite-lived trademarks; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rates, operating profit margin rates, terminal growth rates, and discount rates; 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 and indefinite-lived trademarks impairment assessments, including controls over the valuation of the company’s reporting units and indefinite-lived trademarks. these procedures also included, among others (i) testing management’s process for developing the fair value estimate of certain reporting units and indefinite-lived trademarks; (ii) evaluating the appropriateness of the discounted cash flow analysis; (iii) testing the completeness and accuracy of underlying data used in the analysis; and (iv) evaluating the significant assumptions used by management related to the revenue growth rates, operating profit margin rates, terminal growth rates, and discount rates. evaluating management’s assumptions related to revenue growth rates, operating profit margin rates, and terminal growth rates involved evaluating whether the assumptions were reasonable considering (i) the current and past performance of the reporting units and branded products associated with the trademarks; (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 assumption. /s/ pricewaterhouse coopers llp greensboro, north carolina february 12, 2021we have served as the company’s auditor since 2006.

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. allowance for loan losses – general reserve as described in notes 1 and 3 to the company’s consolidated financial statements, the company has a gross loan balance of $3,453,459,000 and related allowance for loan losses (“allowance”) balance of $35,363,000 at december 31, 2021. the allowance consists of loans individually and collectively evaluated for impairment. loans collectively evaluated for impairment are grouped using similar risk characteristics using historical loss experience that is adjusted for certain qualitative environmental factors. the calculation of this qualitative general reserve adjustment involves estimates and assumptions by management based on the qualitative environmental factors. f-30 table of contents we identified the estimation of certain qualitative environmental factors as a critical audit matter. management’s assumptions related to certain qualitative environmental factors, which are used to adjust the quantitative historical losses (both upwards and downwards), are highly subjective and could have a significant impact on the allowance. auditing these assumptions involves especially challenging and subjective auditor judgment. the primary procedures we performed to address this critical audit matter included: ● testing the design and operating effectiveness of internal controls over the data used by management to assess certain qualitative factors and their effect on the estimation of inherent losses within the loan portfolio. ● evaluating the reliability of the data and assumptions used by management to support their assessment of certain qualitative environmental factors by vouching to internal and external sources, including considerations of contradictory evidence. ● evaluating the reasonableness of management’s conclusion on the qualitative assessment and the resulting adjustment to the allowance. /s/ bdo usa, llpbdo usa, llp we have served as the company’s auditor since 2006.

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. as described in note 9 to the consolidated financial statements, during the year the company reversed approximately $7.5m of its valuation allowance on deferred tax assets in the netherlands. management made the decision to reverse this allowance based on a history of earnings, forecasted income in future periods sufficient to utilize deferred tax assets in the netherlands and changes in netherlands tax law that removed expiration dates on net operating loss carryforwards. the valuation allowance for deferred tax assets in the netherlands has been identified as the critical audit matter due to the significant assumptions management made as to when and in what amount to reverse the valuation allowance. these significant assumptions require management to make estimates related to the forecast of future earnings. auditing management’s assumptions requires a high degree of auditor judgment and increased audit effort due to the significant impact these assumptions have on the amount of the valuation allowance reversed. our audit procedures related to the valuation allowance reversed included the following, among others: we obtained an understanding of the relevant control related to the evaluation of the valuation allowance and tested such control for design and implementation and operating effectiveness. utilized our tax specialists to test the change to the tax law in the netherlands and its applicability to the company’s netherlands operations. performed mathematical accuracy procedures over the forecast of earnings developed by management.41 table of contents tested the reasonableness of assumptions within the forecast including subjected the forecast to sensitivity analysis on key assumptions regarding future sources of income, evaluation of management’s ability to forecast by comparing management’s prior forecasts to historical results, comparing management’s forecasted income growth rates to independent market data, validated management’s recent history of book income and earnings trend and developed an understanding of management’s operational plans for future years related to the netherlands. /s/ rsm us llp we have served as the company’s auditor since 2012.

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. 52valuation of indefinite-lived intangible assets description of the matter at november 30, 2020, the company's indefinite-lived intangible assets consist of brand names and trademarks with an aggregate carrying value of approximately $3.0 billion (of which $0.4 billion related to the cholula brand name, which was acquired on november 30, 2020). as explained in note 1 to the consolidated financial statements, these assets are assessed for impairment at least annually primarily using the relief-from-royalty methodology to determine their fair values. if the fair value of any of the brand names or trademarks is less than its carrying amount, an impairment loss is recognized in an amount equal to the difference.auditing the company's impairment assessments was complex due to the significant estimation required in determining the fair value of the brand names and trademarks. significant management judgment is also involved in determining whether individual brand names and trademarks should be grouped for purposes of the fair value determination or must be evaluated individually. the company's methodologies for estimating the fair value of these assets involve significant assumptions and inputs, including projected financial information for net sales and operating profit by brand, royalty rates, and discount rates, all of which are sensitive to and affected by economic, industry, and company-specific qualitative factors. these significant assumptions and inputs are forward-looking and could be affected by future economic and market conditions.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 indefinite-lived intangible asset review process, including controls over management’s review of its asset groupings and the significant assumptions described above. we tested controls over the review of methodologies used, significant assumptions and inputs, and completeness and accuracy of the data used in the measurements.to test the estimated fair value of the company’s indefinite-lived intangible assets, we performed audit procedures that included, among others, evaluating the asset groupings used by the company to perform its impairment assessment, assessing the methodologies and testing the significant assumptions discussed above and the underlying data used by the company in its analyses. we compared the significant assumptions to current industry, market and economic trends, to the company's historical results, to other guideline companies within the same industry, and to other relevant data. in addition, we evaluated management’s ability to estimate revenues by comparing the current year actual revenues for certain brand names or trademarks to the estimates made in the company’s prior year impairment assessment. we also performed sensitivity analyses of the significant assumptions to evaluate the potential change in the fair values of the brand names and trademarks resulting from hypothetical changes in underlying assumptions. we involved an internal valuation specialist to assist in our evaluation of the methodologies used and significant assumptions and inputs used to determine the fair value of certain brand names and trademarks.valuation of acquired intangible assets description of the matter during 2020, the company completed its acquisition of the parent company of cholula hot sauce (“cholula”) for net consideration of $803 million, and recognized identifiable intangible assets of $401 million, as disclosed in note 2 to the consolidated financial statements. the transaction was accounted for as a business combination.auditing the company's purchase accounting for its acquisition of cholula was complex due to the significant estimation required by management to determine the fair value of the acquired intangible assets, which principally consisted of brand names and trademarks. the estimation complexity was primarily due to the valuation models used to measure the fair value of the intangible assets and the sensitivity of the respective fair values to the significant underlying assumptions. the significant assumptions used to estimate the fair value of the intangible assets included discount rates, royalty rates and certain assumptions that form the basis of the forecasted results (e.g., revenue growth rates and operating profit margin). these significant assumptions are forward-looking and could be affected by future economic and market conditions.53how 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 its accounting for acquisitions. for example, we tested controls over the recognition and measurement of intangible assets, including the valuation models and underlying assumptions used to develop such estimates. we also tested management’s controls over the completeness and accuracy of the data used in the models.to test the estimated fair value of the intangible assets, we performed audit procedures that included, among others, evaluating the company's valuation models and testing the significant assumptions used in the models, as well as testing the completeness and accuracy of the underlying data. we compared the significant assumptions to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, and to the historical results of the acquired business. we also involved an internal valuation specialist to assist in our evaluation of the significant assumptions and those procedures included the completion of independent calculations of the fair value of the acquired intangible assets.we have served as the company’s auditor since 1982.

critical audit matters thecritical audit matters communicated below are matters arising fromthe current period audit of the financial statements that werecommunicated or required to be communicated to the audit committeeand that (1) relate to accounts or disclosures that are material tothe financial statements and (2) involved our especiallychallenging, subjective, or complex judgments. the communication ofcritical audit matters does not alter in any way our opinion on thefinancial statements, taken as a whole, and we are not, bycommunicating the critical audit matters below, providing aseparate opinion on the critical audit matters or on the accountsor disclosures to which they relate. note receivable allowance for losses— refer to notes 1and 14 to the financial statements critical audit matter description the company’s evaluation of the adequacy of its allowance forlosses on notes receivable includes an assessment of thecreditworthiness of individual note holders and the underlyingcollateral value. the company reports notes receivables at theprincipal balance outstanding less an allowance for losses, withinterest charged to individual note holders at a fixed rate overthe life of the receivable. notes are generally secured by theassets of each location and ownership interests in the franchise oroperating entity. the company monitors the financial condition ofthe note holders and records provisions for estimated losses whenthey believe it is probable that the franchisees will be unable tomake required payments. the notes receivable balance as of december31, 2020 was $8,065,528, inclusive of an allowance for losses onnotes receivable of $1,598,672. weidentified the allowance for losses as a critical accounting matterbecause of the significant estimates and assumptions managementmakes to estimate the allowance for losses on notes receivables andthe subjectivity of the calculation. as a result, performing auditprocedures to evaluate the reasonableness of management’sestimates and assumptions related to a note holder’screditworthiness and estimates of future cash flows and collateralvalue required a high degree of auditor judgement and an increasedextent of effort. how the critical audit matter was addressed in the audit outaudit procedures related to the evaluation of the reasonableness ofthe notes receivable allowance for losses included the following,among others: ●we obtained anunderstanding of the process and evaluated the design andimplementation of controls relating to management’sdetermination of the allowance for losses and impairment of notesreceivable. ●we evaluatedmanagement's determination of quantitative and qualitative factoradjustments to the allowance, which included reviewing note holderfinancial projections and the consistency of application ofquantitative and qualitative factors, and evaluationthereof. ●we assessed overalltrends in credit quality of note holders and historical paymentexperience. ●we evaluated theaccuracy and adequacy of the related financial statementdisclosures. workers’ compensation claims liability — refer to notes1 and 6 to the financial statements critical audit matter description the company’s workers’ compensation claims liability isbased on estimated future costs to be incurred by the company. theliability includes claims that have been reported but not settled,as well as claims that have been incurred but not reported.annually, the company utilizes third party actuarial estimates offuture costs of the claims discounted by a present value interestrate to estimate the amount of the reserves. if the actual costs ofthe claims exceed the amount estimated, additional reserves may berequired. the workers’ compensation claims liability balanceas of december 31, 2020 was $4,584,068. weidentified the workers’ compensation claims liability as acritical accounting matter because of the significance of theassumptions used in the actuarial estimates of the liability forworkers’ compensation claims and consideration of thecompleteness of information provided to the third-party actuarialfirm. as a result, performing audit procedures to evaluate thereasonableness of estimates and assumptions related to the adequacyof the workers’ compensation liability required a high degreeof auditor judgement and an increased extent ofeffort. how the critical audit matter was addressed in the audit outaudit procedures related to the evaluation of the reasonableness ofthe workers’ compensation claim liability included thefollowing, among others: ●we obtained anunderstanding of the process and evaluated the design andimplementation of controls relating to management’sdetermination of the workers’ compensation claimliability. ●we assessed theprofessional qualifications of the third-party actuary includingtheir independence, experience, and certifications. ●we obtained andreviewed the independent actuarial report and gained anunderstanding from the actuary of the objectives and scope of theirwork, and we evaluated the consistency of methods and assumptionsused in the current year as compared to previousyears. ●we discussed thevaluation model, data inputs, assumptions, calculations, andresults directly with the third-party actuary. ●we analyticallyconsidered balances in relation to prior years and activity thattook place during the year. ●we tested thecompleteness, integrity, and accuracy of the underlying data usedby the third-party actuary as part of the actuarialvaluation. ●we evaluatedadjustments made by management to the model. /s/plante & moran, pllc we haveserved 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 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. evaluation of investment properties for impairment description of the matter at december 31, 2020, the company’s consolidated net investment properties totaled $23.2 billion. in addition, a significant number of the company’s investments in unconsolidated entities and its investment in klépierre hold investment properties. as discussed in note 3 to the consolidated financial statements, the company reviews investment properties for impairment on a property-by-property basis to identify and evaluate events or changes in circumstances that indicate the carrying value of an investment property may not be recoverable. the company estimates undiscounted cash flows of an investment property using observable and unobservable inputs such as historical and forecasted cash flows, operating income before depreciation and amortization, estimated capitalization rates, leasing prospects and local market information. auditing management’s evaluation of investment properties for impairment was complex due to the estimation uncertainty in determining the undiscounted cash flows of an investment property. in particular, the impairment evaluation for investment properties was sensitive to significant assumptions such as forecasted cash flows and operating income before depreciation and amortization, and capitalization rates, all of which can be affected by expectations about future market 80table of contents or economic conditions, demand, and competition. 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 process for evaluating investment properties for impairment, including controls over management’s review of the significant assumptions described above. to test the company’s evaluation of investment properties for impairment, we performed audit procedures that included, among others, assessing the methodologies applied, evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by management in its analysis. we compared the significant assumptions used by management to current industry and economic trends, relevant market information, and other applicable sources. we also involved a valuation specialist to assist in evaluating certain assumptions. in addition, we compared the forecasted cash flows and operating income before depreciation and amortization to historical actual results and evaluated significant variances, including consideration of the current economic environment. as part of our evaluation, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the undiscounted cash flows of the related investment property that would result from changes in the assumptions. evaluation of investments in unconsolidated entities for impairment description of the matter at december 31, 2020, the carrying value of the company’s investments in unconsolidated entities and its investment in klépierre totaled $4.3 billion. as explained in note 3 to the consolidated financial statements, the company reviews investments in unconsolidated entities for impairment if events or changes in circumstances indicate that the carrying value of an investment in an unconsolidated entity may not be recoverable. to identify and evaluate whether an other-than-temporary decline in the fair value of an investment below its carrying value has occurred, the company assesses economic and operating conditions that may affect the fair value of the investment. the evaluation of operating conditions may include developing estimates of forecasted cash flows or operating income before depreciation and amortization to support the recoverability of the carrying amount of the investment. when required, the company estimates the fair value of an investment and assesses whether any impairment is other-than-temporary using observable and unobservable inputs such as historical and forecasted cash flows or operating income, estimated capitalization and discount rates, or relevant market multiples, leasing prospects and local market information. auditing management’s evaluation of investments in unconsolidated entities for impairment was complex due to the estimation uncertainty in determining the forecasted cash flows, operating income before depreciation and amortization, estimated fair value of each investment and whether any decline in fair value below the related investment’s carrying amount is other-than-temporary. in particular, the impairment evaluation for these investments was sensitive to significant assumptions such as forecasted cash flows, operating income before depreciation and amortization, relevant market multiples, and capitalization and discount rates, all of which can be affected by expectations about future market or economic conditions, demand, and competition. 81table 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 process for evaluating investments in unconsolidated entities for impairment, including controls over management’s review of the significant assumptions described above. to test the company’s evaluation of investments in unconsolidated entities for impairment, we performed audit procedures that included, among others, assessing the methodologies applied, evaluating the significant assumptions discussed above and testing the completeness and accuracy of data used by management in its analysis. we compared the significant assumptions used by management to current industry and economic trends, relevant market information, and other applicable sources. we also involved a valuation specialist to assist in evaluating certain assumptions. in addition, we compared the forecasted cash flows and operating income before depreciation and amortization to historical actual results and evaluated significant variances, including consideration of the current economic environment. as part of our evaluation, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the cash flows and the fair value of the related investment that would result from changes in the assumptions, and we evaluated whether a decline in fair value below the related investment’s carrying value was other-than-temporary. evaluation of collectability of tenant receivables and accrued revenue description of the matter at december 31, 2020, the company’s tenant receivables and accrued revenue totaled $1.2 billion. as discussed in notes 3 and 9 to the consolidated financial statements, the company accrues fixed lease income on a straight-line basis over the term of the lease when the company believes substantially all lease income, including the related straight-line receivable, is probable of collection. the company’s assessment of collectability incorporates available tenant operational and liquidity information and includes expectations and estimates made by the company with respect to each lease. auditing management’s evaluation of collectability of tenant receivables and accrued revenue was challenging due to the significant judgment that was necessary when assessing whether it is probable that the tenant will pay outstanding receivables and whether it is probable that substantially all future lease payments will be collected in accordance with the lease terms. in particular, the assessment of collectability incorporates information regarding a tenant’s financial condition that is obtained from available financial data, the expected outcome of contractual disputes and management’s communications and negotiations with the tenant. 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 process for evaluating collectability of tenant receivables and accrued revenues, including controls over management’s review of the information and judgments described above. to test the company’s evaluation of collectability of tenant receivables and accrued revenue, we performed audit procedures that included, among others, assessing the methodologies applied and evaluating the information used by management in its analysis. as part of our assessment, we reviewed executed lease agreements and amendments, evaluated publicly available information on the tenant’s financial condition and operational performance and considered recent collections activity. further, we evaluated the status of contractual disputes with certain tenants, including review of the related lease agreements, considered recent resolutions of similar matters and obtained representations from internal legal counsel. we also evaluated the impact of activity subsequent to the balance sheet date on the company’s estimates. /s/ ernst & young llp we have served as the company’s auditor since 2002.

