LIVEVOX HOLDINGS, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

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Throughout this section, unless otherwise noted, the "Company," "LiveVox," "we,"
"us," and "our" refers to LiveVox Holdings, Inc., and its subsidiaries,
collectively. You should read the following discussion and analysis of our
financial condition and results of operations in conjunction with other sections
of this Annual Report, including "Item 1. Business," and the audited
consolidated financial statements and related notes thereto included in Part II,
Item 8 of this Annual Report. In addition to historical information, the
following discussion and analysis contains forward-looking statements that
involve risks, uncertainties and assumptions. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including, but not limited to, those set forth in the
section entitled "Item 1A. Risk Factors" in this Annual Report.


Overview

We enable next-generation cloud contact center functionality through a cloud
contact-center-as-a-service (or CCaaS) platform that we provide for enterprises,
business process outsourcers (BPOs) and collections agencies. Our CCaaS platform
provides customers with a scalable, cloud-based architecture and pre-integrated
artificial intelligence (AI) capabilities to support enterprise-grade
deployments of our solutions including omnichannel customer connectivity,
customer relationship management (CRM) and workforce optimization (WFO). Our
omnichannel product offerings enable our customers to connect with their
customers via their channel of choice, including human voice, virtual agents
powered by artificial intelligence (AI), email, text or web chat. Our platform
features a native CRM which unifies disparate, department-level systems of
record to present contact center agents with a single view of its customers
without displacing or replacing existing CRMs or other systems of record. Our
WFO offerings include a lightweight yet fully-featured product that meets the
needs of smaller or less mature contact center operations as well as seamless
integration with WFO products from other providers.

We typically sell our products to customers under one- to three-year
subscription contracts that stipulate a minimum amount of monthly usage and
associated revenue with the ability for the customer to consume more usage above
the minimum contract amount each month. Our subscription revenue is comprised of
the minimum usage revenue under contract (which we call "contract revenue") and
amounts billed for usage above the minimum contract value (which we call "excess
usage revenue"), both of which are recognized on a monthly basis following
deployment to the customer. Excess usage revenue is deemed to be specific to the
month in which the usage occurs, since the minimum usage commitments reset at
the beginning of each month. For the years ended December 31, 2021, 2020 and
2019, subscription revenue (including contract revenue and excess usage revenue)
accounted for 98%, 99% and 99%, respectively, of our total revenue with the
remainder consisting of professional services and other non-recurring revenue
derived from the implementation of our products.


Reverse recapitalization

by LiveVox financial condition and results of operations may not be comparable from period to period due to the Amalgamation (as defined below) and going public.

Pursuant to Accounting Standards Codification ("ASC") 805, Business
Combinations, the merger between LiveVox Holdings, Inc. (hereinafter referred to
as "Old LiveVox") and Crescent Acquisition Corp ("Crescent") consummated on June
18, 2021 (the transaction referred to as the "Merger") was accounted for as a
Reverse Recapitalization, rather than a business combination, for financial
accounting and reporting purposes. Accordingly, Old LiveVox was deemed the
accounting acquirer (and legal acquiree) and Crescent was treated as the
accounting acquiree (and legal acquirer). Under this method of accounting, the
Reverse Recapitalization was treated as the equivalent of Old LiveVox issuing
stock for the net assets of Crescent, accompanied by a recapitalization. The net
assets of Crescent are stated at historical cost, with no goodwill or other
intangible assets recorded. The consolidated assets, liabilities and results of
operations prior to the Merger are those of Old LiveVox. The shares and
corresponding capital amounts and earnings per share available for common
stockholders, prior to the Merger, have been retroactively restated as shares
reflecting the exchange ratio established in the Merger Agreement dated January
13, 2021.

There have been no material changes to the aggregate consideration received or
the total transaction costs incurred as a result of the Merger previously
disclosed in our Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission ("SEC") on August 13, 2021.


Impact of COVID-19

While impacts associated with COVID-19 had certain adverse impacts on our
business and operating results in the first two quarters of fiscal 2020, we have
not experienced a sustained disruption in our overall business other than as
described below.

In March of fiscal 2020, we began to experience softness in our excess usage
revenue in relation to our contract revenue (as evidenced by the calculation of
total revenue divided by contract revenue which we call the "usage multiplier")
as a result of the
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COVID-19 pandemic and this softness continued to persist through the end of
fiscal 2021. We attribute this softness to financial stimulus packages designed
to address the financial hardships of Americans brought about by the COVID-19
pandemic which allowed many of our customers in the collections industry to meet
their collection goals with fewer interactions with debtors. As a result, our
usage multiplier declined sequentially from the fourth quarter of fiscal 2020 to
the second quarter of fiscal 2021. In the second half of fiscal 2021 our usage
multiplier increased slightly over the second quarter of fiscal 2021, but
remained below the first quarter of fiscal 2021. When the effects of the
pandemic and the associated financial stimulus (including, but not limited to
direct stimulus payments, extensions and enhancements of unemployment benefits
and loan forbearances) dissipate and there is a return to growth in consumer
debt relative to disposable income, we believe the usage multiplier will recover
to normal historical levels. As that relationship moves towards normal
historical levels, our excess usage revenue is likely to grow faster than our
contract revenue.


Impact of Consumer Financial Protection Bureau (CFPB) Seven vocal attempts in seven days

The dialing practices of several of our larger BPOs and collection customers
were constrained by Regulation F, which took effect on November 30, 2021.
Regulation F governs third-party debt collectors and, among other things, limits
the number of call attempts that a debt collector may make to a consumer to
seven calls per account within a seven day period (sometimes referred to as "7
in 7"). Once the debt collector makes actual contact with a consumer, the debt
collector may not call the consumer again about that same account for a
seven-day period. Excess usage revenue in December 2021 was impacted by
approximately $1.0 million as many customers conservatively changed their
dialing pattern to less than 7 in 7. We are actively presenting a best practice
designed to enhance our customers' profitability that replaces their previous
behavior with a Regulation F-compliant calling regimen supplemented by best-time
dial technology and/or 2 text messages per week. Sales of our Attempt Supervisor
product have increased in the fourth quarter of fiscal 2021, and while we expect
sales of this product to continue to increase, we believe the conservative
dialing behavior demonstrated by our customers immediately following the
implementation of Regulation F will be replaced by behavior that optimizes the
profitability of our customers in the future. We believe that our recommended
best practices, if implemented, will result in higher collection results for our
customers, at a lower labor cost with a slight increase in software costs.
However, there can be no assurance as to when our customers will adopt our
recommended Regulation F-compliant practices, if at all. For the fourth quarter
of fiscal 2021, our usage multiplier was unfavorably impacted by approximately
0.04x.