critical audit matter the critical audit matters communicated below are matters 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) 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.valuation of contingent consideration liability as described in notes 1 and 6 to the consolidated financial statements, the company has a contingent consideration liability of $4.9 million recorded as of december 31, 2021. the contingent consideration was recorded by the company in connection with the acquisition of ciclofilin pharmaceuticals, inc. (ciclofilin) on june 10, 2016. the contingent consideration represented the acquisition date fair value of potential future payments, to be paid in cash and the company’s stock, to the ciclofilin shareholders and aurinia pharmaceuticals inc. upon the achievement of certain milestones and was estimated based on a probability-weighted discounted cash flow model utilizing, significant unobservable inputs.we identified the contingent consideration liability as critical audit matter. the principal considerations for our determination included the subjectivity and judgment by management in determining the fair value estimate of the contingent consideration liability including a high degree of estimation uncertainty in evaluating the probability of success of milestone achievement and the projected milestone achievement dates. auditing these elements involved significant and subjective auditor judgment in performing procedures to evaluate the fair value of the contingent consideration liability.52table of contents the primary procedures we performed to address this critical audit matter included:•testing management’s process for estimating the fair value of contingent consideration liabilities, including corroborating with research and development personnel with regard to the current status of the clinical development of the company’s product candidate used to support the projected milestone achievement dates.•testing management’s probability-weighted discounted cash flow model through evaluation of the appropriateness of the valuation method used, verifying the inputs to the discounted cash flow model to underlying source data and recalculating the results.•comparing inputs and assumptions used by management to determine the probability of success of milestone achievement to external market and industry data regarding clinical trial success rates.valuation of in process research & development intangible assets as described in notes 3 and 7 to the consolidated financial statements, the company has in-process research and development (“ipr&d”) intangible assets of $3.2 million recorded as of december 31, 2021. the ipr&d intangible assets are indefinite lived and are not subject to amortization. such assets are initially measured at their acquisition-date fair values and are subject to impairment testing at least annually until completion or abandonment of research and development efforts associated with the projects. the company tests ipr&d assets for impairment in the fourth quarter of each year or more frequently if indicators of impairment are present. we identified the valuation of ipr&d intangible assets in the impairment assessment as a critical audit matter. the principal consideration for our determination included the subjectivity and judgment used by management in determining the selection of a discount rate and the probability of success of research and development programs. auditing these elements involved especially challenging and subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.the primary procedures we performed to address this critical audit matter included:•utilizing personnel with specialized knowledge and skill with valuations to assist in: (i) assessing the reasonableness of the discount rate incorporated into the valuation models used by management, and (ii) testing the mathematical accuracy of the company’s calculations.•comparing inputs and assumptions used by management to determine the probability of success of research and development programs to external market and industry data regarding clinical trial success rates./s/ bdo usa, llp we have served as the company’s auditor since 2013w

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.61 goodwill and intangible assets with indefinite lives impairment assessment description of the matter at december 31, 2019, the company’s goodwill and intangible assets with indefinite lives, which consist of newspaper mastheads, were $914.3 million and $178.6 million, respectively. as discussed in note 1 of the consolidated financial statements, goodwill and intangible assets with indefinite lives are tested for impairment at least annually or when events occur that indicate impairment could exist. as a result of these assessments, the company recognized impairments of $100.7 million during the year ended december 31, 2019. auditing management’s impairment tests of goodwill and newspaper masthead intangible assets was complex and judgmental due to the estimation required in determining the fair value of the reporting units and newspaper mastheads. in particular, the estimates of the fair value of the reporting units are sensitive to significant assumptions such as the revenue growth rates, discount rates and projected ebitda margins. the estimates of fair value of the newspaper masthead intangible assets are sensitive to significant assumptions including the royalty rates, discount rates and revenue growth rates. these assumptions are affected by expectations about future economic and industry factors.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 and intangible assets with indefinite lives impairment review process. for example, we tested controls over management’s review of the significant assumptions described above as well as management’s review of the reasonableness of the underlying data used in the valuation analyses. to test the estimated fair value of the company’s reporting units and newspaper masthead intangible assets, we performed audit procedures that included, among others, assessing the valuation methodologies used, testing the significant assumptions described above and testing the completeness and accuracy of the underlying data the company used in its analyses. for example, we compared the revenue growth rates and projected ebitda margins used in the valuations to current industry and economic trends and assessed the historical accuracy of management’s estimates. with the assistance of our internal valuation specialists, we also developed an independent range of the discount rate and royalty rate assumptions and compared them to the rates determined by management. we performed sensitivity analyses of the significant assumptions to evaluate the changes in the fair value of the reporting units and the newspaper masthead intangible assets that would result from changes in the assumptions. in addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the company. valuation of intangible assets acquired in connection with the gannett media corp. acquisition description of the matter as disclosed in note 4 to the consolidated financial statements, during 2019, the company completed the acquisition of gannett media corp. for net consideration of $1.2 billion. this transaction was accounted for as a business combination.auditing the company’s accounting for the acquisition of gannett media corp. was complex and judgmental due to the significant estimation uncertainty in determining the fair value of identified intangible assets, which principally consisted of acquired newspaper mastheads, trade names, customer relationships and developed technology. the significant estimation uncertainty was primarily due to the sensitivity of the respective fair value estimates to underlying assumptions about the future performance of the acquired business. the company used an income approach to measure the intangible assets including the relief from royalty method for newspaper mastheads, trade names and developed technology and the excess earnings method for customer relationships. the significant assumptions used to estimate the fair value of the identified intangible assets included revenue growth rates, discount rates, projected ebitda margins, royalty rates, and customer attrition rates. 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 obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the recognition and measurement of assets acquired. for example, we tested controls over management’s review of the valuation of intangible assets, including the review of the valuation models and significant assumptions used in the valuation.to test the estimated fair value of the acquired intangible assets, our audit procedures included, among others, evaluating the methodologies used, evaluating the significant assumptions used in the valuation models and testing the completeness and accuracy of the underlying data. we involved our valuation specialists to assist in testing certain significant assumptions and methodologies used to value the acquired intangible assets. for example, we compared the significant assumptions to current industry, market and economic trends as well as to historical results of the acquired business and to other guidelines used by companies within the same industry. as part of this evaluation, we also compared the royalty rates used in the valuation of newspaper mastheads, trade names and developed technology to market data. in addition, we performed a sensitivity analysis on the significant assumptions to evaluate the change in the fair values of the intangible assets that would result from the changes in assumptions. 62 defined benefit pension obligation description of the matter at december 31, 2019, the company’s aggregate obligation for its defined benefit pension plans was $3.0 billion and exceeded the gross fair value of the related plan assets of $2.9 billion, resulting in a net defined benefit pension obligation of $116.9 million as of december 31, 2019. the company recorded a net periodic pension benefit of $8.4 million for the year-ended december 31, 2019. as described in note 8 of the consolidated financial statements, the company updates the estimates used to measure the defined benefit pension assets and obligations annually or upon a remeasurement event to reflect the actual return on plan assets and updated actuarial assumptions.auditing the defined benefit pension obligations was complex and required the involvement of specialists due to the judgmental nature of the actuarial assumptions such as the discount rate, expected return on plan assets, and participant longevity used in the measurement process. these assumptions have a significant effect on the projected defined benefit pension obligation and net periodic pension benefit expense.how we addressed the matter in our audit we obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over management’s measurement and valuation of the defined benefit pension obligations. for example, we tested controls over management’s review of the defined benefit pension obligation calculations, the significant actuarial assumptions, and the data inputs used in the actuarial models.to test the defined benefit pension obligation and net periodic pension benefit expense, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions described above, and the underlying data used by the company. we compared the actuarial assumptions used by management to historical trends. we involved actuarial specialists in the evaluation of management’s methodology for determining the discount rate that reflects the maturity and duration of the benefit payments and is used to measure the defined benefit pension obligation. to perform this evaluation, we compared the discount rate to an independent range of discount rates developed using the projected benefit cash outlays. as part of this assessment, we compared the projected cash flows to the historical cash flows and compared the current year benefits paid to the plans’ prior year projected cash flows. to evaluate the mortality and participant longevity, we evaluated management’s selection of mortality base tables and improvement scales, as adjusted for entity-specific factors. we also tested the completeness and accuracy of the underlying data, including the participant data provided to the company’s actuarial specialists. to evaluate the expected return on plan assets, we assessed whether management’s assumption is consistent with a range of returns for a portfolio of comparative investments. /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 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.f-2 impairment of real estate properties description of the matter the company’s net real estate properties totaled $2.5 billion as of december 31, 2019. as discussed in note 1 to the consolidated financial statements, the company reviews for impairment on a property by property basis whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. impairment is recognized on properties held for use when the expected undiscounted cash flows for a property are less than its carrying amount, at which time the property is written down to its estimated fair value. properties classified as held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell. there were no impairment charges during the year ended december 31, 2019.auditing the company's impairment assessment for real estate properties is challenging because of the subjective auditor judgment necessary in evaluating management’s identification of indictors of potential impairment and the related assessment of the severity of such indicators in determining whether a triggering event has occurred that requires the company to evaluate the recoverability of the asset.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 property impairment review process. for example, we tested controls over management’s process for identifying and evaluating potential impairment indicators.our testing of the company’s impairment assessment included, among other procedures, evaluating significant judgments applied in determining whether indicators of impairment were present at any given property by obtaining evidence to corroborate such judgments and searching for evidence contrary to such judgments. for example, we searched for tenants or groups of tenants with large reserved balances or upcoming lease expirations that occupy a substantial portion of any particular property and searched for significant declines in operating results of any particular property due to occupancy changes, tenant bankruptcies, environmental issues, adverse changes in legal factors or natural disasters. property asset acquisition description of the matter on june 20, 2019, the company acquired la jolla commons, consisting of two office buildings, an entitled development parcel and two parking structures, for a purchase price of approximately $525 million, less seller credits of (i) approximately $11.5 million for speculative lease-up, (ii) approximately $4.2 million for assumed contractual liabilities (iii) and approximately $1.7 million for closing prorations, excluding closing costs of approximately $0.2 million. as discussed in note 1 and note 2 to the consolidated financial statements, the company accounted for the purchase of la jolla commons as an asset acquisition in accordance with the authoritative accounting guidance on acquisitions and business combinations. the company’s methodology of allocating the cost of acquisitions to assets acquired and liabilities assumed is based on estimated fair values, replacement cost and appraised values. for acquired operating real estate properties, such as la jolla commons, the purchase price is allocated to land and buildings, intangible assets such as in-place leases, and tangible assets and liabilities acquired, if any.auditing the company’s accounting for its acquisition of la jolla commons was complex and highly judgmental due to the significant judgment required in determining estimated fair values, replacement cost and appraised values of the acquired land and buildings and intangible assets such as in-place leases. the significant judgment was primarily due to (1) the judgmental nature of inputs, including discount rate, capitalization rates, cost multipliers and various market assumptions such as market rental rates, (2) the complexity of the models used to allocate the cost of the acquisition to the assets acquired and liabilities assumed, including income, sales comparison and cost approach models and (3) the sensitivity of the respective values to the underlying significant assumptions.f-3how 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 accounting for acquisitions process. for example, we tested controls over the valuation of acquired land, buildings and intangible assets, including the valuation models and underlying assumptions used to develop such estimates.our testing of the company’s accounting for its acquisition of la jolla commons included, among other procedures, reading the purchase agreement and testing the values allocated to the assets acquired and liabilities assumed by evaluating the valuation methods and significant assumptions used by management. for example, our real estate valuation specialists assisted us in evaluating the methodologies used by the company and testing the consistency of the selected discount rate, capitalization rates, cost multipliers and various market assumptions such as market rental rates with external market data sources. furthermore, we compared assumptions about future projections with historical results of the acquired property. additionally, we evaluated the completeness and accuracy of the underlying data supporting the determination of various inputs. also, with the assistance of our specialists, we evaluated the incorporation of the key assumptions in the aforementioned models and tested such models for clerical accuracy./s/ ernst & young llp we have served as the company’s auditor since 2010.

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.legal and regulatory proceedings as described in notes 1 and 7 to the consolidated financial statements, the company is currently involved in certain legal and regulatory proceedings. if there is at least a reasonable possibility that a material loss may have been incurred associated with a pending legal and regulatory proceeding, management discloses such fact, and if reasonably estimable, management provides an estimate of the possible loss or range of possible loss. management records the best estimate of a loss related to pending legal and regulatory proceedings when the loss is considered probable and the amount can be reasonably estimated. where a range of a loss can be reasonably estimated with no best estimate in the range, management records the minimum estimated liability. as additional information becomes available, management assesses the potential liability related to pending legal or regulatory proceedings and revises the estimates and updates the disclosures accordingly. significant judgment is required by management in both the determination of probability of loss and the determination as to whether a loss is reasonably estimable.the principal considerations for our determination that performing procedures relating to legal and regulatory proceedings is a critical audit matter are the significant judgment by management when assessing the likelihood of a loss being incurred and when determining whether a reasonable estimate of the loss or range of loss can be made; this led to a high degree of auditor judgment, subjectivity and significant audit effort in evaluating management’s assessment of the loss contingencies associated with the legal and regulatory proceedings.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 evaluation of legal and regulatory proceedings, including controls over determining whether a loss is probable and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures. these procedures also included, among others: (i) obtaining and evaluating the letters of audit inquiry with external and internal legal counsel; (ii) reading certain correspondence the company received from regulators; (iii) reading certain documents the company has filed with the courts and related counterparty filings; (iv) reading certain documents issued by the courts; (v) evaluating the reasonableness of management’s process for identifying and assessing loss contingencies regarding whether an unfavorable outcome is probable and reasonably estimable; and (vi) evaluating the sufficiency of the company’s legal and regulatory proceedings disclosures in the consolidated financial statements.revenue recognition - huawei agreements as described in note 2 to the consolidated financial statements, in july 2020, the company entered into a settlement agreement with huawei to resolve their prior dispute related to their license agreement that expired on december 31, 2019 and also entered into a new long term, global patent license agreement that applies to sales of certain wireless products by huawei beginning on january 1, 2020 (collectively “huawei agreements”). amounts due under the settlement agreement are to be paid in installments by the end of june 2021 in accordance with an agreed upon payment schedule. significant evaluation and judgment were required by management in determining the appropriate accounting for the huawei agreements. management considered, among other items, (i) huawei’s commitment to perform under the huawei agreements (including huawei’s intent and ability to pay amounts due); (ii) huawei’s performance to date under the huawei agreements (including timely payments made); (iii) huawei’s current and projected financial condition (including the impact of enacted national security protection policies by the u.s. government on huawei’s business); and (iv) certain contractual protections obtained under the huawei agreements. based on this evaluation, management concluded the revenue recognition criteria were met, and recorded revenues of $1.8 billion in the fourth quarter of fiscal 2020 related to the full amount due from huawei under the settlement agreement and amounts for the march 2020 and june 2020 quarters under the new global patent license agreement. in addition, revenues recorded for the fourth quarter of fiscal 2020 included estimated royalties due from huawei for sales made in the september 2020 quarter under the new global patent license agreement. the principal considerations for our determination that performing procedures relating to revenue recognition for the huawei agreements is a critical audit matter are the significant judgment by management in determining the appropriate accounting for the huawei agreements, including evaluating the significant judgments related to determining huawei's commitment to perform its contractual obligations and probability of collection under the huawei agreements; this led to a high degree of auditor judgment, subjectivity and significant audit effort in performing procedures to evaluate the appropriateness of revenue recognized for the huawei agreements. 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 and evaluation of the huawei agreements. these procedures also included, among others, evaluating the revenue recognized for the huawei agreements and the reasonableness of significant judgments related to determining huawei’s commitment to perform its contractual obligations and probability of collection f-2under the huawei agreements. evaluating the reasonableness of management’s judgments included (i) reading the huawei agreements; (ii) performing inquiries with key members of management who were involved in the negotiation and execution of the huawei agreements; (iii) evaluating huawei’s compliance with initial payment and reporting obligations under the huawei agreements; (iv) evaluating management’s assessment of collectability, including the analysis of the impact of enacted national security protection policies by the u.s. government on huawei’s business; and (v) confirming the outstanding receivable balance from the settlement agreement as of september 27, 2020 with huawei./s/ pricewaterhouse coopers llp san diego, california november 4, 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 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. estimation of fair value of contingent payment obligations as disclosed in note 1 of the company’s consolidated financial statements, the company accounts for their secured and unsecured contingent payment obligations as long-term debt. their payment obligations are contingent upon the receipt of proceeds from patent enforcement and/or patent monetization actions. the company has elected to measure their contingent payment obligations at their estimated fair values. the company recorded the fair value of their contingent payment obligations at approximately $43,063,000 as of december 31, 2021. auditing management’s estimate of the fair value of their contingent payment obligations involved subjective evaluation and high degree of auditor judgement due to significant assumptions involved in estimating the receipt of proceeds from patent enforcement and/or patent monetization actions. addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. we obtained an understanding and evaluated the design of internal controls that address the risks of material misstatement relating to recording the contingent payment obligations at fair value. we tested the accuracy and completeness of the underlying data used in calculating the fair value. we evaluated management’s ability to accurately estimate the assumptions used to develop the fair value of the contingent payment obligations. we also involved an independent legal firm to assist in evaluating the reasonableness of the assumptions of future litigation outcomes used by the company in estimating the receipt of proceeds from patent enforcement and/or patent monetization actions. /s/ msl, p.a. 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. workers’ compensation as described in note 1 to the consolidated financial statements, in the u.s., the company has a combination of insurance and self-insurance contracts under which they effectively bear the first $1.0 million of risk per single accident. management establishes the accrual for workers’ compensation claims utilizing actuarial methods to estimate the undiscounted future cash payments that will be made to satisfy the claims, including an allowance for incurred-but-not-reported claims. as of january 3, 2021, the accrual for workers’ compensation, net of related receivables, is $54.6 million. management retains an independent consulting actuary to establish loss development factors, based on historical claims experience as well as industry experience, and applies those factors to current claims information to derive an estimate of the ultimate claims liability. in preparing the estimates, the consulting actuary considers a number of assumptions and multiple generally accepted actuarial methods in the course of preparing the loss forecast for claims. when claims exceed the applicable loss limit or self-insured retention and realization of recovery of the claim from existing insurance policies is deemed probable, management records a receivable from the insurance company for the excess amount. management evaluates the accrual quarterly throughout the year and makes adjustments as needed.the principal considerations for our determination that performing procedures relating to workers’ compensation is a critical audit matter are (i) the significant judgment by management when determining the actuarial methods and the significant assumptions to use in establishing the accrual for workers’ compensation claims; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s actuarial methods and significant assumptions related to the loss development factors; 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 accrual for workers’ compensation claims, including controls over the actuarial methods and development of significant assumptions. these procedures also included, among others (i) the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate for the accrual for workers’ compensation claims and (ii) comparing the independent estimate to management’s estimate to evaluate the reasonableness of management’s estimate. developing the independent estimate involved (i) testing the completeness and accuracy of underlying data provided by management; (ii) evaluating management’s actuarial methods and significant assumptions related to the loss development factors; and (iii) independently developing the loss development factors and actuarial methods used.goodwill impairment assessment - americas staffing and global talent solutions (“gts”) reporting units as described in note 10 to the consolidated financial statements, the company’s consolidated goodwill balance was $3.5 million as of january 3, 2021. management performs its annual goodwill impairment testing in the fourth quarter each year and regularly assesses whenever events or circumstances make it more likely than not that an impairment may have occurred. during the first quarter of 2020, negative market reaction to the covid-19 crisis, including declines in the company’s common stock price, caused the market capitalization to decline significantly compared to the fourth quarter of 2019, causing a triggering event. therefore, management performed an interim step one quantitative test for reporting units with goodwill, americas staffing and gts, and determined that the estimated fair values of both reporting units no longer exceeded their carrying values. based on the result of the interim goodwill impairment test in the first quarter of 2020, management recorded a goodwill impairment charge of $147.7 million to write off goodwill for both reporting units. management determined the fair value of each reporting unit using the income approach, which was validated through reconciliation to observable market 53capitalization data. management’s analysis used significant assumptions including expected future revenue and expense growth rates, profit margins, discount rate, forecasted capital expenditures and working capital. the principal considerations for our determination that performing procedures relating to the goodwill impairment assessment for the americas staffing and gts 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 related to expected future revenue growth rates, profit margins and the 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 goodwill impairment assessment, including controls over the valuation of the americas staffing and gts reporting units. these procedures also included, among others (i) testing management’s process for developing the fair value measurement of the reporting units; (ii) evaluating the appropriateness of the income approach, including testing management’s reconciliation to observable market capitalization data; (iii) testing the completeness and accuracy of underlying data used in the model; and (iv) evaluating the significant assumptions used by management related to the expected future revenue growth rates, profit margins and the discount rate. evaluating management’s assumptions related to the expected future revenue growth rates and profit margins involved evaluating whether the assumptions used by management 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 management’s income approach and the discount rate assumption./s/ pricewaterhouse coopers llp detroit, michigan february 18, 2021 we have served as the company’s auditor since 1960.

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.45 valuation of indefinite-lived intangible assets, including goodwill description of the matter at december 31, 2021, the company’s goodwill and trade names were $664 million and $384 million, respectively. as discussed in note 2 to the consolidated financial statements, goodwill and trade names are tested for impairment annually or more frequently if certain indicators arise. for purposes of testing goodwill for impairment, the company identified two reporting units which are the wholesale and the retail reporting units. as of december 31, 2021, the company has not recorded any impairment charges to goodwill or tradenames. auditing management’s impairment tests associated with its goodwill and trade names included especially subjective judgements due to the estimation required in determining the fair value of the reporting units and the value of the other indefinite lived intangibles. in particular, the fair value estimates were dependent on significant assumptions, such as the weighted average cost of capital, revenue and earnings before interest, taxes, depreciation, and amortization (“ebitda”) margin growth rates, royalty rates and projected cash flow terminal growth rates that are affected by expected future 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 internal controls over the company's impairment assessments, including management's review controls over the determination of the significant assumptions described above and the data underlying these assumptions. to test the estimated fair value of the company’s reporting units and trade names, we performed audit procedures that included, among others, assessing the valuation methodologies used and testing management’s significant assumptions, discussed above, by comparing them to current industry and economic trends, trends in customer demands and other external factors. we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units and trade names that would result from changes in the assumptions. we involved our valuation specialists to assist in reviewing the valuation methodology, the weighted average cost of capital and other significant assumptions. in addition, as part of our auditing of goodwill, we reviewed the reconciliation of the fair value of the reporting units to the overall market capitalization of the company. retail inventory reserves description of the matter the company's inventories, net of reserves totaled $443 million as of december 31, 2021. as described in note 2 to the consolidated financial statements, inventories are valued at the lower of cost and net realizable value. auditing management's estimates of the net realizable value of its inventory and reserves at retail for excess and obsolete inventory, involved especially subjective auditor judgment as such estimates are based on various factors that are affected by market and economic conditions. in particular, the net realizable value, obsolete and excess inventory reserve calculations are sensitive to certain significant assumptions, including expected sales demand, manufacturing schedules, pricing strategies, and the effect of the possible discontinuation of product designs. 46 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 inventory reserve process, including management's review controls over the determination of the significant assumptions and the data underlying the calculations of the net realizable value of inventory and the excess and obsolete inventory reserves.our procedures included, among others, evaluating the significant assumptions, identified above, and testing the accuracy and completeness of the underlying data used in management's inventory reserve calculation. we recalculated the reserve using management’s methodology and evaluated the methodology and the significant assumptions for reasonableness. we also evaluated management’s retrospective analysis to assess the historical accuracy of the inventory reserves and performed sensitivity analyses over the significant assumptions to evaluate whether changes to these assumptions may result in material changes in the calculated inventory reserves. /s/ ernst & young llp we have served as the company’s auditor since 1998.