LiveVox's Segments

The Company has determined that its CEO is its chief operating decision maker. The Company’s Chief Executive Officer reviews the financial information presented on a consolidated basis to assess performance and make decisions on how to allocate resources. Accordingly, the Company has determined that it operates in a single reportable segment.

Key Non-GAAP Operational and Financial Performance Indicators

In addition to the financial performance measures presented in our consolidated financial statements, we monitor the key indicators set out below to help us assess growth trends, establish budgets, measure the effectiveness of our sales efforts and marketing and to assess operational effectiveness.

LTM Net Revenue Retention Rate

We believe that our LTM Net Revenue Retention Rate provides us and investors
with insight into our ability to retain and grow revenue from our customers and
is a meaningful measure of the long-term value of our customer relationships. We
calculate LTM Net Revenue Retention Rate by dividing the recurring revenue
recognized during the most recent LTM period by the recurring revenue recognized
during the LTM period immediately preceding the most recent LTM period,
provided, however, that recurring revenue from a customer in the most recent LTM
period is excluded from the calculation if recurring revenue was not recognized
from that customer in the preceding LTM period. Customers who cease using our
products during the most recent LTM period are included in the calculation. For
example, LTM Net Revenue Retention for the 12-month period ending December 2021
includes recurring revenue from all customers for whom revenue was recognized in
2020 regardless of whether such customers increased, decreased, or stopped their
use of our products during 2021 (i.e., old customers), but excludes recurring
revenue from all customers who began using our services during 2021 (i.e., new
customers). We define monthly recurring revenue as recurring monthly contract
and excess usage revenue, which we calculate separately from one-time,
non-recurring revenue by month by customer. We consider all contract and excess
usage revenue, which represents 98% of our revenue, to be recurring revenue as
all of our contracts provide for a minimum commitment amount. We consider
professional services revenue and one-time adjustments, which are booked on a
one-time, nonrecurring basis, to be non-recurring revenue. Professional services
and other one-time adjustments are generally not material to the result of the
calculation. However, one-time non-recurring revenue is important with respect
to timing as we bill installation and non-standard statement of work fees
immediately and recognize the revenue as the work is completed, which is
generally in advance of the beginning of recurring revenue which is when we
recognize the beginning of the LTM period immediately preceding the most recent
LTM period.
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The following table shows our LTM Net Revenue Retention Rate for the periods
presented:

                                              Twelve Months Ended December 31,
                                                   2021                          2020       2019
    LTM Net Revenue Retention Rate                              105  %           106  %     118  %


Our LTM Net Revenue Retention Rate reflects the expansion over time of our
existing customers as they add new products and additional units of service. A
much higher percentage of the product revenue from our customers is contracted
on our variable per minute pricing model with a minimum commitment as compared
to our per agent pricing model with minimum commitments for both agents and
units of service.

Our LTM Net Revenue Retention Rate decreased by 1% percentage points, to 105% in
the twelve months ended December 31, 2021 from 106% in the twelve months ended
December 31, 2020 primarily as a result of the impacts of COVID-19 and the
related decrease in excess usage revenue, described above. Despite the decline
in LTM Net Revenue Retention Rate, monthly minimum contract revenue for
customers grew by 26% from fiscal 2020 to fiscal 2021.

Our LTM Net Revenue Retention Rate decreased by 12 percentage points, to 106% in
the twelve months ended December 31, 2020 from 118% in the twelve months ended
December 31, 2019 primarily as a result of the impacts of COVID-19 and the
related decrease in excess usage revenue, described above. Despite the decline
in LTM Net Revenue Retention Rate, monthly minimum contract revenue for
customers grew by 20 % from fiscal 2019 to fiscal 2020.


Adjusted EBITDA

We monitor Adjusted EBITDA, a non-generally accepted accounting principle
("Non-GAAP") financial measure, to analyze our financial results and believe
that it is useful to investors, as a supplement to U.S. GAAP measures, in
evaluating our ongoing operational performance and enhancing an overall
understanding of our past financial performance. We believe that Adjusted EBITDA
helps illustrate underlying trends in our business that could otherwise be
masked by the effect of the income or expenses that we exclude from Adjusted
EBITDA. Furthermore, we use this measure to establish budgets and operational
goals for managing our business and evaluating our performance. We also believe
that Adjusted EBITDA provides an additional tool for investors to use in
comparing our recurring core business operating results over multiple periods
with other companies in our industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute
for, financial information prepared in accordance with U.S. GAAP, and our
calculation of Adjusted EBITDA may differ from that of other companies in our
industry. We compensate for the inherent limitations associated with using
Adjusted EBITDA through disclosure of these limitations, presentation of our
consolidated financial statements in accordance with U.S. GAAP and
reconciliation of Adjusted EBITDA to the most directly comparable U.S. GAAP
measure, net loss. We calculate Adjusted EBITDA as net loss before
(i) depreciation and amortization, (ii) long-term equity incentive bonus, (iii)
stock-based compensation expense, (iv) interest expense, net, (v) change in the
fair value of warrant liability, (vi) other expense (income), net,
(vii) provision for income taxes, and (viii) other items that do not directly
affect what we consider to be our core operating performance.

The following table provides a reconciliation of net loss and adjusted EBITDA for the periods presented (in thousands of dollars):

                                                                           Years Ended December 31,
                                                                               2021               2020              2019
Net loss                                                                   $ (103,194)         $ (4,645)         $ (6,913)
Non-GAAP adjustments:
Depreciation and amortization (1)                                               6,579             6,065             4,894

Expenses related to long-term incentive awards and stock-based compensation (2)(3)

                                                                74,489             1,323             9,182
Interest expense, net                                                           3,732             3,890             3,320
Change in the fair value of warrant liability                                  (1,242)                -                 -
Other expense (income), net                                                      (460)              154               (22)
Acquisition and financing related fees and expenses (4)                         1,537                25             1,664
Transaction-related costs (5)                                                   2,263               707                 -
Golden Gate Capital management fee expenses (6)                                   135               781               732
Provision for income taxes                                                        166               196               149
Other non-recurring expenses                                                        -                 -               249
Adjusted EBITDA                                                            $  (15,995)         $  8,496          $ 13,255



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(1) Amortization expense included in our results of operations is as follows (in thousands of dollars):

                                                          Years Ended December 31,
                                                                     2021         2020         2019
      Cost of revenue                                              $ 3,776      $ 3,826      $ 3,130
      Sales and marketing expense                                    2,390        1,961        1,531
      General and administrative expense                               281          160          153
      Research and development expense                                 132          118           80
      Total depreciation and amortization                          $ 6,579      $ 6,065      $ 4,894


(2) The long-term equity incentives included in our results of operations are as follows (in thousands of dollars):