critical audit matters. we cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. if some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. in addition, the jobs act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. this allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. we have elected to avail ourselves of this exemption, and the reported results of operations contained in our financial statements may not be directly comparable to those of other public companies. accordingly, we will incur additional costs in connection with complying with the accounting standards applicable to public companies at such time or times as they become applicable to us. 69 we are also a “smaller reporting company,” as defined under regulation s-k. we would cease to be a smaller reporting company if we have (i) more than $250 million in market value of our shares held by non-affiliates as of the last business day of our second fiscal quarter or (ii) more than $100 million of annual revenues in our most recent fiscal year completed before the last business day of our second fiscal quarter and a market value of our shares held by non-affiliates more than $700 million as of the last business day of our second fiscal quarter. 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. changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial condition and results of operations. accounting principles and related pronouncements, implementation guidelines and interpretations we apply to a wide range of matters that are relevant to our business, including, but not limited to, revenue recognition, leases and stock-based compensation, are complex and involve subjective assumptions, estimates and judgments by our management. changes in accounting pronouncements or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected financial performance. item 1b. unresolved staff comments. none item 2. properties. our corporate headquarters and manufacturing and clinical training facilities are located in andover, massachusetts, where we lease 54,000 square feet of space, including a 10,500 square foot laboratory and training facility and a 2,400 square foot class 10,000 re-configurable cleanroom facility. the leases for these facilities expire on december 31, 2021. in january 2020, we amended the leases to include an additional 39,744 square feet of space for general office use and an additional 11,735 square feet of space of operation use. we also extended the lease term to december 31, 2026 with an option to extend the term beyond the new expiration date for one additional period of five years. we believe that our current facilities are adequate to meet our current needs, although we may seek to negotiate new leases or evaluate additional or alternate space for our operations. we believe appropriate alternative space would be readily available on commercially reasonable terms. item 3. legal proceedings. we are not currently subject to any material legal proceedings. from time to time, we may be involved in legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business.item 4. mine safety disclosures.not applicable.70 part ii item 5. market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities. certain information regarding the trading of our common stock our common stock trades under the symbol “tmdx” on the nasdaq global market and has been publicly traded since may 2, 2019. prior to this time, there was no public market for our common stock. holders of our common stock as of february 29, 2020, there were approximately 41 holders of record of shares of our common stock. these amounts do not include stockholders for whom shares are held in “nominee” or “street” name.securities authorized for issuance under equity compensation plans information about our equity compensation plans will be included in our definitive proxy statement to be filed with the sec with respect to our 2020 annual meeting of stockholders and is incorporated herein by reference.recent sales of unregistered equity securities the information required by item 701 of regulation s-k was previously included in quarterly reports on form 10-q filed on june 12, 2019 and august 8, 2019. use of proceeds from initial public offering our ipo was effected through a registration statement on form s-1 (file no. 333-230736), which was declared effective by the sec on may 1, 2019 and a registration statement on form s-1mef (file no. 333-231166), which was automatically effective upon filing with the sec on may 1, 2019. the net offering proceeds to us, after deducting underwriting discounts and commissions and other offering expenses, were $91.4 million. none of the net proceeds were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10.0% or more of any class of our equity securities or to any other affiliates, other than payments in the ordinary course of business to officers for salaries and to non-employee directors as compensation for board or board committee service. as of december 28, 2019, we estimate that we have used approximately $16.7 million of the net proceeds from our ipo for commercialization of ocs lung, research and development, and general corporate purposes. we are holding a significant portion of the remaining net proceeds in money market funds, u.s. treasury securities and u.s. government agency bonds. there has been no material change in our planned use of the net proceeds from the ipo as described in the final prospectus filed pursuant to rule 424(b)(4) under the securities act, with the sec, on may 2, 2019.issuer purchases of equity securities we did not purchase any of our registered equity securities during the period from september 29, 2019 to december 28, 2019.dividends we have never declared or paid any dividends on our capital stock. we do not anticipate declaring or paying any cash dividends on our capital stock in the foreseeable future. any future determination to declare and pay cash dividends, if any, will be made at the discretion of our board of directors and will depend on a variety of factors, including applicable laws, our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, general business or financial market conditions and other factors our board of directors may deem relevant. in addition, our credit agreement contains covenants that restrict our ability to pay cash dividends. item 6. selected financial data. we are a smaller reporting company, as defined in rule 12b-2 under the securities exchange act of 1934, as amended, for this reporting period and are not required to provide the information required under this item. 71 item 7. management’s discussion and analysis of financial condition and results of operations. the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. as a result of many factors, including those factors set forth in the “item 1.a. risk factors” section of this annual report on form 10-k, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis overview we are a commercial-stage medical technology company transforming organ transplant therapy for end-stage organ failure patients across multiple disease states. we developed the ocs to replace a decades-old standard of care that we believe is significantly limiting access to life-saving transplant therapy for hundreds of thousands of patients worldwide. our innovative ocs technology replicates many aspects of the organ’s natural living and functioning environment outside of the human body. as such, the ocs represents a paradigm shift that transforms organ preservation for transplantation from a static state to a dynamic environment that enables new capabilities, including organ optimization and assessment. we believe our substantial body of clinical evidence has demonstrated the potential for the ocs to significantly increase the number of organ transplants and improve post-transplant outcomes. we developed the ocs to comprehensively address the major limitations of cold storage. the ocs is a portable organ perfusion, optimization and monitoring system that utilizes our proprietary and customized technology to replicate near-physiologic conditions for donor organs outside of the human body. we designed the ocs technology platform to perfuse donor organs with warm, oxygenated, nutrient-enriched blood, while maintaining the organs in a living, functioning state; the lung is breathing, the heart is beating and the liver is producing bile. because the ocs significantly reduces injurious ischemic time on donor organs as compared to cold storage and enables the optimization and assessment of donor organs, it has demonstrated improved clinical outcomes relative to cold storage and offers the potential to significantly improve donor organ utilization. we designed the ocs to be a platform that allows us to leverage core technologies across products for multiple organs. to date, we have developed three ocs products, one for each of lung, heart and liver transplantations, making the ocs the only multi-organ technology platform. our ocs products have been used for over 1,500 human organ transplants. during our clinical trials, we established relationships with over 55 leading transplant programs worldwide. we have commercialized the ocs lung and ocs heart outside of the united states and received our first pma approval from the fda in march 2018 for the use in the united states of the ocs lung for donor lungs currently utilized for transplantation and since may 2019, for donor lungs currently unutilized for transplantation. we expect fda action over the next six months on additional applications for pm as we have submitted in connection with our other ocs products. since our inception, we have focused substantially all of our resources on designing, developing and building our proprietary ocs technology platform and organ-specific ocs products; obtaining clinical evidence for the safety and effectiveness of our ocs products through clinical trials; securing regulatory approval; organizing and staffing our company; planning our business; raising capital; and providing general and administrative support for these operations. to date, we have funded our operations primarily with proceeds from sales of preferred stock and borrowings under loan agreements, proceeds from the sale of common stock in our ipo and revenue from clinical trials and commercial sales of our ocs products.since our inception, we have incurred significant operating losses. our ability to generate net revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. we generated net revenue of $23.6 million and $13.0 million for the fiscal years ended december 28, 2019 and december 29, 2018, respectively. we incurred net losses of $33.5 million and $23.8 million, respectively, for those same years. as of december 28, 2019, we had an accumulated deficit of $369.5 million. we expect to continue to incur net losses for the foreseeable future as we focus on growing commercial sales of our products in both the u.s. and select non-u.s. markets, including growing our sales and clinical adoption team, which will pursue increasing commercial sales and clinical adoption of our ocs products; scaling our manufacturing operations; continuing research, development and clinical trial efforts; and seeking regulatory clearance for new products and product enhancements, including new indications, in both the u.s. and select non-u.s. markets. further, following the closing of our ipo we have incurred and expect to continue to incur additional costs associated with operating as a public company. as a result, we will need substantial additional funding for expenses related to our operating activities, including selling, general and administrative expenses and research, development and clinical trials expenses. 72 on may 6, 2019, we completed our ipo, pursuant to which we issued and sold 6,543,500 shares of common stock, inclusive of 853,500 shares we sold pursuant to the full exercise of the underwriters’ option to purchase additional shares. the aggregate net proceeds received by us from the ipo were $91.4 million, after deducting underwriting discounts and commissions as well as other offering costs of $6.0 million.on may 6, 2019, immediately prior to the completion of our ipo, we completed a corporate reorganization whereby trans medics, inc., the direct parent of trans medics group, inc. prior to the corporate reorganization, became a direct, wholly-owned subsidiary of trans medics group, inc. pursuant to the merger of tmdx, inc., a direct, wholly-owned subsidiary of trans medics group, inc. prior to the corporate reorganization, merged with and into trans medics, inc., with trans medics, inc. as the surviving corporation. as part of the transactions, each outstanding share of capital stock of trans medics, inc. was converted into shares of common stock of trans medics group, inc. each outstanding option to purchase shares of common stock of trans medics, inc. was converted into an outstanding option to purchase shares of common stock of trans medics group, inc. and each outstanding warrant to purchase shares of preferred stock of trans medics, inc. was converted into a warrant to purchase shares of common stock of trans medics group, inc.. because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. until such time, if ever, as we can generate substantial net revenue sufficient to achieve profitability, we expect to finance our operations through a combination of equity offerings, debt financings and strategic alliances. we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms or at all. if we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations. we believe that the net proceeds from our ipo, together with our cash and cash equivalents, and marketable securities, will enable us to fund our operating expenses, capital expenditure requirements and debt service payments for at least the next 12 months. we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. see “—liquidity and capital resources.” components of our results of operations net revenue we generate revenue primarily from sales of our single-use, organ-specific disposable sets (i.e., our organ-specific ocs perfusion sets sold together with our organ-specific ocs solutions) used on our organ-specific ocs consoles, each being a component of our ocs products. to a lesser extent, we also generate revenue from the sale of ocs consoles to customers and from the implied rental of ocs consoles loaned to customers at no charge. for each new transplant procedure, customers purchase an additional ocs disposable set for use on the customer’s existing organ-specific ocs console. all of our revenue has been generated by sales to transplant centers in the united states, europe and asia-pacific, or, in some cases, to distributors selling to transplant centers in select countries. substantially all of our customer arrangements have multiple-performance obligations that contain deliverables consisting of ocs perfusion sets and ocs solutions. in some of those multiple-element arrangements, the deliverables also include an ocs console, whether sold or loaned to the customer. some of our revenue has been generated from products sold in conjunction with the clinical trials conducted for our ocs products, under arrangements referred to as customer clinical trial agreements. under most of these customer clinical trial agreements, we place an organ-specific ocs console at the customer site for its use free of charge for the duration of the clinical trial, and the customer separately purchases from us the ocs disposable sets used in each transplant procedure during the clinical trial. when we loan the ocs console to the customer, we retain title to the console at all times and do not require minimum purchase commitments from the customer related to any ocs products. in such cases, we invoice the customer for ocs disposable sets based on customer orders received for each new transplant procedure and the prices set forth in the customer agreement. over time, we typically recover the cost of the loaned ocs console through the customer’s continued purchasing and use of additional ocs disposable sets. for these reasons, we have determined that part of the arrangement consideration for the disposable set is an implied rental payment for use of the ocs console. we intend to continue to loan ocs consoles to some of our customers during commercialization of our ocs products. 73 because all elements of a customer order are delivered and recognized as revenue at the same time and because revenue allocated to elements other than ocs disposable sets, such as implied rental income and service revenue, is insignificant, all elements of revenue from customer arrangements are classified as a single category of revenue in our consolidated statements of operations. under some of our customer clinical trial agreements, we make payments to our customers for reimbursements of clinical trial materials and for specified clinical documentation related to their use of our ocs products. because some of these payments do not provide us with a separately identifiable benefit, we record such payments as a reduction of revenue from the customer, resulting in our net revenue presentation. we recorded reimbursable clinical trial costs as a reduction of revenue of $2.2 million and $1.6 million for the fiscal years ended december 28, 2019 and december 29, 2018, respectively.prior to the fourth quarter of 2018, all of our net revenue in the united states had been generated from sales of ocs disposable sets sold in conjunction with clinical trials conducted for our ocs products. in march 2018, we received our first pma for the ocs lung, and we began commercial sales of this product in the united states during the fourth quarter of 2018. therefore, commencing in the fourth quarter of 2018, our net revenue in the united states is derived from both clinical trial sales and commercial sales and consists primarily of sales of ocs disposable sets and, to a much lesser extent, sales of ocs consoles. in may 2019, we received our second fda pma approval for the ocs lung for additional clinical indications. we expect to continue to have u.s. clinical trial sales for our ocs heart and ocs liver products until we receive similar fda pma approvals for those products. historically, our net revenue in the united states fluctuated from period to period as a result of the timing of patient enrollment in our clinical trials. our net revenue during periods of patient enrollment has been higher due to the sale of ocs disposable sets for use during these clinical trials, as compared to periods during which our clinical trials were not actively enrolled. our ocs heart expand trial began patient enrollment in september 2015 and completed patient enrollment in march 2018. our liver protect trial began enrollment in january 2016 and completed enrollment in october 2019. our ocs lung expand ii trial began patient enrollment in march 2018 and has stopped enrollment as of june 24, 2019 since we received fda pma approval for the ocs lung expand indication. our ocs heart expand cap trial and our ocs heart dcd trial began patient enrollment in may 2019 and december 2019, respectively, and are currently enrolling patients. our ocs liver protect cap trial began patient enrollment in february 2020 and is currently enrolling patients. our net revenue may continue to fluctuate from period to period as a result of the timing of ongoing clinical trials in which our ocs products are used. through december 28, 2019, all of our sales outside of the united states have been commercial sales (unrelated to any clinical trials) and our net revenue has been generated primarily from sales of ocs disposable sets and, to a much lesser extent, sales of ocs consoles. commercial sales of ocs disposable sets generally have a higher average selling price than clinical trial sales of ocs disposable sets. we expect that our net revenue will increase in the future as a result of receiving our first two fda pma approvals for the ocs lung in the united states in march 2018 and may 2019 and any potential future fda approvals in the united states for ocs heart and ocs liver. we also expect that our net revenue will increase as a result of anticipated growth in non-u.s. sales if national healthcare systems begin to reimburse transplant centers for the use of the ocs, if transplant centers utilize the ocs in more transplant cases, and if more transplant centers adopt the ocs in their programs. our consolidated financial results for the fiscal year ended december 28, 2019 reflect our adoption of asc 606, revenue from contracts with customers, as of december 30, 2018, applied using the modified retrospective method. under this method, (i) the new guidance was applied to customer contracts that were not yet completed as of december 29, 2018, with the cumulative effect of initially applying the new guidance being recorded as an adjustment to accumulated deficit on the effective date of adoption, and (ii) our historical results for all periods prior to december 30, 2018, including for the fiscal year ended december 29, 2018 are not adjusted. our adoption of asc 606 did not have a material impact on our consolidated financial statements, and the revenue recognition of our ocs products remained substantially unchanged. the impact of the adoption of asc 606 on our consolidated financial statements is described in note 2 to our consolidated financial statements included elsewhere in this annual report on form 10-k. cost of revenue, gross profit and gross margin cost of revenue consists primarily of costs of components of our ocs consoles and disposable sets, costs of direct materials, labor and the manufacturing overhead that directly supports production, and costs related to the depreciation of ocs consoles loaned to customers. when we loan an ocs console to a customer for its use free of charge, we capitalize as property and equipment the cost of our ocs console and depreciate these assets over the five-year estimated useful life of the console. 74 included in the cost of disposable sets is the cost of our ocs lung, ocs heart and ocs liver solutions. in the fiscal year ended december 29, 2018, if we did not meet our annual obligation to purchase minimum quantities from our supplier of ocs lung solution, we were obligated to pay a premium equal to the order shortfall multiplied by a specified price. we capitalized any estimated premium we expected to pay at the end of each year as an adjustment to the inventory cost of ocs lung solution ordered during that year. the capitalized inventory adjustment is recognized as a component of cost of revenue when related ocs disposable sets are sold. we expect that cost of revenue will increase in absolute dollars primarily as, and to the extent that, our net revenue increases. gross profit is the amount by which our net revenue exceeds our cost of revenue in each reporting period. we calculate gross margin as gross profit divided by net revenue. our gross margin has been and will continue to be affected by a variety of factors, primarily production volumes, the cost of components and direct materials, manufacturing costs, headcount, the selling price of our ocs products and fluctuations in amounts paid by us to customers related to reimbursements of their clinical trial expenses. we expect that cost of revenue as a percentage of net revenue will decrease and gross margin and gross profit will increase over the long term as our sales and production volumes increase and our cost per unit of our disposable sets decreases due to efficiencies of scale. we intend to use our design, engineering and manufacturing capabilities to further advance and improve the efficiency of our manufacturing processes, which we believe will reduce costs and increase our gross margin. as utilization by customers of our ocs products increases, we expect that a greater number of ocs disposable sets will be used per year on the same ocs console, thereby driving overall gross margin improvement. because we expect that the number of ocs disposable sets sold over time will be significantly greater than the number of ocs consoles sold or loaned to customers over that same period, we expect that our gross margin improvement will not be significantly affected by the number of ocs consoles that we sell or loan to customers. while we expect gross margin to increase over the long term, it will likely fluctuate from quarter to quarter. operating expenses research, development and clinical trials expenses research, development and clinical trials expenses consist primarily of costs incurred for our research activities, product development, hardware and software engineering, clinical trials to develop clinical evidence of our products’ safety and effectiveness, regulatory expenses, testing, consultant services and other costs associated with our ocs technology platform and ocs products, which include: •employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research, hardware and software development, regulatory and clinical trial functions; •expenses incurred in connection with the clinical trials of our products, including under agreements with third parties, such as consultants, contractors and data management organizations; •the cost of maintaining and improving our product designs, including the testing of materials and parts used in our products; •laboratory supplies and research materials; and •facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance. we expense research, development and clinical trials costs as incurred. in the future, we expect that research, development and clinical trials expenses will increase due to ongoing product development and approval efforts. we expect to continue to perform activities related to obtaining additional regulatory approvals for expanded indications in the united states and to developing the next generation of our ocs technology platform. selling, general and administrative expenses selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in our sales and clinical adoption team and personnel in executive, marketing, finance and administrative functions. selling, general and administrative expenses also include direct and allocated facility-related costs, promotional activities, marketing, conferences and trade shows as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. we expect to continue to increase headcount in our sales and clinical adoption team and increase marketing efforts as we continue to grow commercial sales of our ocs products in both u.s. and select non-u.s. markets. 75 we expect that our selling, general and administrative expenses will increase as we increase our headcount to support the expected continued sales growth of our ocs products. we also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company. other income (expense) interest expense interest expense consists of interest expense associated with outstanding borrowings under a prior loan agreement and our existing loan agreement as well as the amortization of debt discount associated with such agreements. we expect our interest expense will increase in connection with our credit agreement with orbi med, under which we borrowed $35.0 million in june 2018. at that time, we repaid the remaining $6.7 million of principal that had been outstanding under our prior loan and security agreement with hercules technology growth capital, or hercules, thereby increasing our total debt by $28.3 million. change in fair value of preferred stock warrant liability in connection with our prior loan and security agreement, as amended, with hercules, we issued warrants to purchase preferred stock. we classified these warrants as a liability on our consolidated balance sheet that we remeasured to fair value at each reporting date, and we recognized changes in the fair value of the warrant liability as a component of other income (expense) in our consolidated statements of operations. on may 6, 2019, immediately prior to the closing of our ipo, the warrants to purchase preferred stock were converted into warrants to purchase common stock, and the fair value of the warrant liability at that time was reclassified to common stock. as a result, subsequent to the closing of our ipo, we no longer remeasure the fair value of the warrant liability at each reporting date. other income (expense), net other income (expense), net includes interest income, foreign currency transaction gains and losses and other non-operating income and expense items unrelated to our core operations, including the loss on extinguishment of debt that we recognized in june 2018 in connection with our repayment of borrowings under our loan and security agreement with hercules. interest income consists of interest earned on our invested cash balances. foreign currency transaction gains and losses result from intercompany transactions as well as transactions with customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded. provision for income taxes since our inception, we have not recorded any u.s. federal or state income tax benefits for the net operating losses we have incurred in each year or for the research and development tax credits we generated in the united states, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credits will not be realized. in reporting periods subsequent to 2016, we

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.47 defense segment revenue – refer to note 3 to the financial statements critical audit matter description the company’s defense segment recognized revenue on long-term contracts primarily with the u.s. government for the production of goods, the provision of services, or a combination of both totaling $2,482.1 million for the year ended september 30, 2021. the company’s firm-fixed long-term contracts are typically accounted for as a single performance obligation because the goods and services are generally customized and have complex inter-relationships and the company is responsible for overall management of the contract. the company recognizes revenue on defense segment contracts as performance obligations are satisfied and control of the underlying goods and services is transferred to the customer. the company measures progress based on the ratio of costs incurred to date to total estimated costs for the performance obligation under the cost-to-cost method of percentage-of-completion. the estimated costs to complete for the joint light tactical vehicles (jltv) contract represents the majority of the total estimated costs to complete in the defense segment as of september 30, 2021. given the complexity of this contract and the length of the contract term, together with the significant judgments necessary to estimate costs used to measure progress on this contract, auditing the estimates of costs for this contract required extensive audit effort and a high degree of auditor judgment, especially given the risks of contract performance, such as labor and material costs, schedule, and duration.how the critical audit matter was addressed in the audit our audit procedures related to the estimated costs for the jltv contract included the following, among others:•we tested the effectiveness of controls over revenue recognized over time, including management’s controls over estimated costs.•we evaluated the appropriateness and consistency of the methods and assumptions used by management to develop the estimates of costs to completion.•we tested the mathematical accuracy of management’s estimates of costs to completion. •we evaluated the estimates of costs to completion by performing the following: o observed completed vehicles and trailers on a sample basis to evaluate the progress to completion. o compared costs incurred to date to the costs management estimated to be incurred to date. o evaluated management’s ability to achieve the estimates of costs to completion by performing corroborating inquiries with the company’s project managers and engineers, and comparing the estimates to management’s work plans, engineering specifications, and supplier contracts.•we evaluated management’s ability to accurately estimate costs to completion by comparing actual results to management’s historical estimates and actual results on similar completed contracts. /s/ deloitte & touche llp milwaukee, wisconsin november 16, 2021we 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.regulatory accounting - impact of rate regulation on the financial statements - refer to note 2 to the financial statements critical audit matter description the company’s utility companies are subject to rate regulation by one or more of the federal energy regulatory commission and the connecticut, massachusetts, and new hampshire state public utility authorities (the “commissions”) that is based on cost recovery and meets the criteria for application of accounting guidance for rate-regulated operations, which considers the effect of regulation on the timing of the recognition of certain revenues and expenses. the regulated companies’ financial statements reflect the effects of the rate-making process. the rates charged to the customers of the company’s regulated companies are designed to collect each company’s cost to provide service, plus a return on investment.the application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities. regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates. regulatory assets are amortized as the incurred costs are recovered through customer rates. in some cases, the company records regulatory assets before approval for recovery has been received from the applicable regulatory commission. the company must use judgment to conclude that costs deferred as regulatory assets are probable of future recovery. the company bases its conclusion on certain factors, including, but not limited to, regulatory precedent. regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.the company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the financial statements. management believes it is probable that each of the regulated companies will recover its respective investment in long-lived assets, including regulatory assets. if management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to any of the regulated companies' operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.52accounting for the economics of rate-regulation impacts multiple financial statement line items and disclosures, such as regulated property, plant, and equipment, regulatory assets and liabilities, operating revenues and depreciation expense. while management has indicated it expects to recover costs from customers through regulated rates, there is a risk that the commissions will not approve full recovery of such costs or full recovery of all amounts invested in the utility business and a reasonable return on that investment. we identified the impact of rate-regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impact of future regulatory orders on the financial statements. management judgments include assessing the probability of recovery in future rates of incurred costs and a refund to customers. given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the commissions, auditing these judgments requires specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.how the critical audit matter was addressed in the audit our audit procedures related to the uncertainty of future decisions by the commissions included the following, among others:we tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. we tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.we evaluated the company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements.we read relevant regulatory orders issued by the commissions for the company and other public utilities in connecticut, massachusetts, and new hampshire, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedence of the commissions’ treatment of similar costs under similar circumstances. we evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.for regulatory matters in process, we inspected the company’s filings with the commissions and the filings with the commissions by intervenors that may impact the company’s future rates, for any evidence that might contradict management’s assertions.we obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates./s/ deloitte & touche llp hartford, connecticut february 26, 2020 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 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.sufficiency of audit evidence over revenue as discussed in note 3 to the consolidated financial statements, the company earned $2.48 billion of revenue in 2020. the company earned revenue by payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers (collectively services). the services were provided to customers in approximately 175 countries through 66 different business offices in 43 countries within 3 different reportable operating segments.we identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. the company’s geographical dispersion of services worldwide, amongst various business lines required especially subjective auditor judgment in evaluating the sufficiency of audit evidence over revenue. further, our audit team consisted of auditors located in various countries worldwide. this required especially challenging auditor judgment in the level of audit procedures and supervision applied at each country. the following are the primary procedures we performed to address this critical audit matter. we applied auditor judgment to determine the nature and extent of procedures to be performed over revenue, including the determination of locations at which those procedures were to be performed. at each company location selected, we: evaluated the design and tested the operating effectiveness of certain internal controls related to the company’s revenue process, including controls over the accurate recording of revenue amountsassessed the training and experience of the auditors on our audit team that were in countries other than the united statestested a sample of individual revenue transactions by comparing amounts recognized by the company to relevant contracts and or payment and transaction support.we evaluated the sufficiency of audit evidence obtained over revenue by assessing the results of procedures performed, including the appropriateness of such evidence. 65goodwill impairment analysis for one reporting unit in the money transfer segment as discussed in note 3 and 9 to the consolidated financial statements, the company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that it is more likely than not (more than 50%) that the fair value of a reporting unit is less than its carrying amount. the goodwill balance as of december 31, 2020 was $665.8 million. during the year ended december 31, 2020, the company recognized an impairment charge of $104.6 million, including a charge of $82.7 million for one reporting unit in the money transfer segment. the fair value of this one reporting unit in the money transfer segment was determined using a weighting of a discounted cash flow model and market multiples valuation technique.we identified the evaluation of the goodwill impairment analysis for this one reporting unit in the money transfer segment as a critical audit matter. subjective auditor judgment was required in evaluating certain assumptions used to estimate the fair value of the reporting unit, including assumptions related to (1) forecasted revenue growth rates, (2) forecasted operating expense excluding depreciation, amortization, and impairment, (3) discount rate, and (4) earnings before interest, taxes, depreciation, and amortization (ebitda) market multiple. changes to these assumptions could have a significant effect on the fair value determination and assessment of the carrying value of the goodwill. specialized skills and knowledge were required in the assessment of the discount rate and ebitda market multiple.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 goodwill impairment assessment process, including controls related to the development of the significant assumptions. we evaluated the company’s forecasted revenue growth rates and forecasted operating expense excluding depreciation, amortization and impairment assumptions by comparing them to external market and industry data. we compared the company’s historical forecasted results to actual results to assess the company’s ability to accurately forecast. we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating (1) the company’s discount rate by comparing it against a discount rate range that was independently developed using publicly available third-party market data for comparable entities, and (2) the company’s ebitda market multiple, by comparing it against a range of ebitda multiples developed using publicly available third-party market data for comparable entities. /s/ kpmg llp we have served as the company's auditor since 2003.