                                                           Years Ended December 31,
                                                                        2021        2020        2019
     Cost of revenue                                                 $  9,697      $ 123      $ 1,007
     Sales and marketing expense                                       

18,405 277 1,874

     General and administrative expense                                

18,594,336 4,420

     Research and development expense                                  

23 888 31 1 881

     Total long-term equity incentive bonus                          $ 

70,584 $767 $9,182

(3) Stock-based compensation expense included in our results of operations is as follows (in thousands of dollars):

                                                             Years Ended December 31,
                                                                          2021        2020       2019
      Cost of revenue                                                   $   500      $  57      $  -
      Sales and marketing expense                                          

865 113 –

      General and administrative expense                                 

1,169,273 –

      Research and development expense                                   

1,371,113 –

      Total stock-based compensation expenses                           $

3,905 $556 $-

(4) Acquisition-related and financing-related costs and expenses included in our results of operations are as follows (in thousands of dollars):

                                                                        Years Ended December 31,
                                                                             2021             2020             2019
Cost of revenue                                                           $     -          $     -          $     -
Sales and marketing expense                                                     -                -                -
General and administrative expense                                          1,537               25            1,664
Research and development expense                                                -                -                -
Total acquisition and financing related fees and expenses                 $ 

1,537 $25 $1,664

(5) The transaction-related costs included in our results of operations are as follows (in thousands of dollars):

                                                            Years Ended December 31,
                                                                         2021        2020       2019
        Cost of revenue                                                $     -      $   -      $  -
        Sales and marketing expense                                          -          -         -
        General and administrative expense                               2,263        707         -
        Research and development expense                                     -          -         -
        Total transaction-related costs                                $ 2,263      $ 707      $  -


(6) Capital of the Golden Gate the management fees included in our results of operations are as follows (in thousands of dollars):

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                                                                        Years Ended December 31,
                                                                             2021             2020             2019
Cost of revenue                                                           $     -          $     -          $     -
Sales and marketing expense                                                     -                -                -
General and administrative expense                                            135              781              732
Research and development expense                                                -                -                -
Total Golden Gate Capital management fee expenses                         $ 

135 $781 $732

Non-GAAP Gross Profit and Non-GAAP Gross Margin Percentage

U.S. GAAP defines gross profit as revenue less cost of revenue. Cost of revenue
includes all expenses associated with our various product offerings as more
fully described under the caption "Components of Results of Operations-Cost of
Revenue" below. We define Non-GAAP gross profit as gross profit after adding
back the following items:

•depreciation and amortization;

•long-term stock incentive and stock-based compensation expense; and

• other non-recurring expenses

We add back depreciation and amortization, long-term equity incentive bonus and
stock-based compensation expenses and other non-recurring expenses because they
are one-time or non-cash items. We eliminate the impact of these one-time or
non-cash items because we do not consider them indicative of our core operating
performance. Their exclusion facilitates comparisons of our operating
performance on a period-to-period basis. Therefore, we believe showing Non-GAAP
gross margin to remove the impact of these one-time or non-cash expenses is
helpful to investors in assessing our gross profit and gross margin performance
in a way that is similar to how management assesses our performance.

We calculate non-GAAP gross profit percentage by dividing non-GAAP gross profit by revenue, expressed as a percentage of revenue.

Management uses Non-GAAP gross profit and Non-GAAP gross margin percentage to
evaluate operating performance and to determine resource allocation among our
various product offerings. We believe Non-GAAP gross profit and Non-GAAP gross
margin percentage provide useful information to investors and others to
understand and evaluate our operating results in the same manner as our
management and board of directors and allows for better comparison of financial
results among our competitors. Non-GAAP gross profit and Non-GAAP gross margin
percentage may not be comparable to similarly titled measures of other companies
because other companies may not calculate Non-GAAP gross profit and Non-GAAP
gross margin percentage or similarly titled measures in the same manner as we
do.

The following table provides a reconciliation between gross margin and non-GAAP gross margin percentage for the periods presented (in thousands of dollars):

                                                                        Years Ended December 31,
                                                                            2021              2020              2019
Gross profit                                                             $ 58,592          $ 63,069          $ 54,502
Depreciation and amortization                                               3,776             3,826             3,130
Long-term equity incentive bonus and stock-based
compensation expenses                                                      10,197               180             1,007
Other non-recurring expenses                                                    -                 -               211
Non-GAAP gross profit                                                    $ 72,565          $ 67,075          $ 58,850
Non-GAAP gross margin %                                                      60.9  %           65.4  %           63.4  %


Components of operating results

Income

We derive revenue by providing products under a variety of pricing models. Our
recently released AI Virtual Agent product and our historical Voice product are
provided under a usage-based pricing model with prices calculated on a
per-minute basis with a contracted minimum commitment in accordance with the
terms of the underlying pricing agreements. Voice is our predominant source of
revenue. Other revenue sources are derived from products under the following
pricing models:

1)a per “unit of measure” with minimum commitment (e.g. Speech IQ);

2) combining per-agent and per-“unit-of-measure” models with minimum contractual commitments for each (eg, SMS, email, U-CRM services);

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3)a per agent pricing model with a minimum agent commitment (e.g., U-Script,
U-Ticket, U-Chat, U-Quality Management, U-Screen Capture, U-CSAT, U-BI, Hosted
PBX services); and

4) A per agent pricing model with a minimum agent commitment with a maximum monthly commitment (eg PDAS – our compliance product, U-BI).

Outside of Voice, our pricing models detailed above are relatively new to the market and not yet financially material to our business.


Cost of Revenue

Our cost of revenue consists of personnel costs and associated costs such as
travel, information technology, facility allocations and stock-based
compensation for Implementation and Training Services, Customer Care, Technical
Support, Professional Services, User Acceptance Quality Assurance, Technical
Operations and VoIP services to our customers. Other costs of revenue include
non-cash costs associated with depreciation and amortization including acquired
technology, charges from telecommunication providers for communications, data
center costs and costs to providers of cloud communication services, software,
equipment maintenance and support costs to maintain service delivery operations.

In the fourth quarter of fiscal 2021, we completed a major strategic milestone
when our data center transitioned from a model based on maintaining a
co-location facility with our own capital equipment to a 100% cloud strategy
based on monthly recurring charges for capacity added in generally small step
function increments. As a result, we have reduced our capital expenditures for
data center equipment, which has slowed growth in depreciation and increased our
data center costs for our cloud provisioning. We expect feature release
efficiencies for our cloud operations as research and development resources
eliminate the release effort associated with our co-location deployment. We have
accelerated depreciation expense associated with the change in useful life
estimate of the co-location facility.

As our business grows, we expect to realize economies of scale in our cost of
revenue. We use the LiveVox platform to facilitate data-driven innovations to
identify and facilitate efficiency improvement to our implementation, customer
care and support, and technical operations teams. Additionally, our research and
development priorities include ease of implementation, reliability and ease of
use objectives that reduce costs and result in economies of scale relative to
revenue growth.