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. estimate of workers' compensation and general liability self-insurance reserves description of the matter at january 30, 2021, the company’s net reserves for workers’ compensation and general liability self-insurance risks were $5.3 million. as discussed in note 1 of the consolidated financial statements, the company retains a significant portion of risk for its workers’ compensation and general liability exposures. accordingly, provisions are recorded based upon periodic estimates of such losses, as determined by management. the future claim costs for the workers’ compensation and general liability exposures are estimated using actuarial methods that consider assumptions for a number of factors including, but not limited to, historical claims experience, the severity of accidents and the average size of claims. auditing management’s estimate of the recorded workers’ compensation and general liability self-insurance reserves was complex and judgmental due to the significant assumptions and judgments required by management in projecting the exposure on incurred claims that remain unresolved, including those which have occurred but not yet been reported to the company.42 how we addressed the matter in our audit we obtained an understanding of the company’s accounting for self-insurance exposures. for example, we gained an understanding of management’s process for reviewing the appropriateness of the significant assumptions described above, including the completeness and accuracy of the underlying data, as well as the process for reviewing the actuarial calculations. to test the company’s estimate of the self-insurance reserves, we performed audit procedures that included, among others, assessing the actuarial valuation methodologies utilized by management, testing the significant assumptions described above, testing the related underlying data used by the company in its evaluation for completeness and accuracy, and testing the mathematical accuracy of the calculations. our audit procedures also included, among others, comparing the significant assumptions used by management to industry accepted actuarial assumptions and reassessing the accuracy of management’s historical estimates utilized in prior period evaluations. we involved our actuarial valuation specialists to assist in assessing the valuation methodologies and significant assumptions noted above and to develop an independent range of estimates for the insurance reserves which were then compared to management’s estimates. impairment of long-lived assets description of the matter as more fully described in notes 1 and 11 of the consolidated financial statements, the company evaluates if there are indicators of impairment for long-lived assets in accordance with asc 360, property, plant, and equipment. the company’s first step is to determine whether indicators of impairment exist in its long-lived assets, including lease right of use assets, when events or changes in circumstances dictate that their carrying value may not be recoverable. this review includes the evaluation of individual under-performing retail stores and assessing the recoverability of the carrying value of the assets related to the stores. future cash flows are projected for the remaining lease life. if the estimated future cash flows are less than the carrying value of the assets, the company records an impairment charge equal to the difference between the assets’ fair value and carrying value. the fair value is estimated using a discounted cash flow approach considering such factors as sales levels, gross margins, and other expenses as well as the overall operating environment specific to that store. significant assumptions utilized in the fair value analyses for stores include estimating undiscounted future cash flows of the asset or asset group, estimating market participant rents, and estimating a discount rate that approximates the cost of capital of a market participant. auditing the company’s store impairment analysis was complex and involved a high degree of subjectivity, as it included assessing the assumptions utilized to project the undiscounted cash flows to be generated by retail stores with indicators of impairment, for purposes of determining if such cash flows were less than the carrying amount. further, auditing this analysis also involved evaluating the assumptions utilized to estimate the fair value of those retail stores to calculate any impairment. 43how we addressed the matter in our audit we obtained an understanding of the company’s processes over the identification of indicators of impairment, the assessment of the projected undiscounted cash flows to be generated by retail stores with indicators of impairment, the determination of the fair value of the retail stores and the measurement of any resulting impairment. this process includes, among others, review of the assumptions utilized to develop the projected undiscounted cash flows and the related fair value estimates, and management’s evaluation of the completeness and accuracy of the underlying data utilized to project future operating results for the retail stores. our testing of the company’s impairment analyses included, among other procedures, inspecting the company’s analysis of historical results to determine if contrary evidence existed as to the completeness of the population of potentially impaired retail stores. additionally, we evaluated the significant assumptions discussed above used to project the undiscounted cash flows and the incremental assumptions discussed above used to estimate fair value. for example, we compared the significant assumptions used by management to historical results, current industry and economic trends, changes in the company’s business model, and other relevant factors. 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. we involved our valuation specialists to assist in our evaluation of the fair value estimate specific to evaluating market participant real estate data. /s/ ernst & young llp we have served as the company’s auditor since 2006.

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 56table 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, 2021we have served as the company’s auditor since 2001.

critical audit matters thecritical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicatedor required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financialstatements and (2) involved our especially challenging, subjective, or complex judgments. the communication of critical audit mattersdoes not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical auditmatters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. f-2 valuationof long-lived assets descriptionof the matter duringthe fourth quarter of 2021, the company made the decision to write-off certain assets associated with its carbon segment. as furtherdescribed in note 2 and note 3, the company recorded a long-lived asset impairment charge of $2,700,000. auditingthe company’s long-lived asset impairment analysis was complex and highly judgmental due to the significant qualitativejudgment required to determine the realization of the long-lived asset group. howwe addressed the matter weobtained an understanding, evaluated the design and tested the operating effectiveness of controls over the company’s long-livedasset impairment evaluation process, including controls over management’s review of the significant assumptions described above.our audit procedures to evaluate the measurement of the company’s long-lived asset impairment loss included, among others, evaluatingthe reasonableness of management’s significant assumptions. we also reviewed historical reports of a third-party valuation specialiststo establish an understanding of the assets being considered and their ability to be marketed for sale given the length of time suchassets have been idle, and the geography of such assets. in addition, we evaluated the company’s disclosures related to the mattersdescribed above. valuationof inventory descriptionof the matter asof december 31. 2021, the company had approximately $2,100,000 of inventory. as discussed in note 2, inventory is valuedat the lower of cost or net realizable value. the company evaluates and reduces inventory for the excess, slow moving and/or poor productquality issues. we determined valuation of inventory to be a critical audit matter based on the high degreeof management judgment necessary in assessing valuation and any necessary write-downs. howwe addressed the matter weobtained an understanding, evaluated the design and tested the operating effectiveness of controls over the company’s inventoryvaluation process, including controls over management’s review of the significant assumptions described above. ouraudit procedures included: ●physical observation of inventory; ●examining the company’s analysis of raw materials, work-in-process and finished goods inventory in the context of its valuation assertion. ●validating cost assertions by reviewing source documentation of inventory purchases; ●reviewing inventory obsolescence and condition reports provided by management; ●reviewing subsequent sales data; and ●analytical procedures including margin analyses. finally,we evaluated the company’s disclosures related to the matters described above. /s/grassi & co., cp as, p.c. wehave 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 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 - real estate investment trust asset tests as described in notes 1 and 14 to the consolidated financial statements, the company recorded income tax expense of $146.2 million for the year ended december 31, 2020. the company has been operating as a real estate investment trust for federal income tax purposes (“reit”) effective january 1, 2015. as a result, the company may deduct the dividends made to its stockholders from taxable income generated by the company and its qualified reit subsidiaries ("qr ss"). the company’s qualification and taxation as a reit depends on its satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. the company’s ability to satisfy quarterly asset tests depends upon its analysis and the fair market values of its reit and non-reit assets. for purposes of the quarterly reit asset tests, management estimates the fair market value of assets within its qr ss and taxable reit subsidiaries (“tr ss”) using a discounted cash flow approach, by calculating the present value of forecasted future cash flows. management applies discount rates based on industry benchmarks relative to the market and forecasting risks. other significant assumptions used by management to estimate the fair market value of assets in qr ss and tr ss include projected revenue growth, projected operating margins, and projected capital expenditures. management revisits significant assumptions periodically to reflect any changes due to business or economic environment. the principal considerations for our determination that performing procedures relating to income taxes - reit asset tests is a critical audit matter are (i) the significant judgment by management in determining the fair market value of reit and non-reit assets, which in turn led to a high degree of subjectivity in performing procedures relating to the reit asset test, (ii) the significant audit effort and judgment in evaluating audit evidence related to the significant assumptions used in the reit asset test, related to the discount rates, projected revenue growth, projected operating margins, and projected capital expenditures, 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 reit asset test, including controls over the determination of the fair market value of reit and non-reit assets. these procedures also included, among others, testing management’s process for estimating the fair market value of the reit and non-reit assets; evaluating the appropriateness of the discounted cash flow f-2table of contentsapproach; testing the completeness and accuracy of underlying data used in the approach; and evaluating the significant assumptions used by management related to the discount rates, projected revenue growth, projected operating margins, and projected capital expenditures. evaluating management’s assumptions related to projected revenue growth, projected operating margins, and projected capital expenditures involved considering the current and past performance of the company, economic and industry trends, as well as 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 approach and the discount rates./s/ pricewaterhouse coopers llp san jose, california february 19, 2021we 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. 59 allowance for loan losses – qualitative factors – refer to notes 1 and 4 to the financial statements critical audit matter description the allowance for loan losses (allowance) is an estimate of credit losses inherent in the company’s loan portfolio. the allowance consists of two primary components, general reserves and specific reserves related to impaired loans. the general component covers non-impaired loans and is based on historical losses adjusted for current factors. the historical loss experience is determined by portfolio segment and is based on a weighted average of the actual loss history experienced by the company over the most recent four years. the company places more emphasis, or weight, on the more current quarters in the loss history period. this actual loss experience is adjusted for qualitative factors based on the risks present within each portfolio segment including adjustments for levels of classified loans, credit concentrations, and economic trends. these factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment. during 2020, the company added an additional qualitative factor for loans in industries for which it anticipated to be more significantly impacted by covid-19. these qualitative factors are inherently subjective and are driven by the assessed repayment risk associated with each portfolio segment. auditing management’s determination of general reserves within its allowance involved a high degree of subjectivity and judgement in the selection and measurement of the qualitative factors. how the critical audit matter was addressed in the audit our audit procedures related to the qualitative factors with the allowance included the following, among others: •we obtained an understanding of management’s process for determining the need for qualitative factor adjustments, identifying appropriate factors, and measuring the direction and magnitude of the adjustment. •we evaluated the design of controls over the application of management’s qualitative factor methodology in the estimate of general reserves. •we evaluated management's rationale for determining qualitative adjustments was relevant and warranted for each loan segment and assessed the measurement of qualitative factor adjustments applied by management. •where applicable, we tested the accuracy and completeness of data used by management in the measurement of qualitative factor adjustments or vouched factors to relevant external data sources. •we assessed changes in qualitative factors year-over-year against overall trends in credit quality within the company and broader trends within the industry and local and national economies to evaluate reasonableness of management’s qualitative factor adjustments. /s/ plante & moran, pllc we have served as the company’s auditor since 2018.