Operating Expenses

We classify our operating expenses into sales and marketing, general and administrative expenses, and research and development.

Sales and Marketing. Sales and marketing expenses consist primarily of salaries
and related expenses, including stock-based compensation, for personnel in sales
and marketing, sales commissions, channel special program incentive funds
(SPIFF) and channel commissions, travel costs, as well as marketing pipeline
management, content delivery, programs, campaigns, lead generation, and
allocated overhead. We believe it is important to continue investing in sales
and marketing to continue to generate revenue growth, and we expect sales and
marketing expenses to increase in absolute dollars and fluctuate as a percentage
of revenue as we continue to support our growth initiatives.

General and Administrative. General and administrative expenses consist
primarily of salary and related expenses, including stock-based compensation,
for management, finance and accounting, legal, information systems and human
resources personnel, professional fees, compliance costs, other corporate
expenses and allocated overhead. We expect that general and administrative
expenses will fluctuate in absolute dollars from period to period but decline as
a percentage of revenue over time.

Research and Development. Research and development expenses consist primarily of
salary and related expenses, including stock-based compensation, for LiveVox
personnel as well as limited outsourced software development resources related
to the identification and development of improvements, and expanded features for
our products, as well as quality assurance, testing, product management and
allocated overhead. Research and development costs are expensed as incurred. We
have not performed research and development for internal-use software that would
meet the qualifications for capitalization. We believe it is important to
continue investing in research and development to continue to expand and improve
our products and generate future revenue growth, and we expect research and
development expenses to increase in absolute dollars and fluctuate as a
percentage of revenue as we continue to support our growth initiatives.


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Operating results

Comparison of years ended December 31, 2021 and 2020

The following tables summarize key components of our results of operations for
the years ended December 31, 2021 and 2020 (in thousands, except per share
data):

                                                                   Years Ended December 31,
                                                                            2021              2020
Revenue                                                            $     119,231                    $   102,545
Cost of revenue                                                           60,639                         39,476
Gross profit                                                              58,592                         63,069
Operating expenses
Sales and marketing expense                                               62,333                         29,023
General and administrative expense                                        44,694                         14,291
Research and development expense                                          52,562                         20,160
Total operating expenses                                                 159,589                         63,474
Loss from operations                                                    (100,997)                          (405)
Interest expense, net                                                      3,732                          3,890
Change in the fair value of warrant liability                             (1,242)                             -
Other expense (income), net                                                 (459)                           154
Total other expense, net                                                   2,031                          4,044
Pre-tax loss                                                            (103,028)                        (4,449)
Provision for income taxes                                                   166                            196
Net loss                                                           $    (103,194)                   $    (4,645)

Net loss per share-basic and diluted                               $       (1.29)                   $     (0.07)

Weighted average shares outstanding-basic and diluted                     79,964                         66,637



Revenue

                                  Years Ended December 31,
                                    2021                2020         $ Change      % Change
             Revenue        $     119,231            $ 102,545      $ 16,686         16.3  %



Revenue increased by $16.7 million, or 16.3%, to $119.2 million in fiscal 2021
from $102.5 million in fiscal 2020, primarily due to the acquisition of new
customers and upsells to our existing customer base. The recent stimulus
packages designed to address the COVID-19 pandemic have allowed our customers to
meet their goals with less effort, reducing usage volumes, which was more than
offset by 26% growth in contract revenue.


Cost of revenue

                                     Years Ended December 31,
                                     2021                   2020         $ Change      % Change
          Cost of revenue      $     60,639              $ 39,476       $ 21,163         53.6  %
          % of revenue                 50.9   %              38.5  %



Cost of revenue increased by $21.2 million, or 53.6%, to $60.6 million in fiscal
2021 from $39.5 million in fiscal 2020. The increase was attributable primarily
to increased personnel costs of $11.0 million, of which $9.5 million was
associated with our Value Creation Incentive Plan ("VCIP") and Option-based
Incentive Plan ("OBIP") awards that fully vested upon a liquidity event (i.e.,
the Merger) and were recorded as compensation expense within cost of revenue in
the consolidated statements of operations and comprehensive loss in the second
quarter of fiscal 2021. We also experienced increased cloud data center costs of
$4.8 million in fiscal 2021 while transitioning from our co-location deployment.
With the transition to the cloud complete in late 2021, going forward, we expect
continued benefit from reduced technical debt (i.e., the implied cost of
additional rework caused by choosing an easy
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solution now instead of using a better approach that would take longer),
increased development efficiency and significantly reduced capital expenditure
needs. Additionally, stock-based compensation expenses increased $0.4 million
associated with restricted stock units ("RSUs") and performance-based restricted
stock units ("PSUs") granted under the 2021 Equity Incentive Plan (the "2021
Plan") in fiscal 2021.


Gross profit

                                         Years Ended December 31,
                                         2021                   2020         $ Change      % Change
     Gross profit                  $     58,592              $ 63,069       $ (4,477)        (7.1) %
     Gross margin percentage               49.1   %              61.5  %



Gross profit decreased by $4.5 million, or 7.1%, to $58.6 million in fiscal 2021
from $63.0 million in fiscal 2020. The decrease in gross profit was a result of
increased personnel costs of $11.0 million, of which $9.5 million was associated
with our VCIP and OBIP awards that fully vested upon a liquidity event (i.e. the
Merger) and were recognized as compensation expense in the second quarter of
fiscal 2021, increased cloud data center costs of $4.8 million in fiscal 2021
while transitioning from our co-location deployment which we began in early 2020
and completed in late 2021, and increased stock-based compensation expenses of
$0.4 million associated with the RSUs and PSUs granted under the 2021 Plan in
fiscal 2021, partially offset by higher revenue.


Sales and marketing expense

                                           Years Ended December 31,
                                           2021                   2020         $ Change      % Change
    Sales and marketing expense      $     62,333              $ 29,023       $ 33,310        114.8  %
    % of revenue                             52.3   %              28.3  %



Sales and marketing expense increased by $33.3 million, or 114.8%, to $62.3
million in fiscal 2021 from $29.0 million in fiscal 2020. The increase was
primarily due to increased personnel costs of $28.7 million of which $18.1
million was associated with the VCIP and OBIP awards that fully vested upon a
liquidity event (i.e., the Merger) and were recorded as compensation expense
within sales and marketing expense in the consolidated statements of operations
and comprehensive loss in the second quarter of fiscal 2021. Additionally,
marketing, promotions and tradeshow expenses increased $2.7 million, and
stock-based compensation expenses increased $0.8 million associated with the
RSUs and PSUs granted under the 2021 Plan in fiscal 2021.


General and administrative costs

                                                           Years Ended 

the 31st of December,

                                                          2021                     2020            $ Change             % Change
General and administrative expense                  $     44,694                $ 14,291          $ 30,403                   212.7  %
% of revenue                                                37.5   %                13.9  %




General and administrative expense increased by $30.4 million, or 212.7%, to
$44.7 million in fiscal 2021 from $14.3 million in fiscal 2020. The increase was
primarily due to increased personnel costs of $21.0 million of which $18.4
million was associated with the VCIP and OBIP awards that fully vested upon a
liquidity event (i.e., the Merger) and were recorded as compensation expense
within general and administrative expense in the consolidated statements of
operations and comprehensive loss in the second quarter of fiscal 2021.
Additionally, accounting, audit and legal fees increased $3.8 million in
connection with our transition to a public company, miscellaneous general and
administrative expenses increased $3.3 million primarily attributable to $1.5
million for directors' and officers' insurance, and stock-based compensation
expenses increased $0.9 million associated with the RSUs and PSUs granted under
the 2021 Plan in fiscal 2021.


Research and development costs

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                                              Years Ended December 31,
                                              2021                   2020         $ Change      % Change
 Research and development expense       $     52,562              $ 20,160       $ 32,402        160.7  %
 % of revenue                                   44.1   %              19.7  %



Research and development expense increased by $32.4 million, or 160.7%, to $52.6
million in fiscal 2021 from $20.2 million in fiscal 2020. The increase was
primarily due to increased personnel costs of $29.1 million of which $23.5
million was associated with the VCIP and OBIP awards that fully vested upon a
liquidity event (i.e., the Merger) and were recorded as compensation expense
within research and development expense in the consolidated statements of
operations and comprehensive loss in the second quarter of fiscal 2021.
Additionally, computing costs used in the development of software increased $1.6
million, and stock-based compensation expenses increased $1.3 million associated
with the RSUs and PSUs granted under the 2021 Plan in fiscal 2021.


Interest expense, net

                                       Years Ended December 31,
                                      2021                     2020        $ Change       % Change
      Interest expense, net      $     3,732                $ 3,890       $    (158)        (4.1) %
      % of revenue                       3.1   %                3.8  %


Net debit interest less $0.2 millioni.e. 4.1%, to $3.7 million in fiscal year 2021 $3.9 million in fiscal 2020. The decrease is mainly due to lower interest expense from $0.2 million associated with a decrease in the principal amount outstanding on our term loan and lower interest rates, partially offset by the payment of contingent consideration related to the acquisition of the BusinessPhone assets.

Change in fair value of warrant liability

                                                            Years Ended 

the 31st of December,

                                                            2021                   2020              $ Change

Change in fair value of warrant liability $(1,242)

   $        -          $   (1,242)
% of revenue                                                    (1.0)  %                -  %



Gain recognized due to change in the fair value of warrant liability increased
by $1.2 million to $1.2 million in fiscal 2021 from $0 in fiscal 2020. The
increase was attributable primarily to decrease in the fair value of Forward
Purchase Warrants. Upon the consummation of the Merger on June 18, 2021, the
Company recorded a liability related to the Forward Purchase Warrants of $2.0
million, with an offsetting entry to additional paid-in capital. On December 31,
2021, the fair value of the Forward Purchase Warrants decreased to $0.8 million,
with the adjustment reflected as a warrant liability within the consolidated
balance sheets, and the gain on fair value change recorded as a change in the
fair value of warrant liability within the consolidated statements of operations
and comprehensive loss.


Comparison of years ended December 31, 2020 and 2019

A comparison of our results of operations for the years ended December 31, 2020
and 2019 can be found in the section entitled "LiveVox Management's Discussion
and Analysis of Financial Condition and Results of Operations" in Crescent's
Definitive Proxy Statement filed with the SEC on May 14, 2021.


Cash and capital resources

Sources of cash

LiveVox's consolidated financial statements have been prepared assuming the
Company will continue as a going concern for the 12-month period from the date
of issuance of the consolidated financial statements, which contemplates the
realization of assets and
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the settlement of liabilities and commitments in the normal course of business.
Historically, the Company's main sources of liquidity were cash generated by
operating cash flows and debt. For the years ended December 31, 2021, 2020 and
2019, the Company's cash flow from operations was $(69.1) million, $1.1 million
and $1.6 million, respectively. During the year ended December 31, 2021, the
Company's cash flows also include net cash proceeds of $157.6 million from the
Merger and the related PIPE, net of transaction costs, which are available for
general corporate purposes.

As of December 31, 2021 and December 31, 2020, the Company held cash and cash
equivalents of $47.2 million and $18.1 million, respectively. In addition, the
Company had restricted cash of $0.1 million as of December 31, 2021 related to
the holdback amount for one acquisition the Company made in 2019 and $1.5
million in restricted cash as of December 31, 2020 related to the holdback
amount for two acquisitions the Company made in 2019. The Company invested in
various marketable securities in the year ended December 31, 2021, and held
marketable securities of $49.4 million as of December 31, 2021.

On February 28, 2018, the Company entered into an amendment to its term loan and
revolving credit facility with PNC Bank originally dated November 7, 2016 (as so
amended, the "Credit Facility") to provide for a $45.0 million term loan, a $5.0
million line of credit and a $1.5 million letter of credit sub-facility. The
agreement governing the Credit Facility initially had a five-year term ending
November 7, 2021, which has been extended as described below. The Credit
Facility is collateralized by a first-priority perfected security interest in
substantially all the assets of the Company and is subject to certain financial
covenants before and after a covenant conversion date. Covenant conversion may
be elected early by the Company if certain criteria are met, including, but not
limited to, meeting fixed charge coverage and liquidity ratio targets as of the
most recent twelve-month period. Prior to the covenant conversion date, the
Company is required to maintain minimum levels of liquidity and recurring
revenue. As of the covenant conversion date, the Company is required to maintain
the Fixed Charge Coverage Ratio and Leverage Ratio (as defined in the Credit
Facility) measured on a quarter-end basis for the four-quarter period ending on
each such date through the end of the agreement.

On December 16, 2019, the Company amended the Credit Facility, increasing the
term loan borrowing therein by $13.9 million to $57.6 million and amending
certain terms and conditions. The amendment to the Credit Facility reset the
minimum recurring revenue covenant and qualified cash amounts through
December 31, 2021 and extended the quarterly measurement dates through
September 30, 2023 and the maturity date to November 7, 2023.

On August 2, 2021, the Company further amended the Credit Facility, extending
the maturity date to December 31, 2025. The amendment to the Credit Facility
reset the minimum recurring revenue covenant amounts through December 31, 2025
and extended the quarterly measurement dates through September 30, 2025.