critical audit matters the critical audit matter communicated below is amatter arising from the current period audit of the financial statements that were communicated or required to be communicated to theaudit committee and that: (1) related to accounts or disclosures that are material to the financial statements and (2) involved our especiallychallenging, subjective, or complex judgements. the communication of critical audit matters does not alter in any way our opinion on thefinancial statements, taken as a whole, and we are not, by communicating the critical matter below, providing separate opinions on thecritical audit matter or on the accounts or disclosures to which it relates. determination and valuation of derivative liabilities as described further in notes 5 and 6 of thefinancial statements, during the year ended december 31, 2020 and in prior periods, the company issued convertible promissory notes andwarrants that required management to assess whether the conversion features of the convertible notes required bifurcation and separatevaluation as a derivative liability and whether the warrants required accounting as derivative liabilities. the company determined thatthe conversion features of certain of its convertible notes and certain warrants issued in financing arrangements required to be accountedfor as derivative liabilities due to: (1) the variable conversion features in certain instruments did not contain an explicit limit onthe number of shares that could be required to be issued to settle the instrument; and (2) with certain instruments the company couldnot assert it had sufficient authorized but unissued shares available to settle instruments considering all other stock-based commitments.the derivative liabilities were recorded at fair value when issued and subsequently re-measured to fair value upon settlement or at theend of each reporting period. the company utilized a monte carlo valuation model for certain derivative instruments and the black scholes merton model for others to determine the fair value of the derivative liabilities. both of these models use certain assumptions such asexercise price, term, expected volatility, and risk-free interest rate.we identified auditing the determination and valuationof the derivative liabilities as a critical audit matter due to the significant judgements used by the company in determining whetherthe embedded conversion features and warrants required derivative accounting treatment and the significant judgements used in determiningthe fair value of the derivative liabilities. auditing the determination and valuation of the derivative liabilities involved a high degreeof auditor judgement, and specialized skills and knowledge were needed. how the critical audit matter was addressed inthe audit our audit procedures included the following, amongothers: ·we inspected and reviewed debt agreements, warrantagreements, conversion notices, and other documents to evaluate the company's determination of whether derivative accounting was required,including assessing and evaluating management's application of relevant accounting standards to such transactions. ·we evaluated the reasonableness of the valuationmodel used for each specific instrument based off the terms and features of such instrument.·we tested the reasonableness of the assumptionsused by the company in the valuation models used, including exercise price, expected term, expected volatility, and risk-free interestrate.·we tested the accuracy and completeness of dataused by the company in developing the assumptions used in the valuation models.·we developed an independent expectation for comparisonto the company's estimate, which included developing our own monte carlo simulation model and black-scholes merton model.·we evaluated the accuracy and completeness ofthe company's presentation of these instruments in the financial statements and related disclosures in notes 5, 6, and 7, including evaluatingwhether such disclosures were in accordance with relevant accounting standards. professionals with specialized skill and knowledgewere utilized by the firm to assist in the evaluation of the company estimate of fair value and the development of our own independentexpectation. /s/ sadler, gibb & associates, llc 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) 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.impairment of long-lived assets – refer to notes 2 and 12 to the financial statements critical audit matter description90the partnership periodically evaluates whether the carrying value of long-lived assets has been impaired when circumstances indicate the carrying value of those assets may not be recoverable. when management determines a recoverability analysis is required, this evaluation is based on undiscounted cash flow projections. the development of the partnership’s undiscounted future cash flow projections requires management to apply judgment in estimating future cash flows, including the impact of future volumes of raw natural gas, or other applicable throughput, that are expected to be produced or delivered by third parties and subsequently gathered, treated, processed, transported and/or stored. if the carrying value is not recoverable, the impairment loss is measured as the excess of the asset group’s carrying value over its fair value.these analyses resulted in management recognizing a $587 million impairment loss associated with certain asset groups in the permian and south regions during the year ended december 31, 2020. management estimated the fair value of the respective asset groups using discounted cash flow models by selecting a discount rate reflective of the risk inherent in future cash flows, and applying that discount rate to the cash flow projections. changes in the assumptions used to estimate the discount rate could have a significant effect on both the fair value of the respective asset group and the related impairment expense. given the partnership’s use of future volumes of raw natural gas, or other applicable throughput, attributable to the respective asset group, which requires management to apply judgment for which there is limited historical data or other objectively verifiable evidence, auditing management’s judgments regarding future volumes of raw natural gas, or other applicable throughput, attributable to the asset group, and the selection of a discount rate, involved especially subjective auditor judgment and an increased extent of effort was required, including the need to utilize our fair value specialists.how the critical audit matter was addressed in the audit our audit procedures related to future volumes of raw natural gas, or other applicable throughput, attributable to the asset group, and the selection of the discount rate applied to estimated future cash flows, included the following, among others: •we tested the effectiveness of controls over estimates of future volumes of raw natural gas, or other applicable throughput, attributable to the asset groups, and the selection of the discount rate. •we evaluated management’s estimates of future volumes by:–comparing recent actual results to management’s historical forecasts–comparing historical growth rates to future growth rates –searching for information provided by, or relating to, the partnership’s customers–researching industry trends specifically in the permian and south regions –considering recent historical results, and the impact of unique events or circumstances–evaluating forecasted information included in partnership’s public disclosures for consistency•with the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by:–evaluating the appropriateness of the mathematical model used to develop the discount rate–recomputing the mathematical accuracy of the calculation of the discount rate–evaluating the guideline public companies selected by management and used in the selection of the discount rate considering the comparability of operations to those of the partnership–comparing the selected discount rate to discount rate estimates for the industry/location/asset type published by a third-party financial institution–developing a range of independent estimates of the discount rate by independently obtaining information to estimate components of the discount rate, including the cost of debt capital, the cost of equity capital, and debt-to-equity ratio–comparing the discount rate selected by management with the range of independent estimates impairment of investments in unconsolidated affiliates – refer to notes 2 and 12 to the financial statements critical audit matter description the partnership periodically evaluates whether investments in unconsolidated affiliates have become impaired when events or changes in circumstances indicate a decline in value of such investment has occurred that is other than temporary. if an impairment is determined to be other than temporary, the partnership measures the fair value of the investment primarily using a discounted cash flow analysis which requires management to apply judgement in estimating future cash flows, including the impact of future volumes of raw natural gas, or other applicable throughput, that are expected to be produced or delivered by third parties and subsequently gathered, treated, processed, transported and/or stored by the investee. if the estimated fair value of the investment is less than the carrying value, the excess of the carrying value over the estimated fair value is recognized as an impairment loss.91these analyses resulted in management recognizing a $61 million impairment loss on the equity method investment in discovery producer services llc (“discovery”) during the year ended december 31, 2020. management estimated the fair value of the investment using a discounted cash flow model by selecting a discount rate reflective of the risk inherent in future cash flows, and applying that discount rate to the cash flow projections. changes in the assumptions used to estimate the discount rate could have a significant effect on both the fair value of the investment and the related impairment expense.given the partnership’s use of future volumes of raw natural gas, or other applicable throughput, attributable to the investment, which requires management to apply judgment for which there is limited historical data or other objectively verifiable evidence, auditing management’s judgments regarding future volumes of raw natural gas, or other applicable throughput, attributable to the investment, and the selection of a discount rate, involved especially subjective auditor judgment and an increased extent of effort was required, including the need to utilize our fair value specialists.how the critical audit matter was addressed in the audit our audit procedures related to future volumes of raw natural gas, or other applicable throughput, attributable to discovery, and the selection of the discount rate applied to estimated future cash flows, included the following, among others:•we tested the effectiveness of controls over estimates of future volumes of raw natural gas, or other applicable throughput, attributable to discovery, and the selection of the discount rate.•we evaluated management’s estimates of future volumes for discovery by:–comparing recent actual results to management’s forecasts–searching for information provided by, or relating to, discovery’s customers–obtaining internal communications to management from the operator of discovery–considering recent historical results, and the impact of unique events or circumstances–evaluating forecasted information included in the financial statements of discovery for consistency •with the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by:–evaluating the appropriateness of the mathematical model used to develop the discount rate–recomputing the mathematical accuracy of the calculation of the discount rate–evaluating the guideline public companies selected by management and used in the selection of the discount rate–comparing the selected discount rate to discount rate estimates for the industry/location/asset type published by a third-party financial institution–developing a range of independent estimates of the discount rate by independently obtaining information to estimate components of the discount rate, including the cost of debt capital, the cost of equity capital, and debt-to-equity ratio–comparing the discount rate selected by management with the range of independent estimates/s/ deloitte & touche llp denver, colorado february 19, 2021we have served as the partnership’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. 50valuation 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 28, 2019, the company’s goodwill balance related to the auto personal navigation device (“auto pnd”) 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 auto pnd 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 auto pnd reporting unit. considering these qualitative factors, management performed a step one quantitative impairment test of the auto pnd reporting unit in the fourth quarter of 2019. 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 auto pnd reporting unit is at risk of future impairment. auditing management’s annual goodwill impairment test for the auto pnd 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. 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 auto pnd 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 auto pnd 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 auto pnd reporting unit that would result from changes in the assumptions. we reconciled the fair value of the reporting unit to its carrying amount, testing the company’s determination of the assets and liabilities used within the reporting unit that are the basis for the carrying amount. 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. for those uncertain tax positions that qualify for recognition, the company uses significant judgment 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 $101 million at december 28, 2019, primarily related to transfer pricing positions. 51auditing management’s measurement of these material tax positions is complex and involved especially subjective and complex judgements. the assessment process involves both significant judgment 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. 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 measurement and valuation of the uncertain tax position reserves related to transfer pricing from intercompany transactions. for example, we tested controls over management’s 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 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 matters thecritical audit matters communicated below are matters arising fromthe current period audit of the financial statements that werecommunicated or required to be communicated to the audit committeeand that: (1) relate to accounts or disclosures that are materialto the financial statements and (2) involved our especiallychallenging, subjective, or complex judgments. the communication ofcritical audit matters does not alter in any way our opinion on thefinancial statements, taken as a whole, and we are not, bycommunicating the critical audit matters below, providing separateopinions on the critical audit matters or on the accounts ordisclosures to which they relate. mineral property interests impairment consideration at december 31, 2020, the company’s mineral propertyinterests balance totaled $704,053. as more fully described in note2 to the financial statements, the company evaluates its mining andmineral rights for impairment whenever events or changes incircumstances indicate that the carrying amounts of the asset orgroup of assets may not be recoverable. management evaluatesvarious qualitative factors in determining whether or not events orchanges in circumstances indicate that the carrying amount of anasset or group of assets may not be recoverable. auditing the company’s impairment assessment involved oursubjective judgment because, in determining whether any indicatorsof impairment occurred, management uses judgments that include,among others, assumptions about management’s intentions andfuture exploration plans, the ability to fund continued explorationactivities, forecasts on future scandium metal prices, and marketcapitalization. significant uncertainty exists with theseassumptions. further, management’s evaluation of any newinformation indicating that continued exploration will not likelyoccur requires significant judgment. to test the company’s impairment assessment, our auditprocedures included, among others, assessing the company’sright to explore in the relevant exploration area which includedobtaining and assessing supporting documentation such as mininglease applications and final decisions from governmental bodies;evaluating the company’s ability and intent to carry outsignificant exploration and evaluation activity; consideringwhether there was any other data or information that indicated thecarrying amount of the capitalized mineral property interests wouldnot be recovered in full from successful development or by sale;and assessing the adequacy of the associated disclosures in thefinancial statements. we have served as the company’s auditor since2008.

critical audit matters the critical audit matters communicatedbelow are matters arising from the current period audit of the financial statements that were communicated or required to be communicatedto the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involvedour especially 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 matters below,providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. revenue recognition – use of it systems to trackand invoice revenue and the determination of the various promises in the arrangement certain of the company’s revenuecontracts with customers include multiple promises (such as hardware, software and maintenance, among others). the company is requiredto evaluate whether each promise represents a performance obligation. the evaluation of whether promises are both capable of beingdistinct and distinct in the context of a contract (and thus constitute performance obligations) can require significant judgmentand could change the amount of revenue recognized in a given period. we identified the determination of performanceobligations for contracts with higher contract values as a critical audit matter because of the judgments and estimates managementmakes to evaluate such contracts and the impact of such judgments on the amount of revenue recognized in a given period. this requireda high degree of auditor judgment and an increased extent of testing. addressing the matter involved performingprocedures on a sample basis and evaluation of audit evidence that included, among others ●evaluating contract terms and conditions,●reviewing and assessing the methodology applied and testing the reliability and mathematical accuracyof the underlying data and calculations,●testing management’s identification of performance obligations by evaluating whether thepromises were both capable of being distinct and distinct within the context of the contract, including reading the selected contractsand inquiring of certain of the company’s accounting and operations personnel to understand the nature of the promises andhow they are delivered to the customer, and●evaluating and concluding on the reasonableness of management’s judgments and estimates. f-2 we involved it professionals with specializedskills and knowledge, who assisted in evaluating the sufficiency of the audit evidence obtained related to: ●general it controls and it application controls for the relevant it systems used to gather andprocess data,●the transfer of information among the different systems used to gather the data, and●the configuration and change management controls for the reports that were used from the varioussystems to determine the amount of revenue recognized. capitalization of internally and externally developed software the company classifies software developmentcosts as either internal use software or external use software, any costs incurred during preliminary project stages are expensedas incurred; direct costs incurred during the application development stages are capitalized; and costs incurred during the post-implementation/operationstages are expensed. once the software is placed in operation, the company amortizes the capitalized cost of the software overits economic useful life, which ranges from two to five years. during the year ended december 31, 2020, the company capitalized$14,600,000 of software development costs. we identified the evaluation of the company’scapitalization of internal direct labor costs as a critical audit matter. there were inherent challenges in obtaining an understandingof the structure of systems and processes used to capture the large volumes of internal direct labor data. furthermore, subjectivejudgement was required to evaluate the relevant data that was captured and aggregated, and to assess the sufficiency of the auditevidence obtained. the primary procedures we performed toaddress this critical audit matter included the following.. we involved it professionals with specialized skills and knowledge,who assisted in evaluating the sufficiency of the audit evidence obtained related to: ●general it controls and it application controls for the relevant it systems used to gather andprocess data,●the transfer of information among the different systems used to gather the data, and●the configuration and change management controls for the reports that were used from the varioussystems to determine the amount of internal direct labor costs to capitalize. in addition, we evaluated, on a samplebasis, the company’s manual aggregation of information from various it systems, to determine the sufficiency of the auditevidence obtained, by: ●inspecting the capital project codes to assess that the nature of the activity is capitalized inaccordance with u.s. generally accepted accounting principles,●comparing salary and wage information for capitalized internal direct labor costs to employee humanresource documents and system profiles,●comparing the hours of capitalized internal direct labor to the hours recorded to capital activitieson the employees’ timesheets,●inquiring of employees and project managers as to the accuracy of the hours reflected as capitalactivities on the employee timesheets, and●evaluating the methodology used to determine the labor rates and comparing the cost types, datesincurred, and amounts of labor costs used to derive the labor rates to data from the source systems. /s/marcum llp marcumllp wehave 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 certain level 2 and level 3 financial assets and liabilities - refer to note 2 and note 4 to the financial statements critical audit matter description the company estimates fair value for certain financial assets and liabilities utilizing models and unobservable inputs. unlike the fair value of other assets and liabilities which are readily observable and therefore more easily independently corroborated, these financial assets and liabilities are not actively traded, and fair value is determined based on significant judgments regarding models, unobservable inputs and valuation methodologies. such assets and liabilities can be classified as level 2 or level 3.f-1we identified the valuation of certain level 2 and level 3 financial assets and liabilities as a critical audit matter because of the unobservable inputs, complexity of models and/or methodologies used by management and third-party specialists to estimate fair value. the valuations involve a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialist who possess significant quantitative and modeling experience, to audit and evaluate the appropriateness of the models and inputs. how the critical audit matter was addressed in the audit our audit procedures for certain level 2 and level 3 financial assets and liabilities included the following procedures, among others: •we tested the operating effectiveness of the company's valuation controls, including the:◦independent price verification controls.◦third-party specialist valuation model review control, which includes examination of assumptions utilized as well as completeness and accuracy of underlying data.◦pricing model controls which are designed to review a model's theoretical soundness and its appropriateness.•with the assistance of our fair value specialist, we evaluated the reasonableness of management's valuation methodology and estimates and:◦we developed valuation estimates, using externally sourced inputs and models, and compared to management's recorded value and investigated differences.◦we compared management's assumptions utilized within management's models to external sources.•we evaluated management's ability to estimate fair value by comparing management's valuation estimates to subsequent transactions, when available./s/ deloitte & touche llp new york, new york january 28, 2021we have served as the company'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. estimation of the average playing period of paying users associated with durable virtual items as described in notes 1 and 3 to the consolidated financial statements, the company generates revenue through in-application purchases within its games. the company sells both consumable and durable virtual items. the company’s revenue from consumable virtual items has been insignificant. durable virtual items are items that are accessible to the player over an extended period of time and that remain in the game for as long as the player continues to play. revenue from durable virtual items amounted to $481 million for the year ended december 31, 2020. the company’s performance obligations represent a single combined performance obligation, which is to make the game and the ongoing game related services available to the players. the company recognizes revenue from durable virtual items over the estimated average playing period of paying users on a per title basis. management uses the “survival analysis” model to estimate the average playing period for paying users, which statistically estimates the average playing period of each title by analyzing the historical behavior patterns of paying users. the principal considerations for our determination that performing procedures relating to the estimation of the average playing period of paying users associated with durable virtual items is a critical audit matter are (i) the significant judgment by management in the application of the “survival analysis” model; (ii) a high degree of auditor judgment and effort in performing procedures and evaluating management’s application of the “survival analysis” model, 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 estimation of the average playing period of paying users associated with durable virtual items. these procedures also included, among others (i) testing management’s process for estimating the average playing period of paying users associated with durable virtual items, (ii) testing management’s method of obtaining and analyzing the data in the “survival analysis” model; and (iii) testing the completeness and accuracy of the user data. professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the “survival analysis” model. 69table of contents /s/ pricewaterhouse coopers llp san francisco, california february 26, 2021 we have served as the company’s auditor since 2003,

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. allowance for loan losses – general component qualitative factors as described in notes 1 and 4 to the consolidated financial statements, the allowance for loan losses is established through a provision for loan losses and represents an amount which, in management’s judgement, will be adequate to absorb losses in the loan portfolio. the company’s allowance for loan losses balance was $6.7 million at december 31, 2021 and consists of a specific and general component totaling $30 thousand and $6.7 million, respectively. management estimates the allowance based on loan losses believed to be inherent in the company’s loan portfolio at the balance sheet date. the specific component is established for any impaired residential non-owner occupied mortgage, multi-family mortgage, nonresidential real estate, construction and land, commercial, and commercial lease loans for which the recorded investment in the loan exceeds the measured value of the loan. management develops the general component based on historical loan loss experience adjusted for qualitative factors not reflected in the historical loss experience. historical loss ratios are measured on a weighted, rolling twelve-quarter basis. the qualitative factors used by the company include factors specific to the loan class, such as levels of, and trends in, past due and classified loans; levels of, and trends in, charge-offs and recoveries; trends in volume and terms of loans, including any credit concentrations in the loan portfolio; experience and ability of lending management and other relevant staff; and national and local economic trends and conditions. the adjustments for qualitative factors require a significant amount of judgment by management and involve a high degree of estimation uncertainty. we identified the qualitative factor component of the allowance for loan losses as a critical audit matter as auditing the underlying qualitative factors required significant auditor judgment as amounts determined by management rely on analysis that is highly subjective and includes significant estimation uncertainty. our audit procedures related to the qualitative factor component of the allowance for loan losses included the following, among others: ● we obtained an understanding of the relevant controls related to the allowance for loan losses and tested such controls for design and operating effectiveness, including controls related to management’s establishment, review and approval of the qualitative factors, and the completeness and accuracy of data used in determining qualitative factors. ● we evaluated the appropriateness of management’s methodology for estimating the allowance for loan losses. ● we tested the completeness and accuracy of data used by management in determining qualitative factor adjustments by agreeing them to internal and external source data. ● we tested management’s conclusions regarding the appropriateness of the qualitative factor adjustments and agreed the impact to the allowance for loan losses calculation. /s/ rsm 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 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 – qualcomm cdma technologies (qct) customer incentive arrangements as described in notes 1 and 2 to the consolidated financial statements, the company’s qct segment, which recorded revenues of $27.0 billion in fiscal 2021, records reductions to revenues for customer incentive arrangements, including volume-related and other pricing rebates and cost reimbursements for marketing and other activities involving certain products and technologies, in the period that the related revenues are earned. for certain qct customer incentive arrangements, there is complexity in applying certain contractual terms to determine the amount recorded as a reduction to revenues. the amounts accrued for customer incentive arrangements are recorded as a reduction to accounts receivable, net or as other current liabilities based on whether the company has the intent and contractual right of offset. certain amounts recorded as a reduction to revenues for customer incentive arrangements are considered variable consideration and are included in the transaction price primarily based on estimating the most likely amount expected to be provided to the customer. the principal considerations for our determination that performing procedures relating to revenue recognition of qct customer incentive arrangements is a critical audit matter are the significant audit effort in performing procedures and evaluating audit evidence obtained related to the completeness and accuracy of reductions to qct revenues recognized. 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 review of and accounting for customer incentive arrangements as well as controls relating to management’s review over the completeness and accuracy of reductions to revenues in fiscal 2021 and accruals for customer incentive arrangements as of the balance sheet date. these procedures also included, among others, testing the completeness and accuracy of customer incentive arrangement reductions to revenues and customer incentive arrangement accruals recorded in the consolidated financial statements, and recalculating, on a test basis, reductions to revenues and accruals for customer incentive arrangements based upon customer-specific contractual terms./s/ pricewaterhouse coopers llp san diego, california november 3, 2021we have served as the company’s auditor since 1985.

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 – european reporting unit - refer to notes 1 and 9 to the financial statements critical audit matter description the company’s evaluation of their european reporting unit (“europe”) goodwill for impairment involves the comparison of the fair value of the reporting unit to its carrying value. fair value of the reporting unit is estimated based on a combination of discounted cash flows and the use of pricing multiples. the determination of fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to forecasts of future revenues, operating margins, earnings before interest, taxes, depreciation, and amortization (ebitda), capital expenditures and the discount rate. the determination of fair value using pricing multiples requires management to make significant assumptions derived from analysis of the ebitda pricing multiples of comparable, publicly traded companies. as a result of the company’s interim goodwill impairment test in the first quarter of 2020, management determined that the carrying value of europe exceeded its fair value by an amount greater than the remaining goodwill balance. as such, the company recorded a non-cash goodwill impairment charge of $182.6 million in 2020 associated with europe. changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. the company’s goodwill balance was $0 as of december 31, 2020 after the impairment.31we identified goodwill for europe as a critical audit matter because of the significant estimates and assumptions made by management to estimate the fair value of europe and the difference between its fair value and carrying value. this required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenues, operating margins, ebitda and the selection of the discount rate.how the critical audit matter was addressed in the audit our audit procedures related to forecasts of future revenues, operating margins, and ebitda (collectively, the “forecasts”) and the selection of the discount rate included the following, among others: •we tested the effectiveness of controls over management’s goodwill impairment evaluation and determination of related assumptions, including those over management’s forecasts and the selection of the discount rate. •we evaluated management’s ability to accurately forecast future cash flows by comparing actual results to management’s historical forecasts. •we evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the board of directors and (3) forecasted information included in the company’s press releases as well as in analyst and industry reports for the company and certain of its peer group companies. with the assistance of our fair value specialists, we tested the underlying source information and the mathematical accuracy of the forecasted cash flows within the fair value estimate. •with the assistance of our fair value specialists, we evaluated the (1) valuation methodology and (2) discount rate, including 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. /s/ deloitte & touche llp detroit, michigan march 5, 2021 we 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 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. self-insurance accruals as described in note 1 to the consolidated financial statements, the company maintains self-insured and deductible programs for workers’ compensation exposures. the company accrues for known claims and estimated incurred but not reported claims not otherwise covered by insurance based on actuarial assumptions and historical claims experience. while a third party actuary is employed to advise the company, estimating workers’ compensation exposure is inherently uncertain, as estimates are generally derived using a variety of actuarial estimation techniques that are dependent upon assumptions and expectations about future events, many of which are difficult to quantify. as of may 1, 2021 and may 2, 2020, other liabilities included accruals of $5.9 million and $5.5 million, respectively, for estimated non-current risk retention exposures, of which $4.5 million and $4.3 million was covered by insurance at may 1, 2021 and may 2, 2020, respectively. we identified the evaluation of the company’s self-insurance accruals as a critical audit matter due to the significant judgments made by management in estimating the workers’ compensation liability. auditing management’s judgments used in estimating the value of the workers’ compensation liability involved a high degree of auditor judgment and increased audit effort, including the use of our actuarial specialist. our audit procedures related to the company’s self-insurance accrual assessment included the following, among others: ● we obtained an understanding of the relevant controls related to the company’s workers’ compensation liability, and tested such controls for design and operating effectiveness, including controls related to management’s review of the significant assumptions . ● we tested the underlying data, including historical claims and payroll data, which served as the basis for the assumptions used by the third party actuary in the actuarial analysis, to test that the inputs to the actuarial estimates were accurate and complete. ● we compared payments made in the current year for prior year claims to prior year recorded reserves. ● with the assistance of our actuarial specialist, we evaluated the propriety of the reserving techniques utilized for the workers’ compensation exposures. /s/ rsm us llp we 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: (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.evaluation of lower of cost or net realizable value of raw materials inventory as described in note 2 and note 8 to the consolidated financial statements, approximately 31%, or $71.7 million, of the company’s total inventory balance is comprised of raw materials. as discussed in note 2, the company periodically analyzes its raw materials inventories, and writes down obsolete or otherwise unmarketable inventory to its estimated net realizable value. we identified the evaluation of lower of cost or net realizable value of raw materials inventory as a critical audit matter. the estimate of expected future demand for raw materials inventory is difficult to assess and results in the application of greater auditor judgment. specifically, challenging auditor judgment was required to assess the potential impact the company’s gene therapy technologies and competitor rna-targeted therapeutic or gene therapy products could have on existing raw materials inventory. 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 inventory valuation process, including controls related to the estimate of expected future demand for raw materials. we compared the company’s prior period forecasted demand for raw materials to actual results to assess their ability to accurately estimate expected future demand. we evaluated clinical progress associated with the company’s gene therapy technologies by inspecting internal meeting minutes and interviewing research and development personnel of the company and assessed the potential impact of those technologies on expected future demand for raw materials inventory. we also read publicly available information to identify information regarding other competitor entities with rna-targeted therapeutic or gene therapy products that could impact the company’s estimates of expected future demand.standalone selling prices of options in the roche agreement as described in note 3 to the consolidated financial statements, the company entered into a license, collaboration and option agreement with f. hoffman-la roche ltd. (“roche”) and a stock purchase agreement with an affiliate of roche (collectively, the “roche agreement”) that became effective in february 2020. obligations were identified in the roche agreement, including obligations associated with the grant of options to roche to acquire ex-u.s. rights to certain future dmd-specific programs (the “options”). the initial transaction price was $1.2 billion and $485.0 million was allocated to the options based on their estimated standalone selling prices determined using an income approach of projected incremental discounted cash flows from each option. the discounted cash flows incorporate the likelihood of success of each individual product candidate associated with the options and a discount rate. the transaction price allocated to the options is recorded as deferred revenue and will not be recognized until an option is either: (i) exercised by roche, or (ii) expires.we identified the determination of the standalone selling prices of the options as a critical audit matter. specifically, testing the assumption regarding the likelihood of success for each individual product candidate and the discount rate, which are inputs to the estimate of projected incremental discounted cash flows, involved a high degree of subjectivity. the standalone selling prices of the options were challenging to audit due to the sensitivity of the calculation of projected incremental discounted cash flows to changes in the likelihood of success assumptions and discount rate.f-3the 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 process to determine the standalone selling prices of the options, including controls related to the development of the likelihood of success assumptions for each individual product candidate and the discount rate. we performed sensitivity analyses over the likelihood of success assumptions to assess the impact of changes in those assumptions on the company’s determination of the standalone selling prices of the options. we evaluated the likelihood of success assumptions by comparing them to industry benchmarks and data, as well as evaluated the relevance and reliability of information published by third-parties used to develop the assumptions. we also evaluated the likelihood of success assumptions by comparing information contained in internal sources to the results of our inquiries of personnel with knowledge of the company’s research and development activities. we involved a valuation professional with specialized skills and knowledge, who assisted in evaluating the discount rate used by the company, by comparing it against a discount rate that was independently developed using publicly available market data for comparable entities/s/ kpmg llp we have served as the company’s auditor since 2002.

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 thatare 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, takenas a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical auditmatters or on the accounts or disclosures to which they relate. stock based compensation – initial measurement of fair value descriptionof the matter asdescribed in note 2 of the consolidated financial statements, the company measures stock-based awards at fair value and recognizescompensation expense related to such awards over the respective vesting or service period. the company uses the black-scholesoption pricing model to determine the fair value of the awards. certain inputs in the model used for determination of fair valueof the awards of the company, such as the expected term, volatility, and fair value of stock, require management to make significantjudgments. how we addressed the matter in our audit weassessed the appropriateness of judgments made by management in determining key assumptions related to the awards, such as serviceinception date based on the multi-year performance conditions and volatility. we tested the accuracy of the data used in measuringthe awards by agreeing the underlying inputs, such as grant date, grant price, performance targets and vesting terms, among othersto award letters. we determined whether performance targets were satisfied in accordance with the contractual conditions, andrecalculated grant date fair value by multiplying that earned quantity of awards by the grant price going concern – assessing the company’s ability to continue as a going concern descriptionof the matter asdescribed in note 1 of the consolidated financial statements, the company has adequate cash on hand, which will provide sufficientliquidity to finance the operating activities of the company for twelve months from the issuance of these consolidated financialstatements. we determined that the company’s ability to continue as a going concern is a critical audit matter due to significantmanagement’s judgments and assumptions used in estimating future cash flows. how we addressed the matter in our audit wereviewed forecasted information, assessed reasonableness of the forecasted operating results and uses and sources of cash usedin management’s assessment. this testing included inquiries with management, comparison of prior period forecasts to actualresults, assessment of available financing, consideration of positive and negative evidence impacting management’s forecasts,market and industry factors. /s/friedman llp wehave served as the company’s auditor since 2020.