The Company was in compliance with all debt covenants at December 31, 2021 and
December 31, 2020 and was in compliance with all debt covenants as of the date
of issuance of these consolidated financial statements. There was no unused
borrowing capacity under the term loan portion of the Credit Facility at
December 31, 2021 and December 31, 2020. On March 17, 2020, as a precautionary
measure to ensure financial flexibility and maintain maximum liquidity in
response to the COVID-19 pandemic, the Company drew down approximately $4.7
million under the revolving portion of the Credit Facility, which was repaid in
full by the Company in connection with the Merger in the second quarter of
fiscal 2021.


Cash Requirements

LiveVox's cash requirements within the next 12 months consist primarily of
operation and administrative activities including employee related expenses and
general, operating and overhead expenses, current maturities of the Company's
term loan, operating and finance leases and other obligations.

by LiveVox long-term cash requirements consist of various contractual obligations and commitments, including:

•Term loan - The Company has contractual obligations under its term loan to make
principal and interest payments. Please see Note 11 to the Company's
consolidated financial statements included in Part II, Item 8 of this Annual
Report for a discussion of the contractual obligations under the Company's term
loan and the timing of principal maturities. The principal amount is due
December 31, 2025;

•Operating and finance lease obligations - The Company leases its corporate
headquarters and worldwide offices under operating leases, and finance computer
and networking equipment and software purchases for its co-location data centers
under finance leases. Please see Note 10 to the Company's consolidated financial
statements included in Part II, Item 8 of this Annual Report for further detail
of the Company's obligations under operating and finance leases and the timing
of expected future lease payments;

•Other liabilities - These include other long-term liabilities reflected in the
Company's consolidated balance sheets as of December 31, 2021, including
obligations associated with certain employee and non-employee incentive plans,
Forward Purchase Warrants, unrecognized tax benefits and various long-term
liabilities, which have some inherent uncertainty in the timing of these
payments.
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Future capital requirements will depend on many factors, including the Company's
customer growth rate, customer retention, timing and extent of development
efforts, the expansion of sales and marketing activities, the introduction of
new and enhanced product offerings, the continuing market acceptance of the
Company's products, effective integration of acquisition activities, and
maintaining the Company's bank credit facility. Additionally, the duration and
extent of the impact from the COVID-19 pandemic continues to depend on future
developments that cannot be accurately predicted at this time, such as the
ongoing severity and transmission rate of the virus, the extent and
effectiveness of vaccine programs and other containment actions, the duration of
social distancing, office closure and other restrictions on businesses and
society at large, and the specific impact of these and other factors on the
Company's business, employees, customers and partners. While the COVID-19
pandemic has caused operational difficulties, and may continue to create
unprecedented challenges, it has not thus far had a substantial net impact on
the Company's liquidity position.

The Company believes the cash generated by operating cash flows and debt will be
sufficient to meet the Company's anticipated cash requirements for at least the
next 12 months from the date of this Annual Report and beyond, while maintaining
sufficient liquidity for normal operating purposes.


Acquisition Opportunities

The Company believes that there may be opportunity for further consolidation in
LiveVox's industry. From time to time, the Company evaluates potential strategic
opportunities, including acquisitions of other providers of cloud-based
services. The Company has been in, and from time to time may engage in,
discussions with counterparties in respect of various potential strategic
acquisition and investment transactions. Some of these transactions could be
material to the Company's business and, if completed, could require significant
commitments of capital, result in increased leverage or dilution and/or subject
the Company to unexpected liabilities. In connection with evaluating potential
strategic acquisition and investment transactions, the Company may incur
significant expenses for the evaluation and due diligence investigation of these
potential transactions.


Comparison of cash flows for the years ended December 31, 2021 and 2020

The following table summarizes the main components of our cash flows for the years ended December 31, 2021 and 2020 (thousands of dollars):

                                                                   Years 

Ended the 31st of December,

                                                                 2021                     2020

Net cash (used in) provided by operating activities ($69,057)

          $      1,070
Net cash used in investing activities                             (49,803)                   (773)
Net cash provided by financing activities                         146,689                   2,768
Effect of foreign currency translation                                (78)                    (12)

Net increase in cash, cash equivalents and restricted cash $27,751

$3,053

Net cash (used in) provided by operating activities

Cash flows from operating activities in fiscal 2021 decreased by $70.1 million
to $(69.1) million from $1.1 million in fiscal 2020. The decrease to net cash
provided by operating activities was primarily attributable to a $98.5 million
increase to net loss and an increase of $35.8 million in non-cash adjustments to
net loss. These non-cash items primarily consisted of a $32.6 million increase
of compensation expense associated with the VCIP and OBIP awards fully vesting
in connection with the Merger in the second quarter of fiscal 2021, and a $3.3
million increase of stock-based compensation expenses associated with the RSUs
and PSUs granted under the 2021 Plan in fiscal 2021. Net cash used in operating
activities also included a decrease of $7.4 million in cash from operating
assets and liabilities, primarily due to the payment of indirect or
non-incremental transaction costs of $2.1 million associated with the Merger,
and the timing of cash payments to vendors and cash receipts from customers.

Net cash used in investing activities

Cash used in investing activities in fiscal year 2021 increased by $49.0 million for ($49.8) million from ($0.8) million during the same period of fiscal 2020. Net cash used in investing activities during fiscal 2021 consisted mainly of $50.8 million in purchases of debt securities.

Net cash provided by financing activities

Cash flows provided by financing activities in fiscal 2021 increased by $143.9
million to $146.7 million from $2.8 million during the same period in 2020,
reflecting the net cash proceeds of $159.7 million received in fiscal 2021 as a
result of the Merger, net of direct and incremental transaction costs. Net cash
provided by financing activities was partially offset by the repayment of $4.7
million, representing the revolving portion of the Credit Facility, made in
conjunction with the Merger, and the cash payment made in
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from the third quarter of fiscal 2021 to the fair value of the contingent consideration liability at the date of acquisition of $6.0 million associated with the acquisition of the assets of BusinessPhone.

Comparison of cash flows for the years ended December 31, 2020 and 2019

A comparison of our cash flows for the years ended December 31, 2020 and 2019 can be found in the section titled “LiveVox Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Crescent’s definitive proxy statement filed with the SECOND to May 14, 2021.

Critical accounting estimates

Management's discussion and analysis of our financial condition and results of
operations is based on our consolidated financial statements included in Part
II, Item 8 of this Annual Report, which have been prepared in accordance with
U.S. GAAP.

The preparation of these consolidated financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting periods. Significant items subject to such
estimates and assumptions include, but are not limited to, the determination of
the useful lives of long-lived assets, allowances for doubtful accounts, fair
value of goodwill and long-lived assets, fair value of incentive awards, fair
value of Warrants, establishing standalone selling price, valuation of deferred
tax assets, income tax uncertainties, and other contingencies. Management
periodically evaluates such estimates and they are adjusted prospectively based
upon such periodic evaluation. Actual results could differ from those estimates,
and such differences could be material to the Company's consolidated financial
position and results of operations, requiring adjustment to these balances in
future periods.

While our significant accounting policies are more fully described in the notes
to the consolidated financial statements included in Part II, Item 8 of this
Annual Report, we believe that the following accounting estimates are critical
to our business operations and understanding of our financial results. We
consider an accounting judgment, estimate or assumption to be critical when (i)
the estimate or assumption is complex in nature or requires a high degree of
subjectivity and judgment and (ii) the use of different judgments, estimates and
assumptions could have a material impact on our consolidated financial
statements.

Impairment of long-lived assets, including intangible assets

Long-lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying amount may
not be recoverable. When required, impairment losses on assets to be held and
used are recognized based on the fair value of the asset and long-lived assets
to be disposed of are reported at the lower of the carrying amount or fair
value. No impairment losses have been recognized in any of the periods
presented.

We perform our annual impairment review of goodwill on October 1 of each year,
and when a triggering event occurs between annual impairment tests. In testing
for goodwill impairment, the Company has the option to first assess qualitative
factors to determine if it is more likely than not that the fair value of the
Company's single reporting unit is less than its carrying amount, including
goodwill. In the fourth quarter of 2021, the Company elected to bypass the
qualitative assessment and proceed directly to the quantitative impairment test
to determine if the fair value of the reporting unit exceeds its carrying
amount. If the fair value is determined to be less than the carrying value, an
impairment charge is recorded for the amount by which the reporting unit's
carrying amount exceeds its fair value, limited to the total amount of goodwill
allocated to that reporting unit. No impairment losses have been recognized in
any of the periods presented.

Intangible assets, consisting of acquired developed technology, corporate name,
customer relationships and workforce, are reviewed for impairment whenever
events or changes in circumstances indicate an asset's carrying value may not be
recoverable. No impairment losses have been recognized in any of the periods
presented.

Impairment of marketable securities

The Company monitors the carrying value of debt securities compared to their
fair value to determine whether an other-than-temporary impairment has occurred.
Factors considered in determining whether a loss is other-than-temporary include
the length of time and extent to which fair value has been less than the cost
basis, credit quality and the Company's ability and intent to hold the
investment for a period of time sufficient to allow for any anticipated recovery
in market value. If a decline in fair value of debt securities is determined to
be other-than-temporary, an impairment charge related to that specific
investment is recorded in the consolidated statements of operations and
comprehensive loss. The Company has determined that the unrealized losses for
debt securities at December 31, 2021 were temporary in nature and did not
consider any debt securities to be other-than-temporarily impaired. The Company
will continue to assess whether a debt security is other-than-temporarily
impaired at every reporting period (i.e., on quarterly basis).

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Revenue Recognition

The Company recognizes revenue in accordance with we GAAP, in accordance with ASC 606, Revenue from contracts with customers.

The Company derives substantially all of its revenue by providing cloud-based
contact center voice products under a usage-based model. The Company's
performance obligations are satisfied over time as the customer has continuous
access to its hosted technology platform solutions through one of its data
centers and simultaneously receives and consumes the benefits and the Company
performs its services. Other immaterial ancillary revenue is derived from call
recording, local caller identification packages, performance/speech analytics,
text messaging services and professional services billed monthly on primarily
usage-based fees, and to a lesser extent, fixed fees. Professional services,
which represents approximately 2% of revenue, are billed on a fixed-price or on
a time and material basis and the revenue is recognized over time as the
services are rendered.

The Company has service-level agreements with customers warranting defined
levels of uptime reliability and performance. If the services do not meet
certain criteria, fees are subject to adjustment or refund representing a form
of variable consideration. The Company records reductions to revenue for these
estimated customer credits at the time the related revenue is recognized. These
customer credits are estimated based on current and historical customer trends,
and communications with its customers. Such customer credits have not been
significant to date.

For contracts with multiple performance obligations (e.g., including various
combinations of services), the Company allocates the contract price to each
performance obligation based on its relative standalone selling price ("SSP").
The Company generally determines SSP based on the prices charged to customers.
In instances where SSP is not directly observable, the Company determines the
SSP using information that generally includes market conditions or other
observable inputs.

Income taxes

The Company accounts for income taxes using the asset and liability approach.
Deferred tax assets and liabilities are recognized for the future tax
consequences arising from the temporary differences between the tax basis of an
asset or liability and its reported amount in the consolidated financial
statements, as well as from net operating loss and tax credit carryforwards.
Deferred tax amounts are determined by using the tax rates expected to be in
effect when the taxes will be paid or refunds received, as provided for under
currently enacted tax law. A valuation allowance is provided for deferred tax
assets that, based on available evidence, are not expected to be realized.

The Company recognizes the effect of income tax positions only if those
positions are more likely than not to be sustained in a court of last resort.
Recognized income tax positions are measured at the largest amount that is
greater than 50% likely of being realized. Changes in recognition or measurement
are reflected in the period in which the change in judgment occurs. The Company
does not believe its consolidated financial statements include any uncertain tax
positions. It is the Company's policy to recognize interest and penalties
accrued on any unrecognized tax benefit as a component of income tax expense.

Judgment is required in assessing the future tax consequences of events that
have been recognized in our consolidated financial statements or tax returns.
Variations in the actual outcome of these future tax consequences could
materially impact our consolidated financial statements.

Employee and non-employee profit sharing plans

Value creation incentive plan and option-based incentive plan

During 2014, the Company established two bonus incentive plans, the VCIP and the
OBIP, pursuant to which eligible participants receive a predetermined bonus
based on the Company's equity value at the time of a liquidity event. Awards
under the VCIP and OBIP generally time vest over five years and performance vest
upon certain liquidity event conditions, subject to continued service through
the vesting dates. The Company also has an option to repurchase awards under
either plan at an amount deemed to be fair value for which the time-based
vesting period has been completed, contingent on the employee's termination of
service. The fair value used by the Company has historically been determined by
the Company's board of directors with assistance of management at each reporting
period by considering a number of objective and subjective factors including
important developments in the Company's operations, valuations performed by an
independent third party, actual results and financial performance, the
conditions in the CCaaS industry and the economy in general, volatility of
comparable public companies, among other factors. On June 18, 2021, the Company
consummated the Merger in which all outstanding VCIP and OBIP awards became
fully vested and were recorded as compensation expense. The VCIP and OBIP awards
were paid to the plan participants in a combination of cash awards and equity
awards. The cash portion of the awards was recorded to accrued liability for
unpaid cash awards, and the stock portion of the awards was recorded to
additional paid-in capital for undelivered equity shares. The fair value of the
VCIP and OBIP accrued liability for unpaid cash awards was determined based on
the terms of the respective VCIP and OBIP agreements. Since the inputs used to
measure fair value are directly or indirectly observable in the marketplace,
VCIP and OBIP accrued liability was transferred out of the Level 3 fair value
measurement to the Level 2 fair value measurement upon the consummation of the
Merger on June 18, 2021. As of December 31,
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2021, the VCIP and ROBA awards were paid in full and the fair value of the VCIP and ROBA accrual was transferred out of the Level 3 fair value measurement and reduced to zero.

Management incentive units

During 2019, LiveVox TopCo, LLC ("LiveVox TopCo"), a Delaware limited liability
company and the sole stockholder of the Company prior to the Merger, established
a Management Incentive Unit program whereby the LiveVox TopCo board of directors
has the power and discretion to approve the issuance of Class B Units of LiveVox
TopCo that represent management incentive units (which we call "Management
Incentive Units" or "MIUs") to any manager, director, employee, officer or
consultant of the Company or its subsidiaries. Vesting begins on the date of
issuance, and the MIUs vest ratably over five years with 20% of the MIUs vesting
on each anniversary of a specified vesting commencement date, subject to the
grantee's continued employment with the Company on the applicable vesting date.
Vesting of the MIUs will accelerate upon consummation of a "sale of the
company", which is defined in the LiveVox TopCo limited liability company
agreement. The Company recognizes stock-based compensation expense on a
straight-line basis over the requisite service period of five years. Stock-based
compensation for MIUs is measured based on the grant date fair value of the
award using a Monte Carlo simulation. Assumptions used in the Monte Carlo
simulation are holding period, expected share price volatility, discount for
lack of marketability, and risk-free interest rate.

2021 Stock Incentive Plan

On June 16, 2021, the stockholders of the Company approved the 2021 Equity
Incentive Plan (the "2021 Plan"), which became effective upon the closing of the
Merger on June 18, 2021. The Compensation Committee of the Company approved
5,091,331 RSU and 1,611,875 PSU awards in the year ended December 31, 2021 to
employees, executive officers, directors, and consultants of the Company. RSUs
are subject only to service conditions and typically vest over periods ranging
from three to six years based on the grantee's role in the Company. PSUs are
granted to certain key employees and vest either based on the achievement of
predetermined market conditions, or based on both service and market conditions.
All RSU and PSU awards will be settled in shares of Class A common stock and are
classified as equity. Equity-classified awards are generally recognized as
stock-based compensation expense over an employee's requisite service period or
a nonemployee's vesting period on the basis of the grant-date fair value. The
Company recognizes stock-based compensation expense of RSUs using the
straight-line method, and recognizes stock-based compensation expense of PSUs
subject to graded market vesting using the accelerated attribution method. The
fair value of the RSUs is estimated by using the closing price of the Company's
Class A common stock on Nasdaq on the measurement date. The fair value of the
PSUs at each measurement date is estimated by using a Monte Carlo simulation.
The key inputs used in the Monte Carlo simulation are stock price, expected
share price volatility, expected life, risk-free interest rate, and vesting
hurdles. While the Company believes that the assumptions used in these
calculations are reasonable, differences in actual experience or changes in
assumptions could materially affect the expense related to the Company's 2021
Plan.

Acquisitions

The Company evaluates acquisitions of assets and other similar transactions to
assess whether or not the transaction should be accounted for as a business
combination or asset acquisition by first applying a screen test to determine if
substantially all of the fair value of the gross assets acquired is concentrated
in a single identifiable asset or group of similar identifiable assets. If the
screen is met, the transaction is accounted for as an asset acquisition. If the
screen is not met, further determination is required as to whether or not we
have acquired inputs and processes that have the ability to create outputs which
would meet the definition of a business. Significant judgment is required in the
application of the screen test to determine whether an acquisition is a business
combination or an acquisition of assets.

If an acquisition is determined to be a business combination, the assets
acquired and liabilities assumed are recorded at their respective estimated fair
values at the date of the acquisition. Any excess of the purchase price over the
estimated fair values of the identifiable net assets acquired is recorded as
goodwill.

If an acquisition is determined to be an asset acquisition, the cost of the
asset acquisition, including transaction costs, are allocated to identifiable
assets acquired and liabilities assumed based on a relative fair value basis. If
the cost of the asset acquisition is less than the fair value of the net assets
acquired, no gain is recognized in earnings. The excess fair value of the
acquired net assets acquired over the consideration transferred is allocated on
a relative fair value basis to the identifiable net assets (excluding
non-qualifying assets).

Determining estimated fair value requires a significant amount of judgment and
estimates. If our assumptions change or errors are determined in our
calculations, the fair value could materially change resulting in a change in
our goodwill or identifiable net assets acquired.

Public and term warrants

Prior to the Merger, Crescent issued 7,000,000 private placement warrants (“Private Warrants”) and 12,499,995 public warrants (“Public Warrants”) at the closing of the initial public offering ( “IPO”) of Crescent on March 7, 2019. As an incentive for LiveVox enter

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into the Merger Agreement, pursuant to the Sponsor Support Agreement dated
January 13, 2021, Crescent's sponsor agreed to the cancellation of all of the
Private Warrants prior to the Closing Date. 833,333 Forward Purchase Warrants
("Forward Purchase Warrants") were issued pursuant to the Forward Purchase
Agreement dated January 13, 2021 between Crescent and LiveVox. The 12,499,995
Public Warrants and the 833,333 Forward Purchase Warrants (collectively
"Warrants") remain outstanding after the Merger. Each whole warrant entitles the
holder to purchase one share of the Company's Class A common stock at a price of
$11.50 per share, subject to adjustments.

Upon consummation of the Merger, the Company concluded that (a) the Public
Warrants meet the derivative scope exception for contracts in the Company's own
stock and are recorded in stockholders' equity and (b) the Forward Purchase
Warrants do not meet the derivative scope exception and are recorded as
liabilities on the consolidated balance sheets at fair value upon the Merger,
with subsequent changes in the fair value recognized in the consolidated
statements of operations and comprehensive loss at each reporting date. The
Forward Purchase Warrants are classified as Level 3 fair value measurement and
the fair value is measured using a Black-Scholes option pricing model. Inherent
in options pricing models are assumptions related to current stock price,
exercise price, expected share price volatility, expected life, risk-free
interest rate and dividend yield. While the Company believes that the
assumptions used in these calculations are reasonable, changes in assumptions
could materially affect the liabilities related to the Warrants.

Recently Adopted Accounting Pronouncements

See Note 2 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted at the balance sheet date included in this report annual.

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